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BOOTS & COOTS INTERNATIONAL WELL CONTROL, INC.
_______________________________
NOTE PURCHASE AGREEMENT
_______________________________
DATED AS OF JANUARY 2, 1998
$5,000,000
10.0% SENIOR SECURED NOTES DUE MAY 2, 1998
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BOOTS & COOTS INTERNATIONAL WELL CONTROL, INC.
_______________________________
NOTE PURCHASE AGREEMENT
_______________________________
$5,000,000
10.0% Senior Secured Notes Due May 2, 1998
Main Street Merchant Partners II, L.P.
1360 Post Oak Blvd., Suite 800
Houston, Texas 77056
Geneva Associates, L.L.C.
300 North Greene Street
Greensboro, North Carolina 27401
Ladies and Gentlemen:
BOOTS & COOTS INTERNATIONAL WELL CONTROL, INC., a Delaware corporation
(together with its successors and assigns, the "Company"), hereby agrees with
you as follows:
1. PURCHASE AND SALE OF NOTES
1.1 Issuance of Notes. The Company will authorize the issuance of Five
Million Dollars ($5,000,000) in aggregate principal amount of its ten percent
(10.0%) Senior Secured Notes due May 2, 1998 (the "Notes"). The Notes shall be
in the form of Exhibit 1.1 hereto, and shall have the terms as herein and
therein provided, and the terms therein provided are incorporated hereby by
reference as if set forth herein in full.
1.2 The Closing.
(a) Purchase and Sale of Notes. The Company hereby agrees to sell
each of you and each of you hereby agree to purchase from the Company, in
accordance with the provisions hereof, the aggregate principal amount of Notes
set forth below your respective name on Annex 1 hereto at one hundred percent
(100%) of the principal amount thereof.
(b) The Closing. The Closing (the Closing") of the Company's sale of
Notes
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will be held on January 2, 1998 (the "Closing Date") at 10:00 a.m., local time,
at the office of Hutcheson & Grundy, L.L.P., your special counsel. At the
Closing, the Company will deliver to you one or more Notes (as set forth below
your name on Annex 1 hereto), in the denominations indicated on Annex 1 hereto,
in the aggregate principal amount of your purchase, dated the Closing Date and
payable to you or payable as indicated on Annex 1 hereto, against payment by
federal funds wire transfer in immediately available funds of the purchase price
thereof, as directed to you by the Company. The sales of the Notes to each of
you are separate sales.
1.3 Purchase for Investment; ERISA.
(a) Purchase for Investment. You represent to the Company that you
are purchasing the Notes listed on Annex 1 thereto below your name for your own
account for investment and with no present intention of distributing the Notes
or any part thereof, but without prejudice to your right at all times to: (i)
sell or otherwise dispose of all or any part of the Notes under a registration
statement filed under the Securities Act, or in a transaction exempt from the
registration requirements of the Securities Act; and (ii) have control over the
disposition of all of your assets to the fullest extent required by any
applicable law.
(b) ERISA. You represent that you are acquiring the Notes for your
own account with your general assets and that no part of such assets constitutes
assets of an "employee benefit plan" (as defined in ERISA) or a "plan" (as
defined in the Code).
1.4 Failure to Tender, Failure of Conditions. If at the Closing the
Company fails to tender to you the Notes to be purchased by you, or if the
conditions specified in Section 3 hereof to be fulfilled at the Closing have not
been fulfilled, you may thereupon elect to be relieved of all further
obligations hereunder. Nothing in this Section 1.4 shall operate to relieve the
Company from any of its obligations hereunder or to waive any of your rights
against the Company.
1.5 Expenses.
(a) Generally. Whether or not the Notes are sold, the Company will at
the Closing, or if the Closing does not occur, promptly pay all fees, expenses
and costs relating hereto, including, but not limited to:
(i) your reasonable out-of-pocket travel costs associated with
the transactions contemplated by this Agreement;
(ii) the reasonable fees and disbursement of your special counsel
incurred in connection herewith; and
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(iii) the reasonable fees, expenses and costs incurred in
complying with each of the conditions to closing set forth in Section 3
hereto.
(b) Counsel. Without limiting the generality of the foregoing, it is
agreed and understood that the Company will pay, at the Closing, the statement
for fees and disbursements of your special counsel presented at the Closing and
the Company will also pay upon receipt of any statement thereof, each additional
statement for fees and disbursements of your special counsel rendered after the
Closing in connection with the issuance of the Notes or the matters referred to
in Section 1.5(a) hereof.
(c) Survival. The obligations of the Company under this Sections 1.5,
5.4, 9.4(d) and 9.6 hereof shall survive the payment of the Notes and the
termination hereof.
2. WARRANTIES AND REPRESENTATIONS
To induce you to enter into this Agreement and to purchase the Notes listed
on Annex 1 hereto below your name, the Company warrants and represents, as of
the Closing Date, as follows:
2.1 Corporate Organization. (a) The Company and each of its Subsidiaries
(i) is a duly incorporated and existing corporation (or other Person) in good
standing under the laws of the jurisdiction of its organization, (ii) has all
necessary corporate power (or comparable power, in the case of a Subsidiary that
is not a corporation) to own the property and assets it uses in its business and
otherwise to carry on its business, and (iii) is duly licensed or qualified and
in good standing in each jurisdiction in which the nature of the business
transacted by it or the nature of the property owned or leased by it makes such
licensing or qualification necessary, except where the failure to be so licensed
or qualified could not reasonably be expected to have a Material Adverse Effect.
(b) As of the date hereof, the Company has no Subsidiaries and owns no
interest in any joint venture or other entity other than as listed in Schedule
2.1.
2.2 Sale of Notes is Legal and Authorized; Obligations are Enforceable.
(a) Sale of Notes is Legal and Authorized; Obligations are
Enforceable. Each of the issuance, sale and delivery of the Notes by the
Company, the execution and delivery hereof by the Company and compliance by the
Company with all of the provisions hereof and of the Notes;
(i) is within the corporate powers of the Company; and
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(ii) is legal and does not conflict with, result in any breach of
any of the provisions of, constitute a default under, or result in the
creation of any Lien upon any Property of the Company or any Subsidiary
under the provisions of any agreement, charter instrument, bylaw or other
instrument to which it is a party or by which it or any of its properties
may be bound except as set forth in Schedule 2.2.
(b) Obligations are Enforceable. Each of this Agreement, the Notes,
the Guaranties and the other Documents has been duly authorized by all necessary
action on the part of the Company or the applicable Guarantor, has been executed
and delivered by duly authorized officers of the Company or the applicable
Guarantor and constitutes a legal, valid and binding obligation of the Company
or the applicable Guarantor, enforceable in accordance with its terms, except
that the enforceability thereof: (i) limited by applicable bankruptcy,
reorganization, arrangement, insolvency, moratorium or other similar laws
affecting the enforceability of creditors' rights generally; and (ii) subject to
the availability of equitable remedies.
2.3 Private Offering of Notes. Neither the Company nor any other Person
has offered any of the Notes or any similar Security of the Company for sale to,
or solicited offers to buy any thereof from, or otherwise approached or
negotiated with respect thereto with, any prospective purchaser, other than the
Purchasers.
2.4 No Defaults; Transactions Prior to Closing Date.
(a) No event has occurred and no condition exists that, upon the
execution and delivery of this Agreement and the issuance of the Notes, would
constitute a Default or an Event of Default.
(b) The Company has not entered into any transaction since the date of
the most recent balance sheet delivered to you that would have been prohibited
by this Agreement had such Agreement been in effect since such date.
2.5 No Violation. Neither the execution, delivery nor performance by the
Company or any of the Guarantors of the Documents to which it is a party nor
compliance by any of such Persons with the terms and provisions thereof, nor the
consummation by it of the transactions contemplated herein or therein, will (i)
contravene any applicable provision of any law, statute, rule or regulation, or
any applicable order, writ, injunction or decree of any court or governmental
instrumentality, (ii) conflict with or result in any breach of any term,
covenant, condition or other provision of, or constitute a default under, or
result in the creation or imposition of (or the obligation to create or impose)
any Lien other than any Permitted Lien upon any of the property or assets of the
Company or any of its Subsidiaries under the terms of any contractual obligation
to which the Company or any of its Subsidiaries is a party or by which it or any
of its properties or assets are bound or to which it may be subject except as
are not
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reasonably expected to have a Material Adverse Effect, or (iii) violate or
conflict with any provision of the Certificate or Articles of Incorporation or
Bylaws of such Person.
2.6 Litigation. There are no lawsuits (including, without limitation,
derivative or injunctive actions), arbitration proceedings or governmental
proceedings pending or, to the best knowledge of the Company, threatened,
involving the Company or any of its Subsidiaries except for such lawsuits or
other proceedings which are not reasonably expected to have a Material Adverse
Effect.
2.7 Use of Proceeds; Margin Regulations. The proceeds of the Notes shall
only be used for the acquisition by IWC Services, Inc. of the common stock of
ITS Supply Corporation pursuant to the terms of that certain Stock Purchase
Agreement dated as of December 31, 1997, by and between IWC Services, Inc. and
LaSalle Cattle Company, Ltd. and for the payment of certain financial advisory
services as provided in the Note Purchase Agreements. Neither the Company nor
any of its Subsidiaries are engaged in the business of extending credit for the
purpose of purchasing or carrying margin stock. No proceeds of any Note will be
used to purchase or carry any "margin stock" (as defined in Regulation U of the
Board of Governors of the Federal Reserve System), to extend credit for the
purpose of purchasing or carrying any "margin stock," or for a purpose which
violates Regulations G, T, U or X of the Board of Governors of the Federal
Reserve System.
2.8 Investment Company Act. Neither the Company nor any of its
Subsidiaries is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.
2.9 Public Utility Holding Company Act. Neither the Company nor any of
its Subsidiaries is a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company," within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
2.10 True and Complete Disclosure. All factual information heretofore or
contemporaneously furnished by the Company or any of its Subsidiaries in writing
to the holder of any Note in connection with any Document or any transaction
contemplated therein is, and all other such factual information hereafter
furnished by any such Persons in writing to the holder of any Note in connection
herewith, any of the other Documents or the Notes will be, true and accurate in
all material respects, taken as a whole, on the date of such information and not
incomplete by omitting to state any material fact necessary to make the
information therein not misleading at such time in light of the circumstances
under which such information was provided.
