<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF EARLIEST REPORTED EVENT - JULY 29, 1997
BOOTS & COOTS INTERNATIONAL WELL CONTROL, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 033-22097-NY 11-2908692
(State or other jurisdiction (Commission (IRS Employer
incorporation or organization) File Number) Identification Number)
5151 SAN FELIPE, SUITE 450
HOUSTON, TEXAS, 77056
(Address of Registrant's principal executive offices)
(713) 621-7911
(Registrant's telephone number, including area code)
(713) 621-7988
(Registrant's facsimile number, including area code)
HAVENWOOD VENTURES, INC.
P.O. BOX 1451
SEDONA, ARIZONA 86339
(Former name or former address, if changed since last report)
<PAGE>
ITEM 1.
CHANGES IN CONTROL OF THE REGISTRANT
GENERAL. Boots & Coots International Well Control, Inc. (the "Registrant") was
incorporated in Delaware in April 1988 as Havenwood Ventures, Inc. The
Registrant was originally formed to serve as a blind pool investment fund, and
in July 1988, raised $499,500 in an initial public offering of its Common Stock.
After completing its initial public offering, the Registrant elected to use its
available resources to develop a theme attraction in Sedona, Arizona, the Sedona
Spirit Theater (the "Theater"). In connection with these activities, the
Registrant purchased three parcels of land for an aggregate of $843,000, subject
to a first mortgage totaling $400,000. In addition, approximately $400,000 was
spent for site-planning, show and theme attraction development, planning and
zoning approvals and general expenses. During the fiscal year ended June 30,
1992, the Registrant elected to discontinue development of the Theater as a
result of its inability to attract financing for further development of the
project. The Registrant thereafter divested itself of the Theater properties and
wrote off its remaining investment in the project. Upon completion of the
divestiture, the Registrant was left with no material assets or liabilities and
no ongoing business activities. The Registrant remained inactive until it
entered into a business combination with IWC Services, Inc., a Texas corporation
("IWC Services") on July 29, 1997. Upon the closing of that business
combination, IWC Services became a wholly-owned subsidiary of the Registrant.
See "The Reorganization" below.
THE MERGER. The Registrant acquired IWC Services in a transaction structured
as a "reverse triangular merger" (the "Merger") between Havenwood Acquisition
Corporation, a Texas corporation ("Newco"), which was a wholly owned subsidiary
of the Registrant formed for the sole purpose of consummating the Merger, and
IWC Services. Immediately prior to the completion of the Merger, the Registrant
had no material assets, liabilities or business operations. No business
relationship existed between the Registrant or Newco and IWC Services prior to
the Merger. No funds of the Registrant were expended to acquire IWC Services. As
consideration for engaging in the Merger, the Registrant issued shares of Common
Stock, and the warrants and options described below, to the former
securityholders of IWC Services. The amount of consideration given by the
Registrant in the Merger was determined through "arms-length" negotiation
between the parties. The Merger was accounted for as an acquisition of the
Registrant by IWC Services in consideration of the issuance of 1,173,074 shares
of Common Stock to the stockholders of the Registrant.
Prior to the Merger, the Registrant had 258,365,000 shares of common stock
("Old Shares") issued and outstanding. Mark Lebovit and Reed Slatkin, the
principal and controlling stockholders of the Registrant, collectively owned
168,101,465 Old Shares, or approximately 65% of the outstanding voting
securities of the Registrant. In furtherance of the Merger, a majority of the
Registrant's stockholders by written consent approved and the Registrant
effected a "reverse split" of its Common Stock in the ratio of one new share
("New Shares") for every 135 Old Shares held by a stockholder, provided,
however, that no single stockholder's ownership was reduced to fewer than 100
New Shares. Immediately prior to the Merger, the principal stockholders of the
Registrant surrendered a total of 740,740 New Shares to the Registrant for
cancellation, leaving a total of 1,173,074 shares of Common Stock issued and
outstanding on the date of the Merger.
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Articles of Merger were filed with the office of the Secretary of State of
Texas on July 29, 1997, and were effective upon filing. As a result of the
Merger, IWC Services became a wholly-owned subsidiary of the Registrant and
shares of the Registrant's Common Stock, together with the warrants and options
described below were delivered to the former securityholders of IWC Services in
exchange for all of the issued and outstanding common stock, warrants and
options of IWC Services.
The common stock, warrants and options held by the former securityholders of
IWC Services were converted in the Merger into securities of the Registrant as
follows (i) 6,740,000 shares of $0.01 par value common stock of IWC Services
(100% of the issued and outstanding common stock of IWC Services) were converted
into 15,502,000 shares of Common Stock of the Registrant (approximately 93% of
the then issued and outstanding Common Stock of the Registrant); (ii) warrants
to purchase $3,000,000 of IWC Services' common stock held by certain Noteholders
were converted into substantially identical warrants to purchase up to
$3,000,000 of the Registrant's Common Stock; and (iii) options to purchase an
aggregate of 850,000 shares of IWC Services' common stock at a price of $1 per
share were converted into options to purchase 1,955,000 shares of the
Registrant's Common Stock at a price of $0.43 per share.
In summary, (i) prior to the Merger, the Registrant effected a reverse-split
of its outstanding Common Stock in the ratio of one New Share for every 135 Old
Shares held by a stockholder, provided, however, that no single stockholder's
share ownership was reduced to fewer than 100 New Shares, (ii) certain principal
stockholders of the Registrant surrendered a total of 740,740 New Shares to the
Registrant for cancellation leaving a total of 1,173,074 shares of Common Stock
issued and outstanding on the closing date, (iii) the Registrant's authorized
capitalization of 50,000,000 shares of $0.00001 par value Common Stock was
retained and appropriate adjustments were made to the stated capital and
additional paid in capital accounts of the Registrant, (iv) in connection with
the Merger, each issued and outstanding share of common stock of IWC Services
was converted into 2.3 shares of the Registrant's Common Stock, amounting to
15,502,000 shares in the aggregate (v) each issued and outstanding warrant to
purchase shares of common stock of IWC Services was converted into a
substantially identical warrant to purchase shares of the Registrant's Common
Stock, (vi) each option to purchase shares of common stock of IWC Services was
converted into an option to purchase 2.3 shares of the Registrant's Common Stock
at a price of $0.43 per share, and (vii) IWC Services became a wholly-owned
subsidiary of the Registrant.
PRINCIPAL STOCKHOLDERS. After giving effect to the foregoing transactions,
there were 16,675,074 shares of the Registrant's Common Stock issued and
outstanding on July 29, 1997. The following table presents certain information
regarding the beneficial ownership of the Registrant's common stock by (i)each
person known by the Registrant to own beneficially more than 5% of the
outstanding shares of Common Stock, (ii) each of the Registrant's directors, and
(iii) all directors and officers as a group.
<TABLE>
<CAPTION>
NAME OF AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNER (1) BENEFICIAL OWNERSHIP OF CLASS
<S> <C> <C>
*Larry H. Ramming (2) 9,395,500(3) 55.20%
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
*Raymond Henry (2) 4,795,500(4) 28.66%
Mark S. Howells (5) 1,765,988 10.59%
Jeffrey J. Puglisi (5) 1,566,615 9.39%
*Brian Krause (2) 1,345,000 8.04%
Richard Hatteberg (2) 1,150,000 6.90%
Danny Clayton (2) 1,150,000 6.90%
*K. Kirk Krist 575,000 3.44%
*Thomas L. Easley (6) 126,500 0.75%
*All officers and directors
as a group (five persons) 10,097,500 58.49%
</TABLE>
=============
(1) Beneficial owners have sole voting and investment power with respect to the
shares unless otherwise noted.
(2) In May 1995, Messrs. Krause, Henry, Hatteberg and Clayton entered into the
Voting Trust Agreement which gives Messrs. Ramming and Henry, as co-
trustees, the absolute right to vote all the shares of the Registrant's
Common Stock now owned or hereafter acquired by Messrs. Krause, Henry,
Hatteberg and Clayton during the five-year period ending December 31, 2000.
In the event that Messrs. Ramming and Henry are unable to reach an agreement
respecting the voting of such shares, the Voting Trust Agreement designates
Charles T. Phillips, attorney at law, as the tiebreaker.
(3) Includes 4,255,000 shares owned by Mr. Ramming and members of his immediate
family, including certain family-owned entities, 345,000 shares issuable
upon the exercise of presently exercisable options held by Mr. Ramming, and
4,738,000 shares and 57,500 options owned by Messrs. Krause, Henry,
Hatteberg and Clayton, all of which are subject to the Voting Trust
Agreement under which Messrs. Ramming and Henry serve as co-trustees.
(4) Includes 1,150,000 shares owned by Mr. Henry and 3,588,000 shares and 57,500
options owned by Messrs. Krause, Hatteberg and Clayton, all of which are
subject to the Voting Trust Agreement under which Messrs. Ramming and Henry
serve as co-trustees.
(5) Messrs. Howells and Puglisi are principals of Arizona Securities Group, Inc.
The shares held by Mr. Howells and Puglisi include an aggregate of 1,431,002
shares of Common Stock purchased from a stockholder of the Company for cash
and an aggregate of 1,901,601 shares of Common Stock issued to Arizona
Securities Group as compensation for consulting services related to (i) the
negotiation and consummation of the business combination between the
Registrant and IWC Services, (ii) the structuring and implementation of the
Boots & Coots Acquisition described below, (iii) the structuring and
implementation of the Registrant's financing plans, and (vi) the
identification of appropriate investment bankers to serve the Registrant's
future financing needs. A portion of such shares may be deemed to be
additional selling compensation.
(6) Mr. Easley owns an option to purchase 126,500 shares of Common Stock at
$0.43 per share.
The Registrant knows of no arrangements that will result in a change in
control at a date after this Current Report on Form 8-K.
Copies of the various documents used to effect the Merger accompany this
Current Report on Form 8-K and are incorporated herein by reference. See Item 7
of this Report.
ITEM 2.
ACQUISITION OR DISPOSITION OF ASSETS.
<PAGE>
PART 1 ACQUISITION OF IWC SERVICES AND SUBSIDIARIES
INTRODUCTION. IWC Services, Inc., a Texas Corporation, is a global-response
well control service company that specializes in oil field emergencies,
including blowouts and well fires. IWC Services was organized in June 1995 by
six former key employees of the Red Adair Company who resigned their positions
after Mr. Adair retired and sold the company. IWC Services conducts its current
operations through three subsidiaries and one strategic alliance. IWC Services'
subsidiaries are Hell Fighters, Inc., a Texas corporation that is a wholly-owned
subsidiary of IWC Services, International Well Control Services, Ltd., a Cayman
Islands corporation that is a wholly-owned subsidiary of IWC Services, and IWC
de Venezuela, C.A., a Venezuelan corporation that is a majority-owned (90%)
subsidiary of International Well Control Services, Ltd.
TERMS OF ACQUISITION. For a detailed discussion of the terms of the
acquisition of IWC Services by the Registrant, see the discussion in Item 1.
EMERGENCY RESPONSE SEGMENT
OF THE OIL FIELD SERVICE INDUSTRY
HISTORY. The emergency response segment of the oil field services industry
traces its roots to the late 1930's when Myron Kinley organized the Kinley
Company, the first oil and gas well firefighting specialty company. Shortly
after organizing the Kinley Company, Mr. Kinley took on an assistant named Red
Adair who learned the firefighting business under Mr. Kinley's supervision and
remained with the Kinley Company until Mr. Kinley's retirement. When Mr. Kinley
retired in the late 1950's, Mr. Adair organized the Red Adair Company and
subsequently hired Boots Hansen, Coots Mathews and Raymond Henry as members of
his professional firefighting staff. Mr. Adair added Richard Hatteberg, Danny
Clayton, Brian Krause, Mike Foreman and Juan Moran to his professional
firefighting staff and the international reputation of the Red Adair Company
grew to the point where it was a subject of popular films and the dominant
competitor in the industry. Boots Hansen and Coots Mathews remained with the Red
Adair Company until 1978 when they split off to organize Boots & Coots, an
independent firefighting, snubbing and blowout control company. Shortly
thereafter, Boots & Coots added James Tuppen to their professional firefighting
staff. Since inception, Boots & Coots was a major competitor in the worldwide
oil and gas well firefighting and blowout control industry and had recently
expanded its operations to include plugging and abandonment services, industrial
and marine firefighting, firefighting equipment sales and fire-retardant foam
sales.
Historically, the emergency response segment of the oil field services
industry has been reactive, rather than proactive, and a small number of
Houston-based companies have dominated the market. As a result, if an operator
in Indonesia, for example, experienced a blowout and fire, he would likely call
an emergency response company in Houston that would take the following steps:
* Immediately dispatch a control team to the blowout location to supervise
debris removal, local equipment mobilization and site preparation;
* Gather and analyze the available data, including drilling history, geology,
availability of support equipment, personnel, water supplies and ancillary
firefighting resources;
* Develop a detailed fire suppression and well-control plan;
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* Mobilize additional well-control and firefighting equipment in Houston;
* Air freight equipment from Houston to the blowout location;
* Extinguish the fire and bring the well under control; and
* Transport the control team and equipment back to Houston.
On a typical blowout, debris removal, fire suppression and well control can
require several weeks of intense effort and consume millions of dollars,
including several hundred thousand dollars in air freight costs alone.
The 1990's have been a period of rapid change in the oil and gas well
firefighting business. The hundreds of oil well fires that were started by Iraqi
troops during their retreat from Kuwait spurred the development of new
firefighting techniques and tools that have become industry standards. Moreover,
after extinguishing the Kuwait fires, the entrepreneurs who created the oil and
gas well firefighting industry, including Red Adair, Boots Hansen and Coots
Mathews retired, leaving the Company's senior staff as the four most experienced
active firefighters in the world. At present, the principal competitors in the
oil well firefighting business are the Company, Wild Well Control, Inc., and
Cudd Pressure Control, Inc., whose resources may be greater than the Company's.
As a consequence of the Boots & Coots Acquisition, the Registrant is a leader in
the worldwide oil and gas well firefighting business. The Registrant views the
Boots & Coots Acquisition as part business combination and part family reunion.
Corporate downsizing and outsourcing of services, when coupled with increased
recognition of the importance of training, environmental protection and
emergency preparedness, are having a profound impact on the emergency response
segment of the oil field services industry. Instead of waiting for a blowout,
fire or other disaster to occur, major oil producers are coming to IWC Services
and its competitors for proactive preparedness and incident prevention programs,
together with pre-event consultation on matters relating to well control
education, blowout contingency planning, on-site safety inspection and formal
fire drills. As a result, IWC Services' consulting revenue often exceeds its
firefighting revenue.
In addition to seeking pre-event consulting services, a number of major oil
and gas producers have come to the realization that servicing the worldwide
firefighting and well control market from Houston is inefficient: the response
time is too long and the cost of transporting equipment by air freight is
prohibitive. As a result, IWC Services has recently entered into an agreement to
establish and maintain an industry supported "Fire Station" on the North Slope
of Alaska. Under the terms of the agreement, IWC Services has sold to a
consortium of producers the equipment required to respond to a blowout or oil
well fire, and has agreed to maintain the equipment and conduct on-site safety
inspections and emergency response drills. Over the next five years, the
Regsitrant plans to establish a worldwide network of company owned Fire Stations
and to use this global presence as the foundation to seek to establish a
preeminent position in the oil and gas well firefighting business.
VOLATILITY OF FIREFIGHTING REVENUES. The market for oil and gas well
firefighting and blowout control services is highly volatile due to factors
beyond the control of the Registrant. While the market for firefighting and
blowout control services ordinarily follows predictable trends in the oil and
gas industry, extraordinary events such as the Bay Marchand and Piper Al-
<PAGE>
pha disasters can be expected to occur every four to six years. In addition,
wars, acts of terrorism and other unpredictable factors may increase the need
for oil and gas well firefighting and blowout control services from time to
time. Accordingly, the Registrant expects that its revenues from oil well
firefighting and blowout control services will vary widely from year to year.
While the Registrant believes that the Boots & Coots Acquisition discussed
elsewhere herein and its anticipated revenues from consulting, snubbing,
educational and industrial and marine firefighting services will help to provide
a more stable and predictable revenue base, there can be no assurance that IWC
Services will be successful in developing and expanding activities in these
service areas. Accordingly, IWC Services expects its revenues and operating
performance to vary considerably from year to year.
SERVICES PROVIDED BY IWC SERVICES
IWC Services is a global-response oil field services company that specializes
in responding to and controlling oil field emergencies, including blowouts and
well fires. IWC Services' staff of well control specialists has a combined total
of over 120 years' experience in oil well firefighting and an excellent safety
record. Throughout their careers, these professionals have worked in every major
oil producing region in the world and controlled more than 2,500 oil well fires,
including the 1963 Devil's Cigarette Lighter fire, the 1988 Piper-Alpha Platform
disaster and the 1991 Burgan Field fires that were started by Iraqi troops
during their retreat from Kuwait during the Gulf War. IWC Services' principal
services lines include:
Well Control. This service line is divided into two distinct service levels:
(1) "Critical Event" response is ordinarily reserved for well control projects
where hydrocarbons are escaping from a well bore, regardless of whether a fire
has occurred. (2) "Non-critical Event" response, on the other hand, is intended
for the more common operating problems that do not involve escaping
hydrocarbons.
Critical Events. Critical Events frequently result in explosive fires, the
loss of life, the destruction of drilling and production facilities,
substantial environmental damage and the loss of hundreds of thousands of
dollars per day in production revenue. Since Critical Events ordinarily arise
from equipment failures or human error, it is impossible to accurately
predict the timing or scope of IWC Services' Critical Event work.
Notwithstanding the foregoing, a Critical Event of catastrophic proportions
could result in revenues to IWC Services well in excess of $5 million in the
year of the incident. IWC Services' professional firefighting staff has more
than 120 years of aggregate industry experience in responding to Critical
Events, oil well fires and blowouts. The addition of the assets of Boots &
Coots and its professional firefighting staff adds depth and dimension to IWC
Services' Critical Event control activities and expand IWC Services' capacity
to simultaneously respond to multiple events, wherever they may occur.
Non-critical Events. Non-critical Events frequently occur in connection
with the drilling of new wells into high pressure reservoirs. In most Non-
critical Events, the blowout preventers and other safety systems on the
drilling rig function according to design and IWC Services is then called
upon to supervise and assist in the well control effort so that drilling
operations can resume as promptly as safety permits. While Non-critical
Events do not or-
<PAGE>
dinarily have the revenue impact of a Critical Event, they are much more
common and predictable.
Equipment Rentals. This service line includes the rental of specialty well
control and firefighting equipment by IWC Services primarily for use in
conjunction with Critical Events. Such equipment includes, but is not limited
to, firefighting pumps, pipe-racks, Athey Wagons, pipe cutters, crimping tools,
and deluge safety systems. IWC Services charges this equipment out on a per diem
basis. Past experience indicates that rentals can be expected to average
approximately 40% of revenues associated with a Critical Event.
Equipment Sales and Service. This service line involves the sale of complete
firefighting equipment packages, together with maintenance, monitoring, updating
of equipment and ongoing consulting services. A typical example of this service
line is the industry supported Fire Station that IWC Services recently
established in the North Slope of Alaska. In connection with the establishment
of this Fire Station, the original sale included approximately $485,000 in
equipment. In addition, IWC Services has entered into a long-term agreement to
provide ongoing consulting services including education, contingency planning,
safety inspections and emergency response drills. IWC Services believes that the
follow-on revenue from the North Slope Fire Station will be approximately
$100,000 per year. IWC Services expects the Boots & Coots Acquisition to
significantly expand the scope of its activities in the equipment sales and
service arena as a result of Boots & Coots' extensive operations in industrial
and marine firefighting and firefighting equipment distribution.
Consulting; Drilling Engineering. IWC Services has the ability to provide
through its highly-specialized in-house engineering staff, supplemented if
necessary by outside engineering consultants and the Halliburton Energy Services
division, engineering services for such areas as: (1) planning and design of
relief well drilling (trajectory planning, directional control and equipment
specifications, and on-site supervision of the drilling operations), (2)
planning and design of production facilities which are susceptible to well
capping or other control procedures; and, (3) mechanical and computer aided
designs for well control equipment.
Consulting; Inspections. A cornerstone of IWC Services' strategy of providing
preventive well control services involves on-site inspection services for
drilling and workover rigs, drilling and production platforms, and field
production facilities. Since these inspection services will be offered as a
standard option in Halliburton's field service programs, IWC Services
anticipates that inspection services will become an important source of revenue.
Consulting; Training. IWC Services provides specialized training in well
control procedures for drilling, exploration and production personnel. To date
such training programs have been provided for both U.S. and international
operators. Since IWC Services' training services will be offered in conjunction
with ongoing educational programs sponsored by Halliburton, IWC Services
believes the training segment of its business offers considerable potential for
growth.
Strategic Event Planning (S.T.E.P.). A key element of the services offered by
the Halliburton Alliance is a strategic and tactical planning process addressing
action steps, resources and
<PAGE>
equipment necessary for an operator to control a blowout. This planning process
incorporates organizational structures, action plans, specifications, people and
equipment mobilization plans with engineering details for well firefighting,
capping, relief well and kill operations. It also addresses optimal recovery of
well production status, insurance recovery, public information and relations and
safety/environmental issues. While the S.T.E.P. program includes a standardized
package of services, it is easily modified to suit the particular needs of a
specific client.
Regional Fire Stations. IWC Services, in conjunction with Halliburton, plans
to pre-position in selected geographic locations throughout the world complete
complements of specialty firefighting equipment and ancillary tools and
equipment ("Fire Stations"). The equipment for these proposed Fire Stations will
either be purchased by IWC Services for its own account, using cash flow, if
any, from operations, or purchased by a consortium of local producers who will
then contract with IWC Services for maintenance and consulting services. IWC
Services plans to deploy at least one Fire Station per year over the next five
years. It is believed these Fire Stations, once established, will place the
Halliburton Alliance in an unique competitive position within the industry and
allow the alliance to gain market share by reducing the mobilization time and
costs traditionally involved in controlling major blowout events.
HALLIBURTON ALLIANCE
In response to ongoing changes in the emergency response segment of the oil
field service industry, IWC Services entered into a global strategic alliance
with Halliburton in October 1995. Halliburton is widely recognized as an
industry leader in the pumping, cementing, snubbing, production enhancement,
coiled tubing and related services segment of the oil field services industry.
This alliance, "WELLCALL(SM)", draws on the expertise and abilities of both
companies and offers a total well control solution for oil and gas producers
worldwide. WELLCALL(SM) provides a complete range of well control services
including blowout control, snubbing services, pumping services, debris removal,
firefighting, relief well planning, pre-event troubleshooting, contingency
planning, and other specialized services. The specific benefits that
WELLCALL(SM) provides to an operator include:
* Quick response with a global logistics system supported by an international
communications network that operates around the clock, seven days a week;
* A full-time team of experienced well control specialists that are dedicated
to safety;
* Specialized equipment design, rental, and sales;
* Contingency planning consultation where WELLCALL(SM) specialists meet with
customers, identify potential problems, and help develop a comprehensive
contingency plan; and
* A single-point contact to activate a coordinated total response to well
control needs.
Operators contracting with WELLCALL(SM) receive a Strategic Event Plan, or
S.T.E.P., a comprehensive contingency plan for well control that is region-
specific, reservoir-specific, site-specific and well-specific. The S.T.E.P. plan
provides the operator with a written, comprehensive and coordinated action plan
that incorporates historical data, pre-planned call outs of IWC Services and
Halliburton personnel, pre-planned call outs of necessary equipment and
logistical support to minimize response time and coordinate the entire well
control effort. Thereafter, in the event of a blowout, WELLCALL(SM) provides the
worldwide engineering and well
<PAGE>
control equipment capabilities of Halliburton and the firefighting expertise of
IWC Services through an integrated contract with the operator.
As a result of the Halliburton Alliance, IWC Services is directly involved in
Halliburton's well control projects that require firefighting expertise,
Halliburton is a primary service vendor to IWC Services and IWC Services has
exclusive rights to use to certain firefighting technologies developed by
Halliburton. It is presently expected that most of IWC Services' Fire Stations
will be established at existing Halliburton facilities and that maintenance of
the Fire Station equipment will be performed by Halliburton employees. The
Halliburton Alliance also gives IWC Services access to Halliburton's global
communications and currency management systems, capabilities that could prove
invaluable in connection with IWC Services' international operations.
Consistent with the Halliburton Alliance, IWC Services' focus has evolved to
meet its clients' needs in a global theater of operations. With the increased
emphasis by operators on operating efficiencies and outsourcing many engineering
services, IWC Services has developed a proactive menu of services to meet
today's needs. These services emphasize pre-event planning and training to
minimize the likelihood of a blowout and minimize damages in the event of an
actual blowout. IWC Services provides comprehensive advance training, readiness,
preparation, inspections and mobilization drills which allow client companies to
pursue every possible preventive measure and to react in the most cohesive
manner possible when an event occurs. The Halliburton Alliance stresses the
importance of safety, environmental protection and cost control, along with
asset protection and liability minimization.
Summary of Alliance Agreement. The agreement between IWC Services and
Halliburton ("Alliance Agreement") provides a general framework for the
development of an exclusive relationship for the joint marketing and delivery of
well control services, both on land and offshore, whether performed domestically
or in the international market and whether the project is generated by
Halliburton or IWC Services. The principal terms of the Alliance Agreement are
summarized below.
No Separate Entity. The Alliance Agreement does not contemplate the creation
of a separate entity. Instead, it contemplates that the parties will retain
their separate identities when conducting combined operations.
Good Faith and Fair Dealing. The Alliance Agreement requires the parties to
develop and cultivate a good faith course of dealing and a close relationship
based upon common objectives, mutual respect and the highest degree of trust. In
that regard, the parties have agreed that in considering their own interests in
a particular situation, they will also consider the best interests of the
Halliburton Alliance.
Halliburton Lead Contractor. The Alliance Agreement contemplates that
Halliburton will normally act as primary marketer and lead contractor on most
projects but that IWC Services will be in charge of activities in all cases
where a blowout or fire has already occurred until the well has been controlled.
<PAGE>
Bidding and Contracting. The Alliance Agreement contemplates that Halliburton
will bear principal responsibility for project bidding and contracting, but that
IWC Services will be consulted on all bidding and contracting matters involving
the provision of services by IWC Services.
Provision of Services. The Alliance Agreement contemplates that Halliburton
will be responsible for providing:
* primary marketing and business development;
* all required snubbing or hydraulic workover units, together with pumping,
logging, wireline, directional drilling, pressure control and ancillary
equipment, including tubular goods and consumables;
* engineering services and support;
* overall project management and well supervision;
* transportation and other logistical support; and
* governmental and regulatory permits and certifications.
Similarly, the Alliance Agreement contemplates that IWC Services will be
responsible for providing:
* expertise and tools necessary for the removal of damaged drilling and
production equipment, oil and gas well firefighting operations and capping
or replacement of damaged well head or pressure control equipment;
* firefighting equipment including fire pumps, manifolds and monitors, pipe
cutting and crimping equipment and blowout preventer or capping stacks;
* engineering support including contingency and safety case planning,
hydraulic well modeling and computations;
* technical support to operations;
* field supervision of well control and critical well operations; and
* technical support to marketing, including technical presentations to
customers
Conflicts of Interest. The Alliance Agreement requires Halliburton to refrain
from entering the blowout control and oil well firefighting business during the
term of the agreement but does not expressly require IWC Services to refrain
from entering into any line of business, including businesses that are directly
competitive with the business of Halliburton. Notwithstanding the foregoing, the
Alliance Agreement requires the parties to strive toward a cooperative
relationship in all matters.
Costs, Billings and Payments. Each party is responsible for its own costs and
expenses associated with alliance projects. In cases where one party serves as
the lead contractor, the subcontractor is entitled to be paid within 50 days of
the invoice date, or 15 days after the receipt of payment by the lead
contractor, whichever is earlier.
Term of Agreement. The Alliance Agreement will remain in full force and effect
for an indefinite period of time and may be terminated prior to the fifth
anniversary only for cause or by mutual agreement of the parties. Cause for
termination is limited to (i) a fundamental breach of the Alliance Agreement,
(ii) a change in the business circumstances of either party, (iii) the failure
<PAGE>
of the Halliburton Alliance to generate economically viable business, or (iv)
the failure of either party to engage in good faith dealing. Since none of the
enumerated causes for termination is clearly defined and the Alliance Agreement
does not provide for specific performance as a remedy, it is possible that
Halliburton could terminate the agreement and enter into one or more lines of
business that are directly competitive with IWC Services. While IWC Services
considers its relationship with Halliburton to be good, there can be no
assurance that the Alliance Agreement will not be terminated by Halliburton.
RECENT PROJECTS
IWC Services was recently retained to control major blowouts in the Gulf of
Mexico, Bangladesh, Louisiana and Texas. The following paragraphs summarize the
scope of IWC Services' activities with respect to each event.
Gulf of Mexico. On April 1, 1997, IWC Services was called to respond to a
blowout and fire on an offshore production platform, approximately 100 miles
south of Cameron, Louisiana, in the Gulf of Mexico. This call involved a gas
well explosion and fire on a four-well production platform that destroyed one
well and severely damaged the other three. By April 4, 1997, IWC Services' crews
had cleared the wreckage, extinguished the fire and brought the blown well under
control. Since then, Company personnel have been integrally involved in on-site
supervision and are expected to be involved in the future restoration of
production from the three salvageable wells.
Bangladesh. On June 14, 1997, IWC Services was called to respond to a blowout
and fire on a gas well located in a remote location of Bangladesh. The initial
explosion completely destroyed the drilling rig and created a 300 foot crater
surrounding the well. Since arriving on site, IWC Services' crews have been
working to gain access to the burning well, remove debris from the area, bring
in the necessary fire suppression equipment and plan the relief well that will
be required before the burning well can be brought under control.
Louisiana. On June 16, 1997, IWC Services was called to respond to an
explosion and fire on an inland barge drilling rig near Butte LaRose, Louisiana.
Since a significant portion of Company's staff and equipment resources were
already committed to the Gulf of Mexico and Bangladesh fires, IWC Services used
personnel and equipment from Boots & Coots to assist IWC Services with the well
control effort. On June 24, 1997, after clearing the debris and shipping in the
required well control equipment, the joint IWC Services/Boots & Coots team
extinguished the fire and brought the well under control.
Texas. On June 19, 1997, IWC Services was called to respond to a blowout on a
producing gas well situated less than 3 miles from the Midland-Odessa airport.
Once again, IWC Services brought in personnel and equipment from Boots & Coots
to assist IWC Services with the well control effort. On June 20, 1997, after
shipping in the required well control equipment, the joint IWC Services/Boots &
Coots team brought the well under control and prevented a potentially disastrous
fire.
<PAGE>
The four recent Critical Events described above highlight a significant aspect
of the Boots & Coots Acquisition: with the combined resources of both IWC
Services and Boots & Coots, IWC Services possesses sufficient staff and
resources to respond to multiple simultaneous events on a worldwide basis. IWC
Services believes that this depth of capability will be of significant value to
producers worldwide who seek assurance that immediate and experienced help will
be available whenever and wherever needed.
BUSINESS STRATEGY
Over the next few years, the Registrant intends to expand its operations and
build upon the demonstrated strengths of IWC Services while increasing revenues
from consulting services and Non-critical Event activities. Recognizing that the
well control services business is a finite market whose upside potential is
dependent upon the occurrence of blowouts which cannot be reasonably predicted,
the Registrant's business strategy is to market its pre-event services on a
global basis to establish a stable revenue base. The Registrant intends to
accomplish its objectives by promoting the Halliburton Alliance, integrating the
business of Boots & Coots (discussed elsewhere herein) with IWC Services'
business, increasing the geographical scope of its education programs,
capitalizing on the industry reputation of IWC Services' key firefighting
personnel and establishing additional company-owned Fire Stations at locations
outside the United States. Like IWC Services Fire Stations in Houston, Texas,
and Duncan, Oklahoma, the industry supported Fire Stations on the North Slope of
Alaska and the Boots and Coots Fire Station in Anaco, Venezuela, the proposed
company-owned Fire Stations would include the equipment required to respond to a
blowout or fire. Using its education programs, its Fire Stations and the
Halliburton Alliance as a foundation, the Registrant then plans to offer a
broader range of services to oil and gas producers worldwide, thereby increasing
both its market share and the absolute size of its target market.
Due to the fragmented nature of the oil field services industry, the
Registrant believes a number of attractive acquisition opportunities exist in
the pressure control, emergency response and environmental services segments of
the business. The oil field services business in general, and the emergency
response and environmental remediation segments in particular, are characterized
by a small number of dominant global competitors and a significant number of
locally oriented businesses, many of which tend to be viable acquisition
targets. The Registrant believes that the owners of locally oriented companies
may be willing to consider becoming part of a larger organization.
The Registrant hopes to expand its existing well control operations and enter
the training, specialty tools and environmental services businesses through
internal growth, acquisitions, joint-ventures and strategic alliances.
Management has commenced preliminary discussions with a number of companies
engaged in complementary businesses to explore the potential for mutually
beneficial business arrangements. While none of these discussions have
progressed to the point where the Registrant believes a particular transaction
is likely, and there can be no assurances that the Registrant will ever finalize
the terms of a material acquisition, joint-venture or strategic alliance,
management believes that additional acquisitions, joint-ventures and strategic
alliances are likely within 6 to 12 months after the completion of this
offering.
<PAGE>
RESEARCH AND DEVELOPMENT
The Registrant is not directly involved in activities that will require the
expenditure of substantial sums on research and development. The Registrant
will, however, as a result of the Halliburton Alliance, benefit from the ongoing
research and development activities of Halliburton to the extent that new
Halliburton technologies are or may be useful in connection with the
Registrant's business.
COMPETITION
The emergency response segment of the oil field services business is a rapidly
evolving field in which developments are expected to continue at a rapid pace.
The Registrant believes that the Halliburton Alliance and the Boots & Coots
Acquisition (described elsewhere herein) will strengthen its competitive
position in the industry. However, the Registrant's success depends upon, among
other factors, expanding its network of Fire Stations, increasing the breadth of
its available consulting services and increasing industry awareness of all of
its services. Competition from other emergency response companies, such as Wild
Well Control, Inc., and Cudd Pressure Control, Inc., which may have greater
financial resources than the Registrant, is intense and expected to increase as
the industry undergoes additional anticipated change. The Registrant's
competitors may also succeed in developing new techniques and services that are
more effective than any that have been or are being developed by the Registrant
or that render the Registrant's techniques and services obsolete or
noncompetitive. The Registrant's competitors may also succeed in obtaining
patent protection or other intellectual property rights that might hinder the
Registrant's ability to develop or produce specialized equipment used in its
business.
REGULATION
Due to the unique nature of its business, few regulations other than those
applicable to workplace health and safety generally apply to the Registrant's
business. Since the Registrant is not ordinarily called to perform field
services until a major problem has developed, it is usually entitled to rely on
"emergency response" exclusions to applicable regulations in order to bring a
well under control. Notwithstanding the foregoing, the Registrant is obligated
to exercise prudent judgment and reasonable care at all times and the failure to
do so could result in liability under any number of health, safety and
environmental regulations.
INSURANCE
IWC Services presently maintains liability insurance coverage with combined
policy limits of $11,000,000. Nevertheless, certain potential hazards exist,
including the potential for environmental damage, for which insurance coverage
is either prohibitively expensive or unavailable. In the event IWC Services is
subjected to claims for uninsured losses or liabilities, IWC Services' funds may
be reduced and its properties may be lost. A substantial uninsured loss would
have a material adverse effect on IWC Services and its financial position.
Management believes that IWC Services' properties are adequately covered by
insurance.
<PAGE>
EMPLOYEES
As of the date of this Current Report on Form 8-K, taking into account the
Boots & Coots employees that became employees of IWC Services as a consequence
of the Boots & Coots Acquisition, IWC Services has 25 full-time employees,
including two executive officers, ten well control and firefighting specialists,
three sales and marketing representatives and five administrative staff members.
In addition, IWC Services has several part-time employees and consultants. IWC
Services is not subject to any collective bargaining agreements and it considers
its relations with its employees to be good.
PART 2 ACQUISITION OF BOOTS & COOTS
TERMS OF ACQUISITION. On July 22, 1997, IWC Services entered into an Asset
Purchase Agreement (the "Boots and Coots Agreement") with Boots & Coots, L.P., a
Colorado limited partnership ("Boots & Coots") providing for the purchase by IWC
Services of substantially all of the operating assets of Boots & Coots,
including all interests of Boots & Coots in its subsidiary corporations, Boots &
Coots Overseas, Ltd., a British Virgin Islands corporation, and Boots & Coots de
Venezuela, S.A., a Venezuelan corporation. No business relationship existed
between the Registrant or IWC Services and Boots & Coots prior to the Boots &
Coots Acquisition. The closing under the Boots & Coots Agreement occurred on
July 31, 1997, after the completion of the Merger between the Registrant and IWC
Services, with the consideration paid consisting of (i) $369,432 cash payable to
Boots & Coots, (ii) $680,568 placed in escrow to pay certain debts of Boots &
Coots, (iii) the issuance of secured promissory notes of the Registrant in the
aggregate principal amount of $4,760,077 (the "Boots & Coots Notes") and (iv)
the right to receive shares of Common Stock of the Registrant with a value equal
to $1,000,000 (the "Boots & Coots Stock Right"). For purposes of the Boots &
Coots Stock Right, the Registrant's Common Stock will be valued at the weighted
average closing bid price of the Common Stock during a 60-day valuation period
commencing on August 29, 1997 (the "Valuation Period").
The Boots & Coots Agreement provides that Boots & Coots has a one-time demand
registration right commencing two years after the closing for the registration
with the SEC of the shares of Common Stock received by Boots & Coots pursuant to
the Boots & Coots Stock Right and that if the Registrant files a registration
statement with the SEC at any time within the next 7 years, Boots & Coots will
have the right to include in such registration statement the shares of Common
Stock acquired in the Boots & Coots Acquisition at no cost to them (other than
offering commissions and discounts).
HISTORY OF BOOTS & COOTS. Boots & Coots was organized in 1978 by Boots Hansen
and Coots Mathews, two former employees of the Red Adair Company who left that
firm to form an independent firefighting, snubbing and blowout control company.
They were subsequently joined by James Tuppen. Since inception, Boots & Coots
has been a strong competitor in the worldwide oil well firefighting and blowout
control industry and recently expanded its operations to include plugging and
abandonment services, industrial and marine firefighting and firefighting
equipment sales. With the completion of the Boots & Coots Acquisition, the
Registrant believes it is a leader in the worldwide oil well firefighting and
blowout control industry. The Registrant views the Boots & Coots Acquisition as
part business combination and part family reunion.
<PAGE>
ACQUIRED OPERATIONS. With the purchase of the assets of Boots & Coots, the
Registrant acquired two significant lines of business, as described below.
Snubbing Operations. As a full-service snubbing equipment operator, Boots &
Coots was actively involved in the well-control and blowout prevention business.
A snubbing unit is a high pressure workover rig that permits an operator to
repair or change-out damaged casing, production tubing and down-hole production
equipment in a high pressure environment. Using a series of highly sophisticated
blowout prevention devices, a snubbing unit makes it possible to remove and
replace down-hole equipment in a pressurized well. Since snubbing is a very
hazardous process that entails a high risk of flash fire or explosion, the
snubbing segment of the oil field services industry is concentrated in a few
competitors who have the experience and knowledge required to safely and
efficiently perform such services. The Registrant believes that the addition of
snubbing capabilities to its current array of services will benefit both the
Registrant and its customers.
Industrial and Marine Firefighting. Boots & Coots recently expanded its
operations into the field of industrial and marine firefighting and these
operations have also been acquired by the Registrant. This new service line has
been divided into two distinct elements: pre-event consulting and critical event
management. The pre-event services offered in the industrial and marine
firefighting business include complete on-site inspection services, safety
audits and pre-event planning. Based on these pre-event services, the Registrant
can recommend the equipment, facilities and manpower resources that a client
should have available in order to effectively respond to a fire. It can also
consult with the client to insure that the equipment and services required by
the client will be available when needed. If a critical event occurs, the
Registrant is ready to respond to a fire at a client's facility with experienced
firefighters and auxiliary equipment.
ADDITIONAL EMPLOYEES. At the closing of the Boots & Coots Acquisition, Boots &
Coots had 12 full-time employees, including five firefighters and well control
specialists, two engineers, two marketing representatives and three
administrative staff members. In addition, Boots Hansen and Coots Mathews were
both active part-time consultants to Boots & Coots. The senior professional
members of the Boots & Coots staff have over 100 years combined experience in
the well control, blowout prevention and firefighting industries. The Registrant
has agreed to terms of employment with substantially all of the Boots & Coots
employees. The addition of these professionals to the Registrant's staff gives
the Registrant a depth of experience and capabilities in well control and
firefighting that have never before existed in a single company. The Registrant
additionally expects that it will reach agreements with Boots Hansen and Coots
Mathews for their services.
RELIANCE ON MAJOR CUSTOMERS. Approximately $12,230,000, or approximately 90%,
of Boots & Coots revenues for the year ended December 31, 1996 were attributable
to the use of its snubbing equipment and crews on British Petroleum's Pedernales
Old Well Abandonment Project in the jungles of Venezuela's lower Orinoco River
Delta. This plugging and abandonment project was completed during the first
quarter of 1997. While the Registrant is presently seeking additional plugging
and abandonment contracts in Venezuela and elsewhere, and the Registrant
<PAGE>
believes it may be able to lease a portion of the snubbing equipment to
Halliburton on a long-term basis, there can be no assurance that the Registrant
will be successful in its efforts to obtain additional plugging and abandonment
contracts or that the Registrant will be able to lease the snubbing equipment to
Halliburton. The failure to secure one or more plugging and abandonment
contracts, lease the snubbing equipment to Halliburton or effectively deploy the
snubbing equipment in other areas would adversely affect the Registrant's future
operating performance.
LEGAL PROCEEDINGS
In May 1995, a snubbing crew, staffed by employees of Boots & Coots and its
subsidiary, Boots & Coots Consulting, Inc., and under the supervision of Wright,
Boots & Coots, L.L.C., was working on Well 123 in the Isba Field in Syria which
was owned by a joint venture between Syria Shell Petroleum Development, B.V. and
Al Furat Petroleum Company of Syria. During the snubbing operation, there was a
blowout and flash fire that killed a total of five persons, including three
employees of Boots & Coots. As a result of this incident, the estates of two of
the deceased employees of Boots & Coots filed suit in the 157th District Court
of Harris County, Texas in 1995, against Pecten Syria Petroleum Company, Boots &
Coots, Roemer International, Inc., Oilwell Firefighters, Inc., Blowout
Specialists, Inc., Boots & Coots Consulting, Inc. and Wright, Boots & Coots,
L.L.C., seeking unspecified damages for wrongful death, loss of consortium and
pain and suffering. In 1997, the estate of the third deceased employee of Boots
& Coots filed a similar suit in the 269th District Court of Harris County,
alleging similar causes of action, based upon the same fact situation. In June
1997, IWC Services, which did not exist at the time of the event that resulted
in this litigation, was named as a party defendant in each of these suits. IWC
Services believes that the lawsuit against IWC Services, is wholly without merit
since IWC Services, did not exist at the time the incident occurred and was not
involved in the project in any capacity. Moreover, IWC Services believes that
there are meritorious defenses to the claims against Boots & Coots, and Boots &
Coots Consulting, Inc., both of which are covered under insurance policies
provided pursuant to the provisions of the Texas Workers Compensation Act, as
well as additional policies of general public liability insurance. In any event,
Boots & Coots, and its managing general partner, Roemer International, Inc.,
have agreed to indemnify IWC Services for any losses it may sustain as a result
of the foregoing litigation.
PART 3 ACQUISITION OF PROPERTY, PLANT AND EQUIPMENT.
IWC Services Facilities. IWC Services leases a 7,000 square foot office in the
Halliburton Center, Houston, Texas. This space is rented from an unaffiliated
landlord through May 2002 for an average monthly rental of $7,000. In addition,
IWC Services leases an 11,000 square foot Fire Station facility which space is
rented through January 2000 for a monthly rental of $4,476.
IWC Services Equipment. IWC Services is well-equipped for its current
operations in the fields of blowout control, firefighting, and ancillary
consulting services. IWC Services owns one complete set of oil-well firefighting
equipment, including Athey wagons, pumps, water lines, monitors and nozzles.
This equipment is presently located at Company-owned Fire Stations in Houston,
Texas and Duncan, Oklahoma.
<PAGE>
Boots & Coots Facilities. The Registrant acquired Boots & Coots' company-owned
facility in northwest Houston that includes approximately 2 acres of land, a
4,000 square foot office building and a 12,000 square foot manufacturing and
warehouse building. These buildings are well maintained and adequate for the
operational needs of the Registrant. Therefore, the Registrant intends to
consolidate its field operations in the northwest Houston facility. In addition
to the Houston facility, the Registrant acquired Boots & Coots' leased
apartment, office space and equipment storage facilities in Anaco, Venezuela.
The future commitments on such leases are immaterial.
Boots & Coots Equipment. The Registrant acquired four complete sets of oil
well firefighting equipment packages, including Athey wagons, pumps, water
lines, monitors and nozzles. The Registrant also acquired four complete snubbing
units including one 225,000 lb. hydraulic snubbing unit, two 150,000 lb.
hydraulic snubbing units and one 120,000 lb. conventional snubbing unit. This
equipment is located at the northwest Houston facility and Anaco, Venezuela. In
addition, the Registrant acquired the in-house capacity to assemble additional
firefighting packages as needed.
ITEM 3.
BANKRUPTCY OR RECEIVERSHIP.
Not applicable.
ITEM 4.
CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
The financial statements of Havenwood Ventures, Inc. for the years ended June
30, 1995 and 1996 were audited by the Denver, Colorado firm of Cordovano &
Company, P.C., Certified Public Accountants. In connection with the acquisition
of IWC Services, Inc. and its subsidiaries, the Houston firm of Hein +
Associates LLP, Certified Public Accountant, was retained to audit the balance
sheet of Boots & Coots International Well Control, Inc. and its subsidiaries as
of June 30, 1997 and their related statements of income, cash flows and
shareholders equity for the year then ended. During the fiscal years ended June
30, 1995 and 1996, and the subsequent interim periods preceding the appointment
of Hein + Associates, LLP there were no reportable disagreements between the
Registrant and the firm of Cordovano & Company, P.C., Certified Public
Accountants, on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure.
ITEM 5.
OTHER EVENTS
On July 31, 1997, based on the written consent of the holders of a majority in
interest of the Registrant's issued and outstanding Common Stock, the Registrant
changed its name from Havenwood Ventures, Inc. to Boots & Coots International
Well Control, Inc.
ITEM 6.
RESIGNATIONS OF DIRECTORS AND EXECUTIVE OFFICERS.
<PAGE>
No director has resigned or declined to stand for re-election to the Board of
Directors since the date of the last annual meeting of stockholders because of
any disagreement with the Registrant on any matter relating to the Registrant's
operations, policies or practices.
In connection with the Merger between the Registrant and IWC Services (see
Item I of this Report), the persons who were serving as directors and executive
officers of the Registrant immediately prior to the completion of the Merger
resigned, in seriatim, and appointed the persons who were serving as directors
and executive officers of IWC Services immediately prior to the completion of
the Merger, as follows, respectively, to wit:
<TABLE>
<CAPTION>
NAME POSITION RESIGNED
<S> <C>
Mark Leibovit President and Director
Alice Leibovit Secretary, Treasurer and Director
Reed Slatkin Vice President and Director
NAME AGE POSITION APPOINTED
<S> <C> <C>
Larry H. Ramming 50 Chief Executive Officer, Chairman
Brian Kause 41 President, Director
K. Kirk Krist 38 Director
</TABLE>
LARRY H. RAMMING has served as the Chairman of the Board and Chief Executive
Officer of IWC Services since May 1995 and as the Chairman of the Board and
Chief Executive Officer of the Regtistrant since the acquisition of IWC Services
by the Regtistrant on July 29, 1997. In addition to his positions with the
Registrant and IWC Services, Mr. Ramming has been actively involved in mortgage
banking and the packaging and resale of mortgage notes, consumer loans and other
debt instruments for over 15 years. As president of Oxford Funding Corporation,
a privately held company, Mr. Ramming and his associates were early and
substantial purchasers of mortgage notes and other investments from the
Resolution Trust Corporation, the FDIC and various private concerns. Operating
through Buckingham Capital Corporation and an unaffiliated company, Consumer
Loan Portfolios, Inc., Mr. Ramming and his associates continue to be actively
involved in the purchase, packaging and resale of financial instruments. In
addition to his involvement in financial instrument trading, Mr. Ramming is an
active venture capital investor and entrepreneur with substantial holdings in a
number of public and private corporations. While it is anticipated that Mr.
Ramming will devote a majority of his business time to the affairs of the
Registrant, he is not required to do so and is free to pursue other business
interests to the extent that the pursuit of such interests are not inconsistent
with his fiduciary obligations under Delaware corporate law as a director and
officer of the Registrant.
BRIAN KRAUSE has served as the President and as a Director of IWC Services
since May 1995 and as the President and as a Director of the Registrant since
the acquisition of IWC Services by the Company on July 29, 1997. Mr. Krause
brings over 19 years of well control and firefighting experience to the
Registrant. Before joining the group that founded IWC Services, Mr. Krause was
employed for 18 years by the Red Adair Company, Houston, Texas in positions of
increasing responsibility. Mr. Krause joined the Red Adair Company as a Well
Control Specialist in August 1978, was promoted to Vice President in June 1989
and was again promoted to Vice President & Senior Well Control Specialist in
February 1994. During his tenure with the Red Adair Company, Mr. Krause
participated in hundreds of well control events worldwide. Mr.
<PAGE>
Krause, along with Mr. Henry, were principally responsible for responding to the
Piper Alpha platform disaster in 1988. In 1991 Mr. Krause logged a total of 154
days in Kuwait, more time than any firefighter in the region. Mr. Krause, along
with Messrs. Henry, Hatteberg and Clayton, resigned from the Red Adair Company
in August 1994 and began the independent business activities that led to the
formation of IWC Services in May 1995.
K. KIRK KRIST has served as a member of IWC Services' Board of Directors since
May 1995 and of the Registrant's Board of Directors since the acquisition of IWC
Services by the Registrant on July 29, 1997. Mr. Krist has been a self employed
oil and gas investor and venture capitalist since 1982. Mr. Krist is a graduate
of the University of Texas (BBA 1982).
ITEM 7.
FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
Audited consolidated financial statements of IWC Services as of June 30, 1996,
and April 30, 1997, and for the period from May 4, 1995 (inception) through June
30, 1995, the year ended June 30, 1996 and the ten months ended April 30, 1997,
attached hereto have been included in reliance on the report of Hein +
Associates LLP, independent certified public accountants, appearing elsewhere
herein, and upon the authority of said firm as experts in accounting and
auditing.
Audited consolidated financial statements of Boots & Coots as of December 31,
1995 and 1996 and for the years then ended, attached hereto have been included
in reliance on the report of Hein + Associates LLP, independent certified public
accountants, appearing elsewhere herein, and upon the authority of said firm as
experts in accounting and auditing.
Unaudited consolidated financial statements of Boots & Coots as of April 30,
1997 and for the four month periods ended April 30, 1996 and 1997 are also
attached hereto. Such unaudited financial information reflects all adjustments,
consisting of adjustments of a normal recurring nature, which are, in the
opinion of management, necessary for a fair presentation of the interim periods.
(b) PRO FORMA FINANCIAL INFORMATION.
An unaudited pro forma consolidated balance sheet at April 30, 1997, together
with the related unaudited pro forma consolidated statements of income for the
year ended June 30, 1996 and the ten months ended April 30, 1997 and related
notes thereto are attached hereto.
<TABLE>
<CAPTION>
(c) EXHIBITS.
<S> <C>
2.1 Subscription Agreement dated July 28, 1997 between Havenwood
Ventures, Inc. and Havenwood Acquisition Corp.................
2.2 Agreement and Plan of Merger dated July 28, 1997 between
Havenwood Acquisition Corp. and IWC Services, Inc.............
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
2.3 Agreement among Havenwood Ventures, Inc., Havenwood Acquisition
Corp., Mark Leibovit, Reed Slatkin and IWC Services, Inc.
dated July 28, 1997................................................
2.4 Asset Purchase Agreement dated July 22, 1997 between IWC Services,
Inc. and Boots & Coots, L.P........................................
3.2 Amended and Restated Certificate of Incorporation of Havenwood
Ventures, Inc. dated July 24, 1997.................................
3.3 July 31, 1997 Amendment to the Certificate of Incorporation of
Boots & Coots International Well Control, Inc., formerly
Havenwood Ventures, Inc............................................
3.4 Amended By-laws of Boots & Coots International Well Control, Inc...
4.1 Specimen Certificate for the Registrant's Common Stock.............
4.2 Form of 12% Senior Subordinated Notes due December 31, 2000........
4.3 Form of Noteholders' Warrants to Purchase $3,000,000 of Common
Stock..............................................................
4.4 Form of Employees Options to Purchase 690,000 Shares of
Common Stock.......................................................
