<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
<TABLE>
<S> <C>
Filed by the Registrant / /
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to
Section240.14a-11(c) or Section240.14a-12
</TABLE>
<TABLE>
<S> <C>
BJ SERVICES COMPANY
- --------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
</TABLE>
Payment of Filing Fee (Check the appropriate box):
<TABLE>
<S> <C> <C>
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
----------------------------------------------------------
(2) Aggregate number of securities to which transaction
applies:
----------------------------------------------------------
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
it was determined):
----------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------
(3) Filing Party:
----------------------------------------------------------
(4) Date Filed:
----------------------------------------------------------
</TABLE>
<PAGE>
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JANUARY 27, 2000
------------------------
The Annual Meeting of the Stockholders of BJ Services Company (the
"Company") will be held on Thursday, January 27, 2000, at 11:00 a.m. local time,
at The Houstonian, located at 111 North Post Oak Lane, Houston, Texas 77024, for
the following purposes:
1. To elect three Class I directors to serve a three-year term.
2. To approve amendments to the BJ Services Company 1990 Stock Incentive
Plan.
3. To approve amendments to the BJ Services Company 1995 Incentive Plan.
4. To approve amendments to the BJ Services Company 1997 Incentive Plan.
5. To transact such other business as may properly come before the meeting
and any adjournments.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
All stockholders of record at the close of business on December 3, 1999 are
entitled to notice of and to vote at the meeting or any adjournment. At least a
majority of the outstanding shares of the Company are required to be present at
the meeting or represented by proxy to constitute a quorum.
By Order of the Board of Directors,
[/S/ J.W. STEWART]
J. W. Stewart
CHAIRMAN OF THE BOARD, PRESIDENT
AND CHIEF EXECUTIVE OFFICER
Houston, Texas
December 20, 1999
YOUR VOTE IS IMPORTANT
TO ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE SIGN, DATE AND RETURN YOUR
PROXY AS PROMPTLY AS POSSIBLE. AN ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED
IN THE UNITED STATES, IS ENCLOSED FOR THIS PURPOSE.
<PAGE>
BJ SERVICES COMPANY
---------------------
PROXY STATEMENT
---------------------
This proxy statement is furnished to stockholders of BJ Services Company, a
Delaware corporation (the "Company"), in connection with the solicitation of
proxies on behalf of the Board of Directors of the Company to be voted at the
Annual Meeting of Stockholders of the Company (the "2000 Annual Meeting"), to be
held at The Houstonian, located at 111 North Post Oak Lane, Houston, Texas
77024, on Thursday, January 27, 2000, at 11:00 a.m. local time, and at any and
all adjournments. Stockholders of record at the close of business on
December 3, 1999 will be entitled to notice of and to vote at the meeting and at
all adjournments.
When a properly executed proxy is received prior to the meeting, the shares
represented will be voted at the meeting in accordance with the directions
noted. A proxy may be revoked at any time before it is exercised by submitting a
written revocation or a later-dated proxy to the Secretary of the Company, or by
attending the meeting in person and so notifying the inspector of elections.
Management does not intend to present any business for a vote at the
meeting, other than (i) the election of directors and (ii) the approval of
amendments to the BJ Services Company 1990 Stock Incentive Plan, 1995 Incentive
Plan and 1997 Incentive Plan (the "Plan Amendments"). Unless stockholders
specify otherwise in their proxies, proxies will be voted FOR the election of
director nominees listed in this proxy statement and FOR the approval of each of
the Plan Amendments. If other matters requiring the vote of stockholders
properly come before the meeting, it is the intention of the persons named in
the enclosed proxy card to vote proxies held by them in accordance with their
judgment on such matters.
The complete mailing address of the Company's executive offices is 5500
Northwest Central Drive, Houston, Texas 77092. The approximate date on which
this proxy statement and the accompanying proxy card were first sent or given to
the stockholders of the Company is December 22, 1999.
VOTING SECURITIES
On December 3, 1999, the record date, there were outstanding and entitled to
vote 75,820,745 shares of the Company's Common Stock, held of record by
approximately 1,968 persons. Stockholders are entitled to one vote, exercisable
in person or by proxy, for each share of Common Stock held on the record date.
Cumulative voting is not permitted under the Company's Certificate of
Incorporation or Bylaws.
Owners of more than 5% of the outstanding voting securities of the Company
are set forth in the following table. At the record date, management knew of no
person that beneficially owned more than 5% of the outstanding Common Stock or
warrants to purchase Common Stock of the Company, other than as set forth in the
table.
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL OWNERS SHARES CLASS
- -------------- ------------------------------------------------ --------- ----------
<S> <C> <C> <C>
Common Stock FMR Corporation 7,242,076(a) 9.6%
82 Devonshire Street
Boston, Massachusetts 02109
Common Stock T. Rowe Price Associates, Inc. 5,090,000(b) 6.7%
100 E. Pratt Street
Baltimore, Maryland 21202
</TABLE>
- ------------------------
(a) As of January 31, 1999, based on information filed by FMR Corp., Fidelity
Management & Research Company, Fidelity Management Trust Company and
Fidelity International Limited beneficially owned in the aggregate 7,242,076
shares of Common Stock.
(b) As of February 12, 1999, based on information filed by T. Rowe Price
Associates, Inc.
<PAGE>
ELECTION OF DIRECTORS
The Company's Bylaws provide for the Board of Directors to serve in three
classes having staggered terms of three years each. Three Class I directors will
be elected at the 2000 Annual Meeting of Stockholders to serve for a three-year
term expiring at the Annual Meeting of Stockholders in the year 2003. Pursuant
to the Company's Bylaws, in case of a vacancy on the Board of Directors, a
majority of the remaining directors of the class in which the vacancy occurs
will be empowered to elect a successor, and the person so elected will hold
office for the remainder of the full term of the director whose death,
retirement, resignation, disqualification or other cause created the vacancy,
and thereafter until the election of a successor director.
The persons whose names are set forth as proxies in the enclosed proxy card
will vote all shares over which they have discretionary authority "FOR" the
election of the nominees named below unless otherwise directed. Although the
Board of Directors of the Company does not anticipate that any of the nominees
will be unable to serve, if such a situation should arise prior to the meeting,
the appointed proxies will use their discretionary authority pursuant to the
proxy and vote in accordance with their best judgment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES NAMED
BELOW. THE AFFIRMATIVE VOTE OF HOLDERS OF A MAJORITY OF THE SHARES OF COMMON
STOCK PRESENT IN PERSON OR REPRESENTED BY PROXY AT THE MEETING AND ENTITLED TO
VOTE IS REQUIRED TO ELECT EACH DIRECTOR NOMINEE.
The following table sets forth, for each nominee for election as a Class I
director, his name, his principal occupation, his age and the year in which he
first became a director of the Company. The nominees have consented to be named
in this proxy statement and to serve as directors, if elected.
<TABLE>
<CAPTION>
DIRECTOR
NAME PRINCIPAL OCCUPATION AGE SINCE CLASS
- ---- ------------------------------------------------------ -------- -------- --------
<S> <C> <C> <C> <C>
R. A. LeBlanc Mr. LeBlanc served in various executive positions with 69 1994 I
Keystone International, Inc., a manufacturer of flow
control products, including Chairman of the Board,
Chief Executive Officer and a director, from 1959
until his retirement in 1995.
Michael E. Patrick Chief Investment Officer for The Meadows Foundation 55 1995 I
since December 1, 1995; consultant from 1994 to 1995.
Executive Vice President, Chief Financial Officer and
a director of Lomas Financial Corporation, parent, and
President and Chief Operating Officer of two
subsidiaries, Lomas Mortgage USA and Lomas Information
Systems, Inc., from 1992 to December 31, 1993. The
Lomas companies were engaged in mortgage banking, real
estate and information systems. Lomas Financial
Corporation and Lomas Mortgage USA filed for
bankruptcy protection in October 1995. From 1984 to
1991, Mr. Patrick was Executive Vice Chancellor for
Asset Management of the University of Texas System,
where he was responsible for the investment of all
endowment funds. Mr. Patrick is also currently a
director of Cooper Cameron Corporation.
John R. Huff Chairman, President and Chief Executive Officer of 53 1992 I
Oceaneering International, Inc., an oilfield services
corporation (Oceaneering). Mr. Huff has been
President, Chief Executive Officer and a director of
Oceaneering since 1986 and Chairman of the Board since
1990. Mr. Huff is also a director of Triton Energy and
Suncor Energy.
</TABLE>
2
<PAGE>
INFORMATION CONCERNING OTHER DIRECTORS
The following table sets forth certain information for those directors whose
present terms will continue after the 2000 Annual Meeting. The terms of the
Class II and Class III directors named below will expire at the 2001 and 2002
Annual Meetings of Stockholders, respectively.
<TABLE>
<CAPTION>
DIRECTOR
NAME PRINCIPAL OCCUPATION AGE SINCE CLASS
- ---- --------------------------------------------------- -------- -------- --------
<S> <C> <C> <C> <C>
Don D. Jordan Chairman of the Board and a director of Reliant 67 1990 II
Energy, Inc., a diversified international energy
services company that has operations in all
segments of the energy chain that bring natural gas
and electricity to customers. Mr. Jordan has been
employed by various subsidiaries of Reliant
Energy, Inc. since 1956. He currently serves as a
director of Chase Bank of Texas, N.A., Utech Joint
Venture, and AEGIS Insurance Services. Mr. Jordan
has announced his intention to retire from his
positions with Reliant Energy on December 31, 1999.
Michael McShane Senior Vice President-Finance and Chief Financial 45 1990 II
Officer of the Company. 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.
L. William Heiligbrodt Currently, a private investor and consultant to 58 1992 III
Service Corporation International, a funeral
services corporation ("SCI"). President and Chief
Operating Officer of SCI until February 1999, he
had served in various management positions with SCI
since February 1990. Prior to joining SCI,
Mr. Heiligbrodt served as President of Provident
Services, Inc. from March 1988 to February 1990.
Prior to that, he served for five years as Vice
Chairman and Chief Executive Officer of WEDGE
Group, Incorporated, a multi-industry holding
company.
J. W. Stewart Chairman of the Board, President and Chief 55 1990 III
Executive Officer of the Company. Mr. Stewart
joined Hughes Tool Company in 1969 as Project
Engineer and 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.
James L. Payne Since 1990, Chief Executive Officer of Santa Fe 62 1999 III
Snyder Corporation ("Santa Fe"), a company engaged
in the exploration, development and production of
crude oil and natural gas. Mr. Payne also served as
Chairman of the Board from 1990 until May 1999.
Following four years as senior vice
president-exploration of Santa Fe Energy Company (a
predecessor of Santa Fe), then a wholly owned
subsidiary of Santa Fe Pacific Corporation,
Mr. Payne was named president of Santa Fe in 1986,
a position he held until April 1998, and chairman
in 1990. Mr. Payne is also a director of Nabors
Industries.
</TABLE>
3
<PAGE>
The following table sets forth the beneficial ownership of Common Stock as
of December 3, 1999 by each current director and nominee, by each executive
officer named in the Summary Compensation Table and by all current directors and
executive officers as a group.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL
NAME OR GROUP OWNERSHIP(1)(2)
- ------------- ---------------
<S> <C>
L. William Heiligbrodt...................................... 54,000
John R. Huff................................................ 34,000
Don D. Jordan............................................... 55,000
R. A. LeBlanc............................................... 74,500
James E. McCormick(4)....................................... 44,000
Michael E. Patrick.......................................... 38,000
James L. Payne.............................................. 10,000
J. W. Stewart............................................... 921,691
Michael McShane............................................. 220,180
Kenneth Williams............................................ 195,477
Thomas H. Koops............................................. 183,911
David D. Dunlap............................................. 89,271
All current directors and executive officers as a group
(16 persons)(3)........................................... 2,424,515
</TABLE>
- ------------------------
(1) The persons named in the table have sole voting and investment power with
respect to all shares of Common Stock beneficially owned by them. As of
December 3, 1999, no officer or director owned in excess of 1% of the
Company's Common Stock except Mr. Stewart, who owned 1.19%.
(2) Includes the following shares subject to options granted pursuant to the BJ
Services Company 1990 Stock Incentive Plan (the "1990 Stock Incentive
Plan"), the BJ Services Company 1995 Incentive Plan (the "1995 Incentive
Plan") and the BJ Services Company 1997 Incentive Plan (the "1997 Incentive
Plan") and exercisable within 60 days: Mr. Heiligbrodt--52,000 shares;
Mr. Huff--34,000 shares; Mr. Jordan--54,000 shares; Mr. LeBlanc--44,000
shares; Mr. McCormick--42,000 shares; Mr. Patrick--38,000 shares;
Mr. Payne--10,000 shares; Mr. Stewart--745,363 shares; Mr. McShane--127,716
shares; Mr. Williams--133,770 shares; Mr. Koops--131,802 shares;
Mr. Dunlap--66,092 shares.
(3) All current directors and executive officers as a group owned beneficially
an aggregate of approximately 3.12% of the Company's Common Stock.
(4) Mr. McCormick will retire from the Board of Directors following the Annual
Meeting on January 27, 2000.
BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
During fiscal 1999, the Board of Directors held seven meetings of the full
Board and nine meetings of committees. During fiscal 1999, each director
attended at least 75% of the aggregate number of meetings of the Board of
Directors and meetings of committees of the Board on which he served. During
fiscal 1999, directors who were not employees of the Company were paid a monthly
retainer of $2,500 for service on the Board, an attendance fee of $1,250 for the
first meeting of the Board or any of its committees attended in one day, and
$800 for each additional meeting attended in the same day. Committee chairmen
who are not Company employees receive an additional 50% of the meeting fee. In
addition, under the terms of the Company's 1990 Stock Incentive Plan, 1995
Incentive Plan, and 1997 Incentive Plan, the non-employee directors receive
annual automatic grants of options to purchase 8,000 shares of Common Stock
effective the fourth Thursday of October each year at an exercise price equal to
the per share price of the last sale of
4
<PAGE>
Common Stock on the trading day prior to the date of grant. Employees of the
Company are not paid any directors' fees. No member of the Board of Directors
was paid any compensation in the Company's 1999 fiscal year for his service as a
director of the Company other than the standard compensation arrangement for
directors and reimbursement of expenses.
On January 28, 1999, the Board of Directors appointed members to serve on
the Audit Committee, the Executive Compensation Committee and the Nominating
Committee. The Nominating Committee held one meeting during fiscal 1999. The
Executive Compensation Committee met six times and the Audit Committee met two
times during that period.
The responsibilities of the Audit Committee, which in 1999 was composed of
Messrs. McCormick (Chairman), Jordan, Huff, LeBlanc and Patrick, include
reviewing the scope and results of the annual audit of the Company's
consolidated financial statements with the independent auditors, internal
auditors and management; reviewing the independence of the independent auditors
and the internal auditors; reviewing actions by management on the independent
and internal auditors' recommendations; and meeting with management, the
internal auditors and the independent auditors to review the effectiveness of
the Company's system of internal control and internal audit procedures. To
promote the independence of the audit, the Audit Committee consults separately
and jointly with the independent auditors, the internal auditors and management.
The responsibilities of the Executive Compensation Committee, composed of
Messrs. Jordan (Chairman), Heiligbrodt, Huff, Patrick and Payne, include
reviewing the Company's executive salary and bonus structure; reviewing the
Company's employee stock incentive plans, thrift plan and employee stock
purchase plan as well as other incentive alternatives; reviewing the Company's
perquisite program; and recommending directors' fees.
The responsibilities of the Nominating Committee, composed of
Messrs. Heiligbrodt (Chairman), LeBlanc and Payne, include selecting candidates
to fill vacancies on the Board of Directors; reviewing the structure and
composition of the Board; and considering qualifications required for continued
Board service. The Committee also considers nominees recommended by stockholders
in accordance with the Company's Bylaws. Stockholders desiring to make such
recommendations should timely submit the candidate's name, together with
biographical information and the candidate's written consent to be nominated
and, if elected, to serve to: Chairman, Nominating Committee of the Board of
Directors of BJ Services Company, P.O. Box 4442, Houston, Texas 77210-4442.
5
<PAGE>
APPROVAL OF THE
AMENDMENTS TO THE BJ SERVICES COMPANY
1990 STOCK INCENTIVE PLAN,
1995 INCENTIVE PLAN AND 1997 INCENTIVE PLAN
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE PLAN AMENDMENTS AND
UNANIMOUSLY RECOMMENDS THAT THE COMPANY STOCKHOLDERS VOTE FOR APPROVAL OF THE
PROPOSED PLAN AMENDMENTS. THE AFFIRMATIVE VOTE OF HOLDERS OF A MAJORITY OF THE
SHARES OF COMMON STOCK PRESENT IN PERSON OR REPRESENTED BY PROXY AND ENTITLED TO
VOTE AT THE 2000 ANNUAL MEETING IS REQUIRED TO APPROVE THE PROPOSED PLAN
AMENDMENTS.
PROPOSALS 2, 3 AND 4. AMENDMENTS TO THE BJ SERVICES COMPANY INCENTIVE PLANS
At the Annual Meeting, you are being asked to approve an amendment to each
of the Company's three Incentive Plans: the 1990 Incentive Plan, the 1995
Incentive Plan and the 1997 Incentive Plan (together, the "Plans"). The
amendment to each Plan modifies certain provisions of the Plan relating to the
treatment of non-qualified stock options granted to non-employee directors
("Director Options") upon a change of control of the Company (as defined in the
Plans). The Board of Directors has proposed these amendments because it believes
that the Company's non-employee directors should be placed in the same position
as employees of the Company upon a change of control so that they are also able
to realize the inherent value in their stock options.
The amendments provide that, upon the occurrence of a change in control in
which the consideration offered to stockholders of the Company is common stock
of a publicly-traded entity acquiring the Company (the "Acquiring Entity"),
outstanding Director Options will be assumed by the Acquiring Entity and will
become new options ("New Options") to purchase common stock of the Acquiring
Entity ("Acquiror Stock"). The amendments further provide that after a change in
control, each such option will be exercisable for the remainder of its original
term (ten years after the date of grant) regardless of any termination of the
non-employee director's membership on the Company Board or the board of
directors of the Acquiring Entity. Prior to the amendments, in the event of a
change in control each Director Option expired one year after the change in
control. Additionally, the amendments allow each non-employee director to
surrender the New Options to the Acquiring Entity during the 90-day period
following the change in control in return for cash or shares of Acquiror Stock,
as determined by the Acquiring Entity, equal in value to the higher of (a) the
per share consideration received by stockholders of the Company in the change in
control or (b) the highest per share price for the Common Stock of the Company
during the period beginning with the public announcement of the proposed change
in control and ending at the date of the change in control, in each case minus
the option exercise price.
The amendments also provide that if the consideration offered to
stockholders of the Company in connection with a change in control consists of
cash or stock that is not publicly-traded, upon the occurrence of such change of
control, each non-employee director will surrender his outstanding Director
Options in exchange for a cash payment equal to the Black-Scholes value of such
options as of the date of the change in control, without discount for risk of
forfeiture and non-transferability.
The Board of Directors has unanimously approved the Plan Amendments and
unanimously recommends that the Company stockholders vote FOR approval of each
of the proposals containing the Plan Amendments. The affirmative vote of holders
of a majority of the shares of Common Stock present in person or represented by
proxy and entitled to vote at the 2000 Annual Meeting is required to approve
each of the Plan Amendments. You will vote on each Plan Amendment separately,
even though the text of the Amendments is virtually identical. The approval or
disapproval of one of the Plan Amendments will not affect the approval or
disapproval of the other amendments. The Plan Amendments are attached to this
proxy statement as Appendices A, B and C. Copies of the Plans may be obtained by
any stockholder upon request to the Secretary of the Company.
6
<PAGE>
SUMMARY OF EXISTING TERMS OF THE PLANS
TYPES OF AWARDS AVAILABLE
Each of the Plans permits the granting of the following types of awards:
stock options ("Options") to purchase shares of Common Stock to employees,
officers and non-employee directors ("Optionees"), which may be either incentive
stock options ("Incentive Stock Options") within the meaning of Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code"), or options that do
not constitute Incentive Stock Options ("Non-qualified Options"); stock-based
awards ("Performance Stock," "Performance Units" and "Bonus Stock") to employees
and officers ("Employee Grantees") and cash awards ("Tandem Cash Tax Rights,"
"Performance Cash Awards" or "Bonus Cash Awards," collectively referred to as
"Cash Awards") to Employee Grantees. Options, Performance Stock, Performance
Units, Bonus Stock and Cash Awards are collectively referred to herein as
"Awards."
ELIGIBILITY FOR PARTICIPATION
Options granted to non-employee directors shall be Non-qualified Options,
and non-employee directors shall not be eligible to receive any other Award.
Incentive Stock Options may be granted only to individuals who are employees and
officers (whether or not they are directors) of the Company or any "Parent
Corporation" or any "Subsidiary Corporation" (as defined in Section 424 of the
Code) of the Company, and Non-qualified Options, Performance Stock, Performance
Units, Bonus Stock and Cash Awards may be granted only to individuals who are
employees and officers (whether or not they are directors) of the Company, its
subsidiaries and affiliated entities. As of the date of this Proxy Statement,
approximately 300 employees and six non-employee directors are eligible to
participate in the Plans.
SHARES SUBJECT TO THE PLANS
Each Plan provides for the issuance upon the purchase of Common Stock
acquired through such Plan's Awards of up to an aggregate of 3,000,000 shares of
Common Stock, all of such shares being subject to adjustment in the event of
stock splits and certain other corporate events; see "--Adjustments to Shares."
Such shares of Common Stock may be authorized but unissued shares or reacquired
shares. Each share of Common Stock issued pursuant to the Plans will be fully
paid and nonassessable and will include one-half of a preferred share purchase
right under the Company's Rights Plan. As of December 15, 1999 a total of
6,545,362 Options have been granted under the Plans, which includes 306,000
Options to non-employee directors of the Company; 44,000 Options to
Mr. LeBlanc; 40,000 Options to Mr. Patrick; 52,000 Options to Mr. Huff;
1,200,974 Options to Mr. Stewart; 450,632 Options to Mr. McShane; 283,768
Options to Mr. Williams; 337,296 Options to Mr. Koops; 168,064 Options to
Mr. Dunlap; 2,440,734 Options total to the five named executive officers of the
Company; and 3,798,628 Options to all other employees. The market price per
share of the Common Stock underlying such Options was $37.375 as of
December 15, 1999, based on the closing price of the Common Stock as reported in
THE WALL STREET JOURNAL on December 16, 1999.
ADMINISTRATION
Under the terms of the Plans, each Plan is administered by the Executive
Compensation Committee of the Board of Directors, consisting of two or more
directors of the Company appointed by the Board of Directors. Subject to the
terms and conditions of the Plans, the Executive Compensation Committee has
authority to determine the employees who are to be granted Awards, the number of
shares to be issued pursuant to such Awards and, within the limits of the Plans,
the exercise price of Options (other than Options granted to non-employee
directors), to interpret the Plans and all Options and Awards and to administer
the Plans. Under the 1997 Incentive Plan, the Executive Compensation Committee,
in its sole discretion, may delegate any or all of its powers and duties under
the Plans to the President of the Company, subject to such limitations on such
delegated powers and duties as the committee may impose,
7
<PAGE>
except that the President may not grant Awards to, or take any action with
respect to any Award previously granted to, a person who is an officer or a
director of the Company or otherwise subject to Section 16(b) of the Securities
Act of 1933, as amended.
OPTIONS
The Executive Compensation Committee has the authority to grant to the
Employee Optionees, prior to the termination of and subject to the terms and
conditions of the Plans, Options that will be in such form as the Executive
Compensation Committee may from time to time approve. (For a description of
Director Options automatically granted to non-employee directors of the Company,
see "--Non-Employee Directors' Options.") The Executive Compensation Committee
also has the authority to determine whether Options granted to Employee
Optionees will be Incentive Stock Options or Non-qualified Options; provided,
however, only employees of the Company, its Parent Corporation or a Subsidiary
Corporation (as defined in Section 424 of the Code) may be granted Incentive
Stock Options. No Employee Optionee may receive more than 250,000 Options under
each Plan during any calendar year.
To exercise an Option granted under any of the Plans, the person entitled to
exercise the Option must deliver to the Company payment in full for the shares
being purchased, together with any required withholding tax in the case of the
exercise of a Non-qualified Option. The payment must either be in cash or check
acceptable to the Company or through delivery to the Company of shares of Common
Stock already owned by the person (provided that if such shares were acquired
pursuant to the prior exercise of a Company-granted option, such shares must
have been owned for at least six months) or sale through a broker, or by any
combination thereof. The value of each share of Common Stock delivered will be
deemed to be equal to the per share price of the last sale of Common Stock on
the trading day prior to the date the Option is exercised, based on the
composite transactions in the Common Stock as reported in THE WALL STREET
JOURNAL.
The price at which shares of Common Stock may be purchased upon the exercise
of a Non-qualified Option shall be equal to the fair market value per share of
Common Stock at the time of the grant as determined by the Executive
Compensation Committee, based on the composite transactions in the Common Stock
as reported by THE WALL STREET JOURNAL. Under the 1997 Incentive Plan, the
purchase price per share of Common Stock shall not be less than the per share
price of the last sale of Common Stock on the trading day prior to the grant of
such Option. Under the 1990 Stock Incentive Plan and the 1995 Incentive Plan,
the purchase price per share of Common Stock shall not be less than the lesser
of (a) the per share price of the last sale of Common Stock on the trading day
prior to the grant of the option and (b) the arithmetic average of the closing
prices per share of Common Stock on all trading days during the 90 day period
before the date of grant.
In the case of Options granted to non-employee directors, the exercise price
of each Option shall be equal to the per share price of the last sale of Common
Stock on the trading day prior to the date of grant relating to such Option,
based on the composite transactions in the Common Stock as reported by THE WALL
STREET JOURNAL.
In the case of the exercise of an Incentive Stock Option, the purchase price
per share of Common Stock will be equal to the fair market value per share of
Common Stock at the time the Incentive Stock Option is granted as determined by
the Executive Compensation Committee, based on the composite transactions in the
Common Stock as reported by THE WALL STREET JOURNAL, and shall not be less than
the per share price of the last sale of Common Stock on the trading day prior to
the date of grant; provided, however, that the exercise price per share of
Common Stock shall be at least 110% of the fair market value per share of Common
Stock at the time of grant if the Employee Optionee, at the time such Option is
granted, owns (within the meaning of Section 424(d) of the Code) more than 10%
of the total combined voting power of all classes of stock of the Company or any
Parent Corporation or Subsidiary Corporation.
8
<PAGE>
The exercise price for Options shall be subject to appropriate adjustments
in the event that the outstanding shares of Common Stock are changed into or
exchanged for a different number or kind of shares or other securities of the
Company by reason of merger, consolidation, recapitalization, reclassification,
stock split, stock dividend, combination of shares or the like.
Under the 1997 Incentive Plan, the Executive Compensation Committee may, in
its discretion, provide in an option agreement (other than an Incentive Stock
Option agreement) that the option right granted to the individual may be
transferred as provided in such option agreement.
NON-EMPLOYEE DIRECTORS' OPTIONS
Subject in each case to the limitation on the number of shares of Common
Stock included in each Plan, each director of the Company who is neither an
employee nor officer of the Company, its subsidiaries or affiliated entities, is
eligible to receive an automatic grant of Director Options. Each non-employee
director of the Company will be granted, as of the date of his initial election,
a Non-qualified Option under the 1997 Incentive Plan to purchase 2,000 shares of
Common Stock. Annually, on the fourth Thursday of October of each year until the
expiration of the 1997 Incentive Plan, each non-employee director on such date
will receive a grant of a Non-qualified Option to purchase 8,000 shares of
Common Stock. Other than the foregoing provisions, the terms and provisions of
Director Options are generally the same as the terms and provisions of other
Non-qualified Options awarded under the Plan, except that the options granted to
non-employee directors vest immediately upon award.
PERFORMANCE STOCK, PERFORMANCE UNITS AND BONUS STOCK
The Executive Compensation Committee has the authority to grant Awards to
Employee Grantees, which in the case of Performance Stock will be shares of
Common Stock subject to a Performance Period (as defined below), in the case of
Performance Units will represent a phantom share of Common Stock subject to a
Performance Period, and in the case of Bonus Stock will be shares of Common
Stock that are not subject to a Performance Period.
TANDEM CASH TAX RIGHTS, PERFORMANCE CASH AWARDS AND BONUS CASH AWARDS
With respect to a Performance Stock or Performance Unit Award, the Executive
Compensation Committee may grant a Tandem Cash Tax Right that will entitle a
recipient to receive a cash amount from the Company sufficient to gross up the
value of such Award to equal its value before any federal, state and other taxes
payable thereon. Cash Awards may also include Performance Cash Awards, which
shall not be paid prior to six months from the beginning of the Performance
Period, subject to achievement of certain performance goals (as determined by
the Executive Compensation Committee, in its discretion).
The Executive Compensation Committee may, from time to time and subject to
the provisions of the Plans, grant Bonus Cash Awards to employees and officers
(whether or not they are directors) of the Company, its subsidiaries and
affiliated entities. Bonus Cash Awards are cash payments that are not subject to
a Performance Period.
CHANGE OF CONTROL
The Plans currently provide that upon the occurrence of a Change of Control
(defined generally as certain acquisitions by a person, entity or group of 25%
or more of the Common Stock or 25% of the combined voting power of the then
outstanding voting securities of the Company or certain reorganizations,
mergers, consolidations or liquidations), each Option that is not then
immediately exercisable in full shall be immediately exercisable in full. In
addition, upon the occurrence of a Change of Control, each share of Performance
Stock and each Performance Unit that was previously granted under the Plans and
that is not then immediately vested in full will be immediately vested in full.
9
<PAGE>
AMENDMENT AND TERMINATION
The Board of Directors in its discretion may amend, suspend or terminate the
Plans; PROVIDED that any amendment that would (i) extend the period within which
Awards may be granted under the Plans, (ii) increase the aggregate number of
shares of Common Stock to be optioned or awarded under the Plans (other than as
prescribed for changes in capitalization as described herein), (iii) reduce the
Option exercise prices per share of Common Stock provided in the Plans, (iv)
change the class of persons to whom Awards may be made under the Plans, (v)
modify provisions relating to the grant of Options to non-employee directors or
(vi) grant Options to non-employee directors other than pursuant to existing
provisions of the Plans would require the approval of the stockholders of the
Company; and PROVIDED, FURTHER, that no amendment, suspension or termination of
the Plans may cause the Plans to fail to meet the requirements of Rule 16b-3 of
the Exchange Act or may, without the consent of the holder of an Award,
terminate an Award or adversely affect such person's rights in any material
respect.
The Executive Compensation Committee may, with the consent of the person
entitled to exercise an Option, amend an Option (other than an Option granted to
a non-employee director). The Executive Compensation Committee may at any time
or from time to time, in its discretion (other than for Options granted to
non-employee directors), accelerate the time or times at which such Option may
be exercised to any earlier time or times.
ADJUSTMENTS TO SHARES
In the event the outstanding shares of Common Stock are changed into or
exchanged for a different number or kind of shares of the Company or other
securities of the Company by reason of a merger, consolidation,
recapitalization, reclassification, stock split, stock dividend, combination of
shares or the like, the Executive Compensation Committee will ratably adjust the
aggregate number and class of securities available under the Plans, and will
make an appropriate and equitable adjustment in the number and kind of shares of
Common Stock as to which all outstanding Options, or portions thereof then
unexercised, are exercisable, so that after such event the shares of Common
Stock subject to the Plans and the proportionate interest of each Option or
Award will be maintained as before the occurrence of such event. Any such
adjustment made by the Executive Compensation Committee will be final and
binding upon the Company and all other interested persons.
FEDERAL INCOME TAX CONSEQUENCES OF OPTIONS
A grant of a Non-qualified Option, including a Director Option, pursuant to
the Plans results in no taxable income to the Option recipient or deduction to
the Company at the time it is granted. Upon exercising such an Option, the
Optionee will realize taxable ordinary income in the amount of the difference
between the Option exercise price and the then fair market value of the shares
of Common Stock acquired. If the Optionee retains the stock received as a result
of the exercise of an Option for at least two years from the date of the grant
and one year from the date of exercise, then any gain on the sale of such stock
will be treated as capital gain. Subject to the applicable provisions of the
Code, a business expense deduction for federal income tax purposes will be
allowable to the Company in the year of exercise in an amount equal to the
taxable ordinary income realized by the Option recipient.
