Exhibit 10.61

 

FORM OF LETTER AGREEMENT REGARDING OPTIONS GRANTED

TO EXECUTIVE OFFICERS DURING FISCAL 2004

 

[Date]

 

GRANT OF NON-QUALIFIED STOCK OPTION

 

[Name of Executive Officer]

Optionee

 

I am pleased to inform you that the Compensation Committee of the Board of
Directors of BJ Services Company (the “Company”) has granted you a non-qualified
stock option to purchase shares of the Common Stock of the Company as follows:

 

Date of Grant

        [Date of Grant]

Option Price per Share

        $[Exercise Price]

Non-Qualified Stock Option Shares Granted

        [Number of Shares]

Expiration of Options

        [Expiration Date]

 

Please note that this option has a seven-year term.

 

By signing below, you agree that this option is granted under and governed by
the terms and conditions of the Company’s 2000 Incentive Plan, including the
attached Terms and Conditions which are incorporated herein by reference.

 

This grant shall be void and of no effect unless you execute and return this
Agreement within ninety (90) days of the above date. Please sign and date both
copies of this document and return one copy to the Legal Department. The other
copy is for your records.

 

BJ SERVICES COMPANY

By:

       

J. W. Stewart

 

OPTIONEE:

 

Dated: 

   

 

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BJ SERVICES COMPANY

2000 INCENTIVE PLAN

 

TERMS AND CONDITIONS

STOCK OPTION FOR OFFICERS

 

The terms and conditions set forth below are hereby incorporated by reference
into the attached award agreement (“Agreement”) by and between BJ Services
Company (the “Company”) and the employee named therein (the “Employee”). Terms
defined in the 2000 Incentive Plan (the “Plan”) are used herein with the same
meaning.

 

  1. The employee has agreed to perform services for the Company or a subsidiary
and to accept the grant of one or more stock options, as designated on the
attached award agreement (“Option”), in accordance with the terms and provisions
of the Plan and the Agreement.

 

  2. The Option shall become vested (exercisable) and expire in accordance with
the following schedule:

 

Number of Shares

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Vesting Date

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Expiration Date

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1/3 of the Option

   one year from the Date of Grant    seven years from Date of Grant

1/3 of the Option

   two years from the Date of Grant    seven years from Date of Grant

1/3 of the Option

   three years from the Date of Grant    seven years from Date of Grant

 

  3. In the event of the Employee’s termination of employment by reason of
death, disability, or retirement (1) occurring on or after the first anniversary
of the Date of Grant, the Option shall become immediately vested in full on such
date to the extent not already vested.

 

  4. To the extent vested, the Option may be exercised in whole or in part or in
two or more successive parts; provided, however, that the Option shall not be
exercisable following the seventh anniversary of the Date of Grant or the
earlier termination of such Option as provided herein.

 

  (1) NOTE: The terms “disability” and “retirement” are used in these Terms and
Conditions as defined in the 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.

 

  5.

The employee agrees that the Company or its subsidiaries may withhold any
federal, state or local taxes upon the exercise of the Option, at such time and
upon such terms and conditions as required by law and as

 

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provided by the Plan. Notwithstanding anything herein to the contrary, the
Company shall not be obligated to issue any shares of Common Stock pursuant to
the exercise of the Option until the Employee has satisfied such withholding
obligations or made arrangements for satisfying such obligations that are
acceptable to the Company or its subsidiary.

 

  6. The Option may be exercised from time to time by a notice in writing of
such exercise which states the Date of Grant set forth in the Agreement, the
number of shares in respect of which the Option is being exercised and the type
of award (Incentive Stock Option or Non-Qualified Stock Option). Such notice
shall be delivered to the Secretary of the Company or addressed to the Secretary
of the Company at its corporate offices in Houston, Texas. An election to
exercise shall be irrevocable. The date of exercise shall be the date the notice
is hand-delivered or received by the Secretary, whichever is applicable.

 

  7. An election to exercise an Option shall be accompanied by the tender of the
full purchase price of the shares of Common Stock for which the election is
made. Payment may be made in cash, shares of Common Stock of the Company already
owned, a “cashless exercise” procedure established by the Company, or any
combination thereof. If the Employee desires to tender Common Stock already
owned by the Employee as payment, the Employee must notify the Secretary in the
written notice of exercise of such desire and, subject to the Secretary’s
confirmation that the Employee is the record holder of such number of shares, it
shall not be necessary for the Employee to tender stock certificates to
effectuate such payment of the exercise price. The value of the number of shares
tendered to exercise the Option cannot exceed the Option’s exercise price, and
such tendered shares shall be valued at the Common Stock Price per share on the
trading day prior to the date of exercise of the Option. If the shares tendered
for payment were acquired by the Employee pursuant to the prior exercise of a
Company granted option, such shares must have been owned for at least six
months.

 

  8. The portion of the Option that is an Incentive Option is not transferable
by the Employee, otherwise than by will or the laws of descent and distribution,
and may be exercised during the lifetime of the Employee only by the Employee.