4.5 Form of Contractual Options to Purchase 1,265,000 Shares
of Common Stock....................................................
9.1 Voting Trust Agreement between Larry H. Ramming, Raymond
Henry, Richard Hatteburg, Danny Clayton and Brian Krause...........
10.1 Alliance Agreement between IWC Services, Inc. and
Halliburton Energy Services, a division of Halliburton Company.....
10.2 Executive Employment Agreement of Larry H. Ramming.................
10.3 Executive Employment Agreement of Raymond Henry....................
10.4 Executive Employment Agreement of Brian Krause.....................
10.5 Executive Employment Agreement of Richard Hatteburg................
10.6 Executive Employment Agreement of Danny Clayton....................
16.1 Letter from Cordovano & Company, P.C., Certified Public Accountants
Re: Change in Certifying Accountant................................
16.2 Letter from Hein + Associates LLP, Certified Public Accountants
Re: Change in Certifying Accountant................................
24.1 Consent of Hein + Associates, LLP..................................
</TABLE>
ITEM 8.
CHANGE IN FISCAL YEAR.
Not applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BOOTS & COOTS INTERNATIONAL WELL CONTROL, INC.
August 13, 1997
By: /s/ Larry H. Ramming
---------------------------------
Larry H. Ramming, Chief Executive Officer
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
IWC SERVICES, INC. AND SUBSIDIARIES
Consolidated Financial Statements:
Independent Auditor's Report................................................................ B-1
Consolidated Balance Sheets as of June 30, 1996 and April 30, 1997.......................... B-2
Consolidated Statements of Operations for the Period from May 4, 1995 (Inception)
through June 30, 1995, Year Ended June 30, 1996, Ten Months Ended
April 30, 1996 (Unaudited) and Ten Months Ended April 30, 1997............................ B-3
Consolidated Statements of Shareholders' Equity for the Period from May 4, 1995
(Inception) Through June 30, 1995, Year Ended June 30, 1996 and Ten Months
Ended April 30, 1997...................................................................... B-4
Consolidated Statements of Cash Flows for the Period from May 4, 1995 (Inception)
through June 30, 1995, Year Ended June 30, 1996, Ten Months Ended
April 30, 1996 (Unaudited) and Ten Months Ended April 30, 1997............................ B-5
Notes to Consolidated Financial Statements.................................................. B-6
BOOTS & COOTS, L.P. AND SUBSIDIARIES
Consolidated Financial Statements:
Independent Auditor's Report................................................................ C-1
Consolidated Balance Sheets as of December 31, 1995 and 1996 and Unaudited as of
April 30, 1997............................................................................ C-2
Consolidated Statements of Operations for the Years Ended December 31, 1995
and 1996 and the Unaudited Four Months Ended April 30, 1996 and 1997...................... C-3
Consolidated Statements of Partners' Capital for the Years Ended December 31, 1995
and 1996 and the Unaudited Four Months Ended April 30, 1997............................... C-4
Consolidated Statements of Cash Flows for the Years Ended December 31, 1995
and 1996 and the Unaudited Four Months Ended April 30, 1996 and 1997...................... C-5
Notes to Consolidated Financial Statements.................................................. C-6
BOOTS & COOTS INTERNATIONAL WELL CONTROL, INC.
Unaudited Pro Forma Consolidated Financial Statements........................................ D-1
Unaudited Pro Forma Consolidated Statement of Operations for the Year Ended
June 30, 1996............................................................................. D-2
Unaudited Pro Forma Consolidated Statement of Operations for the Ten Months
Ended April 30, 1997...................................................................... D-3
Unaudited Pro Forma Consolidated Balance Sheet as of April 30, 1997......................... D-4
Notes to Unaudited Pro Forma Consolidated Financial Statements.............................. D-5
</TABLE>
<PAGE>
INDEPENDENT AUDITOR'S REPORT
Board of Directors and Shareholders
IWC Services, Inc.
Houston, Texas
We have audited the accompanying consolidated balance sheets of IWC Services,
Inc. and subsidiaries as of June 30, 1996 and April 30, 1997, and the related
consolidated statements of operations, shareholders' equity and cash flows for
the period from May 4, 1995 (inception) through June 30, 1995, the year ended
June 30, 1996 and ten months ended April 30, 1997. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of IWC Services, Inc.
and subsidiaries as of June 30, 1996 and April 30, 1997, and the results of
their operations and their cash flows for the period from May 4, 1995
(inception) through June 30, 1995, the year ended June 30, 1996, and the ten
months ended April 30, 1997, in conformity with generally accepted accounting
principles.
HEIN + ASSOCIATES LLP
Houston, Texas
July 8, 1997
B-1
<PAGE>
IWC SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, April 30,
1996 1997
----------- -----------
ASSETS
CURRENT ASSETS:
Cash $ 53,957 $ 280,878
Receivables - trade and other
(no allowance for doubtful accounts) 305,028 626,544
Inventories and supplies - 129,913
Prepaid expenses 6,450 48,294
----------- -----------
Total current assets 365,435 1,085,629
----------- -----------
PROPERTY AND EQUIPMENT:
Firefighting equipment 143,896 143,896
Shop and other equipment 162,013 157,013
Vehicles 27,697 27,697
Furniture, fixtures and office equipment 49,694 81,917
----------- -----------
383,300 410,523
Accumulated depreciation and amortization (37,279) (98,646)
----------- -----------
346,021 311,877
----------- -----------
OTHER ASSETS:
Deferred financing costs and other
assets - net 18,337 205,301
Goodwill - net 176,601 172,450
----------- -----------
Total assets $ 906,394 $ 1,775,257
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 65,016 $ 309,337
Accrued liabilities and customer advances - 355,233
Notes payable - current portion 28,800 28,800
Loan from shareholder 50,000 -
----------- -----------
Total current liabilities 143,816 693,370
----------- -----------
NOTES PAYABLE - noncurrent 28,800 9,818
12% SENIOR SUBORDINATED NOTES - 769,500
----------- -----------
28,800 779,318
----------- -----------
COMMITMENTS AND CONTINGENCIES (Note F)
SHAREHOLDERS' EQUITY:
Preferred stock - -
Common stock 50,000 57,084
Additional paid-in capital 750,760 829,176
Accumulated deficit (66,982) (583,691)
----------- -----------
Total shareholders' equity 733,778 302,569
----------- -----------
Total liabilities and shareholders' equity $ 906,394 $ 1,775,257
=========== ===========
SEE ACCOMPANYING NOTES TO THESE CONSOLIDATED FINANCIAL STATEMENTS.
B-2
<PAGE>
IWC SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Period From
May 4, 1995
(Inception) Ten Months Ended
Through Year Ended April 30,
June 30, June 30, --------------------------
1995 1996 1996 1997
------------ ------------ ------------ ------------
(Unaudited)
<S> <C> <C> <C> <C>
REVENUES $ 642,353 $ 1,662,121 $ 1,313,887 $ 1,505,772
COSTS AND EXPENSES:
Operating expenses 208,449 1,320,702 1,155,107 1,134,335
General and administrative 18,142 772,626 625,393 749,742
Depreciation and amortization - 49,893 42,166 84,362
------------ ------------ ------------ ------------
226,591 2,143,221 1,822,666 1,968,439
------------ ------------ ------------ ------------
OPERATING INCOME (LOSS) 415,762 (481,100) (508,779) (462,667)
OTHER INCOME (EXPENSES) (103) 4,216 5,288 (32,803)
------------ ------------ ------------ ------------
INCOME (LOSS) BEFORE INCOME
TAXES 415,659 (476,884) (503,491) (495,470)
INCOME TAX EXPENSE (BENEFIT) 143,575 (137,818) (137,936) 21,239
------------ ------------ ------------ ------------
NET INCOME (LOSS) $ 272,084 $ (339,066) $ (365,555) $ (516,709)
============ ============ ============ ============
</TABLE>
SEE ACCOMPANYING NOTES TO THESE CONSOLIDATED FINANCIAL STATEMENTS.
B-3
<PAGE>
IWC SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
PERIOD FROM MAY 4, 1995 (INCEPTION) THROUGH JUNE 30, 1995,
YEAR ENDED JUNE 30, 1996 AND
TEN MONTHS ENDED APRIL 30, 1997
<TABLE>
<CAPTION>
Retained Total
Common Stock Additional Earnings Share-
------------------ Paid-in (Accumulated Holders'
Shares Amount Capital deficit) Equity
------ ------ ---------- ------------- ------
<S> <C> <C> <C> <C> <C>
BALANCES, May 4, 1995
(Inception) - $ - $ - $ - $ -
Common stock issued 1,000 10 990 - 1,000
Net income - - - 272,084 272,084
--------- --------- ---------- ---------- --------
BALANCES, June 30, 1995 1,000 10 990 272,084 273,084
Common stock issued 4,999,000 49,990 749,770 - 799,760
Net loss - - - (339,066) (339,066)
--------- --------- ---------- ---------- --------
BALANCES, June 30, 1996 5,000,000 50,000 750,760 (66,982) 733,778
Common stock issued 708,421 7,084 (7,084) - -
Sale of stock warrants - - 85,500 - 85,500
Net loss - - - (516,709) (516,709)
--------- --------- ---------- ---------- --------
BALANCES, April 30, 1997 5,708,421 $ 57,084 $ 829,176 $ (583,691) $302,569
========= ========= ========== ========== ========
</TABLE>
SEE ACCOMPANYING NOTES TO THESE CONSOLIDATED FINANCIAL STATEMENTS.
B-4
<PAGE>
IWC SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWs
<TABLE>
<CAPTION>
PERIOD FROM
MAY 4, 1995
(INCEPTION) TEN MONTHS ENDED
THROUGH YEAR ENDED APRIL 30,
JUNE 30, JUNE 30, ---------------------------
1995 1996 1996 1997
----------- ----------- ----------- -----------
(Unaudited)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 272,084 $ (339,066) $ (365,555) $ (516,709)
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating activities:
Depreciation and amortization - 49,893 42,166 84,362
Deferred income taxes 139,000 (139,000) (139,000) -
Net effect of changes in assets and liabilities
related to operating accounts:
Receivables (440,892) 135,864 67,968 (321,516)
Inventories and supplies - - - (129,913)
Prepaid expenses - (6,450) (7,371) (41,844)
Accounts payable 50,000 15,016 41,413 244,321
Accounts liabilities and customer advances - - - 355,233
----------- ----------- ----------- -----------
Net cash provided by (used in) operating activities 20,192 (283,743) (360,379) (326,066)
----------- ----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property and equipment additions (21,006) (362,294) (193,363) (27,223)
Acquisition of business and other 16,751 (115,378) (107,751) (17,179)
----------- ----------- ----------- -----------
Net cash used in investing activities (4,255) (477,672) (301,114) (44,402)
----------- ----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds for issuance of debt and warrants 140,267 65,330 61,378 855,000
Deferred financing costs - - - (188,629)
Debt repayments - (97,997) (49,000) (68,982)
Common stock issued 1,000 690,835 499,000 -
----------- ----------- ----------- -----------
Net cash provided by financing activities 141,267 658,168 511,378 597,389
----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH 157,204 (103,247) (150,115) 226,921
CASH, beginning of period - 157,204 157,204 53,957
----------- ----------- ----------- -----------
CASH, end of period $ 157,204 $ 53,957 $ 7,089 $ 280,878
=========== =========== =========== ===========
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Cash paid for interest $ - $ 968 $ 47 $ 33,386
Cash paid for income taxes $ 4,575 $ 1,182 $ 1,064 $ 21,239
=========== =========== =========== ===========
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Common stock issued in exchange for property
and equipment $ - $ 108,925 $ 108,925 $ -
=========== =========== =========== ===========
</TABLE>
SEE ACCOMPANYING NOTES TO THESE CONSOLIDATED FINANCIAL STATEMENTS.
B-5
<PAGE>
IWC SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES:
Organization - IWC Services, Inc. (IWC or the Company) was incorporated in
the state of Texas on June 27, 1995, commenced business activities July 1,
1995, and issued 100,000 shares of no par common stock in exchange for cash
of $549,000, property and equipment valued at $108,925 assigned by
Buckingham Capital Corporation, and services performed by certain other
shareholders. The shareholders of Hell Fighters, Inc. (Hell Fighters), a
Texas corporation incorporated on May 4, 1995, contributed to IWC all of
their outstanding common shares of Hell Fighters, which then became a
wholly-owned subsidiary of IWC. Prior to the acquisition of Hell Fighters,
the Company had no operations; therefore, Hell Fighters is deemed the
predecessor business of IWC Services, Inc. Accordingly, the accompanying
financial statements include the results of operations of Hell Fighters for
the period from May 4, 1995 (inception) to June 30, 1995.
IWC and its subsidiaries are engaged in the oil and natural gas well
control segment of the oil field services industry, providing services on
an international basis in well blowout control and/or firefighting,
specialized firefighting and well control equipment rental and sales,
consulting engineering services, drilling rig and production facilities
inspection, safety training courses and blowout contingency planning.
The accompanying consolidated financial statements include the financial
transactions and accounts of IWC and its majority-owned subsidiaries. All
significant intercompany accounts and transactions are eliminated in
consolidation.
Property and Equipment - Property and equipment is stated at cost.
Depreciation is provided principally using the straight-line method over
the estimated useful lives of the respective assets as follows:
firefighting equipment (8 years), shop and other equipment (8 years),
vehicles (5 years) and furniture, fixtures and office improvements (5
years). Office leasehold improvements are amortized over the remaining
primary lease terms.
Goodwill - In 1994, Buckingham Funding Corporation, an affiliate of
Buckingham Capital Corporation, acquired a majority interest in the
outstanding shares of Emergency Resources International, Inc. (ERI), a
corporation engaged in oil and natural gas well control services, in
exchange for payment of certain ERI liabilities and assumption of certain
contingent liabilities. Effective May 4, 1995, the Company, through its
subsidiary Hell Fighters, retained the services of certain employees of
ERI, and in exchange for payments to vendors for certain ERI contractual
obligations for equipment, materials and services, and was assigned by ERI
ownership rights to such equipment, technology and the use of the trade
name of International Well Control. In addition, Hell Fighters assumed the
contractual rights and obligations for then existing client service
contracts. The excess of ERI related expenditures over related revenues
collected for ERI operational activities prior to May 1995 has been
accounted for as goodwill and is being amortized ratably over 15 years.
Revenue Recognition - Revenue is recognized on the Company's service
contracts either as earned on the basis of day work completed or, for
turnkey contracts, on the percentage-of-completion method based upon costs
incurred to date and estimated total contract costs. Revenue and cost from
equipment sales is recognized upon contract completion.
B-6
<PAGE>
IWC SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES: (continued)
Foreign Currency Translation - The functional currency of the Company's
foreign operations is the U.S. dollar. Revenues and expenses from foreign
operations are remeasured into U.S. dollars on the respective transaction
dates and foreign currency transaction gains or losses are included in the
Consolidated Statements of Operations.
Income Taxes - The Company accounts for income taxes pursuant to the
liability method, which requires recognition of deferred income tax
liabilities and assets for the expected future tax consequences of events
that have been recognized in the Company's financial statements or tax
returns. Under this method, deferred income tax liabilities and assets are
determined based on the temporary differences between the financial
statement carrying amounts and the tax bases of existing assets and
liabilities and available tax carryforwards.
Recent Accounting Pronouncements - The Financial Accounting Standards Board
(FASB) issued SFAS No. 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of, which is effective for
fiscal years beginning after December 15, 1995. This pronouncement
specifies certain events and circumstances which indicate the cost of an
asset or assets may be impaired, the method by which the evaluation should
be performed, and the method by which writedowns, if any, of the asset or
assets are to be determined and recognized. The adoption of this
pronouncement in 1996 did not have a material impact on the Company's
financial condition or operating results.
The FASB also issued SFAS No. 123, Accounting for Stock Based Compensation,
effective for fiscal years beginning after December 15, 1995. This
pronouncement allows companies to choose to adopt the statement's new rules
for accounting for employee stock based compensation plans. For those
companies who choose not to adopt the new rules, the statement requires
disclosures as to what earnings would have been if the new rules had been
adopted. Management will adopt the provisions of this statement in the
fiscal year ended June 30, 1997.
Unaudited Interim Information - The accompanying financial information for
the ten months ended April 30, 1996 has been prepared by the Company
without audit. The financial statements reflect all adjustments, consisting
of normal recurring accruals which are, in the opinion of management,
necessary to fairly present such information in accordance with generally
accepted accounting principles.
Use of Estimates - The preparation of the Company's consolidated financial
statements in conformity with generally accepted accounting principles
requires the Company's management to make estimates and assumptions that
affect the amounts reported in these financial statements and accompanying
notes. Actual results could differ from these estimates.
Cash Flow Information - The Company considers all unrestricted, highly
liquid investments with a maturity of three months or less at the time of
purchase to be cash equivalents.
B-7
<PAGE>
IWC SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
B. INCOME TAXES:
The Company and its wholly-owned domestic subsidiaries filed a consolidated
federal income tax return for the year ended June 30, 1996. The Company's
wholly-owned subsidiary, Hell Fighters, filed on a separate return basis
utilizing the cash method of accounting for its initial period of
operations from May 4, 1995 through June 30, 1995. Deferred taxes of
approximately $139,000 have been provided for such short tax period and
reversed as a credit for the year ended June 30, 1996 when Hell Fighters
and other wholly-owned domestic subsidiaries were included in a
consolidated federal income tax return for IWC.
The provision for income taxes shown in the Consolidated Statements of
Operations differs from the amount that would be computed if the income
(loss) before income taxes were multiplied by the federal income tax rate
(statutory rate) as follows:
<TABLE>
<CAPTION>
PERIOD FROM
MAY 4, 1995
(INCEPTION) TEN MONTHS ENDED
THROUGH YEAR ENDED APRIL 30,
JUNE 30, JUNE 30, ---------------------------
1995 1996 1996 1997
----------- ----------- ----------- -----------
(Unaudited)
<S> <C> <C> <C> <C>
Tax expense (benefit) at statutory rate $ 141,324 $ (162,141) $ (171,186) $ (175,681)
Foreign taxes 4,575 1,182 1,064 19,666
Unrecognized net operating losses - 23,141 32,186 177,254
Other (2,324) - - -
----------- ----------- ----------- -----------
Provision for income taxes $ 143,575 $ (137,818) $ (137,936) $ 21,239
=========== =========== =========== ===========
</TABLE>
The approximate tax effect of significant temporary differences
representing deferred tax assets and liabilities at June 30, 1996 and April
30, 1997 are as follows:
<TABLE>
<CAPTION>
June 30, April 30,
1996 1997
----------- -----------
<S> <C> <C>
Net operating loss carryforwards $ 30,000 $ 200,000
Valuation allowance (30,000) (200,000)
----------- -----------
Net deferred tax asset, net $ - $ -
=========== ===========
</TABLE>
The valuation allowance increased $30,000 and $170,000 in the year ended
June 30, 1996 and ten months ended April 30, 1997, respectively, because of
net operating loss carryforwards generated in those periods.
As of April 30, 1997, the Company has net operating loss carryforwards of
approximately $584,000 expiring in various amounts beginning in 2011.
B-8
<PAGE>
IWC SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
C. NOTES PAYABLE:
-------------
Notes payable consisted of the following:
June 30, April 30,
1996 1997
--------- -------
Vehicle and equipment notes bearing interest
at rates from 9.24% to 12.25%, payable in
monthly installments, through April 1999 and
collateralized by vehicles and equipment. $ 57,600 $ 38,618
The $50,000 unsecured loan from shareholder outstanding at June 30, 1996 was
repaid in full in July 1996, together with interest at 10%.
In January 1997, the Company commenced an offering for up to $5,000,000 of
debt financing on a "best-efforts" basis through a Private Placement
Memorandum providing for the issuance of a minimum of 500 and a maximum of
5,000 Investment Units at a price of $1,000 per Unit with a minimum
investment of 25 Units. Each Unit consisted of a 12% Senior Subordinated
Note of the Company in the principal amount of $1,000 with a warrant to
purchase under certain circumstances shares of the Company's common stock at
a discounted price. Management has estimated the fair value of the proceeds
applicable to the warrants issued as of April 30, 1997 to be $85,500, which
amount has been reflected as a discount on the Subordinated Notes and an
increase to additional paid-in capital. Interest on the Notes at the rate
of 12% per annum is payable semi-annually commencing July 1, 1997 with
maturity date for the Notes on December 31, 2000, subject to extension for
up to two periods of six months each with an increase in the interest rate
to 14%. Net proceeds, after financial consulting fees and offering
expenses, from this planned financing were to be utilized for working
capital and business expansion purposes. Through April 30, 1997,
subscriptions for $855,000 had been received and funded. Subsequent to
April 30, 1997, the Company received additional subscription agreements of
$2,145,000. The offering has been terminated.
As discussed in Note I, the Company plans to offer, through Private
Placement, 6,500,000 shares of its common stock for $1.00 per share, with an
overage allotment of 15%, to fund a portion of the acquisition cost of the
assets and operations of Boots & Coots, L.P. (Boots & Coots) (see Note I)
and to provide working capital.
B-9
<PAGE>
IWC SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
D. CAPITAL STOCK:
-------------
At June 30, 1996, the Company had authorized capital stock of 1,000,000
shares of no par common stock of which 100,000 shares were issued and
outstanding. Effective December 17, 1996, the Company amended its Articles
of Incorporation and By-Laws increasing its authorized capital stock to
50,000,000 shares of $0.01 par value common stock and 5,000,000 shares of
$0.01 par value preferred stock, which may be issued at the discretion of
the Board of Directors. At June 30, 1996 and April 30, 1997, a total of
5,000,000 shares and 5,708,421 shares, respectively, of common stock were
issued and outstanding. All references herein have been restated to reflect
the amended amounts.
In November 1996, the Board of Directors approved the 1996 incentive stock
plan which allows the Board of Directors to grant up to 500,000 stock
options to eligible employees. At April 30, 1997, an aggregate of 200,000
stock options have been issued which are exercisable by the holders thereof
for a period of 10 years from the date of grant at an exercise price of
$1.00 per share. In connection with the Boots & Coots acquisition discussed
in Note I, an additional 100,000 stock options were issued under similar
terms to certain former employees of Boots & Coots.
In December 1996 and April 1997, the Company issued a total of 550,000
contractual stock options to five persons, including 200,000 options issued
to certain officers and directors and 350,000 options issued to two
attorneys. These contractual stock options have a five-year term beginning
on the original date of grant, are fully vested and are immediately
exercisable by the holders thereof at a price of $1.00 per share.
E. RELATED PARTY TRANSACTIONS:
--------------------------
The Company shares certain administrative facilities and services including
corporate office space, administrative personnel and office support
equipment with Buckingham Capital Corporation, an affiliate of the Company's
controlling shareholder. For the period from May 4, 1995 (inception)
through June 30, 1995, year ended June 30, 1996, and ten months ended April
30, 1996 and 1997, the Company paid $0, $214,542, $150,722 and $214,510,
respectively, to Buckingham Capital Corporation for such services.
Management believes such charges are comparable to what would have been paid
to outside parties for such facilities and services.
F. COMMITMENTS AND CONTINGENCIES:
-----------------------------
The Company leases shop and equipment storage facilities under a five-year
operating lease expiring January 2000 at a monthly rental of $4,476.
Effective March 22, 1997, the Company entered into a sub-lease for new
corporate office facilities under an operating lease expiring August 31,
2003 at an initial monthly base rental rate of $8,431 through September 23,
1997, decreasing to $7,410 per month through February 28, 1998 and $6,255
per month thereafter.
B-10
<PAGE>
IWC SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F. COMMITMENTS AND CONTINGENCIES: (continued)
-----------------------------
As of April 30, 1997, future minimum lease payments under these
noncancellable operating leases are approximately:
<TABLE>
<CAPTION>
Years Ending April 30, Amount
- ---------------------------------- --------
<S> <C>
1998 $145,000
1999 129,000
2000 111,000
2001 75,000
2002 75,000
Thereafter 100,000
--------
$635,000
========
</TABLE>
Rent expense for the period from May 4, 1995 (inception) through June 30,
1995, year ended June 30, 1996, and ten months ended April 30, 1996 and
1997, was approximately $1,000, $47,000, $38,000 and $51,000, respectively.
In June 1997, the Company was included as a co-defendant in an amendment to
a lawsuit originally filed by the Community Survivor and the Estate of
certain deceased employees of Boots & Coots, L.P. resulting from an accident
in May 1995. The Company will file a motion for dismissal from this lawsuit
and believes that its inclusion in this litigation is totally inappropriate
and without merit. (See Note I).
G. REVENUES FROM MAJOR CUSTOMERS:
-----------------------------
During the periods presented below, the following customers represented
significant concentrations of revenues:
<TABLE>
<CAPTION>
Period From
May 4, 1995
(Inception) Ten Months Ended
Through Year Ended April 30,
June 30, June 30, ---------------------
1995 1996 1996 1997
------------ ---------- ----------- --------
(Unaudited)
<S> <C> <C> <C> <C>
Customer A $ 624,291 $ 679,099 $ 648,125 $ 332,165
Customer B - - 144,859 -
Customer C - 222,500 163,000 -
Customer D - - - 553,125
</TABLE>
B-11
<PAGE>
IWC SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
H. CONCENTRATION OF CREDIT RISK:
----------------------------
The Company's revenues are generated geographically as follows:
<TABLE>
<CAPTION>
Period From
May 4, 1995
(Inception) Ten Months Ended
Through Year Ended April 30,
June 30, June 30, ------------------
1995 1996 1996 1997
------------ ----------- ----------- -----
(Unaudited)
<S> <C> <C> <C> <C>
Domestic customers 0% 34% 38% 54%
Foreign customers 100% 66% 62% 46%
</TABLE>
Two of the Company's largest customers account for 13% and 89% of
outstanding accounts receivable at June 30, 1996 and April 30, 1997,
respectively. These accounts receivable were subsequently collected under
normal credit terms and the Company believes that future accounts receivable
with these companies will continue to be collected under normal credit terms
based on previous experience. The Company performs ongoing evaluations of
its customers and generally does not require collateral. The Company
assesses its credit risk and provides an allowance for doubtful accounts for
any accounts which it deems doubtful of collection.
The Company maintains deposits in banks which may exceed the amount of
federal deposit insurance available. Management believes that any possible
deposit loss is minimal.
I. EVENTS SUBSEQUENT TO APRIL 30, 1997 (UNAUDITED):
-----------------------------------------------
On July 2, 1997, an announcement was made that the Company had reached an
agreement in principle to enter into a merger transaction with Havenwood
Ventures, Inc. (Havenwood), a publicly held corporation traded on the Over-
the-Counter Bulletin Board. The merger was completed on July 29, 1997 and
under the plan of merger (i) the outstanding voting securities of Havenwood
were reverse split in the ratio of one post-split share for every 135 pre-
split shares held by a shareholder, provided, however, that no single
shareholder's share ownership was reduced to fewer than 100 post-split
shares; (ii) certain principal shareholders of Havenwood surrendered a total
of 740,740 post-split shares to Havenwood for cancellation, leaving a total
of 1,173,074 shares of common stock issued and outstanding on the closing
date; (iii) each issued and outstanding share of common stock of IWC was
converted into 2.30 post-merger shares of Havenwood's common stock,
amounting to approximately 15,502,000 post-merger shares in the aggregate;
(iv) outstanding options and warrant to purchase shares of the authorized
and unissued common stock of IWC were converted into substantially similar
options and warrants to purchase shares of Havenwood's authorized and
unissued common stock, and (v) IWC became a wholly-owned subsidiary of
Havenwood with the former IWC shareholders, as a group, acquiring shares
representing approximately 92% of the resulting capitalization of Havenwood.
Following the completion of the transactions, there were approximately
18,630,000 shares of Havenwood's common stock issued and outstanding, on a
fully diluted basis. Immediately after the merger, all the officers and
directors of Havenwood resigned and were replaced by representatives of the
Company.
B-12
<PAGE>
IWC SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
I. EVENTS SUBSEQUENT TO APRIL 30, 1997 (UNAUDITED): (continued)
-----------------------------------------------
Havenwood was originally incorporated in Delaware in 1988 for the purpose of
developing a theme attraction in Sedona, Arizona. During fiscal 1992, the
Company elected to discontinue development of the theater, and until the
transaction described above, conducted no business operations. During that
period, Havenwood had been pursuing a merger or acquisition candidate.
On July 1, 1997, the Company announced it had reached an agreement to
acquire all of the operating assets of Boots & Coots, L.P. ("Boots &
Coots"), a diversified well blowout, industrial and marine firefighting
company. This acquisition was closed on July 31, 1997 with the Company: (i)
paying at closing $369,432 cash to Boots & Coots and placing in escrow
$680,568 cash to pay certain debts of Boots & Coots; (ii) issuing two
promissory notes, payable September 2, 1997, to Boots & Coots in the
aggregate principal amount of $4,760,077; and, (iii) issuing to Boots &
Coots a contractual right to receive $1,000,000 in common stock of the
Company. The promissory notes are secured by the acquired assets of Boots &
Coots, and may be extended at the option of the Company to September 15,
1997.
After completion of the merger with Havenwood and the Boots & Coots
acquisition, the name of the Company was changed to Boots & Coots
International Well Control, Inc.
B-13
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Partners
Boots & Coots, L.P.
Houston, Texas
We have audited the accompanying consolidated balance sheets of Boots & Coots,
L.P. and subsidiaries as of December 31, 1995 and 1996, and the related
consolidated statements of operations, partners' capital and cash flows for the
years then ended. These consolidated financial statements are the
responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Boots & Coots, L.P.
and subsidiaries as of December 31, 1995 and 1996, and the results of their
operations and their cash flows for the years then ended in conformity with
generally accepted accounting principles.
HEIN + ASSOCIATES LLP
Houston, Texas
June 25, 1997
C-1
<PAGE>
BOOTS & COOTS, L.P. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, December 31, April 30,
1995 1996 1997
--------- ---------- ---------
(Unaudited)
ASSETS
------
CURRENT ASSETS:
<S> <C> <C> <C>
Cash $ 490,801 $ 1,603,855 $ 908,014
Receivables - trade and other (no allowance
for doubtful accounts) 470,354 2,633,790 3,144,201
Inventories and supplies 58,148 122,732 122,732
Prepaid taxes and other expenses 1,157 4,856 27,300
----------- ----------- -----------
Total current assets 1,020,460 4,365,233 4,202,247
----------- ----------- -----------
PROPERTY AND EQUIPMENT:
Land 140,000 140,000 140,000
Buildings and improvements 561,350 561,350 561,350
Firefighting equipment 2,428,784 2,710,729 2,762,074
Vehicles 114,774 155,967 183,131
Furniture, fixtures and office equipment 128,544 159,863 185,810
----------- ----------- -----------
3,373,452 3,729,909 3,832,365
Accumulated depreciation and amortization (1,393,558) (1,320,272) (1,457,898)
----------- ----------- -----------
1,979,894 2,407,637 2,374,467
----------- ----------- -----------
OTHER ASSETS:
Intangibles, net 937,500 812,500 770,834
Goodwill, net 124,439 114,479 111,159
Other assets 228,037 132,222 108,004
----------- ----------- -----------
1,289,976 1,059,201 989,997
----------- ----------- -----------
Total assets $ 4,290,330 $ 7,832,071 $ 7,566,711
=========== =========== ===========
LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
CURRENT LIABILITIES:
Accounts payable $ 512,499 $ 1,611,027 $ 249,466
Accrued liabilities 21,467 301,605 341,913
Accrued interest 347,250 165,274 176,941
Foreign income taxes payable - 13,231 -
Deferred foreign income taxes - 273,327 445,823
Accrual for other foreign taxes - 433,869 633,188
---------- ---------- ----------
Total current liabilities 881,216 2,798,333 1,847,331
NOTES PAYABLE - affiliates 500,000 500,000 500,000
---------- --------- ----------
Total liabilities 1,381,216 3,298,333 2,347,331
COMMITMENTS AND CONTINGENCIES (Note E)
PARTNERS' CAPITAL 2,909,114 4,533,738 5,219,380
---------- ---------- ----------
Total liabilities and partners' capital $4,290,330 $7,832,071 $ 7,566,711
========== ========== ==========
</TABLE>
SEE ACCOMPANYING NOTES TO THESE CONSOLIDATED FINANCIAL STATEMENTS.
C-2
<PAGE>
BOOTS & COOTS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Years Ended Four Months Ended
December 31, April 30,
------------------------- --------------------------
1995 1996 1996 1997
----------- ------------ ----------- ----------
(Unaudited)
<S> <C> <C> <C> <C>
REVENUES $1,468,807 $13,401,251 $4,362,699 $3,954,247
COSTS AND EXPENSES:
Operating expenses 127,523 8,061,989 2,895,956 2,019,975
General and administrative 1,062,064 2,251,586 631,161 722,343
Depreciation and amortization 679,474 523,077 198,963 235,572
---------- ----------- ---------- ----------
1,869,061 10,836,652 3,726,080 2,977,890
---------- ----------- ---------- ----------
OPERATING INCOME (LOSS) (400,254) 2,564,599 636,619 976,357
OTHER INCOME (EXPENSES):
Foreign currency translation
gain (loss) 47,290 (259,646) (237,757) 216,486
Other income (expense) (6,842) 110,048 217,168 1,288
---------- ----------- ---------- ----------
40,448 (149,598) (20,589) 217,774
---------- ----------- ---------- ----------
INCOME BEFORE TAXES (359,806) 2,415,001 616,030 1,194,131
INCOME TAXES (FOREIGN) - 623,757 197,400 165,740
---------- ----------- ---------- ----------
NET INCOME (LOSS) $ (359,806) $ 1,791,244 $ 418,630 $1,028,391
========== =========== ========== ==========
</TABLE>
SEE ACCOMPANYING NOTES TO THESE CONSOLIDATED FINANCIAL STATEMENTS.
C-3
<PAGE>
BOOTS & COOTS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
YEARS ENDED DECEMBER 31, 1995 AND 1996
AND FOUR MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
Total
Partners'
Capital
-----------
<S> <C>
BALANCES, January 1, 1995 $3,435,540
Net loss (359,806)
Partner distributions (166,620)
----------
BALANCES, December 31, 1995 2,909,114
Net income 1,791,244
Partner distributions (166,620)
----------
BALANCES, December 31, 1996 4,533,738
Net income (unaudited) 1,028,391
Partner distributions (unaudited) (342,749)
----------
BALANCES, April 30, 1997 (unaudited) $5,219,380
==========
</TABLE>
SEE ACCOMPANYING NOTES TO THESE CONSOLIDATED FINANCIAL STATEMENTS.
C-4
<PAGE>
BOOTS & COOTS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWs
<TABLE>
<CAPTION>
Years Ended Four Months Ended
December 31, April 30,
---------------------- ------------------------
1995 1996 1996 1997
--------- -------- --------- ----------
(Unaudited)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(359,806) $ 1,791,244 $ 418,630 $ 1,028,391
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization 679,474 523,077 198,563 235,572
Deferred income taxes - 273,327 197,400 172,496
Net effect of changes in assets and liabilities
related to operating accounts:
Receivables (394,061) (2,163,436) (1,544,583) (510,411)
Inventories and supplies (58,148) (64,584) (69,135) -
Prepaid expenses (1,157) (3,699) (1,795) (22,444)
Accounts payable 497,706 1,098,528 820,475 (1,361,561)
Accrued liabilities 21,295 280,138 193,799 40,308
Accrued interest 214,120 (181,976) (158,104) 11,667
Income taxes payable - 13,231 - (13,231)
Accrued other taxes - 433,869 (28,736) 199,319
Other, net (13,037) 9,815 (151,848) -
--------- ----------- ----------- -----------
Net cash provided by (used in) operating activities 586,386 2,009,534 (125,334) (219,894)
--------- ----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES -
Property and equipment additions (674,657) (729,860) (200,284) (133,198)
--------- ----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Loan proceeds - - 250,000 -
Partner distributions (166,620) (166,620) (55,540) (342,749)
--------- ----------- ----------- -----------
Net cash provided by (used in) financing activities (166,620) (166,620) 194,460 (342,749)
--------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH (254,891) 1,113,054 (131,158) (695,841)
CASH, beginning of period 745,692 490,801 490,801 1,603,855
--------- ----------- ----------- -----------
CASH, end of period $ 490,801 $ 1,603,855 $ 359,643 $ 908,014
========= =========== =========== ===========
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Cash paid for interest $ 67,259 $ 11,606 $ - $ -
Cash paid for income taxes $ - $ 305,725 $ - $ -
========= =========== =========== ===========
</TABLE>
SEE ACCOMPANYING NOTES TO THESE CONSOLIDATED FINANCIAL STATEMENTS.
C-5
<PAGE>
BOOTS & COOTS, L.P. AND SUBSIDIARIES
A. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES:
------------------------------------------------
Organization - Boots & Coots, L.P. (B&C or the Partnership), a Colorado
limited partnership, commenced business activities in April 1993. The
Partnership wholly owns Boots & Coots Overseas Inc. (a British Virgin
Islands Corporation), which owns 100% of Boots and Coots de Venezuela, SA
(domiciled in Anaco, Venezuela), which holds in excess of 50% of the
Partnership's consolidated assets in Venezuela. The Partnership also wholly
owns Boots & Coots Consulting, Inc. (a Texas Corporation).
B&C and its subsidiaries are engaged in the oil and natural gas well control
segment of the oil field services industry, providing services on an
international basis in well blowout control and/or firefighting, specialized
firefighting and well control equipment rental and sales, consulting
engineering services, drilling rig and productions facilities inspection,
safety training courses and blowout contingency planning.
The accompanying consolidated financial statements include the financial
transactions and accounts of B&C and its subsidiaries. All significant
intercompany accounts and transactions are eliminated in consolidation.
Property and Equipment - Property and equipment is stated at cost.
Depreciation is provided principally using straight-line and accelerated
methods over the expected useful lives of the respective assets as follows:
building and improvements (15 to 31 1/2 years), firefighting equipment (5
years), shop and other equipment (7 years), vehicles (5 years) and
furniture, fixtures and office improvements (7 years).
Intangibles - Goodwill arose in 1993 upon the original acquisition of the
assets of the predecessor business to B&C and is being amortized over
fifteen years on a straight-line basis. Agreements for consulting and non-
competition are being amortized over the respective lives of the agreements.
Organization costs are being amortized over five years.
Revenue Recognition - Revenue is recognized on the Partnership's service
contracts either as earned on the basis of day work completed or, for
turnkey contracts, on the percentage-of-completion method based upon costs
incurred to date and estimated total contract costs.
Foreign Currency Translation - The functional currency of the Partnership's
foreign operations is the U.S. dollar. Foreign currency transaction gains
or losses are included in the Consolidated Statements of Operations.
Income Taxes - The Partnership is not subject to federal or state taxes on
its domestic income. The partners include in their federal and state
returns the respective portion of the Partnership's results of domestic
operations. The Partnership's subsidiaries are responsible for paying any
foreign income taxes due in foreign jurisdictions.
C-6
<PAGE>
BOOTS & COOTS, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES: (continued)
------------------------------------------------
The Partnership accounts for deferred income taxes on the liability method,
which requires recognition of deferred income tax liabilities and assets for
the expected future tax consequences of events that have been recognized in
the Partnership's financial statements or tax returns. Under this method,
deferred income tax liabilities and assets are determined based on the
temporary differences between the financial statement carrying amounts and
the tax bases of existing assets and liabilities and available tax
carryforwards.
Recent Accounting Pronouncement - The Financial Accounting Standards Board
(FASB) issued SFAS No. 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of, which is effective for
fiscal years beginning after December 15, 1995. This pronouncement
specifies certain events and circumstances which indicate the cost of an
asset or assets may be impaired, the method by which the evaluation should
be performed, and the method by which writedowns, if any, of the asset or
assets are to be determined and recognized. The adoption of this
pronouncement in 1996 did not have a material impact on the Company's
financial condition or operating results.
Unaudited Interim Information - The accompanying financial information as of
April 30, 1997 and for the four months ended April 30, 1996 and 1997 has
been prepared by the Partnership without audit. The financial statements
reflect all adjustments, consisting of normal recurring accruals which are,
in the opinion of management, necessary to fairly present such information
in accordance with generally accepted accounting principles.
Use of Estimates - The preparation of the Partnership's consolidated
financial statements in conformity with generally accepted accounting
principles requires the Partnership's management to make estimates and
assumptions that affect the amounts reported in these financial statements
and accompanying notes. Actual results could differ from these estimates.
Cash Flow Information - The Partnership considers all unrestricted, highly
liquid investments with a maturity of three months or less at the time of
purchase to be cash equivalents.
B. INCOME TAXES:
------------
The provision for income taxes in 1996 was generated by income from the
Partnership's subsidiary in Venezuela (a controlled foreign corporation).
Approximately $348,000 of the total tax provision is current expense, the
remaining approximately $275,000 representing deferred taxes provided on a
delayed billing, which is not taxable in 1996 under Venezuelan law.
C-7
<PAGE>
BOOTS & COOTS, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
C. NOTES PAYABLE - AFFILIATES
--------------------------
The notes payable to affiliates represents two notes (each for $250,000) to
two former owners of the predecessor business. Interest accrues at a rate
of 1% above the Chase Manhattan Bank rate (8.25% at December 31, 1996) and
is payable in full, along with the related principal, on July 8, 1998 . The
notes are collateralized by the assets acquired by the Partnership from
these two individuals in 1993.
D. PARTNER CAPITAL:
---------------
Pursuant to the Partnership agreement, any distributions made in excess of
tax distributions are as directed by the Partnership's Executive Committee.
Class B Limited Partnership Interests are to receive a guaranteed return of
9.5% annually until the Class B partners have been redeemed completely. As
of December 31, 1996, the balance of Class B capital accounts accruing the
guaranteed return amounted to approximately $1,700,000. No other class of
partner is to receive a guaranteed return.
E. COMMITMENTS AND CONTINGENCIES:
-----------------------------
The Company leases shop and equipment storage facilities under operating
leases with original terms of at least one year. As of December 31, 1996,
future lease payments under these noncancellable operating leases are
approximately as follows:
Years Ending December 31, Amount
------------------------- -------
<TABLE>
<CAPTION>
<S> <C>
1997 $49,000
1998 8,000
1999 1,000
-------
$58,000
=======
</TABLE>
Rent expense for the years ended December 31, 1995 and 1996 and the four
months ended April 30, 1996 and 1997 was approximately $6,000, $14,000,
$2,000 and $7,000, respectively.
The Partnership, certain of its subsidiaries, the General Partner and others
are defendants in two lawsuits pending in Texas District Court in which the
plaintiffs assert negligence and gross negligence on the part of the
defendants in connection with the deaths of three employees while performing
well control work. Damages have not been specified in either suit. The
Partnership contends plaintiffs are only entitled to recovery under the
provisions of the Texas Worker's Compensation policy coverage in effect at
the time of the accident. Discovery is still underway and it is likely that
the cases will be consolidated for purposes of trial. The Partnership
believes that damages, if any, awarded to the plaintiffs will be
substantially covered through insurance.
The Partnership is also involved in other litigation incidental to the
conduct of its business, none of which management believes is, individually
or in the aggregate, material to the Partnership's consolidated financial
statements or results of operations.
C-8
<PAGE>
BOOTS & COOTS, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F. MAJOR CUSTOMERS:
---------------
During 1996, approximately 90% of the Partnership's revenues were generated
by one domestic customer. These revenues were generated by the
Partnership's Venezuelan subsidiary for work performed in Venezuela. As of
December 31, 1996, this customer accounted for approximately 95% of the
Partnership's trade receivables. These accounts receivable were
subsequently collected under normal credit terms and the Partnership
believes that future accounts receivable will continue to be collected under
normal credit terms based on previous experience. The Partnership performs
ongoing evaluations of its customers and generally does not require
collateral. The Partnership assesses its credit risk and provides an
allowance for doubtful accounts for any accounts which it deems doubtful of
collection.
No revenue or receivable concentrations existed as of December 31, 1995 or
for the year then ended.
G. CONCENTRATION OF CREDIT RISK:
----------------------------
The Partnership maintains deposits in banks which may exceed the amount of
federal deposit insurance available. Management believes that any possible
deposit loss is minimal.
H. PROFIT SHARING PLAN:
-------------------
The Partnership provides benefits pursuant to a profit sharing plan.
Employees are eligible for participation in the plan at semi-annual dates
immediately following one year of service and after the age of 21. The
provisions of this plan only allow for employer contributions, which are
made at the discretion of the Partnership's Advisory Committee. Employer
contributions become vested after seven years. The Partnership contributed
approximately $31,700, $31,000, $0 and $0 to this plan for the years ended
December 31, 1995 and 1996 and for the four months ended April 30, 1996 and
1997, respectively.
I. SUBSEQUENT EVENTS (UNAUDITED):
-----------------------------
On July 1, 1997, announcement was made that the Partnership had reached an
agreement to sell all of its operating assets to IWC Services, Inc. ("IWC")
an oil and gas well control and firefighting company. This sale was closed
on July 31, 1997 with IWC: (i) paying at closing $369,432 cash to the
Partnership and placing in escrow $680,568 cash to pay certain debts of the
Partnership; (ii) issuing two promissory notes, payable September 2, 1997,
to the Partnership in the aggregate principal amount of $4,760,077; and
(iii) issuing to the Partnership a contractual right to receive $1,000,000
in common stock of IWC. The promissory notes are secured by the acquired
assets of the Partnership, and may be extended at the option of IWC to
September 15, 1997.
C-9
<PAGE>
BOOTS & COOTS INTERNATIONAL WELL CONTROL, INC.
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma consolidated statements of operations of the
Company for the year ended June 30, 1996 and the ten months ended April 30,
1997, and the unaudited pro forma consolidated balance sheet of the Company as
of April 30, 1997 (the "Unaudited Pro Forma Consolidated Financial Statements")
give effect to: (i) the Boots & Coots Acquisition under the purchase method of
accounting; (ii) sale of an additional $2,145,000 by IWC Services, Inc. of its
12% Senior Subordinated Notes and assumed subsequent conversion of all
outstanding Notes (in the aggregate principal amount of $3,000,000) into
4,000,000 shares of the Company's common stock; and (iii) the issuance and sale
of 6,500,000 shares of the Company's common stock pursuant to the offering and
the application of the estimated net proceeds therefrom to reduce the debt
incurred in connection with the Boots & Coots Acquisition and add to working
capital for general corporate purposes.
The unaudited pro forma consolidated statements of operations for the year ended
June 30, 1996, and the ten months ended April 30, 1997, were prepared assuming
that the transactions described above were consummated as of the beginning of
each period presented. The unaudited pro forma consolidated balance sheet as of
April 30, 1997 was prepared assuming that the transactions described in (i),
(ii) and (iii) above were consummated as of April 30, 1997.
The Unaudited Pro Forma Consolidated Financial Statements are based upon the
historical consolidated financial statements of IWC Services, Inc. and Boots &
Coots included elsewhere in this Prospectus and should be read in conjunction
with those consolidated financial statements and the notes thereto. In
addition, historical statements of operations data of Boots & Coots were
converted from its December 31, fiscal year end basis to a June 30 fiscal year
basis in order to conform to IWC Services, Inc.'s fiscal year end. Because of
the nature of IWC Services, Inc.'s and Boots & Coots' operations, among other
factors, the results of the interim periods presented are not necessarily
indicative of the results to be expected for an entire year.
The pro forma adjustments and the resulting Unaudited Pro Forma Consolidated
Financial Statements have been prepared based upon available information and
certain assumptions and estimates deemed appropriate by the Company. A final
determination of required purchase accounting adjustments, including the
allocation of the purchase price to the assets acquired and liabilities assumed
based on their respective fair values, has not yet been made for the Boots &
Coots Acquisition. Accordingly, the purchase accounting adjustments for the
Boots & Coots Acquisition reflected in the pro forma information are preliminary
and have been made solely for purposes of developing such information. The
Company's management believes, however that the pro forma adjustments and the
underlying assumptions and estimates reasonably present the significant effects
of the transactions reflected thereby and that any subsequent changes in the
underlying assumptions and estimates will not materially affect the Unaudited
Pro Forma Consolidated Financial Statements presented herein. The Unaudited Pro
Forma Consolidated Financial Statements do not purport to represent what the
Company's financial position or results of operations actually would have been
had the Boots & Coots Acquisition and the Offering occurred on the dates
indicated or to project the Company's financial position or results of
operations for any future date or period. Furthermore, the Unaudited Pro Forma
Consolidated Financial Statements do not reflect changes that may occur as the
result of post-combination activities and other matters. The results of
operations of Boots & Coots will be included with the Company's actual results
of operations only from the date on which the Boots & Coots Acquisition was
consummated.
D-1
<PAGE>
BOOTS & COOTS INTERNATIONAL WELL CONTROL, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
Historical Pro Forma
------------------------ ------------
<S> <C> <C> <C> <C>
Boots &
Coots Combined
Boots & Acquisition Operations
Company Coots Adjustments and Offering
----------- ----------- ----------- ------------
(a) and (b)
REVENUES $1,662,121 $6,430,619 $8,092,740
COSTS AND EXPENSES:
Operating expenses 1,320,702 3,615,315 4,936,053
General and administrative 772,626 1,430,077 2,202,703
Depreciation and amortization 49,893 626,651 $ 171,156 847,700
---------- ---------- --------- ----------
2,143,221 5,672,079 171,156 7,986,456
---------- ---------- --------- ----------
OPERATING INCOME (LOSS) (481,100) 758,540 (171,156) 106,284
OTHER INCOME (EXPENSES) 4,216 (39,928) (35,712)
---------- ---------- --------- ----------
INCOME (LOSS) BEFORE INCOME TAXES (476,884) 718,612 (171,156) 70,572
INCOME TAX EXPENSE (BENEFIT) (137,818) 159,819 22,001
---------- ---------- --------- ----------
NET INCOME (LOSS) $ (339,066) $ 558,793 $(171,156) $ 48,571
========== ========== ========= ==========
SEE ACCOMPANYING NOTES TO THESE UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>
D-2
<PAGE>
BOOTS & COOTS INTERNATIONAL WELL CONTROL, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE TEN MONTHS ENDED APRIL 30, 1997
<TABLE>
<CAPTION>
Historical Pro Forma
------------------------- -------------------
<S> <C> <C> <C> <C>
Boots &
Coots Combined
Boots & Acquisition Operations
Company Coots Adjustments and Offering
----------- ------------ ----------- ------------
(a) and (b)
REVENUES $ 1,505,772 $ 12,118,565 $ 13,624,337
COSTS AND EXPENSES:
Operating expenses 1,134,335 6,306,796 7,441,131
General and administrative 749,742 2,541,335 3,291,077
Depreciation and amortization 84,362 566,080 $ 98,759 749,201
---------- ----------- ----------- ------------
1,968,439 9,414,211 98,759 11,481,409
---------- ----------- ----------- ------------
OPERATING INCOME (LOSS) (462,667) 2,704,354 (98,759) 2,142,928
OTHER INCOME (EXPENSES) (32,803) (42,096) (74,899)
---------- ----------- ----------- ------------
INCOME (LOSS) BEFORE INCOME TAXES (495,470) 2,662,258 (98,759) 2,068,029
INCOME TAX EXPENSE (BENEFIT) 21,239 761,507 414,222 1,196,968
---------- ----------- ----------- ------------
NET INCOME (LOSS) $ (516,709) $ 1,900,751 $ (512,981) $ 871,061
========== =========== =========== ============
SEE ACCOMPANYING NOTES TO THESE UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>
D-3
<PAGE>
BOOTS & COOTS INTERNATIONAL WELL CONTROL, INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF APRIL 30, 1997
<TABLE>
<CAPTION>
HISTORICAL Pro Forma
----------------------- ---------------------------------------
<S> <C> <C> <C> <C> <C>
Boots &
Coots Combined
Boots & Acquisition Offering Operations
Company Coots Adjustments Adjustments and Offering
---------- ---------- ----------- ----------- ------------
(c) (d)
ASSETS
------
CURRENT ASSETS:
Cash $ 280,878 $ 908,014 $ (6,801,961) $7,385,500 $ 1,772,431
Receivables - trade and other
(no allowance for doubtful
accounts) 626,544 3,144,201 (3,144,201) 626,544
Other current assets 178,207 150,032 328,239
----------- ----------- ------------ ---------- ------------
Total current assets 1,085,629 4,202,247 (9,946,162) 7,385,500 2,727,214
----------- ----------- ------------ ---------- ------------
PROPERTY AND EQUIPMENT, net 311,877 2,374,467 4,321,444 7,007,788
OTHER ASSETS, net 377,751 989,997 (881,993) (181,629) 304,126
----------- ----------- ------------ ---------- ------------
Total assets $ 1,775,257 $ 7,566,711 $ (6,506,711) $7,203,871 $ 10,039,128
=========== =========== ============ ========== ============
LIABILITIES AND
SHAREHOLDERS' EQUITY
- --------------------
CURRENT LIABILITIES:
Accounts payable $ 309,337 $ 249,466 $ (249,466) $ 309,337
Accrued liabilities 355,233 341,913 (281,913) 415,233
Notes payable - current 28,800 - 28,800
Accrued interest - 176,941 (176,941) -
Deferred foreign income taxes - 445,823 (445,823) -
Accrued other taxes - 633,188 (633,188) -
----------- ----------- ------------ ------------
Total current liabilities 693,370 1,847,331 (1,787,331) 753,370
----------- ----------- ------------ ------------
NOTES PAYABLE - noncurrent 9,818 500,000 (500,000) 9,818
12% SENIOR SUBORDINATED NOTES 769,500 - (769,500) -
----------- ----------- ------------ ----------- ------------
Total liabilities 779,318 2,347,331 (500,000) (769,500) 9,818
----------- ----------- ------------ ----------- ------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Preferred stock - - -
Common stock 57,084 - 10,000 105,000 172,084
Additional paid-in capital 829,176 - 990,000 8,168,371 9,987,547
Accumulated deficit (583,691) - (300,000) (883,691)
----------- ----------- ------------ ----------- ------------
Total shareholders' equity 302,569 - 1,000,000 7,973,371 9,275,940
----------- ----------- ------------ ----------- ------------
PARTNERS' CAPITAL - 5,219,380 (5,219,380) - -
----------- ----------- ------------ ----------- ------------
Total liabilities, shareholders'
equity and partners' capital $ 1,775,257 $ 7,566,711 $ (6,506,711) $7,203,871 $ 10,039,128
=========== =========== ============ =========== ============
SEE ACCOMPANYING NOTES TO THESE UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS.