A grant of an Incentive Stock Option pursuant to the Plans does not result
in taxable income to the Option recipient at the time it is granted. The
Optionee would not recognize taxable income upon exercise of an Incentive Stock
Option if the Optionee retains the Common Stock acquired upon exercise for at
least two years from the date of grant of the Option and one year from the date
of exercise (the "holding period"). Any gain on the sale of such Common Stock
after the holding period will be treated as a capital gain. The Company would
not be entitled to any business expense deduction upon the grant or exercise of
an Incentive Stock Option or the disposition of the shares of Common Stock so
acquired.
10
<PAGE>
If, however, the Optionee disposes of the shares of Common Stock acquired
upon exercise of an Incentive Stock Option before the end of the holding period,
the Optionee will realize taxable ordinary income equal to the lesser of
(1) the gain realized by the Optionee upon such disposition or (2) the
difference between the exercise price and the fair market value of the shares of
Common Stock on the date of exercise. In such event the Company would be
entitled to claim a deduction for compensation paid at the same time and in the
same amount as that received by the Optionee.
EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION COMMITTEE REPORT
The Executive Compensation Committee of the Board of Directors consists of
five directors who are not employees of the Company. The Committee reviews the
Company's executive compensation program and policies each year and determines
the compensation of the executive officers.
The Committee's overall policy regarding compensation of the Company's
executive officers, including Mr. Stewart, is to provide competitive salary
levels and compensation incentives that (i) attract and retain individuals of
outstanding ability in these key positions, (ii) recognize individual
performance and the performance of the Company relative to the performance of
other companies of comparable size, complexity and quality, and (iii) support
both the short-term and long-term goals of the Company. The Executive
Compensation Committee believes this approach closely links the compensation of
the Company's executives to the accomplishment of Company goals that coincide
with shareholder objectives.
In addition, the Executive Compensation Committee considers the anticipated
tax treatment of the Company's executive compensation program. Section 162(m) of
the Code generally limits the corporate tax deduction for compensation paid to
executive officers named in the Summary Compensation Table to $1 million, unless
certain conditions are met. The Company's policy is to qualify all executive
compensation for deduction under applicable tax laws to the maximum extent
possible.
The executive compensation program has in the past included three elements
that, taken together, constitute a flexible and balanced method of establishing
total compensation for the Company's executive officers. These elements are
(i) base salary, (ii) annual bonus plan awards, and (iii) long-term incentive
awards, which include stock option grants and performance unit awards.
PROVIDING COMPETITIVE LEVELS OF COMPENSATION. The Executive Compensation
Committee attempts to provide the Company's executives, including Mr. Stewart,
with a total compensation package that is targeted at the 75th percentile of the
market for executives holding comparable positions when the Company's
performance justifies the payment of compensation at such levels. The Committee
determines a competitive level of compensation for each executive based on
information drawn from a variety of sources, including proxy statements of other
companies and surveys conducted by compensation consultants. An independent
consultant periodically reviews and provides survey data to the chief executive
officer and the Executive Compensation Committee to compare the Company's
executive compensation with compensation levels at companies in an industry peer
group.
While the targeted value of an executive's compensation package may be
competitive, its actual value may exceed or fall below competitive levels
depending on performance, as discussed below.
BASE SALARIES. The Committee periodically reviews and establishes executive
base salaries. Generally, base salaries are determined according to the
following factors: the individual's experience level, scope and complexity of
the position held and annual performance of the individual. In addition, the
Committee obtained an independent survey in the fall of 1999 for the purpose of
determining 2000 base salaries. The survey data compares the Company's
executives with those from both general industry and an industry peer group.
Based on the survey and 1999 performance, all executives received increases
including Mr. Stewart.
11
<PAGE>
THE ANNUAL BONUS PLAN. The purpose of the annual bonus plan is to provide
motivation toward and reward the accomplishment of corporate annual objectives
and to provide a competitive compensation package that will attract, reward and
retain individuals of the highest quality. As a pay-for-performance plan, cash
bonus awards are paid based upon the achievement of corporate performance
objectives established for the fiscal year.
Targeted bonus award levels for the Company's executive officers are
established by the Committee each year. The Company's annual performance
measures are established jointly by the Committee and management. For 1999,
bonus targets for the Company's Chief Executive Officer and its other executive
officers were based on earnings per share objectives. These objectives are
established at three levels: entry level, expected value (target level) and over
achievement level. The Committee chooses not to disclose the specific earnings
per share objectives because it believes such disclosure would be detrimental to
the Company's competitive position with respect to the industry. The Company's
1999 earnings per share objectives fell below the entry level and none of the
executive officers, including Mr. Stewart, received a bonus for fiscal year
1999.
LONG-TERM INCENTIVE PROGRAM: PERFORMANCE UNITS AND STOCK OPTION GRANTS. The
long-term incentive program was introduced in fiscal 1993 to focus management
attention on Company performance over a period of time longer than one year in
recognition of the long-term horizons for return on investments and strategic
decisions in the energy services industry. The program is designed to motivate
management to assist the Company in achieving a high level of long-term
performance and serves to link this portion of executive compensation to
long-term stockholder value. Pursuant to the long-term incentive program, the
Executive Compensation Committee may award performance awards to executive
officers on an annual basis. From 1993 to 1997, the Committee awarded
performance units to executive officers on an annual basis. Performance units
were not awarded in 1998. The awards generally vest at the end of a three-year
period of time, based on Company performance over such time period measured
against pre-established objectives. The numbers of shares represented by such
awards are designed to place the Chief Executive Officer and other executive
officers at the 75th percentile of the market for total compensation when
expected performance is met. Aggregate stock or option holdings of the executive
have no bearing on the size of a performance award.
Awards made in December 1999 under the long-term incentive program consisted
of performance units granted under the Company's 1997 Incentive Plan. These
awards will vest at the end of three years according to the Company's three year
stock price performance as compared to an industry peer group index. Such
performance must exceed peer group performance by predetermined percentages in
order for the performance units to vest in full. Notwithstanding the foregoing,
the Executive Compensation Committee is permitted by the terms of the 1997
Incentive Plan to amend the performance objectives or the vesting period for any
performance award. In addition, the performance awards will vest in full upon
the occurrence of a "change of control". Mr. Stewart and the other executive
officers were awarded performance units in December 1999, based on the criteria
described above.
On November 23, 1999, the Committee reviewed the Company's performance for
the three-year period ending September 30, 1999 for purposes of determining the
performance criteria achievement level for the performance unit awards made in
November 1996. The Company's stock price for the three-year measurement period
exceeded the performance targets set by the Committee at the time of award, and
the Compensation Committee decided that the 1996 performance units should vest
at the maximum level. These targets were a comparison of the Company's stock
price to the peer group established at the time of grant, which changed
significantly due to mergers and acquisitions in the oilfield sector. A total of
40,924 units were converted into Common Stock and issued to executive officers.
Under the Company's 1990 Stock Incentive Plan, 1995 Incentive Plan and 1997
Incentive Plan, the Committee may make grants of stock options to the Company's
executive officers. These plans allow the Committee to promote the interests of
the Company and its stockholders by encouraging the executive
12
<PAGE>
officers to increase their equity interest in the Company, thereby giving them
added incentive to work toward the continued growth and success of the Company.
No stock option grants were made following fiscal year 1999 to any of the
executive officers because the stock options awarded on October 12, 1998 were
intended as a two-year grant.
KEY EMPLOYEE SHARE OPTION PLAN. In 1997, the Committee approved the BJ
Services Company Key Employee Share Option Plan, called the "Keysop Plan," which
allows participants to elect to receive, in lieu of salary and bonus, options to
purchase certain designated mutual funds. An executive will not be taxed on the
value of the mutual funds until the Keysop option is exercised, and the Company
does not deduct such amount for tax purposes as compensation until the option is
exercised.
------------------------
THIS REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE SHALL NOT BE DEEMED
INCORPORATED BY REFERENCE BY ANY GENERAL STATEMENT INCORPORATING BY REFERENCE
THIS PROXY STATEMENT INTO ANY FILING UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, EXCEPT TO THE
EXTENT THAT THE COMPANY SPECIFICALLY INCORPORATES THIS INFORMATION BY REFERENCE,
AND SHALL NOT OTHERWISE BE DEEMED FILED UNDER SUCH ACTS.
Don D. Jordan, Chairman
L. William Heiligbrodt
John R. Huff
Michael E. Patrick
James L. Payne
December 9, 1999
13
<PAGE>
PERFORMANCE GRAPH-TOTAL STOCKHOLDER RETURN
SEPTEMBER 1994 THROUGH SEPTEMBER 1999
The Securities and Exchange Commission (the "SEC") requires that the Company
include in its proxy statement a line graph presentation comparing cumulative,
five-year total shareholder return with a general market index (S&P 500) and
either an industry index or custom group of peers as selected by the Company. In
the past, the Company has compared its performance against a group of companies
(the "Peer Group") that for 1997 included Baker Hughes Incorporated; Camco
International, Inc.; Dresser Industries, Inc.; Halliburton Company; Schlumberger
N.V.; Smith International, Inc.; Western Atlas Inc. and Weatherford
International Incorporated. During fiscal 1998, Baker Hughes Incorporated
acquired Western Atlas Inc.; Halliburton Company acquired Dresser
Industries, Inc.; Schlumberger N.V. acquired Camco International, Inc.; and
Energy Ventures Inc. acquired Weatherford International Incorporated. Due to
these changes, the Peer Group includes only the following companies: Baker
Hughes Incorporated, Halliburton Company, Schlumberger N.V., and Smith
International, Inc.
As required by the SEC, the Peer Group data is presented in the following
chart. The graph assumes investments of $100 on September 30, 1994, and
reinvestment of all dividends.
This performance graph shall not be deemed incorporated by reference by any
general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act of 1933, as amended, or the Securities Exchange
Act of 1934, as amended, except to the extent that the Company specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under such acts.
INDEXED TOTAL STOCKHOLDER RETURN
SEPTEMBER 1994-SEPTEMBER 1999
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
BJ SERVICES COMPANY S&P 500 INDEX PEER GROUP
<S> <C> <C> <C>
1994 $100 $100 $100
1995 $129 $126 $121
1996 $185 $149 $183
1997 $378 $205 $354
1998 $168 $220 $176
1999 $324 $277 $240
</TABLE>
14
<PAGE>
The following information relates to compensation paid by the Company for
fiscal 1997, 1998 and 1999 to the Company's Chief Executive Officer and each of
the other four most highly compensated executive officers in 1999:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
(A) (B) (C) (D) (E) (F) (G) (H)
<S> <C> <C> <C> <C> <C> <C> <C>
LONG-TERM COMPENSATION
-------------------------------------------
AWARDS
ANNUAL COMPENSATION ------------------------------ PAYOUTS
OTHER ANNUAL SECURITIES ----------
NAME AND ------------------- COMPEN- RESTRICTED UNDERLYING LTIP
PRINCIPAL POSITION YEAR SALARY BONUS(1) SATION(2) STOCK AWARDS OPTIONS/SARS(3) PAYOUTS(4)
<CAPTION>
- -------------------------------------------
($) ($) ($) ($) ($) (#) ($)
<S> <C> <C> <C> <C> <C> <C> <C>
J. W. Stewart 1999 610,010 0 0 703,927
Chairman, President and Chief 1998 604,508 198,192 240,000 376,599
Executive Officer 1997 568,340 778,960 32,224 0
Michael McShane 1999 273,000 0 0 315,062
Sr. Vice President-Finance and 1998 270,834 68,987 76,000 461,371
Chief Financial Officer 1997 255,838 273,004 10,890 0
Kenneth A. Williams 1999 230,004 0 0 261,478
Vice President and President, 1998 227,170 49,818 75,000 382,833
US Operations 1997 210,000 159,750 7,434 0
Thomas H. Koops 1999 225,000 0 0 253,389
Vice President-Technology and 1998 222,168 48,735 76,000 370,416
Logistics 1997 204,840 140,405 7,260 0
David Dunlap 1999 225,000 0 0 227,986
Vice President and President, 1998 221,168 48,735 76,000 362,563
International Operations 1997 196,674 151,506 7,050 0
<CAPTION>
<S> <C>
ALL OTHER
NAME AND COMPEN-
PRINCIPAL POSITION SATION(5)
J. W. Stewart 42,999
Chairman, President and Chief 42,123
Executive Officer 39,480
Michael McShane 16,932
Sr. Vice President-Finance and 17,685
Chief Financial Officer 15,225
Kenneth A. Williams 12,050
Vice President and President, 12,365
US Operations 12,801
Thomas H. Koops 15,902
Vice President-Technology and 16,293
Logistics 13,992
David Dunlap 10,232
Vice President and President, 10,544
International Operations 9,663
</TABLE>
- ------------------------------
(1) Includes bonuses earned in the reported fiscal year and paid in the
following fiscal year.
(2) Perquisites and other personal benefits paid or distributed during 1999 to
the persons listed in the compensation table above did not exceed, with
respect to any individual, the lesser of $50,000 or 10 percent of such
individual's total salary and bonus.
(3) Includes options earned in the reported fiscal year and granted subsequent
to the end of the reported fiscal year.
(4) Reflects shares of Common Stock issued with respect to performance awards
granted under the 1990 Stock Incentive Plan. Also includes cash awards to
offset the federal income tax payable by the recipients of such shares. In
1998, the Executive Compensation Committee elected to defer the vesting of a
portion of Mr. Stewart's performance awards to future years to stay within
the limits of Internal Revenue Code Section 162(m). The value of such
performance awards, plus the associated cash tax bonus that would have been
payable to Mr. Stewart, had such awards vested in 1998 with the other
awards, was $654,134.
(5) The amount shown in this column is the annual Company contribution to the
Company's 401(k) defined contribution plan on behalf of each executive
officer.
No stock options were awarded to executive officers of the Company for
fiscal year 1999. Options earned in fiscal 1998 and granted on October 12, 1998
are included in the 1998 information.
15
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/SARS AT
SHARES OPTIONS/SARS AT FY-END(#) FY-END($)
ACQUIRED ON VALUE ------------------------------ ------------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
J.W. Stewart 76,000 1,929,429 663,881 282,965 13,069,093 4,801,779
Michael McShane 196,226 90,520 3,819,944 1,531,175
Kenneth A. Williams 20,772 490,738 110,064 84,912 2,078,671 1,455,749
Thomas H. Koops 80,180 2,101,910 107,962 85,680 2,044,727 1,469,468
David Dunlap 33,262 851,219 107,962 85,400 523,.683 1,466,810
</TABLE>
LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS
UNDER NON-STOCK PRICE-BASED PLANS
-------------------------------------
(A) (B) (C) (D) (E) (F)
- ----------------------------------- ------------- ------------ ------------ --------- ----------
PERFORMANCE
NUMBER OF OR OTHER
SHARES, UNITS PERIOD UNTIL
OR OTHER MATURATION
NAME RIGHTS(#)(1) OR PAYOUT(2) THRESHOLD(#) TARGET(#) MAXIMUM(#)
- ---- ------------- ------------ ------------ --------- ----------
<S> <C> <C> <C> <C> <C>
J.W. Stewart....................... 33,626 3 Years 5,380 22,193 33,626
Michael McShane.................... 9,667 3 Years 1,547 6,380 9,667
Kenneth A. Williams................ 9,247 3 Years 1,480 6,103 9,247
Thomas H. Koops.................... 8,995 3 Years 1,439 5,937 8,995
David Dunlap....................... 8,995 3 Years 1,439 5,937 8,995
</TABLE>
- ------------------------
(1) Awards reflected in this table represent performance units awarded under the
Company's 1997 Incentive Plan. These awards were earned during fiscal 1999
and granted on December 9, 1999. For additional information regarding these
awards, see "Executive Compensation--Executive Compensation Committee
Report--Long-Term Incentive Program."
(2) Under the terms of the grant, the performance period is deemed to begin on
October 1, 1999. The performance period is three fiscal years unless a
change of control occurs, in which case the performance units would vest
immediately.
SEVERANCE AGREEMENTS
The Company has severance agreements with certain executive officers,
including each of the named executive officers shown in the Summary Compensation
Table, as well as with Matthew D. Fitzgerald, Margaret B. Shannon, Taylor M.
Whichard III, and Stephen A. Wright. The severance agreements were effective
August 27, 1993, except for Ms. Shannon's agreement, which was effective
February 14, 1994 and Mr. Dunlap's agreement, which was effective November 27,
1995. In 1999, the Board of Directors approved amendments to the form of
executive severance agreements. The following describes the terms of the form of
severance agreement, as so amended. The agreements are automatically extended
for an additional year at the end of each year of the agreements unless the
Company has given one year's prior notice of termination. These agreements are
intended to provide for continuity of management in the event of a change in
control of the Company. The agreements provide that covered executive officers
could be entitled to certain severance benefits following a change in control of
the Company. If, following a change in control, the executive is terminated by
the Company for any reason, other than for death, disability or for cause, or if
such executive officer terminates his or her employment for good reason (as this
term is defined in the agreements), then the executive officer is entitled to a
severance payment that will be three times the sum of the executive officer's
base salary and bonus amount, as defined in the
16
<PAGE>
agreements, plus an amount equal to three times the value of the executive's
largest stock option grant in the prior three years. Option awards that are
intended as two-year awards will be annualized for purposes of this calculation.
The severance payment is generally made in the form of a lump sum. For a period
of up to three years, the Company would also provide life, disability, accident
and health insurance coverage substantially similar to the benefits provided
before termination. The Company would also provide outplacement services, and
would also provide retiree medical coverage if the executive were within five
years of eligibility at the time of termination following a change in control.
If a change in control occurs, the severance agreements are effective for a
period of two years from the date of such change in control. Under the severance
agreements, a change in control would generally include any of the following
events: (i) any "person" as defined in the Securities Exchange Act of 1934, as
amended, acquires 25 percent or more of the Company's voting securities; (ii) a
majority of the Company's directors are replaced during a two-year period;
(iii) stockholders approve a merger, resulting in (a) 60% or less of the common
stock and voting securities of the surviving corporation being owned by the same
persons that owned the Common Stock of the Company immediately prior to such
merger, (b) a person owning 25% or more of the surviving corporation's common
stock or voting securities, or (c) replacement of a majority of the members of
the Board of Directors; or (iv) the Company's stockholders approve a liquidation
or sale of the Company's assets. In the event that any payments made in
connection with a change in control would be subject to the excise tax imposed
by Section 4999 of the Code, the Company would pay an additional payment (a
"gross-up" payment) sufficient to satisfy such excise tax obligations and any
additional taxes imposed with respect to such gross-up payment.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely upon a review of reports on Forms 3 and 4 and amendments
thereto furnished to the Company during its most recent fiscal year and reports
on Form 5 and amendments thereto furnished to the Company with respect to its
most recent fiscal year, and written representations from reporting persons that
no Form 5 was required, the Company believes that all filing requirements
applicable to its officers, directors and beneficial owners under Section
16(a) of the Exchange Act were complied with during fiscal 1999.
SOLICITATION
The Company will bear the cost of the solicitation of proxies. In addition
to solicitation by mail, certain of the directors, officers or regular employees
of the Company may, without extra compensation, solicit the return of proxies by
telephone or electronic media. Arrangements will be made with brokerage houses,
custodians and other fiduciaries to send proxy material to their principals, and
they will be reimbursed by the Company for any out-of-pocket expenses. Georgeson
& Company Inc. will assist the Company in proxy solicitation and will receive a
fee of $8,000 plus reimbursement of certain charges and expenses.
VOTING PROCEDURES
A majority of the outstanding shares of Common Stock present in person or
represented by proxy at the 2000 Annual Meeting constitutes a quorum for the
transaction of business. The inspector of elections appointed by the Company
will count all votes cast, in person or by submission of a properly executed
proxy, before the closing of the polls at the meeting. The affirmative vote of
holders of a majority of the Common Stock present or represented by proxy at the
meeting and entitled to vote is required for the election of each director
nominee and for the approval of each of the Plan Amendments. Therefore,
abstentions have the effect of a negative vote. Broker non-votes will not be
taken into account in determining the outcome of the election of directors or
the approval of the Plan Amendments.
17
<PAGE>
INDEPENDENT AUDITORS
Deloitte & Touche LLP, independent public accountants, audited the Company's
consolidated financial statements for fiscal 1999, and have advised the Company
that they will have a representative available at the 2000 Annual Meeting to
respond to appropriate questions. Such representative will be permitted to make
a statement if he desires to do so. The Company has not yet selected independent
public accountants to audit its 2000 consolidated financial statements. The
Company intends to engage its accountants for such purpose in May 2000.
PROPOSALS OF STOCKHOLDERS
Proposals of stockholders intended to be presented at the 2001 Annual
Meeting of Stockholders must be received by the Secretary of the Company at its
principal executive offices by August 25, 2000 to be considered for inclusion in
the proxy statement and form of proxy relating to the 2001 Annual Meeting. Under
the Company's Bylaws, in order for any stockholder proposal that is not included
in such proxy statement and form of proxy to be brought before the 2001 Annual
Meeting, such proposal must be received by the Secretary of the Company at its
principal executive offices by October 29, 2000.
The Annual Report of the Company for the year ended September 30, 1999,
including audited financial statements, is enclosed with this proxy statement
but does not constitute a part of the proxy soliciting material. Additional
copies of the Annual Report are available without charge, upon request.
BJ SERVICES COMPANY WILL FURNISH A COPY OF ITS ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED SEPTEMBER 30, 1999, WITHOUT EXHIBITS, WITHOUT CHARGE TO EACH
PERSON WHO FORWARDS A WRITTEN REQUEST TO ROBERT C. COONS, DIRECTOR, CORPORATE
COMMUNICATIONS, BJ SERVICES COMPANY, 5500 NORTHWEST CENTRAL DRIVE, HOUSTON,
TEXAS 77092-2036.
18
<PAGE>
APPENDIX A
AMENDMENT TO
BJ SERVICES COMPANY
1990 STOCK INCENTIVE PLAN
(AS AMENDED)
WHEREAS, BJ SERVICES COMPANY (the "Company") has heretofore adopted the BJ
SERVICES COMPANY 1990 STOCK INCENTIVE PLAN (AS AMENDED) (the "Plan"); and
WHEREAS, the Company desires to amend the Plan in certain respects;
NOW, THEREFORE, the Plan shall be amended as follows, effective as of the
date of adoption of this amendment by the Company, but subject to the approval
of the stockholders of the Company:
1. Article IV, Paragraph 5(b)(v) of the Plan shall be deleted and the
following shall be substituted therefor:
"(v) If the Non-Employee Director's directorship is terminated
after the one year period following the date of grant for any reason
(other than for the reasons specified in Article IV, Paragraphs
5(b)(ii) through 5(b)(iv)), at the expiration of a period of three
months after the Non-Employee Director's directorship is so terminated
except as provided in Article IV, Paragraph 5(g); provided, however,
notwithstanding anything to the contrary, no option shall ever be
exercisable later than the Option Expiration Date."
2. The first two sentences of Article IV, Paragraph 5(e) of the Plan shall
be deleted and the following shall be substituted therefor:
"In the event that at any time after the effective date of the Plan the
outstanding shares of Common Stock are changed into or exchanged for a
different number or kind of shares or other securities by reason of
merger, consolidation, recapitalization, reclassification, stock split,
stock dividend, combination of shares or the like, the number and kind
of shares as to which all outstanding options granted under Article IV,
or portions thereof then unexercised, shall be exercisable shall be
appropriately adjusted to reflect the occurrence of such event, with any
necessary corresponding adjustment in exercise price per share, so that
the holder of each option exercised after the occurrence of such event
shall be entitled to receive the aggregrate number and kind of shares
which, if such option had been exercised immediately prior to such
event, the holder would have owned upon such exercise and been entitled
to receive by virtue of such event."
3. The following new Paragraph 5(g) shall be added to Article IV of the
Plan:
"(g) CHANGE OF CONTROL. Notwithstanding any provision to the
contrary in the Plan, the following additional provisions shall become
effective upon the occurrence of a Change of Control:
(i) PUBLICLY-TRADED STOCK TRANSACTION. If the consideration
offered to stockholders of the Company in connection with a Change
of Control consists of shares of the common stock ('New Stock') of
the entity acquiring the Company or the parent company of the
entity acquiring the Company (the 'Acquiring Entity') that are
publicly traded, upon the occurrence of such Change of Control,
the Acquiring Entity shall assume each Non-Employee Director's
outstanding options to purchase Common Stock ('Prior Options') and
each such Prior Option shall become an option (a 'New Option')
(A) to purchase that number of shares of New Stock determined by
multiplying the number of shares of Common Stock issuable upon
exercise of such Prior Option by the
A-1
<PAGE>
exchange ratio of Common Stock in the transaction, (B) at an
exercise price per share determined by dividing the per share
exercise price of such Prior Option by the exchange ratio of
Common Stock in the transaction and (C) otherwise upon the same
terms and conditions as such Prior Option, except that (1) such
New Option shall be exercisable until the applicable Option
Expiration Date regardless of any termination of a Non-Employee
Director's membership on the Board or the board of directors of
the Acquiring Entity following the Change of Control, and
(2) such New Option may be surrendered to the Acquiring Entity
during the 90-day period following the occurrence of the Change of
Control in return for a payment in cash or shares of New Stock or
a combination of cash and shares of New Stock as determined by the
Acquiring Entity, equal in value to the excess of (I) the higher
of (a) the per share value of the consideration received by
stockholders of the Company upon the occurrence of the Change of
Control (valued for such purpose as of the date of the Change of
Control) or (b) the highest per share price for Common Stock of
the Company during the period commencing with the public
announcement of the proposed Change of Control transaction and
ending upon the occurrence of the Change of Control over (II) the
per share exercise price of the Common Stock of the Company under
the Prior Option, multiplied by the number of shares of Common
Stock of the Company subject to the Prior Option.
(ii) OTHER TRANSACTION. If the consideration offered to
stockholders of the Company in connection with a Change of Control
consists of cash or of New Stock that is not publicly traded, upon
the occurrence of such Change of Control, each Non-Employee
Director shall surrender each of his outstanding options to
purchase Common Stock to the Acquiring Entity in return for a
payment in cash equal to the Black-Scholes value of such option as
of the date of the Change of Control, without discount for risk of
forfeiture and non-transferability. Any Black-Scholes valuation
for this purpose shall be performed on a basis consistent with the
methodology set forth below.
<TABLE>
<S> <C>
BLACK-SCHOLES OPTION VALUATION
The stock's current market value............................ $
---------
Estimated future dividend yield............................. %
---------
The option's exercise or strike price....................... $
---------
Option term (in years)......................................
---------
Risk free rate for option term.............................. %
---------
Estimated future annual stock volatility....................
---------
Present value as a percent of market value.................. %
---------
Present value per share..................................... $
---------
</TABLE>
4. As amended hereby, the Plan is specifically ratified and reaffirmed.
A-2
<PAGE>
APPENDIX B
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, the Company desires to amend the Plan in certain respects;
NOW, THEREFORE, the Plan shall be amended as follows, effective as of the
date of adoption of this amendment by the Company, but subject to the approval
of the stockholders of the Company:
1. Article IV, Paragraph 5(b)(v) of the Plan shall be deleted and the
following shall be substituted therefor:
"(v) If the Non-Employee Director's directorship is terminated
after the six-month period following the date of grant for any reason
(other than for the reasons specified in Article IV, Paragraphs
5(b)(ii) through 5(b)(iv)), at the expiration of a period of three
months after the Non-Employee Director's directorship is so terminated
except as provided in Article IV, Paragraph 5(g); provided however,
notwithstanding anything to the contrary, no option shall ever be
exercisable later than the Option Expiration Date."
2. The first sentence of Article IV, Paragraph 5(e) of the Plan shall be
deleted and the following shall be substituted therefor:
"In the event that at any time after the effective date of the Plan the
outstanding shares of Common Stock are changed into or exchanged for a
different number or kind of shares or other securities by reason of
merger, consolidation, recapitalization, reclassification, stock split,
stock dividend, combination of shares or the like, the number and kind
of shares as to which all outstanding options granted under Article IV,
or portions thereof then unexercised, shall be exercisable shall be
appropriately adjusted to reflect the occurrence of such event, with any
necessary corresponding adjustment in exercise price per share, so that
the holder of each option exercised after the occurrence of such event
shall be entitled to receive the aggregrate number and kind of shares
which, if such option had been exercised immediately prior to such
event, the holder would have owned upon such exercise and been entitled
to receive by virtue of such event."
3. The following new Paragraph 5(g) shall be added to Article IV of the
Plan:
"5(g) CHANGE OF CONTROL. Notwithstanding any provision to the
contrary in the Plan, the following additional provisions shall become
effective upon the occurrence of a Change of Control:
(i) PUBLICLY-TRADED STOCK TRANSACTION. If the consideration
offered to stockholders of the Company in connection with a Change
of Control consists of shares of the common stock ('New Stock') of
the entity acquiring the Company or the parent company of the
entity acquiring the Company (the 'Acquiring Entity') that are
publicly traded, upon the occurrence of such Change of Control,
the Acquiring Entity shall assume each Non-Employee Director's
outstanding options to purchase Common Stock ('Prior Options') and
each such Prior Option shall become an option (a 'New Option')
(A) to purchase that number of shares of New Stock determined by
multiplying the number of shares of Common Stock issuable upon
exercise of such Prior Option by the exchange ratio of Common
Stock in the transaction, (B) at an exercise price per share
B-1
<PAGE>
determined by dividing the per share exercise price of such Prior
Option by the exchange ratio of Common Stock in the transaction
and (C) otherwise upon the same terms and conditions as such Prior
Option, except that (1) such New Option shall be exercisable until
the applicable Option Expiration Date regardless of any
termination of a Non-Employee Director's membership on the Board
or the board of directors of the Acquiring Entity following the
Change of Control, and (2) such New Option may be surrendered to
the Acquiring Entity during the 90-day period following the
occurrence of the Change of Control in return for a payment in
cash or shares of New Stock or a combination of cash and shares of
New Stock as determined by the Acquiring Entity, equal in value to
the excess of (I) the higher of (a) the per share value of the
consideration received by stockholders of the Company upon the
occurrence of the Change of Control (valued for such purpose as of
the date of the Change of Control) or (b) the highest per share
price for Common Stock of the Company during the period commencing
with the public announcement of the proposed Change of Control
transaction and ending upon the occurrence of the Change of
Control over (II) the per share exercise price of the Common Stock
of the Company under the Prior Option, multiplied by the number of
shares of Common Stock of the Company subject to the Prior Option.
(ii) OTHER TRANSACTION. If the consideration offered to
stockholders of the Company in connection with a Change of Control
consists of cash or of New Stock that is not publicly traded, upon
the occurrence of such Change of Control, each Non-Employee
Director shall surrender each of his outstanding options to
purchase Common Stock to the Acquiring Entity in return for a
payment in cash equal to the Black-Scholes value of such option as
of the date of the Change of Control, without discount for risk of
forfeiture and non-transferability. Any Black-Scholes valuation
for this purpose shall be performed on a basis consistent with the
methodology set forth below.
<TABLE>
<S> <C>
BLACK-SCHOLES OPTION VALUATION
The stock's current market value............................ $
---------
Estimated future dividend yield............................. %
---------
The option's exercise or strike price....................... $
---------
Option term (in years)......................................
---------
Risk free rate for option term.............................. %
---------
Estimated future annual stock volatility....................
---------
Present value as a percent of market value.................. %
---------
Present value per share..................................... $
---------
</TABLE>
4. As amended hereby, the Plan is specifically ratified and reaffirmed.
B-2
<PAGE>
APPENDIX C
AMENDMENT TO
BJ SERVICES COMPANY
1997 INCENTIVE PLAN
WHEREAS, BJ SERVICES COMPANY (the "Company") has heretofore adopted the BJ
SERVICES COMPANY 1997 INCENTIVE PLAN (the "Plan"); and
WHEREAS, the Company desires to amend the Plan in certain respects;
NOW, THEREFORE, the Plan shall be amended as follows, effective as of the
date of adoption of this amendment by the Company, but subject to the approval
of the stockholders of the Company:
1. Article IV, Paragraph 5(b)(iv) of the Plan shall be deleted and the
following shall be substituted therefor:
"(iv) If the Non-Employee Director's directorship is terminated for
any reason (other than for the reasons specified in Article IV,
Paragraphs 5(b)(i), 5(b)(ii) or 5(b)(iii)), at the expiration of a
period of three months after the Non-Employee Director's directorship is
so terminated except as provided in Article IV, Paragraph 5(g); provided
however, notwithstanding anything to the contrary, no option shall ever
be exercisable later than the Option Expiration Date."
