s
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
|X| Filed by Registrant.
|_| Filed by 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 toss.240.14a-11(c) orss.240.14a-12to ss.240.14a-11(c) or ss.240.14a-12
BLACK WARRIOR WIRELINE CORP.
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(Name of Registrant as Specified in Its Charter)
NOT APPLICABLE
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(Name of Person(s) Filing Proxy Statement if other than Registrant)
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BLACK WARRIOR WIRELINE CORP.
3748 Highway #45 North100 Rosecrest Lane
Columbus, Mississippi 39701
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 10, 2001SEPTEMBER 23, 2002
Notice is hereby given that the Annual Meeting of Stockholders of Black
Warrior Wireline Corp. (the "Company") will be held at the Columbus Country
Club, 2331 Highway 12 East,Wingate Inn, 129
Brickerton Street, Columbus, Mississippi, on Wednesday, October 10,
2001Monday, September 23, 2002 at 9:00
AM local time, for the following purposes:
1. To elect three (3) directors of the Company to hold office
until the next Annual Meeting of Stockholders and until their
successors are elected and qualified; and
2. To transact such other business as may properly come before
the meeting or any adjournments thereof.
Information with respect to the above is set forth in the Proxy
Statement which accompanies this Notice. Only stockholders of record at the
close of business on August 15, 200114, 2002 are entitled to notice of and to vote at
the Meeting.
We hope that all of our Stockholders who can conveniently do so will
attend the Meeting. Stockholders who do not expect to be able to attend the
Meeting are requested to mark, date and sign the enclosed Proxy and return the
same in the enclosed addressed envelope which requires no postage and is
intended for your convenience.
Dated: September 14, 2001August 21, 2002 Allen R. Neel, Secretary
BLACK WARRIOR WIRELINE CORP.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
The enclosed Proxy is solicited by the Board of Directors of Black
Warrior Wireline Corp. (the "Company"), from the holders of shares of Common
Stock, $.0005 par value, to be voted at the Annual Meeting of Stockholders (the
"Meeting") to be held at the Columbus Country Club, 2331 Highway 12 East,Wingate Inn, 129 Brickerton Street, Columbus,
Mississippi, on Wednesday, October 10, 2001Monday, September 23, 2002 at 9:00AM local time, and at any
adjournments thereof.
The only business which the Board of Directors intends to present or
knows that others will present at the Meeting is the election of three (3)
Directors of the Company to hold office until the next Annual Meeting of
Stockholders and until their successors have been elected and qualified.
Management does not know of any other business to be brought before the Meeting,
but it is intended that as to any other business, a vote may be cast pursuant to
the Proxy in accordance with the judgment of the person or persons acting
thereunder. Any stockholder giving a Proxy has the power to revoke it at any
time before the Proxy is voted by revoking it in writing, by executing a later
dated Proxy, or appearing at the Meeting and voting in person. Any writing
revoking a Proxy should be addressed to Allen R. Neel, Secretary, at the address
set forth below.
The Directors to be elected at the Meeting will be elected by a
plurality of the votes cast by the stockholders present in person or by proxy
and entitled to vote. Votes may be cast for or withheld from the nominees. Votes
that are withheld will have no effect on the outcome of the election because the
Directors will be elected by a plurality of votes cast.
Under the rules of the New York Stock Exchange, brokers who hold shares
in street name have the authority to vote on certain routine matters on which
they have not received instructions from beneficial owners. Brokers holding
shares of the Company's Common Stock in street name who do not receive
instructions are entitled to vote on the election of Directors. Under applicable
Delaware law, "broker non-votes" on any such proposal (where a broker submits a
proxy but does not vote a customer's shares on such proposal) will be considered
not entitled to vote on that proposal and thus will not be counted in
determining the outcome of such vote. Likewise, where authority to vote for the
election of Directors is withheld by a stockholder, such shares will not be
counted in determining the outcome of such vote. Therefore, broker non-votes
with respect to the election of Directors and stockholders who mark their
proxies to withhold authority to vote their shares will have no effect on the
outcome of such proposal, although broker non-votes and proxies submitted where
the vote for the election of Directors is withheld are counted in determining
the existence of a quorum.
Only stockholders of record as of the close of business on August 15,
200114,
2002 are entitled to notice of and to vote at the Meeting or any adjournments
thereof. On such date, the Company
had outstanding voting securities consisting of 12,496,408 shares of Common
Stock, $.0005 par value, each of which shares is entitled to one vote.
The Company's principal executive office address is 3748 Highway #45
North,100 Rosecrest Lane,
Columbus, Mississippi 39701, and the telephone number is (662) 329-1047. This
Proxy Statement and the enclosed Form of Proxy will be mailed to the Company's
stockholders on or about September 14, 2001.August 21, 2002.
ELECTION OF DIRECTORS
At the Meeting, it is proposed to elect three (3) Directors to hold
office until the next Annual Meeting of Stockholders and until their respective
successors are elected and qualified. It is intended that, unless otherwise
indicated, the shares of Common Stock represented by proxies solicited by the
Board of Directors will be voted for the election as Directors of the three (3)
nominees hereinafter named. If, for any reason, any of said nominees shall
become unavailable for election, which is not now anticipated, the proxies will
be voted for the other nominees and may be voted for a substitute nominee
designated by the Board of Directors. Each nominee has indicated that he is
willing and able to serve as a Director if elected, and, accordingly, the Board
of Directors does not have in mind any substitute. Each nominee is presently a
Director of the Company and was elected a Director at the 20002001 Annual Meeting of
Stockholders held in February,October, 2001.
The nominees for Director and their ages are as follows:
NAME AGE
William L. Jenkins 4749
Charles E. Underbrink 4647
John L. Thompson 4142
William L. Jenkins has been President, Chief OperatingExecutive Officer and a
Director of the Company since March 1989. From 1973 until 1980, Mr. Jenkins held
a variety of field engineering and training positions with Welex - A Halliburton
Company, in the South and Southwest. From 1980 until March 1989, Mr. Jenkins
worked with Triad Oil & Gas, Inc., as a consultant, providing services to a
number of oil and gas companies. During that time, Mr. Jenkins was involved in
the organization of a number of drilling and oil field service companies,
- 2 -
including a predecessor of the Company, of which he served as
Secretary/Treasurer until 1988. Mr. Jenkins has over twentytwenty-five years'
experience in the oil field service business. Mr. Jenkins is Mr. Thornton's brother-in-law.the brother-in-law
of Danny Ray Thornton, the Company's Vice President-Operations.