D-4
</TABLE>
<PAGE>
BOOTS & COOTS INTERNATIONAL WELL CONTROL, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 1996 AND THE
TEN MONTHS ENDED APRIL 30, 1997, AND AS OF APRIL 30, 1997
1. BASIS OF PRESENTATION:
---------------------
The unaudited pro forma consolidated balance sheet is presented assuming the
Boots & Coots Acquisition and the Offering occurred on April 30, 1997. The
unaudited pro forma consolidated statements of operations for the year ended
June 30, 1996 and the ten months ended April 30, 1997 are presented as if
the Boots & Coots Acquisition and the Offering occurred at the beginning of
each respective period presented. The Unaudited Pro Forma Consolidated
Financial Statements may not necessarily be indicative of the results which
would actually have occurred if the Boots & Coots Acquisition had been in
effect on the date or for the periods indicated or which may result in the
future.
2. PRO FORMA ADJUSTMENTS - STATEMENTS OF OPERATIONS:
------------------------------------------------
The pro forma adjustments to the unaudited pro forma consolidated statements
of operations reflect the following:
(a) Depreciation and Amortization - The adjustment reflects the pro forma
depreciation and amortization expense based on the allocation of the
excess of purchase price over underlying fair value of assets acquired
to the depreciable assets of Boots & Coots and the use of
depreciation lives for all assets based on management's estimates of
their remaining useful lives.
(b) Income Taxes - The acquisition adjustment for income taxes represents
the tax effect of the foregoing acquisition pro forma adjustments
computed at a 34% statutory federal income tax rate, as well as the
utilization of the Company's NOL carryforward.
3. PRO FORMA ADJUSTMENTS - BALANCE SHEET:
-------------------------------------
The pro forma adjustments to the unaudited pro forma consolidated balance
sheet reflect the following:
(c) Boots & Coots Acquisition Adjustments - The adjustment reflects the
recording of the Boots & Coots Acquisition using the purchase method
of accounting and the allocation of the purchase price based on the
Company's estimate of the fair value of the assets acquired. The
allocation of the purchase price is preliminary, as valuation and
other studies have not been finalized; however, it is expected that a
substantial portion of purchase price allocations will be made to
depreciable assets. It is not expected that the final allocation of
the purchase price will produce materially different results from
those presented herein. This set of adjustments also includes
completion of a debt offering that was in process at April 30, 1997.
(d) Offering Adjustments - The adjustment reflects the issuance of
6,500,000 shares of the Company's common stock at a price of $1.00 per
share. The estimated net proceeds of $5,505,000 will be used to
reduce the debt incurred for the Boots & Coots Acquisition and add to
working capital for general corporate purposes.
D-5
<PAGE>
EXHIBIT 2.1
SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT (the "Subscription Agreement"), dated as of the
28th day of July, 1997, between HAVENWOOD VENTURES, INC., a Delaware corporation
(the "Subscriber"), and HAVENWOOD ACQUISITION CORP., a Texas corporation
(the "Company").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Subscriber and the Company have entered into that certain
Agreement (the "Agreement"), dated as of an even date herewith, by and between
the Subscriber, the Company and IWC SERVICES, Inc., a Texas corporation ("IWC"),
which contemplates, among other actions, (i) the sale of capital stock by the
Company to the Subscriber and (ii) the merger of the Company and IWC (the
"Merger");
WHEREAS, the Subscriber desires to acquire 1,000 of the authorized, but
unissued, shares of Common Stock, $.01 par value per share (the "Common Stock")
of the Company for consideration consisting of shares, warrants and options of
the Subscriber sufficient to fulfill the obligations of the Company in the event
the Merger is consummated, and if the Merger is not consummated, for
consideration consisting of $1,000 in cash;
WHEREAS, the Company desires to sell the Common Stock to the Subscriber on
such terms; and
WHEREAS, the Plan and Agreement of Merger (the "Merger Agreement"), by and
between the Company and IWC, as contemplated in the Agreement, sets forth that
all of the outstanding capital stock, warrants and options of IWC will be
canceled and exchanged for common stock, warrants and options of the Subscriber
held by the Company;
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties and covenants herein contained, the parties hereby
agree as follows:
1. Subscription. Subject to the terms and conditions hereof and the
provisions of the Agreement, the Subscriber hereby irrevocably subscribes for
1,000 shares (the "Shares") of Common Stock for the consideration set forth
herein.
2. Purchase Price. The purchase price to be paid by the Subscriber to the
Company at Closing (as defined herein) as payment for the Shares (hereinafter
called the "Purchase Price") shall be as follows:
(a) In the event that the Merger as contemplated in the Agreement is
consummated, the Purchase Price shall be the number of shares of IWC
Common, IWC Warrants and IWC Options (as defined in the Agreement) to be
exchanged for the canceled shares of capital stock, warrants and options of
IWC at the closing of the Merger, as more fully set forth in the Merger
Agreement; or
(b) In the event that the Merger is not consummated, the Purchase
Price shall be One Thousand Dollars ($1,000.00) in cash.
<PAGE>
3. Closing.
(a) The closing ("Closing") of the purchase and sale of the Shares
subscribed for hereby shall be held at the same time, place and date as the
closing contemplated in the Agreement.
(b) At the Closing, in accordance with this Subscription Agreement,
the Company shall issue and deliver to the Subscriber the Shares.
(c) At the Closing, the Subscriber shall deliver to the Company the
Purchase Price. Upon receipt of the Purchase Price the Company shall place
such consideration with the Exchange Agent pending satisfaction of the
conditions to Closing specified herein.
4. Representations and Warranties of the Company. In addition to the
representations and warranties set forth in the Agreement, the Company
represents and warrants to the Subscriber, as follows:
(a) The Shares to be delivered to the Subscriber at the Closing are
duly authorized and will, when issued in accordance with the terms hereof,
be validly issued and outstanding, fully paid and nonassessable, and will
not be subject to any unpaid transfer or other taxes.
(b) The Company is authorized to issue 1,000 shares of Common Stock.
No shares of the Common Stock are presently issued or outstanding. No other
classes of capital stock of the Company are authorized or outstanding.
(c) All documents and other papers delivered by or on behalf of the
Company in connection with this Subscription Agreement, the Agreement, or
the transactions contemplated therein are true, complete and authentic. No
representation, warranty, covenant or agreement of the Company, contained
in this Subscription Agreement or in the Agreement, and no document or
other paper furnished by or on behalf of the Company, to the Subscriber
pursuant to this Subscription Agreement or the Agreement, or in connection
with the transactions contemplated thereby, contains an untrue statement of
material fact or omits to state a material fact required to be stated
therein or necessary to make the statements made, in the context in which
made, not false and misleading.
(d) The Company has all right and authority to execute and deliver
this Subscription Agreement. This Subscription Agreement is a valid and
binding agreement of the Company enforceable against the Company in
accordance with its terms except as the enforceability hereof may be
affected by bankruptcy, insolvency or similar laws affecting creditors'
rights generally, or by court-applied equitable remedies.
5. Representations and Warranties of Subscriber. In addition to the
representations and warranties set forth in the Agreement, Subscriber hereby
represents and warrants to the Company that:
(a) The Subscriber is aware that the Shares have not been registered
under the Securities Act of 1933, as amended (the "Act"), or the securities
laws of any state, and, therefore, cannot be sold, pledged, assigned or
otherwise transferred except in accordance with the registration
requirements of the Act and/or any applicable state securities laws or an
exemption
<PAGE>
from such registration requirements, and further, that only the Company can
take action to so register the Shares.
(b) All documents and other papers delivered by or on behalf of the
Subscriber in connection with this Subscription Agreement, the Agreement,
or the transactions contemplated therein are true, complete and authentic.
No representation, warranty, covenant or agreement of the Subscriber,
contained in this Subscription Agreement or in the Agreement, and no
document or other paper furnished by or on behalf of the Subscriber, to the
Company pursuant to this Subscription Agreement or the Agreement or in
connection with the transactions contemplated therein, contains an untrue
statement of material fact or omits to state a material fact required to be
stated therein or necessary to make the statements made, in a context in
which made, not false or misleading.
(c) The Subscriber has all right and authority to make such
investment in the Shares and to execute and deliver this Subscription
Agreement. This Subscription Agreement is a valid and binding agreement of
the Subscriber enforceable against the Subscriber in accordance with its
terms except as the enforceability hereof may be affected by bankruptcy,
insolvency or similar laws affecting creditor's rights generally, or by
court-applied equitable remedies.
6. Conditions to Obligations of Subscriber. The obligations of
Subscriber hereunder are, at its option, subject to the conditions that the
representations and warranties of the Company in Section 4 hereof shall be
accurate as of the Closing Date, as though such representations and warranties
had been made at and as of such time, and all of the terms, covenants and
conditions of this Subscription Agreement and the Agreement to be complied with
and performed by the Company on or before the Closing Date shall have been duly
complied with and performed.
7. Conditions to Obligations of the Company. The obligations of the
Company hereunder are, at its option, subject to the conditions that the
representations and warranties of Subscriber in Section 5 hereof shall be
accurate as of the Closing Date, as though such representations and warranties
had been made at and as of such time, and all of the terms, covenants and
conditions to this Agreement to be complied with and performed by the Subscriber
on or before the Closing Date shall have been duly complied with and performed.
8. Consummation of Merger. It is the understanding of the parties that
the Merger described in the Agreement shall be consummated immediately after the
Closing of this Subscription Agreement, substantially on the terms of such
Merger as set forth in the Agreement and the Merger Agreement. In the event the
Merger is not consummated, the Purchase Price shall be modified to the
consideration as set forth in Section 2(b) hereof.
9. Indemnification. The Subscriber and the Company acknowledge that they
understand the meaning and legal consequences of the representations, warranties
and covenants set forth in Sections 4 and 5 above and that each party, and its
respective officers, directors, employees and agents have relied or will rely
upon such representations, warranties and covenants, and they hereby agree to
indemnify and hold harmless each other and their respective officers, directors,
employees and agents from and against any and all loss, claim, damage, liability
or expense, and any action in respect thereof, joint or several, to which any
such person may become subject, due to or arising out of a breach of any such
representation, warranty or covenant, together with all reasonable costs and
expenses (including attorney's fees) incurred by any such person in connection
with any action, suit, proceeding, demand, assessment or judgment
<PAGE>
incident to any of the matters so indemnified against.
10. Survival. All representations, warranties and covenants contained in
this Subscription Agreement, including without limitation the indemnification
contained in Section 8 above, shall survive the termination of this Subscription
Agreement. The parties acknowledge and agree that this Subscription Agreement
shall survive changes in the transactions, documents and instruments described
in the Agreement and the Merger Agreement which are not material.
11. Applicable Law. It is the intention of the Company and the Subscriber
that the internal laws, and not the laws of conflicts, of the State of Texas
shall govern the enforceability and validity of this Subscription Agreement, the
construction of its terms and the interpretation of the rights and duties of the
Company and the Subscriber; provided, however, that with respect to matters of
law concerning the internal affairs of any entity that is a party to or the
subject of this Subscription Agreement the law of the jurisdiction of
organization of such entity shall govern.
IN WITNESS WHEREOF, the parties hereto have executed this Subscription
Agreement as of the date first above written.
"SUBSCRIBER"
HAVENWOOD VENTURES, INC.
By: /s/ MARK LEIBOVIT
Name: Mark Leibovit
Title: President
"COMPANY"
HAVENWOOD ACQUISITION CORP.
By: /s/ JOHN L. PETERSEN
Name: John L. Petersen
Title: President
<PAGE>
EXHIBIT 2.2
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER ("Plan" or "Merger Agreement") dated
as of July __, 1997, between HAVENWOOD ACQUISITION CORP., a Texas corporation
("Newco"), and IWC SERVICES, INC., a Texas corporation ("IWC"). Newco and IWC
are hereinafter collectively referred to as the "Constituent Corporations."
W I T N E S S E T H:
-------------------
WHEREAS, Newco is a corporation duly organized and existing under the
laws of the State of Texas, having filed its Articles of Incorporation in the
office of the Secretary of State of Texas on July __, 1997, and having total
authorized capital stock of 1,000 shares of common stock, $0.01 par value
("Newco Stock"), of which 1,000 shares are issued and outstanding and owned by
HAVENWOOD VENTURES, INC., a Delaware corporation ("Havenwood"); and
WHEREAS, IWC is a corporation duly organized and existing under the
laws of the State of Texas, having filed its Articles of Incorporation in the
office of the Secretary of State of Texas on May ___,1995 and having an
authorized structure that includes (i) 50,000,000 shares of common stock, $0.01
par value ("IWC Common"), of which 6,740,000 shares are issued and outstanding;
(ii) 5,000,000 shares of Preferred Stock, $0.01 par value ("IWC Preferred") of
which no shares are issued and outstanding; warrants to purchase a presently
indeterminate number of shares of IWC Common having an aggregate value of
$3,000,000 based on a conversion price equal to one-half of the average closing
bid price of the IWC Common during the 60-day period commencing 30 days after
the completion of a public stock offering or business combination transaction
that results in the creation of a public market for the IWC Common ("IWC
Warrants"); and options to purchase 850,000 shares of IWC Common at a price of
$1.00 per share ("IWC Options"). The IWC Common; IWC Preferred, IWC Warrants and
IWC Options are referred to herein, collectively, as the "IWC Securities").
WHEREAS, the respective Boards of Directors of the Constituent
Corporations deem it advisable and in the best interests of the Constituent
Corporations and their shareholders that Newco be merged with and into IWC,
which shall be the surviving corporation, as authorized by the statutes of the
State of Texas and pursuant to the terms and conditions hereinafter set forth,
and each such Board has duly approved this Agreement and Plan of Merger;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, and for the purpose of setting forth
the terms of the merger (the "Merger") provided by this Merger Agreement, the
mode of carrying the same into effect and such other details and provisions as
are deemed necessary or desirable, the parties hereto have agreed and do hereby
agree, subject to the approval or adoption of this Merger Agreement by the
requisite vote of the shareholders of each Constituent Corporation, and subject
to the conditions hereinafter set forth, as follows:
<PAGE>
ARTICLE I
THE MERGER
SECTION 1.01. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with Texas Law, at the
Effective Time (as defined in Section 1.02), Newco shall be merged with and into
IWC. As a result of the Merger, the separate corporate existence of Newco shall
cease and IWC shall continue as the surviving corporation in the Merger (the
"Surviving Corporation"). The name of the Surviving Corporation shall remain
"IWC SERVICES, Inc."
SECTION 1.02. Effective Time. As promptly as practicable after the
approval hereof by the shareholders of each Constituent Corporation and the
execution and delivery of this Agreement by each of the parties hereto, the
parties hereto shall cause the Merger to be consummated by filing of articles of
merger (the "Articles of Merger") with the Secretary of State of the State of
Texas, in such form as required by, and executed in accordance with the relevant
provisions of, Texas Law (the date and time of such filing being the "Effective
Time").
SECTION 1.03. Effect of the Merger. At the Effective Time, the
effect of the Merger shall be as provided in the applicable provisions of Texas
Law. Without limiting the generality of the foregoing, and subject thereto, at
the Effective Time, except as otherwise provided herein, all the property,
rights, privileges, powers and franchises of Newco and IWC shall vest in the
Surviving Corporation, and all debts, liabilities and duties of Newco and IWC
shall become the debts, liabilities and duties of the Surviving Corporation.
SECTION 1.04. Articles of Incorporation; By-Laws. At the Effective
Time, the Articles of Incorporation and the By-laws of IWC, as in effect
immediately prior to the Effective Time, shall be the Articles of Incorporation
and the By-Laws of the Surviving Corporation; provided that Article IV of the
Articles of Incorporation of IWC shall be amended as follows to reflect that
after the Merger the capitalization of IWC shall be 1,000 shares of Common Stock
issued to and outstanding in the name of Havenwood:
"The total number of shares of all classes of stock which the
corporation shall be authorized to issue is one thousand (1,000) shares of
common stock, $0.01 par value per share."
SECTION 1.05. Directors and Officers. The directors of IWC
immediately prior to the Effective Time shall be the directors of the Surviving
Corporation, each to hold office in accordance with the Articles of
Incorporation and By-Laws of the Surviving Corporation, and the officers of IWC
immediately prior to the Effective Time shall be the officers of the Surviving
Corporation, in each case until their respective successors are duly elected or
appointed and qualified.
<PAGE>
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.01. Conversion of Securities. At the Effective Time, by
virtue of the Merger and without any action on the part of Newco, IWC or the
holders of any of the following securities:
(a) Each share of IWC Common issued and outstanding immediately prior
to the Effective Time, excluding any treasury shares held by IWC, shares held by
Havenwood and Dissenting Shares (as defined in Section 2.04), if any, shall be
converted into the right to receive 2.3 shares (the "Common Stock Exchange
Ratio") of fully paid, nonassessable shares of Havenwood Common.
(b) Each IWC Warrant issued and outstanding immediately prior to the
Effective Time shall be converted into a substantially identical warrant to
purchase shares of Havenwood Common ("Havenwood Warrant") so that the holders of
the IWC Warrants, as a group, shall have the right to purchase $3,000,000 of
Havenwood Common valued at one-half of the average closing bid price of the
Havenwood Common during the 60-day period commencing 30 days after the effective
time.
(c) Each IWC Option outstanding immediately prior to the Effective
Time shall be converted into an option to purchase Havenwood Common ("Havenwood
Option") exercisable for that number of shares of Havenwood Common equal to the
product of the number of shares of IWC Common covered by IWC Warrants
immediately prior to the Effective Time multiplied by the Common Stock Exchange
Ratio rounded up to the nearest whole number of shares of Havenwood Common, and
the per share exercise price for the shares of Havenwood Common issuable upon
the exercise of such Havenwood Warrant shall be equal to the quotient determined
by dividing the exercise price per share of IWC Common specified for such IWC
Warrant under the applicable option agreement immediately prior to the Effective
Time by the Common Stock Exchange Ratio rounding the resulting exercise price
down to the nearest whole cent. The date of grant of a Havenwood Option issued
in exchange for an IWC Option shall be deemed to be the date on which such IWC
Warrant was originally granted. Havenwood Options issued in exchange for IWC
Options pursuant hereto shall have the same schedule of vesting (or
acceleration) as applies to such IWC Options.
(d) All IWC Securities shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each
certificate previously evidencing any such IWC Securities shall thereafter
represent the right to receive the Merger Consideration (as defined in Section
2.02(b) below). The holders of certificates previously evidencing IWC
Securities outstanding immediately prior to the Effective Time shall cease to
have any rights with respect to such IWC Securities, except as otherwise
provided herein or by law. Such certificates previously evidencing IWC
Securities shall be exchanged for certificates evidencing shares of Havenwood
Common, Havenwood Warrants or Havenwood Options (collectively, the "Havenwood
Securities"), as appropriate, issued in consideration therefor in accordance
with the allocation procedures of this Section 2.01 and upon the surrender of
such certificates in accordance with the provisions of Section 2.02.
<PAGE>
(e) All IWC Securities held in the treasury of IWC and all IWC
Securities owned by Havenwood or any direct or indirect wholly owned subsidiary
of Havenwood or of IWC immediately prior to the Effective Time shall be canceled
and extinguished without any conversion thereof and no payment shall be made
with respect thereto.
SECTION 2.02. Exchange of Certificates. (a) Exchange Agent. As of
the date hereof, Newco has deposited, or caused to be deposited, with
_______________________ (the "Exchange Agent"), for the benefit of the holders
of IWC Securities, for exchange in accordance with this Article II through the
Exchange Agent (i) certificates evidencing such number of shares of Havenwood
Common equal to the Common Stock Exchange Ratio multiplied by the number of
shares of IWC Common; (ii) certificates representing Havenwood Warrants that are
equivalent in all material respects to the outstanding IWC Warrants; and (iii)
Havenwood Options evidencing the right to purchase such number of shares of
Havenwood Common equal to the Common Stock Exchange Ratio multiplied by the
number of shares of IWC Common represented by IWC Options at an exercise price
determined in accordance with Section 2.01(c). The Exchange Agent shall,
pursuant to irrevocable instructions, deliver the Havenwood Securities to the
holders of IWC Securities.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, IWC will instruct the Exchange Agent to mail to each holder of
record of IWC Securities (other than Dissenting Shares) (all stock certificates,
warrants and other documents evidencing IWC Options being collectively, the
"Certificates"), (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon proper delivery of the Certificates to the Exchange Agent and shall be
in such form and have such other provisions as IWC may reasonably specify) and
(ii) instructions for use in effecting the surrender of the Certificates in
exchange for certificates evidencing Havenwood Securities. Upon surrender of a
Certificate for cancellation to the Exchange Agent together with such letter of
transmittal, duly executed, and such other customary documents as may be
required pursuant to such instructions, the holder of such Certificate shall be
entitled to receive in exchange therefor (i) certificates evidencing that number
of shares of Havenwood Common which such holder has the right to receive in
respect of the shares of IWC Common; (ii) Havenwood Warrants evidencing the
right to purchase that number of shares of Havenwood Common which such holder
has the right to receive in respect of IWC Warrants; and (iii) Havenwood Options
evidencing the right to purchase that number of shares of Havenwood Common which
such holder has the right to receive in respect of IWC Options. in each case in
accordance with Section 2.01 (such Havenwood Common, Havenwood Warrants and
Havenwood Options being collectively, the "Merger Consideration") and the
Certificates so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of shares of IWC Securities, an IWC Warrant or an IWC
Option which transfer is not registered in the transfer records of IWC, a
certificate evidencing the proper number of shares of Havenwood Common, a
Havenwood Warrant or a Havenwood Option, as appropriate, may be issued in
accordance with this Article II to a transferee if the Certificate evidencing
such IWC Common, IWC Warrant or IWC Option is presented to the Exchange Agent,
accompanied by all documents required to evidence and effect such transfer and
by evidence that any applicable stock transfer taxes have been paid. Until
surrendered as contemplated in this Section 2.02, each Certificate shall be
deemed at any time after the Effective Time to evidence only the right to
receive, upon such surrender, the Merger Consideration.
<PAGE>
(c) No Further Rights in IWC Common, IWC Warrants or IWC Options. All
Havenwood Common, Havenwood Warrants and Havenwood Options issued upon
conversion of IWC Common, IWC Warrants or IWC Options in accordance with the
terms hereof shall be deemed to have been issued or paid in full satisfaction of
all rights pertaining to the previously issued and outstanding IWC Common, IWC
Warrants and IWC Options.
SECTION 2.03. Stock Transfer Books. At the Effective Time, the stock
transfer books of IWC shall be closed and there shall be no further registration
of transfers of shares of IWC Securities thereafter on the records of IWC. On
or after the Effective Time, any Certificates presented to the Exchange Agent
for any reason shall be converted into the Merger Consideration.
SECTION 2.04. Dissenting Shares. If required under Texas Law,
notwithstanding any other provisions of this Agreement to the contrary, IWC
Securities that are outstanding immediately prior to the Effective Time and
which are held by stockholders who shall have not voted in favor of the Merger
or consented thereto in writing and who shall have demanded properly in writing
appraisal for such shares in accordance with Texas Law (collectively, the
"Dissenting Shares") shall not be converted into or represent the right to
receive the Merger Consideration. Such stockholders shall be entitled to receive
payment of the appraised value of the IWC Securities held by them in accordance
with the provisions of such sections of Texas Law, except that all Dissenting
Shares held by stockholders who shall have failed to perfect or who effectively
shall have withdrawn or lost their rights to appraisal of such IWC Securities
under such sections of Texas Law shall thereupon be deemed to have been
converted into and to have become exchangeable, as of the Effective Time, for
the right to receive Havenwood Securities, upon surrender, in the manner
provided in Section 2.02, of the certificate or certificates that formerly
evidenced such IWC Securities.
ARTICLE III
APPROVAL AND EFFECTIVE TIME OF THE MERGER
The Merger shall become effective when certified, executed and acknowledged
in accordance with the Texas Corporations Law and appropriate Articles of Merger
shall be filed and recorded in the office of the Secretary of State of the State
of Texas.
ARTICLE IV
MISCELLANEOUS PROVISIONS
(a) For the convenience of the parties, any number of counterparts
hereof may be executed, and each such counterpart shall be deemed to be an
original instrument.
(b) It is the intention of the parties that the internal laws, and
not the laws of conflicts, of the State of Texas shall govern the enforceability
and validity of this Merger Agreement, the construction of its terms and the
interpretation of the rights and duties of the parties; provided, however, that
with respect to matters of law concerning the internal affairs of any entity
that is a party to or the subject of this Merger Agreement the law of the
jurisdiction of organization of such entity shall govern.
<PAGE>
(c) This Merger Agreement may not be altered or amended except
pursuant to an instrument in writing signed on behalf of the parties hereto.
IN WITNESS WHEREOF, IWC has caused this Merger Agreement to be signed
by its President and attested by its Secretary and its corporate seal to be
affixed hereto pursuant to authorization contained in a resolution adopted by
its Board of Directors approving this Merger Agreement, and Newco has caused
this Merger Agreement to be signed by its President and attested by its
Secretary and its corporate seal to be affixed hereto pursuant to authorization
contained in a resolution adopted by its Board of Directors approving this
Merger Agreement, all on the date first above written.
HAVENWOOD ACQUISITION CORP.
/s/ JOHN L. PETERSEN
By: ________________________________
John L. Petersen
Name: ______________________________
President
Title: _____________________________
Attest:_______________________
___________________, Secretary
IWC SERVICES, INC.
/s/ BRIAN KRAUSE
By: ________________________________
Brian Krause
Name: ______________________________
President
Title: _____________________________
Attest:_______________________
___________________, Secretary
<PAGE>
IN WITNESS WHEREOF, the undersigned Vice-President of the Disappearing
Corporation, executes these Articles of Merger and verify that the statements
contained herein are true and complete and are the act and deed of the
constituent corporations this the ____ day of July, 1997.
HAVENWOOD ACQUISITION CORP.
/s/ CHARLES T. PHILLIPS
By: ________________________________
Charles T. Phillips
Name: ______________________________
Vice President
Title: _____________________________
/s/ SHIRLEY PEARCE
Attest: ________________________
_____________________, Secretary
STATE OF TEXAS (S)
(S)
COUNTY OF HARRIS (S)
On this ____ day of July, 1997, before me, ROBIN CARTMELL, the undersigned
officer, personally appeared Charles Phillips, known personally to me to be the
Vice-President of Havenwood Acquisition Corp. and that he, as such officer,
being authorized to do so, executed the foregoing instrument for the purposes
therein contained, by signing the name of the corporation as such officer.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
/s/ ROBIN CARTMELL
____________________________________
Notary Public in and for the
State of T E X A S
<PAGE>
ARTICLES OF MERGER
OF
HAVENWOOD ACQUISITION CORP. AND
IWC SERVICES, INC.
The undersigned officer of the Surviving Corporation to a Plan of Merger
submits the following Articles of Merger pursuant to the provisions of Article
5.04 of the Texas Business Corporations Act ("TBCA").
ARTICLE I
NAME
The name and place of incorporation of each constituent corporation is:
A. HAVENWOOD ACQUISITION CORP., a Texas corporation (the "Disappearing
Corporation");
B. IWC SERVICES, INC., a Texas corporation (the "Surviving Corporation").
ARTICLE II
ADOPTION OF THE PLAN OF MERGER
The respective Boards of Directors of the Surviving Corporation and the
Disappearing Corporation have duly and validly adopted the Plan of Merger,
containing the information required by Article 5.02 of the TBCA has been adopted
by the board of directors of each corporation that is a party to the merger.
ARTICLE III
OUTSTANDING STOCK
On the date of notice of the special meeting called to consider the Plan of
Merger, there were outstanding shares of stock in the constituent corporations
the numbers and designations of which are as follows:
A. The Surviving Corporation had six million, one hundred seventy-eight
thousand, nine hundred forty-seven (6,740,000) outstanding shares of common
stock, par value $0.01 per share, each share being entitled to one (1) vote for
a total six million, one hundred seventy-eight thousand, nine hundred forty-
seven (6,740,000) votes entitled to be cast for or against the Plan of Merger;
B. The Disappearing Corporation had One Thousand (1,000) outstanding
shares of common stock, par value $0.01 per share, each share being entitled to
one (1) vote for a total of One Thousand (1,000) votes entitled to be cast for
or against the Plan of Merger.
<PAGE>
ARTICLE IV
STOCKHOLDER APPROVAL
The Plan of Merger was duly submitted to the stockholders of the Surviving
Corporation, in accordance with the laws of the State of Texas, and the
stockholders of the Disappearing Corporation in accordance with the laws of the
State of Texas, and approved thereby. The stockholders of the Surviving
Corporation cast six million, one hundred seventy-eight thousand, nine hundred
forty-seven (6,740,000) in favor and no (0) votes against the Plan of Merger and
the stockholders of the Disappearing Corporation cast One Thousand (1,000) votes
in favor and no (0) votes against the Plan of Merger which votes cast in favor
thereof are of a sufficient number for the approval of the Plan of Merger by the
constituent corporations.
ARTICLE V
AMENDMENTS TO THE ARTICLES OF INCORPORATION
OF THE SURVIVING CORPORATION
The Articles of Incorporation of the Surviving Corporation shall continue
as the Articles of Incorporation of the Surviving Corporation in all respects;
except, that on the effective date of the Merger, Article IV of the Articles of
Incorporation of the Surviving Corporation shall be amended to read as follows:
"The total number of shares of all classes of stock which the corporation
shall be authorized to issue is one thousand (1,000) shares of common
stock, $0.01 par value per share."
ARTICLE VI
PLAN OF MERGER
A. A copy of the Plan of Merger is attached hereto as "Exhibit A" and
incorporated herein by this reference.
<PAGE>
IN WITNESS WHEREOF, the undersigned President and Secretary of the
Surviving Corporation, execute these Articles of Merger and verify that the
statements contained herein are true and complete and are the act and deed of
the constituent corporations this the ____ day of July, 1997.
IWC SERVICES, INC.
/s/ BRIAN KRAUSE
By: ________________________________
Brian Krause
Name: ______________________________
President
Title: _____________________________
/s/ JENNIFER LANE
Attest:_______________________
___________________, Secretary
STATE OF TEXAS (S)
(S)
COUNTY OF HARRIS (S)
On this 25th day of July, 1997, before me, SHIRLEY PEARCE, the undersigned
officer, personally appeared ___________ and JENNIFER LANE, known personally to
me to be the President and Secretary, respectively, of IWC SERVICES, INC., and
that they, as such officers, being authorized to do so, executed the foregoing
instrument for the purposes therein contained, by signing the name of the
corporation by themselves as such officers.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
/s/ SHIRLEY PEARCE
________________________________________________________________________________
Notary Public in and for the
State of T E X A S
<PAGE>
EXHIBIT 2.3
AGREEMENT
BY AND AMONG
HAVENWOOD VENTURES, INC.
HAVENWOOD ACQUISITION CORP.
AND
IWC SERVICES, INC.
DATED AS OF JULY 28, 1997
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I THE MERGER 1
SECTION 1.01. The Merger 1
SECTION 1.02. Effective Time 2
ARTICLE II REPRESENTATIONS AND WARRANTIES OF IWC 2
SECTION 2.01. Organization and Qualification; Subsidiaries 2
SECTION 2.02. Articles of Incorporation and By-Laws 2
SECTION 2.03. Capitalization 3
SECTION 2.04. Authority 3
SECTION 2.05. No Conflict; Required Filings and Consent 3
SECTION 2.06. Permits; Compliance 4
SECTION 2.07. Financial Statements 4
SECTION 2.08. No Undisclosed Liabilities 4
SECTION 2.09. Absence of Certain Changes or Events 4
SECTION 2.10. Absence of Litigation 4
SECTION 2.11. Taxes 4
SECTION 2.12. Brokers 5
SECTION 2.13. IWC Corporate Action 5
SECTION 2.14. Environmental Laws and Regulations 5
ARTICLE III REPRESENTATIONS AND WARRANTIES
OF HAVENWOOD AND NEWCO 5
SECTION 3.01. Organization and Qualification 6
SECTION 3.02. Articles of Incorporation and By-Laws 6
SECTION 3.03. Capitalization 6
SECTION 3.04. Authority 7
SECTION 3.05. No Conflict; Required Filings and Consents 7
SECTION 3.06. Permits; Compliance 8
SECTION 3.07. Reports; Financial Statements 8
SECTION 3.08. Absence of Certain Changes or Events 8
SECTION 3.09. No Undisclosed Liabilities 9
SECTION 3.10. Absence of Litigation 9
SECTION 3.11. Ownership of Newco; No Prior Activities 9
SECTION 3.12. Taxes 9
SECTION 3.13. Brokers 9
SECTION 3.14. Environmental Laws and Regulations. 9
SECTION 3.15. Contract Rights 10
SECTION 3.16. Employee Benefit Plans 10
SECTION 3.17. Public Offering. 10
ARTICLE IV ADDITIONAL AGREEMENTS 11
SECTION 4.01. Appropriate Action; Consents; Filings 11
SECTION 4.02. Tax Treatment; Pooling of Interests 11
<PAGE>
SECTION 4.03. Indemnification. 11
SECTION 4.04. Officers and Directors of Havenwood 14
SECTION 4.05. Opinion of Counsel to Havenwood 14
ARTICLE V GENERAL PROVISIONS 14
SECTION 5.01. Effectiveness of Representations, Warranties and Agreements 15
SECTION 5.02. Notices 15
SECTION 5.03. Certain Definitions 16
SECTION 5.04. Headings 16
SECTION 5.05. Severability 16
SECTION 5.06. Entire Agreement 16
SECTION 5.07. Assignment 16
SECTION 5.08. Parties in Interest 16
SECTION 5.09. Failure or Indulgence Not Waiver; Remedies Cumulative 17
SECTION 5.10. Governing Law 17
SECTION 5.11. Jurisdiction 17
SECTION 5.12. Counterparts 17
<PAGE>
AGREEMENT
AGREEMENT dated as of July __, 1997 ("Agreement"), among HAVENWOOD
VENTURES, INC., a Delaware corporation ("Havenwood"), HAVENWOOD ACQUISITION
CORP., a Texas corporation ("Newco"), and a wholly owned subsidiary of
Havenwood, MARK LEIBOVIT, individually ("Leibovit"), REED SLATKIN individually
("Slatkin") and IWC SERVICES, INC., a Texas corporation ("IWC").
WHEREAS, upon the terms and subject to the conditions of this
Agreement and in accordance with the Texas Business Corporations Act ("TBCA"),
Newco will merge with and into IWC (the "Merger") as a result of which the
stockholders of IWC will own together approximately 92% of the issued and
outstanding shares of the common stock, $.00001 par value, of Havenwood (on a
fully diluted basis);
WHEREAS, the Board of Directors of IWC has determined that the Merger
is fair to, and in the best interests of, IWC and its stockholders; has approved
and adopted this Agreement and the transactions contemplated herein; and this
Agreement and the transactions contemplated herein have been approved by the
stockholders of IWC;
WHEREAS, the Board of Directors of Havenwood has determined that the
Merger is in the best interests of Havenwood and its stockholders and has
approved and adopted this Agreement and the transactions contemplated herein;
WHEREAS, the Board of Directors of Newco has determined that the
Merger is in the best interests of Newco and its stockholder and the Board of
Directors of Newco and Havenwood, as the sole stockholder of Newco, have
approved and adopted this Agreement and the transactions contemplated herein;
WHEREAS, for Federal income tax purposes, it is intended that the
Merger qualify as a reorganization under the provisions of section 368(a) of the
United States Internal Revenue Code of 1986, as amended (the "Code") and that
this Agreement and the Annexes hereto shall constitute a "plan of
reorganization" for the purposes of section 368 of the Code;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto agree as follows:
<PAGE>
ARTICLE I
THE MERGER
SECTION 1.01. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the TBCA, at the
Effective Time (as defined in Section 1.02), Newco and IWC shall effect a merger
by executing the Plan and Agreement of Merger (the "Plan") in substantially the
form attached hereto as Annex I, and by executing and filing Articles of Merger
(the "Articles"), substantially in the form attached hereto as Annex II, in the
manner provided in Article 5.04 of the TBCA. As a result of the Merger, the
separate corporate existence of Newco shall cease and IWC shall continue as the
surviving corporation in the Merger (the "Surviving Corporation"). The name of
the Surviving Corporation shall continue to be "IWC SERVICES, INC." Prior to
the Merger, Havenwood shall, pursuant to the terms of the Subscription
Agreement, a copy of which is attached as Annex III hereto (the "Subscription
Agreement"), issue and deliver to Newco shares of Havenwood Stock, Havenwood
Warrants and Havenwood Options equivalent to the number of shares of Havenwood
Stock, the number of Havenwood Warrants and the number of Havenwood Options to
be transferred pursuant to the terms and provisions of the Plan.
SECTION 1.02. Effective Time. As promptly as practicable after the
execution and delivery of this Agreement by each of the parties hereto, the
parties hereto shall cause the Merger to be consummated by filing the Articles
with the Secretary of State of the State of Texas, in such form as required by,
and executed in accordance with the relevant provisions of the TBCA (the date
and time of such filing being the "Effective Time").
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF IWC
IWC hereby represents and warrants to Havenwood and Newco as follows
that:
SECTION 2.01. Organization and Qualification; Subsidiaries. Each of
IWC, its wholly owned subsidiaries Hell Fighters, Inc., a Texas corporation, and
International Well Control Services, Ltd., a Cayman Islands corporation, and its
90%-owned subsidiary, IWC de Venezuela, S.A., a Venezuelan corporation
(collectively the "Subsidiaries"), is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization, has all requisite corporate or other power and
authority to own, lease and operate its properties and to carry on its business
as it is now being conducted, and is duly qualified and in good standing to do
business in each jurisdiction in which the nature of the business conducted by
it or the ownership or leasing of its properties makes such qualification
necessary. Hell Fighters, Inc., International Well Control Services, Ltd., and
IWC de Venezuela, S.A. are IWC's only directly or indirectly owned subsidiaries.
SECTION 2.02. Articles of Incorporation and By-Laws. IWC has
heretofore furnished to Havenwood complete and correct copies of the Articles of
Incorporation and the By-Laws or the equivalent organizational documents, in
each case as amended or restated, of IWC and the Subsidiaries. Neither IWC nor
any Subsidiary is in violation of any of the provisions of its respective
Articles of Incorporation or By-Laws or equivalent organizational documents.
<PAGE>
SECTION 2.03. Capitalization. (a) The authorized capital stock of
IWC consists of 50,000,000 shares of common stock, $0.01 par value ("IWC
Common") and 5,000,000 shares of preferred stock, $0.01 par value ("IWC
Preferred"). As of the date hereof (i) 6,740,000 shares of IWC Common and no
shares of IWC Preferred, are issued and outstanding, all of the issued and
outstanding shares of IWC Common are duly authorized, validly issued, fully paid
and nonassessable and not subject to preemptive rights created by statute, IWC's
Articles of Incorporation or By-Laws or any agreement to which IWC is a party or
bound (ii) a presently indeterminate number of shares of IWC Common are reserved
for issuance upon the exercise of warrants to purchase shares of IWC Common
having an aggregate value of $3,000,000 based on a conversion price equal to
one-half of the average closing bid price of the IWC Common during the 60-day
period commencing 30 days after the completion of a public stock offering or
business combination transaction that results in the creation of a public market
for the IWC Common ("IWC Warrants") and (iii) 850,000 shares of IWC Common are
reserved for issuance at a price of $1.00 per share upon the exercise of
outstanding common stock purchase options ("IWC Options"). The IWC Common; IWC
Preferred, IWC Warrants and IWC Options are referred to herein, collectively, as
the "IWC Securities"). There are no bonds, debentures, notes or other
indebtedness issued or outstanding having the right to vote on any matters on
which IWC's stockholders may vote. Except for the IWC Warrants and IWC Options
set forth in Schedule 2.03(a), there are no options, warrants, calls or other
rights (including registration rights), agreements, arrangements or commitments
presently outstanding obligating IWC to issue, deliver or sell shares of its
capital stock or debt securities, or obligating IWC to grant, extend or enter
into any such option, warrant, call or other such right, agreement, arrangement
or commitment. Schedule 2.03(a) sets forth a true and complete list of all IWC
Warrants and IWC Options, showing for each warrant or option holder the number
of shares of IWC Common for which such warrants or options are exercisable (or
the basis for the determination thereof), the exercise price(s) thereof (or the
basis for the determination thereof), the date(s) of grant, the date(s) of
expiration and the vesting date(s) thereof, all as of the date hereof.
(b) In addition to the IWC Securities, IWC has previously sold
$3,000,000 aggregate principal amount of 12% Senior Subordinated Notes due
December 31, 2000 ("IWC Notes"). The IWC Notes are held beneficially and
proportionally by the holders of IWC Warrants and immediately after the
consummation of the transactions contemplated hereby, IWC intends to offer the
holders of IWC Notes an opportunity, for a period of 30 days, to convert such
notes into common stock at a price of $0.75 per share.
(c) All the outstanding shares of capital stock of the Subsidiaries
are duly authorized, validly issued, fully paid and nonassessable and such
shares are owned by IWC as set forth in Section 2.01 free and clear of any
security interests, liens, claims, pledges, agreements, limitations on voting
rights, charges or other encumbrances of any nature whatsoever ("Encumbrances").
There are no options, warrants, calls or other rights (including registration
rights), agreements, arrangements or commitments of any character to which IWC
or any Subsidiary is a party relating to the issued or unissued capital stock
of, or other equity interests in, any Subsidiary.
SECTION 2.04. Authority. IWC has all requisite corporate power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated herein. The execution
and delivery of this Agreement and the
<PAGE>
consummation of the transactions contemplated herein have been duly authorized
by all necessary corporate action and no other corporate proceeding on the part
of IWC is necessary to authorize this Agreement or to consummate the
transactions contemplated herein. This Agreement has been duly executed and
delivered by IWC and, assuming the due authorization, execution and delivery
thereof by Havenwood and Newco, constitutes the legal, valid and binding
obligation of IWC enforceable in accordance with its terms (i) except as limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws now
or hereafter in effect relating to or affecting creditors' rights generally, and
without limitation, the effect of statutory or other laws regarding fraudulent
conveyances and preferential transfers and (ii) subject to the limitations
imposed by general rules of equity (regardless of whether such enforceability is
considered at law or in equity).
SECTION 2.05. No Conflict; Required Filings and Consent. (a) The
execution and delivery of this Agreement by IWC does not, and the performance of
this Agreement by IWC will not (i) conflict with or violate the Articles of
Incorporation or By-Laws, or the equivalent organizational documents, in each
case as amended or restated, of IWC or any Subsidiary, (ii) conflict with or
violate any federal, state, foreign or local law, statute, ordinance, rule,
regulation, order, judgment or decree (collectively, "Laws") in effect as of the
date of this Agreement and applicable to IWC or any Subsidiary or by which their
respective properties is bound or subject, or (iii) result in any breach of or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or require payment under, or result
in the creation of an Encumbrance on, any of the properties or assets of IWC or
any Subsidiary pursuant to any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which IWC or any Subsidiary is a party or by which IWC or any Subsidiary or
their respective properties is bound or subject except for breaches, defaults,
events, rights of termination, amendment, acceleration or cancellation, payment
obligations or liens or Encumbrances that would not have a material adverse
effect on the business, properties, assets, condition (financial or otherwise)
operations or prospects of IWC and its Subsidiaries, taken as a whole ("IWC
Material Adverse Effect").
(b) The execution and delivery of this Agreement by IWC does not, and
the performance of this Agreement by IWC will not, require IWC to obtain any
consent, approval, authorization or permit of, or to make any filing with or
notification to, any governmental or regulatory authority, domestic or foreign
("Governmental Entities") based on laws, rules, regulations and other
requirements of Governmental Entities in effect as of the date of this
Agreement, except for applicable requirements, if any, of (i) federal or state
securities laws and the filing and recordation of appropriate merger documents
as required by the TBCA and (ii) where the failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or notifications,
would not, either individually or in the aggregate, prevent IWC from performing
its obligations under this Agreement or have a IWC Material Adverse Effect.
SECTION 2.06. Permits; Compliance. IWC and each of its Subsidiaries
is in possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exemptions, consents, certificates, approvals and orders
necessary to own, lease and operate its properties and to carry on its business
as it is now being conducted (collectively, the "IWC Permits"), and there is no
action, proceeding or investigation pending or, to the knowledge of
<PAGE>
IWC, threatened, regarding suspension or cancellation of any of IWC Permits.
Neither IWC nor any Subsidiary is in conflict with, or in default or violation
of (a) any Law applicable to IWC or any Subsidiary or by which any of their
respective properties is bound or subject or (b) any of the IWC Permits, except
for any such conflicts, defaults or violations which would not have a IWC
Material Adverse Effect.
SECTION 2.07. Financial Statements. Attached hereto as Schedule
2.07, the text of which is hereby incorporated herein by reference, are the
audited consolidated financial statements of IWC as of April 30, 1997,
containing the balance sheet of IWC and the related statement of operations and
statement of shareholders' equity for the period then ended (the "IWC Financial
Statements"), as well as the audited consolidated financial statements of Boots
& Coots, L.P. as of December 31, 1996, containing the balance sheet of Boots &
Coots and the related statement of operations and statement of shareholders'
equity for the period then ended (the "Boots & Coots Financial Statements"). To
the best of IWC's knowledge, the IWC Financial Statements and the Boots & Coots
Financial Statements have been prepared in accordance with generally accepted
accounting principles and practices consistently followed by IWC and its
Subsidiaries and Boots & Coots and its subsidiaries throughout the periods
indicated, and fairly present the consolidated financial position of IWC and its
Subsidiaries and Boots & Coots and its subsidiaries as of the dates thereof.
SECTION 2.08. No Undisclosed Liabilities. Except for the obligations
of IWC set forth in that certain Asset Purchase Agreement dated July __, 1997
between IWC and Boots & Coots, L.P., a Colorado limited partnership, a true and
complete copy of which is attached hereto as Exhibit 2.08, there are no
liabilities of IWC or any Subsidiary of any kind whatsoever, whether accrued,
contingent, absolute, determined, determinable or otherwise, and there is no
existing condition, situation or set of circumstances which could reasonably be
expected to result in such a liability, other than liabilities fully reflected
or reserved against on the IWC Financial Statements; and liabilities which,
individually or in the aggregate, would not have a IWC Material Adverse Effect.
SECTION 2.09. Absence of Certain Changes or Events. Except as and to
the extent disclosed herein since April 30, 1997, there has not been any
significant change by IWC or any Subsidiary in their accounting methods,
principles or practices or any circumstance which would constitute a IWC
Material Adverse Effect.
SECTION 2.10. Absence of Litigation. Except as set forth in Schedule
2.10 attached hereto, there is no claim, action, suit, litigation, proceeding,
arbitration or investigation of any kind, at law or in equity (including actions
or proceedings seeking injunctive relief), pending or, to the knowledge of IWC,
threatened against IWC or any Subsidiary or any properties or rights of IWC or
any Subsidiary and neither IWC nor any Subsidiary is subject to any continuing
order of, consent decree, settlement agreement or other similar written
agreement with, or, to the knowledge of IWC, continuing investigation by, any
Governmental Entity, or any judgment, order, writ, injunction, decree or award
of any Governmental Entity or arbitrator, including, without limitation, cease-
and-desist or other orders.
SECTION 2.11. Taxes. IWC and each of its Subsidiaries has filed all
federal, state and local tax returns required by law, or has filed proper
extensions, and has paid all Taxes (as
<PAGE>
defined in Section 5.03 hereof), assessments and penalties due and payable. The
provisions for Taxes, if any, reflected in the most recent balance sheet
included in the IWC Financial Statements are adequate for any and all federal,
state, county and local taxes for the period ending on the date of that balance
sheet and for all prior periods, whether or not disputed. There are no present
disputes as to Taxes of any nature payable by IWC or any Subsidiary.
SECTION 2.12. Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated in this Agreement based upon arrangements
made by or on behalf of IWC except for fees consisting of shares of IWC common
stock that have been issued to Arizona Securities Group, Inc. or its designees.
SECTION 2.13. IWC Corporate Action. The Board of Directors of IWC
has by the unanimous vote of all directors present (a) determined that the
Merger is advisable and fair and in the best interests of IWC and its
stockholders, (b) approved the Merger in accordance with the applicable
provisions of the TBCA, (c) recommended the approval of this Agreement and the
Merger by the holders of IWC Common and directed that the Merger be submitted
for consideration by IWC's stockholders and (d) obtained the unanimous consent
of all holders of IWC Common, of a resolution approving the Merger and the
transactions contemplated in this Agreement.
SECTION 2.14. Environmental Laws and Regulations. (a) IWC and its
Subsidiaries are in material compliance with all applicable foreign, federal
(including but not limited to the Outer Continental Shelf Lands Act, the Clean
Water Act, the Oil Pollution Act, the Resource Conservation and Recovery Act,
the Clean Air Act, the Comprehensive Environmental Response Compensation and
Liability Act, the Occupational Safety and Health Act and the Hazardous
Materials Transportation Act), state and local laws and regulations and common
law relating to pollution or protection of human health or the environment
(including, without limitation, ambient air, surface water, ground water, land
surface or subsurface strata (collectively, "Environmental Laws")), which
compliance includes, but is not limited to, the possession by IWC and its
Subsidiaries of all material permits and other governmental authorizations
required under applicable Environmental Laws, and compliance with the terms and
conditions thereof and compliance with notification, reporting and registration
provisions under applicable Environmental Laws; neither IWC nor any Subsidiary
has received notice of, or, to the knowledge of IWC, is the subject of, any
action, cause of action, claim, investigation, demand or notice by any person or
entity alleging liability under or noncompliance with any Environmental Law
("Environmental Claim"); and to the knowledge of IWC, there are no circumstances
that are reasonably likely to prevent or interfere with such material compliance
in the future, or to require material expenditures to maintain such material
compliance in the future.
(b) There are no Environmental Claims that are pending or, to the
knowledge of IWC or any Subsidiary, threatened against IWC or any Subsidiary,
or, to the knowledge of IWC and its Subsidiaries, against any person or entity
whose liability for any Environmental Claim IWC or any Subsidiary has or may
have retained or assumed either contractually or by operation of law.
(c) To the knowledge of IWC and its Subsidiaries, there are no
circumstances
<PAGE>
that could form the basis for an Environmental Claim against IWC or any
Subsidiary, or against any person or entity whose liability for any
Environmental Claim IWC or any Subsidiary has or may have retained or assumed
either contractually or by operation of law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF HAVENWOOD AND NEWCO
Havenwood and Newco hereby jointly and severally represent and warrant
to IWC that:
SECTION 3.01. Organization and Qualification. Each of Havenwood and
Newco is a corporation, duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation and has all requisite
power and authority to own, lease and operate its properties and to carry on its
business as it is now being conducted, and is duly qualified and in good
standing to do business in each jurisdiction in which the nature of the business
conducted by it or the ownership or leasing of its properties makes such
qualification necessary.
SECTION 3.02. Articles of Incorporation and By-Laws. Havenwood has
heretofore furnished to IWC a complete and correct copy of the Articles of
Incorporation and the By-Laws, as amended or restated to the date hereof, of
each of Havenwood and Newco. Neither Havenwood nor Newco is in violation of any
of the provisions of its Articles of Incorporation or By-Laws.
SECTION 3.03. Capitalization. (a) Prior to the execution of this
agreement Havenwood had 258,365,000 shares of common stock ("Old Shares") issued
and outstanding. In accordance with the requirements of Delaware Law,
Havenwood's stockholders approved and Havenwood effected a "reverse split" in
the ratio of one new share ("New Shares") for every 135 Old Shares held by a
stockholder, provided, however, that no single stockholder's ownership was
reduced to fewer than 100 New Shares. Immediately prior to the execution of this
Agreement, certain principal stockholders of Havenwood surrendered a total of
740,740 New Shares to Havenwood for cancellation, leaving a total of 1,173,074
shares of Common Stock issued and outstanding.