2.11 Financial Statements. The financial statements heretofore delivered
to you for the Company's fiscal year ended June 30, 1997, and for the Company's
fiscal quarter ended
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September 30, 1997, have been prepared in accordance with GAAP, applied on a
basis consistent, except as otherwise noted therein, with the Company's
financial statements for the previous fiscal year. Each of such annual and
quarterly financial statements fairly presents on a consolidated basis the
financial position of the Company as of the dates thereof, and the results of
operations for the periods covered thereby, subject in the case of interim
financial statements, to normal year-end adjustments and omission of certain
footnotes as permitted by the SEC. As of the Effective Date, the Company and its
Subsidiaries, considered as a whole, have no material contingent liabilities or
material Indebtedness required under GAAP to be disclosed in a consolidated
balance sheet of the Company that were not disclosed in the financial statements
referred to in this Section 2.11 or in the notes thereto or disclosed in writing
to you.
2.12 No Material Adverse Change. There has occurred no event or effect
since September 30, 1997, that has had, or to the best knowledge of the Company
could reasonably be expected to have, a Material Adverse Effect.
2.13 Labor Controversies. There are no labor strikes, lock-outs, slow
downs, work stoppages or similar events pending or, to the best knowledge of the
Company, threatened against the Company or any of its Subsidiaries that could
reasonably be expected to have a Material Adverse Effect.
2.14 Taxes. The Company and its Subsidiaries have filed all federal tax
returns and all other material tax returns required to be filed, or obtained
extensions for such filings, and have paid all governmental taxes, rates,
assessments, fees, charges and levies (collectively, "Taxes") currently due
except such Taxes, if any, as are being contested in good faith and for which
reserves have been provided in accordance with GAAP. No tax liens have been
filed and no claims are being asserted for Taxes. The charges, accruals and
reserves on the books of the Company and its Subsidiaries for Taxes and other
governmental charges have been determined in accordance with GAAP.
2.15 ERISA. With respect to each Plan, the Company and its Subsidiaries
have fulfilled their obligations under the minimum funding standards of, and are
in compliance in all material respects with, ERISA and with the Code to the
extent applicable to it, and have not incurred any liability under Title IV of
ERISA to the PBGC or a Plan other than a liability to the PBGC for premiums
under Section 4007 of ERISA. Neither the Company nor any of its Subsidiaries
has any contingent liability with respect to any post-retirement benefits under
a welfare plan as defined in ERISA other than liability for continuation
coverage described in Part 6 of Title I of ERISA.
2.16 Consents. All consents and approvals of, and filings and
registrations with, and all other actions of, all governmental agencies,
authorities or instrumentalities required as a condition to the execution and
delivery of this Agreement or the offer, issuance, sale or delivery of the Notes
have been obtained or made and are in full force and effect.
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2.17 Ownership of Property. The Company and its Subsidiaries have good and
marketable title to or a valid leasehold interest in all of their respective
property except to the extent, in the aggregate, no Material Adverse Effect
could reasonably be expected to result from the failure to have such title or
interest, free and clear of any Liens except Permitted Liens. The Company and
its Subsidiaries own or hold valid licenses to use all the material patents,
trademarks, permits, service marks and trade names, free of any burdensome
restrictions, that are necessary to the operation of the business of the Company
and its Subsidiaries as presently conducted.
2.18 Compliance with Statutes. The Company and its Subsidiaries are in
compliance with all applicable statutes, regulations and orders of, and all
applicable restrictions imposed by, all governmental bodies and have all
necessary permits, licenses and other necessary authorizations with respect to
the conduct of their businesses and the ownership and operation of their
properties except where the failure to so comply or hold such permits, licenses
or other authorizations, individually or in the aggregate, could not reasonably
be expected to have a Material Adverse Effect.
2.19 Environmental Matters.
(a) The Company and its Subsidiaries are in compliance with all
applicable Environmental Laws and the requirements of any permits issued under
such Environmental Laws except as could not reasonably be expected to have a
Material Adverse Effect. To the best knowledge of the Company, there are no
pending, past or threatened Environmental Claims against the Company or any of
its Subsidiaries or any property owned or operated by the Company or any of its
Subsidiaries except as could not be expected to have a Material Adverse Effect.
To the best knowledge of the Company, there are no conditions or occurrences on
any property owned or operated by the Company or any of its Subsidiaries or on
any property adjoining or in the vicinity of any such property that could
reasonably be expected (i) to form the basis of an Environmental Claim against
the Company or any of its Subsidiaries or any property owned or operated by the
Company or any of its Subsidiaries, or (ii) to cause any property owned or
operated by the Company or any of its Subsidiaries to be subject to any material
restrictions on the ownership, occupancy, use or transferability of such
property by the Company or any of its Subsidiaries under any applicable
Environmental Law except for any such condition or occurrence described in
clauses (i) or (ii) which could not reasonably be expected to have a Material
Adverse Effect.
(b) To the best knowledge of the Company (i) Hazardous Materials have
not at any time been generated, used, treated or stored on, or transported to or
from, any property owned or operated by the Company or any of its Subsidiaries
in a manner that has violated or could reasonably be expected to violate any
Environmental Law, except for such violation which could not reasonably be
expected to have a Material Adverse Effect, and (ii) Hazardous Materials
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have not at any time been released on or from any property owned or operated by
the Company or any of its Subsidiaries in a matter that has violated or could
reasonably be expected to violate any Environmental Law, except for such
violation which could not reasonably be expected to have a Material Adverse
Effect.
2.20 Other Agreements. No monetary default or material non-monetary
default exists in connection with any instrument evidencing Indebtedness of the
Company or any of the Subsidiaries except for any default, individually or in
the aggregate which could not reasonably be expected to have a Material Adverse
Effect. Neither the Company nor any Subsidiary is in violation in any respect
of any term in any other agreement or other instrument to which it is a party or
by which it or any of its properties may be bound except for such failures that,
in the aggregate for all such failures, could not reasonably be expected to have
a Material Adverse Effect.
2.21 Restrictions on Company and Subsidiaries. Neither the Company nor any
Subsidiary:
(a) is a party to any contract or agreement, or subject to any charter
or other corporate restriction that, in the aggregate for all such contracts,
agreements, charters and corporate restrictions, could reasonably be expected to
have a Material Adverse Effect;
(b) is a party to any contract or agreement that restricts the right
or ability of such corporation to incur Indebtedness other than this Agreement
or that restricts the issuance and sale of the Notes or the performance of the
Company hereunder or under the Notes; and
(c) has agreed or consented to cause or permit in the future (upon the
happening of a contingency or otherwise) any of its property, whether now owned
or hereinafter acquired, to be subject to a Lien not permitted by this
Agreement.
2.22 Senior Debt; Existing Indebtedness. The obligation of the Company to
the Purchasers under the Notes is senior in right of repayment to all other
Indebtedness except the IWC Note and is secured by all assets of the Company and
its domestic subsidiaries and 65% of the stock of the foreign subsidiaries of
IWC Services, Inc. Schedule 2.22 lists all Indebtedness of the type in clause
(a), (b) and (c) of the definition thereof of the Company and its Subsidiaries
as of the Closing Date, and provides the following information with respect to
each item of such Indebtedness: (i) the holder thereof and type thereof, (ii)
the outstanding amount, (iii) the current portion, and (iv) the collateral
securing such Indebtedness, if any.
3. CLOSING CONDITIONS
Your obligation to purchase and pay for the Notes to be delivered to you at
the Closing
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is subject to the following conditions precedent (unless waived by you and the
Other Purchaser in writing prior to the Closing):
3.1 Opinion of Counsel. You shall have received from Brown, Parker & Leahy, L.L.P. a closing opinion, dated as of the Closing Date, substantially in
the form set forth in Exhibit 3.1 hereto and as to such other matters as you may
reasonably request. This Section 3.1 shall constitute direction by the Company
to such counsel to deliver such closing opinion to you.
3.2 Warranties and Representations True. The warranties and
representations contained in Section 2 hereof shall be true on the Closing Date
with the same effect as though made on or and as of that date.
3.3. Secretary's Certificates. You shall have received a duly executed
Secretary's Certificate dated the Closing Date from the Company and each
Guarantor in form and substance satisfactory to you.
3.4 Guaranties. You shall have received the duly executed Guaranties of
each of the Guarantors in substantially the form of Exhibit 3.4 hereto.
3.5 Stock Pledge Agreement. You shall have received a duly executed Stock
Pledge Agreement from each of the Company and IWC Services, Inc. in
substantially the form of Exhibit 3.5 hereto, together with the undated stock
certificates referenced therein and stock powers relating thereto.
3.6 Security Agreements. You shall have received a duly executed Security
Agreement in substantially the form of Exhibit 3.6 hereto from the Company and
each of the Guarantors, together with duly executed UCC-1 Financing Statements
relating thereto.
3.7 Warrant. Main Street shall have received a duly issued and authorized
Warrant for 1,200,000 shares and Geneva shall have received a duly issued and
authorized Warrant for 800,000 shares of common stock of the Company in
substantially the form of Exhibit 3.7 hereto.
3.8 Registration Rights Agreement. Each of you shall have received a duly
executed Registration Rights Agreement in substantially the form of Exhibit 3.8
hereto.
3.9 Expenses. All fees and disbursements required to be paid pursuant to
Section 1.5(b) hereof shall have been paid in full.
3.10 Intercreditor Agreement. Each of you shall execute and deliver the
Intercreditor Agreement.
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3.11 Financial Advisory Services. Main Street shall have received a fee of
$300,000 and Geneva shall have received a fee of $200,000 in partial
consideration for financial advisory services to be provided by you to the
Company over the thirty-six (36) month period from the Closing Date.
3.12 Compliance with this Agreement. Each of the Company and the
Subsidiaries shall have performed and complied with all agreements and
conditions contained herein that are required to be performed or complied with
by the Company and the Subsidiaries on or prior to the Closing Date, and such
performance and compliance shall remain in effect on the Closing Date.