-2-
Charles E. Underbrink was elected a Director on April 1, 1998. From
July 1995 to March 2001, Mr. Underbrink served as the Chief Executive Officer
and Chairman of St. James Capital Corp. and SJMB, L.L.C., Houston-based merchant
banking firms. He continues to serve as Chairman of St. James Capital Corp. and
SJMB, L.L.C. Mr. Underbrink is also a Director of Monorail Computer Corporation,
Somerset House Publishing,
HUB, Inc. and Industrial Holdings,Imperial Credit Industries, Inc.
John L. Thompson was elected a Director in June 1997. Since July 1995,
he has served as a Director and President of St. James Capital Corp. and SJMB,
L.L.C., Houston-based merchant banking firms. Since March 1, 2001, Mr. Thompson
has also served as the Chief Executive Officer of St. James Capital Corp. and
SJMB, L.L.C. St. James Capital Corp. also serves as the general partner of St.
James Capital Partners, L.P. and SJMB, L.L.C. serves as the general partner of
SJMB, L.P., investment limited partnerships, specializing in merchant banking
related investments. Additionally, he is a Director of Industrial Holdings,
Inc., a publicly held company. Prior to co-founding St. James Capital Corp. and SJMB,
L.L.C., Mr. Thompson served as a Managing Director of Corporate Finance at
Harris Webb & Garrison, a regional investment-banking firm with a focus on
mergers and acquisitions, financial restructuring and private placements of debt
and equity issues. Mr. Thompson was elected to the Company's Board of Directors
in June 1997 pursuant to the terms of Agreements between the Company and St.
James Capital Partners, L.P. See "Certain Transactions" for a description of the
transactions.
EXECUTIVE OFFICERS
The current executive officers of the Company are the following:
NAME POSITION
William L. Jenkins President, Chief Executive Officer and
Chief Operating Officer
Allen R. Neel Executive Vice-PresidentVice President and Secretary
Danny RayR. Thornton Vice-President/OperationsVice President-Operations
Mr. Jenkins' employment background is described above.
- 3 -
Allen R. Neel is the Executive Vice-President and Secretary of the
Company and has been employed by the Company since August 1990. He currently
oversees the Company's offshoredirectional drilling operations, as well as
administrativeadministration and legal matters. In 1981, Mr. Neel received his BS Degree in
Petroleum Engineering from the University of Alabama. From 1981 to 1987, Mr.
-3-
Neel worked in engineering and sales for Halliburton Services. From 1987 to
1989, he worked as a District Manager for Graves Well Drilling Co. When the
Company acquired the assets of Graves in 1990, Mr. Neel assumed a position with
the Company.
Danny RayR. Thornton is a Vice-President of the Company and has been
employed by the Company since March 1989. From 1982 to March 1989, Mr. Thornton
was the president and a principal stockholder of Black Warrior Mississippi, the
Company's operational predecessor. Mr. Thornton has been engaged in the oil and
gas services industry in various capacities since 1978. His principal duties
with the Company include supervising and consulting on wireline operations. Mr.
Thornton is Mr. Jenkins' brother-in-law.
EXECUTIVE COMPENSATION - GENERAL
The following table sets forth the compensation paid or awarded to the
President and Chief Executive Officer of the Company and each other executive
officer of the Company who received compensation exceeding $100,000 during 20002001
for all services rendered to the Company in each of the years 2001, 2000 1999 and
1998.1999.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
----------------------------------------- ------------------------------
BONUS/ANNUAL SECURITIES LONG-TERM
NAME AND INCENTIVE UNDERLYING INCENTIVE ALL OTHER
PRINCIPAL POSITION YEAR SALARY AWARD OPTIONS PAYOUTS COMPENSATION
---------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------
William L. Jenkins 2000 $274,592 -0- -0- $1,216
President 1999 $137,140 -0-2001 $225,000 $123,376 -- -0- $1,216(1)
1998 $146,275President 2000 $195,650 $77,726 -- -0- 200,000$1,216(1)
1999 $87,548 $48,376 -- -0- $1,216(1)
Allen R. Neel 2001 $139,000 -0- -- -0- $9,000(2)
Executive Vice President 2000 $127,500$119,000 -0- 625,000 -0- $8,400
Executive VicePresident 1999 $92,761 -0--- -0- $8,400(2)
1998 $131,3341999 $85,000 -0- -- -0- $8,400(2)
Danny R. Thornton 2001 $100,208 $41,025 -- -0- $3,500(2)
Vice President 2000 $79,500 $6,576 -- -0- $7,000(2)
1999 $77,813 $19,693 -- -0- -0-
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(1) Includes the premiums paid by the Company on a $1,000,000 insurance
policy on the life of Mr. Jenkins which names his wife as beneficiary
and owner of the policy.
(2) Automobile allowance paid to Mr. Neel.
- 4 -Neel and Mr. Thornton.
-4-
OPTION GRANTS IN YEAR ENDED DECEMBER 31, 2000.
----------------------------------------------2001
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The following table provides information with respect to the above
named executive officers regarding options granted to such persons during the
Company's year ended December 31, 2000.2001.
NUMBER OF
% OF TOTAL SECURITIESMARKET
NUMBER OF OPTIONS/ EXERCISE MARKET
UNDERLYIN SAR OR PRICE PER
SARS/SECURITIES SARS GRANTED TO BASEEXERCISE OR SHARE ON
OPTIONS GRANTEDUNDERLYING SARS/ EMPLOYEES IN BASE PRICE EXPIRATION DATE OF
NAME OPTIONS GRANTED (1) FISCAL YEAR ($/SHARE) DATE GRANT
------------------------------------------------------------------------------------------------------------------------ ----------------------------------------------------------------------------------------------------------------------
William L. Jenkins 4,000,000 23.9% $0.75 Feb. 2010 $0.37
Allen R. Neel 625,0001,050,000 6.3% $0.75 February,Feb. 2010 $0.59$0.37
Danny R. Thornton 1,250,000 7.5% $0.75 Feb. 2010 $0.37
- --------------------------
(1) Represents shares of Common Stock.
On February 9, 2001, the Company's stockholders approved the adoption
of the Company's 2000 Stock Incentive Plan pursuant to which 17,500,000 shares
are reserved for the grant of options. At August 17,December 31, 2001, options to purchase
17,201,00016,686,000 shares have been granted to 171159 employees under the 2000 Stock
Incentive Plan. On February 9, 2001, the Company's stockholders approved an
amendment to the 1997 Omnibus Incentive Plan increasing the number of shares
reserved for the grant of options to 1,000,000 and an amendment to the 1997
Non-Employee Stock Option Plan increasing the number of shares reserved for the
grant of options to 300,000. As of August 17,December 31, 2001, options to purchase
787,000315,000 shares and 185,000300,000 shares, respectively, were outstanding under those
plans.
- 5 --5-
STOCK OPTION EXERCISES AND HOLDINGS AT DECEMBER 31, 2000.2001.