2. The first sentence of Article IV, Paragraph 5(e) of the Plan shall be
deleted and the following shall be substituted therefor:
"In the event that at any time after the effective date of the Plan the
outstanding shares of Common Stock are changed into or exchanged for a
different number or kind of shares or other securities by reason of
merger, consolidation, recapitalization, reclassification, stock split,
stock dividend, combination of shares or the like, the number and kind
of shares as to which all outstanding options granted under Article IV,
or portions thereof then unexercised, shall be exercisable shall be
appropriately adjusted to reflect the occurrence of such event, with any
necessary corresponding adjustment in exercise price per share, so that
the holder of each option exercised after the occurrence of such event
shall be entitled to receive the aggregrate number and kind of shares
which, if such option had been exercised immediately prior to such
event, the holder would have owned upon such exercise and been entitled
to receive by virtue of such event."
3. The following new Paragraph 5(g) shall be added to Article IV of the
Plan:
"5(g) CHANGE OF CONTROL. Notwithstanding any provision to the
contrary in the Plan, the following additional provisions shall become
effective upon the occurrence of a Change of Control:
(i) PUBLICLY-TRADED STOCK TRANSACTION. If the consideration
offered to stockholders of the Company in connection with a Change
of Control consists of shares of the common stock ('New Stock') of
the entity acquiring the Company or the parent company of the
entity acquiring the Company (the 'Acquiring Entity') that are
publicly traded, upon the occurrence of such Change of Control,
the Acquiring Entity shall assume each Non-Employee Director's
outstanding options to purchase Common Stock ('Prior Options') and
each such Prior Option shall become an option (a 'New Option')
(A) to purchase that number of shares of New Stock determined by
multiplying the number of shares of Common Stock issuable upon
exercise of such Prior Option by the exchange ratio of Common
Stock in the transaction, (B) at an exercise price per share
determined by dividing the per share exercise price of such Prior
Option by the
C-1
<PAGE>
exchange ratio of Common Stock in the transaction and
(C) otherwise upon the same terms and conditions as such Prior
Option, except that (1) such New Option shall be exercisable until
the applicable Option Expiration Date regardless of any
termination of a Non-Employee Director's membership on the Board
or the board of directors of the Acquiring Entity following the
Change of Control, and (2) such New Option may be surrendered to
the Acquiring Entity during the 90-day period following the
occurrence of the Change of Control in return for a payment in
cash or shares of New Stock or a combination of cash and shares of
New Stock as determined by the Acquiring Entity, equal in value to
the excess of (I) the higher of (a) the per share value of the
consideration received by stockholders of the Company upon the
occurrence of the Change of Control (valued for such purpose as of
the date of the Change of Control) or (b) the highest per share
price for Common Stock of the Company during the period commencing
with the public announcement of the proposed Change of Control
transaction and ending upon the occurrence of the Change of
Control over (II) the per share exercise price of the Common Stock
of the Company under the Prior Option, multiplied by the number of
shares of Common Stock of the Company subject to the Prior Option.
(ii) OTHER TRANSACTION. If the consideration offered to
stockholders of the Company in connection with a Change of Control
consists of cash or of New Stock that is not publicly traded, upon
the occurrence of such Change of Control, each Non-Employee
Director shall surrender each of his outstanding options to
purchase Common Stock to the Acquiring Entity in return for a
payment in cash equal to the Black-Scholes value of such option as
of the date of the Change of Control, without discount for risk of
forfeiture and non-transferability. Any Black-Scholes valuation
for this purpose shall be performed on a basis consistent with the
methodology set forth below.
<TABLE>
<S> <C>
BLACK-SCHOLES OPTION VALUATION
The stock's current market value............................ $
---------
Estimated future dividend yield............................. %
---------
The option's exercise or strike price....................... $
---------
Option term (in years)......................................
---------
Risk free rate for option term.............................. %
---------
Estimated future annual stock volatility....................
---------
Present value as a percent of market value.................. %
---------
Present value per share..................................... $
---------
</TABLE>
4. As amended hereby, the Plan is specifically ratified and reaffirmed.
C-2
<PAGE>
APPENDIX D
BJ SERVICES COMPANY
1990 STOCK INCENTIVE PLAN
(AS AMENDED AND RESTATED)
ARTICLE I
INTRODUCTION
1. PURPOSE. The BJ SERVICES COMPANY 1990 STOCK INCENTIVE PLAN (the "PLAN")
is intended to promote the interests of BJ SERVICES COMPANY (the
"COMPANY") and its stockholders by encouraging employees of the Company,
its subsidiaries and affiliated entities and non-employee directors of
the Company to acquire or increase their equity interest in the Company,
thereby giving them an added incentive to work toward the continued
growth and success of the Company. The Board of Directors of the Company
(the "BOARD") also contemplates that through the Plan, the Company, its
subsidiaries and affiliated entities will be better able to compete for
the services of personnel needed for the continued growth and success of
the Company.
2. SHARES SUBJECT TO THE PLAN. The aggregate number of shares of Common
Stock, $.10 par value per share, of the Company ("COMMON STOCK") that may
be issued under the Plan shall not exceed 1,500,000 shares; PROVIDED,
HOWEVER, that in the event that at any time after the effective date of
the Plan the outstanding shares of Common Stock are changed into or
exchanged for a different number or kind of shares or other securities
of the Company by reason of merger, consolidation, recapitalization,
reclassification, stock split, stock dividend, combination of shares
or the like, the aggregate number and class of securities available
under the Plan shall be ratably adjusted by the Committee (as
hereinafter defined), whose determination shall be final and binding
upon the Company and all other interested persons. In the event the
number of shares to be delivered upon the exercise in full of
any option granted under the Plan is reduced for any reason whatsoever or
in the event any option granted under the Plan can no longer under any
circumstances be exercised, the number of shares no longer subject to
such option shall thereupon be released from such option and shall
thereafter be available under the Plan. If shares of Performance Stock
(as hereinafter defined) awarded under the Plan are forfeited to the
Company, such shares shall thereafter be available for new grants and
awards under the Plan unless the Employee Grantee (as hereinafter
defined) has received benefits of ownership with respect to such shares
of Performance Stock, such as dividends (but not including voting
rights). Shares issued pursuant to the Plan shall be fully paid and
nonassessable.
3. ADMINISTRATION OF THE PLAN. The Plan shall be administered by a committee
(the "COMMITTEE") of two or more directors of the Company appointed by
the Board. Subject to the provisions of the Plan, the Committee shall
interpret the Plan and all awards under the Plan, shall make such rules
as it deems necessary for the proper administration of the Plan, shall
make all other
D-1
<PAGE>
determinations necessary or advisable for the administration of
the Plan and shall correct any defect or supply any omission or
reconcile any inconsistency in the Plan or in any award under the
Plan in the manner and to the extent that the Committee deems
desirable to effectuate the Plan. Any action taken or
determination made by the Committee pursuant to this and the
other paragraphs of the Plan shall be conclusive on all parties.
The act or determination of a majority of the Committee shall be
deemed to be the act or determination of the Committee.
Notwithstanding any provision in the Plan to the contrary, other than
options granted to Non- Employee Directors (as hereinafter defined)
pursuant to Article IV, no options, Performance Stock, Performance Units
or Bonus Stock (collectively "AWARDS") may be granted under the Plan to
any member of the Committee during the term of his membership on the
Committee. No person shall be eligible to serve on the Committee unless
he is then a "DISINTERESTED PERSON" within the meaning of Rule 16b-3
("RULE 16b-3") promulgated under the Securities Exchange Act of 1934, as
amended (the "ACT"), if and as such rule is then in effect.
4. AMENDMENT AND DISCONTINUANCE OF THE PLAN. The Board may amend, suspend
or terminate the Plan; PROVIDED, HOWEVER, that each such amendment of the
Plan (a) extending the period within which Awards may be made under the
Plan, (b) increasing the number of shares of Common Stock to be awarded
under the Plan except as provided in Article I, Paragraph 2, (c)
reducing the option exercise prices per share provided in the Plan, (d)
changing the class of persons to whom Awards may be made under the Plan,
(e) modifying the provisions of Article IV, or (f) granting options to
Non-Employee Directors other than pursuant to Article IV, shall, in each
case, be subject to approval by the stockholders of the Company;
PROVIDED, further, however, that no amendment, suspension or termination
of the Plan may cause the Plan to fail to meet the requirements of Rule
16b-3 or may, without the consent of the holder of an option granted
under Article II, III, or IV, terminate such option or adversely affect
such person's rights in any material respect; and PROVIDED, further,
that the provisions of Article IV may not be amended more than once
every six months other than to comport with changes in the Internal
Revenue Code of 1986, as amended (the "CODE"), the Employee Retirement
Income Security Act of 1974, as amended, or the rules thereunder.
5. GRANTING OF AWARDS TO EMPLOYEES. The Committee shall have the authority
to grant, prior to the expiration date of the Plan, to such eligible
employees and officers as may be selected by it (with respect to
options, "EMPLOYEE OPTIONEES" and, with respect to Performance Stock,
Performance Units and Bonus Stock, "EMPLOYEE GRANTEES"), options to
purchase shares of Common Stock and awards of Performance Stock,
Performance Units and/or Bonus Stock on the terms and conditions
hereinafter set forth in Articles II, III, V and VI. Stock issued with
respect to an Award under the Plan may be authorized but unissued, or
reacquired, shares of Common Stock. The Committee shall also have the
authority to determine whether options granted to Employee Optionees are
granted pursuant to Article II or Article III, as hereinafter set forth.
Options granted to Employee Optionees under Article III shall be
"INCENTIVE STOCK OPTIONS" as defined in Section 422 of the Code, and are
hereinafter referred to as "INCENTIVE STOCK OPTIONS." All other options
granted to Employee Optionees under the Plan shall be
D-2
<PAGE>
granted pursuant to Article II and shall be options which do not
constitute incentive stock options ("NONQUALIFIED OPTIONS"). In
selecting Employee Optionees and Employee Grantees, and in determining
the number of shares to be covered by each Award granted to such
employee, the Committee may consider the office or position held by the
employee, the employee's degree of responsibility for and contribution to
the growth and success of the Company, the employee's length of service,
age, promotions, potential and any other factors which it may consider
relevant.
6. GRANTING OF OPTIONS TO NON-EMPLOYEE DIRECTORS. All options granted to
Non-Employee Directors shall be options to purchase, on the terms and
conditions hereinafter set forth in Article IV, authorized but unissued,
or reacquired, shares of Common Stock and shall be nonqualified options.
Non-Employee Directors shall not be eligible to receive grants of
Performance Stock or Bonus Stock.
7. TERM OF PLAN. This amendment and restatement of the Plan shall be
effective upon the date of its adoption by the Board, provided this
amendment and restatement of the Plan is approved by the stockholders of
the Company within twelve months before or after the date of such
adoption. In the event that this amendment and restatement of the Plan
is not approved by the stockholders of the Company within twelve months
before or after the date of its adoption by the Board, this amendment
and restatement of the Plan shall be null and void and the original
Plan, which became effective on July 13, 1990, shall be deemed to have
continued without interruption in accordance with its terms as in effect
immediately prior to this amendment and restatement thereof. Except with
respect to awards then outstanding, if not sooner terminated under the
provisions of Article I, Paragraph 4, the Plan shall terminate upon and
no further awards shall be made after July 12, 2000.
8. MISCELLANEOUS. All references in the Plan to "ARTICLES," "PARAGRAPHS" and
other subdivisions refer to the corresponding Articles, Paragraphs, and
subdivisions of the Plan.
9. RULE 16b-3 COMPLIANCE. The Company intends:
(a) that the Plan meet the requirements of Rule 16b-3;
(b) that participation by Non-Employee Directors under Article IV of
the Plan will not prohibit them from being "DISINTERESTED
PERSONS" within the meaning of Rule 16b-3 with respect to
administration of the Plan or with respect to administration of
any other plan of the Company;
(c) that transactions of the type specified in Rule 16b-3 by
Non-Employee Directors pursuant to Article IV of the Plan will be
exempt from the operation of Section 16(b) of the Act; and
D-3
<PAGE>
(d) that transactions of the type specified in Rule 16b-3 by
officers of the Company (whether or not they are directors)
pursuant to the Plan will be exempt from the operation of
Section 16(b) of the Act.
In all cases, the terms, provisions, conditions and limitations of the
Plan shall be construed and interpreted consistent with the Company's
intent as stated in this Article I, Paragraph 9.
10. DEFINITION OF THE TERM "CHANGE OF CONTROL". As used in the Plan, a
"CHANGE OF CONTROL" shall be deemed to have occurred upon, and shall
mean (a) the acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Act) (a "PERSON") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the Act) of 25% or more of either (i) the then outstanding shares of
Common Stock of the Company (the "OUTSTANDING COMPANY COMMON STOCK") or
(ii) the combined voting power of the then outstanding voting securities
of the Company entitled to vote generally in the election of directors
(the "OUTSTANDING COMPANY VOTING SECURITIES"); PROVIDED, HOWEVER, that
the following acquisitions shall not constitute a Change of Control: (A)
any acquisition directly from the Company (excluding an acquisition by
virtue of the exercise of a conversion privilege), (B) any acquisition
by the Company, (C) any acquisition by any employee benefit plan(s) (or
related trust(s)) sponsored or maintained by the Company or any
corporation controlled by the Company or (D) any acquisition by any
corporation pursuant to a reorganization, merger or consolidation, if,
immediately following such reorganization, merger or consolidation, the
conditions described in clause (i), (ii) and (iii) of clause (b) of this
Paragraph 10 are satisfied; or (b) the approval by the stockholders of
the Company of a reorganization, merger or consolidation, in each case,
unless immediately following such reorganization, merger or
consolidation (i) more than 60% of, respectively, the then outstanding
shares of common stock of the corporation resulting from such
reorganization, merger or consolidation and the combined voting power of
the then outstanding voting securities of such corporation entitled to
vote generally in the election of directors is then beneficially owned,
directly or indirectly, by all or substantially all of the individuals
and entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such reorganization, merger or
consolidation in substantially the same proportions as their ownership,
immediately prior to such reorganization, merger or consolidation, of
the Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be, (ii) no Person (excluding the Company,
any employee benefit plan(s) (or related trust(s)) of the Company and/or
its subsidiaries or such corporation resulting from such reorganization,
merger or consolidation and any Person beneficially owning, immediately
prior to such reorganization, merger or consolidation, directly or
indirectly, 25% or more of the Outstanding Company Common Stock or
Outstanding Company Voting Securities, as the case may be) beneficially
owns, directly or indirectly, 25% or more of, respectively, the then
outstanding shares of common stock of the corporation resulting from
such reorganization, merger or consolidation or the combined voting
power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors and (iii) at
least a majority of the members of the board of directors of the
corporation resulting from such reorganization, merger or
D-4
<PAGE>
consolidation were members of the Incumbent Board (as defined below) at
the time of the execution of the initial agreement providing for such
reorganization, merger or consolidation. The "INCUMBENT BOARD" shall
mean individuals who, as of December 5, 1991, constitute the Board;
PROVIDED, HOWEVER, that any individual becoming a director subsequent to
such date whose election, or nomination for election by the Company's
stockholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of either (1) an actual or
threatened election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Act), or an actual or threatened
solicitation of proxies or consents by or on behalf of a Person other
than the Board or (2) a plan or agreement to replace a majority of the
members of the Board then comprising the Incumbent Board.
ARTICLE II
NONQUALIFIED STOCK OPTIONS
1. ELIGIBLE EMPLOYEES. Key employees and officers (whether or not they are
directors) of the Company, its subsidiaries and affiliated entities shall
be eligible to receive nonqualified options under this Article II.
2. CALCULATION OF EXERCISE PRICE. The exercise price to be paid for each
share of Common Stock deliverable upon exercise of each nonqualified
option granted under Article II shall be determined by the Committee but
shall not be less than the lesser of (a) the per share price of the last
sale of Common Stock on the trading day prior to the grant of such
option, based on the composite transactions in the Common Stock as
reported by THE WALL STREET JOURNAL, and (b) the arithmetic average of
the closing prices per share of Common Stock on all days on which such
stock was traded during the 90-day period before the date of grant,
based on the composite transactions in the Common Stock as reported by
THE WALL STREET JOURNAL. The exercise price for each nonqualified option
granted under Article II shall be subject to adjustment as provided in
Article II, Paragraph 3(e).
3. TERMS AND CONDITIONS OF OPTIONS. Nonqualified options granted under
Article II shall be in such form as the Committee may from time to time
approve. Options granted under Article II shall be subject to the
following terms and conditions and may contain such additional terms and
conditions, not inconsistent with Article II, as the Committee shall deem
desirable:
(a) OPTION PERIOD AND CONDITIONS AND LIMITATIONS ON EXERCISE. Subject
to Article II, Paragraphs 4 and 5, no nonqualified option granted
under Article II shall be exercisable with respect to any of the
shares subject to the option earlier than the date which is one
year from the date of grant nor later than the date which is ten
years after the date of grant (the "NONQUALIFIED OPTION
EXPIRATION DATE"). To the extent not prohibited by
other provisions of the Plan, each nonqualified option granted
under Article II shall be exercisable at such time or times as
the Committee in its discretion may determine at
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or prior to the time such option is granted; PROVIDED, HOWEVER,
that unless the Committee determines otherwise, each nonqualified
option granted under Article II shall be exercisable from time to
time, in whole or in part, at any time after one year from the
date of grant and prior to the Nonqualified Option Expiration
Date.
(b) TERMINATION OF EMPLOYMENT AND DEATH. For purposes of Article II
and each nonqualified option granted under Article II, an Employee
Optionee's employment shall be deemed to have terminated at the
close of business on the day preceding the first date on which he
is no longer for any reason whatsoever (including his death)
employed by the Company or a subsidiary or affiliated entity of
the Company. Except as provided below, if an Employee Optionee's
employment is terminated for any reason whatsoever (including his
death), each nonqualified option granted to him under Article II
and all of his rights thereunder shall wholly and completely
terminate:
(i) At the time the Employee Optionee's employment is
terminated if termination occurs within the one-year
period following the date of grant; or
(ii) At the time the Employee Optionee's employment is
terminated if his employment is terminated because he
is discharged for fraud, theft or embezzlement
committed against the Company or a subsidiary,
affiliated entity or customer of the Company, or for
conflict of interest (collectively "CAUSE"); or
(iii) At the expiration of a period of one year after the
Employee Optionee's death (but in no event later than
the Nonqualified Option Expiration Date) if the Employee
Optionee's employment is terminated after the one-year
period following the date of grant by reason of his death.
To the extent exercisable, a nonqualified option granted
under Article II may be exercised by the Employee
Optionee's estate or by the person or persons who acquire
the right to exercise his option by bequest or inheritance
with respect to any or all of the shares remaining subject
to his option at the time of his death; or
(iv) Unless it is otherwise provided in the option
agreement, at the expiration of a period of three
years after the Employee Optionee's employment is
terminated if the Employee Optionee's employment is
terminated after the one-year period following the
date of grant because of retirement or disability
(but in no event later than the Nonqualified Option
Expiration Date); or
(v) Unless it is otherwise provided in the option agreement
(but in no event longer than one year after the Employee
Optionee's employment is terminated), at the expiration of
a period of three months after the Employee Optionee's
employment is terminated (but in no event later than the
Nonqualified Option Expiration Date) if the Employee
Optionee's employment is terminated after the
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one-year period following the date of grant for any reason
other than his death, retirement, disability or Cause; or
(vi) Notwithstanding the above, with respect to all
options outstanding at the date of a Change of
Control, if the Employee Optionee's employment is
terminated within the one-year period following such
Change of Control other than for Cause, at the
expiration of one year following the Employee
Optionee's date of termination, unless subparagraph
(iii), (iv) or (v) provides a longer period for the
exercise of such options (but in no event later than
the Nonqualified Option Expiration Date).
As used in this Plan the term "RETIREMENT" means the termination of an
employee's employment with the Company, its subsidiaries and affiliated
entities (i) on or after reaching age 65 or (ii) on or after reaching age
55 with the consent of the Board, for reasons other than death,
disability or Cause, and the term "DISABILITY" shall mean an employee is
suffering from a mental or physical disability, which, in the opinion of
the Board, prevents the employee from performing his regular duties and
is expected to be of long continued duration or to result in death.
Notwithstanding the foregoing, the Committee, in its discretion, may
extend the period for exercise of any option upon an Employee Optionee's
termination, but in no event later than the Nonqualified Option
Expiration Date.
(c) MANNER OF EXERCISE. In order to exercise a nonqualified option
granted under Article II, the person or persons entitled to
exercise it shall deliver to the Company payment in full for
the shares being purchased, together with any required
withholding tax as provided in Article VII. The payment of the
exercise price for each option granted under Article II shall
either be in cash or through delivery to the Company of shares
of Common Stock, or by any combination of cash or shares; the
value of each share of Common Stock delivered shall be deemed
to be equal to the per share price of the last sale of Common
Stock on the trading day prior to the date the option is
exercised, based on the composite transactions in the Common
Stock as reported in THE WALL STREET JOURNAL. If the Committee
so requires, such person or persons shall also deliver a
written representation that all shares being purchased are
being acquired for investment and not with a view to, or for
resale in connection with, any distribution of such shares.
(d) OPTIONS NOT TRANSFERABLE. No nonqualified option granted under
Article II shall be transferable otherwise than by will or by the
laws of descent and distribution and, during the lifetime of the
Employee Optionee to whom any such option is granted, it shall be
exercisable only by the Employee Optionee. Any attempt to
transfer, assign, pledge, hypothecate or otherwise dispose of, or
to subject to execution, attachment or similar process, any
nonqualified option granted under Article II, or any right
thereunder, contrary to the provisions hereof, shall be
void and ineffective, shall give no right to the
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purported transferee, and shall, at the sole discretion of the
Committee, result in forfeiture of the option with respect to
the shares involved in such attempt.
(e) ADJUSTMENT OF SHARES. In the event that at any time after the
effective date of the Plan the outstanding shares of Common
Stock are changed into or exchanged for a different number or
kind of shares or other securities of the Company by reason of
merger, consolidation, recapitalization, reclassification,
stock split, stock dividend, combination of shares or the
like, the Committee shall make an appropriate and equitable
adjustment in the number and kind of shares as to which all
outstanding nonqualified options granted under Article II, or
portions thereof then unexercised, shall be exercisable, to
the end that after such event the shares subject to Article II
of the Plan and each Employee Optionee's proportionate
interest shall be maintained as before the occurrence of such
event. Such adjustment in an outstanding nonqualified option
granted under Article II shall be made without change in the
total price applicable to the option or the unexercised
portion of the option (except for any change in the aggregate
price resulting from rounding-off of share quantities or
prices) and with any necessary corresponding adjustment in
exercise price per share. Any such adjustment made by the
Committee shall be final and binding upon all Employee
Optionees, the Company, and all other interested persons.
(f) LISTING AND REGISTRATION OF SHARES. Each nonqualified option
granted under Article II shall be subject to the requirement
that if at any time the Committee determines, in its
discretion, that the listing, registration, or qualification
of the shares subject to such option under any securities
exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body, is necessary or
desirable as a condition of, or in connection with, the issue
or purchase of shares thereunder, such option may not be
exercised in whole or in part unless such listing,
registration, qualification, consent or approval shall have
been effected or obtained and the same shall have been free of
any conditions not acceptable to the Committee.
4. AMENDMENT. The Committee may, with the consent of the person or persons
entitled to exercise any outstanding nonqualified option granted
under Article II, amend such nonqualified option; PROVIDED,
HOWEVER, that any such amendment increasing the number of shares
of Common Stock subject to such option (except as provided in
Article II, Paragraph 3(e)) or reducing the exercise price per
share of such option (except as provided in Article II, Paragraph
3(e)) shall in each case be subject to approval by the
stockholders of the Company. The Committee may at any time or
from time to time, in its discretion, in the case of any
nonqualified option previously granted under Article II which is
not then immediately exercisable in full, accelerate the time or
times at which such option may be exercised to any earlier time
or times. The Committee, in its absolute discretion, may grant to
holders of outstanding nonqualified options granted under Article
II, in exchange for the surrender and cancellation of such
options, new options having exercise prices lower (or higher)
than the exercise price provided in the options so surrendered
and canceled and containing such other terms and conditions as
the Committee may deem appropriate.
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5. ACCELERATION UPON A CHANGE OF CONTROL. Notwithstanding any provision in
Article II or in any document or instrument evidencing a nonqualified
option granted under Article II, upon the occurrence of a Change of
Control each nonqualified option previously granted under Article II
which is not then immediately exercisable in full shall be immediately
exercisable in full.
6. OTHER PROVISIONS.
(a) The person or persons entitled to exercise, or who have
exercised, a nonqualified option granted under Article II shall
not be entitled to any rights as a stockholder of the Company
with respect to any shares subject to such option until he shall
have become the holder of record of such shares.
(b) No nonqualified option granted under Article II shall be
construed as limiting any right which the Company or any
subsidiary or affiliated entity of the Company may have to
terminate at any time, with or without cause, the employment of
any person to whom such option has been granted.
(c) Notwithstanding any provision of the Plan or the terms of any
nonqualified option granted under Article II, the Company shall
not be required to issue any shares hereunder if such issuance
would, in the judgment of the Committee, constitute a violation
of any state or federal law or of the rules or regulations of any
governmental regulatory body.
ARTICLE III
INCENTIVE STOCK OPTIONS
1. ELIGIBLE EMPLOYEES. Key employees and officers (whether or not they are
directors) of the Company or its Parent Corporation or any Subsidiary
Corporation of the Company shall be eligible to receive incentive stock
options under this Article III. As used in Article III, the terms "PARENT
CORPORATION" and "SUBSIDIARY CORPORATION" shall have the meanings
ascribed to them in Section 424 of the Code.
2. CALCULATION OF EXERCISE PRICE. The exercise price to be paid for each
share of Common Stock deliverable upon exercise of each incentive stock
option granted under Article III shall be equal to the fair market value
per share of Common Stock at the time of grant as determined by the
Committee, based on the composite transactions in the Common Stock as
reported by THE WALL STREET JOURNAL, and shall not be less than the per
share price of the last sale of Common Stock on the trading day prior to
the grant of such option; PROVIDED, HOWEVER, than in the case of an
Employee Optionee who, at the time such option is granted, owns (within
the meaning of Section 424(d) of the Code) more than 10% of the total
combined voting power of all classes of stock of the Company or of its
Parent Corporation or any Subsidiary Corporation, then the exercise price
per share shall be at least 110% of the fair market value per share of
Common
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Stock at the time of grant. The exercise price for each incentive
stock option shall be subject to adjustment as provided in Article III,
Paragraph 3(e).
3. TERMS AND CONDITIONS OF OPTIONS. Incentive stock options granted under
Article III shall be in such form as the Committee may from time to time
approve. Options granted under Article III shall be subject to the
following terms and conditions and may contain such additional terms and
conditions, not inconsistent with Article III, as the Committee shall
deem desirable:
(a) OPTION PERIOD AND CONDITIONS AND LIMITATIONS ON EXERCISE. Subject
to Article III, Paragraphs 4 and 5, no incentive stock
option granted under Article III shall be exercisable with
respect to any of the shares subject to such option earlier
than the date which is one year from the date of grant nor
later than the date which is ten years after the date of
grant; PROVIDED, HOWEVER, that in the case of an Employee
Optionee who, at the time such option is granted, owns
(within the meaning of Section 424(d) of the Code) more
than 10% of the total combined voting power of all classes
of stock of the Company or of its Parent Corporation or any
Subsidiary Corporation, then such option shall not be
exercisable with respect to any of the shares subject to
such option later than the date which is five years after
the date of grant. The date on which an incentive stock
option ultimately becomes unexercisable under the previous
sentence is hereinafter referred to as the "ISO EXPIRATION
DATE." To the extent not prohibited by other provisions of
the Plan, each incentive stock option granted under Article
III shall be exercisable at such time or times as the
Committee in its discretion may determine at or prior to
the time such option is granted; PROVIDED, HOWEVER, that
unless the Committee determines otherwise, each incentive
stock option granted under Article III shall be exercisable
from time to time, in whole or in part, at any time after
one year from the date of grant and prior to the ISO
Expiration Date.
(b) TERMINATION OF EMPLOYMENT AND DEATH. For purposes of Article
III and each incentive stock option granted under Article
III, an Employee Optionee's employment shall be deemed to
have terminated at the close of business on the day
preceding the first date on which he is no longer for any
reason whatsoever (including his death) employed by the
Company or a subsidiary or affiliated entity of the
Company. Except as provided below, if an Employee
Optionee's employment is terminated by any reason
whatsoever (including his death), each incentive stock
option granted to him and all of his rights thereunder
shall wholly and completely terminate:
(i) At the time the Employee Optionee's employment is
terminated if termination occurs within the one-year
period following the date of grant; or
(ii) At the time the Employee Optionee's employment is
terminated if his employment is terminated due to
Cause; or
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(iii) At the expiration of a period of one year after the
Employee Optionee's death (but in no event later than
the ISO Expiration Date) if the Employee Optionee's
employment is terminated after the one-year period
following the date of grant by reason of his death. To
the extent exercisable, an incentive stock option
granted under Article III of the Plan may be exercised
by the Employee Optionee's estate or by the person or
persons who acquire the right to exercise his option by
bequest or inheritance with respect to any or all of
the shares remaining subject to his option at the time
of his death; or
(iv) Unless it is otherwise provided in the option
agreement, at the expiration of a period of three
years after the Employee Optionee's employment is
terminated if the Employee Optionee's employment is
terminated after the one-year period following the
date of grant because of retirement or disability
(but in no event later than the ISO Expiration Date);
or
(v) Unless it is otherwise provided in the option agreement
(but in no event longer than one year after the Employee
Optionee's employment is terminated), at the expiration of
a period of three months after the Employee Optionee's
employment is terminated (but in no event later than the
ISO Expiration Date) if the Employee Optionee's employment
is terminated after the one-year period following the date
of grant for any other reason than his death, retirement,
disability or Cause; or
(vi) Notwithstanding the above, with respect to all
options outstanding at the date of a Change of
Control, if the Employee Optionee's employment is
terminated within the one-year period following such
Change of Control other than for Cause, at the
expiration of one year following the Employee
Optionee's date of termination, unless subparagraph
(iii), (iv) or (v) provides a longer period for the
exercise of such options (but in no event later than
the ISO Expiration Date).
In the event and to the extent that an incentive stock option granted
under Article III is not exercised (A) within three months after the
Employee Optionee's employment is terminated because of retirement or a
disability not within the meaning of Section 22(e)(3) of the Code or (B)
within one year after the Employee Optionee's employment is terminated
because of disability within the meaning of Section 22(e)(3) of the Code,
such option shall be taxed as a nonqualified option and shall be subject
to the manner of exercise provisions described in Article II, Paragraph
3(c). Further, in the event that an Employee Optionee's employment is not
terminated in accordance with the first sentence of Article III,
Paragraph 3(b), but such Employee Optionee ceases to be employed by the
Company, its Parent Corporation or any Subsidiary Corporation, then, to
the extent an incentive stock option granted under Article III
is not exercised within three months after the date of such cessation,
such option shall be taxed as a nonqualified option and shall be subject
to the manner of exercise provisions described in Article II, Paragraph
3(c).
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Notwithstanding the foregoing, the Committee, in its discretion, may
extend the period for exercise of any option upon an Employee Optionee's
termination, but in no event later than the ISO Expiration Date.
(c) MANNER OF EXERCISE. In order to exercise an incentive stock
option granted under Article III, the person or persons
entitled to exercise it shall deliver to the Company
payment in full for the shares being purchased. The payment
of the exercise price for each option granted under Article
III shall either be in cash or through delivery to the
Company of shares of Common Stock, or by any combination of
cash or shares; the value of each share of Common Stock
delivered shall be deemed to be equal to the per share
price of the last sale of Common Stock on the trading day
prior to the date the option is exercised, based on the
composite transactions in the Common Stock as reported in
THE WALL STREET JOURNAL. If the Committee so requires, such
person or persons shall also deliver a written
representation that all shares being purchased are being
acquired for investment and not with a view to, or for
resale in connection with, any distribution of such shares.
(d) OPTIONS NOT TRANSFERABLE. No incentive stock option granted
under Article III shall be transferable otherwise than by
will or by the laws of descent and distribution and, during
the lifetime of the Employee Optionee to whom any option is
granted, it shall be exercisable only by such Employee
Optionee. Any attempt to transfer, assign, pledge,
hypothecate or otherwise dispose of, or to subject to
execution, attachment or similar process, any incentive
stock option granted under Article III, or any right
thereunder, contrary to the provisions hereof, shall be
void and ineffective, shall give no right to the purported
transferee, and shall, at the sole discretion of the
Committee, result in forfeiture of the option with respect
to the shares involved in such attempt.