3.13 Proceedings Satisfactory. All proceedings taken in connection with
the issuance and sale of the Notes and all documents and papers relating thereto
shall be satisfactory to you and your special counsel. You and your special
counsel shall have received copies of such documents and papers as you or they
may reasonably request in connection therewith or in connection with your
special counsel's closing opinion, all in form and substance satisfactory to you
and your special counsel.
3.14 Acquisition of ITS Supply Corporation.
(a) Acquisition Conditions. All conditions to the acquisition of the stock
of ITS Supply Corporation contained in the Stock Purchase Agreement dated as of
December 31, 1997, by and between LaSalle Cattle Company, Ltd., a Texas limited
partnership, and IWC Services, Inc. shall have been satisfied in full (without
amendment or waiver of, or other forbearance to exercise any rights with respect
to, any of the terms and provisions thereof), subject only to purchase of the
Notes under the Note Purchase Agreements;
(b) No Restraint. No judgment, order, injunction or other similar
restraint prohibiting or imposing adverse conditions upon the purchase of shares
of ITS Supply Corporation by IWC Services, Inc. shall be outstanding, and no
actions, suits or proceedings shall be pending or threatened with respect to the
Company, IWC Services, Inc. or ITS Supply Corporation or their respective
Subsidiaries which may have an adverse effect on such Acquisition;
(c) Shares of Stock. The shares of stock of ITS Supply Corporation, ITS
Venezuela S.A., ITS Peru S.A., and ITS Supply & Logistics UK Limited to be
purchased in such acquisition will be purchased free and clear of all
restrictions to purchase imposed by applicable laws or regulations and any
voting trusts, proxies or similar arrangements or applicable laws or regulations
that would restrict IWC Services, Inc.'s or ITS Supply Corporation's, as
applicable, right to exercise the voting rights attributable to such shares;
(d) Regulatory Filings. All actions and proceedings required by applicable
laws or
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regulations to have been taken prior to or on the date of such acquisition in
order for the Company to be able to lawfully consummate such acquisition shall
have been taken, all waiting periods thereunder and therefore shall have expired
or terminated without any action being taken by any competent authority which
restrains, prevents or imposes adverse conditions upon the consummation of such
acquisition, and all consents, waivers and approvals (including, without
limitation, those of any governmental authority or regulatory body) necessary to
have been given or obtained prior to or on the date of such acquisition in order
for the Borrower to be able to lawfully consummate such Acquisition shall have
been given or obtained and remain in full force and effect, including, without
limitation, compliance with the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended; and
(e) Additional Guaranty. ITS Supply Corporation shall execute and deliver
a Guaranty substantially in the form of Exhibit 3.4 hereto within one (1)
Business Date of the Closing Date.
4. PAYMENTS
4.1 Principal Payments. All of the principal of the Notes remaining
outstanding on May 2, 1998, together with interest accrued thereon, shall become
due and payable on May 2, 1998.
4.2 Interest Payments. The Notes will bear interest at the rate of 10.0%
per annum, such interest to be payable monthly in arrears commencing February 1,
1998, and on the first day of each month thereafter until May 2, 1998, when all
principal, together with accrued and unpaid interest shall be due and payable.
If an Event of Default shall have occurred, and for so long as such Event of
Default continues, or if any payment of principal, interest or fees is not paid
when due, interest shall accrue upon the principal of the Notes, together with
any accrued and unpaid interest and fees, at the Highest Lawful Rate. It is the
intention of the holder of the Notes to conform strictly to usury laws
applicable to them. Accordingly, if the transactions contemplated hereby or the
Notes would be usurious as to any of the holders of the Notes under laws
applicable to it (including the laws of the United States of America and the
State of Texas or any other jurisdiction whose laws may be mandatorily
applicable to such holder notwithstanding the other provisions of this
Agreement, the Notes or any other Document), then, in that event,
notwithstanding anything to the contrary in this Agreement, the Notes or any
other Document, it is agreed as follows: (i) the aggregate of all consideration
which constitutes interest under laws applicable to such holder that is
contracted for, taken, reserved, charged or received by such holder under this
Agreement, the Notes or any other Document or otherwise shall under no
circumstances exceed the Highest Lawful Rate, and any excess shall be credited
by such holder on the principal amount of the Notes (or, if the principal amount
of such Notes shall have been paid in full, refunded by such holder to the
Company); (ii) in the event that the maturity of the Notes is accelerated by
reason of an election of the holder or holders thereof resulting
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from any Event of Default hereunder or otherwise, or in the event of any
required or permitted prepayment, then such consideration that constitutes
interest under laws applicable to such holder may never include more than the
Highest Lawful Rate, and excess interest, if any, provided for in this
Agreement, the Notes, any other Document or otherwise shall be automatically
canceled by such holder as of the date of such acceleration or prepayment and,
if theretofore paid, shall be credited by such holder on the principal amount of
the Notes held by it (or if the principal amount of such Notes shall have been
paid in full, refunded by such holder to the Company); and (iii) if at any time
the interest provided under the Notes or the Agreement, together with any other
fees payable pursuant to the Notes, the Agreement or any other Document and
deemed interest under applicable law, exceeds the amount that would have accrued
at the Highest Lawful Rate, the amount of interest and any such fees to accrue
to such holder hereunder and thereunder shall be limited to the amount which
would have accrued at the Highest Lawful Rate, but any subsequent reductions
shall not reduce the interest to accrue to such holder hereunder and thereunder
below the Highest Lawful Rate until the total amount of interest accrued
pursuant hereto and thereto and such fees deemed to be interest equals the
amount of interest which would have accrued to such holder if a varying rate per
annum equal to the interest hereunder had at all times been in effect plus the
amount of fees which would have been received but for the effect hereof; and in
each case, to the extent permitted by applicable law, such holder shall not be
subject to any of the penalties provided by law for contracting for, taking,
reserving, charging or receiving interest in excess of the Highest Lawful Rate.
To the extent applicable, you hereby elect to determine the applicable rate
ceiling under Chapter 1D of Article 5069 of the Texas Credit Title Act, Title
79, Texas Revised Civil Statutes by the weekly rate ceiling from time to time in
effect, subject to your right, or any subsequent holder of the Notes right, to
change such method in accordance with applicable law.
4.3 Best Efforts. The Company shall use its best efforts from and after
the Closing Date to promptly refinance the Notes and to prepay the Notes in
full.
4.4 Optional Prepayments. The Company may, at any time, prepay the
principal amount of the Notes in part, in an aggregate principal amount of not
less than $100,000 at any time, or in whole, in each case together with interest
on such principal amount then being prepaid accrued to the prepayment date.
4.5 Partial Prepayment Pro Rata. The aggregate principal amount of each
partial prepayment of the Notes shall be allocated among the holders of the
Notes at the time outstanding in proportion, as nearly as practicable, to the
respective unpaid principal amounts of the Notes then outstanding.
4.6 Notation of Notes on Prepayment. Upon any partial prepayment of a
Note, such Note may (but shall not be required to be), at the option of the
holder thereof, be:
(a) surrendered to the Company pursuant to Section 5.2 hereof in
exchange
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for a new Note in a principal amount equal to the principal amount remaining
unpaid on the surrendered Note;
(b) made available to the Company for notation thereon of the portion
of the principal so prepaid; or
(c) marked by such holder with a notation thereon of the portion of
the principal so prepaid.
In case the entire principal amount of any Note is paid, such Note shall be
surrendered to the Company for cancellation and shall not be reissued, and no
Note shall be issued in lieu of the paid principal amount of any Note.
5. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES
5.1 Registration of Notes. The Company will cause to be kept at its
principal place of business a register for the registration and transfer of
Notes. The name and address of each holder of one or more Notes, each transfer
thereof and the name and address of each transferee of one or more Notes shall
be registered in such register. The Person in whose name any Note shall be
registered shall be deemed and treated as the owner and holder thereof for all
purposes hereof and the Company shall not be affected by any notice or knowledge
to the contrary.
5.2 Exchange of Notes.
(a) Upon surrender of any Note at the office of the Company duly
endorsed or accompanied by a written instrument of transfer duly executed by the
registered holder of such Note or such holder's attorney duly authorized in
writing, the Company will execute and deliver, at the Company's expense (except
as provided below), new Notes in exchange therefor, in denominations of at least
$100,000 (except as may be necessary to reflect any principal amount not evenly
divisible by $100,000, in an aggregate principal amount equal to the unpaid
principal amount of the surrendered Note. Each such new Note shall be payable
to such Person as such holder may request and shall be substantially in the form
of Exhibit 1.1 hereto. Each such new Note shall be dated and bear interest from
the date to which interest shall have been paid on the surrendered Note or dated
the date of the surrendered Note if no interest shall have been paid thereon.
The Company may require payment of a sum sufficient to cover any stamp tax or
governmental charge imposed in respect of any such transfer of Notes.
(b) The Company will pay the cost of delivering to or from such
holder's home office or custodian bank from or to the Company, insured to the
reasonable satisfaction of such holder, the surrendered Note and any Note issued
in substitution or replacement for the surrendered Note.
13
(c) Each holder of Notes agrees that, in the event it shall sell or
transfer any Note without surrendering such Note to the Company as set forth in
Section 5.2(a) hereof, it shall:
(i) prior to the delivery of such Note, make a notation thereon
of all principal, if any, paid on such Note and shall also indicate thereon
the date to which interest shall have been paid on such Note; and
(ii) promptly notify (or cause the transferee of any such Note to
notify) the Company of the name and address of the transferee of any such
Note so transferred and the effective date of such transfer.
5.3 Replacement of Notes.
Upon receipt by the Company of evidence reasonably satisfactory to it of
the ownership of and the loss, theft, destruction or mutilation of any Note
(which evidence shall be, in the case of an Institutional Investor, an affidavit
from such Institutional Investor of such ownership (or of ownership by such
Institutional Investor's nominee) and such loss, theft, destruction or
mutilation); and
(a) in the case of loss, theft or destruction, of indemnity reasonably
satisfactory to the Company (provided that if the holder of such Note is an
Institutional Investor or a nominee of such Institutional Investor, such
institutional investor's own unsecured agreement of indemnity shall be deemed to
be satisfactory for such purpose), or
(b) in the case of mutilation, upon surrender and cancellation
thereof, the Company at its own expense will execute and deliver, in lieu
thereof, a new Note, dated and bearing interest from the date to which interest
shall have been paid on such lost, stolen, destroyed or mutilated Note or dated
the date of such lost, stolen, destroyed or mutilated Note if no interest shall
have been paid thereon.