- ---------------------------------------------------------
The following table provides information with respect to the above
named executive officers regarding Company options exercised during the year
ended December 31, 20002001 and options held at December 31, 20002001 (such officers did
not exercise any options during the most recent fiscal year).
SHARESVALUE OF UNEXERCISED
NUMBER OF UNEXERCISED OPTIONS VALUE OF UNEXERCISED
ACQUIREDIN-THE-MONEY OPTIONS
AT DECEMBER 31,2001 AT DECEMBER 31, 2000 IN-THE-MONEY OPTIONS2001 (1)
SHARES
ACQUIRED ON VALUE ----------------------------- AT DECEMBER 31, 2000 (1)
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------
William L. Jenkins -0- -0- 200,000(2)4,000,000 -0- -0- -0-
Allen R. Neel -0- -0- 705,000(2)1,050,000 -0- -0- -0-
Danny R. Thornton -0- -0- 1,250,000 -0- -0- -0-
- ----------------------------
(1) Based on the closing sales price on December 31, 20002001 of $0.375.
(2) Subsequent to December 31, 2000, Mr. Jenkins was granted an option to
purchase 4,000,000 shares of common stock exercisable at $0.75 per share and Mr.
Neel was granted an option to purchase 425,000 shares of common stock
exercisable at $0.75 per share.$0.40.
OTHER PLANS
The Company has not adopted any other long-term incentive plans or
defined benefit or actuarial pension plans.
EMPLOYMENT AGREEMENTS
The Company has entered into an Employment Agreement, dated January 1,
1998, with William L.Mr. Jenkins to serveserves as itsthe Company's President, Chief Executive Officer
and a Director of the Company. The Employment Agreement, which
terminatespursuant to an employment agreement, as amended effective January
1, 2002, expiring on December 31, 2001, provides for an annual base salary of $225,000.
The Employment Agreement provides for certain increases in Mr. Jenkins base
compensation in the years 1999, 2000 and 2001 if the Company meets certain
performance objectives. Pursuant to2005. Under the agreement, Mr. Jenkins
was grantedreceives a ten-year optionbase salary of not less than $350,000 per year. If the Company
achieves, during any calendar quarter beginning January 1, 2002, a ratio of
EBITDA to purchase 200,000 sharessales of 20% or more, Mr. Jenkins will be paid a bonus for the quarter
of 1% of the Company's EBITDA during the quarter. As an incentive to retain Mr.
Jenkins' services, the Company agreed to loan Mr. Jenkins the sum of $190,000,
bearing interest at the applicable federal rate, to be repaid at the rate of
one-third of the principal, plus accrued interest, on October 1 of each of the
years 2002, 2003 and 2004. If Mr. Jenkins remains employed by the Company on
September 30 preceding the date annual principal and interest is due on the
loan, the sum due and owing the following day is forgiven. In the event of a
Change of Control, as defined, the death or permanent disability of Mr. Jenkins
or in the event his employment is terminated without cause, the entire amount
owing by Mr. Jenkins is forgiven. In
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the event of a Change of Control, as defined, the Company agrees that the
employment agreement will terminate and Mr. Jenkins will be paid a sum equal to
three times the compensation paid to Mr. Jenkins during the twelve months
preceding the Change of Control. A Change of Control is defined in the agreement
as any person or group of persons acquiring 20% or more of the outstanding
shares of voting capital stock of the Company, the sale of more than 25% of the
assets of the Company in a single or series of related transactions, a merger of
the Company with any other person or firm, a change, during any period of twelve
consecutive calendar months, in the individuals who were Directors at the
beginning of such period (including Directors whose election or nomination for
election was approved by at least two-thirds of the Directors then in office who
were Directors at the beginning of the period or whose election was so approved)
and such persons cease for any reason other than death or disability to
constitute a majority of the Directors then in office, or St. James Capital
Corp. ceases to be the general partner, managing partner or otherwise ceases to
control St. James Capital Partners, L.P. or SJMB, L.P. The Company also agreed
to issue to Mr. Jenkins a five-year common stock purchase warrant to purchase
2.5 million shares of stock exercisable at an
exercise price$0.75 per share. In the event of $6.6875 per share,Mr.
Jenkins' death, subject to any restrictions contained in the Company's agreement
with General Electric Capital Corporation (GECC), the Company agreed to
repurchase the shares and options held by Mr. Jenkins at the fair market value
of the stock on
January 1, 1998,shares, as to shares repurchased, and the datedifference between the fair
market value and the option was granted. With certain exceptions,exercise price, as to options repurchased. Under the
agreement, restrictsthe fair market value is the average of the mid-point between the bid
and asked prices for the Company's common stock for the twenty trading days
preceding death. The Company also confirmed the prior agreement to pay to Mr.
Jenkins from engaging in activities in
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competition withthe event of a sale of the Company, a sum equal to 1% of the gross
sale proceeds or gross value of any stock received, subject to a maximum payment
of $500,000. The amended employment agreement further provides that while in the
employ of the Company and thereafter Mr. Jenkins will not divulge or use any
confidential information of the Company and during the term of his employment
and,will not engage in activities in competition with the event
Mr. Jenkins terminates the agreement prior to its termination date, for a period
of eighteen (18) months thereafter and also in the event he terminates the
agreement, from soliciting for employment any employee of the Company for a
period of two years after termination.Company.
The Company has entered into five-year employment agreements
terminating on March 31, 2006 with each of Allen R. Neel, Executive
Vice-President and Danny R. Thornton, Vice-President, Operations, of the
Company. Mr. Neel receives base compensation of $139,000 per year. Mr. Thornton
receives base compensation of $115,000 per year. On each anniversary date of the
agreements, the Company and the employee agree to renegotiate the base salary
taking into account the rate of inflation, overall profitability and the cash
position of the Company, the performance and profitability of the areas for
which the employee is responsible and other factors. The agreements contain
restrictions on such persons engaging in activities in competition with the
Company during the term of their employment and for a period of two years
thereafter.
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DIRECTORS' COMPENSATION REPORT
The Company's full Board of Directors acts on matters
involving the compensation of the Company's executive officers and employees and
the grant of options under the Company's option plans other than the 2000 Stock
Incentive Plan. At the present time, a compensation committee of the Board of
Directors has not been appointed. Messrs. Jenkins and Thompson have been
appointed to the option committee under the 2000 Stock Incentive Plan. Executive
officers who are Directors whose compensation is being considered do not
participate in board or committee actions regarding their compensation. The
Board of Directors seeks to assure that the Company's executive officers are
adequately and fairly compensated and that their compensation is competitive
with other similar-sized companies in the oilfield service industry and, at the
same time, reflecting their individual performance and responsibilities within
the Company. Historically, the Board has compensated executive officers
primarily through the payment of salaries. In recent years, the Company's
ability to pay salaries has been impacted by its limited financial resources.