 

The portion of the Option that is a Non-Qualified Stock Option may be
transferred (in whole or in part) by the Employee to (1) the spouse, children or
grandchildren of the Employee (“Immediate Family Members”), (2) a trust or
trusts for the exclusive benefit of the Immediate Family Members and, if
applicable, the Employee, or (3) a partnership in which such Immediate Family
Members, and, if applicable, the Employee are the only partners. Following
transfer, any such transferred option rights shall continue to be subject to the
same terms and conditions as

 

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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 and any other legal obligations the Company may have
with respect to the option rights. Except as provided in the preceding sentence,
the Non-Qualified Stock Option is not transferable by the Employee, otherwise
than by will or the laws of descent and distribution, and may be exercised
during the lifetime of the Employee only by the Employee.

 

  9. In the event of the termination of the Employee’s employment (whether
voluntary or involuntary), for any reason other than death, disability or
retirement or by the Company or a subsidiary for Cause, the Option outstanding
on such date of termination, to the extent vested on such date, may be exercised
by the Employee (or in the event of the Employee’s death, by the Employee’s
estate or by the person or persons who acquire the right to exercise the Option
by bequest or inheritance (“Heir”) within three months following such
termination of employment, but, except as provided in paragraph 14 hereof, not
thereafter; provided, however, in no event shall the Option be exercisable after
the seventh anniversary of the Date of Grant. To the extent the Option is not
vested on the Employee’s date of termination, the Option or the portion thereof
that is not vested on such date shall automatically lapse and be cancelled
unexercised as of the Employee’s date of termination.

 

  10. In the event of the Employee’s termination of employment by reason of
death, the Option granted herein, to the extent vested on such date, may be
exercised by the Employee’s Heir at any time within the one-year period after
the Employee’s date of death, but not thereafter, and in no event shall the
option be exercisable after the seventh anniversary of the Date of Grant.

 

  11. In the event of the Employee’s termination of employment by reason of
disability or retirement, (2) the Option granted herein, to the extent vested on
such date may be exercised by the Employee (or in the event of the Employee’s
death, the Employee’s Heir) within the 36-month period following such
termination of employment, but not thereafter, and in no event shall the Option
be exercisable after the seventh anniversary of the Date of Grant.(3)

 

  12. In the event of the Employee’s termination of employment either by reason
of Cause or prior to the date of vesting of the Option, the Option shall
automatically lapse in full and be cancelled unexercised as of that date.

 

  13.

In the event of a change in the capitalization of the Company due to a merger,
consolidation, recapitalization, reclassification, stock split, stock

 

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dividend, combination of shares, or similar event, the terms of the Agreement
shall be adjusted by the Committee to reflect such change, and the determination
of the Committee shall be final and binding.

 

  14. Upon the occurrence of a Change of Control, notwithstanding any other
provision in the Plan or the Agreement to the contrary, the Option shall
automatically become vested and exercisable in fill on such date and shall be
immediately exercisable in full for such period as provided in the Plan.
Further, in the event of a Change of Control, the following provisions also
apply to the Option:

 

  (2) NOTE: See NOTE (1) above.

 

  (3) NOTE: Incentive Stock Options are treated as non-qualified options for tax
purposes if not exercised within three months after the optionee’s employment
with the Company and its subsidiaries ceases. See the Plan Summary and
Prospectus for Incentive Plans.

 

(a) Publicly Traded Stock Transaction. If the consideration offered to
shareholders of the Company in connection with a Change of Control consists of
publicly traded shares of the common stock (the “New Stock”) of an entity
acquiring the Company or the parent company of an entity acquiring the Company
(the “Acquiring Entity”), upon the occurrence of such Change of Control, the
Acquiring Entity will assume the Option and the Option will become an option (a
“New Option”) to purchase a number of shares of New Stock, with the number of
shares subject to the New Option and the exercise price thereof to be determined
in accordance with Article XII of the Plan. The New Option will otherwise be
subject to the same terms and conditions as the Option, except that the New
Option will be exercisable until the seventh anniversary of the Date of Grant
regardless of any termination of the Employee’s employment following the Change
of Control and the 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 in shares of New Stock to be determined in accordance
with Article XII of the Plan.

 

(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 the Change of Control, the
Employee will surrender the Option to the Acquiring Entity in return for a
payment in cash equal to the Black-Scholes value of the Option as of the date of
the Change of Control, without discount for risk of forfeiture and
non-transferability. Such Black-Scholes valuation will be performed on a basis
consistent with the methodology set forth in Article XII of the Plan.

 

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  15. Nothing in the Agreement or in the Plan shall confer on the Employee any
right to continue employment with the Company or its subsidiaries nor restrict
the Company or its subsidiaries from termination of the employment relationship
of the Employee, with or without cause, at any time.

 

  16. Notwithstanding any other provision of the Plan or the Agreement, the
Employee agrees that the Employee will not exercise the Option and the Company
shall not be obligated to issue any shares of Common Stock, if the Committee
determines such issuance would violate any state or federal law or the rules or
regulations of any governmental regulatory body or agreement between the Company
and any national securities exchange upon which the Common Stock is listed.

 

  17. In the event of a conflict between the terms of the Agreement and the
Plan, the Plan shall be the controlling document.