5.4 Issuance Taxes. The Company will pay all taxes (if any) due in
connection with and as the result of the initial issuance and sale of the Notes
and in connection with any modification of this agreement or the Notes and shall
save each holder of Notes harmless without limitation as to time against any and
all liabilities with respect to all such taxes.
6. COVENANTS
The Company covenants and agrees that on and after the Closing Date and so
long as any Note shall be outstanding:
14
6.1 Corporate Existence. The Company and its Subsidiaries will preserve
and maintain their existence except for the dissolution of any Subsidiaries
whose assets are transferred to the Company or any of its Subsidiaries.
6.2 Maintenance. The Company and its Subsidiaries will maintain, preserve
and keep their material plants, properties and equipment necessary to the proper
conduct of their businesses in reasonably good repair, working order and
condition (normal wear and tear excepted) and will from time to time make all
reasonably necessary repairs, renewals, replacements, additions and betterments
thereto so that at all times such plants, properties and equipment are
reasonably preserved and maintained; provided, however, that nothing in this
Section 6.2 shall prevent the Company or any of its Subsidiaries from
discontinuing the operation or maintenance of any such plants, properties or
equipment if such discontinuance is, in the judgment of the Company or any such
Subsidiary, as applicable, desirable in the conduct of its business and not
materially disadvantageous to the holders of the Notes.
6.3 Taxes. The Company and its Subsidiaries will duly pay and discharge
all Taxes upon or against them or their properties before payment is delinquent
and before penalties accrue thereon, unless and to the extent that the same is
being contested in good faith and by appropriate proceedings and reserves have
been established in conformity with GAAP.
6.4 ERISA. Each of the Company and its Subsidiaries will promptly pay and
discharge all obligations and liabilities arising under ERISA or otherwise with
respect to each Plan of a character which if unpaid or unperformed might result
in the imposition of a material Lien against any properties or assets of the
Company and its Subsidiaries and will promptly notify the Agent of (i) the
occurrence of any reportable event (as defined in ERISA) relating to a Plan
(other than a multi-employer plan, as defined in ERISA, so long as the event
thereunder cannot reasonably be foreseen to have a Material Adverse Effect on
any of the Company or its Subsidiaries), other than any such event with respect
to which the PBGC has waived notice by regulation; (ii) receipt of any notice
from PBGC of its intention to seek termination of any Plan or appointment of a
trustee therefor; (iii) the Company's or any of its Subsidiaries' intention to
terminate or withdraw from any Plan; and (iv) the occurrence of any event that
could result in the incurrence of any material liability, fine or penalty, or
any material increase in the contingent liability of the Company or any
Subsidiary, in connection with any post-retirement benefit under a welfare plan
benefit (as defined in ERISA).
6.5 Burdensome Restrictions, Etc. Promptly upon the existence or
occurrence thereof, the Company shall give to the Agent written notice of the
existence or occurrence of (i) any contractual obligation or the adoption of any
new requirement of law which could reasonably be expected to have a Material
Adverse Effect, and (ii) the existence or occurrence of any strike, slow down or
work stoppage which could reasonably be expected to have a Material Adverse
Effect.
15
6.6 Insurance. The Company and its Subsidiaries will maintain or cause to
be maintained with nationally recognized insurance companies, insurance against
any loss or damage to all material insurable property and assets owned by them,
such insurance to be of a character and in or in excess of such amounts as are
customarily maintained by well-insured companies similarly situated and
operating like property or assets. The Company and each of its Subsidiaries
will also insure employers' and public and product liability risks with
responsible insurance companies.
6.7 Financial Reports and Other Information.
(a) The Company and its Subsidiaries will maintain a system of
accounting in such manner as will enable preparation of financial statements in
accordance with GAAP and will furnish to you and your authorized representatives
such information about the business and financial condition of the Company and
its Subsidiaries as you may reasonably request; and, without any request, will
furnish to you:
(i) within sixty (60) days after the end of the last calendar
quarter of 1997, the consolidated and consolidating balance sheet of the
Company and its Subsidiaries as at the end of such calendar quarter and the
related consolidated and consolidating statements of income and retained
earnings and of cash flows for such calendar, all of which shall be in
reasonable detail or in the form filed with the SEC and certified by the
Chief Financial Officer of the Company that they fairly present the
financial condition of the Company and its Subsidiaries as of the dates
indicated and the results of their operations and changes in their cash
flows for the periods indicated and that they have been prepared in
accordance with GAAP, in each case, subject to normal year-end adjustments
and the omission of any footnotes as permitted by the SEC (delivery to the
Agent of a copy of the Company's Form 10-Q filed with the SEC (without
exhibits) in any event will satisfy the requirements of this subsection
with respect to the required consolidated financial statements only subject
to Section 6.7(b)); and
(ii) within ten (10) days after the sending or filing thereof,
copies of all financial statements, reports, notices and proxy statements
that the Company sends to its stockholders generally or files with the SEC
that are publicly available.
(b) Each financial statement furnished to you pursuant to subsection
(i) of Section 6.7(a) shall be accompanied by (i) a written certificate signed
by the Company's Chief Financial Officer to the effect that (x) no Default or
Event of Default has occurred during the period covered by such statements or,
if any such Default or Event of Default has occurred during such period, setting
forth a description of such Default or Event of Default and specifying the
action, if any, taken by the Company to remedy the same, and (y) the
representations and warranties contained herein are true and correct in all
material respects as though made on the
16
date of such certificate, except to the extent that any such representation or
warranty relates solely to an earlier date, in which case it was true and
correct as of such earlier date and except as otherwise described therein.
(c) Promptly after obtaining knowledge of any of the following, the
Company will provide you with written notice in reasonable detail of: (i) any
pending or threatened Environmental Claim against the Company or any of its
Subsidiaries or any property owned or operated by the Company or any of its
Subsidiaries that if adversely determined could reasonably be expected to have a
Material Adverse Effect; (ii) any condition or occurrence on any property owned
or operated by the Company or any of its Subsidiaries that results in material
noncompliance by the Company or any of its Subsidiaries with any Environmental
Law; and (iii) the taking of any material removal or remedial action in response
to the actual or alleged presence of any Hazardous Material on any property
owned or operated by the Company or any of its Subsidiaries.
(d) The Company will promptly and in any event, within five (5) days
after an officer of the Company has knowledge thereof, give written notice to
you of: (i) any pending or threatened litigation or proceeding against the
Company or any of its Subsidiaries asserting any claim or claims against any of
same in excess of $100,000 in the aggregate or that could reasonably be expected
to have a Material Adverse Effect; (ii) the occurrence of any Default or Event
of Default; and (iii) any circumstance that could reasonably be expected to have
a Material Adverse Effect.
6.8 Inspection Rights. Upon reasonable notice from you, the Company will
permit you (and such Persons as you may designate), at the Company's expense and
during normal business hours following reasonable notice to visit and inspect
any of the properties of the Company or any of its Subsidiaries, to examine all
of their books and records, to make copies and extracts therefrom, and to
discuss their respective affairs, finances and accounts with their respective
officers, employees and independent public accountants (and by this provision,
the Company authorizes such accountants to discuss with you, and such Persons as
you may designate, the affairs, finances and accounts of the Company and its
Subsidiaries, all at such reasonable times and as often as may be reasonably
requested.
6.9 Conduct of Business. The Company and its Subsidiaries will not engage
in any line of business other than the design and manufacture of rapid response
oil and chemical spill containment and reclamation equipment and products and
services related to such business, including insurance products.
6.10 New Subsidiaries. The Company shall also cause any other direct or
indirect domestic Subsidiary which is formed or acquired after the Closing Date
to become (i) a Guarantor with respect to, and jointly and severally liable with
all other Guarantors for, all of the obligations of the Company under this
Agreement and the Notes pursuant to a Guaranty
17
substantially in the form of Exhibit 3.4 hereto, and (ii) to execute and deliver
Security Documents substantially in the form of Exhibits 3.5 and 3.6 hereto, as
applicable, in each within five (5) days following such formation or
acquisition.
6.11 Restrictions on Redemption; Dividends.
(a) The Company may not redeem, purchase or otherwise acquire any
shares of its capital stock.
(b) Neither the Company nor any of its Subsidiaries shall, directly or
indirectly, create or otherwise permit to exist or become effective any
restriction on the ability of any Subsidiary of the Company to (i) pay dividends
or make any other distributions on its capital stock or any other interest or
participation in its profits owed by the Company or to pay any Indebtedness owed
to the Company, or (ii) make loans or advances to the Company, except in either
case for restrictions existing under or by reason of applicable law, this
Agreement and the other Documents.
(c) The Company may not declare or pay any dividends on its capital
stock or make any distribution or payment to shareholders, or set aside funds
for any such purpose.
6.12 Restrictions on Fundamental Changes. Neither the Company nor any of
its Subsidiaries shall be a party to any merger into or consolidation with, make
an acquisition or otherwise purchase or acquire all or substantially all of the
assets or stock of, any other Person, or sell all or substantially all of its
assets or stock, except (i) the Company or any of its Subsidiaries may form new
Subsidiaries subject to the requirements of Section 6.10, and (ii) the Company
may issue additional capital stock so long as there is no scheduled mandatory
redemption or scheduled liquidating distribution of any such stock before May 2,
1998. The Company shall not sell or dispose of any capital stock of or its
ownership interest in any of its Subsidiaries.
6.13 Environmental Laws. The Company and its Subsidiaries shall comply
with all Environmental Laws (including, without limitation, obtaining and
maintaining all necessary permits, licenses and other necessary authorizations)
applicable to or affecting the properties or business operations of the Company
or any of its Subsidiaries.