Mr. Jenkins, the Company's chief executive officer, is employed
pursuant to an employment agreement, datedas amended effective January 1, 19982002,
whereby he is to receive a base salary of not less than $225,000 together with increases$350,000 per year. If
the Company achieves, during any calendar quarter beginning January 1, 2002, a
ratio of 15%
overEBITDA to sales of 20% or more, Mr. Jenkins will be paid a bonus for
the prior year's salary in eachquarter of the years 1999, 2000 and 2001 if certain
EBITDA or gross sales thresholds are met. Because1% of the Company's financial
condition in 1999 and adverse conditions throughoutEBITDA during the industry, Mr. Jenkins
was not paid his full salary by the Company in 1999. Mr. Jenkins' salary in 2000
paid
- 7 -
pursuant to thequarter. This employment
agreement was set at $225,000. Also paid pursuant tois more fully described above.
PERFORMANCE GRAPH
The following graph compares the agreements was additional cash compensation reflecting the improvementyearly percentage change in the
Company's operating performance and its success in refinancing its
outstanding indebtedness notwithstanding the Company's inability to meet the
thresholds.
In January 2001, the Board granted to Mr. Jenkins an option to purchase
4.0 million shares of the Company's Common Stock at an exercise price of $0.75
per share.
PERFORMANCE GRAPH
The line graph below compares the(BWWC) cumulative total stockholder return ofon its Common Stock with
the Company's common stock over a five-year period withcumulative total return on the published Standard & Poor's 500 Stock Index
(S&P 500) and the cumulative total return on Standard & PoorsPoor's 500 Oil and Gas
Equipment and Services Index (S&P 500) and Standard & Poors Oil Well Equipment
Services Index (Spoil W).
[OBJECT500 O&G) over the preceding five-year period.
The following graph is presented as required by SEC rules.
-8-
[GRAPHIC OMITTED]
---------------------------------------------------------------------------------------------
12/31/1996 12/31/1997 12/31/1998 12/31/1999 12/31/2000
----------------------------------------------------------------------------------------------
Black $63.46 $110.58 $15.38 $9.62 $5.77
Warrior
----------------------------------------------------------------------------------------------
S&P 500 $120.26 $157.56 $199.57 $238.54 $214.36
----------------------------------------------------------------------------------------------
SpoilW $135.90 $210.16 $121.63 $158.63 $213.86
----------------------------------------------------------------------------------------------
---------------------------------------------------
1996 1997 1998 1999 2000 2001
---------------------------------------------------
S&P 500 100 133.3 171.3 207.4 188.5 166.2
- ------------------------------------------------------------------------
S&P 500 O&G 100 153.3 87.81 117.8 156.1 102.5
- ------------------------------------------------------------------------
BWWC 100 174.3 24.27 15.05 8.98 9.7
- ------------------------------------------------------------------------
The comparison of total return with respect to the Company's commonon investment (change in year-end stock
the S&P500
and the Spoil Wprice plus reinvested dividends) assumes that $100 was invested on January 1,December 31,
1996 in the Company's Common Stock, the S&P 500 Index and the S&P 500 Oil and
Gas Equipment and Services Index. It includes the reinvestment of any dividends.
The Company has never paid any cash dividends.
- 8 -
The Report of the Compensation Committee or Executive Compensation and
the Performance Graph are not deemed to be filed with the Securities and
Exchange Commission under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, or incorporated by reference in any
documents so filed.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
Board of Directors. The Company's Board of Directors held 12four meetings
during the year ended December 31, 2000.2001. Each of the Company's Directors
participated in all of the meetings of the Board and of each committee of the
board of which he is a member.member, except that Mr. Alan W. Mann, a Director until
September, 2001, and Mr. Thompson each missed attending one meeting of the Board
of Directors.
-9-
Audit Committee. Messrs. Jenkins, Underbrink and Thompson, constituting
all of the Company's Directors, also constitute the Audit Committee of the
Company's Board of Directors. The Audit Committee, among other things, meets
with the Company's independent accountants to review the Company's accounting
policies, internal controls and other accounting and auditing matters; makes
recommendations to the Board of Directors as to the engagement of independent accountants; and reviews the
letter of engagement and statement of fees relating to the scope of the annual
audit and special audit work which may be recommended or required by the
independent accountants. The
Audit Committee did not meet during the year ended December 31, 2000. Each of Messrs. Underbrink and Thompson is, in the
opinion of the Company's Board of Directors, an "independent director," as that
term is defined under the Rules relating to the NASDAQ Stock Market. As an
employee of the Company, Mr. Jenkins is not an "independent director" as defined
in the Rules. His presence on the Audit Committee has been considered required
in the best interests of the Company because of his knowledge and familiarity
with the Company. In the year 2000, the Securities and Exchange Commission
adopted new rules relating to the disclosure of information about companies'
audit committees. The new rules require that thisthe Company's proxy statement
contain a report of the audit committee addressing specific matters and that a
company's audit committee charter be included as an attachment to the proxy
statement at least once every three years. The Company's Audit Committee Charter isaudit committee charter was
included as Appendix Aan exhibit to this
Proxy Statement. The Charter describes the nature and scope of the duties and
responsibilities of the Audit Committee.Company's proxy statement dated September 14,
2001.
The Audit Committee's Report follows.
Audit Committee Report
The Audit Committee has reviewed and discussed the Company's audited
consolidated financial statements with management. Further, the Audit Committee
has discussed with the independent public accountants the matters required to be
discussed by the Statement on
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Auditing Standards No. 61 (SAS 61 - Communication
with Audit Committees), as amended, relating to the accountants' judgment about
the quality of the Company's accounting principles, judgments and estimates, as
applied in its financial reporting.
The Audit Committee also has received the written disclosures and the
letter from the independent public accountants required by Independence
Standards Board Standard No. 1 (Independence Discussions with Audit Committees)
that relates to the accountants' independence from the Company and its
subsidiaries and has discussed with the independent public accountants their
independence.
Based on the reviews and discussions referred to above, the Audit
Committee recommended to the Board that the audited financial statements be
included in the Company's Annual Report on Form 10-K for the year ended December
31, 2000,2001, for filing with the Securities and Exchange Commission.
-10-
Audit Committee
Charles E. Underbrink, Chairman
John L. Thompson
William L. Jenkins
Other Committees. The Company's Board of Directors has not appointed
either a compensation committee or a nominating committee. Messrs. Underbrink,
Thompson and Jenkins constitute the Executive Committee of the Board of
Directors.