(e) ADJUSTMENT OF SHARES. In the event that at any time after the
effective date of the Plan the outstanding shares of Common
Stock are changed into or exchanged for a different number or
kind of shares or other securities of the Company by reason
of merger, consolidation, recapitalization,
reclassification, stock split, stock dividend, combination
of shares or the like, the Committee shall make an
appropriate and equitable adjustment in the number and kind
of shares as to which all outstanding incentive stock
options granted under Article III, or portions thereof then
unexercised, shall be exercisable, to the end that after
such event the shares subject to Article III of the Plan
and each Employee Optionee's proportionate interest shall
be maintained as before the occurrence of such event. Such
adjustment in an outstanding incentive stock option shall
be made without change in the total price applicable to the
option or the unexercised portion of the option (except for
any change in the aggregate price resulting from
rounding-off of share quantities or prices) and with any
necessary corresponding adjustment in exercise price per
share. Any such adjustment made by the Committee shall be
final and binding upon all Employee Optionees, the Company,
and all other interested persons. Any adjustment of an
incentive stock option under this paragraph shall be made
in such
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manner as not to constitute a "MODIFICATION" within the
meaning of Section 424(h)(3) of the Code.
(f) LISTING AND REGISTRATION OF SHARES. Each incentive stock
option granted under Article III shall be subject to the
requirement that if at any time the Committee determines,
in its discretion, that the listing, registration, or
qualification of the shares subject to such option upon any
securities exchange or under any state or federal law, or
the consent or approval of any governmental regulatory
body, is necessary or desirable as a condition of, or in
connection with, the issue or purchase of shares
thereunder, such option may not be exercised in whole or in
part unless such listing, registration, qualification,
consent or approval shall have been effected or obtained
and the same shall have been free of any conditions not
acceptable to the Committee.
(g) LIMITATION ON AMOUNT. Notwithstanding any other provision of
the Plan, to the extent that the aggregate fair market
value (determined as of the time the respective incentive
stock option is granted) of the Common Stock with respect
to which incentive stock options are exercisable for the
first time by an Employee Optionee during any calendar year
under all incentive stock option plans of the Company and
its Parent Corporation and Subsidiary Corporations exceeds
$100,000, such incentive stock options shall be taxed as
nonqualified options and shall be subject to the manner of
exercise provisions described in Article II, Paragraph
3(c). The Committee shall determine, in accordance with
applicable provisions of the Code, Treasury Regulations and
other administrative pronouncements, which of an Employee
Optionee's incentive stock options will be treated as
nonqualified options because of such limitation and shall
notify the Employee Optionee of such determination as soon
as practicable after such determination.
4. AMENDMENT. The Committee may, with the consent of the person or persons
entitled to exercise any outstanding incentive stock option granted
under Article III, amend such incentive stock option; PROVIDED,
HOWEVER, that any such amendment increasing the number of shares of
Common Stock subject to such option (except as provided in Article
III, Paragraph 3(e)) or reducing the exercise price per share of
such option (except as provided in Article III, Paragraph 3(e))
shall in each case be subject to approval by the stockholders of
the Company. Subject to Article III, Paragraph 3(g), the Committee
may at any time or from time to time, in its discretion, in the
case of any incentive stock option previously granted under Article
III which is not then immediately exercisable in full, accelerate
the time or times at which such option may be exercised to any
earlier time or times.
5. ACCELERATION UPON A CHANGE OF CONTROL. Notwithstanding any provision in
Article III or in any document or instrument evidencing an incentive
stock option granted under Article III, but subject to the provisions
of Article III, Paragraph 3(g), upon the occurrence of a Change of
Control, each incentive stock option previously granted under Article
III which is not then immediately exercisable in full shall be
immediately exercisable in full.
6. OTHER PROVISIONS.
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(a) The person or persons entitled to exercise, or who have
exercised, an incentive stock option granted under Article III
shall not be entitled to any rights as a stockholder of the
Company with respect to any shares subject to such option until
he shall have become the holder of record of such shares.
(b) No incentive stock option granted under Article III shall be
construed as limiting any right which the Company or any
subsidiary or affiliated entity of the Company may have to
terminate at any time, with or without cause, the employment of
any person to whom such option has been granted.
(c) Notwithstanding any provision of the Plan or the terms of any
incentive stock option granted under Article III, the Company
shall not be required to issue any shares hereunder if such
issuance would, in the judgment of the Committee, constitute a
violation of any state or federal law or of the rules or
regulations of any governmental regulatory body.
(d) The Committee may require any person who exercises an incentive
stock option to give prompt notice to the Company of any
disposition of shares of Common Stock acquired upon exercise of
an incentive stock option within two years after the date of
grant of such option or within one year after the transfer of
shares to such person.
ARTICLE IV
NON-EMPLOYEE DIRECTOR STOCK OPTIONS
1. ELIGIBLE PERSONS. Persons who are members of the Board but are neither
employees nor officers of the Company, its subsidiaries or affiliated
entities ("NON-EMPLOYEE DIRECTORS") shall be eligible to receive options
under, and solely under, this Article IV.
2. INITIAL GRANTING OF OPTIONS TO NON-EMPLOYEE DIRECTORS. Subject to
stockholder approval of the Plan pursuant to Article I, Paragraph
7, and to the limitation of the number of shares of Common Stock
set forth in Article I, Paragraph 2, each Non-Employee Director who
is a member of the Board on December 5, 1991 (collectively, the
"CURRENT NON-EMPLOYEE DIRECTORS") is hereby granted, effective as
of such date (which date shall be the date of grant for purposes
hereof), a nonqualified option to purchase 2,000 shares of Common
Stock. Subject to stockholder approval of the Plan pursuant to
Article I, Paragraph 7, and to the limitation of the number of
shares of Common Stock set forth in Article I, Paragraph 2, each
Non-Employee Director who is first elected to the Board on or after
December 5, 1991 (excluding the Current Non-Employee Directors), is
hereby granted, effective on the date of his initial election
(which date shall be the date of grant for purposes hereof), a
nonqualified option to purchase 1,000 shares of Common Stock
(subject to adjustment in the same manner provided in Article IV,
Paragraph 5(e) with respect to shares of Common Stock subject to
options then outstanding).
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3. ANNUAL GRANTING OF OPTIONS TO NON-EMPLOYEE DIRECTORS. Subject to
stockholder approval of the Plan pursuant to Article I, Paragraph
7, and to the limitation of the number of shares of Common Stock
set forth in Article I, Paragraph 2, a nonqualified option to
purchase 2,000 shares of Common Stock (subject to adjustment in the
same manner provided in Article IV, Paragraph 5(e) with respect to
shares of Common Stock subject to options then outstanding) is
hereby granted, effective the fourth Thursday of October of 1992
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).
4. CALCULATION OF EXERCISE PRICE. The exercise price to be paid for each
share of Common Stock deliverable upon exercise of each option
granted under Article IV shall be equal to the lesser of (a) the
per share price of the last sale of Common Stock on the trading day
prior to the date of grant relating to such option, based on the
composite transactions in the Common Stock as reported by THE WALL
STREET JOURNAL, and (b) the arithmetic average of the closing price
per share of Common Stock on all days in which such stock was
traded during the 90-day period before the date of grant, based on
the composite transactions in the Common Stock as reported by THE
WALL STREET JOURNAL. The exercise price for each option granted
under Article IV shall be subject to adjustment as provided in
Article IV, Paragraph 5(e).
5. TERMS AND CONDITIONS OF OPTIONS. Options granted under Article IV shall
be in the form attached to the Plan as Exhibit A and shall be subject to
the following terms and conditions:
(a) OPTION PERIOD AND CONDITIONS AND LIMITATIONS ON EXERCISE. Each
option granted under Article IV shall be exercisable from
time to time, in whole or in part, at any time after one
year from the date of grant and prior to the date which
is ten years after the date of grant (the "OPTION
EXPIRATION DATE"). Notwithstanding the foregoing or any
provision in any document or instrument evidencing an
option granted under Article IV, upon the occurrence of a
Change of Control, each option previously granted under
Article IV which is not then immediately exercisable in
full shall be immediately exercisable in full.
(b) TERMINATION OF DIRECTORSHIP AND DEATH. For purposes of Article IV
and each option granted under Article IV, a Non-Employee
Director's directorship shall be deemed to have terminated at the
close of business on the day preceding the first date on which he
ceases to be a member of the Board for any reason whatsoever
(including his death). If a Non-Employee Director's directorship
is terminated for any reason whatsoever (including his death),
each option granted to him under Article IV and all of his rights
thereunder shall wholly and completely terminate:
(i) At the time the Non-Employee Director's directorship is
terminated if termination occurs within the one-year
period following the date of grant; or
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(ii) At the time the Non-Employee Director's directorship
is terminated if his directorship is terminated as a
result of his removal from the Board for cause (other
than disability or in accordance with the provisions
of the Company's Bylaws regarding automatic
termination of directors' terms of office); or
(iii) At the expiration of a period of one year after the
Non-Employee Director's death (but in no event later
than the Option Expiration Date) if the Non-Employee
Director's directorship is terminated after the
one-year period following the date of grant by
reason of his death. To the extent exercisable, an
option granted under Article IV may be exercised by
the Non-Employee Director's estate or by the person
or persons who acquire the right to exercise his
option by bequest or inheritance with respect to any
or all of the shares remaining subject to his option
at the time of his death; or
(iv) At the expiration of a period of three years after
the Non-Employee Director's directorship is
terminated if such person's directorship is
terminated after the one-year period following the
date of grant as a result of such person's
resignation or removal from the Board because of
disability or in accordance with the provisions of
the Company's Bylaws regarding automatic termination
of directors' terms of office (but in no event later
than the Option Expiration Date); or
(v) At the expiration of a period of three months after the
Non-Employee Director's directorship is terminated (but in
no event later than the Option Expiration Date) if the
Non-Employee Director's directorship is terminated after
the one-year period following the date of grant for any
reason other than the reasons specified in Article IV,
Paragraphs 5(b)(ii) through 5(b)(iv).
(c) MANNER OF EXERCISE. In order to exercise
an option granted under Article IV, the person or persons
entitled to exercise it shall deliver to the Company
payment in full for the shares being purchased, together
with any required withholding tax. The payment of the
exercise price for each option granted under Article IV
shall either be in cash or through delivery to the
Company of shares of Common Stock, or by any combination
of cash or shares; the value of each share of Common
Stock delivered shall be deemed to be equal to the per
share price of the last sale of Common Stock on the
trading day prior to the date the option is exercised,
based on the composite transactions in the Common Stock
as reported in THE WALL STREET JOURNAL. If the Committee
so requires, such person or persons shall also deliver a
written representation that all shares being purchased
are being acquired for investment and not with a view to,
or for resale in connection with, any distribution of
such shares.
(d) OPTIONS NOT TRANSFERABLE. No option granted under Article IV
shall be transferable otherwise than by will or by the laws of
descent and distribution and, during the lifetime of the
Non-Employee Director to whom any such option is granted,
it shall be
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exercisable only by such Non-Employee Director. Any attempt to
transfer, assign, pledge, hypothecate or otherwise dispose of,
or to subject to execution, attachment or similar process, any
option granted under Article IV, or any right thereunder,
contrary to the provisions hereof, shall be void and
ineffective and shall give no right to the purported
transferee.
(e) ADJUSTMENT OF SHARES. The shares with respect to which options
may be granted pursuant to Article IV are shares of Common
Stock as presently constituted, but if, and whenever, prior to
the expiration of an option theretofore granted, the Company
shall effect a subdivision or consolidation of shares of
Common Stock or the payment of a stock dividend on Common
Stock without receipt of consideration by the Company, the
number of shares of Common Stock with respect to which such
option may thereafter be exercised (i) in the event of an
increase in the number of outstanding shares be
proportionately increased, and the purchase price per share
shall be proportionately reduced, and (ii) in the event of a
reduction in the number of outstanding shares shall be
proportionately reduced, and the purchase price per share
shall be proportionately increased. If the Company
recapitalizes or otherwise changes its capital structure,
thereafter upon any exercise of an option theretofore granted
the optionee shall be entitled to purchase under such option,
in lieu of the number of class of shares of Common Stock as to
which such option shall then be exercisable, the number and
class of shares of stock and securities to which the optionee
would have been entitled pursuant to the terms of the
recapitalization if, immediately prior to such
recapitalization, the optionee had been the holder of record
of the number of shares of Common Stock as to which such
option is then exercisable. Any adjustment provided for in the
preceding provisions of this Paragraph 5(e) shall be subject
to any required stockholder action.
(f) LISTING AND REGISTRATION OF SHARES. Each option granted under
Article IV shall be subject to the requirement that if at any
time the Committee determines, in its discretion, that the
listing, registration, or qualification of the shares subject
to such option under any securities exchange or under any
state or federal law, or the consent or approval of any
governmental regulatory body, is necessary or desirable as a
condition of, or in connection with, the issue or purchase of
shares thereunder, such option may not be exercised in whole
or in part unless such listing, registration, qualification,
consent or approval shall have been effected or obtained and
the same shall have been free of any conditions not acceptable
to the Committee.
6. OTHER PROVISIONS.
(a) The person or persons entitled to exercise, or who have
exercised, an option granted under Article IV shall not be
entitled to any rights as a stockholder of the Company with
respect to any shares subject to such option until he shall have
become the holder of record of such shares.
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(b) No option granted under Article IV shall be construed as limiting
any right which either the stockholders of the Company or the
Board may have to remove at any time, with or without cause, any
person to whom such option has been granted from the Board.
(c) Notwithstanding any provision of the Plan or the terms of any
option granted under Article IV, the Company shall not be
required to issue any shares hereunder if such issuance would, in
the judgment of the Committee, constitute a violation of any
state or federal law or of the rule or regulations of any
governmental regulatory body.
(d) If, as of any date that the Plan is in effect, there are not
sufficient shares of Common Stock available under the Plan to
allow for the grant to each Non-Employee Director of an option
for the number of shares provided for in Article IV, each
Non-Employee Director shall receive an option for his pro-rata share of the
total number of shares of Common Stock then available under the Plan.
ARTICLE V
PERFORMANCE STOCK AND PERFORMANCE UNITS
1. ELIGIBLE EMPLOYEES. Key employees and officers (whether or not they are
directors) of the Company, its subsidiaries and affiliated entities
shall be eligible to receive awards of Performance Stock and/or
Performance Units (as hereinafter defined) under this Article V.
2. TERMS AND CONDITIONS OF PERFORMANCE AWARDS. Shares of Performance Stock
and Performance Units granted under Article V to an eligible employee
(an "EMPLOYEE GRANTEE") shall be, with respect to Performance Stock,
shares of Common Stock and, with respect to Performance Units, a unit
shall represent a phantom share of Common Stock. Both types of Awards
shall be subject to the following terms and conditions and may contain
such additional terms and conditions, not inconsistent with Article V,
as the Committee shall deem desirable:.
(a) PERFORMANCE PERIOD AND VESTING. Subject to Article V,
Paragraphs 3 and 4, no shares of Performance Stock or
Performance Units granted under Article V shall be subject to
becoming vested; I.E., earned and nonforfeitable, earlier
than the date which is one year from the date of grant nor
later than the date which is ten years after the date which
is ten years after the date of grant (the "PERFORMANCE
PERIOD"). To the extent
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not prohibited by other provisions of the Plan, each share of
Performance Stock and each Performance Unit granted under
Article V shall be subject to becoming vested upon the
achievement of such performance goals (Company and/or
individual) over such Performance Period as the Committee in
its discretion may determine at or prior to the grant of such
performance Award.
(b) TERMINATION OF EMPLOYMENT AND DEATH. For purposes of Article
V, and each share of Performance Stock and each Performance
Unit granted hereunder, an Employee Grantee's employment
shall be deemed to have terminated at the close of business
on the day preceding the first date on which he is no longer
for any reason whatsoever (including his death) employed by
the Company or a subsidiary or an affiliated entity of the
Company. If an Employee Grantee's employment is terminated
for any reason whatsoever (including his death), all of his
rights with respect to each share of Performance Stock and
each Performance Unit granted to him under Article V which is
not then vested shall wholly and completely terminate:
(i) At the time the Employee Grantee's employment is
terminated if termination is for any reason other
than retirement, disability or death; or
(ii) If the Employee Grantee's employment is terminated
due to retirement, disability or death, at the time
of such termination but only with respect to that
portion of the Award which is equal to the
fraction, the numerator of which is the number of
full calendar months remaining in the Performance
Period and the denominator of which is the total
number of calendar months in the Performance
Period; PROVIDED, HOWEVER, the remaining,
nonforfeited portion of the Award shall continue to
be subject to the terms and conditions of the
Performance Period and at the end of such
Performance Period shall be forfeited and/or paid
as unrestricted stock to the Employee Grantee on
the achievement of the goals for such Performance
Period; PROVIDED, FURTHER HOWEVER, the Committee
may, in its sole discretion, deem the terms and
conditions have been met at the date of such
termination for all or part of such remaining,
nonforfeited portion of the Performance Stock
award or Performance Unit award.
(c) PERFORMANCE AWARDS NOIT TRANSFERABLE. No shares of Performance
Stock or Performance Units granted under Article V shall be
transferable during a Performance Period otherwise than by
will or by the laws of descent and distribution. Any attempt
to transfer, assign, pledge, hypothecate or otherwise dispose
of, or to subject to execution, attachment or similar process,
any shares of Performance Stock or Performance Units granted
under Article V, or any right thereunder, contrary to the
provisions hereof, shall be void and ineffective, shall give
no right to the purported transferee, and shall, at the sole
discretion of the Committee, result in forfeiture of the
shares of the Performance Stock or Performance Units involved
in such attempt.
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<PAGE>
3. AMENDMENT. The Committee may, with the consent of the Employee Grantee
awarded any outstanding Performance Stock or Performance Units under
Article V, amend the performance objectives and/or the Performance Period
for earning such Award.
4. ACCELERATION UPON A CHANGE OF CONTROL. Notwithstanding any provision in
Article V or in any document or instrument evidencing Performance Stock
or Performance Units granted under Article V upon the occurrence of a
Change of Control each share of Performance Stock and each Performance
Unit previously granted under Article V which is not then immediately
vested in full shall be immediately vested in full.
5. OTHER PROVISIONS.
(a) No grant of Performance Stock or Performance Units under Article
V shall be construed as limiting any right which the Company or
any subsidiary or affiliated entity of the Company may have to
terminate at any time, with or without cause, the employment of
any person to whom such Award has been granted.
(b) Each certificate representing Performance Stock awarded under the
Plan shall be registered in the name of the Employee Grantee and,
during the Performance Period, shall be left in deposit with the
Company and a stock power endorsed in blank. The grantee of
Performance Stock shall have all the rights of a stockholder with
respect to such shares including the right to vote and the right
to receive dividends or other distributions paid or made with
respect to such shares. Any certificate or certificates
representing shares of Performance Stock shall bear a legend
similar to the following:
The shares represented by this certificate have been
issued pursuant to the terms of the BJ Services Company
1990 Incentive Stock Plan and may not be sold, pledged,
transferred, assigned or otherwise encumbered in any
manner except as is set forth in the terms of such award
dated ____________, 19___.
After the satisfaction of all of the terms and conditions set by the
Committee with respect to an award of (i) Performance Stock, a
certificate, without the legend set forth above, for the number of shares
of Common Stock that are no longer subject to such restrictions, terms
and conditions shall be delivered to the employee and (ii) Performance
Units, a certificate for the number of shares of Common Stock equal to
the number of Performance Units vested shall be delivered to the
employee. The remaining unearned shares of Performance Stock issued with
respect to such Award, if any, or unearned Performance Units, as the case
may be, shall either be forfeited back to the Company or, if appropriate
under the terms of the Award applicable to such shares or units, shall
continue to
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<PAGE>
be subject to the restrictions, terms and conditions set by the Committee
with respect to such Award.
ARTICLE VI
BONUS STOCK
The Committee may, from time to time and subject to the provisions of the
Plan, grant shares of Bonus Stock to key employees and officers (whether
or not they are directors) of the Company, its subsidiaries and
affiliated entities. Bonus Stock shall be shares of Common Stock that are
not subject to a Performance Period under Article V.
ARTICLE VII
WITHHOLDING FOR TAXES
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. Such
arrangements may, at the discretion of the Committee, include allowing
the optionee or grantee to tender to the Company shares of Common Stock
owned by the optionee or grantee, or to request the Company to withhold a
portion of the shares of Common Stock being acquired pursuant to the
Award, whether through the exercise of an option or as a distribution of
earned Performance Stock, payment of earned Performance Units or as Bonus
Stock, which have a fair market value per share as of the date of such
withholding that is not greater than the sum of all tax amounts to be
withheld with respect thereto, together with payment of any remaining
portion of such tax amounts in cash or by check payable and acceptable to
the Company.
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<PAGE>
AMENDMENT TO
BJ SERVICES COMPANY
1990 STOCK INCENTIVE PLAN
(AS AMENDED)
WHEREAS, BJ Services Company (the "Company") has heretofore adopted the
BJ Services Company 1990 Stock Incentive Plan (as amended) (the "Plan"); and
WHEREAS, the Company desires to amend the Plan in certain respects;
NOW THEREFORE, the Plan shall be amended as follows, effective as of
the date of adoption of this amendment by the Company:
1. The first sentence of Article I, Paragraph 2 of the Plan shall be
deleted and the following shall be substituted therefor:
"The aggregate number of shares of Common Stock, $.10 par value per
share, of the Company ('Common Stock') that may be issued under the
Plan shall not exceed 3,000,000 shares; provided, however, that in the
event that at any time after the effective date of the Plan the
outstanding shares of Common Stock are changed into or exchanged for a
different number or kind of shares or other securities by reason of
merger, consolidation, recapitalization, reclassification, stock split,
stock dividend, combination of shares or the like, the aggregate number
and class of securities available under the Plan shall be ratably
adjusted by the Committee (as hereinafter defined), whose determination
shall be final and binding upon the Company and all other interested
persons."
2. Article II, Paragraph 3(b)(v) of the Plan shall be deleted and the
following shall be substituted therefor:
"(v) If the Employee Optionee's employment is terminated after
the one-year period following the date of grant for any reason (other
than on account of such person's death, retirement, disability or Cause
termination), at the expiration of a period of three months after the
Employee Optionee's employment is so terminated except (A) as otherwise
provided for in the option agreement (but for no longer than one year)
or (B) as provided in Article VIII; provided, however, notwithstanding
anything to the contrary, no option shall ever be exercisable later
than the Nonqualified Option Expiration Date;"
3. Article II, Paragraph 3(b)(vi) of the Plan shall be deleted.
4. The first sentence of Article II, Paragraph 3(e) of the Plan shall
be deleted and the
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<PAGE>
following shall be substituted therefor:
"In the event that at any time after the effective date of the Plan the
outstanding shares of Common Stock are changed into or exchanged for a
different number or kind of shares or other securities by reason of
merger, consolidation, recapitalization, reclassification, stock split,
stock dividend, combination of shares or the like, the Committee shall
make an appropriate and equitable adjustment in the number and kind of
shares as to which all outstanding nonqualified options granted under
Article II or portions thereof then unexercised, shall be exercisable,
to the end that after such event the shares subject to Article II of
the Plan and each Employee Optionee's proportionate interest shall be
maintained as before the occurrence of such event."
5. Article III, Paragraph 3(b)(v) of the Plan shall be deleted and the
following shall be substituted therefor:
"(v) If the Employee Optionee's employment is terminated after the
one-year period following the date of grant for any reason (other than
on account of such person's death, retirement, disability or Cause
termination), at the expiration of a period of three months after the
Employee Optionee's employment is so terminated except (A) as otherwise
provided for in the option agreement (but for no longer than one year)
or (B) as provided in Article VIII; provided, however, notwithstanding
anything to the contrary, no option shall ever be exercisable later
than the ISO Expiration Date;"
6. Article III, Paragraph 3(b)(vi) of the Plan shall be deleted.
7. The first sentence of Article III, Paragraph 3(e) of the Plan shall
be deleted and the following shall be substituted therefor:
"In the event that at any time after the effective date of the Plan the
outstanding shares of Common Stock are changed into or exchanged for a
different number or kind of shares or other securities by reason of
merger, consolidation, recapitalization, reclassification, stock split,
stock dividend, combination of shares or the like, the Committee shall
make an appropriate and equitable adjustment in the number and kind of
shares as to which all outstanding incentive stock options granted
under Article III, or portions thereof then unexercised, shall be
exercisable, to the end that after such event the shares subject to
Article III of the Plan and each Employee Optionee's proportionate
interest shall be maintained as before the occurrence of such event."
8. The last sentence of Article III, Paragraph 3(e) of the Plan shall
be deleted.
9. The following new Article VIII shall be added to the Plan:
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<PAGE>
"ARTICLE VIII
CHANGE OF CONTROL
Notwithstanding any provision to the contrary in the Plan, the
following additional provisions shall become effective upon the occurrence of a
Change of Control:
(a) PUBLICLY-TRADED STOCK TRANSACTION. If the consideration offered to
shareholders of the Company in connection with a Change of Control consists of
shares of the common stock ('New Stock') of the entity acquiring the Company or
the parent company of the entity acquiring the Company (the 'Acquiring Entity')
that are publicly traded, upon the occurrence of such Change of Control, the
Acquiring Entity shall assume the each Employee Optionee's outstanding options
to purchase Common Stock ('Prior Options') and each such Prior Option shall
become an option (a 'New Option') (i) to purchase that number of shares of New
Stock determined by multiplying the number of shares of Common Stock issuable
upon exercise of such Prior Option by the exchange ratio of Common Stock in the
transaction, (ii) at an exercise price per share determined by dividing the per
share exercise price of such Prior Option by the exchange ratio of Common Stock
in the transaction and (iii) otherwise upon the same terms and conditions as
such Prior Option, except that (A) such New Option shall be exercisable until
the applicable Nonqualified Option Expiration Date or ISO Expiration Date
regardless of any termination of Employee Optionee's employment following the
Change of Control, and (B) such New Option may be surrendered to the Acquiring
Entity during the 90-day period following the occurrence of the Change of
Control in return for a payment in cash or shares of New Stock or a combination
of cash and shares of New Stock as determined by the Acquiring Entity, equal in
value to the excess of (I) the higher of (1) the per share value of the
consideration received by shareholders of the Company upon the occurrence of the
Change of Control (valued for such purpose as of the date of the Change of
Control) or (2) the highest per share price for Common Stock of the Company
during the period commencing with the public announcement of the proposed Change
of Control transaction and ending upon the occurrence of the Change of Control
over (II) the per share exercise price of the Common Stock of the Company under
the Prior Option, multiplied by the number of shares of Common Stock of the
Company subject to the Prior Option.
(b) OTHER TRANSACTION. If the consideration offered to shareholders of
the Company in connection with a Chance of Control consists of cash or of New
Stock that is not publicly traded, upon the occurrence of such Change of
Control, each Employee Optionee shall surrender each of his outstanding options
to purchase Common Stock to the Acquiring Entity in return for a payment in cash
equal to the Black-Scholes value of such option as of the date of the Change of
Control, without discount for risk of forfeiture and non-transferability. The
Black Scholes valuation for this purpose shall be performed using a risk free
rate for option term as determined by the then current rate on Treasury bills
with a maturity approximating the remaining option life, and estimated future
annual stock volatility based on the prior twelve months volatility."
10. As amended hereby, the Plan is specifically ratified and
reaffirmed.
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<PAGE>
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
November 26, 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 ('RULE16B-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
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<PAGE>
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 November 26, 1996."
5. As amended hereby, the Plan is specifically ratified and reaffirmed.
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<PAGE>
APPENDIX E
BJ SERVICES COMPANY
1995 INCENTIVE PLAN
ARTICLE I
INTRODUCTION
1. PURPOSE. The BJ SERVICES COMPANY 1995 INCENTIVE PLAN (the "PLAN")
is intended to promote the interests of BJ SERVICES COMPANY (the "COMPANY") and
its stockholders by encouraging employees of the Company, its subsidiaries and
affiliated entities and non-employee directors of the Company to acquire or
increase their equity interest in the Company and, with respect to employees, to
be able to relate cash bonuses to Company performance goals, thereby giving them
an added incentive to work toward the continued growth and success of the
Company. The Board of Directors of the Company (the "BOARD") also contemplates
that through the Plan, the Company, its subsidiaries and affiliated entities
will be better able to compete for the services of personnel needed for the
continued growth and success of the Company. However, nothing in this Plan shall
operate or be construed to prevent the Company from granting bonuses and other
stock awards outside of this Plan.
2. SHARES SUBJECT TO THE PLAN. The aggregate number of shares of
Common Stock, $.10 par value per share, of the Company ("COMMON STOCK") that may
be issued under the Plan shall not exceed 1,500,000 shares; provided, however,
that in the event that at any time after the effective date of the Plan the
outstanding shares of Common Stock are changed into or exchanged for a different
number or kind of shares or other securities of the Company by reason of merger,
consolidation, recapitalization, reclassification, stock split, stock dividend,
combination of shares or the like, the aggregate number and class of securities
available under the Plan shall be ratably adjusted by the Committee (as
hereinafter defined), whose determination shall be final and binding upon the
Company and all other interested persons. In the event the number of shares to
be delivered upon the exercise in full of any option granted under the Plan is
reduced for any reason whatsoever or in the event any option granted under the
Plan can no longer under any circumstances be exercised, the number of shares no
longer subject to such option shall thereupon be released from such option and
shall thereafter be available under the Plan. If shares of Performance Stock (as
hereinafter defined) awarded under the Plan are forfeited to the Company, such
shares shall thereafter be available for new grants and awards under the Plan
unless the Employee Grantee (as hereinafter defined) has received benefits of
ownership with respect to such shares of Performance Stock, such as dividends
(but not including voting rights). Shares issued pursuant to the Plan shall be
fully paid and nonassessable.
3. ADMINISTRATION OF THE PLAN. The Plan shall be administered by a
committee (the "COMMITTEE") of two or more directors of the Company appointed by
the Board. Subject to the provisions of the Plan, the Committee shall interpret
the Plan and all awards under the Plan, shall make such rules as it deems
necessary for the proper administration of the Plan, shall make all other
determinations necessary or advisable for the administration of the Plan and
shall correct any defect
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or supply any omission or reconcile any inconsistency in the Plan or in any
award under the Plan in the manner and to the extent that the Committee deems
desirable to effectuate the Plan. Any action taken or determination made by the
Committee pursuant to this and the other paragraphs of the Plan shall be binding
on all parties. The act or determination of a majority of the Committee shall be
deemed to be the act or determination of the Committee.
Notwithstanding any provision in the Plan to the contrary, other than
options granted to Non-Employee Directors (as hereinafter defined) pursuant to
Article IV, no options, Performance Stock, Performance Units, Bonus Stock or
Cash Awards (collectively, "AWARDS") may be granted under the Plan to any member
of the Committee during the term of his membership on the Committee. No person
shall be eligible to serve on the Committee unless he is then a "DISINTERESTED
PERSON" within the meaning of Rule 16b-3 ("RULE 16b-3") promulgated under the
Securities Exchange Act of 1934, as amended (the "ACT"), if and as such rule is
then in effect and also an "OUTSIDE DIRECTOR" within the meaning of Section
162(m) of the Internal Revenue Code of 1986, as amended (the "CODE").
4. AMENDMENT AND DISCONTINUANCE OF THE PLAN. The Board may amend,
suspend or terminate the Plan; provided, however, that each such amendment of
the Plan (a) extending the period within which Awards may be made under the
Plan, (b) increasing the number of shares of Common Stock to be awarded under
the Plan, except as provided in Article I, Paragraph 2, (c) reducing the option
exercise prices per share provided in the Plan, (d) changing the class of
persons to whom Awards may be made under the Plan, (e) modifying the provisions
of Article IV, or (f) granting options to Non-Employee Directors other than
pursuant to Article IV, shall, in each case, be subject to approval by the
stockholders of the Company; provided, further, however, that no amendment,
suspension or termination of the Plan may cause the Plan to fail to meet the
requirements of Rule 16b-3 or may, without the consent of the holder of an
Award, terminate such Award or adversely affect such person's rights in any
material respect; provided, further, that the provisions of Article IV may not
be amended more than once every six months other than to comport with changes in
the Code, the Employee Retirement Income Security Act of 1974, as amended, or
the rules thereunder, unless otherwise permitted by Rule 16b-3.