(b) The authorized capital stock of Havenwood consists of 50,000,000
shares of common stock, $.00001 par value ("Havenwood Common") and 5,000,000
shares of preferred stock, $0.00001 par value ("Havenwood Preferred"). As of
the date hereof (before giving effect to the transactions contemplated herein)
(i) 1,173,074 shares of Havenwood Common are issued and outstanding, all of
which are duly authorized, validly issued, fully paid and nonassessable and not
subject to preemptive rights created by statute, Havenwood's Articles of
Incorporation or By-Laws or any agreement to which Havenwood is a party or is
bound and (ii) no shares of Havenwood Preferred are outstanding. There are no
options, warrants, calls or other rights (including registration rights),
agreements, arrangements or commitments presently outstanding obligating
Havenwood to issue, deliver, sell or register shares of its capital stock or
debt securities, or obligating Havenwood to grant, extend or enter into any such
option, warrant, call or other such right, agreement, arrangement or commitment.
<PAGE>
(c) All of the outstanding shares of capital stock of Newco are duly
authorized, validly issued, fully paid and nonassessable, and are owned by
Havenwood free and clear of any Encumbrances. There are no options, warrants,
calls or other rights (including registration rights), agreements, arrangements
or commitments of any character to which Havenwood or Newco is a party relating
to the issued or unissued capital stock of, or other equity interests in, Newco
or obligating Havenwood or Newco to grant, issue or sell any shares of the
capital stock of Newco; other than as contemplated in this Agreement and the
Subscription Agreement between Havenwood and Newco.
(d) The shares of Havenwood Common issued to Newco and exchanged
pursuant to the Merger as contemplated herein, upon issuance in accordance with
this Agreement and the Plan, will be duly authorized, validly issued, fully paid
and nonassessable and will not be subject to preemptive rights created by
statute, Havenwood's Articles of Incorporation or By-Laws or any agreement to
which Havenwood is a party or is bound.
(e) The Havenwood Warrants issued to Newco and exchanged pursuant to
the Merger as contemplated herein, upon issuance in accordance with this
Agreement and the Plan, will be duly authorized and validly issued, and
constitute the legal, valid and binding obligation of Havenwood enforceable in
accordance with their terms.
(f) The Havenwood Options issued to Newco and exchanged pursuant to
the Merger as contemplated herein, upon issuance in accordance with this
Agreement and the Plan, will be duly authorized and validly issued, and
constitute the legal, valid and binding obligation of Havenwood enforceable in
accordance with their terms.
(g) Other than SST Productions, Inc., Havenwood does not have any
subsidiaries or own any interest in any enterprise (whether or not such
enterprise is a corporation) except for Newco. Havenwood has either sold to
third parties, or dissolved in accordance with applicable law, all other
corporations, partnerships and other incorporated or unincorporated enterprises
in which it has previously had an interest, regardless of whether such interest
arose from stock ownership, management control or otherwise.
SECTION 3.04. Authority. Each of Havenwood, Newco, Mark Leibovit and
Slatkin has all requisite corporate or other appropriate power and authority to
execute and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated herein. The execution and delivery of
this Agreement and the consummation of the transactions contemplated herein have
been duly authorized by all necessary corporate action and no other corporate
proceeding on the part of Havenwood or Newco (including, without limitation, any
approval by the shareholders of Havenwood of this Agreement or the transactions
contemplated herein) is necessary to authorize this Agreement or to consummate
the transactions contemplated herein. This Agreement has been duly executed and
delivered by Havenwood, Newco, Mark Leibovit and Slatkin and, assuming the due
authorization, execution and delivery hereof by IWC, constitutes the legal,
valid and binding obligation of Havenwood, Newco, Leibovit and Slatkin
enforceable in accordance with its terms (i) except as limited by bankruptcy,
insolvency, reorganization, moratorium or other similar law now or hereafter in
effect relating to or affecting creditors' rights generally, and without
limitation, the effect of statutory or other laws regarding fraudulent
conveyances and preferential transfers and (ii) subject to the limitations
<PAGE>
imposed by general rules of equity (regardless of whether such enforceability is
considered at law or in equity).
SECTION 3.05. No Conflict; Required Filings and Consents. (a) The
execution and delivery of this Agreement by Havenwood and Newco does not, and
the performance of this Agreement by Havenwood and Newco will not (i) conflict
with or violate the Certificate of Incorporation or By-Laws, as amended or
restated, of Havenwood or Newco, (ii) conflict with or violate any Laws in
effect as of the date of this Agreement applicable to Havenwood or Newco or by
which any of their respective properties is bound, or (iii) result in any breach
of or constitute a default (or an event that with notice or lapse of time or
both would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or require payment under, or result
in the creation of a lien or Encumbrance on, any of the properties or assets of
Havenwood or Newco pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which Havenwood or Newco is a party or by which Havenwood or Newco or any of
their respective properties is bound or subject except for breaches, defaults,
events, rights of termination, amendment, acceleration or cancellation, payment
obligations or liens or Encumbrances that would not have a material adverse
effect on the business, properties, assets, condition (financial or otherwise)
operations or prospects of Havenwood and its subsidiaries, taken as a whole, or
on the transactions herein contemplated ("Havenwood Material Adverse Effect").
(b) The execution and delivery of this Agreement by Havenwood and
Newco and the performance of this Agreement by Havenwood and Newco does not
require Havenwood or Newco to obtain any consent, approval, authorization or
permit of, or to make any filing with or notification to, any Governmental
Entities, except for applicable requirements, if any, of (i) the Securities Act
of 1933, as amended (the "Securities Act"), the Securities Exchange Act of
1934, as amended (the "Exchange Act") or the securities laws of any other
jurisdiction (the "Blue Sky Laws"), the National Association of Securities
Dealers, and the filing and recordation of appropriate merger documents as
required by TBCA and (ii) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not,
either individually or in the aggregate, prevent Havenwood from performing its
obligations under this Agreement or have a Havenwood Material Adverse Effect.
SECTION 3.06. Permits; Compliance. Each of Havenwood and Newco is in
possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exemptions, consents, certificates, approvals and orders
necessary to own, lease and operate its properties and to carry on its business
as it is now being conducted (collectively, the "Havenwood Permits"), and there
is no action, proceeding or investigation pending or, to the knowledge of
Havenwood, threatened, regarding suspension or cancellation of any of the
Havenwood Permits. Neither Havenwood nor Newco is in conflict with, or in
default or violation of (a) any Law applicable to Havenwood or Newco or by which
any of their respective properties is bound or subject or (b) any of the
Havenwood Permits, except for any such conflicts, defaults or violations which
would not have a Havenwood Material Adverse Effect. Neither Havenwood nor Newco
has received from any Governmental Entity any written notification with respect
to possible conflicts, defaults or violations of Laws.
<PAGE>
SECTION 3.07. Reports; Financial Statements. (a) Except as set forth
on Schedule 3.07, (x) Havenwood and its subsidiaries have filed (i) all forms,
reports, statements and other documents required to be filed with (A) the
Securities and Exchange Commission ("SEC"), including, without limitation (1)
all Annual Reports on Form 10-KSB, (2) all Quarterly Reports on Form 10-QSB, (3)
all proxy statements relating to meetings of stockholders (whether annual or
special), (4) all Reports on Form 8-K, (5) all other reports or registration
statements and (6) all amendments and supplements to all such reports and
registration statements (collectively, the "Havenwood SEC Reports") and (B) any
applicable Blue Sky Laws and (ii) all forms, reports, statements and other
documents required to be filed with any other applicable federal or state
regulatory authorities (all such forms, reports, statements and other documents
in clauses (i) and (ii) of this Section 3.07(a) being referred to herein,
collectively, as the "Havenwood Reports"). The Havenwood Reports were prepared
in all material respects in accordance with the requirements of applicable Law
(including, with respect to the Havenwood SEC Reports, the Securities Act and
Exchange Act, as the case may be, and the rules and regulations of the SEC
thereunder applicable to such Havenwood SEC Reports) and (y) did not at the time
they were filed contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(b) Each of the financial statements (including, in each case, any
related notes thereto) contained in the Havenwood SEC Reports filed prior to or
on the date of this Agreement (i) have been prepared in accordance with, and
complied as to form with, the published rules and regulations of the SEC and
generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as otherwise noted therein) and (ii)
fairly present the financial position of Havenwood as of the respective dates
thereof and the results of its operations and cash flows for the periods
indicated.
(c) To the best of Havenwood's knowledge after due inquiry, except as
set forth on Schedule 3.07(c) hereto, Havenwood's auditors have issued no
management letters in connection with Havenwood's financial statements.
SECTION 3.08. Absence of Certain Changes or Events. Except as
disclosed in Schedule 3.08, and as and to the extent disclosed in the Havenwood
SEC Reports filed prior to or on the date of this Agreement, there has not been
any significant change by Havenwood in its accounting methods, principles or
practices.
SECTION 3.09. No Undisclosed Liabilities. There are no liabilities
of Havenwood, Newco or any subsidiary of any kind whatsoever, whether accrued,
contingent, absolute, determined, determinable or otherwise, and there is no
existing condition, situation or set of circumstances which could reasonably be
expected to result in such a liability, other than (a) liabilities fully
reflected or reserved against on the balance sheet contained in Havenwood's 1996
Annual Report on Form 10-KSB for the fiscal year ended June 30, 1996 or in the
unaudited consolidated balance sheet contained in the Quarterly Report on Form
10-QSB for the fiscal quarter ended March 31, 1997; (b) liabilities under this
Agreement and fees and expenses related thereto; and (c) liabilities which,
individually or in the aggregate would not have a Havenwood Material Adverse
Effect.
<PAGE>
SECTION 3.10. Absence of Litigation. There is no claim, action,
suit, litigation, proceeding, arbitration or, to the knowledge of Havenwood,
investigation of any kind, at law or in equity (including actions or proceedings
seeking injunctive relief), pending or, to the knowledge of Havenwood,
threatened against Havenwood or Newco or any properties or rights of Havenwood
or Newco and neither Havenwood nor Newco is subject to any continuing order of,
consent decree, settlement agreement or other similar written agreement with,
or, to the knowledge of Havenwood, continuing investigation by, any Governmental
Entity, or any judgment, order, writ, injunction, decree or award of any
Governmental Entity or arbitrator, including, without limitation, cease and
desist or other orders.
SECTION 3.11. Ownership of Newco; No Prior Activities. (a) Newco was
formed solely for the purpose of engaging in the transactions contemplated in
this Agreement.
(b) Except for obligations or liabilities incurred in connection with
its incorporation or organization and the transactions contemplated in this
Agreement and any other agreements or arrangements contemplated in this
Agreement, Newco has not incurred, directly or indirectly, through any
subsidiary or affiliate, any obligations or liabilities or engaged in any
business activities of any type or kind whatsoever or entered into any
agreements or arrangements with any person.
SECTION 3.12. Taxes. Havenwood has timely filed all returns or
reports required to be filed with any taxing authority with respect to Taxes for
any period ending on or before the Effective Time, taking into account any
extension of time to file granted to or obtained on behalf of Havenwood or
Newco, all Taxes shown to be payable on such returns or reports that are due
prior to the Effective Time have been paid and, as of the date hereof, no
deficiency for any material amount of tax has been asserted or assessed by a
taxing authority against Havenwood or Newco and all liability for Taxes of
Havenwood or Newco that are or will become due or payable with respect to
periods covered by the financial statements referred to in Section 3.07(b)
hereof have been paid or adequately reserved for on such financial statements.
SECTION 3.13. Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated in this Agreement based upon arrangements
made by or on behalf of Havenwood or Newco.
SECTION 3.14. Environmental Laws and Regulations. (a) Havenwood and
Newco are in material compliance with all applicable Environmental Laws, which
compliance includes, but is not limited to, the possession by Havenwood and
Newco of all material permits and other governmental authorizations required
under applicable Environmental Laws, and compliance with the terms and
conditions thereof and compliance with notification, reporting and registration
provisions under applicable Environmental Laws; neither Havenwood nor Newco has
received notice of, or, to the knowledge of Havenwood or Newco, is the subject
of any Environmental Claim; and to the knowledge of Havenwood, there are no
circumstances that are reasonably likely to prevent or interfere with such
material compliance in the future, or to require material expenditures to
maintain such material compliance in the future.
(b) There are no Environmental Claims that are pending or, to the
knowledge
<PAGE>
of Havenwood and Newco, threatened against Havenwood or Newco or, to the
knowledge of Havenwood and Newco, against any person or entity whose liability
for any Environmental Claim Havenwood or Newco has or may have retained or
assumed either contractually or by operation of law.
(c) To the knowledge of Havenwood and Newco, there are no
circumstances that could form the basis for an Environmental Claim against
Havenwood or Newco, or against any person or entity whose liability for any
Environmental Claim Havenwood or Newco has or may have retained or assumed
either contractually or by operation of law.
SECTION 3.15. Contract Rights. Except for this Agreement and the
agreements contemplated herein or as described on Schedule 3.15, neither
Havenwood nor Newco is a party to or bound by any contract or agreement, whether
written or oral, including, without limitation, any contract or agreement for
employment, consulting or similar services, for capital expenditures or the
acquisition or construction of fixed assets, which constitutes any note, bond,
indenture or other evidence of indebtedness or guaranty or security for
indebtedness of others, for the sale of any asset, or the grant of any right or
option to purchase such asset, which constitutes a lease, which purports to
limit the freedom of Havenwood or any of its affiliates to compete in any line
of business or in any geographic area or to borrow money or incur indebtedness.
SECTION 3.16. Employee Benefit Plans.
(a) Havenwood and Newco do not have, and have not had any employee
benefit plan (including, without limitation, any "employee benefit plan," as
defined in Section 3(3) of the ERISA), or any bonus, pension, profit sharing,
deferred compensation, incentive compensation, stock ownership, stock purchase,
stock option, phantom stock, retirement, vacation, severance, disability, death
benefit, hospitalization, insurance or other plan, arrangement or understanding
(whether or not legally binding).
(b) Havenwood and Newco are not parties to any collective bargaining
agreement.
(c) Havenwood and Newco have no obligation for retiree health, medical
or life insurance benefits under any plan or arrangement.
(d) Schedule 3.16 lists each employee of Havenwood and Newco and the
terms of employment of each such employee.
SECTION 3.17. Public Offering. The initial public offering of
Havenwood was a bona fide offering to the "public" as such term is used and
defined in connection with offerings of securities subject to the Securities Act
in material compliance with the Securities Act and the rules and regulations
promulgated thereunder. All shares issued in such offering were issued in
compliance with applicable Blue Sky Laws. Attached hereto as Schedule 3.17 is a
true and correct list, as of the date hereof, of the shareholders of Havenwood.
<PAGE>
ARTICLE IV
ADDITIONAL AGREEMENTS
SECTION 4.01. Appropriate Action; Consents; Filings. IWC and
Havenwood shall each use its best efforts to (i) take, or cause to be taken, all
appropriate action, and do, or cause to be done, all things necessary, proper or
advisable under applicable Law or otherwise to consummate and make effective the
transactions contemplated in this Agreement, (ii) obtain from any Governmental
Entities any consents, licenses, permits, waivers, approvals, authorizations or
orders required to be obtained or made by Havenwood or IWC or any of their
subsidiaries in connection with the consummation of the transactions
contemplated herein, including, without limitation, the Merger, (iii) make all
necessary filings, and thereafter make any other required submissions, with
respect to this Agreement and the Merger required under (A) the Securities Act
and the Exchange Act and the rules and regulations thereunder (in the case of
Havenwood), and any other applicable federal or state securities laws and (B)
any other applicable Law. IWC and Havenwood shall furnish all information
required for any application or other filing to be made pursuant to the rules
and regulations of any applicable Law in connection with the transactions
contemplated in this Agreement.
SECTION 4.02. Tax Treatment. Each of IWC and Havenwood shall use its
best efforts to cause the Merger to qualify, and will not take any actions which
could prevent the Merger from qualifying, as a reorganization under the
provisions of section 368(a) of the Code.
SECTION 4.03. Indemnification. (a) Each of Havenwood, Leibovit and
Slatkin (collectively the "Indemnitors") jointly and severally covenants and
agrees that it will indemnify the stockholders of IWC exchanging IWC Common, IWC
Warrants and IWC Options in connection with the Merger ("IWC Stockholders") and
Havenwood (after the Merger) from and against any Loss (as hereinafter defined)
asserted against, resulting to, imposed upon or incurred or suffered, directly
or indirectly (for example, on account of a Loss incurred by Havenwood after the
date hereof), by such IWC Stockholders or and Havenwood (after the Merger)
resulting or arising from any of the following ("IWC Indemnified Claims"):
(i) Any inaccuracy in any of the representations and warranties made
by Havenwood or Newco herein or in any exhibit or schedule
attached hereto or any facts or circumstances constituting such
inaccuracy; and
(ii) Any breach or nonfulfillment by Havenwood or Newco of the
covenants or agreements set forth herein or in any exhibit or
schedule attached hereto or any facts or circumstances
constituting such breach or nonfulfillment;
provided, however, that IWC Stockholders and Havenwood (after the Merger) shall,
in the event of a claim for such indemnification, be entitled to reimbursement
for Losses in connection with such claim only as provided herein.
(b) IWC covenants and agrees that it will indemnify the stockholders of
Havenwood prior to the Merger ("Havenwood Stockholders") from and against any
Loss asserted against,
<PAGE>
resulting to, imposed upon or incurred or suffered, directly or indirectly (for
example, on account of a Loss incurred by Havenwood after the date hereof), by
such Havenwood Stockholders resulting or arising from any of the following
("Havenwood Indemnified Claims"):
(i) Any inaccuracy in any of the representations and warranties made
by IWC herein or in any exhibit or schedule attached hereto or
any facts or circumstances constituting such inaccuracy; and
(ii) Any breach or nonfulfillment by IWC of the covenants or
agreements set forth herein or in any exhibit or schedule
attached hereto or any facts or circumstances constituting such
breach or nonfulfillment;
provided, however, that Havenwood Stockholders shall, in the event of a claim
for such indemnification, be entitled to reimbursement for Losses in connection
with such claim only as provided herein.
(c) As used herein, "Loss" or "Losses" shall mean any damage, liability or
loss (including, without limitation, reasonable attorneys' fees and court costs
and reasonable costs and expenses incident to, and amounts paid by the IWC
Stockholders or Havenwood (after the Merger), or any of their respective
affiliates, in settlement of, any claim, suit, action or proceeding) sustained,
incurred, paid or required to be paid by the IWC Stockholders or Havenwood
(after the Merger), or any of their respective affiliates, after the date
hereof, plus interest thereon at an annual rate of interest equal to the prime
rate of interest of Texas Commerce Bank National Association from the date of
such Loss to the date such claim is paid, provided that losses shall not be
duplicative (with respect to the IWC Stockholders and Havenwood (after the
Merger)) and shall be paid to the party or parties incurring such loss.
(d) The period of indemnity for Losses (the "Indemnity Period") shall begin
on the date hereof and end at midnight on the second anniversary of the
Effective Time, and upon such expiration, the Indemnitors shall have no further
liability in respect of IWC Indemnified Claims and IWC shall have no further
liability for Havenwood Indemnified Claims hereunder; provided, however, that if
there is an outstanding notice of claim at the expiration of the Indemnity
Period, the Indemnity Period shall continue until each such indemnified claim or
claim related to such claimed Loss is resolved. The Indemnity Period shall not
continue as a result of the mere sending of a general notice of a claim
unsupported by a reasonable basis for believing that grounds for indemnification
exist; provided that the party receiving a notice which it believes meets the
exception set forth in the preceding clause shall raise such objection within
five days of receipt thereof and the party sending such notice shall have five
days thereafter to amend such notice to identify the reasonable basis of such
claim.
(e) Notwithstanding anything to the contrary contained herein, IWC
Stockholders and Havenwood (after the Merger) shall not be permitted
indemnification for any IWC Indemnified Claim until the Losses incurred with
respect to all IWC Indemnified Claims aggregate $20,000, in which event IWC
Stockholders shall be indemnified for the full value of all such IWC Indemnified
Claims and the full value of all subsequent IWC Indemnified Claims for which,
individually, Losses in excess of $1,000 have been incurred or asserted.
<PAGE>
(f) Notwithstanding anything to the contrary contained herein, Havenwood
Stockholders shall not be permitted indemnification for any Havenwood
Indemnified Claim until the Losses incurred with respect to all Havenwood
Indemnified Claims aggregate $50,000, in which event Havenwood Stockholders
shall be indemnified for the full value of all such Havenwood Indemnified Claims
and the full value of all subsequent Havenwood Indemnified Claims for which,
individually, Losses in excess of $1,000 have been incurred or asserted.
(g) Indemnification for a Havenwood Indemnified Claim shall be solely in
the form of issuance of additional shares of Havenwood Common to Havenwood
Stockholders (their successors, assigns and transferees) pro rata in accordance
with their ownership of Havenwood Stock equal to the aggregate amount of the
Loss associated with such Havenwood Indemnified Claim through the date of
issuance. The value of such Havenwood Common for the purposes of this Section
4.03 only in determining the number of shares to be issued to compensate
Havenwood Stockholders for such Havenwood Indemnified Claim shall be fixed at
the fair market value per share determined by reference to the average closing
bid price of the thirty (30) day period immediately preceeding the date payment
is due hereunder. No payment shall be required of the recipients of shares of
Havenwood Common issued pursuant to this Section 4.03 in respect to such shares,
and Havenwood shall provide for the transfer of funds from its surplus account
to its stated capital account as necessary in relation to the aggregate par
value of the shares so issued.
(h) A claim for indemnification hereunder shall be sent to Havenwood and
each other Representative (as defined in subsection (i) hereof) by registered or
certified mail prior to the expiration of the Indemnity Period and shall set
forth (i) a brief description of the nature of the potential or actual Loss, and
(ii) the total amount of the Loss anticipated or incurred. Upon receiving
notice, if the Representative receiving the notice rejects any Loss, such
Representative shall give written notice of such rejection within thirty days
after the date of the notice of claim. If no such rejection of a notice of a
claim shall be so sent within such 30-day period, Havenwood and the
Representative receiving notice of a claim for any Loss shall be deemed to
acknowledge the validity of such claim for the full amount thereof. Each
Representative shall endeavor to assert each claim for indemnification, if any,
promptly after it has actual notice of such claim, even if it has not determined
the full amount of Loss associated with such claim. In the event that the other
Representative shall have made timely rejection of any such claim, and the
parties shall have failed to resolve or compromise such claim within thirty days
from the date the receiving Representative shall have mailed notice of such
rejection, then such claim shall be settled by arbitration in Houston, Harris
County, Texas. Such arbitration shall be subject to the Texas General
Arbitration Act and the rules of the American Arbitration Association, in
accordance with this Section. After the initiation of arbitration, the parties
shall attempt to agree upon one arbitrator. In the absence of such agreement,
there shall be three arbitrators, one designated in writing by the
Representative sending the notice and one designated in writing by the
Representative receiving notice, both of which shall be designated within thirty
days after arbitration has been initiated. The third arbitrator shall be chosen
by the two designated arbitrators within forty days after arbitration has been
initiated. All expenses of the arbitration shall be borne by the parties to the
arbitration as the arbitrator(s) shall determine. Any award shall be a
conclusive determination of the matter, shall be binding upon the parties and
shall not be contested by them. Within ten days after the liability for
indemnity hereunder is finally established, whether by the agreement
(constructive or otherwise) with a notice of claim,
<PAGE>
settlement, arbitration or otherwise, payment shall be made in the amount of the
Loss determined by the arbitrator(s) in accordance with the terms hereof.
(i) Charles T. Phillips is hereby appointed to act as the agent and
attorney-in-fact of the IWC Stockholders and Havenwood (after the Merger), in
connection with the performance of this Section 4.03, and Mark Leibovit is
hereby appointed to act as the agent and attorney-in-fact of Havenwood
Stockholders in connection with the performance of this Section 4.03
(individually a "Representative" and collectively the "Representatives"), each
of whom shall have authority including, but not limited to, executing and
delivering for and on behalf of such parties all notices, receipts, approvals,
consents, waivers, agreements, papers, instruments and other documents in
connection herewith which such Representative deems necessary or appropriate,
including, without limitation, in connection with any amendments to or waiver of
any of the terms or provisions hereof, the granting of any consent hereunder,
and in all other instances where the IWC Stockholders, Havenwood (after the
Merger) or the Havenwood Stockholders, as appropriate, are required or permitted
to take any action hereunder. Any instruments and other deliveries to be made or
delivered to any IWC Stockholders, Havenwood (after the Merger) or Havenwood
Stockholders pursuant to this Agreement may be made or delivered to or as
directed by the Representative of such parties, and upon any such payment or
delivery the other parties hereto shall have no further liability with respect
thereto. The IWC Stockholders, and Havenwood (after the Merger) may, by the vote
or consent of the holders of Havenwood Stock and Havenwood Warrants receiving a
majority of the Merger Consideration to be paid to IWC Stockholders hereunder,
from time to time designate another person to serve as their Representative, and
upon notice to the other parties hereto, such parties shall thereafter deal with
such successor as if he were the Representative named herein. Havenwood
Stockholders may, by the vote or consent of the holders of Havenwood Stock on
the date hereof, from time to time designate another person to serve as their
Representative, and upon notice to the other parties, such parties shall
thereafter deal with such successor as if he were the Representative named
herein. The appointment of each Representative or successor Representative shall
be coupled with an interest and shall be irrevocable and binding in all respects
upon each of the IWC Stockholders, Havenwood (after the Merger) and Havenwood
Stockholders and his, her or its respective successors, assigns, heirs and
personal representatives.
SECTION 4.04. Officers and Directors of Havenwood. Prior to the date
hereof, the board of directors of Havenwood has been increased in number in
accordance with the Certificate of Incorporation and By-laws of Havenwood and
the General Corporation Law of Delaware, to ten (10) and, as of the date hereof,
the board of directors of Havenwood has, in accordance with the Certificate of
Incorporation and By-laws of Havenwood and the General Corporation Law of
Delaware, filled the vacancies on the board of directors resulting from such
increase in number by electing as directors of Havenwood: Larry H. Ramming,
Brian Krause, Doug Johnson, K. Kirk Krist and Jerry Winchester, effective upon
the resignation of the members of the board of directors currently in office.
Immediately following the closing hereof by Havenwood and Newco, the directors
and officers of Havenwood and Newco currently in office shall tender their
resignations effective immediately and the above named directors shall be the
only directors of Havenwood, until their death, resignation, removal from office
or their successors are elected and qualified.
SECTION 4.05. Opinion of Counsel to Havenwood. In connection herewith and
as a
<PAGE>
condition hereto, Cohan, Cohen & Flame, P.C., as counsel to Havenwood, shall
deliver to IWC a legal opinion to the effect that a vote of the stockholders of
Havenwood is not required pursuant to Delaware law in order to approve the
merger or the transactions herein contemplated.
ARTICLE V
GENERAL PROVISIONS
SECTION 5.01. Effectiveness of Representations, Warranties and
Agreements. The representations, warranties and agreements of each party hereto
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any other party hereto, any person
controlling any such party or any of their officers or directors, whether prior
to or after the execution of this Agreement.
SECTION 5.02. Notices. All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been duly
given or made as of the date delivered, mailed or transmitted, and shall be
effective upon receipt, if delivered personally, mailed by registered or
certified mail (postage prepaid, return receipt requested) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like changes of address) or sent by electronic transmission to the telecopier
number specified below:
(a) If to Havenwood or Newco:
HAVENWOOD VENTURES, INC.
c/o Cohan, Cohen & Flame, P.C.
12301 Wilshire Boulevard, Suite 550
Los Angeles, California 90025
Attention: Norman R. Cohen
Telecopier No.: (310) 207-6184
(b) If to IWC:
IWC SERVICES, Inc.
5151 San Filipe, Suite 450
Houston, Texas 77056
Attention: Larry H. Ramming
Telecopier No.: (713) 621-7988
with a copy to:
Brown, Parker & Leahy, L.L.P.
3600 Citicorp Center
1200 Smith Street
Houston, Texas 77002-4595
Attention: William Heller
Telecopier No.: (713) 654-1871
<PAGE>
(c) If to Charles T. Phillips, as the IWC Representative:
c/o IWC SERVICES, Inc.
5151 San Filipe, Suite 450
Houston, Texas 77056
Telecopier No.: (713) 621-7988
(d) If to Mark Leibovit, as the Havenwood Representative
c/o Paradise Valley Securities, Inc.
11811 North Tatum Boulevard, Suite 4040
Phoenix, Arizona 85028
Telecopier No.: (602) 953-7989
After consummation of the Merger, notices to Havenwood shall be sent to the
address set forth for IWC.
SECTION 5.03. Certain Definitions. For purposes of this Agreement,
the term:
"knowledge" or "known" shall mean, with respect to any matter in
question, if an executive officer of IWC or Havenwood, as the case may be, has
actual knowledge of such matter as of the date as of which such matter is
represented;
"Person" means an individual, corporation, limited liability company,
partnership, association, trust, unincorporated organization, other entity or
group (as defined in Section 13(d) of the Exchange Act);
"Subsidiary" or "Subsidiaries" of IWC or Havenwood or any other
person, means any corporation, limited liability company, partnership, joint
venture or other legal entity of which IWC, Havenwood or such other person, as
the case may be (either alone or through or together with any other subsidiary),
owns, directly or indirectly, 50% or more of the capital stock or other equity
interests the holders of which are generally entitled to vote for the election
of the board of directors or other governing body of such corporation or other
legal entity;
"Tax" or "Taxes" shall mean any and all taxes, charges, fees or
levies, payable to any federal, state, local or foreign taxing authority or
agency, including, without limitation, (i) income, franchise, profits, gross
receipts, minimum, alternative minimum, estimated, ad valorem, value added,
sales, use, service, real or personal property, capital stock, license, payroll,
withholding, disability, employment, social security, workers compensation,
unemployment compensation, utility, severance, excise, stamp, windfall profits,
transfer and capital gains taxes, (ii) custom duties, imposts, charges, levies
or other similar assessments of any kind, and (iii) interest, penalties and
additions to tax imposed with respect thereto.
SECTION 5.04. Headings. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
<PAGE>
SECTION 5.05. Severability. If any term or other provision of this
Agreement is determined to be invalid, illegal or incapable of being enforced by
any rule of law or public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated herein is not
affected in any manner materially adverse to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner to the end that the transactions contemplated
hereby are fulfilled to the extent possible.
SECTION 5.06. Entire Agreement. This Agreement (together with the
Annexes, Schedules and Exhibits hereto) constitutes the entire agreement of the
parties and supersedes all prior agreements and undertakings, both written and
oral, between the parties with respect to the subject matter hereof.
SECTION 5.07. Assignment. This Agreement shall not be assigned by
operation of law or otherwise without the prior express written consent of the
other parties hereto.
SECTION 5.08. Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied (other than the provisions of Section 5.07), is
intended to or shall confer upon any other person any right, benefit or remedy
of any nature whatsoever under or by reason of this Agreement.
SECTION 5.09. Failure or Indulgence Not Waiver; Remedies Cumulative.
No failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude other or
further exercise thereof or of any other right. All rights and remedies
existing under this Agreement are in addition to, and not exclusive of, any
rights or remedies otherwise available.
SECTION 5.10. Governing Law. It is the intention of the parties that
the internal laws, and not the laws of conflicts, of the State of Texas shall
govern the enforceability and validity of this Agreement, the construction of
its terms and the interpretation of the rights and duties of the parties;
provided, however, that with respect to matters of law concerning the internal
affairs of any entity that is a party to or the subject of this Agreement, the
law of the jurisdiction of organization of such entity shall govern.
SECTION 5.11. Jurisdiction. Each party hereby irrevocably submits to
the exclusive jurisdiction of the United States District Court for the Southern
District of Texas or any court of the State of Texas located in the City of
Houston in any action, suit or proceeding arising in connection with this
Agreement or the transactions contemplated herein, and agrees that any such
action, suit or proceeding shall be brought only in such court (and waives any
objection based on forum non conveniens or any other objection to venue
therein); provided, however, that such consent to jurisdiction is solely for the
purpose referred to in this Section 5.11 and shall not be deemed to be a general
submission to the jurisdiction of said Courts or in the State of Texas other
than for such purpose. All parties hereby waive any right to a trial by jury in
connection
<PAGE>
with any such action, suit or proceeding; provided, however, that matters to be
resolved through arbitration as specified herein shall be resolved only by such
arbitration, and the final arbitration award may thereafter be enforced as
provided in this Section 5.11.
SECTION 5.12. Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
SECTION 5.13 Amendment. This Agreement may be amended only by
written instrument executed by the parties hereto.
IN WITNESS WHEREOF, Havenwood, Newco, IWC, Leibovit and Slatkin have
caused this Agreement to be executed as of the date first written above by their
respective officer thereunto duly authorized.
SIGNATURES ON FOLLOWING PAGE
<PAGE>
HAVENWOOD VENTURES, INC.
By: /s/ MARK LEIBOVIT
Name: Mark Leibovit
Title: President
Attest:_______________________
___________________, Secretary
HAVENWOOD ACQUISITION CORP.
By: /s/ JOHN L. PETERSEN
Name: John L. Petersen
Title: President
Attest:_______________________
___________________, Secretary
MARK LEIBOVIT, INDIVIDUALLY
/s/ MARK LEIBOVIT
REED SLATKIN, INDIVIDUALLY
/s/ REED SLATKIN
IWC SERVICES, INC.
By: /s/ BRIAN KRAUSE
Name: Brian Krause
Title: President
/s/ JENNIFER LANE
Attest:_______________________
___________________, Secretary
<PAGE>
EXHIBIT 2.4
ASSET PURCHASE AGREEMENT
Between
BOOTS & COOTS, L.P.
and
IWC SERVICES, INC.
Dated as of
July 22, 1997
<PAGE>
TABLE OF CONTENTS
Page
PURCHASE AND SALE OF ASSETS OF SELLER...................................... 1
1.1 Purchase and Sale of Assets.................................... 1
1.2 Excluded Assets................................................ 3
1.3 Instruments of Transfer........................................ 3
1.4 Reserves....................................................... 4
PURCHASE PRICE............................................................. 4
2.1 Purchase Price and Payments.................................... 4
2.2 Assumption of Liabilities...................................... 6
2.3 Adjustments and Prorations..................................... 7
CLOSING.................................................................... 9
3.1 Closing Date................................................... 9
REPRESENTATIONS AND WARRANTIES OF SELLER................................... 10
4.1 Existence and Qualification.................................... 10
4.2 Authorization.................................................. 10
4.3 Approvals and Consents......................................... 10
4.4 Undisclosed Liabilities........................................ 11
4.5 Tax Returns and Audits......................................... 12
4.6 Necessary Contracts. etc....................................... 12
4.7 Material Contracts and Obligations............................. 13
4.8 Employees...................................................... 14
4.9 Absence of Certain Developments................................ 14
4.10 Real Property.................................................. 15
4.11 Title to Assets: Personal Property............................ 15
4.12 Necessary Property............................................. 16
4.13 Compliance with Laws........................................... 16
4.14 Transactions................................................... 16
4.15 Litigation and Legal Proceedings............................... 16
4.16 Financial Statements........................................... 17
4.17 Brokers' Fees.................................................. 17
4.18 Pensions and Other Deferred Compensation....................... 17
4.19 Benefit Plans.................................................. 18
4.20 Insurance, Surety Bonds, Damages............................... 18
4.21 Relationships with Affiliates.................................. 18
4.22 Relationships with Suppliers and Customers..................... 19
4.23 Subsidiaries................................................... 19
4.24 Representations of General Partners............................ 19
4.25 Representations and Warranties................................. 20
REPRESENTATIONS AND WARRANTIES OF BUYER.................................... 20
5.1 Organization................................................... 20
5.2 Authorization of Agreement..................................... 20
5.3 No Default..................................................... 21
5.4 Litigation..................................................... 21
<PAGE>
5.5 Articles and Bylaws............................................ 21
5.6 Capitalization................................................. 21
5.7 No Conflicts; Required Approvals and Consents.................. 22
5.8 Undisclosed Liabilities........................................ 22
5.9 Necessary Contracts. etc....................................... 23
5.10 Absence of Certain Developments................................ 23
5.11 Title to Assets: Personal Property............................ 24
5.12 Compliance with Laws........................................... 24
5.13 Transactions................................................... 24
5.14 Financial Statements........................................... 25
5.15 Brokers' Fees.................................................. 25
5.16 Subsidiaries................................................... 25
5.17 Representations and Warranties................................. 25
CONDUCT OF BUSINESS PRIOR TO CLOSING........ 25
6.1 Seller's Restrictions on Operations Prior to Closing Date...... 25
6.2 Buyer's Restrictions on Operations Prior to Closing Date....... 27
INVESTIGATION BY BUYER...................... 28
7.1 Access to Records.............................................. 28
7.2 Confidentiality of Information................................. 28
FURTHER COVENANTS.......................................................... 29
8.1 Delivery of Documents to Buyer................................. 29
8.2 Transfer of Agreements......................................... 29
8.3 Further Assurances............................................. 30
8.4 Employee Benefit Matters....................................... 30
CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS................................ 31
9.l Compliance with Agreement...................................... 31
9.2 Correctness of Representations and Warranties.................. 31
9.3 Delivery of Documents.......................................... 31
9.4 No Adverse Change in Business or Properties.................... 31
9.5 Certificate of Officer......................................... 32
9.6 Opinion of Counsel............................................. 32
9.7 Absence of Litigation.......................................... 32
9.8 Consents....................................................... 32
9.9 Employment Agreements.......................................... 32
9.10 Proceedings and Documents...................................... 32
9.11 Receivables Report............................................. 33
9.12 Deliveries..................................................... 33
9.13 Private Placement Representations.............................. 33
9.14 Lockup Agreements.............................................. 33
9.15 Subsequent Schedules........................................... 33
ii
<PAGE>
CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS............................... 34
10.1 Correctness of Representations and Warranties.................. 34
10.2 Compliance with Agreement...................................... 34
10.3 No Adverse Change in Business or Properties.................... 34
10.4 Certificate of Officer......................................... 34
10.5 Opinion of Counsel............................................. 35
10.6 Absence of Litigation.......................................... 35
10.7 Proceedings and Documents...................................... 35
EXPENSES OF NEGOTIATION AND TRANSFER....................................... 35
11. Expenses....................................................... 35
RIGHTS TO TERMINATE BREACH................................................. 35
12. Termination.................................................... 35
INDEMNIFICATION............................................................ 36
13.1 Indemnification by Seller and its General Partners............. 36
13.2 Indemnification by Buyer....................................... 37
13.3 Notice and Right to Defend Third Party Claims.................. 38
REGISTRATION RIGHTS........................................................ 39
14.1 Certain Definitions............................................ 39
14.2 Demand Registration............................................ 40
14.3 "Piggyback" Registration....................................... 41
14.4 Registration Procedures........................................ 42
14.5 Allocation of Expenses......................................... 44
14.6 Indemnification................................................ 44
NONCOMPETITION............................................................. 46
15.1 Noncompetition Agreement....................................... 46
MISCELLANEOUS.............................................................. 47
16.1 Survival....................................................... 47
16.2 Change of Seller's Name........................................ 47
16.3 Assignment..................................................... 47
16.4 Successors..................................................... 47
16.5 Entire Agreement............................................... 47
16.6 Power of Attorney.............................................. 47
16.7 Amendments in Writing.......................................... 47
16.8 Interpretation................................................. 48
16.9 Arbitration.................................................... 48
16.10 Notices........................................................ 48
16.11 Severability................................................... 49
16.12 Headings....................................................... 49
16.13 Counterparts................................................... 49
16.14 Telecopy Execution and Delivery................................ 49
16.15 Bulk Sales Law................................................. 49
16.16 Effectiveness.................................................. 49
iii
<PAGE>
[PAGE 4 TO COME]
iv
<PAGE>
LIST OF SCHEDULES
Schedule 1.1(A) - Real Property
Schedule 1.1(B) - Real Property Leases
Schedule l. l (C) - Equipment and Property
Schedule 1.1(D) - Choses-in-Action
Schedule 1.1(E) - Patents, Copyrights, Trademarks and Service Marks
Schedule 1.1(F) - Motor Vehicles
Schedule 1.1(G) - Subsidiaries
Schedule 1.2 - Excluded Assets
Schedule 2.1(A) - Promissory Notes
Schedule 2.1(B) - Designation of Series A and Series B Stock
Schedule 2.1(C) - Purchase Price Allocation
Schedule 2.2(A) - Assumption Agreement
Schedule 2.3(B) - Equipment Purchased by Seller at Buyer's Request
Schedule 4.3 - Approvals and Consents for Seller
Schedule 4.5 - Tax Returns
Schedule 4.6(A) - Necessary Contracts
Schedule 4.6(B) - Defaults under Necessary Contracts
Schedule 4.7(A) - Material Agreements
Schedule 4.7(B) - Defaults under Material Agreements
Schedule 4.8 - Employees
Schedule 4.9 - Certain Developments
Schedule 4.10 - Encumbrances on Real Property
Schedule 4.11 - Exceptions to Title - Personal Property
Schedule 4.14 - Material Adverse Changes
Schedule 4.15 - Litigation and Legal Proceedings
Schedule 4.16 - Financial Statements
Schedule 4.19 - Claims under Benefit Plans
Schedule 4.20 - Insurance
Schedule 4.21 - Relationships with Affiliates
Schedule 4.22 - Relationships with Suppliers and Customers
Schedule 4.23 - Interests in Other Entities
Schedule 5.5 - Outstanding Rights for Capital Stock of Buyer
Schedule 5.6 - Options, Warrants and Other Rights
Schedule 5.7 - Capitalization of Public Company
Schedule 5.8 - Approvals and Consents for Buyer
Schedule 5.11 - Certain Developments
Schedule 5.15 - Financial Statements
Schedule 5.17 - Subsidiaries
Schedule 6.2 - Exceptions to Buyer's Restrictions on Operations
Schedule 9.9(A) - Form of Employment Agreement
Schedule 9.13 - Form of Subscription Agreement
v
<PAGE>
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT, made and entered into as of this 22nd day of
July, 1997, by and between Boots & Coots, L.P., a Colorado limited partnership
("Seller"), and IWC Services, Inc., a Texas corporation ("Buyer").
WHEREAS, Seller owns and operates an oil well fire fighting and well
control business; and
WHEREAS, Seller in reliance upon the representations and warranties of
Buyer, desires to sell to Buyer and Buyer, in reliance upon the representations
and warranties of Seller, desires to purchase from Seller, all of the assets,
property and business relating to the oil well fire fighting and well control
business operated by Seller and its subsidiaries (such assets, properties and
business, collectively referred to herein as the "Business") but specifically
excluding those assets described in Section 1.2 hereof.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein set forth, the parties hereto agree as follows:
PURCHASE AND SALE OF ASSETS OF SELLER
1.1 Purchase and Sale of Assets.
Seller agrees to sell, assign, transfer, convey, bargain, grant and deliver
to Buyer, and Buyer agrees to purchase from Seller, all on the terms and
conditions hereinafter set forth, all right, title, interest and benefit,
including all of Seller's right, title, interest and benefit, of whatever kind
and nature, real, personal and mixed, tangible and intangible, whether or not
reflected on Seller's books and records, known or unknown, accrued, absolute,
contingent or otherwise, in and to the assets, properties and rights (but
excluding those assets described in Section 1.2 hereof) with respect to the
Business, all as the same exist on the Effective Date (as hereinafter defined),
free and clear of and expressly excluding all debts, liabilities, obligations,
taxes, liens and encumbrances of any kind, character or description, whether
accrued, absolute, contingent or otherwise (and whether or not reflected or
reserved against in the balance sheets, books of account and records of Seller)
(the foregoing collectively referred to as "Encumbrances"), except for the
assumption of obligations expressly provided for in Section 2.2 hereof,
including, without limitation:
<PAGE>
(a) all the real property currently owned by Seller (the "Real Estate"),
all of which is described in Schedule 1.1(A) hereto, together with any real
property acquired by Seller between the date hereof and the Closing Date (as
hereinafter defined);
(b) all buildings, structures, and other improvements now or hereafter
actually or constructively attached to the Real Estate, and all modifications,
additions, restorations or replacements of the whole or any part thereof (the
"Improvements");
(c) all interests of Seller as landlord (whether named as such therein or
by assignment or otherwise) in all leases and subleases, if any, of the Real
Estate and the Improvements now existing or at any time hereafter made, and any
and all amendments, modifications, supplements, renewals and extensions thereof,
together with all rents, royalties, security deposits, revenues, issues,
earnings, profits, income and other benefits of the Real Estate or the
Improvements now due or hereafter to become due with respect to the Real Estate
or the Improvements or any part thereof, all of which are described in Schedule
1.1 (B) hereto;
(d) all of the equipment used by Seller in the operation of the business
including, but not limited to fire fighting equipment, blowout equipment, office
furnishings, machinery, and other property owned by Seller, all of which is
listed in Schedule l.l(C) hereto;
(e) all rights of Seller under those contracts, leases or other agreements
described and categorized in Schedule 4.6(A) and Schedule 4.7(A) hereto and
those contracts, leases or other agreements which are not required to be
disclosed pursuant to the provisions of Section 4.7 hereof because such
contracts, leases or other agreements involve payments of less than $1000
individually over the life of such agreements and $2000 in the aggregate for all
such agreements over the life of such agreements and which do not impose any
significant non-monetary obligations;
(f) all choses-in-action of Seller, all of which are described in Schedule
1.1(D) hereto;
(g) all patents, copyrights, trademarks, tradenames and service marks used
by Seller, including but not limited to the trade name "Boots & Coots", and all
of the rights associated therewith (including any and all applications,
registrations, extensions and renewals thereof), all of which are described in
Schedule 1.1(E) hereto;
(h) all engineering specifications, maps, plans, diagrams, billing service
reports, computer master tapes, books and records owned by Seller and relating
to the Business, other than its tax returns and financial records, provided,
however, that Buyer agrees to provide access,
2
<PAGE>
at Seller's expense, to such transferred books and records to Seller during
normal business hours upon reasonable notice if necessary for tax purposes for a
period not to exceed three years after Closing (as hereinafter defined); and
(i) all automotive equipment and motor vehicles utilized in the operation
of the Business by Seller, all of which are described in Schedule 1.1(F) hereto;
and
(j) all interest in each of the subsidiaries of Seller listed in Schedule
1.1(G) hereto (individually a "Subsidiary" and collectively the "Subsidiaries")
and their respective business and properties.
All of the foregoing business, assets, properties and rights to be
transferred to Buyer hereunder are collectively referred to herein as the
"Assets."
1.2 Excluded Assets.
Anything in the foregoing to the contrary notwithstanding, there shall be
excluded from the Assets (i) cash and cash equivalents (except as provided in
Section 1.4 hereof); (ii) accounts receivable for sales and services provided
prior to the Effective Time; (iii) obligations, commitments, contracts,
agreements and leases of Seller that are not expressly assumed by Buyer pursuant
to this Agreement; and (iv) such other assets as are listed on Schedule 1.2
hereto.
1.3 Instruments of Transfer.
At the Closing, Seller will deliver to Buyer (i) such deeds, bills of sale,
assignments, endorsements, checks and other good and sufficient instruments of
sale, transfer and conveyance, in such form and substance as Buyer shall
reasonably request and consistent with all applicable law, as shall be effective
to vest in Buyer all right and title to, and interest in, the Assets free and
clear of all Encumbrances, except for the assumption of obligations expressly
provided for in Section 2.2 hereof; and (ii) all contracts and commitments,
instruments, books and records and other data being conveyed hereunder and
relating to the Assets and the Business, and, simultaneous with such delivery,
Seller will take such steps as may be reasonably required to put Buyer in actual
possession and operating control of such Assets and Business. At any time and
from time to time after the Closing Date, on Buyer's reasonable request, Seller
will execute, acknowledge and deliver such further deeds, assignments and
transfers and take such actions as may be required in conformity with this
Agreement for the adequate assignment, transfer, and grant to Buyer of the
Assets.
3
<PAGE>
1.4 Reserves.
Seller shall pay any assumed accounts payable and taxes on earned revenues
of its subsidiaries on or before Closing. In addition, Seller agrees that the
promissory note to be delivered by Buyer pursuant to Section 2.1(a)(ii) will be
credited by an amount sufficient to cover two months operating expenses of
Seller as provided in Section 2.1(a)(ii). Buyer and Seller agree that the
amount of the reserve for operating expenses shall be $300,000; provided,
however, that from such amount shall be deducted the salary and benefits that
would be paid to Mr. Thompson and/or Mr. Tuppen, as applicable, during such
period in the event either or both of them have not executed Employment
Agreements with Buyer at Closing (the "Operating Expenses Reserve").
PURCHASE PRICE
2.1 Purchase Price and Payments.
The purchase price for the sale of the Assets under this Agreement shall be
$7,300,000 as adjusted pursuant to Section 2.3 hereof (collectively, the
"Purchase Price") and consisting of cash, stock and the assumption of certain
promissory notes as set forth below. The Purchase Price shall be payable as
follows:
(a) on the Closing Date:
(i) a payment of $1,050,000 by the wire transfer of immediately
available funds to the account designated by Seller in a written notice
delivered by Seller to Buyer;
(ii) delivery of a promissory note from Buyer to Seller, in the
amount of $2,000,000 (increased or decreased by any Purchase Price adjustments
pursuant to Section 2.3, decreased by the amount of the Operating Expenses
Reserve set forth in Section 1.4, and increased by the amount of the Debt [as
hereinafter defined], if paid in full by Seller at Closing) at 8% interest per
annum with a maturity of 30 days after the Closing Date (or the next day which
is not a Saturday, Sunday or a holiday on which national banking associations in
the State of Texas are closed), and on the terms and conditions as set forth in
Schedule 2.1(a)(ii) hereto; provided Seller shall pay such Debt only if the Debt
is not assumed by Buyer at Closing;
(iii) a payment of $75,000 by the wire transfer of immediately
available funds to the account designated by James Tuppin in a written notice
delivered by James Tuppin to Buyer in consideration for entering into an
employment agreement with Buyer in the form of Schedule 9.9(B) hereto and a
Lockup Agreement as required pursuant to Section 9.14 hereof;
4
<PAGE>
(iv) a payment of $75,000 by the wire transfer of immediately
available funds to the account designated by David Thompson in a written notice
delivered by David Thompson to Buyer in consideration for entering into an
employment agreement with Buyer in the form of Schedule 9.9(B) hereto and a
Lockup Agreement as required pursuant to Section 9.14 hereof; and
(v) the assumption of the promissory notes described in Schedule
2.1(a)(v) hereto, in the aggregate principal amount of $500,000, plus all
accrued but unpaid interest thereon as described in Schedule 2.1(a)(v) (in the
aggregate, the "Debt");
(vi) the delivery of a promissory note from Buyer to Seller, in the
amount equal to eighty-five percent of the difference between (x) the Purchase
Price less $1,000,000 and (y) the sum of items 2.1(a)(i)-(iv) if the Debt has
been paid in full by Seller at Closing, or the sum of items 2.1(a)(i)-(v) if the
Debt has been assumed by Buyer at Closing, which note shall be non-interest
bearing with a maturity of 30 days after the Closing Date (or the next day which
is not a Saturday, Sunday or a holiday on which national banking associations in
the State of Texas are closed), and on the terms and conditions as set forth in
Schedule 2.1(a)(vi) hereto;
(b) stock of the Buyer as follows:
(i) if the contemplated acquisition of Buyer by a publicly-held
corporation (i.e., a corporation that files periodic reports with the Securities
and Exchange Commission under Sections 13 or 15(d) of the Securities Exchange
Act of 1934, as amended, the "Public Company") has been consummated prior to
Closing, shares of the common stock of the Public Company equal to $1,000,000
(delivered promptly after the determination of the value per share of such stock
as set forth below). The value of a share of Public Company stock shall be
determined by the weighted average closing bid price during the sixty day period
commencing thirty (30) days after the acquisition of Buyer by the Public
Company; or
(ii) if the contemplated acquisition of Buyer by a publicly-held
corporation has not occurred on or before the Closing, shares of Series A
Convertible Preferred Stock of Buyer ("Series A Stock") and shares of Series B
Convertible Preferred Stock of Buyer ("Series B Stock") with a value equal to
$1,000,000. The Series A Stock and Series B Stock shall have the terms and
provisions set forth in Schedule 2.1(B) hereof. The relative amount of Series A
Stock and Series B Stock issued hereunder shall be determined by Seller and
communicated to Buyer prior to the date of issuance.
5
<PAGE>
The Purchase Price shall be allocated in accordance with Schedule 2.1(C) hereto.
Buyer and Seller shall, in any state, federal and/or local income tax or
information return filed by it, which includes an evaluation of the Assets
(i.e., allocation of the Purchase Price), report such value at the amounts set
forth on Schedule 2.l(C) for the various assets. If Buyer or Seller breaches
this provision, the breaching party shall indemnify and hold the nonbreaching
party harmless from any and all loss, cost and expense (including, without
limitation, attorneys' and accountants' fees, costs for any audit, any
additional income taxes and any interest found to be payable by the non-
breaching party) relating to and/or arising out of any such breach.