2000-11-
2001 AUDIT AND RELATED FEES
The following sets forth fees incurred by the Company during the year
ended December 31, 20002001 for services provided by Pricewaterhouse CoopersPricewaterhouseCoopers LLP, the
Company's independent public accountant:
FINANCIAL INFORMATION
FINANCIAL STATEMENT SYSTEMS DESIGN AND ALL OTHER
FEES IMPLEMENTATION FEES FEES
----------------------------- ------------------------------- ---------------
$216,200 $ - 0 - $34,300
- 10 -
Financial Information
Financial Statement Systems Design and All Other
Fees Implementation Fees Fees
- ------------------------------------- ------------------------------------------ ------------------------
$364,245 $-0- $28,354
The Company's Board of Directors believes that the provision of the
services during the year ended December 31, 2001 other than those relating to
Financial Statement Fees is compatible with maintaining the independence of
Pricewaterhouse CoopersPricewaterhouseCoopers LLP
CERTAIN TRANSACTIONS
Commencing in June 1997 through February, 2000, the Company entered
into a series of transactions withwhereby it sold to St. James Capital Partners,
L.P., SJMB, L.P. and certain
partners and affiliated entitiestheir affiliates (collectively referred to as "St. James"),
whereby the Company sold to St. James
on the following dates for an aggregate purchase price of $26.4 million the
following securities:
DATE SECURITY PRINCIPAL AMOUNT
----------------------- ------------------------------- ----------------
June 6, 1997 9%principal amounts of 15% Convertible Promissory Note $2.0 million (1)
October 9, 1997 7% Convertible Promissory Note $2.9 million (2)
January 23, 1998 8% Convertible Promissory Note $10.0 million(3)
October 30, 1998 10% Convertible Promissory Note $2.0 million (4)
February 18, 1999 10% Convertible Promissory Note $2.5 million (5)
December 17, 1999 10% Convertible Promissory Note $3.1 million (6)
January-February, 2000 10% Convertible Promissory Note $3.5 million (7)
DATE NUMBER OF WARRANTS (8)(9) EXPIRATION DATE
----------------------- ------------------------------- ----------------
June 6, 1997 2,442,000 June 5, 2002
October 9, 1997 4,478,277 October 10, 2002
January 23,1998 16,200,000 January 23, 2003
October 30, 1998 4,000,000 October 30, 2003
February 18, 1999 4,150,000 February 18, 2004
December 17, 1999 14,350,000Notes and common stock purchase
warrants, all expiring on December 31, 2004, January-February,to purchase the number of shares
stated as follows:
DATE PRINCIPAL AMOUNT OF NOTES(1) NUMBER OF WARRANTS (5)
--------------------------- ------------------------------ ------------------------
June 6, 1997 $2.0 million(2) 2,442,000
October 9, 1997 $2.9 million 4,478,277
January 23, 1998 $10.0 million(3) 18,000,000
October 30, 1998 $2.0 million 4,000,000
February 18, 1999 $2.5 million 4,150,000
December 17, 1999 $3.5 million 14,350,000
February 14, 2000 $3.5 million(4) 14,350,000
December 31, 2004
- 11 -
---------------------------
(1) Convertible at a current conversion price of $0.75 per share, as
adjusted through December 17, 1999 pursuant to anti-dilution
adjustments, subject to further possible adjustment as provided in the
terms of the warrants.
(2) Excludes an additional $3.0 million borrowed in June 1997 that was
repaid in October 1997.
-12-
(3) On December 14, 2000 $1,750,000 of this note was converted into
2,333,333 shares of Common Stock, leaving a remaining principal balance
of $8,250,000 convertible into an aggregate of 2,666,66711,000,000 shares of
Common Stock.
(2) Convertible at(4) On September 14, 2001, $83,118 of this principal balance was repaid,
leaving a current conversion priceremaining principal balance of $0.75 per share, as
adjusted through December 17, 1999 pursuant to anti-dilution
adjustments,$3,416,882 convertible into
an aggregate of 3,866,667 shares of Common Stock.
(3) Convertible at an exercise price of $0.75 per share, as adjusted
through December 17, 1999 pursuant to anti-dilution adjustments, into
an aggregate of 13,333,333 shares of Common Stock
(4) Convertible at a current conversion price of $0.75 per share, as
adjusted through December 17, 1999 pursuant to anti-dilution
adjustments, into an aggregate of 2,666,6664,555,843 shares of Common Stock.
(5) Convertible at a current conversion price of $0.75 per share, as
adjusted through December 17, 1999 pursuant to anti-dilution
adjustments, into an aggregate of 3,333,333 shares of Common Stock.
(6) Convertible at a current conversion price of $0.75 per share, subject
to anti-dilution adjustments, into an aggregate of 4,666,667 Shares of
Common Stock.
(7) Convertible at a current conversion price of $0.75 per share, subject
to anti-dilution adjustments, into an aggregate of 4,666,667 shares of
Common Stock.
(8) Each warrant represents the right to purchase one share of Common Stock
at $0.75 per share, subject to possible further anti-dilution
adjustments. (9) As adjusted and subjectIn March 2002, in connection with the extension of the
maturity date of $17.7 million indebtedness, the Company agreed to
further anti-dilution adjustment.extend the expiration date of all these warrants to December 31, 2004.
Except for those terms relating to the amounts of securities purchased,
maturity and expiration dates, interest rates, and conversion and exercise
prices, each of such transactions contained substantially identical terms and
conditions relating to the purchase of the securities involved. Payment of
principal and interest on all the notes is collateralized by substantially all
the assets of the Company, subordinated to borrowings by the Company from CoastGECC
in the maximum aggregate amount of $25.0$40.0 million. The notes are convertible into
shares of the Company's Common Stock at the conversion prices set forth in the
tables above. The conversion price of the Notes and the exercise price of the
Warrants is subject to anti-dilution adjustments for certain issuances of
securities by the Company at prices per share of Common Stock less than the
conversion or exercise price then in effect in which event the conversion price
and exercise price are reduced to the lower price at which such shares were
issued. As a consequence of several transactions involving the Company and St.
James, the conversion and exercise prices have been reduced pursuant to the
anti-dilution adjustments to $0.75 per share. The shares issuable on conversion
of the notes and exercise of the warrants have demand and piggy-back
registration rights under the Securities Act of 1933. The Company agreed that
one person designated by St. James would be nominated for election to the
Company's Board of Directors. Mr. John L. Thompson, currently a Director of the
Company, serves in this capacity. The Agreements grant St. James certain
preferential rights to provide future financings to the Company, subject to
certain exceptions. The notes also contain various affirmative and negative
covenants, including a prohibition against the Company consolidating, merging or
entering into a share exchange with another person, with certain exceptions,
without the consent of St. James. Events of default under the notes include,
among other events, (i) a default in the payment of principal or interest; (ii)
a default under any of the notes and the failure to cure such default for five
days, which will constitute a cross default under each of the other notes; (iii)
a breach of the Company's covenants, representations and warranties under any of
the Agreements; (iv) a breach under any of the Agreements between the Company
and St. James, subject to certain exceptions; (v) any person or group of persons
acquiring 40% or more of the voting power of the Company's outstanding shares
who was not the owner thereof as of October 30, 1998, a merger of the Company
with another person, its dissolution or liquidation or a sale of all or
substantially all its - 12 -
assets; and (vi) certain events of bankruptcy. In the
event of a default under any of the notes, subject to the terms of an agreement
between St. James and Coast,GECC, St. James could seek to foreclose against the
collateral for the notes.