5. GRANTING OF AWARDS TO EMPLOYEES. The Committee shall have the
authority to grant, prior to the expiration date of the Plan, to such eligible
key employees and officers as may be selected by it (with respect to options,
"EMPLOYEE OPTIONEES" and, with respect to Performance Stock, Performance Units,
Bonus Stock and Cash Awards, "EMPLOYEE GRANTEES"), options to purchase shares of
Common Stock and awards of Performance Stock, Performance Units, Bonus Stock
and/or Cash Awards on the terms and conditions hereinafter set forth. Stock
issued with respect to an Award under the Plan may be authorized but unissued,
or reacquired, shares of Common Stock. The Committee shall also have the
authority to determine whether options granted to Employee Optionees are granted
pursuant to Article II or Article III, as hereinafter set forth. Options granted
to Employee Optionees under Article III shall be "INCENTIVE STOCK OPTIONS" as
defined in Section 422 of the Code, and are hereinafter referred to as
"INCENTIVE STOCK OPTIONS." All other options granted to Employee Optionees under
the Plan shall be granted pursuant to
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Article II and shall be options which do not constitute incentive stock options
("NONQUALIFIED OPTIONS"). In selecting Employee Optionees and Employee Grantees,
and in determining the number of shares to be covered by each Award granted to
such employee, the Committee may consider the office or position held by the
employee, the employee's degree of responsibility for and contribution to the
growth and success of the Company, the employee's length of service, age,
promotions, potential and any other factors which it may consider relevant.
6. GRANTING OF OPTIONS TO NON-EMPLOYEE DIRECTORS. All options granted
to Non- Employee Directors shall be options to purchase, on the terms and
conditions hereinafter set forth in Article IV, authorized but unissued, or
reacquired, shares of Common Stock and shall be nonqualified options.
Non-Employee Directors shall not be eligible to receive any other Award.
7. TERM OF PLAN. This Plan shall be effective upon the date of its
adoption by the Board, provided the Plan is approved by the stockholders of the
Company within twelve months after the date of such adoption. In the event that
the Plan is not approved by the stockholders of the Company within twelve months
after the date of its adoption by the Board, the Plan shall be null and void. No
Award shall be exercisable or payable under the Plan prior to its approval by
the stockholders and, if the Plan is not approved by the stockholders of the
Company within such twelve month period, all Awards granted under the Plan shall
be automatically cancelled. Except with respect to Awards then outstanding, if
not sooner terminated under the provisions of Article I, Paragraph 4, the Plan
shall terminate upon and no further Awards shall be made after December 31,
2004.
8. MISCELLANEOUS. All references in the Plan to "ARTICLES,"
"PARAGRAPHS" and other subdivisions refer to the corresponding Articles,
Paragraphs, and subdivisions of the Plan.
9. RULE 16b-3 COMPLIANCE. The Company intends:
(a) that the Plan meet the requirements of Rule 16b-3;
(b) that participation by Non-Employee Directors under Article IV of
the Plan will not prohibit them from being "DISINTERESTED PERSONS" within
the meaning of Rule 16b- 3 with respect to administration of the Plan or
with respect to administration of any other plan of the Company;
(c) that transactions of the type specified in Rule 16b-3 by
Non-Employee Directors pursuant to Article IV of the Plan will be exempt
from the operation of Section 16(b) of the Act; and
(d) that transactions of the type specified in Rule 16b-3 by officers
of the Company (whether or not they are directors) pursuant to the Plan
will be exempt from the operation of Section 16(b) of the Act.
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In all cases, the terms, provisions, conditions and limitations of the Plan
shall be construed and interpreted consistent with the Company's intent as
stated in this Article I, Paragraph 9.
10. DEFINITION OF THE TERM "CHANGE OF CONTROL". As used in the Plan, a
"CHANGE OF CONTROL" shall be deemed to have occurred upon, and shall mean (a)
the acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Act) (a "PERSON") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Act) of 25% or more of
either (i) the then outstanding shares of Common Stock of the Company (the
"OUTSTANDING COMPANY COMMON STOCK") or (ii) the combined voting power of the
then outstanding voting securities of the Company entitled to vote generally in
the election of directors (the "OUTSTANDING COMPANY VOTING SECURITIES");
provided, however, that the following acquisitions shall not constitute a Change
of Control: (A) any acquisition directly from the Company (excluding an
acquisition by virtue of the exercise of a conversion privilege), (B) any
acquisition by the G-3 262 Company, (C) any acquisition by any employee benefit
plan(s) (or related trust(s)) sponsored or maintained by the Company or any
corporation controlled by the Company (D) any acquisition by any corporation
pursuant to a reorganization, merger or consolidation, if, immediately following
such reorganization, merger or consolidation, the conditions described in clause
(i), (ii) and (iii) of clause (b) of this Paragraph 10 are satisfied, or (E) any
acquisition by the stockholders of The Western Corporation of North America
("Western") in conjunction with the merger of Western into the Company or one of
its subsidiaries pursuant to the Agreement and Plan of Merger dated as of
November 17, 1994, as amended (the "Western Merger"); or (b) the approval by the
stockholders of the Company of a reorganization, merger or consolidation, in
each case, unless immediately following such reorganization, merger or
consolidation (other than the Western Merger) (i) more than 60% of,
respectively, the then outstanding shares of common stock of the corporation
resulting from such reorganization, merger or consolidation and the combined
voting power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then beneficially
owned, directly or indirectly, by all or substantially all of the individuals
and entities who were the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities immediately prior
to such reorganization, merger or consolidation in substantially the same
proportions as their ownership, immediately prior to such reorganization, merger
or consolidation, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities, as the case may be, (ii) no Person (excluding the
Company, any employee benefit plan(s) (or related trust(s)) of the Company
and/or its subsidiaries or such corporation resulting from such reorganization,
merger or consolidation and any Person beneficially owning, immediately prior to
such reorganization, merger or consolidation, directly or indirectly, 25% or
more of the Outstanding Company Common Stock or Outstanding Company Voting
Securities, as the case may be) beneficially owns, directly or indirectly, 25%
or more of, respectively, the then outstanding shares of common stock of the
corporation resulting from such reorganization, merger or consolidation or the
combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors and (iii) at
least a majority of the members of the board of directors of the corporation
resulting from such reorganization, merger or consolidation were members of the
Incumbent Board (as defined below) at the time of the execution of the initial
agreement providing for such reorganization, merger or
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consolidation. The "INCUMBENT BOARD" shall mean individuals who, as of the date
the Plan is adopted by the Board, constitute the Board; provided, however, that
any individual becoming a director subsequent to such date whose election, or
nomination for election by the Company's stockholders, was approved by a vote of
at least a majority of the directors then comprising the Incumbent Board shall
be considered as though such individual were a member of the Incumbent Board,
but excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of either (1) an actual or threatened election contest
(as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Act), or an actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board or (2) a plan or agreement to replace a
majority of the members of the Board then comprising the Incumbent Board.
ARTICLE II
NONQUALIFIED STOCK OPTIONS
1. ELIGIBLE EMPLOYEES. Key employees and officers (whether or not they
are directors) of the Company, its subsidiaries and affiliated entities shall be
eligible to receive nonqualified options under this Article II; provided,
however, no such person may receive more than 250,000 nonqualified options
and/or incentive stock options hereunder during any calendar year.
2. CALCULATION OF EXERCISE PRICE. The exercise price to be paid for
each share of Common Stock deliverable upon exercise of each nonqualified option
granted under Article II shall be determined by the Committee but shall not be
less than the lesser of (a) the per share price of the last sale of Common Stock
on the trading day prior to the grant of such option, based on the composite
transactions in the Common Stock as reported by THE WALL STREET JOURNAL, and (b)
the arithmetic average of the closing prices per share of Common Stock on all
days on which such stock was traded during the 90-day period before the date of
grant, based on the composite transactions in the Common Stock as reported by
THE WALL STREET JOURNAL. The exercise price for each nonqualified option granted
under Article II shall be subject to adjustment as provided in Article II,
Paragraph 3(e).
3. TERMS AND CONDITIONS OF OPTIONS. Nonqualified options granted under
Article II shall be in such form as the Committee may from time to time approve.
Options granted under Article II shall be subject to the following terms and
conditions and may contain such additional terms and conditions, not
inconsistent with Article II, as the Committee shall deem desirable:
(a) OPTION PERIOD AND CONDITIONS AND LIMITATIONS ON EXERCISE. Subject
to Article II, Paragraphs 4 and 5, no nonqualified option granted under
Article II shall be exercisable with respect to any of the shares subject
to the option earlier than the date which is six months from the date of
grant nor later than the date which is ten years after the date of grant
(the "NONQUALIFIED OPTION EXPIRATION DATE"). To the extent not prohibited
by other provisions of the Plan, each nonqualified option granted under
Article II shall be
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exercisable at such time or times as the Committee in its discretion may
determine at or prior to the time such option is granted; PROVIDED,
HOWEVER, that unless the Committee determines otherwise, each nonqualified
option granted under Article II shall be exercisable from time to time, in
whole or in part, at any time after six months from the date of grant and
prior to the Nonqualified Option Expiration Date.
(b) TERMINATION OF EMPLOYMENT AND DEATH. For purposes of Article II
and each nonqualified option granted under Article II, an Employee
Optionee's employment shall be deemed to have terminated at the close of
business on the day preceding the first date on which he is no longer for
any reason whatsoever (including his death) employed by the Company or a
subsidiary or affiliated entity of the Company. Except as provided below,
if an Employee Optionee's employment is terminated for any reason
whatsoever (including his death), each nonqualified option granted to him
under Article II and all of his rights thereunder shall wholly and
completely terminate:
(i) At the time the Employee Optionee's employment is terminated
if termination occurs within the six-month period following the date
of grant; or
(ii) At the time the Employee Optionee's employment is terminated
if his employment is terminated because he is discharged for fraud,
theft or embezzlement committed against the Company or a subsidiary,
affiliated entity or customer of the Company (collectively CAUSE); or
(iii) At the expiration of a period of one year after the
Employee Optionee's death (but in no event later than the Nonqualified
Option Expiration Date) if the Employee Optionee's employment is
terminated after the six-month period following the date of grant by
reason of his death. To the extent exercisable, a nonqualified option
granted under Article II may be exercised by the Employee Optionee's
estate or by the person or persons who acquire the right to exercise
his option by bequest or inheritance with respect to any or all of the
shares remaining subject to his option at the time of his death; or
(iv) Unless it is otherwise provided in the option agreement, at
the expiration of a period of three years after the Employee
Optionee's employment is terminated if the Employee Optionee's
employment is terminated after the six-month period following the date
of grant because of retirement or disability (but in no event later
than the Nonqualified Option Expiration Date); or
(v) Unless it is otherwise provided in the option agreement (but
in no event longer than one year after the Employee Optionee's
employment is terminated), at the expiration of a period of three
months after the Employee Optionee's employment is terminated (but in
no event later than the Nonqualified Option Expiration Date) if the
Employee Optionee's employment is terminated after
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the six-month period following the date of grant for any reason
other than his death, retirement, disability or Cause; or
(vi) Notwithstanding the above, with respect to all options
outstanding at the date of a Change of Control, if the Employee
Optionee's employment is terminated within the one-year period
following such Change of Control other than for Cause, at the
expiration of one year following the Employee Optionee's date of
termination, unless subparagraph (iii), (iv), (v) or (vii) provides a
longer period for the exercise of such options (but in no event later
than the Nonqualified Option Expiration Date); or
(vii) Notwithstanding the foregoing, the Committee, in its
discretion, may extend the period for exercise of any option upon an
Employee Optionee's termination, but in no event later than the
Nonqualified Option Expiration Date.
As used in this Plan the term "RETIREMENT" means the termination of an
employee's employment with the Company, its subsidiaries and affiliated entities
(i) on or after reaching age 65 or (ii) on or after reaching age 55 with the
consent of the Board, for reasons other than death, disability or Cause, and the
term "DISABILITY" shall mean an employee is suffering from a mental or physical
disability, which, in the opinion of the Board, prevents the employee from
performing his regular duties and is expected to be of long continued duration
or to result in death.
(c) MANNER OF EXERCISE. In order to exercise a nonqualified
option granted under Article II, the person or persons entitled to
exercise it shall deliver to the Company payment in full for the
shares being purchased, together with any required withholding tax as
provided in Article VIII. The payment of the exercise price for each
option granted under Article II shall be (i) in cash or check payable
and acceptable to the Company, (ii) through tendering to the Company
shares of Common Stock already owned by the person (provided that the
Company may, upon confirming that the person owns the number of shares
being tendered, issue a new certificate for the number of shares being
acquired pursuant to the exercise of the option less the number of
shares being tendered upon the exercise and return to the person (or
not require surrender of) the certificate for the shares being
tendered upon the exercise), (iii) by the person delivering to the
Company a properly executed exercise notice together with irrevocable
instructions to a broker to promptly deliver to the Company cash or a
check payable and acceptable to the Company to pay the option exercise
price and any applicable withholding taxes; provided that in the event
the person chooses to pay the option exercise price as provided in
(iii) above, the person and the broker shall comply with such
procedures and enter into such agreements of indemnity and other
agreements as the Committee shall prescribe as a condition of such
payment procedure or (iv) by any combination of the above. The value
of each share of Common Stock tendered pursuant to (ii) above shall be
deemed to be equal to the per share price of the last sale of Common
Stock on the trading day prior to the date the option is exercised,
based on the composite transactions in the Common Stock as reported in
THE WALL STREET JOURNAL. The date of sale
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of the shares by the broker pursuant to a "cashless exercise"
under (iii) above shall be the date of exercise of the option. If the
Committee so requires, such person or persons shall also deliver a
written representation that all shares being purchased are being
acquired for investment and not with a view to, or for resale in
connection with, any distribution of such shares.
(d) OPTIONS NOT TRANSFERABLE. No nonqualified option granted
under Article II shall be transferable otherwise than by will or by
the laws of descent and distribution and, during the lifetime of the
Employee Optionee to whom any such option is granted, it shall be
exercisable only by the Employee Optionee. Any attempt to transfer,
assign, pledge, hypothecate or otherwise dispose of, or to subject to
execution, attachment or similar process, any nonqualified option
granted under Article II, or any right thereunder, contrary to the
provisions hereof, shall be void and ineffective, shall give no right
to the purported transferee, and shall, at the sole discretion of the
Committee, result in forfeiture of the option with respect to the
shares involved in such attempt.
(e) ADJUSTMENT OF SHARES. In the event that at any time after the
effective date of the Plan the outstanding shares of Common Stock are
changed into or exchanged for a different number or kind of shares or
other securities of the Company by reason of merger, consolidation,
recapitalization, reclassification, stock split, stock dividend,
combination of shares or the like, the Committee shall make an
appropriate and equitable adjustment in the number and kind of shares
as to which all outstanding nonqualified options granted under Article
II, or portions thereof then unexercised, shall be exercisable, and
with any necessary corresponding adjustment in exercise price per
share, to the end that after such event the shares subject to Article
II of the Plan and each Employee Optionee's proportionate interest
shall be maintained as before the occurrence of such event. Any such
adjustment made by the Committee shall be final and binding upon all
Employee Optionees, the Company, and all other interested persons.
(f) LISTING AND REGISTRATION OF SHARES. Each nonqualified option
granted under Article II shall be subject to the requirement that if
at any time the Committee determines, in its discretion, that the
listing, registration, or qualification of the shares subject to such
option under any securities exchange or under any state or federal
law, or the consent or approval of any governmental regulatory body,
is necessary or desirable as a condition of, or in connection with,
the issue or purchase of shares thereunder, such option may not be
exercised in whole or in part unless such listing, registration,
qualification, consent or approval shall have been effected or
obtained and the same shall have been free of any conditions not
acceptable to the Committee.
4. AMENDMENT. The Committee may, with the consent of the person or
persons entitled to exercise any outstanding nonqualified option granted under
Article II, amend such nonqualified option; PROVIDED, HOWEVER, that any such
amendment increasing the number of shares of Common Stock subject to such option
(except as provided in Article II, Paragraph 3(e)) or
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reducing the exercise price per share of such option (except as provided in
Article II, Paragraph 3(e)) shall in each case be subject to approval by the
stockholders of the Company. The Committee may at any time or from time to time,
in its discretion, in the case of any nonqualified option previously granted
under Article II which is not then immediately exercisable in full, accelerate
the time or times at which such option may be exercised to any earlier time or
times. The Committee, in its absolute discretion, may grant to holders of
outstanding nonqualified options granted under Article II, in exchange for the
surrender and cancellation of such options, new options having exercise prices
lower (or higher) than the exercise price provided in the options so surrendered
and canceled and containing such other terms and conditions as the Committee may
deem appropriate.
5. ACCELERATION UPON A CHANGE OF CONTROL. Notwithstanding any
provision in Article II or in any document or instrument evidencing a
nonqualified option granted under Article II, upon the occurrence of a Change of
Control each nonqualified option previously granted under Article II which is
not then immediately exercisable in full shall be immediately exercisable in
full.
6. OTHER PROVISIONS.
(a) The person or persons entitled to exercise, or who have exercised,
a nonqualified option granted under Article II shall not be entitled to any
rights as a stockholder of the Company with respect to any shares subject
to such option until he shall have become the holder of record of such
shares.
(b) No nonqualified option granted under Article II shall be construed
as limiting any right which the Company or any subsidiary or affiliated
entity of the Company may have to terminate at any time, with or without
cause, the employment of any person to whom such option has been granted.
(c) Notwithstanding any provision of the Plan or the terms of any
nonqualified option granted under Article II, the Company shall not be
required to issue any shares hereunder if such issuance would, in the
judgment of the Committee, constitute a violation of any state or federal
law or of the rules or regulations of any governmental regulatory body.
ARTICLE III
INCENTIVE STOCK OPTIONS
1. ELIGIBLE EMPLOYEES. Key employees and officers (whether or not they
are directors) of the Company or its Parent Corporation or any Subsidiary
Corporation of the Company shall be eligible to receive incentive stock options
under this Article III; provided, however, no such person may receive more than
250,000 incentive stock options and/or nonqualified options hereunder during any
calendar year. As used in Article III, the terms "PARENT CORPORATION" and
"SUBSIDIARY CORPORATION" shall have the meanings ascribed to them in Section 424
of the Code.
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2. CALCULATION OF EXERCISE PRICE. The exercise price to be paid for
each share of Common Stock deliverable upon exercise of each incentive stock
option granted under Article III shall be equal to the fair market value per
share of Common Stock at the time of grant as determined by the Committee, based
on the composite transactions in the Common Stock as reported by THE WALL STREET
JOURNAL, and shall not be less than the per share price of the last sale of
Common Stock on the trading day prior to the grant of such option; PROVIDED,
HOWEVER, than in the case of an Employee Optionee who, at the time such option
is granted, owns (within the meaning of Section 424(d) of the Code) more than
10% of the total combined voting power of all classes of stock of the Company or
of its Parent Corporation or any Subsidiary Corporation, then the exercise price
per share shall be at least 110% of the fair market value per share of Common
Stock at the time of grant. The exercise price for each incentive stock option
shall be subject to adjustment as provided in Article III, Paragraph 3(e).
3. TERMS AND CONDITIONS OF OPTIONS. Incentive stock options granted
under Article III shall be in such form as the Committee may from time to time
approve. Options granted under Article III shall be subject to the following
terms and conditions and may contain such additional terms and conditions, not
inconsistent with Article III, as the Committee shall deem desirable:
(a) OPTION PERIOD AND CONDITIONS AND LIMITATIONS ON EXERCISE. Subject
to Article III, Paragraphs 4 and 5, no incentive stock option granted under
Article III shall be exercisable with respect to any of the shares subject
to such option earlier than the date which is six months from the date of
grant nor later than the date which is ten years after the date of grant;
PROVIDED, HOWEVER, that in the case of an Employee Optionee who, at the
time such option is granted, owns (within the meaning of Section 424(d) of
the Code) more than 10% of the total combined voting power of all classes
of stock of the Company or of its Parent Corporation or any Subsidiary
Corporation, then such option shall not be exercisable with respect to any
of the shares subject to such option later than the date which is five
years after the date of grant. The date on which an incentive stock option
ultimately becomes unexercisable under the previous sentence is hereinafter
referred to as the "ISO EXPIRATION DATE." To the extent not prohibited by
other provisions of the Plan, each incentive stock option granted under
Article III shall be exercisable at such time or times as the Committee in
its discretion may determine at or prior to the time such option is
granted; PROVIDED, HOWEVER, that unless the Committee determines otherwise,
each incentive stock option granted under Article III shall be exercisable
from time to time, in whole or in part, at any time after six months from
the date of grant and prior to the ISO Expiration Date.
(b) TERMINATION OF EMPLOYMENT AND DEATH. For purposes of Article III
and each incentive stock option granted under Article III, an Employee
Optionee's employment shall be deemed to have terminated at the close of
business on the day preceding the first date on which he is no longer for
any reason whatsoever (including his death) employed by the Company or a
subsidiary or affiliated entity of the Company. Except as provided below,
if an Employee Optionee's employment is terminated by any reason whatsoever
(including his
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death), each incentive stock option granted to him and all of his
rights thereunder shall wholly and completely terminate:
(i) At the time the Employee Optionee's employment is terminated
if termination occurs within the six-month period following the date
of grant; or
(ii) At the time the Employee Optionee's employment is terminated
if his employment is terminated due to Cause; or
(iii) At the expiration of a period of one year after the
Employee Optionee's death (but in no event later than the ISO
Expiration Date) if the Employee Optionee's employment is terminated
after the six-month period following the date of grant by reason of
his death. To the extent exercisable, an incentive stock option
granted under Article III of the Plan may be exercised by the Employee
Optionee's estate or by the person or persons who acquire the right to
exercise his option by bequest or inheritance with respect to any or
all of the shares remaining subject to his option at the time of his
death; or
(iv) Unless it is otherwise provided in the option agreement, at
the expiration of a period of three years after the Employee
Optionee's employment is terminated if the Employee Optionee's
employment is terminated after the six-month period following the date
of grant because of retirement or disability (but in no event later
than the ISO Expiration Date); or
(v) Unless it is otherwise provided in the option agreement (but
in no event longer than one year after the Employee Optionee's
employment is terminated), at the expiration of a period of three
months after the Employee Optionee's employment is terminated (but in
no event later than the ISO Expiration Date) if the Employee
Optionee's employment is terminated after the six-month period
following the date of grant for any other reason than his death,
retirement, disability or Cause; or
(vi) Notwithstanding the above, with respect to all options
outstanding at the date of a Change of Control, if the Employee
Optionee's employment is terminated within the one-year period
following such Change of Control other than for Cause, at the
expiration of one year following the Employee Optionee's date of
termination, unless subparagraph (iii), (iv), (v) or (vii) provides a
longer period for the exercise of such options (but in no event later
than the ISO Expiration Date); or
(vii) Notwithstanding the foregoing, the Committee, in its
discretion, may extend the period for exercise of any option upon an
Employee Optionee's termination, but in no event later than the ISO
Expiration Date.
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In the event and to the extent that an incentive stock option granted
under Article III is not exercised (A) within three months after the
Employee Optionee's employment is terminated because of retirement or a
disability not within the meaning of Section 22(e)(3) of the Code or (B)
within one year after the Employee Optionee's employment is terminated
because of disability within the meaning of Section 22(e)(3) of the Code,
such option shall be taxed as a nonqualified option and shall be subject to
the manner of exercise provisions described in Article II, Paragraph 3(c).
Further, in the event that an Employee Optionee's employment is not
terminated in accordance with the first sentence of Article III, Paragraph
3(b), but such Employee Optionee ceases to be employed by the Company, its
Parent Corporation or any Subsidiary Corporation, then, to the extent an
incentive stock option granted under Article III is not exercised within
three months after the date of such cessation, such option shall be taxed
as a nonqualified option and shall be subject to the manner of exercise
provisions described in Article II, Paragraph 3(c).
(c) MANNER OF EXERCISE. In order to exercise an incentive stock option
granted under Article III, the person or persons entitled to exercise it
shall deliver to the Company payment in full for the shares being
purchased. The payment of the exercise price for each option granted under
Article III shall be in (i) cash or check payable and acceptable to the
Company, (ii) through tendering to the Company shares of Common Stock
already owned by the person (provided that the Company may, upon confirming
that the person owns the number of shares being tendered, issue a new
certificate for the number of shares being acquired pursuant to the
exercise of the option less the number of shares being tendered upon the
exercise and return to the person (or not require surrender of) the
certificate for the shares being tendered upon the exercise), (iii) by the
person delivering to the Company a properly executed exercise notice
together with irrevocable instructions to a broker to promptly deliver to
the Company cash or a check payable and acceptable to the Company to pay
the option exercise price; provided that in the event the person chooses to
pay the option exercise price as provided in (iii) above, the person and
the broker shall comply with such procedures and enter into such agreements
of indemnity and other agreements as the Committee shall prescribe as a
condition of such payment procedure or (iv) by any combination of the
above. The value of each share of Common Stock tendered pursuant to (ii)
above shall be deemed to be equal to the per share price of the last sale
of Common Stock on the trading day prior to the date the option is
exercised, based on the composite transactions in the Common Stock as
reported in THE WALL STREET JOURNAL. The date of sale of the shares by the
broker pursuant to a "CASHLESS EXERCISE" under (iii) above, shall be the
date of exercise of the option. If the Committee so requires, such person
or persons shall also deliver a written representation that all shares
being purchased are being acquired for investment and not with a view to,
or for resale in connection with, any distribution of such shares.
(d) OPTIONS NOT TRANSFERABLE. No incentive stock option granted under
Article III shall be transferable otherwise than by will or by the laws of
descent and distribution and, during the lifetime of the Employee Optionee
to whom any option is granted, it shall be exercisable only by such
Employee Optionee. Any attempt to transfer, assign, pledge,
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hypothecate or otherwise dispose of, or to subject to execution,
attachment or similar process, any incentive stock option granted under
Article III, or any right thereunder, contrary to the provisions hereof,
shall be void and ineffective, shall give no right to the purported
transferee, and shall, at the sole discretion of the Committee, result in
forfeiture of the option with respect to the shares involved in such
attempt.
(e) ADJUSTMENT OF SHARES. In the event that at any time after the
effective date of the Plan the outstanding shares of Common Stock are
changed into or exchanged for a different number or kind of shares or other
securities of the Company by reason of merger, consolidation,
recapitalization, reclassification, stock split, stock dividend,
combination of shares or the like, the Committee shall make an appropriate
and equitable adjustment in the number and kind of shares as to which all
outstanding incentive stock options granted under Article III, or portions
thereof then unexercised, shall be exercisable, and with any necessary
corresponding adjustment in exercise price per share, to the end that after
such event the shares subject to Article III of the Plan and each Employee
Optionee's proportionate interest shall be maintained as before the
occurrence of such event. Any such adjustment made by the Committee shall
be final and binding upon all Employee Optionees, the Company, and all
other interested persons. Any adjustment of an incentive stock option under
this paragraph shall be made in such manner as not to constitute a
"MODIFICATION" within the meaning of Section 424(h)(3) of the Code.
(f) LISTING AND REGISTRATION OF SHARES. Each incentive stock option
granted under Article III shall be subject to the requirement that if at
any time the Committee determines, in its discretion, that the listing,
registration, or qualification of the shares subject to such option upon
any securities exchange or under any state or federal law, or the consent
or approval of any governmental regulatory body, is necessary or desirable
as a condition of, or in connection with, the issue or purchase of shares
thereunder, such option may not be exercised in whole or in part unless
such listing, registration, qualification, consent or approval shall have
been effected or obtained and the same shall have been free of any
conditions not acceptable to the Committee.
(g) LIMITATION ON AMOUNT. Notwithstanding any other provision of the
Plan, to the extent that the aggregate fair market value (determined as of
the time the respective incentive stock option is granted) of the Common
Stock with respect to which incentive stock options are exercisable for the
first time by an Employee Optionee during any calendar year under all
incentive stock option plans of the Company and its Parent Corporation and
Subsidiary Corporations exceeds $100,000, such incentive stock options
shall be taxed as nonqualified options and shall be subject to the manner
of exercise provisions described in Article II, Paragraph 3(c). The
Committee shall determine, in accordance with applicable provisions of the
Code, Treasury Regulations and other administrative pronouncements, which
of an Employee Optionee's incentive stock options will be treated as
nonqualified options because of such limitation and shall notify the
Employee Optionee of such determination as soon as practicable after such
determination.
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4. AMENDMENT. The Committee may, with the consent of the person or
persons entitled to exercise any outstanding incentive stock option granted
under Article III, amend such incentive stock option; PROVIDED, HOWEVER, that
any such amendment increasing the number of shares of Common Stock subject to
such option (except as provided in Article III, Paragraph 3(e)) or reducing the
exercise price per share of such option (except as provided in Article III,
Paragraph 3(e)) shall in each case be subject to approval by the stockholders of
the Company. Subject to Article III, Paragraph 3(g), the Committee may at any
time or from time to time, in its discretion, in the case of any incentive stock
option previously granted under Article III which is not then immediately
exercisable in full, accelerate the time or times at which such option may be
exercised to any earlier time or times.
5. ACCELERATION UPON A CHANGE OF CONTROL. Notwithstanding any
provision in Article III or in any document or instrument evidencing an
incentive stock option granted under Article III, but subject to the provisions
of Article III, Paragraph 3(g), upon the occurrence of a Change of Control, each
incentive stock option previously granted under Article III which is not then
immediately exercisable in full shall be immediately exercisable in full.
6. OTHER PROVISIONS.
(a) The person or persons entitled to exercise, or who have exercised,
an incentive stock option granted under Article III shall not be entitled
to any rights as a stockholder of the Company with respect to any shares
subject to such option until he shall have become the holder of record of
such shares.
(b) No incentive stock option granted under Article III shall be
construed as limiting any right which the Company or any subsidiary or
affiliated entity of the Company may have to terminate at any time, with or
without cause, the employment of any person to whom such option has been
granted.
(c) Notwithstanding any provision of the Plan or the terms of any
incentive stock option granted under Article III, the Company shall not be
required to issue any shares hereunder if such issuance would, in the
judgment of the Committee, constitute a violation of any state or federal
law or of the rules or regulations of any governmental regulatory body.
(d) The Committee may require any person who exercises an incentive
stock option to give prompt notice to the Company of any disposition of
shares of Common Stock acquired upon exercise of an incentive stock option
within two years after the date of grant of such option or within one year
after the transfer of shares to such person.
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ARTICLE IV
NON-EMPLOYEE DIRECTOR STOCK OPTIONS
1. ELIGIBLE PERSONS. Persons who are members of the Board but are
neither employees nor officers of the Company, its subsidiaries or affiliated
entities ("NON-EMPLOYEES DIRECTORS") shall receive options under, and solely
under, this Article IV.
2. INITIAL GRANTING OF OPTIONS TO NON-EMPLOYEE DIRECTORS AFTER THE
1990 PLAN TERMINATION. Subject to stockholder approval of the Plan pursuant to
Article I, Paragraph 7, and to the limitation of the number of shares of Common
Stock set forth in Article I, Paragraph 2, each Non-Employee Director who is
first elected to the Board on or after the date director options may no longer
be granted under the terms of the Company's 1990 Stock Incentive Plan (the "1990
PLAN TERMINATION"), is hereby granted, effective on the date of his initial
election (which date shall be the date of grant for purposes hereof), a
nonqualified option to purchase 1,000 shares of Common Stock (subject to
adjustment in the same manner provided in Article IV, Paragraph 5(e) with
respect to shares of Common Stock subject to options then outstanding).
3. ANNUAL GRANTING OF OPTIONS TO NON-EMPLOYEE DIRECTORS. Subject to
stockholder approval of the Plan pursuant to Article I, Paragraph 7, and to the
limitation of the number of shares of Common Stock set forth in Article I,
Paragraph 2, a nonqualified option to purchase 1,000 (increased to 3,000 after
the 1990 Plan Termination) shares of Common Stock (subject to adjustment in the
same manner provided in Article IV, Paragraph 5(e) with respect to shares of
Common Stock subject to options then outstanding) is hereby granted, effective
the fourth Thursday of October of 1995 and each year thereafter until the
expiration of the Plan, to each person who is a Non-Employee Director on each
such date (which date shall be the date of grant for purposes hereof).
4. CALCULATION OF EXERCISE PRICE. The exercise price to be paid for
each share of Common Stock deliverable upon exercise of each option granted
under Article IV shall be equal to the lesser of (a) the per share price of the
last sale of Common Stock on the trading day prior to the date of grant relating
to such option, based on the composite transactions in the Common Stock as
reported by THE WALL STREET JOURNAL, and (b) the arithmetic average of the
closing price per share of Common Stock on all days in which such stock was
traded during the 90-day period before the date of grant, based on the composite
transactions in the Common Stock as reported by THE WALL STREET JOURNAL. The
exercise price for each option granted under Article IV shall be subject to
adjustment as provided in Article IV, Paragraph 5(e).