2.2 Assumption of Liabilities.
On the Closing Date, pursuant to the terms of the Assumption Agreement
attached hereto as Schedule 2.2(A), Buyer shall assume and agree to perform and
discharge the following as they become due for all periods from and after the
Closing Date, to the extent not theretofore performed or discharged:
(a) all obligations of Seller except those outside the normal course
of business arising from and after the Effective Time (as hereinafter defined)
and attributable and relating to the period after the Effective Time under all
leases and other agreements expressly set forth on Schedule 4.6(A) and Schedule
4.7(A) hereto or which are not required to be set forth under the provisions of
Section 4.7 because such contracts, leases or other agreements involve payments
of less than $1000 individually over the life of such agreements and $2000 in
the aggregate for all such agreements over the life of such agreements and do
not impose any significant non-monetary obligations;
(b) all obligations arising out of customer prepayments and all
other accrued and unpaid expenses that result in a Buyer's Adjustment to the
Purchase Price as provided in Sections 2.3(a), (b) and (c) hereof; and
(c) the obligations of Seller to those employees who are hired by
Buyer for accrued but unused vacation time, as adjusted through the Effective
Date pursuant to Section 2.3(a) hereof (the "Seller's Accrued Vacation Pay").
NOTWITHSTANDING ANYTHING CONTAINED IN THIS AGREEMENT OR APPLICABLE LAW TO
THE CONTRARY, BUT SUBJECT TO SECTION 2.2 HEREOF, BUYER DOES NOT ASSUME AND SHALL
NOT BE LIABLE FOR ANY DEBTS, OBLIGATIONS OR LIABILITIES OF SELLER OF ANY NATURE
WHATSOEVER, INCLUDING, WITHOUT LIMITATION, ANY LIABILITY OF SELLER FOR
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ENVIRONMENTAL CONTAMINATION OR REMEDIATION, FOR TAXES OF ANY KIND OR
DESCRIPTION, ANY ACCRUED OR OTHER LIABILITY FOR CONTRIBUTION OR PAYMENTS TO BE
MADE IN RESPECT OF SERVICES BY EMPLOYEES TO SELLER DURING PERIODS THROUGH THE
CLOSING DATE INCLUDING, WITHOUT LIMITATION, ANY SEVERANCE PAY, SICK LEAVE PAY,
OBLIGATIONS UNDER SECTION 4980B OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
("CODE"), ERISA (AS HEREINAFTER DEFINED), BONUSES, OR OTHERWISE WITH RESPECT TO
SELLER'S EMPLOYEES.
2.3 Adjustments and Prorations.
The operation of the Business until 11:59 p.m. of the close of business on
the day immediately preceding the Closing Date (the "Effective Time") shall be
for the account of Seller and thereafter for the account of Buyer. The
operation of the Business and the income and expenses attributable thereto shall
be prorated as of the Effective Time. The aggregate amount paid for the Assets
on the Closing Date shall be adjusted and revenues and expenses, costs and
liabilities relating to the Business shall be prorated as follows with all
adjustments and prorations as of the Effective Time:
(a) The aggregate amount paid for the Assets shall be reduced by the
sum of the following amounts: (i) the amount of liabilities with respect to
customer prepayments, the responsibility for which is assumed by Buyer under
this Agreement, with the amount of prepayments relating to services provided
prior to the Effective Time for the account of Seller and prepayments relating
to services which Buyer will be obligated to provide after the Effective Time
for the account of Buyer, and (ii) Seller's Accrued Vacation Pay.
(b) The aggregate amount paid for the Assets shall be decreased by
the value as reflected on the 1996 Financial Statements of Seller of that
certain real property of Seller located in Midland, Texas, decreased by the
value on the 1996 Financial Statements for any of the Assets which have, at
Closing, been destroyed or rendered unfit for their intended purpose in the
operation of the Business, and shall be increased by the amount paid prior to
Closing by Seller for those items of equipment purchased by Seller at Buyer's
request as set forth on Schedule 2.3(b) hereof.
(c) All revenues and expenses, costs and liabilities relating to the
Assets being purchased by Buyer (including, without limitation, rental or
similar charges or payments payable in respect of any contracts, leases or
agreements of Seller being assumed by Buyer, insurance
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premiums (but only to the extent such insurance, if any, is assumed by Buyer),
sales and use taxes payable in respect of services and equipment furnished in
connection with the operation of the Business, power and utility charges, real
and personal property taxes and rentals, sales and service charges, taxes and
similar prepaid and deferred items), shall be prorated, with Seller being
entitled to all revenues and liable for all such expenses, costs and liabilities
relating to the period at or prior to the Effective Time and Buyer entitled to
all revenues and liable for all such expenses relating to the period after the
Effective Time, determined in accordance with generally accepted accounting
principles consistently applied, subject to Section 2.3(e) below. An increase
or decrease in the cash price paid at Closing shall be made, as appropriate,
based upon such proration. Buyer shall use reasonable efforts to collect the
accounts receivable existing on the Closing Date but shall not be required to
bring suit with respect to any such amount and shall not be liable to Seller or
any other party for any amounts not collected thereon. The portion of any such
accounts receivable for services prior to the Effective Time are for the account
of Seller and for the period after the Effective Time are for the account of
Buyer. To the extent that either party collects accounts receivable that are
for the account of the other, such party shall promptly remit such amounts to
the other.
(d) Seller shall deliver to Buyer, not less than one (1) business
day prior to the Closing Date, a certificate (the "Closing Adjustment
Certificate") of Seller which shall set forth Seller's good faith estimate of
the amount of the adjustments and prorations set forth in Sections 2.3(a),(b)
and (c) above, as of the Effective Time. The Closing Adjustment Certificate
shall be in form and substance satisfactory to Buyer, and Seller shall deliver
to Buyer with the Closing Adjustment Certificate a copy of such supporting
evidence as shall be appropriate hereunder as Buyer may reasonably request. At
the Closing there will be a settlement between Buyer and Seller with respect to
the adjustments and prorations set forth in Sections 2.3(a), (b) and (c) above,
and the amounts determined by Buyer and Seller pursuant to the provisions of
this Section 2.3 shall be paid to Buyer or Seller, as appropriate, by an
increase or decrease in the Purchase Price, as appropriate on the Closing Date,
with a final settlement within sixty (60) days after the Closing Date.
(e) Within thirty (30) days after the Closing Date, Buyer shall
deliver to Seller a certificate (the "Final Closing Certificate") setting forth
any changes to the adjustments made at the Closing pursuant to Sections 2.3(a),
(b) and (c), together with a copy of such supporting evidence as shall be
appropriate hereunder as Seller may reasonably request. If Seller shall
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conclude that the Final Closing Certificate does not accurately reflect the
changes to be made to the closing adjustments pursuant to this Section 2.3,
Seller shall, within thirty (30) days after its receipt of the Final Closing
Certificate, provide to Buyer its written statement (together with any
supporting documentation as Buyer may reasonably request) of any discrepancy or
discrepancies believed to exist. Seller's representatives shall be permitted
access to all books, records, billing service reports and other documents
necessary or appropriate for the determination of the adjustments and
prorations.
Buyer and Seller shall attempt jointly to resolve any discrepancies within
thirty (30) days after receipt of Seller's discrepancy statement, which
resolution, if achieved, shall be binding upon all parties to this Agreement and
not subject to dispute or review. If Buyer and Seller cannot resolve the
discrepancies to their mutual satisfaction within such thirty (30) day period,
Buyer and Seller shall, within the following ten (10) days, jointly designate a
nationally known independent public accounting firm to be retained to review the
Final Closing Certificate together with Seller's discrepancy statement and any
other relevant documents. The cost of retaining such independent public
accounting firm shall be borne equally by Seller and Buyer. Such firm shall
report its conclusions in writing to Buyer and Seller and such conclusions as to
adjustments pursuant to this Section 2.3 shall be conclusive on all parties to
this Agreement and not subject to dispute or review.
If, as a result of such adjustments, Buyer is determined to owe an amount
to Seller, Buyer shall pay such amount thereof to Seller in immediately
available funds within three business days of such determination, and if Seller
is determined to owe an amount to Buyer, Seller shall pay such amount thereof to
Buyer in immediately available funds within three business days of such
determination, and such amounts to be paid by Seller shall not be subject to the
limitations of Section 13.1.
(e) Section 2.3 hereof is intended to establish the Effective Time
as the cutoff date from which Buyer shall be entitled to the revenues and
responsible for expenses of operating the Business and shall not be construed as
an assumption by Buyer of any liability, contract, agreement or obligation which
is not specifically set forth in Section 2.2 hereof.
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CLOSING
3.1 Closing Date.
Subject to satisfaction of all conditions set forth in this Agreement, the
closing of the transactions contemplated herein (the "Closing") shall take place
on or before July 31, 1997 at least one business day after Seller has provided
Buyer with written notice that all material consents have been obtained as of
the date of such notice. The Closing shall be held at the offices of Brown,
Parker & Leahy, L.L.P., 1200 Smith Street, Suite 3600, Houston, Texas 77002 or
at such place as the parties may agree in writing. The date on which Closing
takes place is referred to as the "Closing Date."
REPRESENTATIONS AND WARRANTIES OF SELLER
As an inducement to Buyer to enter into this Agreement and to consummate
the transactions contemplated herein, Seller hereby makes (as of the date hereof
and, as of the Closing Date except for those stated to be as of the date hereof)
the following representations and warranties:
4.1 Existence and Qualification.
Seller is a limited partnership duly organized, validly existing and in
good standing under the laws of the State of Colorado and has the power and
authority to own, lease, use and operate its properties and to transact the
business in which it is engaged and to enter into this Agreement and the other
documents and instruments contemplated herein and to carry out the transactions
contemplated herein. Each of the Subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation and has the power and authority to own, lease, use and operate its
properties and to transact the business in which it is engaged. Seller and each
of the Subsidiaries is qualified to do business, and has all appropriate or
necessary licenses in each jurisdiction or place in which the nature of its
business or the character of its properties requires such registration, except
where the failure to so register or qualify would not have a material adverse
effect.
4.2 Authorization.
This Agreement and the other documents or instruments executed and
delivered or to be executed and delivered pursuant hereto have been duly
authorized, executed and delivered by Seller. This Agreement constitutes and
the other documents or instruments executed and delivered or to be executed and
delivered when executed will constitute, the legal, valid and binding
obligations of Seller, enforceable in accordance with their terms subject to
applicable
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bankruptcy, insolvency, reorganization, moratorium or other laws affecting the
rights of creditors generally and by general principals of equity.
4.3 Approvals and Consents.
Subject to obtaining the approvals and consents set forth in Schedule 4.3
hereto required under any of Seller's material leases and agreements in order
for the transfer of such agreements to Buyer to occur pursuant to this
Agreement, neither the execution, delivery and performance by Seller of this
Agreement nor the consummation of the transactions contemplated herein will to
Seller's knowledge after due inquiry (i) conflict with, or result in a breach of
the terms of, or constitute a default under, or violation of, any lease or
agreement to which Seller or the Subsidiaries is a party or by which Seller or
the Subsidiaries, or any of their respective properties are bound, or (ii)
result in a material violation of any material law, rule, regulation, order,
writ, judgment, decree, determination or award presently in effect or having
applicability to Seller or the Subsidiaries. Subject to obtaining such
approvals and consents, such execution, delivery, performance or consummation
will not give to others any rights of termination, acceleration or cancellation
in or with respect to any leases or agreements of (or relating to the business
of) Seller or the Subsidiaries. Schedule 4.3 hereto sets forth all approvals or
consents contractually or legally required to (i) enable Buyer to continue to
lawfully operate the Business as it is presently operated by Seller and the
Subsidiaries; (ii) render this Agreement and the transactions contemplated
herein valid and effective with respect to the parties hereto (including any
approvals or consents required under Seller's organizational documents or
applicable loan agreements); and (iii) permit Seller to assign to Buyer all
material leases or agreements or other instruments to be assigned to and assumed
by Buyer hereunder. All references in this Agreement to the "knowledge" of
Seller will be deemed to include the knowledge of the executive officers of the
general partners of Seller who have executed this Agreement.
4.4 Undisclosed Liabilities.
Each of Seller and each of the Subsidiaries have no material liabilities or
obligations, whether accrued, absolute, contingent or otherwise, and whether due
or to become due, in connection with the Business and the Assets and Seller does
not know of any basis for any claim against it or the Subsidiaries for any such
material liabilities or obligations, including specifically (but without
limiting the foregoing) (i) claims alleging the presence or the existence of any
substance or condition constituting violation of the Comprehensive Environmental
Response Compensation and Liability Act ("CERCLA"), as amended, or any other
federal or state
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environmental law or regulation except to the extent set forth in this Agreement
or in the Schedules hereto, or (ii) liabilities, debts or obligations incurred
in the ordinary course of the operation of the Business since December 31, 1996,
none of which individually or in the aggregate will have a material adverse
effect upon the business or condition, financial or otherwise, of Seller.
Neither Seller nor any of the Subsidiaries has any liabilities, material or
otherwise, that will impose transferee liability upon Buyer.
4.5 Tax Returns and Audits.
Seller and each of the Subsidiaries have filed with the appropriate
agencies all tax returns and tax reports required by law to be filed by them
with respect to the operation of the Business. Seller and each of the
Subsidiaries have paid all of its assessments, fees and taxes to the extent that
the same have become due and payable. Except as set forth on Schedule 4.5
hereto, there exists no unpaid federal, state or local income or other tax with
respect to the existence or operations of the Business or the Assets, except for
accrued taxes not yet due and payable. Seller and each of the Subsidiaries have
no liability, fixed or contingent, known or unknown, for any foreign, federal,
state or local taxes (including without limitation, income, franchise, sales,
use, occupation, property, excise, alternative or add-on minimum, social
security, employees' withholding, unemployment, disability, transfer and other
taxes) of any nature whatsoever that might impose transferee liability on Buyer.
Except as set forth in Schedule 4.5 hereto, neither Seller nor any of the
Subsidiaries holds nor has held a permit, registration, certificate or like
instrument as a "dealer" or other collecting agent from a state taxing authority
under which Seller or any of the Subsidiaries collects sales tax from the
Business and remits such tax to such taxing authority. Seller and each of the
Subsidiaries are in compliance with all applicable sales and use tax laws and
regulations.
4.6 Necessary Contracts. etc.
Seller and each of the Subsidiaries have entered into and validly holds all
necessary agreements for the operation of their respective Businesses (the
"Necessary Contracts"). All Necessary Contracts are in full force and effect,
without any pending (or to the best of Seller's knowledge, threatened)
modification, amendment or termination of such Necessary Contracts. Set forth
on Schedule 4.6(A) hereto is a true and accurate description of each Necessary
Contract to which Seller or any of the Subsidiaries is a party other than those
Necessary Contracts that are excluded assets pursuant to Section 1.2 hereof.
Except as set forth on Schedule 4.6(B) hereto, Seller and/or the Subsidiaries
party thereto have performed all of their obligations under
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the Necessary Contracts and Seller and/or the Subsidiaries party thereto are not
in default under any Necessary Contract, nor is there any condition, event or
occurrence existing, nor is any proceeding pending (or, to the best of Seller's
knowledge, threatened) or being conducted by any governmental authority or any
other party, which would cause the termination, suspension or cancellation of
any Necessary Contract. Seller has no knowledge of any material breach or
anticipated material breach by the other parties to the Necessary Contracts.
The operation of the Business and the Assets have been and are being conducted
in accordance with all applicable provisions of such Necessary Contracts.
4.7 Material Contracts and Obligations.
(a) Attached hereto as Schedule 4.7(A) is a list of all agreements
(other than those required to be listed by Section 4.6 and other than agreements
which are excluded assets pursuant to Section 1.2 hereof and non-assignable
insurance policies) of any nature to which Seller or any of the Subsidiaries is
a party or by which Seller or any of the Subsidiaries or any of their properties
are bound which obligate Seller or any of the Subsidiaries to pay individually
under any agreement more than $1000, and in the aggregate for all such
agreements more than $2000, or which impose any significant non-monetary
obligations (collectively, the "Material Agreements"). Except as set forth on
the Schedules hereto and except as may be required under Section 601 et seq. of
ERISA, neither Seller nor any Subsidiary is a party to any written or oral
contract with respect to the Business that is not cancelable without penalty
upon thirty (30) days notice or less, including, without limitation, any:
(i) pension, profit sharing, retirement, hospitalization, insurance,
stock option, employee stock purchase, or any other employee
benefit or "fringe benefit" plan, including, without limitation,
medical or other insurance plans or any union collective
bargaining or any other contract with any labor union;
(ii) contract for the employment of any officer, director, individual
employee, or other person or entity on a full-time, part-time,
consulting or other basis;
(iii) agreement or indenture relating to the borrowing of money or
to mortgaging, pledging or otherwise placing a lien on any asset
or group of assets of Seller or any of the Subsidiaries;
(iv) guarantee of any obligation;
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(v) lease or agreement under which it is lessee or lessor, or holds
or operates any property, real or personal, owned by any other
party, except for any lease under which the aggregate annual
rental payments do not exceed $1000;
(vi) agreement or group of related agreements with the same party or
any group of affiliated parties which requires or may in the
future require aggregate consideration by or to Seller or any of
the Subsidiaries in excess of $1000 per annum; or
(vii) continuing contract for the future purchase of materials,
supplies, equipment or services.
(b) Except as disclosed on Schedule 4.7 (B) hereto, with respect to
the Business, each of Seller and each of the Subsidiaries has performed all
material obligations required to be performed by it and is not in material
default under, or in material breach of, or in receipt of any claim of default
under, any Material Agreement to which it is a party or by which it or any of
its properties are bound; Seller has no knowledge of any material breach or
anticipated material breach by the other parties to any contract or commitment
to which it and any of the Subsidiaries is a party or by which Seller or any of
the Subsidiaries or any of their respective properties are bound.
4.8 Employees.
The names of all employees of Seller and of the Subsidiaries together with
their December 31, 1996 gross salaries and wages as reported for income tax
purposes and current gross salaries are listed on Schedule 4.8 hereto. Neither
Seller nor any Subsidiary is, nor during the past six months has it been,
involved in any discussion with any unit or group seeking to become the
bargaining unit for any of its employees nor, to the best of Seller's knowledge,
has there been any threat of such discussions.
4.9 Absence of Certain Developments.
Except as set forth on Schedule 4.9 attached hereto, and except for the
transactions contemplated in this Agreement, Seller and each of the Subsidiaries
have not insofar as the Business, or the Assets are concerned, since
December 31, 1996:
(i) sold, assigned or transferred any tangible assets, except in the
ordinary course of business;
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(ii) suffered any material losses or waived any material rights,
whether or not in the ordinary course of business;
(iii) suffered any termination or cancellation of any Necessary
Contract without the consent of Buyer, including without
limitation, the contracts to be assumed by Buyer hereunder;
(iv) made any material changes in employee compensation (other than
severance pay and deferred compensation) except in the
ordinary course of business;
(v) entered into any other material transaction other than in the
ordinary course of business;
(vi) suffered any material damage, destruction or casualty loss,
whether or not covered by insurance;
(vii) suffered any strikes, work stoppages or other material labor
disputes adversely affecting the Business or the Assets; or
(viii) entered into any agreement or understanding to do any of the
foregoing.
4.10 Real Property.
Schedule 1.1 (A) attached hereto contains a legal description of each
parcel of Real Estate owned by Seller and the Subsidiaries in connection with
the Business with a description of the type of use of each such parcel. Seller
and the Subsidiaries have provided Buyer with a title insurance commitment with
respect to each such parcel of Real Estate and will obtain at Seller's expense
and will deliver to Buyer as soon as possible after closing a title insurance
policy with respect to each such parcel in the amounts that are allocated to the
Real Estate as set forth in Schedule 2.1(B). Except for current taxes or
assessments due but not yet payable and easements, liens, or other encumbrances
set forth on Schedule 4.10 hereto or in the title insurance commitments which
have been provided to Buyer which do not materially adversely affect their use
with respect to the Business or materially detract from their value, Seller or
the applicable Subsidiary of Seller is the sole owner (both legal and equitable)
of and has good and marketable title to each property described thereon. All of
the Real Estate and all of the real property leased by Seller or any of the
Subsidiaries has unfettered access to public roads or streets and all utilities
and services necessary for the proper conduct and operation of the Business.
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4.11 Title to Assets: Personal Property.
Except as set forth on Schedule 4.11 hereto, Seller is the sole owner (both
legal and equitable) of and has good and marketable title to the Assets,
tangible and intangible, and has or will have at the Closing Date, the absolute
right to sell, assign, transfer, convey and deliver the Business, and such
Assets to Buyer, free and clear of all mortgages, liens, security interests,
charges, claims, restrictions and other encumbrances of every kind. All of the
Assets are in good working order and condition and are suitable for the purposes
for which they are employed in the operation of the Business, ordinary wear and
tear excluded. Except as set forth on Schedule 4.11 hereto, each Subsidiary is
the sole owner (both legal and equitable) of and has good and marketable title
to the assets, tangible and intangible, used in the conduct of its respective
portion of the Business, free and clear of all mortgages, liens, security
interests, charges, claims, restrictions and other encumbrances of every kind.
All of such assets are in good working order and condition and are suitable for
the purposes for which they are employed in the operation of the Business.
4.12 Necessary Property.
The Assets and the assets owned by the Subsidiaries constitute all of the
property used in the operation of the Business lawfully and in the manner and to
the extent presently conducted by Seller and the Subsidiaries.
4.13 Compliance with Laws.
The operation of the Business has been conducted and is being conducted in
compliance in all material respects with all applicable laws, rules, regulations
and other requirements of all federal, state, county or local governmental
authorities or agencies.
4.14 Transactions.
Except as set forth in Schedule 4.14, since December 31, 1996, neither
Seller nor any of the Subsidiaries has entered into any transaction not in the
ordinary course of its business, and there has not been any material adverse
change in the manner in which Seller or any Subsidiary conducts its Business or
any change in the assets, liabilities, property, business, operations,
prospects, customers or financial condition of Seller or any Subsidiary, the
effect of which was or will be, in any single case or in the aggregate,
materially adverse to Seller or any Subsidiary, the Assets, or the Business.
4.15 Litigation and Legal Proceedings.
Set forth on Schedule 4.15 hereto is a complete and accurate list of all
suits, claims, actions and administrative, arbitration or other similar
proceedings relating to the operation of
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the Business or the Assets (including proceedings concerning labor disputes or
grievances, civil rights discrimination cases and affirmative action
proceedings) and all governmental investigations pending or, to the knowledge of
Seller, threatened, to which Seller or a Subsidiary is a party, or against their
respective properties or business, and each judgment, order, injunction, decree
or award relating to Seller or any Subsidiary, or the Assets (whether rendered
by a court, administrative agency or by arbitration pursuant to a grievance or
other procedure) to which Seller or any Subsidiary is a party which is
unsatisfied or requires continuing compliance therewith (such suits, actions,
claims, judgments, orders, injunctions, decrees and awards are herein referred
to as "legal proceedings"). Seller is not aware of any facts or circumstances
which would give rise to any unasserted possible material claims against the
Business or the Assets.
4.16 Financial Statements.
Schedule 4.16 hereto contains the unaudited consolidated balance sheet of
Seller for the year ended December 31, 1996, and the unaudited consolidated
statements of income and cashflow for the fiscal year then ended together with
all notes thereto (the "1996 Financial Statements"), and the unaudited
consolidated balance sheet of Seller as of April 30, 1997 and the unaudited
consolidated statements of income and cashflow for the period then ended (the
"Interim Financial Statements"; the 1996 Financial Statements and Interim
Financial Statements being referred to herein collectively as the "Financial
Statements"). The Financial Statements (i) fairly present the financial
condition of Seller and its results of operations as of the relevant dates
thereof and for the periods covered thereby, and (ii) contain and reflect all
necessary adjustments and accruals for a fair presentation of Seller's financial
condition as of the relevant dates thereof and the results of Seller's
operations for the periods covered thereby.
4.17 Brokers' Fees.
Neither Seller nor any Subsidiary, nor anyone on their behalf has retained
any broker, finder or agent or other intermediary or agreed to pay any brokerage
fee, finder's fee or commission with respect to the transactions contemplated in
this Agreement.
4.18 Pensions and Other Deferred Compensation.
(a) With the exception of pension, or retirement plans or policies
that are excluded assets pursuant to Section 1.2 hereof, neither Seller nor any
Subsidiary maintains or contributes to any pension, retirement or other Employee
Benefit Plan as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974 ("ERISA") (collectively, "Employee
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Benefit Plans"). Neither Seller nor any Subsidiary has maintained or been
obligated to contribute to any multi-employer plan, as defined in Section 3(37)
of ERISA. Neither Seller nor any Subsidiary is subject to any liability
resulting from the withdrawal by Seller, any Subsidiary, or any of their
affiliates from a multi-employer plan or resulting from the termination of a
plan previously utilized in a trade or business affiliated with Seller or any
Subsidiary under Code Section 414. Each Employee Benefit Plan sponsored or
maintained by Seller or any Subsidiary or any trade or business affiliated with
Seller or any Subsidiary under Code Section 414 has been administered, without
material exception, in compliance with the terms of the plan, ERISA, the Code
and other applicable laws.
(b) Neither Seller nor any Subsidiary, nor any trade or business
affiliated with Seller or any Subsidiary under Code Section 414 is aware of the
existence of any pending or threatened governmental audit or examination of any
Employee Benefit Plan sponsored, maintained or contributed to by Seller or any
Subsidiary, or of any pending or threatened action, suit or claim (other than
routine claims for benefits which are fully covered by insurance maintained with
reputable, financially responsible insurers) against any such Employee Benefit
Plan, compensation arrangement or trustees or administrators thereof, or of any
facts that could give rise to such action, suit or claim.
4.19 Benefit Plans.
Except as set forth in Schedule 4.19, Seller has no unfunded liability or
accumulated benefit obligation with respect to any Employee Benefit Plans and no
person has asserted any claim under which Seller, any Subsidiary, or Buyer would
have any liability under any health insurance, life insurance, disability,
medical, surgical, hospital, death benefit, or any other employee benefit plan,
contract or arrangement maintained by Seller or any Subsidiary, or to which
Seller or any Subsidiary is a party or may be bound, or under any worker's
compensation or similar law, which is not self funded with adequate stop loss
insurance coverage (which is described on Schedule 4.19 along with any claims
thereunder) or fully covered by insurance maintained with reputable, responsible
financial insurers.
4.20 Insurance, Surety Bonds, Damages.
Set forth on Schedule 4.20 hereto is a list of all insurance certificates
and surety bonds of Seller and each Subsidiary now in effect, including the
coverages thereof. The premiums on such insurance policies and bonds have been
currently paid, and such policies and bonds are valid, outstanding and
enforceable, in full force and effect and insure against risks and liabilities
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and provide for coverage to the extent and in a manner required of or
historically deemed appropriate and sufficient by Seller and each Subsidiary.
Seller and each Subsidiary will maintain coverage of similar kinds and amounts
and pay the premium for such coverage through the Closing Date.
4.21 Relationships with Affiliates.
Except as set forth in Schedule 4.21 hereto, none of the partners of Seller
nor any affiliate of Seller, individually or collectively, owns or has owned of
record or as a beneficial owner an equity interest or any other financial or
profit interest in any firm corporation or any other entity or person which (a)
has had business dealings or a material financial interest in any transaction
with Seller or any Subsidiary or (b) is in competition with Seller or any
Subsidiary with respect to any services of Seller or any Subsidiary in any
market presently served by Seller or any Subsidiary except for less than one
percent (1%) of the outstanding capital stock of any such competing business
which is publicly traded on any recognized exchange or in the over-the-counter
market.
4.22 Relationships with Suppliers and Customers.
Schedule 4.22 hereto sets forth the names and business addresses of all
customers to whom more than five percent (5%) of Seller's consolidated revenues
for fiscal year 1996 were attributable or are expected to be attributable for
fiscal year 1997. No such supplier or customer has indicated any intention to
terminate its existing business relationship with Seller or any Subsidiary or
has indicated any intention not to continue its business relationship with Buyer
following the consummation of the transactions contemplated herein.
4.23 Subsidiaries.
Other than as set forth on Schedules 1.1(G), 4.21 and 4.23 hereto, Seller
does not hold any interests in any partnerships, corporations or other entities.
Seller owns all of the interests of each entity identified on Schedule 1.1(G)
free and clear of any and all Encumbrances and there are no rights, options or
agreements requiring the issuance of any capital stock or interests in any of
such entities.
4.24 Representations of General Partners.
Each General Partner of Seller that has executed this Agreement ("General
Partner") represents the following: (i) if such General Partner is an entity, it
is duly organized, validly existing and in good standing under the laws of its
State of formation; (ii) this Agreement and the other documents or instruments
executed and delivered or to be executed and delivered
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pursuant hereto by such General Partner have been duly authorized, executed and
delivered by such General Partner; (iii) this Agreement constitutes and such
other documents or instruments executed and delivered or to be executed and
delivered pursuant hereto by such General Partner when executed will constitute,
the legal, valid and binding obligations of such General Partner, enforceable in
accordance with their terms subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the rights of creditors
generally; and (iv) will not conflict with, or result in a breach of the terms
of, or constitute a default under, or violation of, any agreement to which such
General Partner is a party or its properties are bound, or of any law, rule,
regulation, order, writ, judgment, decree, determination or award applicable to
such General Partner.
4.25 Representations and Warranties.
No representation or warranty made herein by Seller and no statement
contained in any certificate or other instrument furnished or to be furnished by
Seller to Buyer in connection with the transactions contemplated in this
Agreement contains or will contain any untrue statement of a material fact or,
to the best of Seller's knowledge, omits or will omit to state any facts or
statements necessary in order to make the other facts or statements set forth
herein or therein not misleading under the circumstances in which made.
REPRESENTATIONS AND WARRANTIES OF BUYER
Except if expressly stated otherwise in this section 5, all references to
Buyer include references to the Public Company which is anticipated to acquire
Buyer prior to the Closing. Buyer hereby makes (as of the date hereof and as of
the Closing Date except for those stated to be as of the date hereof) the
following representations and warranties:
5.1 Organization.
Buyer is, and Public Company will be, a corporation duly organized, validly
existing and in good standing under the laws of the states of Texas and
Delaware, respectively, and has or will have the power and authority to own,
lease, use and operate its properties and to transact the business in which it
is engaged and to enter into this Agreement and the other documents and
instruments contemplated herein and to carry out the transactions contemplated
herein. Each of Buyer's subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and has the power and authority to own, lease, use and operate its
properties and to transact the business in which it is engaged. Buyer and each
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of its subsidiaries is qualified to do business, and has all appropriate or
necessary licenses in each jurisdiction or place in which the nature of its
business or the character of its properties requires such registration, except
where the failure to so register or qualify would not have a material adverse
effect.
5.2 Authorization of Agreement.
The execution and delivery of this Agreement and all other instruments or
documents executed or delivered by Buyer in connection herewith as well as all
action required to be taken hereunder or thereunder by Buyer has been duly
authorized by Buyer and upon execution and delivery, each such document will
constitute the legal, valid and binding obligation of Buyer enforceable upon and
in accordance with its terms subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the rights of creditors
generally and by general principles of equity. All persons who have executed
this Agreement on behalf of Buyer are authorized to do so under its
organizational documents and the laws of its state of creation.
5.3 No Default.
The execution and delivery of this Agreement and all other instruments or
documents executed or delivered by Buyer in connection herewith and the
consummation of the transactions contemplated herein will not violate any
provision of or constitute a default under any provision in Buyer's Articles of
Incorporation, Bylaws or any agreement or instrument to which Buyer is a party
or which is otherwise applicable to Buyer or result in the acceleration of any
obligation or to the best of its knowledge, cause or give any reason for an
adverse action to be taken by any person or governmental authority under any
mortgage, lien, lease, agreement, instrument, order, judgment, or decree to
which Buyer is a party or by which it is bound and will not violate or conflict
with any other restriction to which Buyer is subject, including, to the best of
Buyer's knowledge, federal, state, and local laws and regulations.
5.4 Litigation.
As of the date hereof, there is no pending or, to the knowledge of Buyer,
threatened suit, claim, action or proceeding to which Buyer is a party which
individually or in the aggregate will have a material adverse effect upon the
business or condition, financial or otherwise, of Buyer. As of the date hereof,
no judgment, order or decree has been entered nor any such liability incurred
which has or will have such effect. There is no claim, action or proceeding
pending as of the date hereof or threatened as of the date hereof against Buyer
which will prevent or delay the consummation of the transactions contemplated in
this Agreement.
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5.5 Articles and Bylaws.
Buyer has provided to Seller complete and correct copies of its Articles of
Incorporation and Bylaws, each as amended to the date hereof. Buyer will
provide complete and current copies of any amendments to such documents. Public
Company will adopt Articles of Incorporation and Bylaws with substantially the
same provisions as those stated therein as of the date hereof.
5.6 Capitalization of Buyer. As of the date hereof, Buyer's authorized
capital stock consists of 50,000,000 shares of common stock, $0.01 par value of
which 6,178,947 shares are issued and outstanding as of the date hereof and
5,000,000 shares of preferred stock, $0.01 par value. At Closing, Buyer will,
if necessary designate and authorize shares designated as "Series A Convertible
Preferred Stock" and shares designated as "Series B Convertible Preferred Stock"
sufficient in number to consummate the purchase as required hereunder. No
shares of Series A Stock or Series B Stock are issued as of the date hereof and,
except as contemplated in this Agreement and as set forth on Schedule 5.6
hereto, there are no outstanding preemptive, conversion or other rights,
options, warrants or agreements granted or issued by or binding upon Buyer for
the purchase or acquisition of any shares of the capital stock of Buyer. When
issued in accordance with the terms hereof, the shares of Series A Stock and
Series B Stock shall be duly authorized and validly issued, fully paid and
nonassessable, and issued in compliance with the applicable requirements of the
Securities Act and applicable state securities laws, or in transactions exempt
from registration under the Securities Act and such applicable state securities
laws.
5.7 Capitalization of the Public Company. At the Closing Date, if a
transaction has occurred between Buyer and the Public Company, Buyer shall cause
the Public Company's authorized capital stock to consist of 50,000,000 shares of
common stock, $0.01 par value and 5,000,000 shares of preferred stock, $0.01 par
value. On or before the Closing Date, Buyer and the Public Company shall
provide Seller Schedule 5.7, which shall set forth the issued and outstanding
capital stock of the Public Company and all outstanding preemptive, conversion
or other rights, options, warrants or agreements granted or issued by or binding
upon the Public Company for the purchase or acquisition of any shares of the
capital stock of the Public Company. Shares of Common Stock of the Public
Company issued in accordance with the terms hereof shall, when issued, be duly
authorized and validly issued, fully paid and nonassessable, and issued in
compliance with the applicable requirements of the Securities Act and applicable
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state securities laws, or in transactions exempt from registration under the
Securities Act and such such applicable state securities laws.
5.8 No Conflicts; Required Approvals and Consents. There are no approvals
and consents required by Buyer in order for the payment of the Purchase Price,
including the issuance of the stock to Seller (provided that the approval of the
Public Company will be required for the issuance of the Common Stock and will be
obtained by Buyer prior to Closing) to occur pursuant to this Agreement, neither
the execution, delivery and performance by Buyer of this Agreement nor the
consummation of the transactions contemplated herein will to Buyer's knowledge
after due inquiry (i) conflict with, or result in a breach of the terms of, or
constitute a default under, or violation of, any lease or agreement to which
Buyer or its subsidiaries is a party or by which Buyer or its subsidiaries, or
any of their respective properties are bound, or (ii) result in a material
violation of any material law, rule, regulation, order, writ, judgment, decree,
determination or award presently in effect or having applicability to Buyer or
its subsidiaries, or (iii) result in the creation or imposition of any lien
against or upon the Series A Stock or the Series B Stock. Such execution,
delivery, performance or consummation will not give to others any rights of
termination, acceleration or cancellation in or with respect to any leases or
agreements of (or relating to the business of) Buyer or its subsidiaries.
Schedule 5.8 hereto sets forth all approvals or consents contractually or
legally required to (i) enable Buyer to continue to lawfully operate its
business as it is presently operated by Buyer and its subsidiaries; (ii) render
this Agreement and the transactions contemplated herein valid and effective with
respect to the parties hereto (including any approvals or consents required
under Buyer's organizational documents or applicable loan agreements).
5.9 Undisclosed Liabilities.
Buyer and each of its subsidiaries each have no material liabilities or
obligations, whether accrued, absolute, contingent or otherwise, and whether due
or to become due, in connection with its business and Buyer does not know of any
basis for any claim against it or its subsidiaries for any such material
liabilities or obligations, including specifically (but without limiting the
foregoing) claims relating to federal or state environmental or tax liabilities
or ERISA or other employee benefits except to the extent set forth in this
Agreement or in the Schedules hereto.
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5.10 Necessary Contracts. etc.
Buyer and each of its subsidiaries have entered into and validly holds all
necessary agreements for the operation of their respective businesses (the
"Buyer Necessary Contracts"). All Buyer Necessary Contracts are in full force
and effect, without any pending (or to the best of Buyer's knowledge,
threatened) modification, amendment or termination of such Buyer Necessary
Contracts. Buyer and/or its subsidiaries party thereto have performed all of
their obligations under the Buyer Necessary Contracts and Buyer and/or its
subsidiaries party thereto are not in default under any Buyer Necessary
Contract, nor is there any condition, event or occurrence existing, nor is any
proceeding pending (or, to the best of Buyer's knowledge, threatened) or being
conducted by any governmental authority or any other party, which would cause
the termination, suspension or cancellation of any Buyer Necessary Contract.
Buyer has no knowledge of any material breach or anticipated material breach by
the other parties to the Buyer Necessary Contracts. The operation of Buyer's
and its subsidiaries' businesses have been and are being conducted in accordance
with all applicable provisions of such Buyer Necessary Contracts.
5.11 Absence of Certain Developments.
Except as set forth on Schedule 5.11 attached hereto, and except for the
transactions contemplated in this Agreement, Buyer and each of its subsidiaries
have not insofar as their respective businesses or assets are concerned, since
the date of the audited balance contained within Buyer's Financial Statements:
(i) sold, assigned or transferred any tangible assets, except in
the ordinary course of business;
(ii) suffered any material losses or waived any material rights,
whether or not in the ordinary course of business;
(iii) suffered any termination or cancellation of any Buyer
Necessary Contract without the consent of Seller;
(iv) made any material changes in employee compensation (other than
severance pay and deferred compensation) except in the ordinary
course of business;
(v) entered into any other material transaction other than in the
ordinary course of business;
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(vi) suffered any material damage, destruction or casualty loss,
whether or not covered by insurance;
(vii) suffered any strikes, work stoppages or other material labor
disputes adversely affecting its business or assets; or
(viii) entered into any agreement or understanding to do any of the
foregoing.
5.12 Title to Assets: Personal Property.
Buyer and its subsidiaries are the sole owner (both legal and equitable) of
and have good and marketable title to the assets, tangible and intangible,
reflected in the Buyer's Financial Statements or acquired since the date of the
balance sheet included therein, free and clear of all mortgages, liens, security
interests, charges, claims, restrictions and other encumbrances of every kind,
except (i) as set forth in the Buyer's Financial Statements or the Schedules
herein, (ii) for liens for current taxes not yet due and payable, (iii) for
statutory liens not yet delinquent, and (iv) for matters that are not, in the
aggregate, material to Buyer and its subsidiaries, taken as a whole. All such
assets are in good working order and condition and are suitable for the purposes
for which they are employed in the operation of the business, ordinary wear and
tear excluded.
5.13 Compliance with Laws.
The operation of Buyer's business has been conducted and is being conducted
in compliance in all material respects with all applicable laws, rules,
regulations and other requirements of all federal, state, county or local
governmental authorities or agencies.
5.14 Transactions.
Since the date of Buyer's Financial Statements, neither Buyer nor any of
its subsidiaries has entered into any transaction not in the ordinary course of
its business, and there has not been any material adverse change in the manner
in which Buyer or any of its subsidiaries conducts its business or any change in
the assets, liabilities, property, business, operations, prospects, customers or
financial condition of Buyer or any of its subsidiaries, the effect of which was
or will be, in any single case or in the aggregate, materially adverse to Buyer
or any of its subsidiaries, assets, or business.
5.15 Financial Statements.
Schedule 5.15 hereto contains the audited consolidated balance sheet of
Buyer for the ten-month period ended April 30, 1997, and the audited
consolidated statements of income and cashflow for the ten-month period then
ended together with all notes thereto (the "Buyer's Financial Statements"). The
Buyer's Financial Statements (i) fairly present the financial condition
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of Buyer and its results of operations as of the relevant dates thereof and for
the periods covered thereby, and (ii) contain and reflect all necessary
adjustments and accruals for a fair presentation of Buyer's financial condition
as of the relevant dates thereof and the results of Buyer's operations for the
periods covered thereby.
5.16 Brokers' Fees.
Neither Buyer nor anyone on its behalf has retained any finder, broker,
agent or other intermediary or agreed to pay any brokerage fee, finder's fee or
commission with respect to the transactions contained in this Agreement.
5.17 Subsidiaries.
Other than as set forth on Schedule 5.17, Buyer does not hold any interests
in any partnerships, corporations or other entities. Buyer owns all of the
interests of each entity identified on Schedule 5.17 free and clear of any and
all encumbrances and there are no rights, options or agreements requiring the
issuance of any capital stock or interests in any of such entities.
5.18 Representations and Warranties.
No representation or warranty made herein by Buyer and no statement
contained in any certificate or other instrument furnished or to be furnished by
Buyer to Seller in connection with the transactions contemplated in this
Agreement contains or will contain any untrue statement of a material fact or,
to the best of Buyer's knowledge, omits or will omit to state any facts or
statements necessary in order to make the other facts or statements set forth
herein or therein not misleading under the circumstances in which made.
CONDUCT OF BUSINESS PRIOR TO CLOSING
6.1 Seller's Restrictions on Operations Prior to Closing Date.
(a) Negative Covenants. From the date of execution of this Agreement
until the Closing, Seller will not, and will cause the Subsidiaries not to,
without the prior written consent of Buyer, do or agree to do any of the
following:
(i) sell, assign, lease or otherwise transfer or dispose of any
of the Assets or any of the Assets of any Subsidiary,
except in the case of inventory in the ordinary course of
business consistent with past practices;
(ii) merge or consolidate with or into any other entity or enter
into any agreements relating hereto;
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(iii) enter into or renew, amend or modify any contracts or
leases, commitments or understandings, or other agreements
or incur any obligation or liability relating to the
Business; provided, however, that Seller and the
Subsidiaries may enter into such other contracts, leases,
commitments, understandings, or other agreements in the
ordinary course of business consistent with Seller's and
the Subsidiaries' past business practices but in no event
which would obligate Seller or any Subsidiary to pay more
than $1000 for any individual contract and $2000 in the
aggregate for all such Contracts or which would impose
significant non-monetary obligations; and provided further,
that Seller may incur obligations or liabilities for which
Seller will remain responsible after the Closing Date and
which Buyer will not assume;
(iv) with respect to the employees of the Business, enter into
or become subject to any employment, labor or union
contract not terminable at will, any professional service
contract not terminable at will, or any pension, insurance,
profit sharing, deferred compensation, retirement,
hospitalization, employee benefit, or other similar plan
not currently in effect or any renewal on different terms
(other than renewals with normal premium increases, in the
ordinary course of business); or increase the compensation
payable to any employee other than in the ordinary course
of business consistent with past practices, or increase the
benefits payable under any Employee Benefit Plan, or pay or
arrange to pay any bonus payment to any employee for which
Buyer will be obligated after the Closing.
(b) Affirmative Covenants of Seller. From the Effective Date until
the Closing Date, Seller has, and will continue to, and will cause each of the
Subsidiaries to continue to:
(i) preserve its existence and business organization intact,
use its best efforts to preserve, for Buyer, its
relationships with suppliers, customers, employees and
others having business relations with it, and keep all
Assets in their present condition, ordinary wear and tear
excepted;
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(ii) operate the Business in the normal and usual manner
consistent with its ordinary and usual course of business
and in compliance in all material respects with all
applicable laws, rules and regulations;
(iii) maintain in full force and effect all of the insurance
policies listed on Schedule 4.20, or substantially similar
policies, through the Closing Date in amounts not less than
those in effect on the date hereof;
(iv) notify Buyer of the necessity for renewal of any Necessary
Contract prior to its expiration and if requested by Buyer
renew such contract; and
(v) give Buyer prompt written notice of any material change in
any of the information in the representations and
warranties made in Section 4 hereof or the Schedules hereto
which occurs prior to the Closing.
6.2 Buyer's Restrictions on Operations Prior to Closing Date.
(a) Negative Covenants. Except as set forth on Schedule 6.2 hereto,
from the date of execution of this Agreement until the Closing, Buyer will not,
and will cause its subsidiaries not to, outside the ordinary course of business,
without the prior written consent of Seller, do or agree to do any of the
following:
(i) sell, assign, lease or otherwise transfer or dispose of any
material asset;
(ii) merge or consolidate with or into any other entity or enter
into any agreements relating hereto, except for the
contemplated transaction with the Public Company that is
currently anticipated;
(iii) issue any additional shares of stock, including issuing any
options, warrants, rights or other derivative securities;
(iv) amend its Articles of Incorporation or Bylaws except as may
be necessary to effect the contemplated transaction with
the Public Company, but only if the amended Articles and
Bylaws contain substantially the same provisions are those
currently set forth in such documents as of the date
hereof.
(b) Affirmative Covenants of Buyer. From the Effective Date until
the Closing Date, Buyer has, and will continue to, and will cause each of its
subsidiaries to:
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(i) operate its business in the normal and usual manner
consistent with its ordinary and usual course of business
and in compliance in all material respects with all
applicable laws, rules and regulations;
(ii) give Seller prompt written notice of any material change in
any of the information in the representations and
warranties made in Section 5 hereof or the Schedules hereto
which occurs prior to the Closing.
INVESTIGATION BY BUYER
7.1 Access to Records.
Following execution hereof and prior to the Closing Date, Seller shall give
Buyer and its representatives (including, without limitation, advisers,
accountants and attorneys designated by Buyer) full access during ordinary
business hours upon reasonable notice to its and its Subsidiaries' premises,
assets, properties, books of account, agreements and commitments pertaining to
the Business, provided that Buyer's investigation and use of the same shall not
unreasonably interfere with Seller's and its Subsidiaries' normal operations.
Seller shall furnish Buyer all information with respect to the Business as Buyer
may from time to time reasonably request. Seller shall cause its employees and
its Subsidiaries' employees to render to Buyer and its representatives
reasonable cooperation in connection with their investigation of Seller's and
its Subsidiaries' premises, assets, properties, records, books of account,
agreements, commitments and other information relating to the Business. If
Buyer discovers any condition which would make any condition, representation or
warranty of Seller untrue, Buyer shall notify Seller of such condition and allow
Seller a reasonable time to cure (provided that the Closing Date shall not be
extended thereby). Notwithstanding the previous sentence, any investigation
made at any time by or on behalf of any party hereto shall not diminish in any
respect Buyer's right to rely on the foregoing representations and warranties
and any others made by or on behalf of Seller pursuant to this Agreement.
7.2 Confidentiality of Information.
Buyer and Seller each agree to keep confidential and to cause their
respective employees, counsel, accountants and other representatives to keep
confidential, the documents and other information and data, whether written or
oral, that is identified as confidential, relating to Seller, Buyer or the
Business furnished such party and its representatives, subject in all respects
to any exercise by the party keeping such information confidential of any of its
rights or remedies
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hereunder. If the transaction contemplated herein is not consummated for any
reason whatsoever, then Buyer and Seller shall return to the other all such
confidential documents and other information and data obtained from Seller or
Buyer, as the case may be, and/or any of their respective employees, counsel,
accountants or representatives and each of Buyer and Seller shall destroy all
summaries, notations, analyses and other reports prepared by or for Buyer or
Seller which incorporate or are based upon any of such documents, information or
data. Nothing herein contained shall prevent Buyer or Seller from disclosing
such information or delivering any documents, information or data relating to
Seller, Buyer or the Business (i) in connection with any legal proceeding to
which it is a party (or otherwise pursuant to a subpoena) or pursuant to the
request or requirement of a government agency or to the extent required by law,
or (ii) to Buyer's or Seller's consultants, advisors, counsel, accountants,
lenders and potential lenders and its investors. The provisions of this Section
shall survive any termination of this Agreement for a period of three years.
FURTHER COVENANTS
8.1 Delivery of Documents to Buyer.
Seller covenants that it either has delivered or has made available to
Buyer for inspection, the following:
(i) copies of any and all insurance policies in force with regard to
the Business and Seller; and
(ii) copies of all contracts, agreements and other documents listed in
the Schedules attached hereto with the exception of the excluded
assets set forth in Section 1.2.
8.2 Transfer of Agreements.
Seller shall use its best efforts and all due diligence prior to the
Closing Date to obtain assignments to Buyer of all assignable Necessary
Contracts and all other contracts to be assumed by Buyer hereunder, including
the leases and all other agreements referred to in Schedule 4.6A (or the
issuance of substantially equivalent new agreements directly with Buyer). Buyer
agrees to reasonably cooperate and assist Seller in obtaining such assignments
or new agreements, subject to all the terms and conditions of this Agreement.
With regard to agreements other than non-assignable agreements, Buyer shall have
the right but not the obligation to communicate directly with the contracting
parties to each of said agreements and leases with respect to said
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assignments or new agreements and leases, but the foregoing right of Buyer and
the exercise thereof shall not diminish Seller's obligation under this
Section 8.2.
8.3 Further Assurances.
Each of the parties hereto shall, subject to all of the terms and
conditions of this Agreement and to the fulfillment at or before the Closing
Date of each of the conditions to its performance set forth herein or the waiver
thereof, perform such further acts and execute such documents as reasonably may
be required to effectuate the transactions contemplated herein. Each of the
parties hereto shall use all reasonable efforts to expeditiously fulfill or
obtain the fulfillment of the conditions precedent to Buyer's and Seller's
obligations hereunder, which conditions are set forth below, provided that
nothing herein shall be deemed to expand any parties' obligations hereunder.
8.4 Employee Benefit Matters.
(a) To the extent required under Section 601 et seq. of ERISA, Seller
shall assume full responsibility and liability for offering and providing
"continuation coverage" to any "qualified beneficiary" who is covered by a
"group health plan" sponsored, maintained or contributed to by Seller or any
Subsidiary and who has experienced a "qualified event" or is receiving such
"continuation coverage" on or prior to the Closing Date. The continuation
coverage shall be provided under a group health plan of Seller or an affiliate
of Seller. Continuation coverage, qualified beneficiary, qualifying event and
group health plan shall have the meanings given to such terms under Section
4980B of the Code and Section 601 et seq. of ERISA. Seller shall hold Buyer and
any party required to be combined with Buyer under Section 414 of the Code
("Affected Parties") harmless from and fully indemnify such Affected Parties
against any costs, expenses, losses, damages and liabilities incurred or
suffered by such Affected Parties directly or indirectly, including, but not
limited to, reasonable attorneys fees and expenses, which arise under a group
health plan sponsored, maintained or contributed to by Seller or any Subsidiary
as a result of any action or omission of Seller or any Subsidiary prior to the
Closing Date or because Buyer is deemed to be a successor employer to Seller;
provided, however, that such indemnity shall not apply to any liability that
arises by reason of any event, act, or omission occurring on or after the
Closing Date.
(b) Seller shall be responsible for satisfying in full all amounts
owed to any employee of Seller or any Subsidiary, including without limitation,
wages, salaries, accrued vacation pay, any employment, incentive, compensation
or bonus agreements or other benefits,
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or payments on account of termination through the Effective Time, and Seller
hereby agrees to indemnify and hold harmless Buyer from any liabilities through
such time.
(c) Prior to Closing, Seller and Buyer shall agree to the disposition
of the account balances of the employees of Seller or its Subsidiaries in any
profit sharing, pension or salary reduction plan of Seller or its Subsidiaries
maintained or contributed to by Seller or its Subsidiaries.
CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS
The obligations of Buyer to consummate the transactions contemplated herein
are subject to the fulfillment (or waiver in whole or in part by Buyer in
writing) on or before the Closing Date (or such sooner date as may be
specified), of each of the following conditions:
9.l Compliance with Agreement.
Seller shall have performed and complied in all material respects with all
of its covenants, agreements and obligations under this Agreement to be
performed or complied with by it at or prior to Closing and there shall be no
material uncured default of Seller under any term of this Agreement.
9.2 Correctness of Representations and Warranties.
The representations and warranties of Seller contained in this Agreement,
and in the certificates and papers delivered to Buyer, shall be true and correct
in all material respects on the date hereof and on the Closing Date as though
such representations and warranties were made on and as of the Closing Date,
except for those stated to be as of a certain date.
9.3 Delivery of Documents.
Seller shall have delivered to Buyer or made available to Buyer as
specified in Section 8.l hereof the documents referred to in Section 8.1.
9.4 No Adverse Change in Business or Properties.
Since December 31, 1996, neither the Business nor its properties, prospects
or conditions, financial or otherwise shall have been affected in the aggregate
adversely to a material extent or interfered with in any material way.