6.14 Liens. The Company and its Subsidiaries shall not create, incur,
assume or suffer to exist any Lien of any kind on any of their properties or
assets of any kind except the following (collectively, the "Permitted Liens"):
(a) Liens arising in the ordinary course of business by operation of
law in connection with workers' compensation, unemployment insurance, old age
benefits, social
18
security obligations, taxes, assessments, statutory obligations or other similar
charges, good faith deposits, pledges or other Liens in connection with (or to
obtain letters of credit in connection with) bids, performance bonds, contracts
or leases to which the Company or its Subsidiaries are a party or other deposits
required to be made in the ordinary course of business; provided that in each
case the obligation secured is not for Indebtedness and is not overdue or, if
overdue, is being contested in good faith by appropriate proceedings and
reserves in conformity with GAAP have been provided therefor;
(b) mechanics', workmen, materialmen, landlords', carriers' or other
similar Liens arising in the ordinary course of business (or deposits to obtain
the release of such Liens) related to obligations not due or, if due, that are
being contested in good faith by appropriate proceedings and reserves in
conformity with GAAP have been provided therefor;
(c) inchoate Liens under ERISA and Liens for Taxes not yet due or
which are being contested in good faith by appropriate proceedings and reserves
in conformity with GAAP have been provided therefor;
(d) Liens arising out of judgments or awards against the Company or
any of its Subsidiaries, or in connection with surety or appeal bonds or the
like in connection with bonding such judgments or awards, the time for appeal
from which or petition for rehearing of which shall not have expired or for
which the Company or such Subsidiary shall be prosecuting on appeal or
proceeding for review and for which it shall have obtained a stay of execution
or the like pending such appeal or proceeding for review; provided that the
aggregate amount of uninsured or underinsured liabilities (including interest,
costs, fees and penalties, if any) of the Company and its Subsidiaries secured
by such Liens shall not exceed $100,000 at any one time outstanding and provided
further there is adequate assurance, in the reasonable opinion of the
Purchasers, that the insurance proceeds, if any, attributable thereto shall be
paid promptly upon the expiry of such time period or resolution of such
proceeding if necessary to remove such Liens;
(e) rights of a common owner of any interest in property held by a
Person and such common owner as tenants in common or through other common
ownership;
(f) encumbrances (other than to secure the payment of Indebtedness),
easements, restrictions, servitudes, permits, conditions, covenants, exceptions
or reservations in any property or rights-of-way of a Person for the purpose of
roads, pipelines, transmission lines, transportation lines, distribution lines,
removal of gas, oil, coal, metals, steam, minerals, timber or other natural
resources, and other like purposes, or for the joint or common use of real
property, rights-of-way, facilities or equipment, or defects, irregularity and
deficiencies in title of any property or rights-of-way;
19
(g) financing statements filed by lessors of property (but only with
respect to the property so leased) and Liens under any conditional sale or title
retention agreements entered into in the ordinary course of business;
(h) rights of lessees of equipment owned by the Company or any of its
Subsidiaries;
(i) liens under the Security Documents;
(j) any extension, renewal or replacement (or successive extensions,
renewals or replacements) in whole or in part of any Lien referred to in the
foregoing subsections (a) through (h), provided that any Indebtedness secured
thereby does not exceed the principal amount secured at the time of such
extension, renewal or replacement, and that such extension, renewal or
replacement is limited to the property already subject to the Lien so extended,
renewed or replaced; and
(k) Liens granted to Boots & Coots, L.P., a Colorado limited
partnership, on the assets acquired by IWC Services, Inc. from Boots & Coots,
L.P. to secure the payment by IWC Services, Inc. of that certain promissory note
in the original principal amount of $2,066,597 dated July 31, 1997, (the "IWC
Note").
6.15 Indebtedness. The Company and its Subsidiaries shall not contract,
assume or suffer to exist any Indebtedness (including, without limitation, any
Contingent Obligations), except:
(a) Indebtedness under the Notes;
(b) unsecured intercompany loans and advances from the Company to any
of its Subsidiaries and unsecured intercompany loans and advances from any of
such Subsidiaries to the Company or any other Subsidiaries of the Company, in
each case which are subordinated to the obligations of the Company and the
Guarantors to you in form and substance satisfactory to you; and
(c) existing Indebtedness listed on Schedule 2.22 hereto.
6.16 Loans, Advances and Investments. The Company and its Subsidiaries
shall not purchase or acquire any stock, indebtedness, obligations or securities
of, or any other interest in, or make any capital contribution to, any Person
(any of the foregoing, an "Investment") or lend money or make advances to any
Person except:
(a) Investments outstanding as of the Closing Date and listed on
Schedule 6.16
20
hereto;
(b) loans to employees of the Company or any of its Subsidiaries for
(i) short-term loans in an aggregate amount of no greater than $100,000 at any
one time outstanding and in an amount no greater than $20,000 for any Person,
and (ii) moving and travel expenses and other similar expenses, in each case
incurred in the ordinary course of business;
(c) receivables owing to the Company or its Subsidiaries created or
acquired in the ordinary course of business and payable on customary trade terms
of the Company or such Subsidiary and in compliance with the arms-length
requirements of Section 6.18; and
(d) Investments in Cash Equivalents.
6.17 Transfer of Assets. The Company and its Subsidiaries shall not permit
any Transfer of any asset of the Company or any of its Subsidiaries except:
(a) Transfers of inventory, equipment and other assets in the ordinary
course of business;
(b) the retirement or replacement of assets (with assets of equal or
greater value) in the ordinary course of business or the Transfer of assets that
are obsolete, worn out or no longer useful in the business of the Company and
its Subsidiaries; and
(c) Transfers of any assets among the Borrower and any of its
Subsidiaries, provided that the Borrower and any domestic Subsidiary may not
transfer any assets to a foreign Subsidiary except for assets to be used in the
ordinary course of its business and as advisable to perform a contract or
services in a particular geographical area.
6.18 Transactions with Affiliates. Except as otherwise specifically
permitted herein, the Company and its Subsidiaries shall not enter into or be a
party to any material transaction or arrangement or series of related
transactions or arrangements which in the aggregate would be material with any
Affiliate of such Person, including without limitation, the purchase from, sale
to or exchange of property with or the rendering of any service by or for, any
Affiliate, except pursuant to the reasonable requirements of such entity's
business and upon fair and reasonable terms no less favorable to such entity
than would be able to be obtained in a comparable arm's-length transaction with
a Person other than an Affiliate.
6.19 Compliance with Laws. The Company and its Subsidiaries shall conduct
their businesses and otherwise be in compliance in all material respects with
all applicable laws, regulations, ordinances and orders of all governmental,
judicial and arbitral authorities applicable to them and shall obtain and
maintain all necessary permits, licenses and other authorizations
21
necessary to conduct their businesses and own and operate their properties
except where the failure to comply or have such permits, licenses or other
authorizations could not reasonably be expected to have a Material Adverse
Effect.
6.20 Negative Pledges. Neither the Company nor any of its Subsidiaries
shall enter into any agreement creating or assuming any Lien upon its
properties, revenues or assets, whether now owned or hereafter acquired other
than as permitted hereunder. Neither the Company nor any of its Subsidiaries
shall enter into any agreement other than this Agreement and the Documents
prohibiting the creation or assumption of any Lien upon its properties, revenues
or assets, whether now owned or hereafter acquired, or prohibiting or
restricting the ability of the Company or any of its Subsidiaries to amend or
otherwise modify this Agreement or any Document.
6.21 Additional Financial Advisory Services. The Company shall pay to you,
in addition to the fee described in Section 3.11, such additional fees as are
customary in connection with any future advisory services which are provided by
you to the Company.
6.22 IWC Note. The Company shall, by January 31, 1998, either pay in full
the IWC Note and obtain a release of the Liens securing payment of the IWC Note
or place and maintain in escrow in a segregated escrow account sufficient funds
to pay the IWC Note in full.
6.23 Capital Expenditures. Neither the Company nor any of its Subsidiaries
shall not make any Capital Expenditures outside the ordinary course of business
at levels consistent under historical Capital Expenditures.
SECTION 7. EVENTS OF DEFAULT AND REMEDIES.
7.1 Events of Default. Any one or more of the following shall constitute
an Event of Default under this Agreement:
(a) default by the Company in the payment of the principal amount of
any Note, any interest thereon or any fees payable hereunder on the date such
payment is due;
(b) default by the Company in the observance or performance of any
covenant set forth in Sections 6.7(d), 6.11, 6.12, 6.17 or 6.22;
(c) default or event of default by the Company in the observance or
performance of any provision hereof or of any other Document not mentioned in
(a) or (b) above which is not remedied within thirty (30) days after the earlier
of (i) such default or event of default first becoming known to any officer of
the Company, or (ii) notice to the Company by you of the occurrence of such
default or event of default;
22
(d) any representation or warranty or other written statement made or
deemed made herein, in any other Document or in any financial or other report or
document furnished in compliance herewith or therewith by the Company or any of
its Subsidiaries proves untrue in any material respect as of the date of the
issuance or making, or deemed issuance or making thereof;
(e) default occurs in the payment when due (after any applicable grace
period) of any Indebtedness of the Company or any of its Subsidiaries, or the
occurrence of any other default, which with the passage of time or notice, would
permit the holder or beneficiary of such Indebtedness, or a trustee therefor, to
cause the acceleration of the maturity of any such Indebtedness or any mandatory
unscheduled prepayment, purchase, or other early funding thereof;
(f) the Company or any of its Subsidiaries (i) has entered
involuntarily against it an order for relief under the United States Bankruptcy
Code or a comparable action is taken under any bankruptcy or insolvency law of
another country or political subdivision of such country, (ii) generally does
not pay, or admits its inability generally to pay, its debts as they become due,
(iii) makes a general assignment for the benefit of creditors, (iv) applies for,
seeks, consents to, or acquiesces in, the appointment of a receiver, custodian,
trustee, examiner, liquidator or similar official for it or any substantial part
of its property, (v) institutes any proceeding seeking to have entered against
it an order for relief under the United States Bankruptcy Code or any comparable
law, to adjudicate it insolvent, or seeking dissolution, winding up,
liquidation, reorganization, arrangement, adjustment or composition of it or its
debts under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors or fails to file an answer or other pleading denying the
material allegations of any such proceeding filed against it, (vi) makes any
board of directors resolution in direct furtherance of any matter described in
clauses (i)-(v) above, or (vii) fails to contest in good faith any appointment
or proceeding described in this Section 7.1(f);
(g) a custodian, receiver, trustee, examiner, liquidator or similar
official is appointed for the Company or any of its Subsidiaries or any
substantial part of its property, or a proceeding described in Section 7.1(f)(v)
is instituted against the Company or any of its Subsidiaries, and such
appointment continues undischarged or such proceeding continues undismissed or
unstayed for a period of sixty (60) days;
(h) the Company or any of its Subsidiaries fails within thirty (30)
days (or such earlier date as any steps to execute on such judgment or order
take place) to pay, bond or otherwise discharge, or to obtain an indemnity
against on terms and conditions satisfactory to the Purchasers in their sole
discretion, any judgment or order for the payment of money in excess of $100,000
which is uninsured or underinsured by at least such amount (provided that there
is adequate assurance, in the sole discretion of the Purchasers, that the
insurance proceeds
23
attributable thereto shall be paid promptly upon the expiration of such time
period or resolution of such proceeding), which is not stayed on appeal or
otherwise being appropriately contested in good faith in a manner that stays
execution;
(i) the Company or any of its Subsidiaries fails to pay when due an
amount aggregating in excess of $100,000 that it is liable to pay to the PBGC or
to a Plan under Title IV of ERISA; or a notice of intent to terminate a Plan
having Unfunded Vested Liabilities of any of the Company or any of its
Subsidiaries in excess of $100,000 (a "Material Plan") is filed under Title IV
of ERISA in a distress termination pursuant to Section 4041(c) of ERISA; or the
PBGC institutes proceedings under Title IV of ERISA to terminate or to cause a
trustee to be appointed to administer any Material Plan; or a proceeding is
instituted by a fiduciary of any Material Plan against the Company or any of its
Subsidiaries to collect any liability under Section 515 or 4219(c)(5) of ERISA
and such proceeding is not dismissed within thirty (30) days thereafter; or a
condition exists by reason of which the PBGC would be entitled to obtain a
decree adjudicating that any Material Plan must be terminated;
(j) the Company, any Guarantor, any Person acting on behalf of the
Company or any Guarantor or any governmental, judicial or arbitral authority
challenges the validity of any Note or any other Document or the Company's or
any Guarantor's obligations thereunder, or any Note or other Document ceases to
be in full force and effect in all material respects or ceases to give to the
holder of any Note the rights and powers purported to be granted in their favor
thereby in all material respects;
(k) any Control Event or Change of Control shall occur; or
(l) the Company or any of its Subsidiaries shall fail to cooperate
fully with the Noteholders to ensure the Documents comply with the business
intent of the parties.