-13-
On December 14, 2000, St. James converted $1,750,000 principal amount
of a note and $2,013,111 of accrued interest on indebtedness owing to it into
5,017,481 shares of the Company's Common Stock at a conversion price of $0.75
per share.
In February, 2000, Hub, Inc., a corporation of which Mr. Underbrink is
a Director, purchased for $500,000 an $800,000 note of the Company payable to
Fleet Capital Corporation, the Company's previous senior secured lender. Hub,
Inc. agreed to accept $500,000 from the Company in payment of the note. Hub,
Inc. was paid $500,000 in JanuaryFebruary, 2000.
In February 2001, the Company issued to Mr. Underbrink and St. James
five-year warrants to purchase 700,000 and 400,000 shares, respectively, of the
Company's Common Stock at exercise prices of $0.75 per share. The warrants were
issued in consideration of financial accommodationsguarantees extended to the Company by Mr. Underbrink
and St. James in connection with the Company's borrowings from Coast and the guarantees of Mr. Underbrink and St. James of that indebtedness.Business
Credit in 2000. The holders of the warrants have the right to include the shares
issuable on exercise included in any registration statement filed by the Company
under the Securities Act of 1933, as amended, subject to certain limitations.
On June 17, 1999, the Company sold for $200,000 approximately $329,000
of trade accounts receivable, which was fully reserved due to the customer
declaring bankruptcy, to RJ Air, LLC, an entity partially owned by John L.
Thompson, a member of the Company's Board of Director's, for $200,000.Director's. As of December 31,
2000, the Company has collected $100,000 of the sale price and theprice. The remaining
$100,000 is includedrepresented by an unsecured promissory note executed by Mr. Thompson
dated March 1, 2002 in deferred revenuethe principal amount of $100,000 bearing interest at the
rate of 6% per annum from the inception of sale of the accounts receivable with
$50,000, plus one-half of the interest then accrued, due on December 31, 2002
and the balance sheet. Mr. Thompsonof principal and interest due on June 30, 2003.
In connection with the GECC refinancing, the Company agreed with the
holders to extend the maturity date of $6.9 million of the $7.0 million
principal amount of promissory notes due on June 30, 2001 to December 31, 2004.
The remainder of the outstanding principal notes was repaid. The notes bear
interest at 15% per annum and are convertible into shares of the Company's
common stock at a conversion price of $0.75 per share, subject to an
anti-dilution adjustment for certain issuances of securities by the Company at
prices per share of common stock less than the conversion price then in effect,
in which event the conversion price is reduced to the lower price at which the
shares were issued. As a condition to extend the maturity date, holders of the
notes are to receive additional five-year common stock purchase warrants
exercisable at $0.75 per share to such holders if the Company has not entered
into a purchase or merger agreement on or before certain dates. Because such an
agreement was not entered into by December 31, 2001, the Company became
obligated to issue approximately 2.4 million additional warrants. In the event
such an agreement is not entered into by December 31, 2002 with a closing by
March 31, 2003, the Company will be obligated to issue approximately 5.2
-14-
million additional warrants and if such agreement is not entered into by
December 31, 2003 with a closing by March 31, 2004, the Company will be
obligated to issue approximately 10.4 million additional warrants. Under the
terms of the note extensions, in the event that the Company has not entered into
a purchase or merger agreement by December 31, 2003 with a closing date no later
than March 31, 2004, an aggregate of 18.2 million additional warrants will have
been issued. The exercise price of the warrants that are to be issued are
subject to anti-dilution adjustments for certain issuances of securities by the
Company at prices per share of common stock less than the exercise price then in
effect in which event the exercise price is reduced to the lower price at which
such shares were issued.
The Company also extended until December 31, 2004 the promissory notes
totaling $17.7 million owing to St. James which matured in March, 2001. The
notes bear interest at 15% per annum and are convertible into shares of the
Company's common stock at a conversion price of $0.75 per share, subject to an
anti-dilution adjustment for certain issuances of securities by the Company at
prices per share of common stock less than the conversion price then in effect,
in which event the conversion price is reduced to the lower price at which the
shares were issued.
In connection with the extension of the maturity date of $6.9 million
and $17.7 million of indebtedness described above, the Company agreed to extend
the expiration date of warrants to purchase an aggregate of 33,070,277 shares of
the Company's common stock to December 31, 2004.
The Company has agreed to pay to SJMB, L.P. a fee of approximately
$274,000 in consideration of SJMB, L.P. providing cash collateral of $8.2
million deposited to secure the performance of the continuing guaranty extended
by SJMB, L.P. of the Company's borrowing from Coast. In addition, SJMB, L.L.C.
received a fee in September, 2001 of $200,000 for services provided by SJMB,
L.L.C. in connection with the Company's borrowing from GE Capital. Under the
terms of the Credit Facility, the Company is restricted from paying any further
sums to either of SJMB, L.P. or SJMB, L.L.C. unless the remaining $100,000Company's quarterly
report on Form 10-Q reflects that the Company had EBITDA of at least $7.0
million for the purchase price. Mr.
Thompson's obligation is without interest or a fixed due date.
The Company was indebted to Bendover Company under an unsecured
convertible note dated December 17, 1999 inquarter ended September 30, 2001 and the principal amount of $1,182,890
plus accrued interest through June 30, 2001 of approximately $59,000. This note,
as amendedsuch payment
is limited to no more than $150,000. The EBITDA sum was not met and extended, wasthe $274,000
balance due and payable on June 15, 2001. This note was
repaid on September 14, 2001.SJMB, L.P. is deferred.
On November 20, 2000, the Company entered into an equipment lease with
Big Foot Rental Tool Service, L.L.C., a Louisiana limited liability company of
which Mr. Neel is an approximately 20% owner. The Company leased for a term of
twenty-four months oil and gas - 13 -
well service equipment with an original cost of
approximately $539,000. The
agreement provides$539,000 for a monthly rental payments of approximately $24,200 over the
term of the lease. At the expiration of the lease, the Company hashad the option to
purchase the equipment for approximately $54,000. The Company entered into the
lease with Big Foot Rental Tool Service, L.L.C. to provide needed well service
equipment at times when other sources of financing to acquire the equipment was
unavailable. - 14 -The rental agreement was terminated in September 2001 and the
Company purchased the equipment for $393,000.