9.5 Certificate of Officer.
Seller shall deliver to Buyer a certificate dated the Closing Date,
certifying, in such form as Buyer may reasonably request, as to the fulfillment
of the conditions set forth in Sections 9.1, 9.2, 9.3 and 9.4 above.
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9.6 Opinion of Counsel.
Buyer shall have received from counsel to Seller an opinion of such counsel
addressed to Buyer dated as of the Closing Date in form and substance
satisfactory to Buyer.
9.7 Absence of Litigation.
No suit, action or other proceeding shall be pending, or to the knowledge
of Seller, threatened before any court or governmental agency to restrain or
prohibit, or to obtain damages or other relief in connection with this Agreement
or the consummation of the transactions contemplated herein.
9.8 Consents.
All consents or approvals of third parties which are required in connection
with the transfer of the assets to Buyer designated on Schedule 4.3 (the
"Required Consents") shall have been obtained in writing, in form and substance
reasonably acceptable to Buyer and such Required Consents shall (i) have become
final and effective; and (ii) not contain the imposition of any adverse changes
to the underlying documents for which consent was sought or impose any adverse
conditions thereon; Seller shall have delivered to Buyer copies of all such
consents and approvals so obtained.
9.9 Employment Agreements.
James Tuppen shall have entered into an employment agreement in the form of
Schedule 9.9(A) hereto.
9.10 Proceedings and Documents.
All partnership and other proceedings taken in connection with the
transactions contemplated herein and all documents incident thereto shall be in
form and substance reasonably satisfactory to Buyer and its counsel.
9.11 Receivables Report.
At least five days prior to the Closing, Seller shall provide Buyer with an
accounts receivable aging report.
9.12 Deliveries.
At Closing, Buyer shall have received the following:
(a) an executed Bill of Sale in the form customarily used in the
State of Texas;
(b) an executed general warranty deed to each parcel of Real Estate
in form customarily used in the State of Texas;
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(c) all other applicable assignments and other good and sufficient
instruments of conveyance transfer and assignment, in form and substance
satisfactory to Buyer;
(d) certified copies of appropriate resolutions of Seller
authorizing the consummation of the transactions contemplated in this Agreement
and a certificate of existence for Seller;
(e) and such other documents as are to be delivered by Seller
hereunder (which shall be in form and substance reasonably satisfactory to Buyer
consistent with the provisions hereof) or which may be reasonably requested by
Buyer to consummate the transactions contemplated herein.
9.13 Private Placement Representations.
Buyer shall have received executed Subscription Agreements in the form of
Schedule 9.13 hereto from each of the recipient of the Series A Stock and
Series B Stock or the Common Stock of the Public Company and has determined
therefrom that an exemption from registration is available under federal and
applicable state securities laws.
9.14 Lockup Agreements.
Buyer shall have received executed Lockup Agreements in form and substance
satisfactory to the parties thereto from each holder of Series B Stock,
providing for restrictions on the disposition or transfer of shares of Common
Stock of Buyer issuable upon the conversion thereof or on the disposition or
transfer of shares of Common Stock of the Public Company.
CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS
The obligations of Seller to consummate the transactions contemplated
herein are subject to fulfillment (or waiver in whole or in part by Seller in
writing) on or before the Closing Date (or such sooner date as may be specified)
of each of the following conditions:
10.1 Correctness of Representations and Warranties.
The representations and warranties of Buyer contained in this Agreement and
the certificates or papers delivered to Seller pursuant hereto shall be true and
correct in all material respects on the date hereof and on the Closing Date as
though such representations and warranties were made at and as of the Closing
Date except for those stated to be as of the date hereof.
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10.2 Compliance with Agreement.
Buyer shall have performed and complied in all material respects with all
of its covenants, agreements and obligations under this Agreement to be
performed or complied with by it at or prior to Closing and there shall be no
material uncured default of Buyer under any term of this Agreement.
10.3 No Adverse Change in Business or Properties.
Since April 30, 1997, neither Buyer nor its properties, prospects or
conditions, financial or otherwise, shall have been affected in the aggregate
adversely to a material extent or interfered with in any material way.
10.4 Certificate of Officer.
Buyer shall have delivered to Seller a certificate dated the Closing Date,
certifying, in such form as Seller may reasonably request, as to the fulfillment
of the conditions set forth in Sections 10.1, 10.2 and 10.3 above.
10.5 Opinions of Counsel.
Seller shall have received from Brown, Parker & Leahy, L.L.P., counsel to
Buyer, and from counsel to the Public Company, if applicable, opinions, dated as
of the Closing Date in form and substance satisfactory to Seller.
10.6 Absence of Litigation.
No suit, action or other proceeding shall be pending, or to the knowledge
of Buyer threatened, before any court or governmental agency to restrain or
prohibit, or to obtain damages or other relief in connection with this Agreement
or the consummation of the transactions contemplated herein.
10.7 Proceedings and Documents.
All corporate and other proceedings taken in connection with the
transactions contemplated herein and all documents incident thereto shall be
satisfactory in form and substance to Seller and its counsel.
10.8 Deliveries.
At Closing, Seller shall have received the following:
(a) evidence of the payment of the amounts set forth in Section
2.1(a)(i), (iii) and (iv);
(b) an executed promissory note in the form set forth in Schedule
2.1(a)(ii);
(c) an executed promissory note in the form set forth in Schedule
2.1(a)(vi);
(d) an executed security agreement granting a first security
interest in the Assets;
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(e) evidence of either payment or assumption of the Debt;
(f) a Share certificate, if applicable, representing the appropriate
value (as determined pursuant to Section 2.1 hereof) of shares of Series A
Stock;
(g) a Share certificate, if applicable, representing the appropriate
value (as determined pursuant to Section 2.1 hereof) of shares of Series B
Stock;
(h) an executed Assumption Agreement in the form of Schedule 2.2(A);
(i) certified copies of appropriate resolutions of Buyer authorizing
the consummation of the transactions contemplated in this Agreement and a
certificate of good standing from the Secretary of State of Texas for Buyer;
(j) certified copies of appropriate resolutions of Public Company
authorizing the issuance of the stock and the transactions contemplated in this
Agreement and a certificate of good standing from the Secretary of State of
Delaware for Public Company; and
(k) such other documents as are to be delivered by Buyer and Public
Company hereunder (which shall be in form and substance reasonably satisfactory
to Seller consistent with the provisions hereof) or which may be reasonably
requested by Seller to consummate the transactions contemplated herein.
10.9 Buyer's Financial Statements. Buyer shall have delivered its
Financial Statements to Seller on or before one week prior to the Closing and
Seller shall have approved in writing the contents of such Financial Statements;
provided, that should Seller fail to so approve such Financial Statements,
neither party shall be required to close the transactions contemplated herein.
SUBSEQUENT DELIVERY OF SCHEDULES
11. Subsequent Schedules.
The parties hereto agree that the parties' respective disclosure schedules
pursuant to Sections 4 and 5 hereof which have not been delivered as of the date
of the execution hereof shall be delivered not later than one week prior to the
Closing Date. In the event all of such schedules are not delivered by such
date, the party entitled to receive such schedules shall have the right and
option to terminate this Agreement, which shall become null and void and of no
further force or effect (other than as to the confidentiality provisions
hereof). In the event one party delivers after the date hereof disclosure
schedules that disclose adverse claims, expenses or liabilities relating to the
assets and business of such party that are materially different in the aggregate
from the anticipated amount of such adverse claims, expenses or liabilities, the
other
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party shall have the right and option to terminate this Agreement which shall
become null and void and of no further force or effect (other than as to the
confidentiality provisions hereof).
EXPENSES OF NEGOTIATION AND TRANSFER
12. Expenses.
Except as provided herein, each party shall pay its own expenses, taxes and
other costs incident to or resulting from this Agreement whether or not the
transactions contemplated herein are consummated. Costs of Seller include, but
are not limited to, sales and use taxes resulting from the consummation of the
transactions contemplated herein. If any such sales or use taxes are due,
Seller shall provide Buyer with evidence at Closing of payment of such taxes.
Buyer and Seller shall each pay one half of all documentary taxes and real
property transfer taxes and fees for the filing or recording of instruments of
transfer. Buyer shall pay any stock transfer or issuance taxes on the issuance
of the shares of Series A Stock, Series B Stock or Common Stock delivered
hereunder.
RIGHTS TO TERMINATE BREACH
13. Termination.
(a) This Agreement may be terminated prior to the Closing:
(i) at any time by mutual written agreement of Seller and
Buyer;
(ii) by Seller if all the conditions set forth in Section 10
hereof have not been satisfied or waived by the Closing
Date; and
(iii) by Buyer if all the conditions set forth in Section 9
hereof have not been satisfied or waived by the Closing
Date.
(b) In the event of termination of this Agreement by either party
pursuant to Section 13(a), prompt written notice thereof shall be given to the
other party and this Agreement shall terminate without further action by any of
the parties hereto. If this Agreement is terminated as provided herein:
(i) none of the parties hereto nor any of their partners
(including any general partner), shall have any liability
or further obligation to the other party or any of its
partners pursuant to this Agreement, except as stated in
Sections 7.2 and 13(c);and
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(ii) all filings, applications and other submissions relating to
the transfer of the Assets shall, to the extent
practicable, be withdrawn from the agency or other person
to which made.
(c) Notwithstanding anything to the contrary contained in this
Agreement, if Seller or Buyer is in breach under this Agreement prior to
Closing, then and in that event, as appropriate, in addition to the right to
terminate, the following provisions shall apply: if Seller or Buyer is in
material breach of its obligations under this Agreement (including a breach of
its representations and warranties in any material respect), and such breach is
fraudulent or intentional, the non-breaching party may terminate this Agreement
and shall also have the right to seek all legal and equitable remedies available
to it as provided hereunder, at law or equity.
INDEMNIFICATION
14.1 Indemnification by Seller and its General Partners.
From and after the Closing, Seller and its General Partners, jointly and
severally, shall indemnify Buyer against and hold it harmless from any and all
damages, losses or liabilities in respect of suits, proceedings, demands,
judgments, damages, expenses and costs (including, without limitation,
reasonable counsel fees and costs and expenses incurred in the investigation,
defense or settlement of any claims covered by this indemnity) (collectively,
the "Indemnifiable Damages") which Buyer may suffer or incur by reason of (i)
the inaccuracy of any of the representations and warranties of Seller contained
in this Agreement, or any document, certificate or agreement delivered pursuant
hereto; (ii) any liability for claims made by third parties against Buyer, the
Assets or the Business, arising out of the ownership and operation of the
Business on or prior to the Closing Date, including, specifically, without
limitation, those items of litigation set forth on Schedule 4.15 hereto; (iii)
any liabilities for claims made by third parties against Buyer, the Assets, or
the Business not assumed by Buyer pursuant to this Agreement; or (iv) the
nonperformance by Seller of any of its covenants or agreements contained in this
Agreement or any document, certificate or agreement delivered pursuant hereto.
Without limiting the generality of the foregoing, with respect to the
measurement of Indemnifiable Damages, Buyer shall have the right to be put in
the same financial position as it would have been in had each of the
representations and warranties of Seller been true and correct or had Seller not
breached any such covenants, representations, warranties or agreements.
Notwithstanding anything contained in this Section 14.1 to the contrary, (1) if
there is a claim for damages, Buyer will use commercially
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reasonable efforts to mitigate the amount and nature of damages, and (2) Buyer
shall not knowingly take affirmative actions to initiate any claims made by
third parties for which indemnification is sought. Each of the representations
and warranties made by Seller in this Agreement or in any document, certificate
or agreement delivered pursuant hereto and all of Seller's other covenants and
agreements contained herein or in any document, certificate or instrument
delivered pursuant hereto shall survive for a period of two (2) years after the
Closing Date, and thereafter all such representations and warranties shall be
extinguished, and no action for the enforcement of the representations and
warranties may be commenced with respect to any claim made more than two (2)
years following the Closing Date.
14.2 Indemnification by Buyer.
From and after the Closing, Buyer shall indemnify Seller against and hold
it harmless from any and all damages, losses or liabilities in respect of suits,
proceedings, demands, judgments, damages, expenses and costs (including, without
limitation, reasonable counsel fees and costs and expenses incurred in the
investigation, defense or settlement of any claims covered by this indemnity)
(collectively, the "Indemnifiable Damages") which Seller may suffer or incur by
reason of (i) the inaccuracy of any of the representations and warranties of
Buyer contained in this Agreement, or any document, certificate or agreement
delivered pursuant hereto, (ii) any liability for claims made by third parties
against Seller arising out of the operation of the Business by Buyer after the
Closing Date, (iii) by reason of Buyer's failure to satisfy the liabilities
specifically assumed by it pursuant to this Agreement, or (iv) the
nonperformance by Buyer of any of its covenants or agreements contained in this
Agreement or any document, certificate or agreement delivered pursuant hereto.
Without limiting the generality of the foregoing, with respect to the
measurement of Indemnifiable Damages, Seller shall have the right to be put in
the same financial position as it would have been in had each of the
representations and warranties of Buyer been true and correct or had Buyer not
breached any such covenants, representations, warranties or agreements. Each of
the representations and warranties made by Buyer in this Agreement or pursuant
hereto shall survive for a period of two (2) years after the Closing Date, and
thereafter all such representations and warranties shall be extinguished, and no
action for the enforcement of the foregoing obligation may be commenced with
respect to any claim made more than two (2) years following the Closing Date.
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14.3 Notice and Right to Defend Third Party Claims.
Promptly, upon receipt of notice of any claim, demand or assessment or the
commencement of any suit, action or proceedings by any party not a party to this
Agreement in respect of which indemnity may be sought on account of an indemnity
agreement contained in this Section, the party seeking indemnification (the
"Indemnitee") will notify, within sufficient time to respond to such claim or
answer or otherwise plead in such action, the party from whom indemnification is
sought (the "Indemnitor"), in writing, thereof. The omission of such Indemnitee
to notify promptly the Indemnitor of any such claim or action shall not relieve
such Indemnitor from any liability which it may have to such Indemnitee in
connection therewith on account of the indemnity agreements contained in this
Section unless the Indemnitor is prejudiced thereby, and then only to the extent
of the prejudice caused by such delay. In case any claim, demand or assessment
shall be asserted or suit, action or proceeding commenced against an Indemnitee,
and it shall notify the Indemnitor of the commencement thereof, the Indemnitor
will be entitled to participate therein, and, to the extent that it may wish, to
assume the defense, conduct or settlement thereof, with counsel reasonably
satisfactory to the Indemnitee; provided that no settlement may be made by an
Indemnitor on behalf of an Indemnitee without the Indemnitee's express written
consent if such settlement would impose continuing obligations or any liability
upon the Indemnitee. After notice from the Indemnitor to the Indemnitee of its
election so to assume the defense, conduct or settlement thereof, the Indemnitor
will not be liable to the Indemnitee for any legal or other expenses
subsequently incurred by the Indemnitee in connection with the defense, conduct
or settlement thereof. The Indemnitee will cooperate with the Indemnitor in
connection with any such claim, make personnel, books and records relevant to
the claim available to the Indemnitor, and grant such authorizations or powers
of attorney to the agents, representatives and counsel of the Indemnitor as such
Indemnitor may reasonably consider desirable in connection with the defense of
any such claim. In the event that the Indemnitor does not wish to assume the
defense, conduct or settlement of any claim, demand, or assessment, the
Indemnitee will not settle such claim, demand, or assessment without the consent
of the Indemnitor, which shall not be unreasonably withheld. It is understood
and agreed that to the extent a claim for indemnification is made by Buyer or
Seller within the survival periods stated herein, the responsibility for
indemnification with respect to such claim shall then survive until such claim
is resolved. Each of Buyer and Seller expressly understands and agrees that
notwithstanding any disclosure herein or in the Schedules hereto or in any
document,
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certificate, or instrument delivered pursuant hereto of actual or potential
defaults, claims, litigation and the like that may be asserted against the
Business, Assets, Seller or Buyer, that Buyer and Seller shall be entitled to
indemnification against such matters under Section 14.1 or 14.2, as applicable.
REGISTRATION RIGHTS
15.1 Certain Definitions. As used in this Section 15, the following terms
shall have the following meanings:
(a) "Buyer" shall mean Buyer or the Public Company, as applicable.
(b) "Common Stock" shall mean the common stock of Buyer issued upon
conversion of the Series A Stock or Series B Stock issued hereunder (if any) or
the common stock of the Public Company issued hereunder (if any).
(c) "Holders" shall mean (i) persons or entities and their affiliates
receiving Common Stock issued pursuant to the terms hereof, (ii) persons or
entities and their affiliates receiving Common Stock upon a liquidating
distribution of the Common Stock by Seller to its partners, and (iii) persons or
entities and their affiliates that purchase substantially all the assets of the
persons or entities receiving Common Stock pursuant to either (i) or (ii) above.
(d) "Registration Statement" shall mean a registration statement filed
by Buyer to effect a public offering for the sale of Common Stock on behalf of
Buyer (other than a registration statement on Form S-8, or its successor, or any
registration statement covering Common Stock proposed to be issued in exchange
for securities or assets of another corporation in a transaction subject to Rule
145 under the Securities Act).
(e) "Registration Expenses" shall mean the expenses described in
Subsection 15.5.
(f) "Registrable Shares" shall mean (i) all shares of Common Stock and
(ii) all other shares of Common Stock or other securities issued in respect of
such shares (as a result of stock splits, stock dividends, reclassifications,
recapitalizations or similar events); provided, however, that each share of
Common Stock or other securities shall cease to be Registrable Shares when (x)
it has effectively been registered under the Securities Act and disposed of in
accordance with the Registration Statement covering it, (y) it has been
distributed to the public pursuant to Rule 144 under the Securities Act, or any
similar provision then in effect, or (z) it
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has otherwise been transferred to a party other than a Holder, as defined in
Section 15.1(c) hereof.
15.2 Demand Registration. On one occasion upon request in writing by the
Holders of an aggregate of not less than fifty-one percent (51%) of the
aggregate number of shares of Common Stock issued hereunder, Buyer agrees, at
any time (i) after July 31, 1999 and (ii) prior to the earlier of (x) the time a
Holder becomes eligible to sell all such stock without any restrictions under
Rule 144 or (y) the fifth anniversary of the Effective Time, to (a) give prompt
notice of the proposed registration to all other Holders, and (b) use its
reasonably best efforts to effect all such registrations, qualifications, and
compliances (including, without limitation, the filing of post-effective
amendments, appropriate qualifications under the applicable Blue Sky or other
state securities laws and appropriate compliance with exemptive regulations
issued under the Securities Act and any other governmental requirements or
regulations) as may be so requested and as would permit or facilitate the sale
and distribution of all or such portion of such Holders' Registrable Shares as
are specified in such request, together with all or such portion of the
Registrable Shares of any Holder or Holders joining in such request as are
specified in a written request given within 20 days after receipt of such
written notice from Buyer. Buyer shall use its reasonable best efforts to cause
a Registration Statement on Form S-3 or such other form as Buyer shall
determine, in its discretion, to be available for such registration ("Demand
Registration"), to be filed as soon as practicable, but in any event within 45
days after receipt of the initial request of the Holders demanding registration.
If the Holders requesting registration under this Section 15.2 intend to
distribute the Registrable Shares covered in their request by means of an
underwriting, such Holders shall so advise Buyer as part of their request made
pursuant to this Section 15.2 and Buyer shall include such information in the
written notice to the other Holders. The selection of the underwriter shall be
within the reasonable discretion of Buyer; provided, however, that the
underwriter shall be approved by the Holders participating in the offering,
whose approval will not be unreasonably withheld. In the event of an
underwritten offering, Buyer and the Holders participating therein will enter
into an underwriting agreement with respect to such offering, such agreement to
be reasonably satisfactory in substance and form to the Holders of the
Registrable Shares to be included in such Demand Registration, Buyer, and the
managing underwriter or underwriters, and contain such representations and
warranties by Buyer and the Holders participating therein and such other terms
and provisions as are customarily contained in underwriting agreements with
respect to
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secondary distributions, including, without limitation, indemnities to the
effect and to the extent provided in Section 15.6 hereof.
Notwithstanding the foregoing, Buyer may defer for a period of up to 60 days its
obligation to prepare and file any registration statement pursuant to this
Agreement at any time when Buyer, in its good faith judgment with the advice of
counsel, reasonably believes that the filing thereof at the time requested, or
the offering of shares pursuant thereto, would materially adversely affect a
pending or scheduled public offering of the Company's securities or an
acquisition, merger, recapitalization, consolidation, reorganization or similar
transaction or negotiations thereto.
15.3 "Piggyback" Registration.
(a) Whenever, at any time (i) after the Effective Time and (ii)
prior to the earlier of (x) the time a Holder becomes eligible to sell all such
stock without any restrictions under Rule 144 or (y) the seventh anniversary of
the Effective Time, Buyer files a Registration Statement it will, at least 20
days prior to such filing, give written notice to each Holder of its intention
to do so, describing such securities and specifying the form and manner and the
other relevant facts involved in such proposed registration and, upon the
written request of a Holder given within 15 days after receipt of such notice
(which request shall state the intended method of disposition of the Common
Stock), Buyer shall (subject to this Section) use its reasonable best efforts to
cause all Registrable Shares which Buyer has been requested by a Holder to
register to be registered under the Securities Act to the extent necessary to
permit the sale or other disposition thereof in accordance with the intended
methods of distribution specified in the request of the Holder ("Piggyback
Registration"); provided, however, that Buyer shall have the right to postpone
or withdraw any registration effected pursuant to this Section without
obligation to any Holder.
(b) If the proposed registration of Registrable Shares which Buyer
has been requested by the Holder to include in a Piggyback Registration is to be
distributed by or through an underwriter or underwriters, who shall be chosen in
the sole discretion of Buyer, the Holder must agree (i) to sell such Registrable
Shares on the same basis as provided in the underwriting arrangement approved by
Buyer and (ii) to complete and execute, in a timely manner, all reasonable and
customary questionnaires, powers of attorney, indemnities, hold-back or lockup
agreements, underwriting agreements and other documents required by Buyer, under
the terms of such arrangement or by the SEC.
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(c) If, in the opinion of the managing underwriter for any such
underwritten offering, the registration of all, or part of, the Registrable
Shares which any Holder has requested be included in such public offering would
have an adverse effect on the success of the offering by Buyer, then Buyer shall
be required to include in the underwriting only that number of Registrable
Shares, if any, which the managing underwriter reasonably believes may be sold
without causing such adverse effect. If the number of shares to be included in
the underwriting in accordance with the foregoing is less than the number of
shares which the Holder and all other persons entitled to participate in the
registration have requested be included (whether pursuant to the exercise of
registration rights or otherwise) Buyer and any stockholder exercising demand
registration rights shall be entitled to include all shares which it had
intended to register, after which the Holder shall participate in the
underwriting pro rata with the holders of all other shares entitled to
participate in the underwriting pursuant to registration rights or otherwise,
based upon their respective total ownership of shares of Common Stock, and if
any holder or the Holder would thus be entitled to include more shares than such
holder or the Holder requested to be registered, the excess shall be allocated
among other requesting holders and the Holder pro rata based upon their
respective total ownership of shares of Common Stock. If requested by any
underwriter or underwriters, the Holder shall agree to sell its Registrable
Shares which are subject to the Piggyback Registration to or through such
underwriter or underwriters at the same price to be paid to Buyer and any other
selling stockholders;
15.4 Registration Procedures. Whenever any Registrable Shares are to be
registered pursuant to this Agreement, Buyer will use its reasonable best
efforts to effect the registration as quickly as practicable and will involve
Holder's counsel in the preparation of the Registration Statement (provided that
the fees of Holder's counsel shall be borne by the Holder), and in connection
with such registration Buyer will as expeditiously as practicable:
(a) prepare and file with the SEC such amendments and post-effective
amendments to the Registration Statement, in the case of a Demand Registration,
as may be necessary to keep the Registration Statement effective for a period
equal to the lesser of (x) 90 days, (y) the number of days remaining until the
participating Holders shall be eligible to sell all such Registrable Shares
without any restrictions under Rule 144, or (z) when all Registrable Shares
covered by such Registration Statement have been sold or withdrawn at the
request of participating Holders; cause the prospectus to be supplemented by any
required prospectus supplement, and as so supplemented to be filed pursuant to
Rule 424 under the Securities Act;
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and comply with the provisions of the Securities Act applicable to it with
respect to the disposition of all securities covered by such Registration
Statement during the applicable period in accordance with the intended methods
of disposition set forth in such Registration Statement or supplement to the
prospectus;
(b) furnish to participating Holder such number of copies of the
Registration Statement and amendments thereto and such number of copies of the
prospectus (including each preliminary prospectus) and any amendments or
supplements thereto, and any documents incorporated by reference therein, as
participating Holder or the underwriters, if any, may request in order to
facilitate the disposition of the Registrable Shares being sold by participating
Holder;
(c) notify a participating Holder and such Holder's counsel at any
time when Buyer becomes aware of the occurrence of any event as a result of
which the prospectus included in such Registration Statement (as then in effect)
contains any untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
(in the case of the prospectus or any preliminary prospectus, in light of the
circumstances of which they were made) not misleading and, as promptly as
practicable thereafter, if required by applicable law, prepare and file with the
SEC and furnish a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable Shares, such
prospectus will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading;
(d) on or prior to the date on which the Registration Statement is
declared effective, use its reasonable best efforts to register or qualify, in
connection with the registration or qualification of the Registrable Shares
covered by the Registration Statement, for offer and sale under the securities
or Blue Sky laws of each state and other jurisdiction of the United States as
the participating Holder or the underwriter, if any, may reasonably request in
writing, and to do any and all other acts or things necessary or advisable to
enable the disposition in all such jurisdictions of the Registrable Shares
covered by the applicable Registration Statement; provided, that Buyer will not
be required to qualify generally to do business in any jurisdiction where it is
not then so qualified or to take any action which would subject it to general
service of process in any such jurisdiction where it is not then so subject;
(e) each participating Holder agrees that, upon receipt of any
notice from Buyer of the occurrence of any event of the kind described in
Section 15.4(c) hereof, it will
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forthwith discontinue disposition of Registrable Shares until it has received
copies of the supplemented or amended prospectus contemplated herein;
(f) it shall be a condition precedent to the obligation of the Buyer
to file a Registration Statement, which includes or will include Registrable
Shares, that the participating Holder shall furnish promptly to Buyer
instruments in writing duly executed containing all such information as Buyer
shall reasonably request for use in connection with the preparation of the
Registration Statement or the prospectus or preliminary prospectus included
therein, as well as all undertakings which the SEC may request or Buyer or any
underwriter may reasonably request under the Exchange Act.
15.5 Allocation of Expenses. With regard to the registration of
Registrable Shares pursuant to the terms of this Agreement, except as otherwise
provided for below, Buyer shall bear all usual and customary costs and expenses
incidental to the preparation of the Registration Statement, including all
registration, filing and qualification fees and expenses of counsel to Buyer,
all fees and expenses of Buyer's independent auditors, all fees and expenses of
underwriters and all printing costs and all fees and expenses incidental to
complying with the state securities or Blue Sky laws with regard to the
Registrable Shares, provided, however, that the Holder shall bear all fees and
expenses of any underwriters that are customarily paid by selling stockholders,
such as underwriter discounts and commissions attributable to the Registrable
Shares offered by the Holder, and all fees and expenses of any counsel or
experts retained by the Holder plus all out-of-pocket expenses of Holder or any
agent who manages Holder's account, in connection with the requested
registration.
15.6 Indemnification.
(a) Indemnification by Buyer. For the purposes of this Section 15,
Buyer will indemnify and hold harmless the Holder (the "Indemnified Person")
against any and all losses, claims, damages, costs, penalties, expenses
(including reasonable attorney's fees and expenses and costs of investigation or
litigation) or liabilities, joint or several, to which the Indemnified Person
may become subject under the Securities Act, the Exchange Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of, are based upon or are caused by:
(i) any untrue statement or alleged untrue statement of any
material fact contained in a Registration Statement, any
preliminary prospectus or final prospectus contained in the
Registration Statement, or any amendment or supplement to
such Registration Statement,
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or arise out of or are based upon the omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances under which they were made;
provided, however, that Buyer will not be liable in any such case to: (a) the
Indemnified Person to the extent that any such loss, claim, damage or liability
arises out of or is based upon any untrue statement or omission made in such
Registration Statement, preliminary prospectus or prospectus, or any such
amendment or supplement, in reliance upon and in conformity with information
furnished in writing to Buyer by or on behalf of the Indemnified Person for
inclusion in the Registration Statement, prospectus, amendment or supplement or
(b) the Indemnified Person from whom the person asserting any such loss, claim,
damage or liability purchased the Registrable Shares if the Indemnified Person
failed, if required by the Securities Act, to send or give a copy of the final
prospectus to the person asserting such loss, claim, damage or liability; or
(ii) any violation or alleged violation by Buyer of the
Securities Act.
Such indemnification shall remain in full force and effect regardless of
any investigation made by any party and shall survive the transfer of the Common
Stock by the Indemnified Person.
(b) Indemnification by the Holder. For the purposes of this
Section 15, the Holder will, to the extent permitted by law, indemnify and hold
harmless Buyer, each of its directors and officers, each underwriter, each
officer and director of each underwriter, and each person, if any, who controls
Buyer (within the meaning of Section 15 of the Securities Act) against any and
all losses, claims, damages or liabilities, joint or several, to which Buyer,
such directors and officers, underwriter, officers or directors of underwriter,
or controlling person may become subject under the Securities Act, Exchange Act
or otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of, are based upon or are caused by any untrue
statement or alleged untrue statement of a material fact contained in a
Registration Statement, any preliminary prospectus or final prospectus contained
in the Registration Statement, or any amendment or supplement to the
Registration Statement, or any omission or alleged omission to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances under which they were under, if the
statement or omission was made in reliance upon and in conformity with
information furnished in writing to Buyer by or on behalf of, the Holder for use
in connection with the preparation of such Registration Statement, prospectus,
amendment or supplement.
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NONCOMPETITION
16.1 Noncompetition Agreement. Seller and all of the General Partners of
Seller agree that neither it nor they nor any affiliate will at any time within
the three (3) year period following the date of this Agreement directly or
indirectly engage in, or have any interest in, any firm, corporation or business
(whether as an agent, partner, security holder, creditor, consulting firm or
otherwise) that engages in, any Prohibited Activity (as defined below). The
geographical scope of this noncompetition agreement shall be worldwide, in
recognition of the worldwide market heretofore served by the Seller (the
"Restricted Territories"). For purposes of this Section 16.1, "Prohibited
Activity" shall mean (a) any activity that is the same as, similar to, or
competitive with any activity engaged in by Seller in the one year (1) period
immediately preceding the date of this Agreement so long as Buyer (or Buyer's
successor or assignee) shall engage in such activity within the Restricted
Territories, and (b) consulting with, being employed by or acting as an agent
for any prior or existing client of Seller with respect to those activities
specified in (a) above.
The parties intend that the covenant contained in the preceding paragraph
shall be construed as a series of separate covenants, one for each state and
country covered thereby. Except for geographic coverage, each such separate
covenant shall be deemed identical in terms to the covenant contained in the
preceding paragraph. If, in any judicial proceeding, a court shall refuse to
enforce any of the separate covenants deemed included in this Section 16.1, then
the unenforceable covenant shall be reformed and enforced to the maximum extent
permissible or, should such court refuse to so reform such covenant, it shall be
deemed eliminated from these provisions for the purpose of those proceedings to
the extent necessary to permit the remaining separate covenants to be enforced.
MISCELLANEOUS
17.1 Survival.
The representations, warranties, covenants and agreements of the parties
set forth herein and in the documents or instruments delivered pursuant hereto
shall survive the Closing as set forth in Section 14 hereof.
17.2 Change of Seller's Name. Seller shall cooperate with Buyer in
changing its name in the jurisdiction of its formation and in each jurisdiction
in which it is registered to do business.
17.3 Assignment.
48
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Except as provided for in Section 15.1 et seq., neither this Agreement, nor
any right hereunder, may be assigned by any of the parties hereto, provided that
Buyer shall have the right to assign its rights and obligations under this
Agreement to affiliates of Buyer provided that Buyer shall remain liable under
this Agreement. The term "affiliate" as used in this Agreement shall have the
meaning prescribed by Rule 12(b)-2 of the regulations promulgated pursuant to
the Securities Exchange Act of 1934, as amended.
17.4 Successors.
This Agreement shall be binding upon and inure to the benefit of Buyer and
its heirs, successors or assigns, and Seller and its heirs, successors or
assigns.
17.5 Entire Agreement.
This Agreement, including the exhibits and schedules attached hereto which
are incorporated herein by reference and other agreements referred to herein or
delivered pursuant hereto constitute the entire agreement of the parties.
17.6 Power of Attorney.
Seller agrees that, effective as at the Closing Date, it hereby constitutes
and appoints Buyer, its successors and assigns, the true and lawful attorney of
Seller in the name of Buyer or in the name of Seller, to endorse, collect and
deposit any checks, drafts or other instruments payable to Seller which relate
to payments for goods and/or services provided by Seller or Buyer in connection
with the Business sold to Buyer hereunder.
17.7 Amendments in Writing.
The terms of this Agreement may not be amended, modified or waived except
by written agreement between the parties. No waiver shall be deemed a waiver of
any other provision or any subsequent breach or default of the same or similar
nature.
17.8 Interpretation.
This Agreement shall be construed in accordance with and governed by the
laws of the State of Texas.
17.9 Arbitration.
Any dispute hereunder shall be submitted to binding arbitration to be
conducted in Houston, Texas, before a single arbitrator appointed by the
American Arbitration Association in accordance with the commercial rules of the
American Arbitration Association then in effect. The award of such arbitrator
shall be final and may be entered by any party hereto in any court of competent
jurisdiction. All costs and expenses of such arbitration shall be paid solely
by the
49
<PAGE>
party against whom the arbitrator's award is directed or as directed by the
arbitrator if an award not entirely in favor of either party is made.
17.10 Notices.
All notices hereunder shall be in writing and shall be deemed given when
delivered personally or by facsimile transmission, or when received when mailed
by reputable overnight courier or by certified mail, return receipt requested,
to such party at its address set forth below or such other address as either
party may designate to the other in writing:
If to Seller: Boots & Coots, L.P.
c/o Roemer International, Inc.
1200 17th Street, Suite 2610
Denver, Colorado 80202
Attention: Steven Swanson
Facsimile: (303) 446-2643
with a copy to: Stuart Rifkin
Baker & Hostetler LLP
303 East 17th Avenue, Suite 1100
Denver, Colorado 80203
Facsimile: (303) 861-2307
If to Buyer: IWC Services, Inc.
5151 San Felipe, Suite 450
Houston, Texas 77056
Attention: Charles Phillips, Esq.
Facsimile: (713) 621-7988
with a copy to: Dallas Parker
Brown, Parker & Leahy, L.L.P.
1200 Smith Street, Suite 3600
Houston, Texas 77002
Facsimile: (713) 654-1871
17.11 Severability.
Any provision hereof which is prohibited or unenforceable shall be
ineffective only to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof.
17.12 Headings.
The headings appearing in this Agreement have been inserted solely for the
convenience of the parties and shall be of no force and effect in the
construction of provisions of this Agreement.
50
<PAGE>
17.13 Counterparts.
This Agreement may be executed in one or more counterparts and each
executed copy shall constitute an original, but all of which together shall
constitute one instrument.
17.14 Telecopy Execution and Delivery. A facsimile, telecopy or other
reproduction of this Agreement may be executed by one or more parties hereto,
and an executed copy of this Agreement may be delivered by one or more parties
hereto by facsimile or similar instantaneous electronic transmission device
pursuant to which the signature of or on behalf of such party can be seen, and
such execution and delivery shall be considered valid, binding and effective for
all purposes.
17.15 Bulk Sales Law.
Seller agrees to take or cause to be taken all steps necessary to comply
with the provisions of any applicable bulk sales, fraudulent conveyance or other
laws for protection of creditors and Seller further agrees to indemnify and hold
Buyer harmless from and reimburse Buyer for any and all liabilities, claims or
obligations which Buyer may suffer or incur by virtue of non-compliance with any
such applicable laws.
17.16 Effectiveness.
This Agreement shall be binding and enforceable upon the execution and
delivery hereof by Buyer and Seller; provided that either party shall be
permitted to terminate this Agreement pursuant to Section 13 should a majority
of the executive committee of Seller fail to approve this Agreement on or before
5:00 p.m., Houston Time, July 22, 1997.
51
<PAGE>
IN WITNESS WHEREOF, the parties hereunto have duly executed this Agreement
on the date first above written.
BUYER:
IWC SERVICES, INC.
/s/ LARRY RAMMING
By: ________________________________
Larry Ramming
Print:______________________________
CEO
Title: _____________________________
SELLER:
BOOTS & COOTS, L.P.
By: Roemer International, Inc.,
Managing General Partner
/s/ STEVEN SWANSON
By:____________________________
Steven Swanson,
Vice President
GENERAL PARTNERS OF SELLER:
ROEMER INTERNATIONAL, INC.
/s/ STEVEN SWANSON
____________________________________
Steven Swanson, Vice President
BLOWOUT SPECIALISTS, INC.
____________________________________
Annie Kelly, President
OIL WELL FIREFIGHTERS, INC.
By:_________________________________
James Tuppen, President
52
<PAGE>
EXHIBIT 3.2
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF
HAVENWOOD VENTURES, INC.
ARTICLE ONE
HAVENWOOD VENTURES, INC. (the "Corporation"), incorporated on
April 28, 1988, pursuant to the provisions of (S)245 and (S)242 of the General
Corporation Law of the State of Delaware, as amended ("GCLD"), hereby adopts
this Amended and Restated Certificate of Incorporation which (i) accurately
copies the Certificate of Incorporation and all amendments thereto that are in
effect to date, (ii) further amends the Certificate of Incorporation, and (iii)
except for such further amendments to the Certificate of Incorporation, contains
no other change in any provision thereof.
ARTICLE TWO
Each amendment to the Certificate of Incorporation made by this Amended and
Restated Certificate of Incorporation has been effected in conformity with the
provisions of the GCLD. This Amended and Restated Certificate of Incorporation
and each such amendment made hereby were duly approved by the Corporation's
Board of Directors and adopted by the written consent of the Corporation's
stockholders on July 24, 1997.
ARTICLE THREE
The number of shares of the Corporation outstanding at the time of such
adoption and the number of shares entitled to vote thereon was TWO HUNDRED
FIFTY-EIGHT MILLION, THREE HUNDRED SIXTY-FIVE THOUSAND (258,365,000) shares of
common stock, par value $.00001 per share (the "Common Stock"). The holders of
ONE HUNDRED SIXTY-EIGHT MILLION, ONE HUNDRED AND ONE THOUSAND, FOUR HUNDRED
SIXTY-FIVE (168,101,465 shares) of Common Stock consented in writing to the
adoption and approval of this Amended and Restated Certificate of Incorporation.
ARTICLE FOUR
The Certificate of Incorporation and all amendments and supplements thereto
are hereby superseded by the following Amended and Restated Certificate of
Incorporation which accurately copies the entire text thereof, as amended as
above set forth:
ARTICLE I
NAME
The name of the Corporation shall be IWC Holdings, Inc.
ARTICLE II
PURPOSES
The purposes for which the Corporation is organized are to transact any and
all lawful business for which corporations may be incorporated under, and
exercise the powers granted by, the General Corporation Law of the State of
Delaware, as the same exists or may hereafter be amended from time to time (the
"GCLD"), within or without the State of Delaware, and to do such things as may
be incident to, and necessary or appropriate to effect, any and all of the
purposes for which the Corporation is organized.
<PAGE>
ARTICLE III
DURATION
The duration of this Corporation shall be in perpetuity, or such maximum
period as may be authorized by the GCLD.
ARTICLE IV
AUTHORIZED CAPITAL
The Corporation is hereby authorized to issue a total of Fifty-five
Million (55,000,000) shares of capital stock which shall be subdivided into
classes as follows:
(a) Fifty Million (50,000,000) shares of the Corporation's capital stock shall
be denominated as Common Stock, have a par value of $.00001 per share, and
have the rights, powers and preferences set forth in this paragraph. The
Holders of Common Stock shall share ratably, with all other classes of
common equity, in any dividends that may, from time to time, be declared by
the Board of Directors. No dividends may be paid with respect to
Corporation's Common Stock, however, until dividend distributions to the
holders of Preferred Stock, if any, have been paid in accordance with the
certificate or certificates of designation relating to such Preferred
Stock. The holders of Common Stock shall share ratably, with all other
classes of common equity, in any assets of the Corporation that are
available for distribution to the holders of common equity securities of
the Corporation upon the dissolution or liquidation of the Corporation.
The holders of Common Stock shall be entitled to cast one vote per share on
all matters that are submitted for a vote of the stockholders. There are
no redemption or sinking fund provisions that are applicable to the Common
Stock of the Corporation. Subject only to the requirements of the General
Corporation Law of Delaware and the foregoing limits, the Board of
Directors is expressly authorized to issue shares of Common Stock without
stockholder approval, at any time and from time to time, to such persons
and for such consideration as the Board of Directors shall deem appropriate
under the circumstances. Notwithstanding the foregoing, and with the sole
exception of shares issued pursuant to those of the Corporation's stock
option and other employee benefit plans which have been approved by the
stockholders entitled or required by law to vote thereon, no shares of
Common Stock shall be issued or sold to any officer or director of the
Corporation, or any stockholder who directly or indirectly owns more than
10% of the issued and outstanding voting stock of the Corporation, or any
affiliate of such a person, without the affirmative vote of a majority in
interest of the disinterested stockholders of the Corporation. Effective
upon the filing of this Amended and Restated Certificate of Incorporation
in the office of the Secretary of State of the State of Delaware, and
without any further action by the holders of the $.00001 par value Common
Stock of the Corporation, the TWO HUNDRED FIFTY-EIGHT MILLION, THREE
HUNDRED SIXTY-FIVE THOUSAND (258,365,000) issued and outstanding shares of
the Corporation's Common Stock shall consolidated or "reverse split" in the
ratio of 1 new share for every 135 shares currently held by a stockholder
so that the total issued and outstanding capital stock of the Corporation
from and after the date of this Amended and Restated Certificate of
Incorporation shall consist of ONE MILLION, NINE HUNDRED THIRTEEN THOUSAND,
EIGHT HUNDRED FIFTEEN (1,913,815) shares, more or less. Notwithstanding
the generality of the foregoing, no fractional shares shall be issued in
connection with the reverse split and all calculations that would result in
the issuance of a fractional share shall be rounded up to the nearest whole
number. In addition, no single stockholder's ownership shall be reduced to
fewer than 100 shares of the $.00001 par value Common Stock of the
Corporation.
(b) Five Million (5,000,000) shares of the Corporation's authorized capital
stock shall be denominated as Preferred Stock, par value of $.00001 per
share. Shares of Preferred Stock may be issued from time to time in one or
more series as the Board of Directors, by resolution or resolutions, may
from time to time determine, each of said series to be distinctively
designated. The voting powers, preferences and relative, participating,
optional and other special rights, and the
<PAGE>
qualifications, limitations or restrictions thereof, if any, of each such
series of Preferred Stock may differ from those of any and all other series
of Preferred Stock at any time outstanding, and the Board of Directors is
hereby expressly granted authority to fix or alter, by resolution or
resolutions, the designation, number, voting powers, preferences and
relative, participating, optional and other special rights, and the
qualifications, limitations and restrictions thereof, of each such series
of Preferred Stock, including, but without limiting the generality of the
foregoing, the following:
(i) The distinctive designation of, and the number of shares of
Preferred Stock that shall constitute, each series of Preferred
Stock, which number (except as otherwise provided by the Board of
Directors in the resolution establishing such series) may be
increased or decreased (but not below the number of shares of such
series then outstanding) from time to time by the Board of Directors
without prior approval of the holders of such series;
(ii) The rights in respect of dividends, if any, of such series of
Preferred Stock, the extent of the preference or relation, if any,
of such dividends to the dividends payable on any other class or
classes or any other series of the same or other class or classes of
capital stock of the Corporation, and whether such dividends shall
be cumulative or non-cumulative;
(iii) The right, if any, of the holders of such series of Preferred Stock
to convert the same into, or exchange the same for, shares of any
other class or classes or of any other series of the same or any
other class or classes of capital stock of the Corporation and the
terms and conditions of such conversion or exchange, including,
without limitation, whether or not the number of shares of such
other class or series into which shares of such series may be
converted or exchanged shall be adjusted in the event of any stock
split, stock dividend, subdivision, combination, reclassification or
other transaction or series of transactions affecting the class or
series into which such series of Preferred Stock may be converted or
exchanged:
(iv) Whether or not shares of such series of Preferred Stock shall be
subject to redemption, and the redemption price or prices and the
time or times at which, and the terms and conditions on which,
shares of such series of Preferred Stock may be redeemed;
(v) The rights, if any, of the holder of such series of Preferred Stock
upon the voluntary or involuntary liquidation, dissolution or
winding up of the Corporation or in the event of any merger or
consolidation of or sale of assets by the Corporation;
(vi) The terms of sinking fund or redemption or repurchase account, if
any, to be provided for shares of such series of Preferred Stock;
(vii) The voting powers, if any, of the holders of any series of Preferred
Stock generally or with respect to any particular matter, which may
be less than, equal to or greater than one vote per share, and which
may, without limiting the generality of the foregoing, include the
right, voting as a series by itself or together with the holders of
any other series of Preferred Stock or all series of Preferred Stock
as a class, to elect one or more Directors of the Corporation
(which, without limiting the generality of the foregoing, may
include a specified number or portion of the then-existing number of
authorized Directorships of the Corporation, or a specified number
or portion of Directorships in addition to the then-existing number
of authorized Directorships of the Corporation), generally or under
such specific circumstances and on such conditions, as shall be
provided in the resolution or resolutions of the Board of Directors
adopted pursuant hereto; and
<PAGE>
(viii) Such other powers, preferences and relative, participating, optional
and other special rights, and the qualifications, limitations and
restrictions thereof, as the Board of Directors shall determine.
Notwithstanding the foregoing, and with the sole exception of shares issued
pursuant to those of the Corporation's stock option and other employee
benefit plans which have been approved by the stockholders entitled or
required by law to vote thereon, no shares of Preferred Stock shall be
issued or sold to any officer or director of the Corporation, or any
stockholder who directly or indirectly owns more than 10% of the issued and
outstanding voting stock of the Corporation, or any affiliate of such a
person, without the affirmative vote of a majority in interest of the
disinterested stockholders of the Corporation. Upon the creation of any
new class or series of Preferred Stock of the Corporation, the Board of
Directors shall prepare and file with the records of the Corporation a
Certificate setting forth the rights and preferences of such class or
series of Preferred Stock, which shall be deemed an amendment to this
Amended and Restated Certificate of Incorporation and shall not require the
consent of any stockholder.
(c) In addition to the Common Stock and Preferred Stock described above, the
Board of Directors is authorized to cause the issuance of any other type of
security (including without limitation, options, rights, warrants or
appreciation rights relating to any equity or debt security of the
Corporation and which may have rights or preferences junior or senior to
any equity or debt security of the Corporation) from time to time on terms
and conditions established in the sole and complete discretion of the Board
of Directors. If and to the extent required by the General Corporation Law
of Delaware, upon the creation of any new class or series of additional
securities of the Corporation, the Board of Directors shall prepare and
file with the records of Corporation a Certificate setting forth the rights
and preferences of such class or series of additional securities of the
Corporation, which Certificate shall be deemed an amendment to this Amended
and Restated Certificate of Incorporation and shall not require the consent
of any stockholder.
(d) Except to the extent that such rights are specifically enumerated in a
Certificate setting forth the rights and preferences of a specific class or
series of Preferred Stock or other securities of the Corporation, no
stockholder shall have any preemptive, preferential or other right,
including without limitation with respect to (i) the issuance or sale of
additional Common Stock of the Corporation, (ii) the issuance or sale of
additional Preferred Stock of the Corporation, (iii) the issuance of any
obligation, evidence of indebtedness of the Corporation which is or may be
convertible into or exchangeable for, or accompanied by any rights to
receive, purchase or subscribe to, any shares of Common Stock, Preferred
Stock or other securities of the Corporation, (iv) the issuance of any
right of subscription to, or right to receive, any warrant or option for
the purchase of any Common Stock, Preferred Stock or other securities of
the Corporation, or (v) the issuance or sale of any other equity or debt
securities that may be issued or sold by the Corporation from time to time.
ARTICLE V
RIGHTS AND POWERS OF STOCKHOLDERS
(a) The amount of paid-in capital with which this Corporation began business is
One Thousand and no/100 Dollars ($1,000) which has been previously paid.
(b) Except as otherwise fixed pursuant to the provisions of Article IV(b) of
this Amended and Restated Certificate of Incorporation relating to the
rights of the holders of any one or more series of Preferred Stock to call
an annual or special meeting of stockholders, special meetings of the
stockholders of the Corporation may be called only by the Board of
Directors or by the Board of Directors at the written request of the
holders of at least fifty percent (50%) of all the shares entitled to vote
at the proposed special meeting. Each such written request of the
stockholders shall specify the purpose or purposes of the proposed special
meeting.
<PAGE>
(c) At any annual or special meeting of the stockholders, only such business
shall be conducted as shall have been properly brought before the meeting
in accordance with this Article V. To be properly brought before an annual
meeting business must be (a) specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the Board of Directors,
(b) otherwise properly brought before the meeting by or at the direction of
the Board of Directors, or (c) otherwise properly brought before the
meeting by a stockholder. For business to be properly brought before an
annual meeting by a stockholder, the stockholder must have given timely
notice thereof in writing to the Secretary of the Corporation. To be
timely, a stockholder's notice must be delivered to or mailed and received
at the principal executive offices of the Corporation not less than 60 days
nor more than 90 days prior to the meeting; provided; however, that in the
event that less than 70 days' notice or prior public disclosure of the date
of the meeting is given or made to stockholders, notice by the stockholder
to be timely must be so received not later than the close of business on
the lot day following the day on which such notice of the date of the
annual meeting was mailed or such public disclosure was made. A
stockholder's notice to the Secretary shall set forth as to each matter the
stockholder proposes to bring before the annual meeting (a) a brief
description of the business desired to be brought before the annual meeting
and the reasons for conducting such business at the annual meeting, (b) the
name and address, as they appear on the Corporation's books, of the
stockholder proposing such business, (c) the number of shares of the
Corporation which are beneficially owned by the stockholder, and (d) any
material interest of the stockholder in such business. To be properly
brought before a special meeting of stockholders, business must have been
specified in the notice of meeting (or supplement thereto) given by or at
the direction of the Board of Directors. Notwithstanding anything in the
By-Laws to the contrary, no business shall be conducted at any annual or
special meeting except in accordance with the procedures set forth in this
Article V. The Chairman of the annual meeting shall, if the facts warrant,
determine and declare to the meeting that business was not properly brought
before the meeting in accordance with the provisions of this Article V, and
if he should so determine, he shall so declare to the meeting and any such
business not properly brought before the meeting shall not be transacted.
(d) Only persons who are nominated in accordance with the procedures set forth
in this Article V shall be eligible for election as Directors. Nominations
of persons for election to the Board of Directors of the Corporation may be
made at a meeting of stockholders by or at the direction of the Board of
Directors or by any stockholder of the Corporation entitled to vote for the
election of Directors at the meeting who complies with the notice
procedures set forth in this Article V. Such nominations, other than those
made by or at the direction of the Board of Directors, shall be made
pursuant to timely notice in writing to the Secretary of the Corporation.
To be timely, a stockholder's notice shall be delivered to or mailed and
received at the principal executive offices of the Corporation not less
than 60 days nor more than 90 days prior to the meeting; provided, however,
that in the event that less than 70 days' notice or prior public disclosure
of the date of the meeting is given or made to stockholders, notice by the
stockholder to be timely must be so received not later than the close of
business on the 10th day following the day on which such notice of the date
of the meeting was mailed or such public disclosure was made. Such
stockholder's notice shall set forth (a) as to each person whom the
stockholder proposes to nominate for election or reelection as a Director,
(i) the name, age, business address and residence address of such person,
(ii) the principal occupation or employment of such person, (iii) the
number of shares of the Corporation which are beneficially owned by such
person, and (iv) any other information relating to such person that is
required to be disclosed in solicitations of proxies for election of
Directors, or is otherwise required, in each case pursuant to Regulation
14A under the Securities Exchange Act of 1934, as amended (including
without limitation such persons' written consent to being named in the
proxy statement as a nominee and to serving as a Director if elected); and
(b) as to the stockholder giving the notice (i) the name and address, as
they appear on the Corporation's books, of such stockholder and (ii) the
number of shares of the Corporation which are beneficially owned by such
stockholder. No person shall be eligible for election as a Director of the
Corporation unless nominated in accordance with the procedures set forth in
this
<PAGE>
Article V. The Chairman of the meeting shall, if the facts warrant,
determine and declare to the meeting that a nomination was not made in
accordance with the procedures prescribed herein, and if he should so
determine, he shall so declare to the meeting and the defective nomination
shall be disregarded.