7.2 Default Remedies.
(a) Additional Warrant. Upon any Event of Default occurring, the
Company agrees to immediately issue to each of Main Street and Geneva you an
additional Warrant in substantially the form of Exhibit 3.7 hereto to purchase
300,000 shares and 200,000 shares respectively of common stock of the Company at
an exercise price of $2.00 per share. The Company shall at all times have
authorized and reserved, and keep available free from preemptive rights, a
sufficient number of shares of common stock to provide for the exercise of such
additional Warrant.
(b) Acceleration on Event of Default.
(i) If an Event of Default specified in clause (f) or (g) or
clause (i) of
24
Section 7.1 hereof shall exist, all of the Notes at the time outstanding
shall automatically become immediately due and payable together with
interest accrued thereon, in each case without presentment, demand, protest
or notice of any kind, all of which are hereby expressly waived.
(ii) If an Event of Default other than those specified in clause
(f) or clause (g) of Section 7.1 hereof shall exist, the Majority
Noteholders (exclusive of Notes then owned by any one or more of the
Company or any Affiliate) may exercise any right, power or remedy permitted
to such holder or holders by law and in accordance with the Intercreditor
Agreement and shall have, in particular, without limiting the generality of
the foregoing, the right to declare the entire principal of, and all
interest accrued on, all the Notes then outstanding to be, and such Notes
shall thereupon become, forthwith due and payable, without any presentment,
demand, protest or other notice of any kind, all of which are hereby
expressly waived, and the Company shall forthwith pay to the holder or
holders of all the Notes then outstanding the entire principal of, and
interest accrued on, the Notes.
(c) Acceleration on Payment Default. During the existing of an Event
of Default described in Section 7.1(a) hereof, and irrespective of whether the
Notes then outstanding shall have been declared to be due and payable pursuant
to Section 7.2(b)(ii) hereof, any holder of Notes that shall have not consented
to any waiver with respect to such Event of Default may, at such holder's
option, by notice in writing to the Company, declare the Notes then held by such
holder to be, and such Notes shall thereupon become, forthwith due and payable
together with all interest accrued thereon, without any presentment, demand,
protest or other notice of any kind, all of which are hereby expressly waived,
and the Company shall forthwith pay to such holder the entire principal of and
interest accrued on such Notes.
(d) Nonwaiver and Expenses. No course of dealing on the part of any
holder of Notes nor any delay or failure on the part of any holder of Notes to
exercise any right shall operate as a waiver of such right or otherwise
prejudice such holder's rights, power and remedies. If the Company shall fail
to pay when due any principal of, or interest on, any Note, or shall fail to
comply with any other provision hereof, the Company shall pay to each holder of
Notes, to the extent permitted by law, such further amounts as shall be
sufficient to cover the costs and expenses (including, but not limited to,
reasonable attorneys' fees) incurred by such holder in collecting any sums due
on such Notes or in otherwise assessing, analyzing or enforcing any rights or
remedies that are or may be available to it.
8. INTERPRETATION OF THIS AGREEMENT
8.1 Terms Defined, As used herein, the following terms have the
respective meanings set forth below or set forth in the Section hereof following
such term:
25
"Affiliate" means, for any Person, (i) any other Person that directly
or indirectly through one or more intermediaries controls, or is under common
control with, or is controlled by, such Person, and (ii) any other Person owning
beneficially or controlling five percent (5%) or more of the equity interests in
such Person. As used in this definition, "control" means the power, directly or
indirectly, to direct or cause the direction of management or policies of a
Person (through ownership of voting securities or other equity interests, by
contract or otherwise).
"Agreement" means this Agreement, as amended, restated or supplemented
from time to time.
"Business Day" means any day other than a Saturday, Sunday or other
day on which banks in Houston, Texas are authorized or required by law to be
closed.
"Capital Expenditures" means, for any period, the sum, without
duplication, of (i) all expenditures of the Company and its Subsidiaries for
fixed or capital assets made during such period which, in accordance with GAAP,
would be classified as capital expenditures, and (ii) all Capitalized Lease
Obligations incurred during such period.
"Capitalized Lease Obligations" means, for any period, the amount of
the Company's and its Subsidiaries' liabilities under all leases (or similar
arrangements) of real or personal property (or any interest therein) which in
accordance with GAAP would be classified as capitalized leases on the balance
sheet of the Company and its Subsidiaries.
"Cash Equivalents" means (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof having maturities of not more than twelve (12) months
from the date of acquisition; (ii) U.S. Dollar denominated time deposits and
certificates of deposit maturing within one (1) year from the date of
acquisition thereof with any financial institution whose short-term senior
unsecured debt rating is at least A-1 from S&P or P-1 from Moody's; (iii) LIBOR
denominated time deposits and certificates of deposit maturing within six (6)
months from the date of acquisition thereof with any financial institution whose
short-term senior unsecured debt rating is at least A-1 from S&P or P-1 from
Moody's; (iv) commercial paper or Eurocommercial paper with a rating of at least
A-1 from S&P or P-1 from Moody's, with maturities of not more than twelve (12)
months from the date of acquisition; (v) repurchase obligations entered into
with any financial institution whose short-term senior unsecured debt rating is
at least A-1 from S&P or P-1 from Moody's, which are secured by a fully
perfected security interest in any obligation of the type described in (i) above
and has a market value of the time such repurchase is entered into of not less
than 100% of the repurchase obligation of such Purchaser or such other Person
thereunder; (vi) marketable direct obligations issued by any state of the United
States of America or any political subdivision of any such state or any public
instrumentality thereof maturing within twelve (12) months from the date of
acquisition thereof or providing for the resetting of the interest rate
applicable thereto
26
not less often than annually and, at the time of acquisition, having one of the
two highest ratings obtainable from either S&P or Moody's; and (vii) money
market funds which have at least $1,000,000,000 in assets and which invest
primarily in securities of the types described in clauses (i) through (vi)
above.
"Change in Control" means, at any time, a merger, consolidation, sale
of all or substantially all assets, tender offer or exchange offer in respect of
the Voting Stock of the Company, contested election of the Board of Directors,
or any other similar event or condition (herein referred to as a "Corporate
Change"):
(a) that results in the acquisition, holding or control (whether
directly or indirectly) by
(i) any "person" (as such term is used in section 13(d) and
section 14(d)(2) of the Exchange Act as in effect on
the Closing Date), or
(ii) related Persons constituting a "group" (as such term is
used in Rule 13d-5 under the Exchange Act as in effect
on the Closing Date),
of beneficial ownership of at least fifty percent (50%) (by number of
votes) of the Voting Stock of the Company outstanding at such time
(excluding for such purpose Persons who own shares through any employee
benefit plan of the Company or any trust established in connection
therewith) or of beneficial ownership of at least fifty percent (50%) of
the assets of the Company at such time; or
(b) in connection with which more than fifty percent (50%) of the
Persons who were members of the Board of Directors immediately prior to
such Corporate Change shall cease to be members of the Board of Directors
(or members of the board of directors of the Surviving Corporation) as a
result of such Corporate Change.
"Contingent Obligation" means, as applied to any Person, any direct or
indirect liability of that Person with respect to any Indebtedness, lease,
dividend, letter of credit or other obligation (the "primary obligations") of
another Person (the "primary obligor"), in any manner, whether direct or
indirect, including, without limitation, any obligations of such Person, whether
or not contingent, (a) to purchase, repurchase or otherwise acquire such primary
obligations or any property constituting direct or indirect security therefor,
or (b) to advance or provide funds (i) for the purchase, payment or discharge of
any such primary obligation, or (ii) to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net worth
27
or solvency or any balance sheet item, level of income or financial condition of
the primary obligor or (c) to lease property or to purchase property, securities
or services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such primary
obligation or (d) otherwise to assure or hold harmless the owner of any such
primary obligation against loss in respect thereof.