5. TERMS AND CONDITIONS OF OPTIONS. Options granted under Article IV
shall be subject to the following terms and conditions:
(a) OPTION PERIOD AND CONDITIONS AND LIMITATIONS ON EXERCISE. Each
option granted under Article IV shall be exercisable from time to time, in
whole or in part, at any
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time after six months from the date of grant and prior to the date
which is ten years after the date of grant (the "OPTION EXPIRATION DATE").
Notwithstanding the foregoing or any provision in any document or
instrument evidencing an option granted under Article IV, upon the
occurrence of a Change of Control, each option previously granted under
Article IV which is not then immediately exercisable in full shall be
immediately exercisable in full.
(b) TERMINATION OF DIRECTORSHIP AND DEATH. For purposes of Article IV
and each option granted under Article IV, a Non-Employee Director's
directorship shall be deemed to have terminated at the close of business on
the day preceding the first date on which he ceases to be a member of the
Board for any reason whatsoever (including his death). If a Non-Employee
Director's directorship is terminated for any reason whatsoever (including
his death), each option granted to him under Article IV and all of his
rights thereunder shall wholly and completely terminate:
(i) At the time the Non-Employee Director's directorship is
terminated if termination occurs within the six-month period following
the date of grant; or
(ii) At the time the Non-Employee Director's directorship is
terminated if his directorship is terminated as a result of his
removal from the Board for cause (other than disability or in
accordance with the provisions of the Company's Bylaws regarding
automatic termination of directors' terms of office); or
(iii) At the expiration of a period of one year after the
Non-Employee Director's death (but in no event later than the Option
Expiration Date) if the Non-Employee Director's directorship is
terminated after the six-month period following the date of grant by
reason of his death. To the extent exercisable, an option granted
under Article IV may be exercised by the Non-Employee Director's
estate or by the person or persons who acquire the right to exercise
his option by bequest or inheritance with respect to any or all of the
shares remaining subject to his option at the time of his death; or
(iv) At the expiration of a period of three years after the
Non-Employee Director's directorship is terminated if such person's
directorship is terminated after the six-month period following the
date of grant as a result of such person's resignation or removal from
the Board because of disability or in accordance with the provisions
of the Company's Bylaws regarding automatic termination of directors'
terms of office (but in no event later than the Option Expiration
Date); or
(v) At the expiration of a period of three months after the
Non-Employee Director's directorship is terminated (but in no event
later than the Option Expiration Date) if the Non-Employee Director's
directorship is terminated after the six-month period following the
date of grant for any reason other than the reasons specified in
Article IV, Paragraphs 5(b)(ii) through 5(b)(iv).
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(c) MANNER OF EXERCISE. In order to exercise a nonqualified option
granted under Article II, the person or persons entitled to exercise it
shall deliver to the Company payment in full for the shares being
purchased, together with any required withholding tax as provided in
Article VII. The payment of the exercise price for each option granted
under Article II shall be (i) in cash or check payable and acceptable to
the Company, (ii) through tendering to the Company shares of Common Stock
already owned by the person (provided that the Company may, upon confirming
that the person owns the number of shares being tendered, issues a new
certificate for the number of shares being acquired pursuant to the
exercise of the option less the number of shares being tendered upon the
exercise and return to the person (or not require surrender of) the
certificate for the shares being tendered upon the exercise), (iii) by the
person delivering to the Company a properly executed exercise notice
together with irrevocable instructions to a broker to promptly deliver to
the Company cash or a check payable and acceptable to the Company to pay
the option exercise price and any applicable withholding taxes; provided
that in the event the person chooses to pay the option exercise price as
provided in (iii) above, the person and the broker shall comply with such
procedures and enter into such agreements of indemnity and other agreements
as the Committee shall prescribe as a condition of such payment procedure
or (iv) by any combination of the above. The value of each share of Common
Stock tendered pursuant to (ii) above shall be deemed to be equal to the
per share price of the last sale of Common Stock on the trading day prior
to the date the option is exercised, based on the composite transactions in
the Common Stock as reported in THE WALL STREET JOURNAL. The date of sale
of the shares by the broker pursuant to a "cashless exercise" under (iii)
above shall be the date of exercise of the option. If the Committee so
requires, such person or persons shall also deliver a written
representation that all shares being purchased are being acquired for
investment and not with a view to, or for resale in connection with, any
distribution of such shares.
(d) OPTIONS NOT TRANSFERABLE. No option granted under Article IV shall
be transferable otherwise than by will or by the laws of descent and
distribution and, during the lifetime of the Non-Employee Director to whom
any such option is granted, it shall be exercisable only by such
Non-Employee Director. Any attempt to transfer, assign, pledge, hypothecate
or otherwise dispose of, or to subject to execution, attachment or similar
process, any option granted under Article IV, or any right thereunder,
contrary to the provisions hereof, shall be void and ineffective and shall
give no right to the purported transferee.
(e) ADJUSTMENT OF SHARES. In the event that at any time after the
effective date of the Plan the outstanding shares of Common Stock are
changed into or exchanged for a different number or kind of shares or other
securities of the Company by reason of merger, consolidation,
recapitalization, reclassification, stock split, stock dividend,
combination of shares or the like, the Committee shall make an appropriate
and equitable adjustment in the number and kind of shares as to which all
outstanding nonqualified options granted under Article II, or portions
thereof then unexercised, shall be exercisable, and with any necessary
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corresponding adjustment in exercise price per share, to the end that
after such event the shares subject to Article II of the Plan and each
Non-Employee Director's proportionate interest shall be maintained as
before the occurrence of such event. Any adjustment provided for in the
preceding provisions of this Paragraph 5(e) shall be subject to any
required stockholder action.
(f) LISTING AND REGISTRATION OF SHARES. Each option granted under
Article IV shall be subject to the requirement that if at any time the
Committee determines, in its discretion, that the listing, registration, or
qualification of the shares subject to such option under any securities
exchange or under any state or federal law, or the consent or approval of
any governmental regulatory body, is necessary or desirable as a condition
of, or in connection with, the issue or purchase of shares thereunder, such
option may not be exercised in whole or in part unless such listing,
registration, qualification, consent or approval shall have been effected
or obtained and the same shall have been free of any conditions not
acceptable to the Committee.
6. OTHER PROVISIONS.
(a) The person or persons entitled to exercise, or who have exercised,
an option granted under Article IV shall not be entitled to any rights as a
stockholder of the Company with respect to any shares subject to such
option until he shall have become the holder of record of such shares.
(b) No option granted under Article IV shall be construed as limiting
any right which either the stockholders of the Company or the Board may
have to remove at any time, with or without cause, any person to whom such
option has been granted from the Board.
(c) Notwithstanding any provision of the Plan or the terms of any
option granted under Article IV, the Company shall not be required to issue
any shares hereunder if such issuance would, in the judgment of the
Committee, constitute a violation of any state or federal law or of the
rule or regulations of any governmental regulatory body.
(d) If, as of any date that the Plan is in effect, there are not
sufficient shares of Common Stock available under the Plan to allow for the
grant to each Non-Employee Director of an option for the number of shares
provided for in Article IV, each Non-Employee Director shall receive an
option for his pro-rata share of the total number of shares of Common Stock
then available under the Plan.
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ARTICLE V
PERFORMANCE STOCK AND PERFORMANCE UNITS
1. ELIGIBLE EMPLOYEES. Key employees and officers (whether or not they
are directors) of the Company, its subsidiaries and affiliated entities shall be
eligible to receive awards of Performance Stock and/or Performance Units (as
hereinafter defined) under this Article V; PROVIDED, HOWEVER, no such individual
may receive more than 250,000 Performance Stock and/or Performance Unit awards
hereunder during any calendar year.
2. TERMS AND CONDITIONS OF PERFORMANCE AWARDS. Shares of Performance
Stock and Performance Units granted under Article V to an eligible employee (an
"EMPLOYEE GRANTEE") shall be, with respect to Performance Stock, shares of
Common Stock and, with respect to Performance Units, a unit shall represent a
phantom share of Common Stock. Both types of Awards shall be subject to the
following terms and conditions and may contain such additional terms and
conditions, not inconsistent with Article V, as the Committee shall deem
desirable:
(a) PERFORMANCE PERIOD AND VESTING. Subject to Article V, Paragraphs 3
and 4, no shares of Performance Stock or Performance Units granted under
Article V shall be subject to becoming vested; i.e., earned and
nonforfeitable, earlier than the date which is six months from the date of
grant nor later than the date which is ten years after the date of grant
(the "PERFORMANCE PERIOD"). To the extent not prohibited by other
provisions of the Plan, each share of Performance Stock and each
Performance Unit granted under Article V shall be subject to becoming
vested upon the achievement of such performance goals (Company and/or
individual) over such Performance Period as the Committee in its discretion
may determine at or prior to the grant of such performance Award. The
Committee shall also designate, at the date of grant, whether a performance
Award is intended to meet the requirements of Section 162(m) of the Code.
With respect to any Performance Stock or Performance Unit grant that is
intended to meet the requirements of Section 162(m) of the Code, the
performance goal or goals for such Award shall be with respect to one or
more of the following: earnings per share; earnings before interest, taxes,
depreciation and amortization expenses ("EBITDA"); earnings before interest
and taxes ("EBIT"); EBITDA, EBIT or earnings before taxes and unusual or
nonrecurring items as measured either against the annual budget or as a
ratio to revenue; market share; sales; costs; return on equity; operating
cash flow; return on net capital employed ("RONCE") and/or stock price
performance. The goals can be applied, where appropriate, with respect to
an individual, a business unit or the Company as a whole and need not be
based on increases or positive results, but can be based on maintaining the
status quo or limiting economic losses, for example. Which goals to use
with respect to a performance Award, the weighting of the goals if more
than one is used, and whether the goal is to be measured against a
Company-established budget or target, an index or a peer group of
companies, shall also be determined by the Committee at the time of grant
of the Award.
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(b) TERMINATION OF EMPLOYMENT AND DEATH. For purposes of Article V,
and each share of Performance Stock and each Performance Unit granted
hereunder, an Employee Grantee's employment shall be deemed to have
terminated at the close of business on the day preceding the first date on
which he is no longer for any reason whatsoever (including his death)
employed by the Company or a subsidiary or an affiliated entity of the
Company. If an Employee Grantee's employment is terminated for any reason
whatsoever (including his death), all of his rights with respect to each
share of Performance Stock and each Performance Unit granted to him under
Article V which is not then vested shall wholly and completely terminate:
(i) At the time the Employee Grantee's employment is terminated
if termination is for any reason other than retirement, disability or
death; or
(ii) If the Employee Grantee's employment is terminated due to
retirement, disability or death, at the time of such termination but
only with respect to that portion of the Award which is equal to the
fraction, the numerator of which is the number of full calendar months
remaining in the Performance Period and the denominator of which is
the total number of calendar months in the Performance Period;
PROVIDED, HOWEVER, the remaining, nonforfeited portion of the Award
shall continue to be subject to the terms and conditions of the
Performance Period and at the end of such Performance Period shall be
forfeited and/or paid as unrestricted stock to the Employee Grantee
depending on the achievement of the goals for such Performance Period;
PROVIDED FURTHER, HOWEVER, with respect to any performance Award not
intended on its date of grant to meet the requirements of Section
162(m) of the Code, the Committee may, in its sole discretion, deem
the terms and conditions have been met at the date of such termination
for all or part of such remaining, nonforfeited portion of the
Performance Stock award or Performance Unit award.
(c) PERFORMANCE AWARDS NOT TRANSFERABLE. No shares of Performance
Stock or Performance Units granted under Article V shall be transferable
during a Performance Period otherwise than by will or by the laws of
descent and distribution. Any attempt to transfer, assign, pledge,
hypothecate or otherwise dispose of, or to subject to execution, attachment
or similar process, any shares of Performance Stock or Performance Units
granted under Article V, or any right thereunder, contrary to the
provisions hereof, shall be void and ineffective, shall give no right to
the purported transferee, and shall, at the sole discretion of the
Committee, result in forfeiture of the shares of the Performance Stock or
Performance Units involved in such attempt.
3. AMENDMENT. With respect to any outstanding Performance Stock or
Performance Unit that does not qualify as performance based compensation under
Section 162(m) of the Code, the Committee may, at any time or times, amend the
performance objectives and/or the Performance Period for earning such Award.
However, with respect to any Performance Stock or
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Performance Unit Award that is intended on its date of grant to qualify as
performance based compensation under Section 162(m) of the Code, the Committee,
in its sole discretion and without the consent of the Employee-Grantee, may
amend the Award only to reflect a change in corporate capitalization, such as a
stock split or dividend, or a corporate transaction, such as a corporate merger,
a corporate consolidation, any corporate separation (including a spinoff or
other distribution of stock or property by a corporation), any corporate
reorganization (whether or not such reorganization comes within the definition
of such term in section 368), or any partial or complete corporate liquidation.
4. ACCELERATION UPON A CHANGE OF CONTROL. Notwithstanding any
provision in Article V or in any document or instrument evidencing Performance
Stock or Performance Units granted under Article V, upon the occurrence of a
Change of Control each share of Performance Stock and each Performance Unit
previously granted under Article V which is not then immediately vested in full
shall be immediately vested in full, all performance goals shall be deemed to
have been met to the fullest extent under the terms of such grant, and the
Performance Periods shall immediately end.
5. OTHER PROVISIONS.
(a) No grant of Performance Stock or Performance Units under Article V
shall be construed as limiting any right which the Company or any
subsidiary or affiliated entity of the Company may have to terminate at any
time, with or without cause, the employment of any person to whom such
Award has been granted.
(b) Each certificate representing Performance Stock awarded under the
Plan shall be registered in the name of the Employee Grantee and, during
the Performance Period, shall be left in deposit with the Company and a
stock power endorsed in blank. The grantee of Performance Stock shall have
all the rights of a stockholder with respect to such shares including the
right to vote and the right to receive dividends or other distributions
paid or made with respect to such shares. Any certificate or certificates
representing shares of Performance Stock shall bear a legend similar to the
following:
The shares represented by this certificate have been issued
pursuant to the terms of the BJ Services Company 1995
Incentive Plan and may not be sold, pledged, transferred,
assigned or otherwise encumbered in any manner except as is
set forth in the terms of such award dated ____________.
After certification by the Committee as to the satisfaction of the
terms and conditions set by the Committee with respect to an Award of (i)
Performance Stock, a certificate, without the legend set forth above, for
the number of shares of Common Stock that are no longer subject to such
restrictions, terms and conditions shall be delivered to the employee and
(ii) Performance Units, a certificate for the number of shares of Common
Stock equal
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to the number of Performance Units vested shall be delivered to the
employee. The remaining unearned shares of Performance Stock issued with
respect to such Award, if any, or unearned Performance Units, as the case
may be, shall either be forfeited back to the Company or, if appropriate
under the terms of the Award applicable to such shares or units, shall
continue to be subject to the restrictions, terms and conditions set by the
Committee with respect to such Award.
ARTICLE VI
BONUS STOCK
The Committee may, from time to time and subject to the provisions of
the Plan, grant shares of Bonus Stock to key employees and officers (whether or
not they are directors) of the Company, its subsidiaries and affiliated
entities. Bonus Stock shall be shares of Common Stock that are not subject to a
Performance Period under Article V.
ARTICLE VII
CASH AWARDS
1. ELIGIBLE EMPLOYEES. Officers (whether or not they are directors) of
the Company, its subsidiaries and affiliated entities shall be eligible to
receive Cash Awards, which may be Tandem Cash Tax Rights, Performance Cash
Awards or Bonus Cash Awards (as hereinafter defined) under this Article VII.
2. TANDEM CASH TAX RIGHTS. The Committee may grant a Tandem Cash Tax
Right with respect to a Performance Stock or Performance Unit Award that,
subject to the further provisions hereof, entitles the Employee Grantee to
receive from the Company, upon the later of the vesting of the Performance Stock
or Performance Unit Award or the date such Performance Stock or Performance Unit
Award is taxable to the Employee Grantee, an amount of cash such that the "net"
benefit received by the Employee Grantee, after paying all applicable federal,
state and other taxes (assuming for this purpose, the highest marginal income
tax rate for individuals applies) on the Performance Stock or Performance Unit
Award and this Tandem Cash Tax Right, shall be equal to the value of the
Performance Stock or Performance Unit Award payment received by the Employee
Grantee before any such taxes thereon.
3. TERMS AND CONDITIONS OF PERFORMANCE CASH AWARDS. Performance Cash
Awards granted an EMPLOYEE GRANTEE shall be subject to the following terms and
conditions and may contain such additional terms and conditions, not
inconsistent with Article VII, as the Committee shall deem desirable:
(a) PERFORMANCE PERIOD AND VESTING. Subject to Article VII, Paragraphs
4 and 5, no Performance Cash Awards granted under Article VII shall be
subject to becoming
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vested; i.e., earned and nonforfeitable, earlier than the date which
is six months from the date of grant nor later than the date which is ten
years after the date of grant (the "PERFORMANCE PERIOD"). To the extent not
prohibited by other provisions of the Plan, each Performance Cash Award
granted under Article VII shall be subject to becoming vested upon the
achievement of such performance goals (Company and/or individual) over such
Performance Period as the Committee in its discretion may determine at or
prior to the grant of such Performance Cash Award. The Committee shall also
designate, at the date of grant, whether a Performance Cash Award is
intended to meet the requirements of Section 162(m) of the Code. With
respect to any Performance Cash Award grant that is intended to meet the
requirements of Section 162(m) of the Code, the performance goal or goals
for such Award shall be with respect to one or more of the following:
earnings per share; earnings before interest, taxes, depreciation and
amortization expenses ("EBITDA"); earnings before interest and taxes
("EBIT"); EBITDA, EBIT or earnings before taxes and unusual or nonrecurring
items as measured either against the annual budget or as a ratio to
revenue; market share; sales; costs; return on equity; operating cash flow;
return on net capital employed ("RONCE") and/or stock price performance.
The goals can be applied, where appropriate, with respect to an individual,
a business unit or the Company as a whole and need not be based on
increases or positive results, but can be based on maintaining the status
quo or limiting economic losses, for example. Which goals to use with
respect to a Performance Cash Award, the weighting of the goals if more
than one is used, and whether the goal is to be measured against a
Company-established budget or target, an index or a peer group of
companies, shall also be determined by the Committee at the time of grant
of the Award.
(b) TERMINATION OF EMPLOYMENT AND DEATH. For purposes of Article VII
and each Performance Cash Award granted hereunder, an Employee Grantee's
employment shall be deemed to have terminated at the close of business on
the day preceding the first date on which he is no longer for any reason
whatsoever (including his death) employed by the Company or a subsidiary or
an affiliated entity of the Company. If an Employee Grantee's employment is
terminated for any reason whatsoever (including his death), all of his
rights with respect to each Performance Cash Award granted to him under
Article VII which is not then vested shall wholly and completely terminate:
(i) At the time the Employee Grantee's employment is terminated
if termination is for any reason other than retirement, disability or
death; or
(ii) If the Employee Grantee's employment is terminated due to
retirement, disability or death, at the time of such termination but
only with respect to that portion of the Award which is equal to the
fraction, the numerator of which is the number of full calendar months
remaining in the Performance Period and the denominator of which is
the total number of calendar months in the Performance Period;
PROVIDED, HOWEVER, the remaining, nonforfeited portion of the Award
shall continue to be subject to the terms and conditions of the
Performance Period and at the end of such Performance Period shall be
forfeited and/or paid in cash to the
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Employee Grantee depending on the achievement of the goals for
such Performance Period; PROVIDED, HOWEVER, notwithstanding
the foregoing, with respect to any Performance Cash Award not
intended on its date of grant to meet the requirements of
Section 162(m) of the Code, the Committee may, in its sole
discretion, deem the terms and conditions of an Employee
Grantee's Performance Cash Award(s) to have been met in full
or in part on the date of such Employee Grantee's termination
of employment, regardless of the reason for such termination
of employment.
(c) PERFORMANCE CASH AWARDS NOT TRANSFERABLE. No Performance Cash
Awards granted under Article VII shall be transferable during a Performance
Period otherwise than by will or by the laws of descent and distribution.
Any attempt to transfer, assign, pledge, hypothecate or otherwise dispose
of, or to subject to execution, attachment or similar process, any
Performance Cash Awards granted under Article VII, or any right thereunder,
contrary to the provisions hereof, shall be void and ineffective, shall
give no right to the purported transferee, and shall, at the sole
discretion of the Committee, result in forfeiture of the Performance Cash
Awards involved in such attempt.
(d) MAXIMUM AWARD. With respect to a Performance Cash Award that is
intended to qualify as performance based compensation under Section 162(m)
of the Code, the maximum aggregate of such awards that may be granted to
any one Employee Grantee during any calendar year shall not exceed $2
million.
4. AMENDMENT. With respect to any outstanding Performance Cash Awards
that does not qualify as performance based compensation under Section 162(m) of
the Code, the Committee may, at any time or times, amend the performance
objectives and/or the Performance Period for earning such Award. However, with
respect to any Performance Cash Award that is intended on its date of grant to
qualify as performance based compensation under Section 162(m) of the Code, the
Committee, in its sole discretion and without the consent of the
Employee-Grantee, may amend the Award only to reflect a change in corporate
capitalization, such as a stock split or dividend, or a corporate transaction,
such as a corporate merger, a corporate consolidation, any corporate separation
(including a spinoff or other distribution of stock or property by a
corporation), any corporate reorganization (whether or not such reorganization
comes within the definition of such term in section 368), or any partial or
complete corporate liquidation.
5. ACCELERATION UPON A CHANGE OF CONTROL. Notwithstanding any
provision in Article VII or in any document or instrument evidencing Performance
Cash Awards granted under Article VII, upon the occurrence of a Change of
Control each Performance Cash Award previously granted under Article VII which
is not then immediately vested in full shall be immediately vested and payable
in cash in full, all performance goals shall be deemed to have been met to the
fullest extent under the terms of such grant, and the Performance Periods shall
immediately end.
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6. OTHER PROVISIONS.
(a) No grant of a Performance Cash Award under Article VIII shall be
construed as limiting any right which the Company or any subsidiary or
affiliated entity of the Company may have to terminate at any time, with or
without cause, the employment of any person to whom such Award has been
granted.
(b) After certification by the Committee as to the satisfaction of the
terms and conditions set by the Committee with respect to a Performance
Cash Award, the portion of such Award that is no longer subject to such
restrictions, terms and conditions shall be paid (in cash) to the Employee
Grantee. The remaining unearned portion of such Performance Award, if any,
shall either be forfeited or, if appropriate under the terms applicable to
such Award, shall continue to be subject to the restrictions, terms and
conditions set by the Committee with respect to such Award.
7. BONUS CASH AWARDS. The Committee may, from time to time and subject
to the provisions of the Plan, grant Bonus Cash Awards to key employees and
officers (whether or not they are directors) of the Company, its subsidiaries
and affiliated entities. Bonus Cash Awards shall be cash payments that are not
subject to a Performance Period under Article VII.
ARTICLE VIII
WITHHOLDING FOR TAXES
Notwithstanding anything in the Plan to the contrary, any issuance of
Common Stock pursuant to the exercise of an option or payment of any other Award
under the Plan shall not be made until appropriate arrangements satisfactory to
the Company have been made for the payment of any tax amounts (federal, state,
local or other) that may be required to be withheld or paid by the Company with
respect thereto. Such arrangements may, at the discretion of the Committee,
include allowing the optionee or grantee to tender to the Company shares of
Common Stock owned by the optionee or grantee, or to request the Company to
withhold a portion of the shares of Common Stock being acquired pursuant to the
Award, whether through the exercise of an option or as a distribution of earned
Performance Stock, payment of earned Performance Units or as Bonus Stock, which
have a fair market value per share as of the date of such withholding that is
not greater than the sum of all tax amounts to be withheld with respect thereto,
together with payment of any remaining portion of such tax amounts in cash or by
check payable and acceptable to the Company; provided, however, with respect to
any Employee Optionee or Employee Grantee who is subject to Rule 16b-3 at the
time withholding is required with respect to an Award payable in Common Stock,
the Company shall automatically withhold from such Award, to the extent such
withholding is not satisfied by a Tandem Cash Tax Right, a number of shares of
Common Stock having an aggregate fair market value per share equal to the amount
of tax required to be withheld.
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ARTICLE IX
PARACHUTE TAX GROSS-UP
To the extent that the grant, payment, or acceleration of vesting or
payment, whether in cash or stock, of any Award made to a participant under the
Plan (a "BENEFIT") is subject to a golden parachute excise tax under Section
4999(a) of the Code (a "PARACHUTE TAX"), the Company shall pay such person an
amount of cash (the "GROSS-UP AMOUNT") such that the 'net' Benefit received by
the person under this Plan, after paying all applicable Parachute Taxes
(including those on the Gross-up Amount) and any federal or state income taxes
on the Gross-up Amount, shall be equal to the Benefit that such person would
have received if such Parachute Tax had not been applicable.
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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 the date this amendment is approved by
the stockholders of the Company, 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.
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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
November 26, 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 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 ad 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. The optionee or grantee may tender to the Company shares of
Common Stock owned by the optionee or grantee, or direct the Company to
withhold a portion of the shares of Common Stock being acquired
pursuant to the Award, whether through the exercise of an option or as
a distribution of earned Performance Stock, payment of earned
Performance Units or as Bonus Stock, which have a fair market value per
share as of the date of such withholding that is not greater than the
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sum of all tax amounts to be withheld with respect thereto, together
with payment of any remaining portion of such tax amounts in cash or by
check payable and acceptable to the Company; provided, that with
respect to incentive stock options outstanding as of November 26, 1996,
(i) the foregoing right may be exercised only at the discretion of the
Committee, or (ii) with respect to incentive stock options 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.
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APPENDIX F
BJ SERVICES COMPANY
1997 INCENTIVE PLAN
ARTICLE I
INTRODUCTION
1. PURPOSE. The BJ SERVICES COMPANY 1997 INCENTIVE PLAN (the "PLAN") is
intended to promote the interests of BJ SERVICES COMPANY (the "COMPANY") and its
stockholders by encouraging employees of the Company, its subsidiaries and
affiliated entities and non-employee directors of the Company to acquire or
increase their equity interest in the Company and, with respect to employees, to
be able to relate cash bonuses to Company performance goals, thereby giving them
an added incentive to work toward the continued growth and success of the
Company. The Board of Directors of the Company (the "BOARD") also contemplates
that through the Plan, the Company, its subsidiaries and affiliated entities
will be better able to compete for the services of personnel needed for the
continued growth and success of the Company. However, nothing in this Plan shall
operate or be construed to prevent the Company from granting bonuses and other
stock awards outside of this Plan.
2. SHARES SUBJECT TO THE PLAN. The aggregate number of shares of Common
Stock, $.10 par value per share, of the Company ("COMMON STOCK") that may be
issued under the Plan shall not exceed 1,500,000 shares; provided, however, that
in the event that at any time after the effective date of the Plan the
outstanding shares of Common Stock are changed into or exchanged for a different
number or kind of shares or other securities of the Company by reason of merger,
consolidation, recapitalization, reclassification, stock split, stock dividend,
combination of shares or the like, the aggregate number and class of securities
available under the Plan shall be ratably adjusted by the Committee (as
hereinafter defined), whose determination shall be final and binding upon the
Company and all other interested persons. In the event the number of shares to
be delivered upon the exercise in full of any option granted under the Plan is
reduced for any reason whatsoever or in the event any option granted under the
Plan can no longer under any circumstances be exercised, the number of shares no
longer subject to such option shall thereupon be released from such option and
shall thereafter be available under the Plan. If shares of Performance Stock (as
hereinafter defined) awarded under the Plan are forfeited to the Company, such
shares shall thereafter be available for new grants and awards under the Plan.
Shares issued pursuant to the Plan shall be fully paid and nonassessable.
3. ADMINISTRATION OF THE PLAN. The Plan shall be administered by a
committee (the "COMMITTEE") of two or more directors of the Company appointed
by the Board. Subject to the provisions of the Plan, the Committee shall
interpret the Plan and all awards under the Plan, shall make such rules as it
deems necessary for the proper administration of the Plan, shall make all
other determinations necessary or advisable for the administration of the
Plan and shall correct any defect
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or supply any omission or reconcile any inconsistency in the Plan or in any
award under the Plan in the manner and to the extent that the Committee deems
desirable to effectuate the Plan. Any action taken or determination made by
the Committee pursuant to this and the other paragraphs of the Plan shall be
binding on all parties. The act or determination of a majority of the
Committee shall be deemed to be the act or determination of the Committee.
No person shall be eligible to serve on the Committee unless he is 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 and also an "outside director" within the meaning
of Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"CODE"). Notwithstanding any provision in the Plan to the contrary, other
than options granted to Non-Employee Directors pursuant to Article IV, no
options, Performance Stock, Performance Units, Bonus Stock, Cash Awards, or
Other Stock-Based Awards (collectively, "AWARDS") may be granted under the
Plan to any member of the Committee during the term of his membership on the
Committee. Subject to the following, the Committee, in its sole discretion,
may delegate any or all of its powers and duties under the Plan, including
the power to grant Awards under the Plan, to the President of the Company,
subject to such limitations on such delegated powers and duties as the
Committee may impose. Upon any such delegation all references in the Plan to
the "Committee" shall be deemed to include the President; provided, however,
that such delegation shall not limit the President's right to receive Awards
under the Plan. Notwithstanding the foregoing, the President may not grant
Awards to, or take any action with respect to any Award previously granted
to, a person who is an officer or a director of the Company or otherwise
subject to Section 16(b) of the Act.
4. AMENDMENT AND DISCONTINUANCE OF THE PLAN. The Board may amend,
suspend or terminate the Plan; provided, however, that each such amendment of
the Plan (a) extending the period within which Awards may be made under the
Plan, (b) increasing the number of shares of Common Stock to be awarded under
the Plan, except as provided in Article I, Paragraph 2, (c) reducing the
option exercise price per share provided in the Plan, (d) modifying the
provisions of Article IV, (e) changing the class of persons to whom Awards
may be made under the Plan, or (f) granting options to Non-Employee Directors
other than pursuant to Article IV, shall, in each case, be subject to
approval by the stockholders of the Company; provided, further, however, that
no amendment, suspension or termination of the Plan may cause the Plan to
fail to meet the requirements of Rule 16b-3 or may, without the consent of
the holder of an Award, terminate such Award or adversely affect such
person's rights in any material respect.
5. GRANTING OF DISCRETIONARY AWARDS. The Committee shall have the
authority to grant, prior to the expiration date of the Plan, to such
employees and officers as may be selected by it (with respect to options,
"EMPLOYEE OPTIONEES" and, with respect to Performance Stock, Performance
Units, Bonus Stock and Cash Awards, "EMPLOYEE GRANTEES"), options to purchase
shares of Common Stock and awards of Performance Stock, Performance Units,
Bonus Stock and/or, Cash Awards on the terms and conditions hereinafter set
forth. Stock issued with respect to an Award under the Plan may be authorized
but unissued, or reacquired shares of Common Stock. The
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Committee shall also have the authority to determine whether options granted
to Employee Optionees are granted pursuant to Article II or Article III, as
hereinafter set forth; provided, however, only employees of the Company, its
Parent Corporation or a Subsidiary Corporation (as such terms are defined in
Section 424 of the Code) may be granted options pursuant to Article III.
Options granted to Employee Optionees under Article III shall be "incentive
stock options" as defined in Section 422 of the Code, and are hereinafter
referred to as "incentive stock options." All other options granted to
Employee Optionees under the Plan shall be granted pursuant to Article II and
shall be options which do not constitute incentive stock options
("NONQUALIFIED OPTIONS"). In selecting Employee Optionees and Employee
Grantees, and in determining the number of shares to be covered by each Award
granted to such individual, the Committee may consider such factors which it
may consider relevant.
6. GRANTING OF OPTIONS TO NON-EMPLOYEE DIRECTORS. All options
granted to Non-Employee Directors shall be options to purchase, on the terms
and conditions hereinafter set forth in Article IV, authorized but unissued,
or reacquired shares of Common Stock and shall be nonqualified options.
Non-Employee Directors shall not be eligible to receive any other Award.
7. TERM OF PLAN. This Plan shall be effective upon the date of its
adoption by the Board, provided the Plan is approved by the stockholders of
the Company within twelve months after the date of such adoption. In the
event that the Plan is not approved by the stockholders of the Company within
twelve months after the date of its adoption by the Board, the Plan shall be
null and void. No Award shall be exercisable or payable under the Plan prior
to its approval by the stockholders and, if the Plan is not approved by the
stockholders of the Company within such twelve-month period, all Awards
granted under the Plan shall be automatically canceled. Except with respect
to Awards then outstanding, if not sooner terminated under the provisions of
Article I, Paragraph 4, the Plan shall terminate upon and no further Awards
shall be made after the tenth anniversary of the date the Plan is adopted by
the Board.