ARTICLE VI
DIRECTORS
(a) The business and affairs of the Corporation shall be conducted and managed
by, or under the direction of, the Board of Directors. Except as otherwise
provided for or fixed pursuant to the provisions of Article IV(b) of this
Amended and Restated Certificate of Incorporation, relating to the rights
of the holders of any series of Preferred Stock to elect additional
directors, the total number of directors constituting the entire Board of
Directors shall be not less than three (3) nor more than nine (9), with the
then-authorized number of directors being fixed from time to time solely by
or pursuant to a resolution passed by the Board of Directors.
(b) Except for such directors, if any, as are elected by the holders of any
series of Preferred Stock separately as a class as provided for or fixed
pursuant to the provisions of Article IV(b) of this Amended and Restated
Certificate of Incorporation, any director of the Corporation may be
removed from office only for cause and only by the affirmative vote of the
holders of not less than sixty-six percent (66%) of the votes which could
be cast by holders of all outstanding shares of the capital stock of the
Corporation entitled to vote generally in the election of directors,
considered for this purpose as one class.
(c) The Board of Directors shall have the power to make, adopt, alter, amend
and repeal from time to time the By-Laws of this Corporation, subject to
the right of the stockholders entitled to vote with respect thereto to
adopt, alter, amend and repeal the By-Laws; provided, however, that By-Laws
shall not be adopted, altered, amended or repealed by the stockholders of
the Corporation except by the vote of the holders of not less than sixty-
six percent (66%) of the votes which could be cast by holders of all
outstanding shares of the capital stock of the Corporation entitled to vote
generally in the election of directors, considered for this purpose as one
class.
(d) No director of the Corporation shall be liable to the Corporation or its
stockholders for monetary damages for an act or omission (or an alleged act
or omission) in a director's capacity as a director, except that this
Article VI(d) does not eliminate or limit the liability of a director to
the extent the director is found liable for:
(i) a breach of a director's duty of loyalty to the Corporation or its
stockholders;
(ii) an act or omission not in good faith which constitutes a breach of
duty of the director to the Corporation, or an act or omission which
involves intentional misconduct or a knowing violation of the law;
(iii) a transaction from which a director received an improper benefit,
whether or not the benefit resulted from an action taken within the
scope of the director's office; or
(iv) an act or omission for which the liability of a director is
expressly provided for by an applicable statute.
If the GCLD or any other applicable law is amended or adopted to authorize
corporate action further eliminating or limiting the personal liability of
directors, then the liability of a director of the Corporation shall be
eliminated or limited to the fullest extent permitted by such law(s), as so
amended or adopted. No amendment to or repeal of this Article VI(d) shall
apply to or have
<PAGE>
any effect on the liability or alleged liability of any director of the
Corporation for or with respect to any acts or omissions of the director
occurring prior to such amendment or repeal.
(e) The Board of Directors shall be divided into three classes, designated
Class I, Class II, and Class III. Each class shall consist, as nearly as
may be possible, of one-third of the total number of directors constituting
the entire Board of Directors. Initially, Class I directors shall be
elected for a one-year term, Class II directors for a two-year term and
Class III directors for a three-year term. At the annual meeting of
stockholders beginning in 1998, successors to the class of directors whose
term expires at that annual meeting shall be elected for a three-year term.
If the number of directors is changed, any increase or decrease shall be
apportioned among the classes so as to maintain the number of directors in
each class as nearly equal as possible, and any additional director of that
class elected to fill a vacancy resulting from an increase in such class
shall hold office for a term that shall coincide with the remaining term of
that class, but in no case shall a decrease in the number of directors
shorten the term of any incumbent director. A director shall hold office
until the annual meeting for the year in which his term expires and until
his successor shall be elected and shall qualify, subject, however, to
prior death, resignation, retirement, disqualification or removal from
office. Any vacancy on the Board of Directors or any newly created
directorship resulting from an increase in the number of directors may be
filled in any manner permitted by the GCLD.
(f) Notwithstanding the foregoing, whenever, pursuant to the provisions of
Article IV(b) of this Amended and Restated Certificate of Incorporation,
the holders of any one or more series of Preferred Stock shall have the
right, voting separately as a series or together with holders of other such
series, to elect directors at an annual or special meeting of stockholders,
the election, term of office, filling of vacancies and other features of
such directorships shall be governed by the terms of this Amended Restated
Certificate of Incorporation and the Certificate of Designations applicable
thereto, and such directors so elected shall not be divided into classes
pursuant to this Article VI(f) unless expressly provided by such terms.
(g) Directors must be at least 21 years of age and need not be stockholders.
There shall be no qualifications for directors of the Corporation other
than as set forth in this Amended and Restated Certificate of
Incorporation.
ARTICLE VII
REGISTERED AGENT AND OFFICE, AND DIRECTORS
(a) The registered office of the Corporation in the State of Delaware shall be
located in the City of Dover, County of Kent and the name and post office
address of the registered agent for service of process for the Corporation
is:
Capitol Services, Inc.
9 East Loockerman Street
Dover, Delaware 19901
In the County of Kent
(b) The number of directors constituting the current board of directors of the
Corporation is three. The name and address of each of the Corporation's
directors is:
Mark Leibovit
Alice Leibovit
Reed Slatkin
P.O. Box 1451
Sedona, Arizona 86339
<PAGE>
ARTICLE VIII
AMENDMENTS TO CERTIFICATE OF INCORPORATION
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Amended and Restated Certificate of Incorporation,
in the manner now or hereafter prescribed by the GCLD, and all rights conferred
upon stockholders by the terms of this Amended and Restated Certificate of
Incorporation are granted subject to this reservation of powers.
Except as otherwise provided for or fixed pursuant to the provisions of
Article IV(b) of this Amended and Restated Certificate of Incorporation relating
to the rights of the holders of one or more series of Preferred Stock, to the
extent that the GCLD expressly provides for separate voting by the holders of
shares of any class or series on any proposed amendment to the Corporation's
Certificate of Incorporation, the proposed amendment shall be adopted upon
receiving the affirmative vote of the holders of at least (i) a majority of the
shares within each class or series of shares entitled to vote thereon as a class
and (ii) a majority of the total outstanding shares entitled to vote thereon.
Any other amendment to the Corporation's Certificate of Incorporation shall be
adopted upon receiving the affirmative vote of the holders of at least a
majority of the outstanding shares entitled to vote thereon, except as otherwise
provided for or fixed pursuant to the provisions of Article IV(b) of this
Amended and Restated Certificate of Incorporation relating to the rights of the
holders of one or more series of Preferred Stock.
<PAGE>
ARTICLE IX
INDEMNIFICATION
The Corporation may indemnify and advance expenses to each person who was
or is an officer, director, employee or agent of the Corporation to the fullest
extent permitted by the GCLD and the By-Laws of the Corporation.
Dated July 24, 1997. IWC HOLDINGS, INC.
/s/ MARK LEIBOVIT
By: ________________________________
Mark Leibovit, Chairman
/s/ ALICE LEIBOVIT
By: ________________________________
Alice Leibovit, Director
<PAGE>
EXHIBIT 3.3
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
IWC HOLDINGS, INC.
* * * * * *
IWC Holdings, Inc., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware, DOES HEREBY
CERTIFY:
FIRST: That the Board of Directors of IWC Holdings, Inc., by written
consent of its members dated July 31, 1997, duly adopted resolutions setting
forth a proposed amendment to the Certificate of Incorporation of said
corporation, declaring said amendment is as follows to replace Article One of
the Certificate of Incorporation in its entirety:
"ARTICLE I
NAME
"The name of the Corporation shall be BOOTS & COOTS INTERNATIONAL WELL
CONTROL, INC."
SECOND: That in lieu of a meeting and vote of stockholders, the
stockholders have given written consent on July 31, 1997, signed by a majority
of the stockholders, to said amendment in accordance with the provision of
Section 228 of the General Corporation Law of the State of Delaware.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware. That this Certificate of Amendment of the Certificate of
Incorporation shall be effective upon its filing date.
IN WITNESS WHEREOF, said IWC Holdings, Inc. has caused this certificate to
be signed by Larry Ramming, its Chief Executive Officer, this 31st day of
July, 1997.
IWC HOLDINGS, INC.
/s/ LARRY RAMMING
By:_________________________________
Larry Ramming,
Chief Executive Officer
<PAGE>
Subscribed and sworn to before me this 31st day of July, 1997.
A. JAN COLDER
____________________________________
Notary Public in and for
Harris County, State of Texas
2
<PAGE>
EXHBIT 3.4
BY-LAWS OF
BOOTS & COOTS INTERNATIONAL WELL CONTROL, INC.
(hereinafter called the "Corporation")
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the Corporation
shall be in the State of Delaware.
Section 2. Other Offices. The Corporation may also have offices at such
other places both within and without the State of Delaware as the Board of
Directors may from time to time determine.
ARTICLE II
MEETING OF STOCKHOLDERS
Section 1. Place of Meeting. Meetings of the shareholders for the election
of directors or for any other purpose shall be held at such time and place,
either within or without the State of Delaware, as shall be designated from time
to time by the Board of Directors and stated in the notice of the meeting or in
a duly executed waiver of notice thereof.
Section 2. Annual Meetings. The Annual Meetings of shareholders shall be
held on such date and at such time as shall be designated from time to time by
the Board of Directors and stated in the notice of the meeting, at which
meetings the shareholders shall elect by a plurality vote a Board of Directors,
and transact such other business as may properly be brought before the meeting.
At any annual meeting of the shareholders, only such business shall be conducted
as shall have been properly brought before the meeting in accordance with the
Certificate of Incorporation.
Section 3. Special Meetings. Special Meetings of the shareholders may be
called by the Board of Directors, the Chairman of the Board or the President.
Upon request in writing to the Secretary by any person entitled to call a
special meeting of the shareholders, the Secretary forthwith shall cause notice
to be given to the shareholders entitled to vote that a meeting will be held at
a time requested by the person or persons calling the meeting. At any special
meeting of the shareholders, only such business shall be conducted as shall have
been properly brought before the meeting in accordance with the Certificate of
Incorporation.
Section 4. Notice of Meetings. Written notice of the place, date, and time
of all meetings of the shareholders shall be given, not less than ten (10) nor
more than sixty (60) days before the date on which the meeting is to be held, to
each shareholder entitled to vote at such meeting, except as otherwise provided
herein or as required from time to time by the General Corporation Law of
Delaware or the Certificate of Incorporation.
Section 5. Quorum: Adjournment. With respect to any matter, a quorum shall
be present at a meeting of shareholders if the holders of a majority of the
shares entitled to vote on that
<PAGE>
matter are represented at the meeting in person or by proxy, unless otherwise
provided in the Certificate of Incorporation. If a quorum shall fail to attend
any meeting, the chairman of the meeting or the holders of a majority of the
shares of stock entitled to vote who are present, in person or by proxy, may
adjourn the meeting to another place, date or time without notice other than
announcement at the meeting, until a quorum shall be present or represented.
When a meeting is adjourned to another place, date or time, written notice
need not be given of the adjourned meeting if the place, date and time thereof
are announced at the meeting at which the adjournment is taken; provided,
however, that if the date of any adjourned meeting is more than thirty (30) days
after the date for which the meeting was originally noticed, or if a new record
date is fixed for the adjourned meeting, written notice of the place, date and
time of the adjourned meeting shall be given in conformity herewith. At any
adjourned meeting, any business may be transacted which might have been
transacted at the original meeting.
Section 6. Organization. At every meeting of the shareholders, the chairman
of the board, if there be one, or in the case of a vacancy in the office or
absence of the chairman of the board, one of the following persons present in
the order stated shall act as chairman of the meeting: the vice chairman of the
board, if there be one, the president, the vice presidents in their order of
rank or seniority, a chairman designated by the board of directors or a chairman
chosen by the shareholders in the manner provided in Section 5 of this Article
II. The secretary, or in his absence, an assistant secretary, or in the absence
of the secretary and the assistant secretaries, a person appointed by the
chairman of the meeting, shall act as secretary.
Section 7. Proxies and Voting. At any meeting of the shareholders, every
shareholder entitled to vote may vote in person or by proxy authorized by an
instrument in writing filed in accordance with the procedure established for the
meeting.
Each shareholder shall have one vote for every share of stock entitled to
vote which is registered in his name on the record date for the meeting, except
as otherwise provided herein or required by law or the Certificate of
Incorporation.
All voting, including on the election of directors but exception where
otherwise provided herein or required by law or the Certificate of
Incorporation, may be by a voice vote; provided, however, that upon demand
therefor by a shareholder entitled to vote or such shareholder's proxy, a stock
vote shall be taken. Every stock vote shall be taken by ballots, each of which
shall state the name of the shareholder or proxy voting and such other
information as may be required under the procedure established for the meeting.
All elections of directors shall be determined by a plurality of the votes
cast by the holders of shares entitled to vote in the election of directors at a
meeting of shareholders at which a quorum is present. Except as otherwise
required by law or the Certificate of Incorporation, all matters other than the
election of directors shall be determined by the affirmative vote of the holders
of a majority of the shares entitled to vote on that matter and represented in
person or by proxy at a meeting of shareholders at which a quorum is present.
Section 8. Stock List. A complete list of shareholders entitled to vote at
any meeting of shareholders, arranged in alphabetical order for each class of
stock and showing the address of
<PAGE>
each such shareholder and the number of shares registered in such shareholder's
name, shall be open to the examination of any such shareholder, for any purpose
germane to the meeting, during ordinary business hours for a period of at least
ten (10) days prior to the meeting, at the registered office or principal place
of business of the Corporation.
The stock list shall also be kept at the place of the meeting during the
whole time thereof and shall be open to the examination of any such shareholder
who is present. This list shall presumptively determine the identity of the
shareholder entitled to vote at the meeting and the number of shares held by
each of them.
Section 9. Inspectors of Election. In advance of any meeting of
shareholders, the Board of Directors may appoint inspectors of election, who
need not be shareholders, to act at such meeting or any adjournment thereof. If
inspectors of election are not so appointed, the person presiding at any such
meeting may, and on the request of any shareholder entitled to vote at the
meeting and before voting begins shall, appoint inspectors of election. The
number of inspectors shall be either one or three, as determined, in the case of
inspectors appointed upon demand of a shareholder, by the shareholders in the
manner provided in Section 5 of this Article II, and otherwise by the Board of
Directors or person presiding at the meeting, as the case may be. If any person
who is appointed fails to appear or act, the vacancy may be filled by
appointment made by the Board of Directors in advance of the meeting, or at the
meeting by the person presiding at the meeting. Each inspector, before entering
upon the discharge of his duties, shall take an oath faithfully to execute the
duties of inspector at such meeting.
If inspectors of election are appointed as aforesaid, they shall determine
from the lists referred to in Section 8 of this Article II the number of shares
outstanding, the shares represented at the meeting, the existence of a quorum
and the voting power of shares represented at the meeting, determine the
authenticity, validity and effect of proxies, receive votes or ballots, hear and
determine all challenges and questions in any way arising in connection with the
right to vote or the number of votes which may be cast, count and tabulate all
votes or ballots, determine the results, and do such acts as are proper to
conduct the election or vote with fairness to all shareholders entitled to vote
thereat. If there be three inspectors of election, the decision, act or
certificate of two shall be effective in all respects as the decision, act or
certificate of the inspectors of election.
Unless waived by vote of the shareholders conducted in the manner which is
provided in Section 5 of this Article, the inspectors shall make a report in
writing of any challenge or question matter which is determined by them, and
execute a sworn certificate of any facts found by them.
ARTICLE III
BOARD OF DIRECTORS
Section 1. Duties and powers. The business of the Corporation shall be
managed by or under the direction of the Board of Directors which may exercise
all such powers of the Corporation and do all such lawful acts and things as are
not by law or by the Certificate of Incorporation or by these By-laws directed
or required to be exercise or done by the shareholders.
<PAGE>
Section 2. Number and Term in Office. This Section 2 is subject to the
provisions in a formal certificate of rights, powers and designations relating
to the rights of the holders of one or more series of Preferred Stock or other
provisions of the Corporation's Certificate of Incorporation. The total number
of directors constituting the entire Board of Directors shall be not less than
one (1) nor more than ten (10), with the then authorized number of directors
being fixed from time to time solely by or pursuant to a resolution passed by
the Board of Directors. A director shall hold office until the annual meeting
and until his successor shall be elected and shall qualify, subject, however, to
prior death, resignation, retirement, disqualification or removal from office.
Section 3. Vacancies. This Section 3 is subject to the provisions of the
Corporation's Certificate of Incorporation. Vacancies and newly created
directorships resulting from any increase in the authorized member of directors
may be filled only by action of a majority of the Board of Directors then in
office, even if less than a quorum, or by a sole remaining director. Any
director elected to fill a vacancy not resulting from an increase in the number
of directors shall have the same remaining term as that of his predecessor. Any
director may resign at any time upon written notice to the Corporation.
Section 4. Nominations of Directors; Election. This Section 4 is subject to
the provisions of the Corporation's Certificate of Incorporation. Nominations
for the election of directors may be made by the Board of Directors or a
committee appointed by the Board of Directors, or by any shareholder entitled to
vote generally in the election of directors who complies with the procedures set
forth in this Section 4. Directors shall be at least 21 years of age and need
not be shareholders. Nominations, other than those made by or at the direction
of the Board of Directors, shall be made pursuant to timely notice in writing to
the Secretary of the Corporation. To be timely, a shareholder's notice shall be
delivered to or mailed and received at the principal executive offices of the
Corporation not less than 60 days nor more than 90 days prior to the meeting;
provided, however, that in the event that less than 70 days' notice or prior
public disclosure of the date of the meeting is given or made to shareholders,
notice by the shareholder to be timely must be so received not later than the
close of business on the 10th day following the day on which such notice of the
date of the meeting was mailed or such public disclosure was made. Such
shareholder's notice shall set forth (a) as to each person whom the shareholder
proposes to nominate for election or re-election as a Director, (i) the name,
age, business address and residence address of such person, (ii) the principal
occupation or employment of such person, (iii) the number of shares of the
Corporation which are beneficially owned by such person, and (iv) any other
information relating to such person that is required to be disclosed in
solicitations of proxies for election of Directors, or is otherwise required, in
each case pursuant to Regulation 14A under the Securities Exchange Act of 1934,
as amended (including without limitation such persons' written consent to being
named in the proxy statement as a nominee and to serving as a Director if
elected); and (b) as to the shareholder giving the notice (i) the name and
address, as they appear on the Corporation's books, of such shareholder and (ii)
the number of shares of the Corporation which are beneficially owned by such
shareholder. No person shall be eligible for election as a Director of the
Corporation unless nominated in accordance with the procedures set forth in this
Article. The Chairman of the meeting shall, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with the
procedures
<PAGE>
prescribed herein, and if he should so determine, he shall so declare to the
meeting and the defective nomination shall be disregarded.
Section 5. Meetings. The Board of Directors of the Corporation may hold
meetings, both regular and special, either within or without the State of
Delaware. The first meeting of each newly-elected Board of Directors shall be
held immediately following the Annual Meeting of Stockholders and no notice of
such meeting shall be necessary to be given the newly-elected directors in order
legally to constitute the meeting, provided a quorum shall be present. Regular
meetings of the Board of Directors may be held without notice at such time and
at such place as may from time to time be determined by the Board of Directors.
Special meetings of the Board of Directors may be called by the Chairman of the
Board, the president or at least two of the directors then in office. Notice
thereof stating the place, date and hour of the meetings shall be given to each
director by mail, telephone or telegram not less than seventy-two (72) hours
before the date of the meeting. Meetings may be held at any time without notice
if all the directors are present or if all those not present waive such notice
in accordance with Section 2 of Article VI of these By-laws.
Section 6. Quorum. Except as may be otherwise specifically provided by law,
the Certificate of Incorporation or these By-laws, at all meetings of the Board
of Directors, a majority of the directors then in office shall constitute a
quorum for the transaction of business. The act of a majority of the directors
present at any meeting at which there is a quorum shall be the act of the Board
of Directors. If a quorum shall not be present at any meeting of the Board of
Directors, the directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present.
Section 7. Action of Board Without a Meeting. Unless otherwise provided by
the Certificate of Incorporation or these By-laws, any action required or
permitted to be taken at any meeting of the Board of Directors of any committee
thereof may be taken without a meeting if all members of the Board of Directors
or committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the Board of Directors or
committee.
Section 8. Resignations. Any director of the Corporation may resign at any
time by giving written notice to the president or the secretary. Such
resignation shall take effect at the date of the receipt of such notice or at
any later time specified therein and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
Section 9. Organization. At every meeting of the Board of Directors, the
Chairman of the Board, if there be one, or, in the case of a vacancy in the
office or absence of the Chairman of the Board, one of the following officers
present in the order stated shall act as Chairman of the meeting: the president,
the vice presidents in their order of rank and seniority, or a chairman chosen
by a majority of the directors present. The secretary, or, in his absence, an
assistant secretary, or in the absence of the secretary and the assistant
secretaries, any person appointed by the Chairman of the meeting shall act as
secretary.
Section 10. Committees. The Board of Directors may, by resolution passed by
a majority of the directors then in office, designate one or more committees,
each committee to consist of
<PAGE>
one or more of the directors of the Corporation. The Board of Directors may
designate one or more directors as alternate members of any committee, whom may
replace any absent or disqualified member at any meeting of any such committee.
In the absence or disqualification of a member of a committee, and in the
absence of a designation by the Board of Directors of an alternate member to
replace the absent or disqualified member, the member or members thereof present
at any meeting and not disqualified from voting, whether or not such members
constitute a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of any such absent or disqualified
member. Any committee, to the extent allowed by law and provided in the By-laws
or resolution establishing such committee, shall have and may exercise all the
powers and authority of the Board of Directors in the management of the business
affairs of the Corporation, and may authorize the seal of the Corporation to be
affixed to all papers which may require it. Each committee shall keep regular
minutes and reports to the Board of Directors when required.
Section 11. Compensation. Unless otherwise restricted by the Certificate of
Incorporation or these By-laws, the Board of Directors shall have the authority
to fix the compensation of directors. The directors may be paid their expenses,
if any, of attendance at each meeting of the Board of Directors and may be paid
a fixed sum for attendance at each meeting of the Board of Directors or a stated
salary as director. No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
Section 12. Removal. This Section 12 is subject to the provisions of the
Corporation's Certificate of Incorporation. Except for such directors, if any,
as are elected by the holders of any series of Preferred Stock separately as a
class as provided for or fixed pursuant to the provisions of the Certificate of
Incorporation, any director of the Corporation may be removed from office only
for cause and only by the affirmative vote of the holders of not less than
sixty-six percent (66%) of the votes which could be cast by holders of all
outstanding shares of the capital stock of the Corporation entitled to vote
generally in the election of directors, considered for this purpose as one
class.
ARTICLE IV
OFFICERS
Section 1. General. The officers of the Corporation shall be appointed by
the Board of Directors and shall consist of a Chairman of the Board or a
President, or both, one or more Vice Presidents, a Treasurer and a Secretary.
The Board of Directors may also choose one or more assistant secretaries and
assistant treasurers, and such other officers and agents as the Board of
Directors, in its sole and absolute discretion shall deem necessary or
appropriate as designated by the Board of Directors from time to time. Any
number of offices may be held by the same person, unless the Certificate of
Incorporation or these By-laws provide otherwise.
Section 2. Election; Term of Office. The Board of Directors at its first
meeting held after each Annual Meeting of Stockholders shall elect a Chairman of
the Board or a President, or both, one or more Vice Presidents, a Secretary and
a Treasurer, and may also elect at that meeting or any other meeting, such other
officers and agents as it shall deem necessary or appropriate. Each
<PAGE>
officer of the Corporation shall exercise such powers and perform such duties as
shall be determined from time to time by the Board of Directors together with
the powers and duties which are customarily exercised by such officer; and each
officer of the Corporation shall hold office until such officer's successor is
elected and qualified or until such officer's earlier resignation or removal.
Any officer may resign at any time upon written notice to the Corporation. The
Board of Directors may at any time, with or without cause, by the affirmative
vote of a majority of directors then in office, remove an officer.
Section 3. Chairman of the Board. The Chairman of the Board shall preside
at all meetings of the shareholders and the Board of Directors and shall have
such other duties and powers as may be prescribed by the Board of Directors from
time to time.
Section 4. President. The President shall be the chief executive officer of
the Corporation, shall have general and active management of the business of the
Corporation and shall see that all orders and resolutions of the Board of
Directors are carried into effect. The President shall have and exercise such
further powers and duties as may be specifically delegated to or vested in the
President from time to time by these By-laws or the Board of Directors. In the
absence of the Chairman of the Board or in the event of his inability or refusal
to act, or if the Board has not designated a Chairman, the President shall
perform the duties of the Chairman of the Board, and when so acting, shall have
all the powers and be subject to all of the restrictions upon the Chairman of
the Board.
Section 5. Vice President. In the absence of the President or in the event
of his inability or refusal to act, the Vice President (or in the event that
there be more than one vice president, the vice presidents in the order
designated by the Board of Directors, or in the absence of any designation, then
in the order of their election) shall perform the duties of the President, and
when so acting, shall have all the powers of and be subject to all the
restrictions upon the President. The vice presidents shall perform such other
duties and have such other powers as the Board of Directors or the President may
from time to time prescribe.
Section 6. Secretary. The Secretary shall attend all meetings of the Board
of Directors and all meetings of the shareholders and record all the proceedings
thereat in a book or books to be kept for that purpose; the Secretary shall also
perform like duties for the standing committees when required. The Secretary
shall give, or cause to be given notice of meetings of the shareholders and
special meetings of the Board of Directors, and shall perform such other duties
as may be prescribed by the Board of Directors or the President. If the
Secretary shall be unable or shall refuse to cause to be given notice of all
meetings of the shareholders and special meetings of the Board of Directors, and
if there be no Assistant Secretary, then either the Board of Directors or the
President may choose another officer to cause such notice to be given. The
Secretary shall have custody of the seal of the Corporation and the Secretary or
any Assistant Secretary, if there be one, shall have authority to affix same to
any instrument requiring it and when so affixed, it may be attested to by the
signature of the Secretary or by the signature of any such Assistant Secretary.
The Board of Directors may give general authority to any other officer to affix
the seal of the Corporation and to attest to the affixing by his or her
signature. The Secretary shall see that all books, reports, statements,
certificates and other documents and records required by law to be kept or filed
are properly kept or filed, as the case may be.
<PAGE>
Section 7. Treasurer. The Treasurer shall have the custody of the corporate
funds and securities and shall keep complete and accurate accounts of all
receipts and disbursements of the Corporation, and shall deposit all monies and
other valuable effects of the Corporation in its name and to its credit in such
banks and other depositories as may be designated from time to time by the Board
of Directors. The Treasurer shall disburse the funds of the Corporation, taking
proper vouchers and receipts for such disbursements, and shall render to the
Board of Directors, at its regular meetings, or when the Board of Directors so
requires, an account of all his or her transactions as Treasurer and of the
financial condition of the Corporation. The Treasurer shall, when and if
required by the Board of Directors, give and file with the Corporation a bond,
in such form and amount and with such surety or sureties as shall be
satisfactory to the Board of Directors, for the faithful performance of his or
her duties as Treasurer. The Treasurer shall have such other powers and perform
such other duties as the Board of Directors or the President shall from time to
time prescribe.
Section 8. Other Officers. Such other officers as the Board of Directors
may choose shall perform such duties and have such powers as from time to time
may be assigned to them by the Board of Directors. The Board of Directors may
delegate to any other officer of the Corporation the power to choose such other
officers and to prescribe their respective duties and powers.
Section 9. Resignations. Any officer may resign at any time by giving
written notice to the Board of Directors, the Chairman of the Board, the
President or the Secretary shall be deemed to constitute notice to the
Corporation. Such resignation shall take effect upon receipt of such notice or
at any later time specified therein; and, unless otherwise specified therein,
the acceptance of such resignation shall not be necessary to make it effective.
Section 10. Removal. Any officer or agent may be removed, either with or
without cause, at any time, by the Board of Directors at any meeting called for
that purpose; provided, however, that the President may remove any agent
appointed by him.
Section 11. Vacancies. Any vacancy among the officers, whether caused by
death, resignation, removal or any other cause, shall be filled in the manner
which is prescribed for election or appointment to such office.
ARTICLE V
STOCK
Section 1. Form of Certificates. Every holder of stock in the Corporation
shall be entitled to have a certificate signed, in the name of the Corporation
(i) by the Chairman of the Board or the President or a Vice President and (ii)
by the Treasurer or Secretary of the Corporation, certifying the number of
shares owned by such holder in the Corporation.
Section 2. Signatures. Any or all the signatures on the certificate may be
a facsimile. In case any officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if such person were such officer, transfer agent or registrar at the date of
issue.
<PAGE>
Section 3. Lost Certificates. The Board of Directors may direct a new
certificate to be issued in place of any certificate theretofore issued by the
Corporation alleged to have been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate of stock to be
lost, stolen or destroyed. When authorizing such issue of a new certificate, the
Board of Directors may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
certificate, or such owner's legal representative, to advertise the same in such
manner as the Board of Directors shall require and/or to give the Corporation a
bond in such sum as it may direct as indemnity against any claim that may be
made against the Corporation with respect to the certificate alleged to have
been lost, stolen or destroyed.
Section 4. Transfers. Stock of the Corporation shall be transferable in the
manner prescribed by law and in these By-laws. Transfers of stock shall be made
on the books of the Corporation only by the person named in the certificate or
by such person's attorney lawfully constituted in writing and upon the surrender
of the certificate therefor, which shall be cancelled before a new certificate
shall be issued.
Section 5. Record Date. In order that the Corporation may determine the
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment thereof, or entitled to receive a distribution or share
dividend, or in order to make a determination of shareholders for any other
proper purpose, the Board of Directors may fix, in advance, a record date, which
shall not be more than sixty (60) days and, in the case of a meeting of
shareholders, not less than ten (10) days before the date of such meeting or
event. A determination of shareholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
Section 6. Beneficial Owners. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise provided by
law.
Section 7. Voting Securities Owned by the Corporation. Powers of attorney,
proxies, waivers of notice of meeting, consents and other instruments relating
to securities owned by the Corporation may be executed in the name of and on
behalf of the Corporation by the Chairman of the Board, the President, any Vice
President or the Secretary and any such officer may, in the name of and on
behalf of the Corporation take all such action as any such officer may deem
advisable to vote in person or by proxy at any meeting of security holders of
any corporation in which the Corporation may own securities and at any such
meeting shall possess and may exercise any and all rights and powers incident to
the ownership of such securities and which, as the owner thereof, the
Corporation might have exercised and possessed if present. The Board of
Directors may, by resolution, from time to time confer like powers upon any
other person or persons.
<PAGE>
ARTICLE VI
NOTICES
Section 1. Notice. Whenever, under the provisions of the laws of Delaware
or the Certificate of Incorporation or these By-laws, any notice, request,
demand or other communication is required to be or may be given or made to any
officer, director, or registered shareholder, it shall not be construed to mean
that such notice, request, demand or other communication must be given or made
in person, but the same may be given or made by mail, telegraph, cablegram,
telex, or telecopier to such officer, director or registered shareholder. Any
such notice, request, demand or other communication shall be considered to have
been properly given or made, in the case of mail, telegraph or cable, when
deposited in the mail or delivered to the appropriate office for telegraph or
cable transmission, and in other cases when transmitted by the party giving or
making the same, directed to the officer or director at his address as it
appears on the records of the Corporation or to a registered shareholder at his
address as it appears on the record of shareholders, or, if the shareholder
shall have filed with the Secretary of the Corporation a written request that
notices to him be mailed to some other address, then directed to the shareholder
at such other address. Notice to directors may also be given in accordance with
Section 5 of Article III hereof.
Whenever, under the provisions of the laws of the State of Delaware or the
Certificate of Incorporation or these By-laws, any notice, request, demand or
other communication is required to be or may be given or made to the
Corporation, it shall also not be construed to mean that such notice, request,
demand or other communication must be given or made in person, but the same may
be given or made to the Corporation by mail, telegraph, cablegram, telex, or
telecopier. Any such notice, request, demand or other communication shall be
considered to have been properly given or made, in the case of mail, telegram or
cable, when deposited in the mail or delivered to the appropriate office for
telegraph or cable transmission.
Section 2. Waivers of Notice. Whenever any written notice is required to be
given under the provisions of the Certificate of Incorporation, these By-laws or
a statute, a waiver thereof in writing, signed by the person or persons entitled
to such notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice. Neither the business to be transacted
at, nor the purpose of, any regular or special meeting of the shareholders,
directors, or members of a committee of directors need be specified in any
written waiver of notice of such meeting.
Attendance of a person, either in person or by proxy at any meeting, without
protesting prior to the conclusion of the meeting the lack of notice of such
meeting, shall constitute a waiver of notice of such meeting.
ARTICLE VII
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the Corporation,
subject to applicable law and the provisions of the Certificate of
Incorporation, if any, may be declared by the Board of Directors at any regular
or special meeting or by any Committee of the Board of
<PAGE>
Directors having such authority at any meeting thereof, and may be paid in cash,
in property, in shares of the capital stock, or in any combination thereof.
Before payment of any dividend, there may be set aside out of any funds of the
Corporation available for dividends such sum or sums as the Board of Directors
from time to time, in its absolute discretion, deems proper as a reserve or
reserves to meet contingencies, or for equalizing dividends, or for any proper
purpose, and the Board of Directors may modify or abolish any such reserve.
Section 2. Disbursements. All notes, checks, drafts and orders for the
payment of money issued by the Corporation shall be signed in the name of the
Corporation by such officers or such other persons as the Board of Directors may
from time to time designate.
Section 3. Corporation Seal. The corporate seal, if the Corporation shall
have a corporate seal, shall have inscribed thereon the name of the Corporation,
the year of its organization and the words "Corporate Seal, Delaware". The seal
may be used by causing it or a facsimile thereof to be impressed or affixed or
reproduced or otherwise.
ARTICLE VIII
INDEMNIFICATION
Section 1. Mandatory Indemnification of Directors and Officers. Each person
who at any time is or was a director or officer of the Corporation, and who was,
is or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative, arbitrative
or investigative (a "Proceeding," which shall include any appeal in such a
Proceeding, and any inquiry or investigation that could lead to such a
Proceeding), by reason of the fact that such person is or was a director or
officer of the Corporation, or is or was a director or officer of the
Corporation serving at the request of the Corporation as a director, officer,
partner, venturer, proprietor, trustee, employee, agent or similar functionary
of another foreign or domestic corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan or other enterprise shall be
indemnified by the Corporation to the fullest extent authorized by the Delaware
General Corporation Law as the same exists or may hereafter be amended from time
to time (the "DGCL"), or any other applicable law as may from time to time be in
effect (but, in the case of any such amendment or enactment, only to the extent
that such amendment or law permits the Corporation to provide broader
indemnification rights than such law prior to such amendment or enactment
permitted the Corporation to provide), against judgments, penalties (including
excise and similar taxes), fines, settlements and reasonable expenses (including
court costs and attorneys' fees) actually incurred by such person in connection
with such Proceeding. The Corporation's obligations under this Section 1
include, but are not limited to, the convening of any meeting, and the
consideration of any matter thereby, required by statute in order to determine
the eligibility of any person for indemnification. Expenses incurred in
defending a Proceeding shall be paid by the Corporation in advance of the final
disposition of such Proceeding to the fullest extent permitted, and only in
compliance with, the DGCL or any other applicable laws as may from time to time
be in effect. The Corporation's obligation to indemnify or to prepay expenses
under this Section 1 shall arise, and all rights granted hereunder shall vest,
at the time of the occurrence of the transaction
<PAGE>
or event to which such proceeding relates, or at the time that the action or
conduct to which such proceeding relates was first taken or engaged in (or
omitted to be taken or engaged in), regardless of when such proceeding is first
threatened, commenced or completed. Notwithstanding any other provision of the
Certificate of Incorporation or these Bylaws, no action taken by the
Corporation, either by amendment of the Certificate of Incorporation or these
Bylaws or otherwise, shall diminish or adversely affect any rights to
indemnification or prepayment of expenses granted under this Section 1 which
shall have become vested as aforesaid prior to the date that such amendment or
other corporate action is taken.
Section 2. Permissive Indemnification of Employees and Agents. The rights
to indemnification and prepayment of expenses which are conferred to the
Corporation's directors and officers by Section 1 of this Article VIII may be
conferred upon any employee or agent of the Corporation if, and to the extent,
authorized by its Board of Directors.
Section 3. Indemnity Insurance. The Corporation shall have power to
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a director, officer, partner, venturer,
proprietor, trustee, employee, agent or similar functionary of another
corporation, partnership, joint venture, sole proprietorship, trust, employee
benefit plan, or other enterprise, against any liability asserted against him
and incurred by him in any such capacity or arising out of his status as such,
whether or not the Corporation would have the power to indemnify him against
such liability under the provisions of the DGCL. Without limiting the power of
the Corporation to procure or maintain any kind of insurance or other
arrangement, the Corporation may, for the benefit of persons indemnified by the
Corporation (1) create a trust fund, (2) establish any form of self-insurance,
(3) secure its indemnity obligation by grant of a security interest or other
lien on the assets of the Corporation, or (4) establish a letter of credit,
guaranty or surety arrangement.
ARTICLE IX
AMENDMENTS
Except as otherwise specifically stated within an Article to be altered,
amended or repealed these By-laws may be altered, amended or repealed and new
By-laws may be adopted at any meeting of the Board of Directors or of the
shareholders, provided notice of the proposed change was given in the notice of
the meeting.
<PAGE>
EXHIBIT 4.1
[BOOTS & COOTS INTERNATIONAL WELL CONTROL LOGO APPEARS HERE]
COMMON STOCK COMMON STOCK
NUMBER SHARES
INCORPORATED UNDER THE LAWS CUSIP 099469 10 8
OF THE STATE OF DELAWARE SEE REVERSE FOR CERTAIN ABBREVIATIONS
- --------------------------------------------------------------------------------
THIS CERTIFIES THAT
IS THE OWNER OF
- --------------------------------------------------------------------------------
FULLY PAID AND NON-ASSESSABLE SHARES OF THE PAR VALUE OF $.00001 EACH OF THE
COMMON STOCK OF
BOOTS & COOTS INTERNATIONAL WELL CONTROL, INC.
(hereinafter called the "Corporation"), transferable on the books of the
Corporation by the holder hereof in person or by his duly authorized Attorney
upon surrender of this certificate properly endorsed.
This certificate is not valid unless countersigned by the Transfer Agent and
Registrar.
WITNESS the facsimile seal of the Corporation and the facsimile signatures of
its duly authorized officers.
Dated:
/s/ Thomas R. Easley BOOTS & COOTS Signature appears here
______________________________ CORPORATE SEAL ________________________________
SECRETARY APPEARS HERE PRESIDENT
Countersigned and Registered:
JERSEY TRANSFER AND TRUST CO.
201 Bloomfield Ave. Box 36
Verona, NJ 07044
Transfer Agent and Registrar
By Authorized Officer
<PAGE>
BOOTS & COOTS INTERNATIONAL WELL CONTROL, INC.
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM- as tenants in common UNIF GIFT MIN ACT-______Custodian_______
TEN ENT- as tenants by the entireties (Cust) (Minor)
JT TEN- as joint tenants with
right of survivorship and under Uniform Gifts to Minors
not as tenants in common
Act__________________________
(State)
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED, ______________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
[ ]__________________________________________
________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
________________________________________________________________________________
________________________________________________________________________________
__________________________________________________________________________Shares
of the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint _____________________________________Attorney
to transfer the said stock on the books of the within named Company with full
power of substitution in the premises.
Dated ________________________________
________________________________________________
NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT MUST
CORRESPOND WITH THE NAME(S) AS WRITTEN UPON THE
FACE OF THE CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE
WHATEVER.
SIGNATURE(S) GUARANTEED:
____________________________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE
GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS
AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBER-
SHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION
PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.
<PAGE>
EXHIBIT 4.2
IWC SERVICES, INC.
12% SENIOR SUBORDINATED NOTE DUE DECEMBER 31, 2000
DATED: MARCH 19, 1997
IWC Services, Inc., a Texas corporation (hereinafter called the "Company,"
which term includes any successor corporation) for value received, hereby
promises to pay to , or registered assigns (the "Holder"), the
principal sum of Dollars ($ ) ("Principal
Amount"), on, or before, December 31, 2000 (the "Maturity Date"). Interest on
the Principal Amount shall accrue at the rate of 12% per annum and shall be
payable semi-annually on June 30 and December 31 of each year until the Maturity
Date. On the Maturity Date, the Principal Amount and all accrued and unpaid
interest thereon, shall be payable. The Maturity Date may be extended at the
option of the Company as provided herein for up to two periods of six months
each (the "Extended Maturity Period"). Interest on the Principal Amount shall
accrue at the rate of 14% per annum during any Extended Maturity Period. If the
Maturity Date of this Note is extended, the entire Principal Amount plus all
accrued but unpaid interest thereon shall be due and payable in full on the last
day of such Extended Maturity Period ("Extended Maturity Date").
Reference is made to the further provisions of this Note on the following 10
pages attached hereto and sequentially numbered, which are incorporated herein
for all purposes, and shall have the same effect as if set forth at this place.
This Note is one of a series of 12% Senior Subordinated Notes being offered and
sold by the Company.
IN WITNESS WHEREOF, the Company has caused this Note to be duly executed
under its corporate seal.
Attest: [Seal] IWC Services, Inc.
_________________________________ ___________________________________
Secretary By: Its:
Senior Subordinated Note
Page 1
<PAGE>
IWC SERVICES, INC.
12% SENIOR SUBORDINATED NOTE DUE DECEMBER 31, 2000
THESE SECURITIES (THE "SECURITIES") HAVE BEEN (I) ACQUIRED FOR INVESTMENT; (II)
ISSUED AND SOLD IN RELIANCE UPON THE EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES LAWS OF VARIOUS STATES; AND (III) ISSUED AND SOLD IN RELIANCE UPON
THE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933 (THE "ACT")
PROVIDED BY SECTION 4(2) OF THE ACT. THE SECURITIES CANNOT BE OFFERED FOR SALE,
SOLD OR TRANSFERRED OTHER THAN PURSUANT TO (A) AN EFFECTIVE REGISTRATION UNDER
THE ACT OR ANY TRANSACTION WHICH IS OTHERWISE IN COMPLIANCE WITH THE ACT; AND
(B) EVIDENCE SATISFACTORY TO THE ISSUER OF COMPLIANCE WITH THE APPLICABLE
SECURITIES LAWS OF ANY OTHER JURISDICTION. THE ISSUER SHALL BE ENTITLED TO RELY
UPON AN OPINION OF COUNSEL SATISFACTORY TO IT WITH RESPECT TO COMPLIANCE WITH
THE ABOVE LAWS.
1. INTEREST.
IWC Services, Inc. a Texas corporation (the "Company"),promises to pay
interest on the Principal Amount of this Note at the rate of 12% per annum until
the Principal Amount hereof is paid in full. To the extent it is lawful, the
Company promises to pay interest on any interest payment due but unpaid on such
Principal Amount at a rate of 12% per annum.
Interest on the Principal Amount shall accrue from the date of issuance
of this Note, and all accrued but unpaid interest on the Principal Amount shall
be payable by the Company on December 31, 2000 (the "Maturity Date"). Interest
on the Principal Amount shall be payable by the Company on June 30 and December
31 of each year until the Maturity Date. If the Maturity Date of this Note is
extended as provided in Section 2 hereof, interest on the Principal Amount shall
accrue from the first day of the Extended Maturity Period, as defined in
Section 2 hereof, at the rate of 14% per annum and shall be paid on the last day
of the Ex-tended Maturity Period (the "Extended Maturity Date"). interest will
be computed on the basis of a 360-day year of twelve 30-day months.
It is the intention of the parties hereto to comply with all applicable
usury laws, if any; accordingly, it is agreed that notwithstanding any provision
to the contrary in this Note, no such provision shall require the payment or
permit the collection of interest in excess of the maximum permitted by law. If
any excess interest in such respect is provided for, or shall be adjudicated to
be so provided for in this Note or in any of the documents securing payment
hereof or otherwise relating hereto, then in such event:
(a) The provisions of this paragraph shall govern and control;
(b) Neither the Company nor its legal representatives, successors or assigns, or
any other party liable for the payment hereof, shall be obligated to pay the
amount of such interest to the extent that it is in excess of the maximum
amount permitted by law:
(c) Any such excess which may have been collected shall be, at the Holder's
option, either applied as a credit against the then unpaid principal amount
hereof or refunded to the Company; and
(d) The effective rate of interest shall be automatically subject to reduction
to the maximum lawful contract rate allowed under the applicable usury laws
as now or hereafter construed by the courts having jurisdiction.
In the event of default in the making of any payment herein provided,
either of principal or interest, or in the event the entirety of this Note is
declared due, interest shall accrue at the rate of eighteen percent (18%) or the
maximum amount allowable under applicable law, whichever is less. In the event
of default hereunder and this Note is placed in the hands of
Senior Subordinated Note
Page 2
<PAGE>
an attorney for collection (whether or not suit is filed), or if this Note is
collected by suit or legal proceedings or through the probate court or
bankruptcy proceedings, the Company agrees to pay reasonable attorney's fees
along with all expenses of collection.
2. MATURITY.
The Principal Amount of this Note, together with all accrued but unpaid
interest thereon shall be due and payable in full to the Holder hereof at the
Holder's address as set forth on the books of the Company on the Maturity Date.
The Company may at its option extend the Maturity Date for up to two periods of
six months each (the "Extended Maturity Period") by delivering written notice of
such extension to the Holder hereof at least 30 days prior to the Maturity Date
or the Extended Maturity Date, whichever is applicable. If the Maturity Date of
this Note is extended, the entire Principal Amount plus all accrued but unpaid
interest thereon shall be due and payable in full on the Extended Maturity Date.
3. METHOD OF PAYMENT.
The Company shall pay the Principal Amount of and all accrued but unpaid
interest on this Note to the person who is the registered Holder at the close of
business on the Maturity Date or the Extended Maturity Date, whichever is
applicable. The Holder must surrender this Note to the Company to collect the
Principal Amount and interest thereon. Except as provided below, the Company
shall pay the Principal Amount of and interest on the Note in such coin or
currency of the United States of America as at the time of payment shall be
legal tender for payment of public and private debts ('U.S. Legal Tender").
However, the Company may pay the Principal Amount of and interest on the Note by
wire transfer of federal funds or by its check payable in such U.S. Legal
Tender. The Company shall deliver any Principal Amount and interest payment to
the person in whose name this Note (or one or more predecessor Notes) is
registered on the Maturity Date or an Extended Maturity Date, whichever is
applicable.
4. UNSECURED OBLIGATION.
This Note and the other Notes which are part of this series are unsecured
general obligations of the Company.
5. SUBORDINATION.
Upon liquidation or reorganization of the Company, the Notes will be senior
in right of payment to payments with respect to Common Stock of the Company and
payments with respect to any preferred stock or other class of capital stock
that the Company may authorize and issue.
The Notes will be subordinated and junior in right of payment to all Senior
Indebtedness of the Company. Senior indebtedness is defined to include all bank
indebtedness of the Company, whether outstanding currently or hereafter created,
unless by the terms of the instrument creating or evidencing such indebtedness,
it is provided that such indebtedness is not senior in right of payment to the
Notes. In the event of any dissolution, winding-up, liquidation or
reorganization of the Company, whether in bankruptcy, insolvency or receivership
proceedings or upon an assignment for the benefit of creditors or otherwise, the
holders of Senior indebtedness then outstanding will be entitled to receive
payment in full of all such Senior Indebtedness before the holders of the Notes
are entitled to receive any payment on account of the Principal Amount or
interest on the Notes. Such subordination will not prevent the occurrence of an
Event of Default.
As of December 31, 1996, the Company had no Senior indebtedness
outstanding.
6. PERSONS DEEMED OWNERS.
The Company and any agent of the Company may treat the registered Holder of
this Note as the owner of the Note for all purposes. Ownership of the Note is
conditioned upon the owner or prospective owner thereof having
Senior Subordinated Note
Page 3
<PAGE>
provided to the Company definitive written information concerning such
ownership.
7. AMENDMENT: SUPPLEMENT: WAIVER.
Subject to certain exceptions, the Notes may be amended or supplemented
with the written consent of the Holders of at least a majority in aggregate
principal amount of the Notes then outstanding, and any existing Event of
Default or compliance with any provision may be waived with the consent of the
Holders of a majority in aggregate principal amount of the Notes then
outstanding. Without the consent of any Holder, the Company may amend or
supplement the Notes to, among other things, cure any ambiguity, defect or
inconsistency (provided such amendment or supplement does not adversely affect
the rights of any Holder of a Note), and notice of such amendment or supplement
shall be given to each Holder.
8. COVENANTS.
So long as any Principal Amount of this Note is outstanding, the Company
shall perform where required, or refrain from performing where prohibited, each
of the actions listed below:
CORPORATE EXISTENCE. The Company shall do or cause to be done all things
necessary to preserve and keep in full force and effect its corporate existence
and the corporate or other existence of each of its subsidiaries in accordance
with the respective organizational documents of each of them; provided ' ed,
however, that the Company shall not be required to preserve any such existence
if (a) the Board of Directors of the Company shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company and (b) the loss thereof is not disadvantageous in any material
respect to the Holders of the Notes. The Company will not engage in any
business if, as a result thereof, the general nature of the business that would
then be engaged in by the Company would be substantially changed from the
general nature of the business currently engaged m by the Company.
COMPLIANCE WITH LAWS. The Company shall comply in all material respects
with all applicable laws, statutes and governmental regulations and with all
applicable orders, rules, rulings, certificates, licenses, regulations and
decrees (collectively "Laws") and shall pay all taxes, assessments, governmental
charges, claims for labor, supplies, rent and any other obligations which, if
unpaid, might become a lien, charge or encumbrance against any of its
properties, except Laws contested in good faith and liabilities being contested
in good faith and against which adequate reserves have been established.
MAINTENANCE OF PROPERTY AND INSURANCE. The Company shall maintain or shall
insure in commercially reasonable amounts in favor of the Company its tangible
properties and assets in good repair, working order and condition, ordinary wear
and tear excepted, so far as is necessary or advantageous to the proper carrying
on of its business and operations and shall make or shall cause to be made all
needed repairs, replacements and renewals as are necessary to conduct its
business in accordance with customary business practices.
PROHIBITION OF FUNDAMENTAL CHANGES. The Company shall not liquidate, wind
up or dissolve itself (or suffer any liquidation or dissolution), consolidate
with, or merge with or into, or convey, sell, lease or transfer or otherwise
dispose of, in one transaction or a series of related transactions, all or
substantially all of its business, property or tangible or intangible assets,
whether now owned or hereafter acquired, to another corporation unless (a) the
successor corporation is a corporation organized and existing under the laws of
the United States or any state thereof or the District of Columbia, (b) the
successor corporation (if other than the Company) assumes all of the obligations
of the Company under the Notes, and (c) immediately after giving effect to such
transaction (I) no Event of Default shall have occurred and be continuing and
(ii) the net worth of the successor corporation is not less than that of the
Company immediately prior to such merger consolidation or transfer.
LIMITATION ON DIVIDENDS AND RESTRICTED PAYMENTS. The Company shall not
declare or pay any dividends on or make any payment on account of or set apart
assets for a sinking or other analogous fund for the purchase redemption
retirement or other acquisition of shares of any class of capital stock of the
Company whether now or hereafter outstanding or make any other distribution in
respect thereof either directly or indirectly whether in cash or property or in
obligations of the Company or any of its subsidiaries.
Senior Subordinated Notes
Page 4
<PAGE>
LIMITATION ON COMPENSATION. The Company shall not increase the compensation
payable to any employee unless such compensation is reasonable and consistent
with the Company s past practices and existing policies or is pursuant to an
existing agreement with such employee.
NOTICE REGARDING ABSENCE OF DEFAULTS. When requested the Company shall
furnish to the Holder hereof a written statement that there does not exist any
default hereunder. Promptly (but in any event within five business days) after
the discovery or receipt of notice of any default under this Note any default
under any material agreement to which the Company is a party or any other
material adverse event or circumstance affecting the Company (including the
filing of any material litigation against the Company or the existence of any
dispute with any person or entity which involves a reasonable likelihood of such
litigation being commenced) the Company shall furnish to the Holder hereof an
officer's certificate specifying the nature and period of existence thereof and
what actions the Company has taken and proposes to take with respect thereto.
FINANCIAL INFORMATION. The Company shall provide the Holder of this Note
with (a) unaudited quarterly financial statements of the Company and its
subsidiaries within forty-five (45) days after the end of each fiscal quarter;
(b) fiscal year financial statements of the Company audited by a national
accounting firm within ninety (90) days after the end of each fiscal year; and
(c) such other financial information of the Company and its subsidiaries as the
Holder reasonably requests provided such financial information is prepared by
the Company in the ordinary course.
LIMITATION ON AFFILIATE TRANSACTIONS. Neither the Company nor any of its
subsidiaries shall enter into an Affiliate Transaction (as defined below) unless
the Board of Directors m good faith determines that me terms of such Affiliate
Transaction are fair to the Company or such subsidiary. For purposes of this
paragraph the term "Affiliate Transaction" means a transaction between the
Company or its subsidiary and one of its officers or directors or any
shareholder of the Company who holds five percent or more of the issued and
outstanding shares of the Company s Common Stock.