"Control Event" means:
(a) the execution by the Company or any Affiliate of any letter of
intent or similar agreement with respect to any proposed transaction or
event or series of transactions or events that, individually or in the
aggregate, could reasonably be expected to result in a Change in Control;
(b) the execution of any written agreement that, when fully performed
by the parties thereto, would result in a Change in Control; or
(c) the making of any written offer by any "person" (as such term is
used in section 13(d) and section 14(d)(2) of the Exchange Act as in effect
on the Closing Date) or related persons constituting a "group" (as such
term is used in Rule 13d-5 under the Exchange Act as in effect on the
Closing Date) to the holders of the Voting Stock of the Company which
offer, if accepted by the requisite number of such holders, would result in
a Change in Control.
"Default" means any event or condition the occurrence of which would,
with the passage of time or the giving of notice, or both, constitute an Event
of Default.
"Dollar" and "U.S. Dollar" and the sign "$" means lawful money of the
United States of America.
"Documents" means this Agreement, the Note Purchase Agreement of the
Other Purchaser, the Notes, the Guaranties, the Security Documents, the
Warrants, the Registration Rights Agreements and any other documents or
instruments executed by the Company or any of the Guarantors in connection with
this Agreement.
"Environmental Claims" means any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens, notices of non-
compliance or violations, investigations or proceedings relating to any
Environmental Law ("Claims") or any permit issued under any Environmental Law,
including, without limitation, (i) any and all Claims by governmental or
regulatory authorities for enforcement, cleanup, removal, response, remedial or
other actions or damages pursuant to any applicable Environmental Law, and (ii)
any and all Claims by any third party seeking damages, contribution,
indemnification, cost recovery,
28
compensation or injunctive relief resulting from Hazardous Materials or arising
from alleged injury or threat of injury to health or safety in relation to the
environment.
"Environmental Law" means any federal, state or local statute, law,
rule, regulation, ordinance, code, written policy or rule of common law now or
hereafter in effect, including any judicial or administrative order, consent,
decree or judgment relating to (i) the environment, (ii) health or safety in
relation to the environment or (iii) Hazardous Materials.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Event of Default" means any of the events or circumstances specified
in Section 7.1.
"GAAP" means generally accepted accounting principles from time to
time in effect as set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
the statements and pronouncements of the Financial Accounting Standards Board or
in such other statements, opinions and pronouncements by such other entity as
may be approved by a significant segment of the U.S. accounting profession.
"Guaranties" means each Guaranty of the Guarantors in substantially
the form of Exhibit 3.4 hereto.
"Guarantor" means each of IWC Services, Inc., a Texas corporation,
Hell Fighters, Inc., a Texas corporation, IWC Engineering, Inc., a Texas
corporation, Abasco, Inc., a Texas corporation, and ITS Supply Corporation, a
Delaware corporation.
"Hazardous Material" shall have the meaning assigned to that term in
the Comprehensive Environmental Response Compensation and Liability Act of 1980,
as amended by the Superfund Amendments and Reauthorization Acts of 1986, and
shall include any substance defined as "hazardous" or "toxic" or words used in
place thereof under any Environmental Law applicable to the Company or any of
its Subsidiaries.
"Highest Lawful Rate" means the maximum nonusurious interest rate, if
any, that any time or from time to time may be contracted for, taken, reserved,
charged or received on the Notes, or under laws applicable to the holders of the
Notes, as applicable, which are presently in effect or, to the extent allowed by
applicable law, under such laws which may hereafter be in effect and which allow
a higher maximum nonusurious interest rate than applicable laws now allow.
Determination of the rate of interest for the purpose of determining
29
whether the Notes are usurious under all applicable laws shall be made by
amortizing, prorating, allocating, and spreading, in equal parts during the
period of the full stated term of the Notes, all interest at any time contracted
for, taken, reserved, charged or received from the Company or any other Person
in connection with the Notes.
"Indebtedness" means, for any Person, the following obligations of
such person, without duplication: (i) obligations of such Person for borrowed
money; (ii) obligations of such person representing the deferred purchase price
of property or services other than accounts payable arising in the ordinary
course of business and other than amounts which are being contested in good
faith and for which reserves in conformity with GAAP have been provided; (iii)
obligations of such Person evidenced by bonds, notes, bankers acceptances,
debentures or other similar instruments of such Person or reimbursement
obligations or other obligations with respect to letters of credit issued for
such Person's account or letters of credit issued pursuant to such Person's
application therefor; (iv) obligations of other Persons, whether or not assumed,
secured by Liens upon property or payable out of the proceeds or production from
property now or hereafter owned or acquired by such Person, but only to the
extent of such property's fair market value; (v) Capitalized Lease Obligations
of such Person; (vi) obligations under hedge, swap, exchange, forward, future,
collar or cap arrangements, fixed price agreements and all other agreements or
arrangements designed to protect against fluctuations in interest rates,
commodity prices or currency exchange rates; and (vii) obligations of such
Person pursuant to any Contingent Obligation of any of the foregoing of another
Person. For purposes of this Agreement, the Indebtedness of any Person shall
include the Indebtedness of any partnership or joint venture to the extent such
Indebtedness has recourse to such Person.
"Institutional Investor" means the Purchasers, any affiliate of any of
the Purchasers and any holder or beneficial owner of Notes that is an
"accredited investor" as defined in Section 2(15) of the Securities Act.
"Intercreditor Agreement" means that certain Intercreditor Agreement
dated as of January 2, 1998, by and among the Purchasers, as amended,
supplemented or otherwise modified from time to time.
"IWC Note" means the promissory note of IWC Services, Inc. described
in Section 6.14(k).
"Lien" means any interest in any property or asset in favor of a
Person other than the owner of the property or asset and securing an obligation
owed to such Person, whether such interest is based on the common law, statute
or contract, including, but not limited to, the security interest lien arising
from a mortgage, encumbrance, pledge, conditional sale, security agreement or
trust receipt, or a lease, consignment or bailment for security purposes.
30
"Majority Noteholders" means, at any time, Noteholders then holding in
the aggregate at least forty (40%) of the outstanding obligations due and owing
under the Notes.
"Material Adverse Effect" means an effect that results in a material
adverse change (i) since September 30, 1997, in the business, properties,
assets, financial condition or prospects of the Company and its Subsidiaries
taken as a whole, (ii) the ability of the Company or any of the Guarantors to
perform its Obligations under the Credit Documents to which it is a party, or
(iii) the rights and remedies of the Noteholders or the Collateral Agent in any
material adverse respect under the Documents.
"Moody's" means Moody's Investors Service, Inc. or any successor
thereto.
"Note Purchase Agreements" is defined in Section 1.2 hereof.
"Notes" is defined in Section 1.1 hereof.
"Other Purchaser" is defined in Section 1.2 hereof.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.
"Permitted Liens" means the Liens described in Section 6.14.
"Person" means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization or any other
entity or organization, including a government or any agency or political
subdivision thereof.
"Plan" means an employee pension benefit plan covered by Title IV of
ERISA or subject to the minimum funding standards under Section 412 of the Code
that is either (i) maintained by the Company or any of its Subsidiaries, or (ii)
maintained pursuant to a collective bargaining agreement or any other
arrangement under which more than one employer makes contributions and to which
the Company or any of its Subsidiaries is then making or accruing an obligation
to make contributions or has within the preceding five (5) plan years made or
had an obligation to make contributions.
"Purchasers" means you and the Other Purchaser.
"SEC" means the Securities and Exchange Commission.
"S&P" means Standard & Poor's Ratings Group or any successor thereto.
"Security Agreement" means the Security Agreement and Financing
Statement in
31
substantially the form of Exhibit 3.6 hereto executed and delivered by the
Company and the Guarantors, as any of same may be amended, supplemented or
otherwise modified from time to time.
"Security Documents" means the Stock Pledge Agreements, the Security
Agreements, the Guaranties, and all other security agreements and like
agreements or instruments delivered by the Company or any Guarantor granting a
Lien in any of such Person's property to secure the Notes, as any of the same
may be amended, supplemented or otherwise modified from time to time.
"Securities Act" means the Securities Act of 1933, as amended.
"Security" means "security" as defined in section 2(1) of the
Securities Act.
"Stock Pledge Agreements" means the Stock Pledge Agreements in
substantially the form of Exhibit 3.5 hereto executed and delivered by the
Company and certain of the Guarantors, as any of same may be amended,
supplemented or otherwise modified from time to time.
"Subsidiary" means, for any Person, any corporation or other entity of
which more than fifty percent (50%) of the outstanding stock or comparable
equity interests having ordinary voting power for the election of the board of
directors of such corporation, any managers of such limited liability company or
similar governing body (irrespective of whether or not, at the time, stock or
other equity interests of any other class or classes of such corporation or
other entity shall have or might have voting power by reason of the happening of
any contingency) is at the time directly or indirectly owned by such Person, as
applicable, or by one or more of its Subsidiaries. For purposes of this
definition, ITS Supply Corporation, ITS Venezuela S.A., ITS Peru S.A. and ITS
Logestics UK Limited shall be deemed to be Subsidiaries as if the acquisition of
the stock of ITS Supply Corporation had occurred immediately prior to the
Closing Date.
"Transfer" means a sale, transfer, conveyance, assignment or other
disposition (or a series of related dispositions), including, without
limitation, any transfer pursuant to an option to purchase, any sale or
assignment (with or without recourse) of any accounts receivable and any sale
and leaseback of assets, of an asset having a net book value as established in
accordance with GAAP in excess of $50,000, but excluding any involuntary
transfer by operation of law and any transfers of an asset pursuant to any
casualty or theft with respect to such asset.
"Unfunded Vested Liabilities" means, for any Plan at any time, the
amount by which the present value of all vested nonforfeitable accrued benefits
under such Plan exceeds the fair market value of all Plan assets allocable to
such benefits, determined as of the then most recent valuation date for such
Plan, but only to the extent that such excess represents a potential
32
liability of the Company or any of its Subsidiaries to the PBGC or such Plan.
"Voting Stock" means capital stock of any class or classes of a
corporation the holders of which are ordinarily, in the absence of
contingencies, entitled to elect corporate directors (or Persons performing
similar functions).
8.2 Interpretation. The foregoing definitions shall be equally applicable
to the singular and plural forms of the terms defined. All references to times
of day in this Agreement shall be references to Houston, Texas time unless
otherwise specifically provided.