-15-
PRINCIPAL AND OTHER STOCKHOLDERS
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of August 15, 200114, 2002 (a) by each person
who is known by the Company to own beneficially more than five percent (5%) of
the Company's Common Stock, (b) by each of the Company's Directors and officers,
and (c) by all Directors and officers as a group. As of August 15, 2001,14, 2002, the
Company had 12,496,408 shares of Common Stock outstanding.
PERCENTAGE OF
NUMBER OF SHARES OUTSTANDING SHARES(3)PERCENTAGE OF
NAME AND ADDRESS (1)(2) OWNED OUTSTANDING SHARES(3)
------------------------------------------- ------------------------- -----------------------
William L. Jenkins 4,210,000 (4) 25.2%6,710,000(4) 34.9%
Danny R. Thornton 1,250,666 (5)1,250,666(5) 9.1%
Allen R. Neel 1,574,904 (6) 11.2%1,443,261(6) 10.4%
Charles E. Underbrink 71,062,625 (7) 90.5%113,259,378(7) 93.8%
c/o St. James Capital Partners, L.P.
4295 San Felipe
Suite 200
Houston, TX 77027
John L. Thompson 66,787,443(8) 89.9%108,916,938(8) 93.6%
c/o St. James Capital Partners, L.P.
4295 San Felipe - Suite 200
Houston, TX 77027
St. James Capital Partners, L.P. 106,937,077(9) 93.5%
("SJCP"), SJMB, 64,959,249(9) 89.7%
L.P. ("SJMB"), and
affiliates
4295 San Felipe - Suite 200
Houston, Texas 77027
Bendover Corp. (10) 3,814,235 30.5%
Alan W. Mann
M. Dale Jowers
1053 The Cliffs Blvd.
Montgomery, TX 77356
All Directors and Officers as a Group
(5 persons) 78,098,195 91.5%122,663,305 94.4%
- 15 -
---------------------
(1) This tabular information is intended to conform with Rule 13d-3
promulgated under the Securities Exchange Act of 1934 relating to the
determination of beneficial ownership of securities. The tabular
information gives effect to the exercise of warrants or options
exercisable within 60 days of the date of this table owned in each case
by the person or group whose percentage ownership is set forth opposite
the respective percentage and is based on the assumption that no other
person or group exercise their option.
-16-
(2) Unless otherwise indicated, the address for each of the above is c/o
Black Warrior Wireline Corp., 3748 Highway #45 North,100 Rosecrest Lane, Columbus, Mississippi
39701.
(3) The percentage of outstanding shares calculation is based upon
12,496,408 shares outstanding as of August 15, 2001,14, 2002, except as
otherwise noted.
(4) Includes 4,000,0006,500,000 shares issuable on exercise of options.
(5) Includes 1,250,000 shares issuable on exercise of an option.
(6) Includes 1,050,000 shares issuable on exercise of an option. Also
includes an aggregate of 524,904393,261 shares issuable on exercise of
warrants and conversion of notes and accrued interest through August
15, 2001.14, 2002.
(7) Includes an aggregate of 64,354,699106,937,077 shares held directly by SJCP, SJMB
and their affiliates and shares issuable on exercise of warrants and
conversion of notes and accrued interest through August 15,, 200114, 2002 deemed
held beneficially by Messrs. Underbrink and Thompson because of their
relationships with SJCP and SJMB. Also includes 4,870,410an aggregate of
6,322,301 shares issuable on exercise of warrants and conversion of
notes and accrued interest through August 15, 200114, 2002 held directly by Mr.
Underbrink and
1,168,611 shares issuable on conversion of notes and accrued
interest through August 15, 200114, 2002 held jointly by Messrs. Underbrink and
Thompson.
(8) Includes an aggregate of 64,354,699106,937,077 shares held directly by SJCP, SJMB
and their affiliates and shares issuable on exercise of warrants and
conversion of notes and accrued interest through August 15, 200114, 2002 deemed
held beneficially by Messrs. Underbrink and Thompson because of their
relationships with SJCP and SJMB. Also includes 615,000an aggregate of
1,979,861 shares issuable on exercise of warrants and conversion of
notes and accrued interest through August 15, 200114, 2002 held directly by Mr.
Thompson and 1,168,611 shares issuable on conversion of notes and accrued
interest through August 15, 200114, 2002 held jointly by Messrs. Underbrink and
Thompson.
(9) Includes shares issuable to St. James Capital Partners, LP and St.
James MerchanrMerchant Bankers L.P. and their affiliates on conversion of
notes and accrued interest through August 15, 200114, 2002 and exercise of
warrants. See " Certain"Certain Transactions."
(10) Based on information contained in the Schedule 13D dated October 9,
1997. On October 9, 1997, the Company issued 647,569 shares and paid
$586,000 in cash to purchase substantially all the assets of
Diamondback Directional, Inc. (which corporation subsequently changed
its name to Bendover Corp.). As of December 22, 1999, the Company
issued an additional 2,666,667 shares to Bendover CorpCorp. as part of the
consideration paid to resolve certain litigation. Messrs. Mann and
Jowers each own approximately 42.5% of the outstanding capital stock of
Bendover Corp.
CERTIFYING ACCOUNTANT
No principal accountant has been selected or is being recommended to
security holders for election, approval or ratification in the current year. The
Company's Board of Directors has selected PricewaterhouseCoopers L.L.P. as
the Company's independent auditors for 2001.not completed its selection procedures.
The Company expects a representative of PricewaterhouseCoopers L.L.P.LLP to
be present at the Meeting and to be available to respond to appropriate
questions or make a statement if they desire to do so.
SUBMISSION OF STOCKHOLDERS' PROPOSALS FOR 20022003 ANNUAL MEETING
Any proposals which Stockholders intend to present for a vote of
Stockholders at the Company's 20022003 Annual Meeting, and which such Stockholders
desire to have included in the Company's Proxy Statement and Form of Proxy
relating to that Meeting, must be sent to the Company's executive office and
received by the Company on or before May 14, 2002.
- 16 -April 23, 2003.
-17-
GENERAL
The cost of soliciting proxies will be borne by the Company. In
addition to solicitation by use of the mails, certain officers and regular
employees may solicit proxies personally and by telephone, and the Company will
request banks, brokerage houses and nominees and fiduciaries to forward
soliciting material to their principals and will reimburse them for their
reasonable out-of-pocket expenses.
The Company's annual report on Form 10-K for the year ended December
31, 2000,2001, including financial statements, as amended by an amendment on Form
10-K/A filed June 28, 2001, and its quarterly report on Form 10-Q/A10-Q
for the quarter and six months ended June 30, 20012002 are being mailed to
Stockholders herewith. Such reports are not, however, a part of this proxy
statement.