8. MISCELLANEOUS. All references in the Plan to "Articles,"
"Paragraphs" and other subdivisions refer to the corresponding Articles,
Paragraphs, and subdivisions of the Plan.
9. RULE 16b-3 COMPLIANCE. The Company intends:
(a) that the Plan meet the requirements of Rule 16b-3;
(b) that transactions of the type specified in Rule 16b-3 by
Non-Employee Directors pursuant to Article IV of the Plan will be exempt from
the operation of Section 16(b) of the Act; and
(c) that transactions of the type specified in Rule 16b-3 by
officers of the Company (whether or not they are directors) pursuant to the
Plan will be exempt from the operation of Section 16(b) of the Act.
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<PAGE>
In all cases, the terms, provisions, conditions and limitations of the Plan
shall be construed and interpreted consistent with the Company's intent as
stated in this Article 1, Paragraph 9.
10. DEFINITION OF THE TERM "CHANGE OF CONTROL". As used in the Plan,
a "CHANGE OF CONTROL" shall be deemed to have occurred upon, and shall mean
(a) the acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Act) (a "PERSON") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Act) of 25% or more
of either (i) the then outstanding shares of Common Stock of the Company (the
"OUTSTANDING COMPANY COMMON STOCK") or (ii) the combined voting power of the
then outstanding voting securities of the Company entitled to vote generally
in the election of directors (the "OUTSTANDING COMPANY VOTING SECURITIES");
provided, however, that the following acquisitions shall not constitute a
Change of Control: (A) any acquisition directly from the Company (excluding
an acquisition by virtue of the exercise of a conversion privilege), (B) any
acquisition by the Company, (C) any acquisition by any employee benefit
plan(s) (or related trust(s)) sponsored or maintained by the Company or any
corporation controlled by the Company, or (D) any acquisition by any
corporation pursuant to a reorganization, merger or consolidation, if,
immediately following such reorganization, merger or consolidation, the
conditions described in clause (i), (ii) and (iii) of clause (c) of this
Paragraph 10 are satisfied; (b) the approval by the Company's stockholders of
the sale or disposition of all or substantially all of the Company's assets
or the dissolution or liquidation of the Company; or (c) the approval by the
stockholders of the Company of a reorganization, merger or consolidation, in
each case, unless immediately following such reorganization, merger or
consolidation (i) more than 60% of, respectively, the then outstanding shares
of common stock of the corporation resulting from such reorganization, merger
or consolidation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly by all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such reorganization, merger or
consolidation in substantially the same proportions as their ownership,
immediately prior to such reorganization, merger or consolidation, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities,
as the case may be, (ii) no Person (excluding the Company, any employee
benefit plan(s) (or related trust(s)) of the Company and/or its subsidiaries
or such corporation resulting from such reorganization, merger or
consolidation and any Person beneficially owning, immediately prior to such
reorganization, merger or consolidation, directly or indirectly, 25% or more
of the Outstanding Company Common Stock or Outstanding Company Voting
Securities, as the case may be) beneficially owns, directly or indirectly,
25% or more of, respectively, the then outstanding shares of common stock of
the corporation resulting from such reorganization, merger or consolidation
or the combined voting power of the then outstanding voting securities of
such corporation entitled to vote generally in the election of directors and
(iii) at least a majority of the members of the board of directors of the
corporation resulting from such reorganization, merger or consolidation were
members of the Incumbent Board (as defined below) at the time of the
execution of the initial agreement providing for such reorganization, merger
or consolidation. The "Incumbent Board" shall mean individuals who, as of the
date the Plan is adopted by the Board, constitute the Board; provided,
however, that any individual becoming a
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director subsequent to such date whose election, or nomination for election
by the Company's stockholders, was approved by a vote of at least a majority
of the directors then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board, but excluding,
for this purpose, any such individual whose initial assumption of office
occurs as a result of either (1) an actual or threatened election contest (as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Act), or an actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board or (2) a plan or agreement to replace
a majority of the members of the Board then comprising the Incumbent Board.
ARTICLE II
NONQUALIFIED STOCK OPTIONS
1. ELIGIBLE INDIVIDUALS. Employees and officers (whether or not they
are directors) of the Company, its subsidiaries and affiliated entities shall
be eligible to receive nonqualified options under this Article II; provided,
however, no such person may receive more than 250,000 nonqualified options
and/or incentive stock options hereunder during any calendar year.
2. CALCULATION OF EXERCISE PRICE. The exercise price to be paid for
each share of Common Stock deliverable upon exercise of each nonqualified
option granted under Article II shall be equal to the fair market value per
share of Common Stock at the time of grant as determined by the Committee,
based on the composite transactions in the Common Stock as reported by THE
WALL STREET JOURNAL, and shall not be less than the per share price of the
last sale of Common Stock on the trading day prior to the grant of such
option. The exercise price for each nonqualified option granted under Article
II shall be subject to adjustment as provided in Article II, Paragraph 3(e).
3. TERMS AND CONDITIONS OF OPTIONS. Nonqualified options granted
under Article II shall be in such form as the Committee may from time to time
approve. Options granted under Article II shall be subject to the following
terms and conditions and may contain such additional terms and conditions,
not inconsistent with Article II, as the Committee shall deem desirable:
(a) OPTION PERIOD AND CONDITIONS AND LIMITATIONS ON EXERCISE.
No nonqualified option shall be exercisable later than the date which
is ten years after the date of grant. To the extent not prohibited by
other provisions of the Plan, each nonqualified option granted under
Article II shall be exercisable no later than the date which is ten
years after the date of grant (the "Nonqualified Option Expiration
Date") and at such time or times as the Committee, in its discretion,
may establish in the option agreement.
(b) TERMINATION OF EMPLOYMENT AND DEATH. For purposes of
Article II and each nonqualified option granted under Article II, an
Employee Optionee's employment shall be deemed to have terminated at
the close of business on the day preceding the first date on which he
is no longer for any reason whatsoever (including his death) employed
by the
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Company or a subsidiary or affiliated entity of the Company. Unless
otherwise provided in the Option Agreement, upon an Employee Optionee's
termination of employment for any reason whatsoever (including his
death), each nonqualified option granted to him under Article II and
all of his rights thereunder shall wholly and completely terminate:
(i) At the time the Employee Optionee's employment is
terminated if his employment is terminated because he is
discharged for (A) fraud, theft or embezzlement committed
against the Company or a subsidiary, affiliated entity or
customer of the Company , (B) Employee's willful misconduct in
performance of the duties of Employee's employment or (C)
Employee's final conviction of a felony (collectively, Cause);
or
(ii) At the expiration of a period of one year after
the Employee Optionee's death (but in no event later than the
Nonqualified Option Expiration Date) if the Employee
Optionee's employment is terminated after the six-month period
following the date of grant by reason of his death. To the
extent exercisable, a nonqualified option granted under
Article II may be exercised by the Employee Optionee's estate
or by the person or persons who acquire the right to exercise
his option by bequest or inheritance with respect to any or
all of the shares remaining subject to his option at the time
of his death; or
(iii) At the expiration of a period of three years
after the Employee Optionee's employment is terminated if the
Employee Optionee's employment is terminated after the
six-month period following the date of grant because of
retirement or disability (but in no event later than the
Nonqualified Option Expiration Date); or
(iv) At the expiration of a period of three months
after the Employee Optionee's employment is terminated (but in
no event later than the Nonqualified Option Expiration Date)
if the Employee Optionee's employment is terminated after the
six-month period following the date of grant for any reason
other than his death, retirement, disability or Cause (but in
no event longer than one year after the Employee Optionee's
employment is terminated); or
(v) Notwithstanding the above, with respect to all
options outstanding at the date of a Change of Control, if the
Employee Optionee's employment is terminated within the
one-year period following such Change of Control other than
for Cause, at the expiration of one year following the
Employee Optionee's date of termination, unless subparagraph
(ii), (iii), (iv) or (vi) provides a longer period for the
exercise of such options (but in no event later than the
Nonqualified Option Expiration Date); or
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(vi) Notwithstanding the foregoing, the Committee, in
its discretion, may extend the period for exercise of any
option upon an Employee Optionee's termination, but in no
event later than the Nonqualified Option Expiration Date.
As used in this Plan the term "retirement" means the
termination of an employee's employment with the Company, its
subsidiaries and affiliated entities (i) on or after reaching
age 65 or (ii) on or after reaching age 55 with the consent of
the Board, for reasons other than death, disability or Cause,
and the term "disability' shall mean an employee is suffering
from a mental or physical disability, which, in the opinion of
the Board, prevents the employee from performing his regular
duties and is expected to be of long continued duration or to
result in death.
(c) MANNER OF EXERCISE. In order to exercise a nonqualified
option granted under Article II, the person or persons entitled to
exercise it shall deliver to the Company payment in full for the shares
being purchased, together with any required withholding tax as provided
in Article XI. The payment of the exercise price for each option
granted under Article II shall be (i) in cash or check payable and
acceptable to the Company, (ii) through tendering to the Company shares
of Common Stock already owned by the person (provided that if such
shares were acquired pursuant to the prior exercise of a Company
granted option, such shares must have been owned for at least six
months, and provided further, that the Company may, upon confirming
that the person owns the number of shares being tendered, issue a new
certificate for the number of shares being acquired pursuant to the
exercise of the option less the number of shares being tendered upon
the exercise and return to the person (or not require surrender of) the
certificate for the shares being tendered upon the exercise), (iii) by
the person delivering to the Company a properly executed exercise
notice together with irrevocable instructions to a broker to promptly
deliver to the Company cash or a check payable and acceptable to the
Company to pay the option exercise price and any applicable withholding
taxes; provided that in the event the person chooses to pay the option
exercise price as provided in (iii) above, the person and the broker
shall comply with such procedures and enter into such agreements of
indemnity and other agreements as the Committee shall prescribe as a
condition of such payment procedure or (iv) by any combination of the
above. The value of each share of Common Stock tendered pursuant to
(ii) above shall be deemed to be equal to the per share price of the
last sale of Common Stock on the trading day prior to the date the
option is exercised, based on the composite transactions in the Common
Stock as reported in THE WALL STREET JOURNAL. The date of sale of the
shares by the broker pursuant to a "cashless exercise" under (iii)
above shall be the date of exercise of the option. If the Committee so
requires, such person or persons shall also deliver a written
representation that all shares being purchased are being acquired for
investment and not with a view to or for resale in connection with, any
distribution of such shares.
(d) OPTIONS NOT TRANSFERABLE. Except as provided in Article
IX, no nonqualified option granted under Article II shall
be transferable otherwise than by will or by the laws of descent and
distribution and, during the lifetime of the Employee Optionee to
whom any such option is granted, it shall be exercisable only by the
Employee Optionee. Any attempt
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to transfer, assign, pledge, hypothecate or otherwise dispose of, or
to subject to execution, attachment or similar process, any
nonqualified option granted under Article II, or any right
thereunder, contrary to the provisions hereof, shall be void and
ineffective, shall give no right to the purported transferee and
shall, at the sole discretion of the Committee, result in forfeiture
of the option with respect to the shares involved in such attempt.
(e) ADJUSTMENT OF SHARES. In the event that at any time after
the effective date of the Plan the outstanding shares of Common Stock
are changed into or exchanged for, a different number or kind of shares
or other securities of the Company by reason of merger, consolidation,
recapitalization, reclassification, stock split, stock dividend,
combination of shares or the like, the Committee shall make an
appropriate and equitable adjustment in the number and kind of shares
as to which all outstanding nonqualified options granted under Article
II, or portions thereof then unexercised, shall be exercisable, and
with any necessary corresponding adjustment in exercise price per
share, to the end that after such event the shares subject to Article
II of the Plan and each Employee Optionee's proportionate interest
shall be maintained as before the occurrence of such event. Any such
adjustment made by the Committee shall be final and binding upon all
Employee Optionees, the Company, and all other interested persons.
(f) LISTING AND REGISTRATION OF SHARES. Each nonqualified
option granted under Article II shall be subject to the requirement
that if at any time the Committee determines, in its discretion, that
the listing, registration, or qualification of the shares subject to
such option under any securities exchange or under any state or federal
law, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition of, or in connection with, the
issue or purchase of shares thereunder, such option may not be
exercised in whole or in part unless such listing, registration,
qualification, consent or approval shall have been free of any
conditions not acceptable to the Committee.
4. AMENDMENT. The Committee may, with the consent of the person or
persons entitled to exercise any outstanding nonqualified option granted under
Article II, amend such nonqualified option. The Committee may at any time or
from time to time, in its discretion, in the case of any nonqualified option
previously granted under Article II which is not then immediately exercisable in
full, accelerate the time or times at which such option may be exercised to any
earlier time or times.
5. ACCELERATION UPON A CHANGE OF CONTROL. Notwithstanding any provision
in Article II or in any document or instrument evidencing a nonqualified option
granted under Article II, upon the occurrence of a Change of Control each
nonqualified option previously granted under Article II which is not then
immediately exercisable in full shall be immediately exercisable in full.
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6. OTHER PROVISIONS.
(a) The person or persons entitled to exercise, or who have
exercised, a nonqualified option granted under Article II shall not be
entitled to any rights as a stockholder of the Company with respect to
any shares subject to such option until he shall have become the holder
of record of such shares.
(b) No nonqualified option granted under Article II shall be
construed as limiting any right which the Company or any subsidiary or
affiliated entity of the Company may have to terminate at any time,
with or without Cause, the employment of any person to whom such option
has been granted.
(c) Notwithstanding any provision of the Plan or the terms of
any nonqualified option granted under Article II, the Company shall not
be required to issue any shares hereunder if such issuance would, in
the judgment of the Committee, constitute a violation of any state or
federal law or of the rules or regulations of any governmental
regulatory body.
(d) The Committee, in its discretion, may permit any Employee
Optionee to surrender unexercised any nonqualified option for the
receipt of another Award or other arrangement in order to defer the
"spread" on exercise of such option.
ARTICLE III
INCENTIVE STOCK OPTIONS
1. ELIGIBLE EMPLOYEES. Employees and officers (whether or not they are
directors) of the Company or its Parent Corporation or any Subsidiary
Corporation of the Company shall be eligible to receive incentive stock options
under this Article III; provided, however, no such person may receive more than
250,000 incentive stock options and/or nonqualified options hereunder during any
calendar year.
2. CALCULATION OF EXERCISE PRICE. The exercise price to be paid for
each share of Common Stock deliverable upon exercise of each incentive stock
option granted under Article III shall be equal to the fair market value per
share of Common Stock (the "MARKET VALUE PER SHARE") at the time of grant as
determined by the Committee, based on the composite transactions in the
Common Stock as reported by THE WALL STREET JOURNAL, and shall not be less
than the per share price of the last sale of Common Stock on the trading day
prior to the grant of such option; provided, however, than in the case of an
Employee Optionee who, at the time such option is granted, owns (within the
meaning of Section 424(d) of the Code) more than 10% of the total combined
voting power of all classes of stock of the Company or of its Parent
Corporation or any Subsidiary Corporation, then the exercise price per share
shall be at least 110% of the fair market value per share of Common Stock at
the time of grant. The exercise price for each incentive stock option shall
be subject to adjustment as provided in Article III, Paragraph 3(e).
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3. TERMS AND CONDITIONS OF OPTIONS. Incentive stock options granted
under Article III shall be in such form as the Committee may from time to
time approve. Options granted under Article III shall be subject to the
following terms and conditions and may contain such additional terms and
conditions, not inconsistent with Article III, as the Committee shall deem
desirable:
(a) OPTION PERIOD AND CONDITIONS AND LIMITATIONS ON EXERCISE.
No incentive stock option granted under Article III shall be
exercisable later than the date which is ten years after the date of
grant; provided, however, that in the case of an Employee Optionee who,
at the time such option is granted, owns (within the meaning of Section
424(d) of the Code) more than 10% of the total combined voting power of
all classes of stock of the Company or of its Parent Corporation or any
Subsidiary Corporation, then such option shall not be exercisable with
respect to any of the shares subject to such option later than the date
which is five years after the date of grant. The date on which an
incentive stock option ultimately becomes unexercisable under the
previous sentence is hereinafter referred to as the "ISO EXPIRATION
DATE." To the extent not prohibited by other provisions of the Plan,
each incentive stock option granted under Article III shall be
exercisable at such time or times as the Committee in its discretion
may determine.
(b) TERMINATION OF EMPLOYMENT AND DEATH. For purposes of
Article III and each incentive stock option granted under Article III,
an Employee Optionee's employment shall be deemed to have terminated at
the close of business on the day preceding the first date on which he
is no longer for any reason whatsoever (including his death) employed
by the Company or a subsidiary or affiliated entity of the Company.
Unless otherwise provided in the Option Agreement, upon an Employee
Optionee's termination of employment by any reason whatsoever
(including his death), each incentive stock option granted to him and
all of his rights thereunder shall wholly and completely terminate:
(i) At the time the Employee Optionee's employment is
terminated if his employment is terminated due to Cause; or
(ii) At the expiration of a period of one year after
the Employee Optionee's death (but in no event later than the
ISO Expiration Date) if the Employee Optionee's employment is
terminated after the six-month period following the date of
grant by reason of his death. To the extent exercisable, an
incentive stock option granted under Article III of the Plan
may be exercised by the Employee Optionee's estate or by the
person or persons who acquire the right to exercise his option
by bequest or inheritance with respect to any or all of the
shares remaining subject to his option at the time of his
death; or
(iii) At the expiration of a period of three years
after the Employee Optionee's employment is terminated if
the Employee Optionee's employment is
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terminated after the six-month period following the date of
grant because of retirement or disability (but in no event
later than the ISO Expiration Date); or
(iv) At the expiration of a period of three months
after the Employee Optionee's employment is terminated (but in
no event later than the ISO Expiration Date) if the Employee
Optionee's employment is terminated after the six-month period
following the date of grant for any other reason than his
death, retirement, disability or Cause (but in no event longer
than one year after the Employee Optionee's employment is
terminated); or
(v) Notwithstanding the above, with respect to all
options outstanding at the date of a Change of Control, if the
Employee Optionee's employment is terminated within the
one-year period following such Change of Control other than
for Cause, at the expiration of one year following the
Employee Optionee's date of termination, unless subparagraph
(ii), (iii), (iv) or (vi) provides a longer period for the
exercise of such options (but in no event later than the ISO
Expiration Date); or
(vi) Notwithstanding the foregoing, the Committee, in
its discretion may extend the period for exercise of any
option upon an Employee Optionee's termination, but in no
event later than the ISO Expiration Date.
In the event and to the extent that an incentive stock option
granted under Article III is not exercised (A) within three months
after the Employee Optionee's termination of employment or (B) within
one year after the Employee Optionee's employment is terminated because
of disability within the meaning of Section 22(e)(3) of the Code,
whichever is applicable, such option shall be taxed as a nonqualified
option and shall be subject to the manner of exercise provisions
described in Article II, Paragraph 3(c). Further, in the event that an
Employee Optionee ceases to be employed by the Company, its Parent
Corporation or any Subsidiary Corporation, but continues to be employed
by an affiliate, then, to the extent an incentive stock option granted
under Article III is not exercised within three months after the date
of such cessation of employment with the Company, its Parent
Corporation or any Subsidiary Corporation, such option shall be taxed
as a nonqualified option and shall be subject to the manner of exercise
provisions described in Article II, Paragraph 3(c).
(c) MANNER OF EXERCISE. In order to exercise an incentive
stock option granted under Article III, the person or persons
entitled to exercise it shall deliver to the Company payment in full
for the shares being purchased. The payment of the exercise price
for each option granted under Article III shall be in (i) cash or
check payable and acceptable to the Company, (ii) through tendering
to the Company shares of Common Stock already owned by the person
(provided that if such shares were acquired pursuant to the prior
exercise of a Company granted option, such shares must have been
owned for at least six months, and provided further, that the
Company may, upon confirming, that the person owns the number
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of shares being tendered, issue a new certificate for the number of
shares being acquired pursuant to the exercise of the option less
the number of shares being tendered upon the exercise and return to
the person (or not require surrender of) the certificate for the
shares being tendered upon the exercise), (iii) by the person
delivering to the Company a properly executed exercise) notice
together with irrevocable instructions to a broker to promptly
deliver to the Company cash or a check payable and acceptable to the
Company to pay the option exercise price; provided that in the event
the person chooses to pay the option exercise price as provided in
(iii) above, the person and the broker shall comply with such
procedures and enter into such agreements of indemnity and other
agreements as the Committee shall prescribe as a condition of such
payment procedure or (iv) by any combination of the above. The value
of each share of Common Stock tendered pursuant to (ii) above shall
be deemed to be equal to the per share price of the last sale of
Common Stock on the trading day prior to the date the option is
exercised, based on the composite transactions in the Common Stock
as reported in THE WALL STREET JOURNAL. The date of sale of the
shares by the broker pursuant to a "cashless exercise" under (iii)
above, shall be the date of exercise of the option. If the Committee
so requires, such person or persons shall also deliver a written
representation that all shares being purchased are being acquired
for investment and not with a view to, or for resale in connection
with any distribution of such shares.
(d) OPTIONS NOT TRANSFERABLE. No incentive stock option
granted under Article III shall be transferable otherwise than by will
or by the laws of descent and distribution and, during the lifetime of
the Employee Optionee to whom any option is granted, it shall be
exercisable only by such Employee Optionee. Any attempt to transfer,
assign, pledge, hypothecate or otherwise dispose of, or to subject to
execution, attachment or similar process, any incentive stock option
granted under Article III, or any right thereunder, contrary to the
provisions hereof, shall be void and ineffective, shall give no right
to the purported transferee, and shall, at the sole discretion of the
Committee, result in forfeiture of the option with respect to the
shares involved in such attempt.
(e) ADJUSTMENT OF SHARES. In the event that at any time
after the effective date of the Plan the outstanding shares of
Common Stock are changed into or exchanged for a different number or
kind of shares or other securities of the Company by reason of
merger, consolidation, recapitalization, reclassification, stock
split, stock dividend, combination of shares or the like, the
Committee shall make an appropriate and equitable adjustment in the
number and kind of shares as to which all outstanding incentive
stock options granted under Article III, or portions thereof then
unexercised, shall be exercisable, and with any necessary
corresponding adjustment in exercise price per share, to the end
that after such event the shares subject to Article III of the Plan
and each Employee Optionee's proportionate interest shall be
maintained as before the occurrence of such event. Any such
adjustment made by the Committee shall be final and binding upon all
Employee Optionees, the Company, and all other interested persons.
Any adjustment of an incentive stock option under this paragraph
shall be made in such manner as not to constitute a "modification"
within the meaning of Section 424 of the Code.
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(f) LISTING AND REGISTRATION OF SHARES. Each incentive stock
option granted under Article III shall be subject to the requirement
that if at any time the Committee determines, in its discretion, that
the listings registration, or qualification of the shares subject to
such option upon any securities exchange or under any state or federal
law, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition of, or in connection with, the
issue or purchase of shares thereunder, such option may not be
exercised in whole or in part unless such listing, registration,
qualification, consent or approval shall have been effected or obtained
and the same shall have been free of any conditions not acceptable to
the Committee.
(g) LIMITATION ON AMOUNT. Notwithstanding any other provision
of the Plan, to the extent that the aggregate fair market value
(determined as of the time the respective incentive stock option is
granted) of the Common Stock with respect to which incentive stock
options are exercisable for the first time by an Employee Optionee
during any calendar year under all incentive stock option plans of the
Company and its Parent Corporation and Subsidiary Corporations exceeds
$100,000, such incentive stock options shall be taxed as nonqualified
options and shall be subject to the manner of exercise provisions
described in Article II, Paragraph 3(c). The Committee shall determine,
in accordance with applicable provisions of the Code, Treasury
Regulations and other administrative pronouncements, which of an
Employee Optionee's incentive stock options will be treated as
nonqualified options because of such limitation and shall notify the
Employee Optionee of such determination as soon as practicable after
such determination.
4. AMENDMENT. The Committee may, with the consent of the person or
persons entitled to exercise any outstanding incentive stock option granted
under Article III, amend such incentive stock option. The Committee may at
any time or from time to time, in its discretion, in the case of any
incentive stock option previously granted under Article III which is not then
immediately exercisable in full, accelerate the time or times at which such
option may be exercised to any earlier time or times.
5. ACCELERATION UPON A CHANGE OF CONTROL. Notwithstanding any
provision in Article III or in any document or instrument evidencing an
incentive stock option granted under Article III, upon the occurrence of a
Change of Control, each incentive stock option previously granted under
Article III which is not then immediately exercisable in full shall be
immediately exercisable in full.
6. OTHER PROVISIONS.
(a) The person or persons entitled to exercise, or who have
exercised, an incentive stock option granted under Article III shall
not be entitled to any rights as a stockholder of the Company with
respect to any shares subject to such option until he shall have
become the holder of record of such shares.
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(b) No incentive stock option granted under Article III shall
be construed as limiting any right which the Company or any subsidiary
or affiliated entity of the Company may have to terminate at any time,
with or without Cause, the employment of any person to whom such option
has been granted.
(c) Notwithstanding any provision of the Plan or the terms of
any incentive stock option granted under Article III, the Company shall
not be required to issue any shares hereunder if such issuance would,
in the judgment of the Committee constitute a violation of any state or
federal law or of the rules or regulations of any governmental
regulatory body.
(d) The Committee may require any person who exercises an
incentive stock option to give prompt notice to the Company of any
disposition of shares of Common Stock acquired upon exercise of an
incentive stock option within two years after the date of grant of such
option or within one year after the transfer of shares to such person.
ARTICLE IV
NON-EMPLOYEE DIRECTOR STOCK OPTIONS
1. ELIGIBLE PERSONS. Persons who are members of the Board but are
neither employees nor officers of the Company, its subsidiaries or affiliated
entities ("NON-EMPLOYEES DIRECTORS") shall receive options under, and solely
under, this Article IV.
2. INITIAL GRANTING OF OPTIONS TO NON-EMPLOYEE DIRECTORS AFTER THE 1995
PLAN TERMINATION. Subject to stockholder approval of the Plan pursuant to
Article I, Paragraph 7, and to the limitation of the number of shares of Common
Stock set forth in Article I, Paragraph 2, each Non-Employee Director who is
first elected to the Board on or after the date director options may no longer
be granted under the terms of either the Company's 1990 Stock Incentive Plan or
the 1995 Incentive Plan, is hereby granted effective on the date of his initial
election (which date shall be the date of grant for purposes hereof), a
nonqualified option to purchase 1,000 shares of Common Stock (subject to
adjustment in the same manner provided in Article IV, Paragraph 5(e) with
respect to shares of Common Stock subject to options then outstanding).
3. ANNUAL GRANTING OF OPTIONS TO NON-EMPLOYEE DIRECTORS. Subject to
stockholder approval of the Plan pursuant to Article I, Paragraph 7, and to
the limitation of the number of shares of Common Stock set forth in Article
I, Paragraph 2, a nonqualified option to purchase 4,000 shares of Common
Stock (subject to adjustment in the same manner provided in Article IV,
Paragraph 5(e) with respect to shares of Common Stock subject to options then
outstanding) is hereby granted, effective the fourth Thursday of October of
1997 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); provided, however, the number of
shares of Common Stock subject to such annual grant shall be reduced by the
number of shares subject to annual grants made to each
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Non-Employee Director on such date under the Company's 1990 Stock Incentive
Plan and 1995 Incentive Plan.
4. CALCULATION OF EXERCISE PRICE. The exercise price to be paid for
each share of Common Stock deliverable upon exercise of each option granted
under Article IV shall be equal to the fair market value per share of Common
Stock at the time of grant based on the composite transactions in the Common
Stock as reported by THE WALL STREET JOURNAL, and shall not be less than the
per share price of the last sale of Common Stock on the trading day prior to
the grant of such option. The exercise price for each option granted under
Article IV shall be subject to adjustment as provided in Article IV,
Paragraph 5(e).
5. TERMS AND CONDITIONS OF OPTIONS. Options granted under Article IV
shall be subject to the following terms and conditions:
(a) OPTION PERIOD AND CONDITIONS AND LIMITATIONS ON EXERCISE.
Each option granted under Article IV shall be exercisable from time to
times in whole or in part, at any time after the date of grant and
prior to the date which is ten years after the date of grant (the
"OPTION EXPIRATION DATE"). Notwithstanding the foregoing or any
provision in any document or instrument evidencing an option granted
under Article IV, upon the occurrence of a Change of Control, each
option previously granted under Article IV which is not then
immediately exercisable in full shall be immediately exercisable in
full.
(b) TERMINATION OF DIRECTORSHIP AND DEATH. For purposes of
Article IV and each option granted under Article IV, a Non-Employee
Director's directorship shall be deemed to have terminated at the close
of business on the day preceding the first date on which he ceases to
be a member of the Board for any reason whatsoever (including his
death). If a Non-Employee Director's directorship is terminated for any
reason whatsoever (including his death), each option granted to him
under Article IV and all of his rights thereunder shall wholly and
completely terminate:
(i) At the time the Non-Employee Director's
directorship is terminated if his directorship is terminated
as a result of his removal from the Board for (A) fraud, theft
or embezzlement committed against the Company or a Subsidiary,
affiliated entity or customer of the Company, (B) Non-Employee
Director's willful misconduct in performance of his duties as
Non-Employee Director or (C) Non- Employee Director's final
conviction of a felony; or
(ii) At the expiration of a period of one year after
the Non-Employee Director's death (but in no event later than
the Option Expiration Date). An option granted under Article
IV may be exercised by the Non-Employee Director's estate
or by the person or persons who acquire the right to exercise
his option by bequest or inheritance with respect to any or
all of the shares remaining subject to his option at the time
of his death; or
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<PAGE>
(iii) At the expiration of a period of three years
after the Non-Employee Director's directorship is terminated
if such person's directorship is terminated as a result of
such person's resignation or removal from the Board because of
disability or in accordance with the provisions of the
Company's Bylaws regarding automatic termination of directors'
terms of office (but in no event later than the Option
Expiration Date); or
(iv) At the expiration of a period of three months
after the Non-Employee Director's directorship is terminated
(but in no event later than the Option Expiration Date) if the
Non-Employee Director's directorship is terminated for any
reason other than the reasons specified in Article IV,
Paragraphs 5(b)(i), 5(b)(ii) or 5(b)(iii).
(c) MANNER OF EXERCISE. In order to exercise a nonqualified
option granted under Article II, the person or persons entitled to
exercise it shall deliver to the Company payment in full for the shares
being purchased, together with any required withholding tax as provided
in Article XI. The payment of the exercise price for each option
granted under Article shall be (i) in cash or check payable and
acceptable to the Company, (ii) through tendering to the Company shares
of Common Stock already owned by the person (provided that if such
shares were acquired pursuant to the prior exercise of a Company
granted option, such shares must have been owned for at least six
months, and provided further, that the Company may, upon confirming
that the person owns the number of shares being tendered issue a new
certificate for the number of shares being acquired pursuant to the
exercise of the option less the number of shares being tendered upon
the exercise and return to the person (or not require surrender of) the
certificate for the shares being tendered upon the exercise), (iii) by
the person delivering to the Company a properly executed exercise
notice together with irrevocable instructions to a broker to promptly
deliver to the Company cash or a check payable and acceptable to the
Company to pay the option exercise price and any applicable withholding
taxes; provided that in the event the person chooses to pay the option
exercise price as provided in (iii) above, the person and the broker
shall comply with such procedures and enter into such agreements of
indemnity and other agreements as the Committee shall prescribe as a
condition of such payment procedure or (iv) by any combination of the
above. The value of each share of Common Stock tendered pursuant to
(ii) above shall be deemed to be equal to the per share price of the
last sale of Common Stock on the trading day prior to the date the
option is exercised, based on the composite transactions in the Common
Stock as reported in THE WALL STREET JOURNAL. The date of sale of the
shares by the broker pursuant to a "cashless exercise" under (iii)
above shall be the date of exercise of the option. If the Committee so
requires, such person or persons shall also deliver a written
representation that all shares being purchased are being acquired for
investment and not with a view to, or for resale in connection with,
any distribution of such shares.
(d) OPTIONS NOT TRANSFERABLE. Except as provided in Article
IX, no option granted under Article IV shall be transferable
otherwise than by will or by the laws of descent and distribution
and, during the lifetime of the Non-Employee Director to whom any
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such option is granted, it shall be exercisable only by such
Non-Employee Director. Any attempt to transfer, assign, pledge,
hypothecate or otherwise dispose of, or to subject to execution,
attachment or similar process, any option granted under Article IV,
or any right thereunder, contrary to the provisions hereof, shall be
void and ineffective and shall give no right to the purported
transferee.