9. MISCELLANEOUS
9.1 Communications.
(a) Method; Address. All communications hereunder or under the Notes
shall be in writing, shall be hand delivered, deposited into the United States
mail (registered or certified mail), postage prepaid, sent by overnight courier
or sent by confirmed facsimile transmission and shall be addressed,
(i) if to the Company,
Boots & Coots International Well Control, Inc.
5151 San Felipe, Suite 450
Houston, Texas 77056
Telephone: (713) 621-7911
Facsimile: (713) 621-7988
or at such other address as the Company shall have furnished in writing to all
holders of the Notes at the time outstanding, and
(ii) if to any of the holders of the Notes,
(A) if such holders are the Purchasers, at their respective
addresses set forth on Annex 1 hereto, and further including any
parties referred to on such Annex 1 that are required to receive
notices in addition to such holders of the Notes, and
(B) if such holders are not the Purchasers, at their
respective addresses set forth in the register for the
registration and transfer of Notes maintained pursuant to this
Agreement,
or to any such party at such other address as such party may designate by notice
duly given in accordance with this Section 9.1 to the Company (which other
address shall be entered in such
33
register).
(b) When Given. Any communication so addressed and deposited in the
United States mail, postage prepaid, by registered or certified mail (in each
case, with return receipt requested) shall be deemed to be received on the third
(3rd) succeeding Business Day after the day of such deposit (not including the
date of such deposit). Any notice so addressed and otherwise delivered shall be
deemed to be received when actually received at the address of the addressee.
9.2 Survival. All warranties, representations, certifications and
covenants made by the Company herein or in any certificate or other instrument
delivered by it or on its behalf hereunder shall be considered to have been
relied upon by you and shall survive the delivery to you of the Notes regardless
of any investigation made by you or on your behalf. All statements in any such
certificate or other instrument shall constitute warranties and representations
by the Company hereunder.
9.3 Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties hereto.
The provisions hereof are intended to be for the benefit of all holders, from
time to time, of Notes, and shall be enforceable by any such holder, whether or
not an express assignment to such holder of rights hereunder shall have been
made by you or your successor or assign.
9.4. Amendment and Waiver.
(a) Requirements. This Agreement may be amended, and the observance
of any term hereof may be waived, with (and only with) the written consent of
the Company and you and the Majority Noteholders (exclusive of Notes held by the
Company or any Affiliate at the time outstanding).
(b) Solicitation of Noteholders.
(i) Solicitation. The Company shall not solicit, request or
negotiate for or with respect to any proposed waiver or amendment of
any of the provisions hereof or the Notes unless each holder of the
Notes (irrespective of the amount of Notes then owned by it) shall be
provided by the Company with sufficient information to enable it to
make an informed decision with respect thereto. Executed or true and
correct copies of any waiver or consent effected pursuant to the
provisions of this Section 9.4 shall be delivered by the Company to
each holder of outstanding Notes forthwith following the date on which
the same shall have been executed and delivered by all holders of
outstanding Notes required to consent or agree to such waiver or
consent.
34
(ii) Payment. The Company shall not, directly or indirectly, pay
or cause to be paid any remuneration, whether by way of supplemental
or additional interest, fee or otherwise, or grant any security, to
any holder of Notes as consideration for or as an inducement to the
entering into by any holder of Notes of any waiver or amendment of any
of the terms and provisions hereof unless such remuneration is
concurrently paid, or security is concurrently granted, on the same
terms, ratably to the holders of all Notes then outstanding.
(iii) Scope of Consent. Any consent made pursuant to this
Section 9.4 by a holder of Notes that has transferred or has agreed to
transfer its Notes to the Company or any Affiliate and has provided or
has agreed to provide such written consent as a condition to such
transfer shall be void and of no force and effect except solely as to
such holder, and any amendments effected or waivers granted or to be
effected or granted that would not have been or would not be so
effected or granted but for such consent (and the consents of all
other holders of Notes that were acquired under the same or similar
conditions) shall be void and of no force and effect, retroactive to
the date such amendment or waiver initially took or takes effect,
except solely as to such holder.
(c) Binding Effect. Except as otherwise provided in Section 9.4
hereof, any amendment or waiver consented to as provided in this Section 9.4
shall apply equally to all holders of Notes and shall be binding upon them and
upon each future holder of any Note and upon the Company whether or not such
Note shall have been marked to indicate such amendment or waiver. No such
amendment or waiver shall extend to or affect any obligation, covenant,
agreement, Default or Event of Default not expressly amended or waived or impair
any right consequent thereon.
(d) Expenses. The Company shall promptly pay when billed the
reasonable expenses relating to the consideration, negotiation, preparation or
execution of any amendments, waivers or consents pursuant to the provisions
hereof, whether or not any such amendments, waivers or consents are executed and
the exercise of any remedies to collect the Notes or the Guaranties or enforce
the Security Documents.
9.5 Payment on Notes.
(a) Manner of Payment. The Company shall pay all amounts payable with
respect to each Note (without any presentment of such Notes and without any
notation of such payment being made thereon) by crediting, by federal funds bank
wire transfer, the account of the holder thereof in any bank in the United
States of America as may be designated in writing by such holder, or in such
other manner as may be reasonably directed or to such other address in the
United States of America as may be reasonably designated in writing by such
holder.
35
Annex 1 hereto shall be deemed to constitute notice, direction or designation
(as appropriate) to the Company with respect to payments as aforesaid. In the
absence of such written direction, all amounts payable with respect to each Note
shall be paid by check mailed and addressed to the registered holder of such
Note at the address shown in the register maintained by the Company pursuant to
this Agreement.
(b) Payments Due on Holidays. If any payment due on, or with respect
to, any Note shall fall on a day other than a Business Day, then such payment
shall be made on the first Business Day following the day on which such payment
shall have so fallen due, provided that if all or any portion of such payment
shall consist of a payment of interest, for purposes of calculating such
interest, such payment shall be deemed to have been originally due on such first
following Business Day, such interest shall accrue and be payable to (but not
including) the actual date of payment and the amount of the next succeeding
interest payment shall be adjusted accordingly.
(c) Payments, When Received. Any payment to be made to the holders of
Notes hereunder or under the Notes shall be deemed to have been made on the
Business Day such payment actually becomes available to such holder at such
holder's bank prior to 12:00 noon (local time of such bank).
9.6 Indemnification. The Company agrees to indemnify each holder of the
Notes and their respective shareholders, directors, officers, partners,
employees and attorneys (collectively, the "Indemnified Parties"), against all
losses, claims, damages, penalties, judgments, liabilities and expenses
(including, without limitation, all reasonable attorneys' fees and other
reasonable expenses of investigating, defending against claims, litigation or
preparation therefor, whether or not such Indemnified Party is a party thereto)
which any of them may pay or incur arising out of or relating to (i) any action,
suit or proceeding by any third party or governmental authority against such
Indemnified Party and relating to any Document or the application or proposed
application by the Company of the proceeds of any Note, REGARDLESS OF WHETHER
SUCH CLAIMS OR ACTIONS ARE FOUNDED IN WHOLE OR IN PART UPON THE ALLEGED SIMPLE
OR CONTRIBUTORY NEGLIGENCE OF ANY OF THE INDEMNIFIED PARTIES AND/OR ANY OF THEIR
RESPECTIVE SHAREHOLDERS, DIRECTORS, OFFICERS, PARTNERS, EMPLOYEES OR ATTORNEYS,
(ii) any investigation of any third party or any governmental authority
involving any Indemnified Party and related to any use made or proposed to be
made by the Company of the proceeds of the Notes, or any transaction financed or
to be financed in whole or in part, directly or indirectly with the proceeds of
any Note, and (iii) any investigation of any third party or any governmental
authority, litigation or proceeding involving any Indemnified Party by virtue of
the Documents and related to any environmental cleanup, audit, compliance or
other matter relating to any Environmental Law or the presence of any Hazardous
Material (including, without limitation, any losses, liabilities, damages,
injuries, costs, expenses or claims asserted or arising under any
36
Environmental Law) with respect to the Company or any of its Subsidiaries,
regardless of whether caused by, or within the control of, the Company or any of
its Subsidiaries; provided, however, that the Company shall not be obligated to
indemnify any Indemnified Party for any of the foregoing arising out of such
Indemnified Party's gross negligence or willful misconduct.
9.7 Entire Agreement. The Documents constitute the entire understanding
among the Company, the Guarantors and the Purchasers and supersede all earlier
or contemporaneous agreements, whether written or oral, concerning the subject
matter of the Documents. THIS WRITTEN AGREEMENT TOGETHER WITH THE OTHER
DOCUMENTS REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
9.8 Waiver of Jury Trial. EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY NOTE, ANY OTHER DOCUMENT OR
THE TRANSACTIONS CONTEMPLATED THEREBY.
37
9.9 Duplicate Originals, Execution in Counterpart. Two (2) or more
duplicate originals hereof may be signed by the parties, each of which shall be
an original but all of which together shall constitute one and the same
instrument. This Agreement may be executed in one or more counterparts and
shall be effective when at least one counterpart shall have been executed by
each party hereto, and each set of counterparts that, collectively, show
execution by each party hereto shall constitute one duplicate original.
[REMAINDER OF PAGE INTENTIONALLY BLANK; NEXT PAGE IS SIGNATURE PAGE.]
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If this Agreement is satisfactory to you, please so indicate by signing the
acceptance of the foot of a counterpart hereof and returning such counterpart to
the Company, whereupon this Agreement shall become binding between us in
accordance with its terms.
Very truly yours,
BOOTS & COOTS INTERNATIONAL
WELL CONTROL, INC.
By:____________________________
Name:__________________________
Title:_________________________
Accepted:
MAIN STREET MERCHANT PARTNERS II, L.P.
By: _______________________________
Vince D. Foster, Managing Director
GENEVA ASSOCIATES, L.L.C.
By: _______________________________
Tracy Scott Turner, Principal
[Signature page for NOTE PURCHASE AGREEMENT dated as of January 2, 1998, of
Boots & Coots International Well Control, Inc. in connection with the issuance
of its 10.0% Senior Secured Notes due May 2, 1998]
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Note Purchase Agreement - Boots & Coots International Well Control Inc., Main Street Merchant Partners II LP and Geneva Associates LLC
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