By Order of the Board of Directors
Dated: September 14, 2001August 21, 2002 Allen R. Neel, Secretary
- 17 -
APPENDIX A
AUDIT COMMITTEE CHARTER
I. PURPOSE
The purpose of the Audit Committee is to assist the Board of Directors
by overseeing the internal and external processes relating to the keeping of the
Company's financial and accounting records and the preparation of its financial
statements.
II. MEMBERSHIP
The members of the Audit Committee shall be appointed from time to time
by the Board of Directors from among its members. The Audit Committee shall
consist of at least two members, a majority of which shall be independent
directors. "Independent" is defined as an individual not employed by the Company
or its subsidiaries or otherwise having a relationship which, in the opinion of
the Company's Board of Directors, would interfere with the exercise of
independent judgment in carrying out the responsibilities of a Director.
III. MEETINGS
The Audit Committee shall meet at least two times per year and more
frequently as it believes is necessary or appropriate to fulfill its duties and
responsibilities under this Charter. The Committee shall report regularly to the
Board of Directors on the Committee's activities.
If the Committee deems it necessary, the Committee may retain special
accounting, legal or other advisors to assist it. The Committee shall have
access to all books, records, facilities and personnel of the Company. The
Committee may request any Company personnel, or the Company's outside legal
counsel or outside auditors, to meet with the Committee or any of its members or
advisors.
The Committee shall meet at least annually, in separate executive
sessions, with (a) the Company's management and (b) the Company's outside
auditors.
- 18 -
IV. DUTIES AND RESPONSIBILITIES
The Audit Committee shall:
Outside Auditors
----------------
1. In consultation with management, select and recommend to the Board
of Directors for appointment the Company's outside auditors for the coming
fiscal year.
2. In consultation with management, review and discuss with the outside
auditors the scope of their audit and non-audit services and their fees for
each.
3. Require that the outside auditors periodically submit to the
Committee a written statement consistent with Independent Standards Board
Standard No. 1 delineating all relationships between the outside auditors and
the Company.
4. Discuss with the outside auditors any disclosed relationships or
services that may affect their objectivity and independence.
5. Recommend to the Board any appropriate actions to satisfy itself of
the outside auditor's independence.
6. Recognizing that the outside auditors ultimately are accountable to
the Board of Directors and the Audit Committee, evaluate the performance of the
outside auditors and, if appropriate, recommend to the Board that the outside
auditors be replaced.
Financial Statements and Audit Results
--------------------------------------
7. Direct from time to time, as may be appropriate, that one or more of
its members discuss with management and the outside auditors the results of the
outside auditors' review of the Company's interim financial statements, prior to
the Company's quarterly earnings release or to the filing of its Quarterly
Report on Form 10-QSB, whichever is earlier.
8. Review and discuss the Company's audited financial statements and
the related auditors' report with management and the outside auditors prior to
recommending their approval and inclusion in the Company's Form 10-KSB to the
Board. In particular, as applicable before, during and after the audit process:
(a) Discuss with financial management and the outside
auditors any new auditing and accounting principals and
practices that must or may be adopted and their impact on the
Company's financial statements.
(b) Determine through discussion with the outside auditors
that no limitations were placed by management on the scope of
their audit or its implementation and that there was a free
exchange of information between Company personnel and the
outside auditors.
- 19 -
(c) Discuss with the outside auditors their judgment about
the quality, as well as the acceptability, of the accounting
principles which the Company applies in its financial
reporting.
(d) Periodically discuss areas of known financial risk and
uncertainty with management and management's plans to deal
with these risks and uncertainties.
Internal Accounting Procedures and Controls
-------------------------------------------
9. Review with management and the outside auditors reports and
recommendations relating to the integrity of the Company's internal accounting
procedures and controls.
10. Review the Company's plans for implementing any necessary or
desirable improvements to its internal accounting procedures and controls.
V. CHARTER AND PROXY STATEMENT REPORTS
11. The Audit Committee shall review and assess this Charter at least
annually and shall recommend to the Board of Directors for adoption any
revisions which the Committee believes are necessary or appropriate.
12. Consistent with the exercise of its business judgment, the
Committee shall prepare, for inclusion in the Company's Proxy Statement, the
annual Committee report required by the rules of the Securities and Exchange
Commission.
VI. COMMITTEE GOVERNANCE; LIMITS OF RESPONSIBILITY
13. The Committee shall establish such rules and procedures as it
believes are necessary to fulfill its duties and responsibilities under this
Charter.
14. The Committee shall be mindful that its role is one of oversight
and that it is not the duty or responsibility of the Committee to plan or
conduct audits or to determine if the Company's financial statements are
complete and accurate and in accordance with generally accepted accounting
principles. It is the responsibility of the Company's management to prepare the
financial statements and the responsibility of the Company's outside auditors to
conduct the audit. It also is not the duty of the Committee to resolve any
disagreements between the Company's management and its outside auditors.
- 20 --18-
APPENDIX: FORM OF PROXY
BLACK WARRIOR WIRELINE CORP.
3748 Highway #45 North100 Rosecrest Lane
Columbus, Mississippi 39701
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints William L. Jenkins and Danny Ray
Thornton, and each of them, as proxies, each with the power to appoint his
substitute, and hereby authorizes them to represent and vote, as designated
below, all the shares of common stock of Black Warrior Wireline Corp. held of
record by the undersigned on August 15, 200114, 2002 at the Annual Meeting of
Shareholders to be held on October 10, 2001September 23, 2002 or any adjournment thereof.
1. Election of Directors
|_| For all nominees listed below (except as marked to
contrary below)
|_| Withhold Authority to vote for all nominees listed
below
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE
A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.
William L. Jenkins
Charles E. Underbrink
John L. Thompson
2. In their discretion, the Proxies are authorized to vote upon
such other business as may properly come before the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR EACH OF THE DIRECTORS.
PLEASE SIGN EXACTLY AS NAME APPEARS BELOW. PLEASE MARK, SIGN, DATE AND
RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
WHEN SHARES ARE HELD BY JOINT TENANTS, BOTH SHOULD SIGN. WHEN SIGNING
AS ATTORNEY, AS EXECUTOR, ADMINISTRATOR, TRUSTEE, OR GUARDIAN, PLEASE GIVE FULL
TITLE AS
-19-
SUCH. IF A CORPORATION, PLEASE SIGN IN FULL CORPORATE NAME BY PRESIDENT
OR OTHER AUTHORIZED OFFICER. IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME
BY AUTHORIZED PERSON.
Dated: _______________, 2001 ___________________________________, 2002
--------------
-------------------------------------
Signature
Title (if required)
____________________________________-------------------------------------
Signature (if held jointly)
- II --20-