(e) ADJUSTMENT OF SHARES. In the event that at any time after
the effective date of the Plan the outstanding shares of Common Stock
are changed into or exchanged for a different number or kind of shares
or other securities of the Company by reason of merger, consolidation,
recapitalization, reclassification, stock split, stock dividend,
combination of shares or the like, the Committee shall make an
appropriate and equitable adjustment in the number and kind of shares
as to which all outstanding nonqualified options granted under Article
IV, or portions thereof then unexercised, shall be exercisable and with
any necessary corresponding adjustment in exercise price per shares to
the end that after such event the shares subject to Article IV of the
Plan and each Non-Employee Director's proportionate interest shall be
maintained as before the occurrence of such event. Any adjustment
provided for in the preceding provisions of this Paragraph 5(e) shall
be subject to any required stockholder action.
(f) LISTING AND REGISTRATION OF SHARES. Each option granted
under Article IV shall be subject to the requirement that if at any
time the Committee determines, in its discretion, that the listing,
registration, or qualification of the shares subject to such option
under any securities exchange or under any state or federal law, or the
consent or approval of any governmental regulatory body, is necessary
or desirable as a condition of, or in connection with, the issue or
purchase of shares thereunder, such option may not be exercised in
whole or in part unless such listings registration qualification,
consent or approval shall have been effected or obtained and the same
shall have been free of any conditions not acceptable to the Committee.
6. OTHER PROVISIONS.
(a) The person or persons entitled to exercise, or who have
exercised, an option granted under Article IV shall not be entitled to
any rights as a stockholder of the Company with respect to any shares
subject to such option until he shall have become the holder of record
of such shares.
(b) No option granted under Article IV shall be construed as
limiting any right which either the stockholders of the Company or the
Board may have to remove at any time, with or without Cause, any person
to whom such option has been granted from the Board.
(c) Notwithstanding any provision of the Plan or the terms of
any option granted under Article IV, the Company shall not be required
to issue any shares hereunder if such
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issuance would, in the judgment of the Committee, constitute a
violation of any state or federal law or of the rule or regulations
of any governmental regulatory body.
(d) If, as of any date that the Plan is in effect, there are
not sufficient shares of Common Stock available under the Plan to allow
for the grant to each Non-Employee Director of an option for the number
of shares provided for in Article IV, each Non- Employee Director shall
receive an option for his pro-rata share of the total number of shares
of Common Stock then available under the Plan.
ARTICLE V
PERFORMANCE STOCK AND PERFORMANCE UNITS
1. ELIGIBLE INDIVIDUALS. Employees and officers (whether or not they
are directors) of the Company, its subsidiaries and affiliated entities shall
be eligible to receive awards of Performance Stock and/or Performance Units
(as hereinafter defined) under this Article V; provided, however, no such
individual may receive more than 250,000 Performance Stock and/or Performance
Unit awards hereunder during any calendar year.
2. TERMS AND CONDITIONS OF PERFORMANCE AWARDS. Shares of Performance
Stock and Performance Units granted under Article V to an eligible individual
(an "EMPLOYEE GRANTEE") shall be, with respect to Performance Stock, a share
of Common Stock and, with respect to a Performance Unit, a phantom share of
Common Stock. Both types of Awards shall be subject to the following terms
and conditions and may contain such additional terms and conditions, not
inconsistent with Article V, as the Committee shall deem desirable:
(a) PERFORMANCE PERIOD AND VESTING. Subject to Article V,
Paragraphs 3 and 4, no shares of Performance Stock or Performance
Units granted under Article V shall be subject to becoming vested;
I.E., earned and nonforfeitable, earlier than the date which is six
months from the date of grant nor later than the date which is ten
years after the date of grant (the "PERFORMANCE PERIOD"). To the
extent not prohibited by other provisions of the Plan, each share of
Performance Stock and each Performance Unit granted under Article V
shall be subject to becoming vested upon the achievement of such
performance goals (Company and/or individual), if any, over such
Performance Period as the Committee, in its discretion, may
determine at or prior to the grant of such performance Award. The
Committee shall also designate, at the date of grant, whether a
performance Award is intended to meet the requirements of Section
162(m) of the Code. With respect to any Performance Stock or
Performance Unit grant that is intended to meet the requirements of
Section 162(m) of the Code, the performance goal or goals for such
Award shall be with respect to one or more of the following:
earnings per share; earnings before interest, taxes, depreciation
and amortization expenses ("EBITDA"); earnings before interest and
taxes ("EBIT"); EBITDA, EBIT or earnings before taxes and unusual or
nonrecurring items as measured either against
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the annual budget or as a ratio to revenue; market share; sales;
costs; return on equity; operating cash flow; return on net capital
employed ("RONCE") and/or stock price performance. The goals can be
applied, where appropriate, with respect to an individual, a
business unit or the Company as a whole and need not be based on
increases or positive results, but can be based on maintaining the
status quo or limiting economic losses, for example. Which goals to
use with respect to a performance Award, the weighting of the goals
if more than one is used, and whether the goal is to be measured
against a Company- established budget or target, an index or a peer
group of companies, shall also be determined by the Committee at the
time of grant of the Award.
(b) TERMINATION OF EMPLOYMENT AND DEATH. For purposes of
Article V, and each share of Performance Stock and each Performance
Unit granted hereunder, an Employee Grantee's employment shall be
deemed to have terminated at the close of business on the day preceding
the first date on which he is no longer for any reason whatsoever
(including his death) employed by the Company or a subsidiary or an
affiliated entity of the Company. If an Employee Grantee's employment
is terminated for any reason whatsoever (including his death), all of
his rights with respect to each share of Performance Stock and each
Performance Unit granted to him under Article V which is not then
vested shall wholly and completely terminate:
(i) At the time the Employee Grantee's employment is
terminated if termination is for any reason other than
retirement, disability or death; or
(ii) if the Employee Grantee's employment is
terminated due to retirement, disability or death, at the time
of such termination but only with respect to that portion of
the Award which is equal to the fraction, the numerator of
which is the number of full calendar months remaining in the
Performance Period and the denominator of which is the total
number of calendar months in the Performance Period; provided,
however, the remaining, nonforfeited portion of the Award
shall continue to be subject to the terms and conditions of
the Performance Period and at the end of such Performance
Period shall be forfeited and/or paid as unrestricted stock to
the Employee Grantee depending on the achievement of the goals
for such Performance Period; provided further, however, with
respect to any performance Award not intended on its date of
grant to meet the requirements of Section 162(m) of the Code,
the Committee may, in its sole discretion, deem the terms and
conditions have been met at the date of such termination for
all or part of such remaining, nonforfeited portion of the
Performance Stock award or Performance Unit award.
(c) PERFORMANCE AWARDS NOT TRANSFERABLE. No shares of
Performance Stock or Performance Units granted under Article V shall
be transferable otherwise than by will or by the laws of descent and
distribution. Any attempt to transfer, assign, pledge, hypothecate
or otherwise dispose of, or to subject to execution, attachment or
similar process, any shares of Performance Stock or Performance
Units granted under Article V, or any right thereunder,
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contrary to the provisions hereof, shall be void and ineffective,
shall give no right to the purported transferee, and shall, at the
sole discretion of the Committee, result in forfeiture of the shares
of the Performance Stock or Performance Units involved in such
attempt.
3. AMENDMENT. With respect to any outstanding Performance Stock or
Performance Unit, the Committee may, at any time or times, without the consent
of the Employee-Grantee, amend the performance objectives and/or the Performance
Period for earning such Award.
4. ACCELERATION UPON A CHANGE OF CONTROL. Notwithstanding any provision
in Article V or in any document or instrument evidencing Performance Stock or
Performance Units granted under Article V, upon the occurrence of a Change of
Control each share of Performance Stock and each Performance Unit previously
granted under Article V which is not then immediately vested in full shall be
immediately vested in full, all performance goals shall be deemed to have been
met to the fullest extent under the terms of such grant, and the Performance
Periods shall immediately end.
5. OTHER PROVISIONS.
(a) No grant of Performance Stock or Performance Units under
Article V shall be construed as limiting any right which the Company or
any subsidiary or affiliated entity of the Company may have to
terminate at any time, with or without Cause, the employment of any
person to whom such Award has been granted.
(b) Each certificate representing Performance Stock awarded
under the Plan shall be registered in the name of the Employee Grantee
and, during the Performance Period, shall be left in deposit with the
Company and a stock power endorsed in blank. The grantee of Performance
Stock shall have all the rights of a stockholder with respect to such
shares including the right to vote and the right to receive dividends
or other distributions paid or made with respect to such shares. Any
certificate or certificates representing shares of Performance Stock
shall bear a legend similar to the following:
The shares represented by this certificate have been issued
pursuant to the terms of the BJ Services Company 1997 Incentive Plan
and may not be sold, pledged, transferred, assigned or otherwise
encumbered in any manner except as is set forth in the terms of such
award dated _________________.
After certification by the Committee as to the satisfaction
of the terms and conditions set by the Committee with respect to an
Award of (i) Performance Stock, a certificate, without the legend
set forth above, for the number of shares of Common Stock that are
no longer subject to such restrictions, terms and conditions shall
be delivered to the employee and (ii) Performance Units, a
certificate for the number of shares of Common Stock equal to the
number of Performance Units vested shall be delivered to the
employee. The remaining unearned shares of Performance Stock issued
with respect to such Award, if any, or unearned Performance Units,
as the case may be, shall either be forfeited back to the
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Company or, if appropriate under the terms of the Award applicable
to such shares or units, shall continue to be subject to the
restrictions, terms and conditions set by the Committee with respect
to such Award.
(c) Notwithstanding any provision of the Plan or the terms of
any nonqualified Award granted under Article V, the Company shall not
be required to issue any shares hereunder if such issuance would, in
the judgment of the Committee, constitute a violation of any state or
federal law or of the rules or regulations of any governmental
regulatory body.
ARTICLE VI
BONUS STOCK
The Committee may, from time to time and subject to the provisions of
the Plan, grant shares of Bonus Stock to employees and officers (whether or not
they are directors) of the Company, its subsidiaries and affiliated entities.
Bonus Stock shall be shares of Common Stock that are not subject to a
Performance Period under Article V.
ARTICLE VII
CASH AWARDS
1. ELIGIBLE INDIVIDUALS. Employees and officers (whether or not they
are directors) of the Company, its subsidiaries and affiliated entities shall be
eligible to receive Cash Awards, which may be Tandem Cash Tax Rights,
Performance Cash Awards or Bonus Cash Awards (as hereinafter defined) under this
Article VII.
2. TANDEM CASH TAX RIGHTS. The Committee may grant a Tandem Cash Tax
Right with respect to a Performance Stock or Performance Unit Award that,
subject to the further provisions hereof, entitles the Employee Grantee to
receive from the Company, upon the later of the vesting of the Performance Stock
or Performance Unit Award or the date such Performance Stock or Performance Unit
Award is taxable to the Employee Grantee, an amount of cash such that the "net"
benefit received by the Employee Grantee, after paying all applicable federal,
state and other taxes (assuming for this purpose, the highest marginal income
tax rate for individuals applies) on the Performance Stock or Performance Unit
Award and this Tandem Cash Tax Right, shall be equal to the value of the
Performance Stock or Performance Unit Award payment received by the Employee
Grantee before any such taxes thereon.
3. TERMS AND CONDITIONS OF PERFORMANCE CASH AWARDS. Performance Cash
Awards granted an Employee Grantee shall be subject to the following terms and
conditions and may contain such additional terms and conditions, not
inconsistent with Article VII, as the Committee shall deem desirable:
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(a) PERFORMANCE PERIOD AND VESTING. Subject to Article VII,
Paragraphs 4 and 5, no Performance Cash Awards granted under Article
VII shall be subject to becoming vested; I.E., earned and
nonforfeitable, earlier than the date which is six months from the date
of grant nor later than the date which is ten years after the date of
grant (the "PERFORMANCE PERIOD"). To the extent not prohibited by
other provisions of the Plan, each Performance Cash Award granted under
Article VII shall be subject to becoming vested upon the achievement of
such performance goals (Company and/or individual) over such
Performance Period as the Committee in its discretion may determine at
or prior to the grant of such Performance Cash Award. The Committee
shall also designate at the date of grants whether a Performance Cash
Award is intended to meet the requirements of Section 162(m) of the
Code. With respect to any Performance Cash Award grant that is intended
to meet the requirements of Section 162(m) of the Code, the performance
goal or goals for such Award shall be with respect to one or more of
the following: earnings per share; earnings before Interest, taxes,
depreciation and amortization expenses ("EBITDA"); earnings before
interest and taxes ("EBIT"); EBITDA, EBIT or earnings before taxes and
unusual or nonrecurring items as measured either against the annual
budget or as a ratio to revenue; market share; sales; costs; return on
equity; operating cash flow; return on net capital employed ("RONCE")
and/or stock price performance. The goals can be applied, where
appropriate, with respect to an individual, a business unit or the
Company as a whole and need not be based on increases or positive
results, but can be based on maintaining the status quo or limiting
economic losses, for example. Which goals to use with respect to a
Performance Cash Award, the weighting of the goals if more than one is
used, and whether the goal is to be measured against a
Company-established budget or target, an index or a peer group of
companies, shall also be determined by the Committee at the time of
grant of the Award.
(b) TERMINATION OF EMPLOYMENT AND DEATH. For purposes of
Article VII and each Performance Cash Award granted hereunder, an
Employee Grantee's employment shall be deemed to have terminated at the
close of business on the day preceding the first date on which he is no
longer for any reason whatsoever (including his death) employed by the
Company or a subsidiary or an affiliated entity of the Company. If an
Employee Grantee's employment is terminated for any reason whatsoever
(including his death), all of his rights with respect to each
Performance Cash Award granted to him under Article VII which is not
then vested shall wholly and completely terminate:
(i) At the time the Employee Grantee's employment is
terminated if termination is for any reason other than
retirement, disability or death; or
(ii) If the Employee Grantee's employment is
terminated due to retirement, disability or death, at the time
of such termination but only with respect to that portion of
the Award which is equal to the fraction, the numerator of
which is the number of full calendar months remaining in the
Performance Period and the denominator of which is the total
number of calendar months in the Performance
F-22
<PAGE>
Period; provided, however, the remaining, nonforfeited
portion of the Award shall continue to be subject to the
terms and conditions of the Performance Period and at the
end of such Performance Period shall be forfeited and/or
paid in cash to the Employee Grantee depending on the
achievement of the goals for such Performance Period;
provided, however, notwithstanding the foregoing, with respect to any
Performance Cash Award not intended on its date of grant to meet the
requirements of Section 162(m) of the Code, the Committee may, in its
sole discretion, deem the terms and conditions of an Employee Grantee's
Performance Cash Award(s) to have been met in full or in part on the
date of such Employee Grantee's termination of employment, regardless
of the reason for such termination of employment.
(c) PERFORMANCE CASH AWARDS NOT TRANSFERABLE. No Performance
Cash Awards granted under Article VII shall be transferable otherwise
than by will or by the laws of descent and distribution. Any attempt to
transfer, assign, pledge, hypothecate or otherwise dispose of, or to
subject to execution, attachment or similar process, any Performance
Cash Awards granted under Article VII, or any right thereunder,
contrary to the provisions hereof, shall be void and ineffective, shall
give no right to the purported transferee, and shall, at the sole
discretion of the Committee, result in forfeiture of the Performance
Cash Awards involved in such attempt.
(d) MAXIMUM AWARD. With respect to a Performance Cash Award
that is intended to qualify as performance based compensation under
Section 162(m) of the Code, the maximum aggregate of such awards that
may be granted to any one Employee Grantee during any calendar year
shall not exceed $2 million.
4. AMENDMENT. With respect to any outstanding Performance Cash Awards,
the Committee may, at any time or times, without the consent of the
Employee-Grantee, amend the performance objectives and/or the Performance Period
for earning such Award.
5. ACCELERATION UPON A CHANGE OF CONTROL. Notwithstanding any provision
in Article VII or in any document or instrument evidencing Performance Cash
Awards granted under Article VII, upon the occurrence of a Change of Control
each Performance Cash Award previously granted under Article VII which is not
then immediately vested in full shall be immediately vested and payable in cash
in full, all performance goals shall be deemed to have been met to the fullest
extent under the terms of such grant, and the Performance Periods shall
immediately end.
F-23
<PAGE>
6. OTHER PROVISIONS.
(a) No grant of a Performance Cash Award under Article VII
shall be construed as limiting any right which the Company or any
subsidiary or affiliated entity of the Company may have to terminate at
any time, with or without Cause, the employment of any person to whom
such Award has been granted.
(b) After certification by the Committee as to the
satisfaction of the terms and conditions set by the Committee with
respect to a Performance Cash Award, the portion of such Award that is
no longer subject to such restrictions, terms and conditions shall be
paid (in cash) to the Employee Grantee. The remaining unearned portion
of such Performance Award, if any, shall either be forfeited or, if
appropriate under the terms applicable to such Award, shall continue to
be subject to the restrictions, terms and conditions set by the
Committee with respect to such Award.
7. BONUS CASH AWARDS. The Committee may, from time to time and subject
to the provisions of the Plan, grant Bonus Cash Awards to employees and officers
(whether or not they are directors) of the Company, its subsidiaries and
affiliated entities. Bonus Cash Awards shall be cash payments that are not
subject to a Performance Period under Article VII.
ARTICLE VIII
ADJUSTMENT OF AWARDS
In the event that at any time after the effective date of the Plan the
outstanding shares of Common Stock are changed into or exchanged for, a
different number or kind of shares or other securities of the Company by reason
of merger, consolidation, recapitalization, reclassification, stock split, stock
dividend, combination of shares or the like, the Committee shall make an
appropriate and equitable adjustment to all outstanding Awards or portions
thereof then unexercised, and with any necessary corresponding adjustment in
exercise price per share, to the end that after such event the Awards and each
Employee's proportionate interest shall be maintained as before the occurrence
of such event. Any such adjustment made by the Committee shall be final and
binding upon all Employees, the Company, and all other interested persons.
ARTICLE IX
TRANSFERABLE OPTIONS
The Committee may, in its discretion, provide in an option agreement
(other than an incentive stock option) that the option right granted to the
individual may be transferred (in whole or in part and shall be subject to such
terms and conditions as the Committee may impose thereon)
F-24
<PAGE>
by the individual to (i) the spouse, children or grandchildren of the individual
("IMMEDIATE FAMILY MEMBERS"), (ii) a trust or trusts for the exclusive benefit
of the Immediate Family Members and, if applicable, the individual, (iii) a
partnership in which such Immediate Family Members and, if applicable, the
individual are the only partners, or (iv) as otherwise provided for in the
option agreement. Following transfer, any such transferred option rights shall
continue to be subject to the same terms and conditions as were applicable to
the option rights immediately prior to transfer; provided, however, that no
transferred option rights shall be exercisable unless arrangements satisfactory
to the Company have been made to satisfy any tax withholding obligations the
Company may have with respect to the option rights.
ARTICLE X
WITHHOLDING FOR TAXES
Notwithstanding anything in the Plan to the contrary any issuance of
Common Stock pursuant to the exercise of an option or payment of any other Award
under the Plan shall not be made until appropriate arrangements satisfactory to
the Company have been made for the payment of any tax amounts (federal, state,
local or other) that may be required to be withheld or paid by the Company with
respect thereto. Such arrangements may, at the discretion of the Committee,
include allowing the optionee or grantee to tender to the Company shares of
Common Stock owned by the optionee or grantee, or to request or, to the extent
provided in the Award agreement to direct, the Company to withhold a portion of
the shares of Common Stock being acquired pursuant to the Award, whether through
the exercise of an option or as a distribution of earned Performance Stock,
payment of earned Performance Units or as Bonus Stock, which have a fair market
value per share as of the date of such withholding that is not greater than the
sum of all tax amounts to be withheld with respect thereto, together with
payment of any remaining portion of such tax amounts in cash or by check payable
and acceptable to the Company.
ARTICLE XI
PARACHUTE TAX GROSS-UP
To the extent that the grant, payment, or acceleration of vesting or
payment, whether in cash or stock, of any Award made to a participant under the
Plan (a "BENEFIT") is subject to a golden parachute excise tax under Section
4999(a) of the Code (a "PARACHUTE TAX"), the Company shall pay such person an
amount of cash (the "GROSS-UP AMOUNT") such that the "net" Benefit received by
the person under this Plan, after paying all applicable Parachute Taxes
(including those on the Gross-up Amount) and any federal or state taxes on the
Gross-up Amount, shall be equal to the Benefit that such person would have
received if such Parachute Tax had not been applicable.
F-25
<PAGE>
AMENDMENT TO
BJ SERVICES COMPANY
1997 INCENTIVE PLAN
WHEREAS, BJ Services Company (the "Company") has heretofore adopted the
BJ Services Company 1997 Incentive Plan (the "Plan"); and
WHEREAS, the Company desires to amend the Plan in certain respects;
NOW, THEREFORE, the Plan shall be amended as follows, effective as of
the date of adoption of this amendment by the Company:
1. The first sentence of Article I, Paragraph 2 of the Plan shall be
deleted and the following shall be substituted therefor:
"The aggregate number of shares of Common Stock, $.10 par value per
share, of the Company ('Common Stock') that may be issued under the
Plan shall not exceed 3,000,000 shares; provided, however, that in the
event that at any time after the effective date of the Plan the
outstanding shares of Common Stock are changed into or exchanged for a
different number or kind of shares or other securities by reason of
merger, consolidation, recapitalization, reclassification, stock split,
stock dividend, combination of shares or the like, the aggregate number
and class of securities available under the Plan shall be ratably
adjusted by the Committee (as hereinafter defined), whose determination
shall be final and binding upon the Company and all other interested
persons."
2. The following shall be added at the end of the first sentence of
Article II, Paragraph 1 of the Plan:
"(subject to adjustment in the same manner as provided in Article I,
Paragraph 2 with respect to shares of Common Stock available under the
Plan)"
3. Article II, Paragraph 3(b)(iv) of the Plan shall be deleted and the
following shall be substituted therefor:
"(iv) If the Employee Optionee's employment is terminated
after the six-month period following the date of grant for any reason
(other than such person's death, retirement, disability or Cause
termination), at the expiration of a period of three months after the
Employee Optionee's employment is so terminated except (A) as otherwise
provided for in the option. agreement (but for no longer than one year)
or (B) as prodded in Article XII: provided however, notwithstanding
anything to the
F-26
<PAGE>
contrary, no option shall ever be exercisable later than the
Nonqualified Option Expiration Date."
4. Article II, Paragraph 3(b)(v) of the Plan shall be deleted.
5. The first sentence of Article II, Paragraph 3(e) of the Plan shall
be deleted and the following shall be substituted therefor:
"In the event that at any time after the effective date of the Plan the
outstanding shares of Common Stock are changed into or exchanged for, a
different number or kind of shares or other securities by reason of
merger, consolidation, recapitalization, reclassification, stock split,
stock dividend, combination of shares or the like, the Committee shall
make an appropriate and equitable adjustment in the number and kind of
shares as to which all, outstanding nonqualified options granted under
Article II, or portions thereof then unexercised, shall be exercisable,
and with any necessary corresponding adjustment in exercise price per
share, to the end that after such event the shares subject to Article
II of the Plan and each Employee Optionee's proportionate interest
shall be maintained as before the occurrence of such event."
6. The following shall be added at the end of the first sentence of
Article III, Paragraph I of the Plan:
"(subject to adjustment in the same manner as provided in Article I,
Paragraph 2 with respect to shares of Common Stock available under the
Plan)"
7. Article III, Paragraph 3(b)(iv) of the Plan shall be deleted and the
following shall be substituted therefor:
"(iv) If the Employee Optionee's employment is terminated
after the six-month period following the date of grant for any reason
(other than such person's death, retirement, disability or Cause
termination), at the expiration of a period of three months after the
Employee Optionee's employment is so terminated except (A) as otherwise
provided for in the option agreement (but for no longer than one year)
or (B) as provided in Article XII; provided however, notwithstanding
anything to the contrary, no option shall ever be exercisable later
than the ISO Expiration Date;"
8. Article III, Paragraph 3(b)(v) of the Plan shall be deleted.
9. The first sentence of Article 111, Paragraph 3(e) of the Plan shall
be deleted and the following shall be substituted therefor:
"In the event that at any time after the effective date of the Plan the
outstanding shares of Common Stock are changed into or exchanged for a
different number or
F-27
<PAGE>
kind of shares or other securities by reason of merger, consolidation,
recapitalization, reclassification, stock splits, stock dividend,
combination of shares or the like, the Committee shall make an
appropriate and equitable adjustment in the number and kind of shares
to which all outstanding incentive stock options granted under Article
III or portions thereof then unexercised, shall be exercisable, and
with any necessary corresponding adjustment in exercise price per
share, to the end that after such event the shares subject to Article
III of the Plan and each Employee Optionee's proportionate interest
shall be maintained as before the occurrence of such event."
10. The last sentence of Article III, Paragraph 3(e) of the Plan shall
be deleted.
11. The following shall be added at the end of the first sentence of
Article V, Paragraph 1 of the Plan:
"(subject to adjustment in the same manner as provided in Article I,
Paragraph 2 with respect to shares of Common Stock available under the
Plan)"
12. Article VIII of the Plan shall be deleted and the following shall
be substituted therefor:
"ARTICLE VIII
ADJUSTMENT OF AWARDS
"In the event that at any time after the effective date of the
Plan the outstanding shares of Common Stock are changed into or
exchanged for a different number or kind of shares or other securities
by reason of merger, consolidation, recapitalization, reclassification,
stock split, stock dividend, combination of shares or the like, the
Committee shall make an appropriate and equitable adjustment in the
number and kind of shares as to all outstanding Awards, or portions
thereof then unexercised, and with any necessary corresponding
adjustment in exercise price per share, to the end that after such
event the Awards and each Employee's proportionate interest shall be
maintained as before the occurrence of such event. Any such adjustment
made by the Committee shall be final and binding upon all Employees,
the Company, and all other interested persons."
13. The following new Article XII shall be added to the Plan:
"ARTICLE XII
CHANGE OF CONTROL
Notwithstanding any provision to the contrary in the Plan, the
following additional provisions
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<PAGE>
shall become effective upon the occurrence of a Change of Control:
(a) PUBLICLY-TRADED STOCK TRANSACTION. If the consideration offered to
shareholders of the Company in connection with a Change of Control consists of
shares of the common stock ('New Stock') of the entity acquiring the Company or
the parent company of the entity acquiring the Company (the 'Acquiring Entity')
that are publicly traded, upon the occurrence of such Chance of Control, the
Acquiring Entity shall assume the each Employee Optionee's outstanding options
to purchase Common Stock ('Prior Options') and each such Prior Option shall
become an option (a 'New Option') (i) to purchase that number of shares of New
Stock determined by multiplying the number of shares of Common Stock issuable
upon exercise of such Prior Option by the exchange ratio of Common Stock in the
transaction, (ii) at an exercise price per share determined by dividing the per
share exercise price of such Prior Option by the exchange ratio of Common Stock
in the transaction and (iii) otherwise upon the same terms and conditions as
such Prior Option, except that (A) such New Option shall be exercisable until
the applicable Nonqualified Option Expiration Date or ISO Expiration Date
regardless of any termination of Employee Optionee's employment following the
Change of Control, and (B) such New Option may be surrendered to the Acquiring
Entity during the 90-day period following the occurrence of the Change of
Control in return for a payment in cash or shares of New Stock or a combination
of cash and shares of New Stock as determined by the Acquiring Entity, equal in
value to the excess of (I) the higher of (1) the per share value of the
consideration received by shareholders of the Company upon the occurrence of the
Chance of Control (valued for such purpose as of the date of the Change of
Control) or (2) the highest per share price for Common Stock of the Company
during the period commencing with the public announcement of the proposed Change
of Control transaction and ending upon the occurrence of the Change of Control
over (II) the per share exercise price of the Common Stock of the Company under
the Prior Option, multiplied by the number of shares of Common Stock of the
Company subject to the Prior Option.
(b) OTHER TRANSACTION. If the consideration offered to shareholders of
the Company in connection with a Change of Control consists of cash or of New
Stock that is not publicly traded, upon the occurrence of such Chance of
Control, each Employee Optionee shall surrender each of his outstanding options
to purchase Common Stock to the Acquiring Entity in return for a payment in cash
equal to the Black-Scholes value of such option as of the date of the Change of
Control, without discount for risk of forfeiture and non-transferability. The
Black-Scholes valuation for this purpose shall be performed using a risk free
rate for option term as determined by the then current rate on Treasury bills
with a maturity approximating the remaining option life, and estimated future
annual stock volatility based on the prior twelve months volatility."
14. As amended hereby, the Plan is specifically ratified and
reaffirmed.
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<PAGE>
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BJ SERVICES COMPANY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS ON JANUARY 27, 2000
The Annual Meeting of the Stockholders of BJ Services Company (the
"Company") will be held on Thursday, January 27, 2000, at 11:00 a.m. local
time, at The Houstonian located at 111 North Post Oak Lane, Houston, Texas,
for the following purposes:
1. To elect three Class I directors to serve a three-year term;
2. To approve amendments to the BJ Services Company 1990 Stock Incentive
Plan.
3. To approve amendments to the BJ Services Company 1995 Incentive Plan.
4. To approve amendments to the BJ Services Company 1997 Incentive Plan.
5. To transact such other business as may properly come before the
meeting and any adjournment or postponement thereof.
The undersigned having received the notice and accompanying Proxy
Statement for said meeting hereby constitutes and appoints J. W. Stewart,
Michael McShane and Margaret B. Shannon, and each of them, his true and
lawful agents and proxies with power of substitution and resubstitution in
each, to represent and vote at the Annual Meeting scheduled to be held on
January 27, 2000, or at any adjournment or postponement thereof on all matters
coming before said meeting, all shares of common
stock of BJ Services Company which the undersigned
may be entitled to vote. The above proxies are
hereby instructed to vote as shown on the reverse
side of this card. BJ SERVICES COMPANY
P.O. BOX 11099
YOUR VOTE IS IMPORTANT NEW YORK, N.Y. 10203-0099
TO ASSURE YOUR REPRESENTATION AT THE MEETING,
PLEASE SIGN, DATE AND RETURN YOUR PROXY AS
PROMPTLY AS POSSIBLE. AN ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES, IS ENCLOSED FOR THIS PURPOSE.
(Continued and to be dated and signed on the reverse side.)
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<PAGE>
DETACH PROXY CARD HERE
<TABLE>
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/ /
This proxy when properly executed will be voted in the manner directed hereto. If no direction is made, this proxy will be voted
FOR the election of the nominees for Director and FOR Proposal No. 2, Proposal No. 3 and Proposal No. 4.
The Board of Directors recommends a vote FOR the election of the nominees for Director and FOR Proposal No. 2, Proposal No. 3
and Proposal No. 4.
<S> <C> <C> <C>
1. To elect three Class I directors to serve FOR all nominees /X/ WITHHOLD AUTHORITY to vote /X/ *EXCEPTIONS /X/
a three-year term. listed below for all nominees listed below
Nominees for election as Class I directors: John R. Huff, R. A. LeBlanc and Michael E. Patrick
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark the "Exceptions" box and write that nominee's name in
the space provided below.)
Exceptions ____________________________________________________________________________________________________________________
2. To approve amendments to the BJ Services Company 1990 Stock Incentive
Plan. FOR /X/ AGAINST /X/ ABSTAIN /X/
3. To approve amendments to the BJ Services Company 1995 Incentive Plan.
FOR /X/ AGAINST /X/ ABSTAIN /X/
4. To approve amendments to the BJ Services Company 1997 Incentive Plan.
FOR /X/ AGAINST /X/ ABSTAIN /X/
5. In the discretion of the proxies, such other business as may properly CHANGE OF ADDRESS AND
come before the meeting and any adjournments or postponements thereof. OR COMMENTS MARK HERE /X/
NOTE: Please sign, date and return
your instruction promptly in the
enclosed envelope. Sign exactly as
name(s) appear(s) hereon. Joint
owners should each sign. When signing
as attorney, executor, administrator,
trustee or guardian or other
fiduciary, please give full title as
such.
Dated: ------------------------------
-------------------------------------
Signature(s)
-------------------------------------
Signature(s)
(PLEASE SIGN, DATE AND RETURN THIS PROXY IN THE ENCLOSED POSTAGE PREPAID ENVELOPE.) VOTES MUST BE INDICATED (X) IN BLACK
OR BLUE INK.
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</TABLE>
PLEASE DETACH HERE
YOU MUST DETACH THIS PORTION OF THE PROXY CARD
BEFORE RETURNING IT IN THE ENCLOSED ENVELOPE