9. SUCCESSORS.
When a successor assumes all the obligations of its predecessor under the
Notes, the predecessor will be released from those obligations.
10. DEFAULTS AND REMEDIES.
"Event of Default." wherever used herein, means any one of the following
events (whatever the reason for such Event of Default and whether it shall be
caused voluntarily or involuntarily or effected, without limitation, by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(a) the failure by the Company to pay interest upon the Note as and when the
same becomes due and payable, and the continuance of such failure for 30
days;
(b) the failure by the Company to pay all or any part of the Principal Amount of
the Note when and as the same becomes due and payable on the Maturity Date,
on the Extended Maturity Date, if applicable, upon acceleration, or
otherwise;
(c) a material breach by the Company of any covenant or agreement of the Company
contained in this Note if such failure continues for a period of 30 days
after the earlier to occur of (i) written notice of such failure has been
delivered to the Company, or (ii) the day on which the Company first obtains
knowledge of such default;
(d) a material breach by the Company of any representation or warranty made by
the Company in this Note if such breach continues for a period of 30 days
after written notice of such breach has been delivered to the Company;
Senior Subordinated Note
Page 5
<PAGE>
(e) a default or defaults under any bond, debenture, note or other evidence of
indebtedness for money borrowed by the Company, or under any mortgage,
indenture or instrument under which there may be issued or by which there
may be secured or evidenced any indebtedness for money borrowed, whether
such indebtedness now exists or shall hereafter be created, which shall have
resulted m indebtedness in the outstanding principal amount of at least
$100,000 becoming or being declared due and payable prior to the date on
which it would otherwise have become due and payable, without such
indebtedness having been discharged, or such acceleration having been
rescinded or annulled.
(f) the entry by a court or courts of competent jurisdiction of a final judgment
or final judgments for the payment of money against the Company which remain
undischarged for a period (during which execution shall not be effectively
stayed, the posting of any required bond not being deemed an execution for
purposes hereof) of 30 days after all rights to appeal have been exhausted,
provided that the aggregate amount of all such judgments exceeds $100,000;
(g) the entry by a court having jurisdiction in the premises of (I) a decree or
order for relief in respect of the Company in an involuntary case or
proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization or other similar law, or (ii) a decree or order adjudging the
Company a bankrupt or insolvent, or approving as properly fled a petition
seeking reorganization, arrangement, adjustment or composition of or in
respect of the Company under any applicable federal or state law, or
appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or of any substantial
part of their respective property, or ordering the winding up or liquidation
of affairs, and the continuance of any such decree or order for relief or
any such other decree or order current and in effect for a period of 90
consecutive days; or
(h) the commencement by the Company of a voluntary case or proceeding under any
applicable federal or state bankruptcy, insolvency, reorganization or other
similar law or of any other case or proceeding to be adjudicated a bankrupt
or insolvent, or the consent to the entry of a decree or order for relief in
respect of the Company m an involuntary case or proceeding under any
applicable federal or state bankruptcy, insolvency, reorganization or other
similar law or to the commencement of any bankruptcy or insolvency case or
proceeding against it, or the fling of a petition or answer or consent
seeking reorganization or relief under any applicable federal or state law,
or the consent to the filing of such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator, assignee trustee,
sequestrator or other similar official of the Company or of any substantial
part of its property, or the making of an assignment for the benefit of
creditors, or the admission in writing of inability to pay debts generally
as they become due, or the taking of corporate action by the Company m
furtherance of any such action.
A Default under clause (g) above is not an Event of Default until the
Holders of at least 25% in aggregate principal amount of the Notes then
outstanding notify the Company of the Event of Default, and the Company does not
cure the Event of Default within 60 days after receipt of the notice. The notice
must specify the Event of Default, demand that it be remedied and state that the
notice is a "Notice of Default."
If an Event of Default shall occur and be continuing, the holders of a
minimum of 25 % in aggregate principal amount of the Notes then outstanding may
declare the Principal Amount of and all accrued but unpaid interest on all Notes
to be immediately due and payable in full.
The Holders of a majority in aggregate principal amount of the Notes then
outstanding (exclusive of Notes held by the Company and its Affiliates) shall
have the right to determine the time, method and place of conducting any
proceeding for any remedy available to the Holders of the Notes, but the Holder
of any Note has the right to receive payment of the principal amount of and
interest on such Note on the Maturity Date or Extended Maturity Date, whichever
is applicable, and to institute suit for the enforcement of any such payment.
The holders of a majority in aggregate principal amount of the Notes then
outstanding (exclusive of Notes held by the Company and its Affiliates) may
waive any default and its consequences under the Notes, except a default in the
payment of the principal amount of, or interest on any Note; provided, however,
that Holders of at least 75 % of the aggregate principal amount of the Notes
then outstanding (exclusive of Notes held by the Company and its Affiliates) may
consent to the extension of any payment for up to two periods of six months each
after any Extended Maturity Period.
Senior Subordinated Note
Page 6
<PAGE>
If the Company does not close an initial public offering of its Common
Stock, or a business combination transaction involving the Company and a
publicly-held corporation whose shares are traded in the over-the-counter market
or on an established securities exchange, for any reason whatsoever prior to the
Maturity Date or the Extended Maturity Date, whichever is applicable, and the
Principal Amount of and accrued but unpaid interest on the Notes are not paid in
full on or before the Maturity Date or the Extended Maturity Date, whichever is
applicable, then a representative of the Holders of all outstanding Notes will
have the right to appoint one member to the Company's Board of Directors and to
maintain that directorship until the earlier of (i) the closing of an initial
public offering of Common Stock by the Company, (ii) a business combination
transaction involving the Company and a publicly-held corporation whose shares
are traded in the over-the-counter market or on an established securities
exchange, or (iii) payment of the entire Principal Amount of and accrued but
unpaid interest on the Notes.
11. NO RECOURSE AGAINST OTHERS.
No stockholder, director, officer, employee or incorporator, as such, past,
present or future, of the Company or any successor corporation shall have any
personal liability for any obligation of the Company under the Notes or for any
claim based on, m respect of or by reason of, such obligations or their
creation. Each Holder of a Note by accepting a Note waives and releases all such
personal liability. The waiver and release are part of the consideration for the
issuance of the Notes.
12. REPRESENTATIONS AND WARRANTIES OF COMPANY.
The Company hereby represents and warrants to the Holder of this Note that
the following statements are correct and complete as of the date hereof except
as set forth therein:
ORGANIZATION AND GOOD STANDING. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Texas and has the corporate power and authority necessary to carry on its
business as it is now being conducted and is duly licensed as a foreign
corporation to do business in each jurisdiction in which the nature of its
business or its activities or the character or ownership of its properties makes
such licensing or qualification necessary. The Company is not in default under
or in violation of any provision of its charter or bylaws.
CAPITALIZATION. The capital stock that the Company is authorized to issue
consists of 30,000,000 shares, consisting of 25,000,000 shares of common stock,
$.0l par value per share (the "Common Stock") and 5,000,000 shares of such
preferred stock, $.Ol par value per share ("Preferred Stock") as the Board of
Directors may from time to time authorize and issue. As of December 12, 1996, a
total of 5,000,000 shares of Common Stock were issued and outstanding and no
shares of Preferred Stock were issued and outstanding. All of the issued and
outstanding shares of Common Stock have been duly authorized, are validly
issued, fully paid, and nonassessable. As of December 12, 1996, the Company had
granted its employees options to acquire an aggregate of 500,000 shares of
Common Stock.
AUTHORITY; NO BREACH. The Company has the requisite power and authority to
execute, deliver and perform this Note. The execution and delivery of this Note
does not violate any provisions of the constituent documents of the Company, nor
any provisions of, or result in the acceleration of, any obligation under any
indenture, mortgage, lien, lease, agreement, license, permit, rule, regulation,
statute or any other agreement or instrument, to which the Company is a party,
or by which it is bound. This Note has been duly authorized, executed and
delivered by the Company and constitutes the legal, valid and binding obligation
of the Company, enforceable in accordance with its terms and conditions, subject
to bankruptcy, insolvency, reorganization, moratorium or similar laws of general
application at the time in effect relating to or affecting the rights of
creditors generally.
FINANCIAL STATEMENTS. The financial statements of the Company are true and
correct in all material respects, fairly present the financial position of the
Company at the dates indicated therein and the results of operations for the
Company for the periods indicated therein, and were prepared in accordance with
generally accepted accounting principles consistently applied.
Senior Subordinated Note
Page 7
<PAGE>
TITLE TO ASSETS. The Company holds good title to all of its property, free
and clear of any liens, claims, charges, exceptions or encumbrances, except for
liabilities disclosed in the Company's financial statements or incurred in the
ordinary course of business. All inventories, supplies, equipment, furniture
and other assets currently used by or useful to the Company in the ordinary
course of business by the Company are in good operating condition, reasonable
wear and tear excepted, and perform the function for which they were intended.
LITIGATION OR CLAIMS. The Company is not a party to any litigation,
proceeding, governmental investigation or other proceeding pending or, to the
best of the Company's knowledge or its officers, threatened against or relating
to the Company or its properties or business, or the issuance of the Notes, and,
so far as is known to the Company or its officers, no basis for any such action
exists. Litigation or a proceeding or other matter will be deemed to have been
"threatened" if any demand or statement has been made orally or in writing to
the Company or any officer with respect thereto.
EMPLOYEES, LABOR CONTRACTS AND EMPLOYEE BENEFIT PLANS. To the best of the
Company's knowledge, no executive, key employee or group of employees has any
plans to terminate employment with the Company. The Company is not a party to
or bound by any collective bargaining agreement, nor has it experienced any
strikes, grievances, claims of unfair labor practices or other collective
bargaining disputes. The Company has not committed any unfair labor practice.
The Company has no knowledge of any organizational effort presently being made
or threatened by or on behalf of any labor union with respect to employees of
the Company. AU of the Company's employees have entered into written Employment
Agreements that require such employees to devote substantially all of their
business time to the affairs of the Company, establish standards of conduct,
prohibit competition with the Company during their term, expressly affirm the
Company's rights respecting the ownership and disclosure of confidential
information, provide for acts and events that would give rise to termination of
such agreements and provide express remedies for a breach of the agreement by
the covered employee or the Company. The Company has not received any claims in
the nature of worker's compensation claims or employment discrimination in the
last two years. The Company is not a party to any written or oral contract with
any labor union.
SUBSEQUENT EVENTS TO MOST RECENT FINANCIAL STATEMENT. Except as disclosed
in the Company's Private Placement Memorandum dated December 12, 1996, since
September 30, 1996, the Company has not (a) incurred any material obligation or
liability (absolute, accrued, contingent or otherwise) related to its business;
(b) experienced any material adverse change in its business; (c) sold or
transferred any of its property used in connection with its business, or
canceled any debts or claims or waived any rights related to its business,
except in the ordinary course of business; (d) increased the compensation of any
officer employee, consultant or agent; (e) authorized any capital expenditures
in excess of $10,000 in the aggregate; (f) entered into any agreements regarding
the foregoing or any others material transaction in connection with the
business; or (g) experienced damage, destruction or loss (whether or not covered
by insurance) materially and adversely affecting any of the properties, assets
or business used in connection with the business, or experienced any other
material adverse change in the assets or business of the Company.
TAXES.
(a) The Company has fled all of the tax returns that it is required to file.
All such tax returns were correct and complete in all respects and all taxes
owed by the Company (whether or not shown on any tax return) have been paid.
The Company is currently under no extension of time within which to file any
tax return. No claim has ever been made by an authority in a jurisdiction
where the Company does not file tax returns that it is or may be subject to
taxation by that jurisdiction. There are no security interests or liens on
any of the assets that arose in connection with any failure (or alleged
failure) to pay any tax.
(b) The Company has withheld and paid all taxes required to have been withheld
and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, shareholder, or other third party.
(c) Neither the Company nor any director or officer (or employee responsible for
tax matters) has any reason to believe that any authority proposes to assess
any additional taxes for any period for which tax returns have been fled.
There is w dispute or claim concerning any tax liability of the Company
either (a) claimed or raised by any authority in writing, or (b) proposed to
which the Company and the directors and officers (or employee
Senior Subordinated Note
Page 8
<PAGE>
responsible for tax matters) of the Company has knowledge based upon
personal contact with any agent of such authority. No tax returns fled by
the Company are currently the subject of an audit nor, to the best of the
Company's knowledge, are being proposed for an audit.
(d) The Company has not waived any statute of limitations in respect of taxes or
agreed to any extension of time with respect to any tax assessment or
deficiency. The Company has not made any payments, is not obligated to make
any payments, nor is a party to any agreement that under certain
circumstances could obligate it to make any payments that would not be
deductible under Section 280(G) of the Code. The Company is not and has
never been a United States real property holding corporation within the
meaning of Section 897(C)(2) of the Code. T he Company is not a party to
any tax allocation or tax sharing agreement, and the Company has no
liability for the taxes of any other person as a transferee or successor, by
contract or otherwise.
INSURANCE. The Company is now and in the past has been covered by insurance
in scope and amount customary and reasonable for its business. With respect to
each such insurance policy, (a) the policy is legal, valid, binding,
enforceable, and in full force and effect; (b) the policy will continue to be
legal, valid, binding, enforceable, and in full force and effect on identical
terms throughout the term of the Notes; (c) neither the Company nor any other
party to the policy is in breach or default (including with respect to the
payment of premiums or the giving of notices), and no event has occurred which,
with notice or the lapse of time, would constitute such a breach or default, or
permit termination, modification, or acceleration, under the policy; and (d) no
party to the policy has repudiated any provision thereof.
COMPLIANCE WITH LAWS. The Company has complied with the applicable
provisions of all laws and no notice of any pending inspection or violation of
any law has been received by the Company.
COBRA. The Company is in compliance with the continuation of coverage
requirements of COBRA.
LICENSES AND APPROVALS. The Company has obtained all licenses, permits and
approvals necessary to operate its business, each of which is currently in full
force and effect, and the issuance of this Note and the Notes will not conflict
with or result in termination of such licenses and approvals.
CONSENTS. The Company has obtained all consents and approvals from third
parties necessary for the issuance of the Notes and no additional consents or
approvals are required.
INTELLECTUAL PROPERLY. The Company owns or possesses adequate licenses or
other rights to use all patents, patent applications, trademarks, trademark
applications, service marks, service mark applications, trade names, copyrights,
manufacturing processes, formulae, trade secrets, customer lists and know how
(collectively, "Intellectual Property") necessary or desirable to the conduct of
its business as conducted and as proposed to be conducted, no claim is pending
or, to the best of the Company's knowledge, threatened to the effect that the
operations of the Company infringe upon or conflict with the asserted rights of
any other person under any Intellectual Property, and there is no basis for any
such claim (whether or not pending or threatened). No claim is pending or
threatened to the effect that any such Intellectual Property owned or licensed
by the Company, or which the Company otherwise has the right to use, is invalid
or unenforceable by the Company, and there is no basis for any such claim
(whether or not pending or threatened).
13. ABBREVIATIONS AND DEFINED TERMS.
Customary abbreviations may be used in the name of a Holder of a Note or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN ( = joint tenants with right of survivorship and not as
tenants m common), CUST ( = Custodian), and U/G/M/A (= Uniform Gifts to Minors
Act). Additional abbreviations may also be used though not in the above list.
Senior Subordinated Note
Page 9
<PAGE>
14. ISSUANCE OF COMMON STOCK WARRANTS.
As additional consideration for the purchase of the Notes, the Company is
granting to each of the Holders of the Notes detachable Common Stock Warrants to
purchase that number of shares of the Company's Common Stock determined by
dividing the aggregate Principal Amount of Notes purchased by such Holder by the
exercise price for the shares of Common Stock subject to purchase under the
Warrants, which shall be either (I) one-half of the per share offering price for
Common Stock sold by the Company in an underwritten initial public offering, or
(ii) one-half of the average closing bid price of the Common Stock of the
Company during the 90-day period commencing 60 days after the closing of a
business combination transaction involving the Company and a publicly-held
corporation whose shares are traded in the over-the-counter market or on an
established securities exchange. In the event that the Maturity Date of the
Notes is extended by the Company as provided in Section 2 hereof, each of the
Holders will be granted additional Warrants to purchase that number of shares of
Common Stock equal to 50% of the number of shares of Common Stock purchasable
under the Warrants.
Senior Subordinated Note
Page 10
<PAGE>
EXHIBIT 4.3
IWC SERVICES, INC.
COMMON STOCK PURCHASE WARRANT
DATED MARCH 19, 1997
EXERCISABLE AT ANY TIME AT OR PRIOR TO
3:30 P.M. CENTRAL STANDARD TIME ON DECEMBER 31, 2000
TO PURCHASE THE NUMBER OF SHARES DETERMINED IN SECTION 1
THESE SECURITIES (THE "SECURITIES") HAVE BEEN (1) ACQUIRED FOR INVESTMENT; (II)
ISSUED AND SOLD IN RELIANCE UPON THE EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES LAWS OF VARIOUS STATES; AND (III) ISSUED AND SOLD IN RELIANCE UPON
THE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933 (THE "ACT")
PROVIDED BY SECTION 4(2) OF THE 1933 ACT. THE SECURITIES CANNOT BE OFFERED FOR
SALE, SOLD OR TRANSFERRED OTHER THAN PURSUANT TO (A) AN EFFECTIVE REGISTRATION
UNDER THE ACT OR ANY TRANSACTION WHICH IS OTHERWISE IN COMPLIANCE WITH THE ACT;
AND (B) EVIDENCE SATISFACTORY TO THE ISSUER OF COMPLIANCE WITH THE APPLICABLE
SECURITIES LAWS OF ANY OTHER JURISDICTION. THE ISSUER SHALL BE ENTITLED TO RELY
UPON AN OPINION OF COUNSEL SATISFACTORY TO IT WITH RESPECT TO COMPLIANCE WITH
THE ABOVE LAWS.
This Common Stock Warrant ("Warrant") is issued as of the date set forth
above by IWC Services, Inc., a Texas corporation (the "Company"), to
or registered assigns (the "Holder"). This Warrant is part of a series
of Common Stock Warrants ("Warrants") issued in connection with the offer and
sale by the Company of up to 5,000 investment units ("Units") each of which
consists of a Warrant and a 12% Senior Subordinated Note (individually a "Note"
and collectively the "Notes") in the principal amount of $1,000 ($5,000,000 in
the aggregate) to the purchasers thereof (collectively the "Holders").
WITNESSETH:
1. ISSUANCE OF WARRANT: TERM. In consideration for the purchase
contemporaneously herewith of one or more 12% Senior Subordinated Note (the
"Notes") and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company hereby grants to the
Holder, subject to the provisions hereinafter set forth, the right to purchase
that number of shares of common stock, $.0l per share ("Common Stock"), of the
Company (the shares of Common Stock issuable upon exercise of this Warrant are
hereinafter referred to as the "Shares") determined by dividing the principal
amount of the Notes purchased by the Holder by the Exercise Price, as defined in
Section 2 hereof. If the maturity date of the Notes is extended as provided in
Section 2 thereof, the Holder shall be granted an additional Warrant to purchase
that number of shares of Common Stock equal to 50% of the number of shares of
Common Stock purchasable under this Warrant. This Warrant shall be exercisable
by the Holder at any time during the period ending at 3:30 p.m. Central Standard
Time on December 31, 2000 (the "Expiration Date").
2. EXERCISE PRICE. The exercise price (the "Exercise Price") per share for
the Shares that may be purchased pursuant to the terms of this Warrant shall be
either (i) one-half of the per share offering price for Common Stock sold by the
Company in an underwritten initial public offering, or (ii) one-half of the
average closing bid price of the Common Stock of the Company during the 90-day
period commencing 60 days after the closing of a business combination
transaction involving the Company and a publicly-held corporation whose shares
are traded in the over-the-counter market or on an established securities
exchange. If the Company does not complete an initial public offering or
business combination transaction prior to the Expiration Date, the Exercise
Price per share for the Shares that may be purchased pursuant to the terms of
this Warrant shall be $2.00, which has been arbitrarily determined by the
Company and is not based on any established criteria for determining the value
of common stock.
3. EXERCISE OF WARRANTS.
(A) EXERCISE PROCEDURES. Prior to the Expiration Date, this Warrant
may be exercised at any time,
Warrant
Page 1
<PAGE>
from time to time, by the Holder hereof, subject to the conditions set
forth herein, by (i) delivering to the Company the written notice on
the Form of Election to purchase attached hereto as Exhibit "A,"
specifying the number of Shares that the Holder has elected to
purchase, at the following address: 2800 Post Oak Boulevard, Suite
6300, Houston, Texas, 77056 ("Company Office"), or such other address
as the Company shall designate by written notice to the Holder, (ii)
surrendering this Warrant to the Company, and (iii) delivering to the
Company payment (in the manner set forth in Section 3(b) hereof) of
the aggregate Exercise Price for the Shares to be purchased. The date
of the exercise of the purchase of any Shares to be purchased pursuant
to this Warrant shall be deemed to be the date of receipt by the
Company of the Form of Exercise duly completed and signed by the
Holder, this Warrant and the appropriate aggregate Exercise Price.
(B) PAYMENT OF EXERCISE PRICE; EXPENSES. The aggregate Exercise Price
for the Shares to be purchased pursuant to the exercise of this
Warrant shall be paid to the Company at the Company Office in cash, by
wire transfer or by certified or official bank check. The Company
shall pay all expenses, taxes and other charges payable in connection
with the preparation, execution and delivery of stock certificates
pursuant to this Section 3, except that, in the case of stock
certificates that have been registered in a name or names other than
the names of the registered holder of this Warrant, funds sufficient
to pay all stock transfer taxes which shall be payable upon the
execution and delivery of such stock certificate or certificates,
shall be paid by the registered holder hereto to the Company at the
time of delivering this Warrant to the Company as mentioned above.
(C) EXERCISE OF FEWER THAN ALL WARRANTS. If the Holder exercises this
Warrant with respect to fewer than all of the Shares that may be
purchased hereunder, then upon surrender of this Warrant at the
Company Office by the registered Holder hereof in person or by
attorney and the Form of Exercise duly authorized in writing, this
Warrant will be exchanged for a similar Warrant, representing the
right to purchase the remaining number of Shares subject to purchase
hereunder.
(D) DENOMINATIONS OF WARRANTS. This Warrant may be exchanged for new
Warrants in different denominations at the option of the Holder by the
surrender of this Warrant to the Company at the Company Office
accompanied by written instructions setting forth the denominations of
the new Warrants.
(E) FRACTIONAL SHARES. No fractional shares of Common Stock will be
issued upon the exercise of this Warrant, but in lieu thereof, a cash
payment will be made to the Holder in an amount equal to any
fractional share resulting from the calculation of the number of
Shares to be purchased in accordance with the provisions in Section 1
hereof multiplied by the Exercise Price determined in Section 2
hereof.
4. ANTI-DILUTION PROTECTION. The applicable Exercise Price per share
determined in Section 2 hereof and the number of Shares issuable upon exercise
of this Warrant determined in Section I hereof are subject to weighted average
adjustment from time to time upon the occurrence hereafter of certain
transactions by the Company, including dividends of stock or other securities or
property, stock splits, reverse stock splits, subdivisions, combinations,
recapitalizations, reorganizations, reclassifications, consolidations, mergers
or sales of properties and assets and dissolution (collectively,
"Reorganization"). In the event that the outstanding Common Stock of the
Company is at any time increased or decreased solely by reason of a
Reorganization, appropriate adjustments in the number and kind of such
securities then subject to this Warrant shall be made effective as of the date
of such occurrence so that the interest of the Holder upon exercise will be the
same as it would have been had such Holder owned the underlying securities
immediately prior to the occurrence of such event. Such adjustment shall be
made successively whenever any Reorganization shall occur. Not withstanding the
foregoing, no adjustment shall be required under this Section 4 until the
cumulative adjustments result in a dilution to the Holder of 5% or more.
5. TRANSFERABILITY. The Warrants are separate and detachable securities,
transferable on the books of the Company at the Company Office by the registered
Holder hereof in person or by attorney duly authorized in writing, upon
Warrant
Page 2
<PAGE>
surrender of this Warrant to the Company for transfer. Upon any such transfer,
a new Warrant to purchase a like number of Shares will be issued to the
transferee or transferees in exchange for this Warrant. Upon receipt by the
Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and, in case of loss, theft or
destruction, of an agreement of indemnity (without security therefor, and upon
surrender and cancellation of this Warrant, if mutilated), the Company will make
and deliver a new Warrant of like tenor, in lieu of this Warrant. This Warrant
shall be promptly canceled by the Company upon the surrender hereof in
connection with any exchange, transfer or replacement. The Company shall pay all
expenses, taxes (other than stock transfer taxes) and other charges payable in
connection with the preparation, execution and delivery of this Warrant pursuant
to this Section.
6. HOLDER NOT A SHAREHOLDER. No Holder of this Warrant shall, solely by
reason of being a Holder hereof, possess any right or privilege as a shareholder
of the Company, including without limitation, the right to vote or receive
dividends or be deemed for any purpose the holder of Common Stock or of any
other securities of the Company which may at any time be issuable on the
exercise hereof, until the Holder shall have exercised all or any part of this
Warrant in accordance with the provisions set forth in Section 3 hereof.
Nothing contained herein shall be construed to confer upon the Holder, as such,
any of the rights of a shareholder of the Company or any right to vote upon any
matter submitted to shareholders at any meeting thereof, or to give or withhold
consent to any corporate action (whether upon any recapitalization, issue of
stock, reclassification of stock, change of par value, consolidation, merger,
conveyance, or otherwise) or, to receive notice of the meetings, until the
Warrant shall have been exercised as provided in Section 3 hereof.
7. COVENANTS AND CONDITIONS. The provisions of this Warrant are subject
to the following covenants and conditions:
(A) RESTRICTED SHARES. Neither this Warrant nor the Shares have been
registered under the Act or the securities laws of any state (the
"Blue Sky Laws"). By purchasing a Note and receiving this Warrant,
the Holder hereof acknowledges that the Holder is acquiring this
Warrant for investment purposes only, for his own account and not with
a view to the distribution or resale of this Warrant without an
effective registration for this Warrant under the Act and applicable
Blue Sky Laws or an opinion of counsel reasonably satisfactory to the
Company and its counsel that registration is not required under the
Act or any applicable Blue Sky Laws. The Shares issued upon exercise
of this Warrant shall be restricted securities under the Act and
applicable Blue Sky Laws, and the certificates representing the Shares
shall bear a restrictive legend in substantially the same form as set
forth on the cover page of this Warrant.
Other legends as required under federal or state laws may be placed on
the certificates evidencing any Shares purchased hereunder. The
Holder hereof agrees to execute such other documents and instruments
as counsel for the Company reasonably deems necessary to effect the
compliance of the issuance of this Warrant and any Shares issued upon
exercise hereof with applicable federal and state securities laws.
(B) RESERVATION OF SHARES. The Company covenants and agrees that the
Shares to be issued upon the exercise of this Warrant shall, upon
issuance and payment therefor in accordance with the terms hereof be
legally and validly authorized, issued and outstanding, fully paid and
nonassessable and free from preemptive rights. The Company shall at
all times reserve and keep available for issuance upon the exercise of
this Warrant such number of authorized but unissued shares of Common
Stock as will be sufficient to permit the exercise in full of this
Warrant and all other outstanding Warrants, taking into account for
this purpose, any adjustments to the Shares purchasable under this
Warrant as provided under Section 4 hereof.
(C) AFFIRMATIVE AND RESTRICTED COVENANTS. The Company will at all
times take such action in good faith asmay be necessary or appropriate
in order to preserve the rights of the Holder. The Company will not,
by amendment of its certificate of incorporation, enter into any
reorganization, transfer of assets, consolidation, merger, issue or
sale of securities or otherwise avoid or take any action which would
have the effect of avoiding the observance or performance of any of
the terms to be observed or performed hereunder by the Company, but
will at all times in good faith assist in carrying out all of the
provisions
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of this Warrant and in taking all such action as may be necessary or
appropriate in order to protect the rights of the holders of this
Warrant against dilution or other impairment.
(D) FINANCIAL INFORMATION. So long as this Warrant or any part hereof
remains outstanding, the Company shall furnish to the Holder: (i)
unaudited, quarterly financial statements of the Company within forty-
five (45) days after the end of each fiscal quarter; (ii) financial
statements of the Company for each fiscal year within ninety (90) days
after the end of the fiscal year, audited by a national accounting
firm; and (iii) such other financial information of the Company as the
Holder may reasonably request in writing, provided that such other
financial information is prepared by the Company in the ordinary
course.
8. REGISTRATION RIGHTS.
(A) DEMAND REGISTRATION. The Company hereby agrees that upon the
written request of a Holder or Holders of 50% or more of the aggregate
number of Shares, which have been or could be issued or are issuable
upon exercise of the Warrants, it will use its best efforts in
accordance with the terms of this Section 8 to effect the registration
under the Act of any Shares purchased pursuant to the terms of this
Warrant; provided, however, that such request shall not be made until
180 days after (i) the effective date of the Company's initial public
offering, or (ii) the closing of a business combination transaction
involving the Company and a publicly-held corporation whose shares are
traded in the over-the-counter market or on an established securities
exchange. Such registration is herein sometimes referred to as the
"Demand Registration." In connection with such Demand Registration,
the Company will give written notice (a "Notice of Registration") to
all of the Holders, of its intent to effect the Demand Registration
under the Act of the Shares. The Holders shall then provide the
Company, within 15 days after the giving of the Notice of
Registration, a written response which shall specify the number of
Shares to be registered and the intended method of disposition
thereof. The Company shall not be required to effect more than one
Demand Registration under this Section 8. It is understood and agreed
that the Company's obligation to register the Shares hereunder may be
fulfilled by either a Company-sponsored "shelf" registration or
through an underwritten public offering and that if participation in
either one of such types of registration is offered to the Holders,
and that if a Holder shall be offered the ability to, and shall
decline to participate in such Demand Registration, such offer and
declination shall be deemed to constitute the registration rights
granted hereunder with respect to the Shares subject thereto.
(B) REGISTRATION STATEMENT FORM. The Demand Registration shall be on
such appropriate registration form promulgated by the Commission as
shall be selected by the Company, and shall permit the disposition of
the Shares covered thereby in accordance with the intended method or
methods specified by the Holders in their request for such
registration.
(C) REGISTRATION EXPENSES. The Company will pay all Registration
Expenses incurred in connection with the Demand Registration.
(D) RIGHT TO INCLUDE SHARES IN REGISTRATION. The Company may include
in the registration statement related to the Demand Registration
securities on its own behalf The amount of securities that the Company
may include in the registration statement relating to such Demand
Registration on its own behalf shall be determined at the Company's
sole discretion, taking into consideration all contractual
registration rights then outstanding to all parties.
(E) DELAY OF COMPANY'S REGISTRATION OBLIGATIONS. Notwithstanding the
foregoing, the Company may postpone taking action with respect to the
Demand Registration for a reasonable period if, in the good faith
opinion of the Company's Board of Directors, effecting the
registration would adversely affect a material financing, acquisition,
disposition of assets or stock, merger or other comparable transaction
or would require the Company to make public disclosure of information,
the public disclosure of which would have a materially adverse effect
upon the Company, provided that the Company shall not delay
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such action pursuant to this sentence more than once in any 6- month
period.
(F) TERMINATION OF RIGHTS. The registration rights granted hereunder
shall terminate with respect to Shares that become eligible for resale
under Rule 144, as in effect at the time, or any other applicable
exemption for the registration requirements of the Act.
9. REGISTRATION PROCEDURES. If and whenever the Company is required to
use its best efforts to effect the Demand Registration of any Shares under the
Act pursuant to Section 8, the Company will use its best efforts to effect the
Demand Registration and sale of such Shares in accordance with the intended
methods of disposition thereof specified by the Holders. Without limiting the
foregoing, the Company will, as expeditiously as possible:
(a) prepare and file with the Commission as soon as practicable,
unless delayed pursuant to Section 8(e), the requisite registration
statement to effect such Demand Registration and use its best efforts
to cause such registration statement to become effective, provided
that as far in advance as practical before filing such registration
statement or any amendment thereto, the Company will furnish to the
Holders who have elected to participate in such Demand Registration.
copies of reasonably complete drafts of all such documents proposed to
be fled (including exhibits), and any such Holder shall have the
opportunity to object to any information pertaining solely to such
Holder that is contained therein, and the Company will make the
corrections reasonably requested by such Holder with respect to such
information prior to filing any such registration statement or
amendment;
(b) prepare and file with the Commission such amendments and
supplements to such registration statements, financial statements and
any prospectus used in connection therewith as may be necessary to
maintain the effectiveness of such registration statement and to
comply with the provisions of the Act with respect to the disposition
of all Shares covered by such registration statement, in accordance
with the intended methods of disposition thereof, until the earlier of
(i) such time as all of such Shares have been disposed of in
accordance with the intended methods of disposition by the Holder or
Holders thereof set forth in such registration statement and (ii) 180
days after such registration statement becomes effective;
(c) promptly notify each Holder of Shares who has elected to
participate in such Demand Registration and the underwriter or
underwriters, if any:
(i) when such registration statement or any prospectus used in
connection therewith, or any amendment or supplement thereto, has
been filed and, with respect to such registration statement or
any post-effective amendment thereto. when the same has become
effective;
(ii) of the notification to the Company by the Commission of its
initiation of any proceeding with respect to the issuance by the
Commission of, or of the issuance by the Commission of, any stop
order suspending the effectiveness of such registration
statement; and
(ii) of the receipt by the Company of any notification with
respect to the suspension of the qualification of any Shares for
sale under the applicable Blue Sky Laws of any jurisdiction;
(d) furnish to each Holder of Shares covered by such registration
statement such number of conformed copies of such registration
statement and of each amendment and supplement thereto (in each case
including all exhibits and documents incorporated by reference), such
number of copies of the prospectus contained in such registration
statement (including each preliminary prospectus and any summary
prospectus) and any other prospectus fled under Rule 424 promulgated
under the Act relating to such Holder's Shares, and such other
documents, as such Holder may reasonably request to facilitate the
disposition of its Shares;
(e) use its best efforts to register or qualify all Shares covered by
such registration statement under
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the Blue Sky Laws of such jurisdictions as each Holder thereof shall
reasonably request, to keep such registration or qualification in
effect for so long as such registration statement remains in effect,
and take any other action which may be reasonably necessary or
advisable to enable such Holder to consummate the disposition in such
jurisdictions of the Shares owned by such Holder, except that the
Company shall not for any such purpose be required (i) to qualify
generally to do business as a foreign corporation in any jurisdiction
wherein it would not but for the requirements of this Section 9(e) be
obligated to be so qualified, or (ii) to subject itself to taxation in
any such jurisdiction;
(f) use its best efforts to cause all Shares covered by such
registration statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable
each h older thereof to consummate the disposition of such Shares;
(g) notify each Holder of Shares covered by such registration
statement, at any time when a prospectus relating thereto is required
to be delivered under the Act, of the happening of any event as a
result of which any prospectus included in such registration
statement, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading,
and at the request of any such holder promptly prepare and furnish to
such Holder a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such securities, such
prospectus shall not include an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(h) otherwise use its best efforts to comply with all applicable rules
and regulations of the Commission, and make available to its security
holders, as soon as reasonably practicable, an earnings statement
covering the period of at least 12 months, but not more than 18
months, beginning with the first full calendar month after the
effective date of such registration statement, which earnings
statement shall satisfy the provisions of Section 11 (a) of the Act
and Rule 158 promulgated thereunder;
(i) make available for inspection by any Holder who has elected to
participate in such registration statement, any underwriter
participating in any disposition pursuant to such registration
statement and any attorney, accountant or other agent retained by any
such Holder or underwriter (collectively, the "Inspectors"), all
financial and other records, pertinent corporate documents and
properties of the Company (collectively, the "Records") as shall be
reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers, directors and
employees to supply all information reasonably requested by any such
inspector in connection with such registration statement, and permit
the inspectors to participate in the preparation of such registration
statement and any prospectus contained therein and any amendment or
supplement thereto. Records which the Company determines, in good
faith, to be confidential and which it notifies the inspectors are
confidential shall not be disclosed by the inspectors unless (i) the
disclosure of such Records is necessary to avoid or correct a
misstatement or omission in the registration statement, (ii) the
release of such Records is ordered pursuant to a subpoena or other
order from a court of competent jurisdiction or (iii) the information
in such Records has been made generally available to the public. The
Holder of Shares agrees by acquisition of such Shares that it will,
upon learning that disclosure of such Records is sought in a court of
competent jurisdiction, give notice to the Company and allow the
Company, at the Company's expense, to undertake appropriate action to
prevent disclosure of the Records deemed confidential;
(j) provide a transfer agent and registrar for all Shares covered by
such registration statement not later than the effective date of such
registration statement; and
(k) use its best efforts to cause all Shares covered by such
registration statement to be listed, upon
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official notice of issuance, on any securities exchange on which any
of the securities of the same class as the Shares are then listed.
The Company may require each Holder of Shares as to which any registration
is being effected to, and each such Holder, as a condition to including Shares
in such Demand Registration, shall, furnish the Company with such information
and affidavits regarding such Holder and the distribution of such securities as
the Company may from time to time reasonably request in writing in connection
with such Demand Registration.
Each Holder of Shares agrees by acquisition of such Shares that upon
receipt of any notice from the Company of the happening of any event of the kind
described in Section 9(g), such Holder will forthwith discontinue such Holder's
disposition of Shares pursuant to the registration statement relating to such
Shares until such Holder's receipt of the copies of the supplemented or amended
prospectus contemplated by Section 9(g) and, if so directed by the Company, will
deliver to the Company (at the Company's expense) all copies, other than
permanent file copies, then in such Holder's possession of the prospectus
relating to such Shares current at the time of receipt of such notice.
10. UNDERWRITTEN OFFERINGS. In the case of an underwritten Public
Offering, the Lead Underwriter, if any, shall be any underwriter or underwriters
as shall be selected by the Company, in its sole discretion. The Company shall
enter into an underwriting agreement in customary form with such underwriter or
underwriters, which shall include, among other provisions, indemnities to the
effect and to the extent provided in Section 12 unless otherwise agreed to by
the Lead Underwriter and a Holder or Holders of Shares to be distributed by such
underwriters. The Holders of Shares to be distributed by such underwriters
shall be parties to such underwriting agreement and may, at their option,
require that any or all of the representations and warranties by, and the other
agreements on the part of, the Company to and for the benefit of such
underwriters also be made to and for their benefit and that any or all of the
conditions precedent to the obligations of such underwriters under such
underwriting agreement also be conditions precedent to their obligations.
Unless otherwise agreed to by the Lead Underwriter and a Holder or Holders of
Shares to be distributed by such underwriters, no Holder of Shares shall be
required to make any representations or warranties to or agreements with the
Company or the underwriters other than representations, warranties or agreements
regarding such Holder and its ownership of the securities being registered on
its behalf and such Holder's intended method of distribution and any other
representation required by law. No Holder may participate in such underwritten
offering unless such Holder agrees to sell its Shares on the basis provided in
such underwriting agreement and completes and executes all questionnaires,
powers of attorney, indemnities and other documents reasonably and customarily
required under the terms of such underwriting agreement. If any Holder
disapproves of the terms of an underwriting prior to the effectiveness of the
registration statement, such Holder may elect to withdraw therefrom and from
such registration by notice to the Company and the Lead Underwriter.
11. INCIDENTAL REGISTRATION. If the Company at any time (other than
pursuant to Section 10) proposes to register any of its Common Stock under the
Act for sale to the public, whether for its own account or for the account of
other security holders or both (except with respect to registration statements
on Forms S-4, S-8 or another form not available for registering the Shares for
sale to the public), each such time it will give written notice to the Holders
of its intention so to do. Upon the written request of any such Holder,
received by the Company within 30 days after the giving of any such notice by
the Company, to register any of its Shares, the Company will use its best
efforts to cause the Shares as to which registration shall have been so
requested to be included in the securities to be covered by the registration
statement proposed to be filed by the Company, all to the extent requisite to
permit the sale or other disposition by the Holder of such Shares. In the event
that any Registration pursuant to this Section I I shall be, in whole or in
part, an underwritten public offering of Common Stock, the number of Shares to
be included in such an underwriting may be reduced (pro rata among the
requesting Holders based upon the number of Shares owned by such Holders and the
Company) if and to the extent that the managing underwriter shall be of the
opinion that such inclusion would adversely affect the marketing of the
securities to be sold by the Company. Notwithstanding the foregoing provisions,
the Company may withdraw any registration statement referred to in this Section
11 without thereby incurring any liability to the Holders.
12. INDEMNIFICATION.
(A) INDEMNIFICATION BY THE COMPANY. The Company shall, to the full
extent permitted by law,
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indemnify and hold harmless each Holder of Shares included in any
registration statement fled in connection with a registration under
Sections 8, 9 or 10 hereof, its directors and officers, and each other
Person, if any, who controls any such Holder within the meaning of the
Act, against any losses, claims, damages, expenses or liabilities,
joint or several (together, "Losses"), to which such Holder or any
such director or officer or controlling Person may become subject
under the Act or otherwise, insofar as such Losses (or actions or
proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any such registration
statement, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto,
or any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein (in the case of a prospectus, in the light of the
circumstances under which they were made) not misleading, and the
Company will reimburse such Holder and each such director, officer and
controlling Person for any legal or any other expenses reasonably
incurred by them in connection with investigating or defending any
such Loss (or action or proceeding in respect thereof); provided that
the Company shall not be liable in any such case to the extent that
any such Loss (or action or proceeding in respect thereof) arises out
of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in any such registration statement,
preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement in reliance upon and in conformity with
written information furnished to the Company through an instrument
duly executed by such Holder specifically stating that it is for use
in the preparation thereof. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of
such Holder or any such director, officer or controlling Person, and
shall survive the transfer of Shares by such Holder. The Company
shall also indemnify each other Person who participates (including as
an underwriter) in the offering or sale of Registrable Securities,
their officers and directors and each other Person, if any, who
controls any such participating Person within the meaning of the Act
to the same extent as provided above with respect to Holders of
Shares.
(B) INDEMNIFICATION BY THE HOLDERS. Each Holder of Shares which are
included or are to be included in any registration statement filed in
connection with any registration under Sections 8, 9 or 10 hereof, as
a condition to including Shares in such registration statement, shall,
to the full extent permitted by law, indemnify and hold harmless the
Company, its directors and officers, and each other Person, if any,
who controls the Company within the meaning of the Act, against any
Losses to which the Company or any such director or officer or
controlling Person may become subject under the Act or otherwise,
insofar as such Losses (or actions or proceedings, whether commenced
or threatened, in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact
contained in any such registration statement, any preliminary
prospectus, final prospectus or summary prospectus contained therein,
or any amendment or supplement thereto, or any omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein (in the case of a
prospectus, in the light of the circumstances under which they were
made) not misleading, if such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon
and in conformity with written information furnished to the Company
through an instrument duly executed by such Holder specifically
stating that it is for use in the preparation of such registration
statement, preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement; provided, however, that the
obligation to provide indemnification pursuant to this Section 12(b)
shall be several, and not joint and several, among such indemnifying
Parties on the basis of the number of Shares included in such
registration statement and the aggregate amount which may be recovered
from any Holder of Shares pursuant to the indemnification provided for
in this Section 12(b) in connection with any registration and sale of
Shares shall be limited to the total proceeds (including commissions
and underwriting discounts) received by such Holder from the sale of
such Shares. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Company or
any such director, officer or controlling Person and shall survive the
transfer of such Shares by such Holder. Such Holders shall also
indemnify each other Person who participates (including as an
underwriter) in the offering or sale of Registrable Securities, their
officers and directors and each other
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Person, if any, who controls any such participating Person within the
meaning of the Act to the same ex-tent as provided above with respect
to the Company.
(C) NOTICES OF CLAIMS, ETC. Promptly after receipt by an Indemnified
Party of notice of the commencement of any action or proceeding
involving a claim referred to in Section 12(a) or 12(b), such
Indemnified Party will, if a claim in respect thereof is to be made
against an indemnifying Party pursuant to such subsections, give
written notice to the latter of the commencement of such action,
provided that the failure of any Indemnified Party to give notice as
provided herein shall not relieve the indemnifying Party of its
obligations under the preceding paragraphs of this Section 12, except
to the extent that the indemnifying Party is actually prejudiced by
such failure to give notice. In case any such action is brought
against an Indemnified Party, the indemnifying Party shall be entitled
to participate in and, unless, in the reasonable judgment of any
Indemnified Party, a conflict of interest between such Indemnified
Party and any indemnifying Party exists with respect to such claim, to
assume the defense thereof, jointly with any other indemnifying Party
similarly notified to the extent that it may wish, with counsel
reasonably satisfactory to such Indemnified Party, and after notice
from the Indemnifying Party to such Indemnified Party of its election
so to assume the defense thereof, the indemnifying Party shall not be
liable to such Indemnified Party for any legal or other expenses
subsequently incurred by the latter in connection with the defense
thereof other than reasonable costs of investigation; provided that
the indemnified Party or Indemnified Parties shall have the right to
employ one counsel to represent it or them if, in the reasonable
judgment of the Indemnified Party or Indemnified Parties, it is
advisable for it or them to be represented by separate counsel by
reason of having legal defenses which are different from or in
addition to those available to the indemnifying Party, and in that
event the reasonable fees and expenses of such one counsel shall be
paid by the indemnifying Party. If the indemnifying Party is not
entitled to, or elects not to, assume the defense of a claim, it will
not be obligated to pay the fees and expenses of more than one counsel
for the Indemnified Parties with respect to such claim, unless in the
reasonable judgment of any Indemnified Party a conflict of interest
may exist between such Indemnified Party and any other indemnified
Parties with respect to such claim, in which event the indemnifying
Party shall be obligated to pay the fees and expenses of such
additional counsel for the Indemnified Parties or counsels. No
indemnifying Party shall consent to entry of any judgment or enter
into any settlement without the consent of the Indemnified Party which
does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnified Party of a release from all
liability in respect to such claim or litigation. No indemnifying
Party shall be subject to any liability for any settlement made
without its consent, which consent shall not be unreasonably withheld.
(D) CONTRIBUTION. If the indemnity and reimbursement obligation
provided for in any subsection of this Section 12 is unavailable or
insufficient to hold harmless an Indemnified Party in respect of any
Losses (or actions or proceedings in respect thereof) referred to
therein, then the indemnifying Party shall contribute to the amount
paid or payable by the Indemnified Party as a result of such Losses
(or actions or proceedings in respect thereof) in such proportion as
is appropriate to reflect the relative fault of the indemnifying
Party, on the one hand, and the Indemnified Party, on the other hand,
in connection with statements or omissions which resulted in such
Losses, as well as any other relevant equitable considerations. The
relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact
relates to information supplied by the indemnifying Party or the
Indemnified Party and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such untrue
statement or omission. The parties hereto agree that it would not be
just and equitable if contributions pursuant to this paragraph were to
be determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations
referred to in the first sentence of this paragraph. The amount paid
by an Indemnified Party as a result of the Losses referred to in the
first sentence of this Section 12(d) shall be deemed to include any
legal and other expenses reasonably incurred by such Indemnified Party
in connection with investigating or defending any Loss which is the
subject of this Section 12(d).
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No Indemnified Party guilty of fraudulent misrepresentation (within
the meaning of Section 1 l(f) of the Act) shall be entitled to
contribution from the Indemnifying Party if the indemnifying Party was
not guilty of such fraudulent misrepresentation.
(E) OTHER INDEMNIFICATION. Indemnification similar to that specified
in the preceding paragraphs of this Section 12 (with appropriate
modifications) shall be given by the Company and each Holder of Shares
with respect to any required registration or other qualification of
securities under any federal or state law or regulation of any
governmental authority other than the Act reasonable and customary in
scope and effect. The provisions of this Section 12 shall be in
addition to any other rights to indemnification or contribution which
an Indemnified Party may have pursuant to law, equity, contract or
otherwise.
(F) INDEMNIFICATION PAYMENTS. The indemnification required by this
Section 12 shall be made by periodic payments of the amount thereof
during the course of the investigation or defense, as and when bills
are received or Losses are incurred.
13. COVENANTS RELATING TO RULE 144. The Company will file reports in
compliance with the Exchange Act, will comply with all rules and regulations of
the Commission applicable in connection with the use of Rule 144 and take such
other actions and furnish any Holder with such other information as such Holder
may request in order to avail itself of such rule or any other rule or
regulation of the Commission allowing such Holder to sell any Shares without
registration, and will, at its expense, forthwith upon the request of any
Holder, deliver to such Holder a certificate, signed by the Company's principal
financial officer, stating (a) the Company's name, address and telephone number
(including area code), (b) the Company's Internal Revenue Service identification
number, (c) the Company's Commission file number, (d) the number of shares of
each class of stock outstanding as shown by the most recent report or statement
published by the Company, and (e) whether the Company has filed the reports
required to be filed under the Exchange Act for a period of at least 90 days
prior to the date of such certificate and in addition has filed the most recent
annual report required to be filed thereunder. If at any time the Company is not
required to file reports in compliance with either Section 13 or Section 15(d)
of the Exchange Act, the Company at its expense will, forthwith upon the written
request of the Holder of any Shares, make available adequate current public
information with respect to the Company within the meaning of paragraph (c)(2)
of Rule 144.
14. DEFINITIONS. Unless the context otherwise requires, (i) words of any
gender include each other gender; (ii) words using the singular or plural number
also include the plural or singular number, respectively; (iii) the terms
"hereof," "herein," "hereby" and derivative or similar words refer to this
entire Warrant; and (iv) the term "Section" refers to the specified Section of
this Warrant. Whenever this Warrant refers to a number of days, such number
shall refer to calendar days unless Business Days are specified. Except as
otherwise specifically indicated, the following terms will have the following
meanings for all purposes of this Warrant:
(A) "BUSINESS DAY" means a day other than Saturday, Sunday or any
other day on which banks located in the State of New York are
authorized or obligated to close.
(B) "COMMON STOCK" means shares of the Company's common stock, par
value $.01 per share, as constituted on the date of this Warrant, and
any stock into which such Common Stock shall have been changed or any
stock resulting from any reclassification of such Common Stock.
(C) "COMMISSION" means the United States Securities and Exchange
Commission, or any successor governmental agency or authority.
(D) "COMPANY" means IWC Services, Inc.
(E) "EXCHANGE ACT " means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
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(F) "HOLDER" means the initial Holder of this Warrant and any
transferee, successors or assigns.
(G) "HOLDERS" means the initial Holders of the Warrants and any
transferee. successors or assigns.
(H) "INDEMNIFIED PARTY" means a party entitled to indemnity in
accordance with Section 12.
(I) "INDEMNIFYING PARTY" means a party obligated to provide indemnity
in accordance with Section 12.
(J) "INSPECTORS" has the meaning ascribed to it in Section 9(I).
(K) "LEAD UNDERWRITER" means, with respect to any Public Offering, the
underwriter managing such Public Offering.
(L) "LOSSES" has the meaning ascribed to it in Section 12(a).
(M) "NASD" means the National Association of Securities Dealers, inc.
(N) "NOTES" means the $5,000,000 principal amount of 12% Senior
Subordinated Notes being offered and sold by the Company pursuant to a
Private Placement Memorandum dated December 12, 1997.
(O) "PERSON" means any natural person, corporation, general
partnership, limited partnership, proprietorship, other business
organization, trust, union or association.
(P) "PUBLIC OFFERING" means any offering of Common Stock to the
public, either on behalf of the Company or any of its security
Holders, pursuant to an effective registration statement under the
Act.
(Q) "REGISTRATION EXPENSES" means all expenses incident to the
Company's performance of or compliance with its obligations under this
Warrant to effect the registration of Shares in a registration under
Sections 8, 9 or 10 hereof, including, without limitation, all
registration, filing, securities exchange listing and NASD fees, all
registration, filing, qualification and other fees and expenses of
complying with state securities laws, all word processing, duplicating
and printing expenses, messenger and delivery expenses, the fees and
disbursements of counsel for the Company and of its independent public
accountants, premiums and other costs of policies of insurance against
liabilities arising out of the Public Offering of the Shares being
registered and any fees and disbursements of underwriters customarily
paid by issuers or Holders of securities, but excluding underwriting
discounts and commissions or brokerage fees and transfer taxes, if
any, in respect of Shares, which shall be payable by each Holder
thereof.
(R) "RULE 144" means Rule 144 promulgated by the Commission under the
Act, and any successor provision thereto.
(S) "ACT" means the Act of 1933, as amended. and the rules and
regulations promulgated thereunder.
(T) "SHARES" means the shares of Common Stock issuable to the Holders
of the Warrants upon the exercise thereof, and any additional shares
of Common Stock issued or distributed by way of a dividend, stock
split or other distribution in respect of the Shares.
(U) "WARRANT" means this Warrant.
(V) "WARRANTS" means the series of Warrants being granted by the
Company in connection with the
Warrant
Page 11
<PAGE>
offering and sale of the Notes.
15. MISCELLANEOUS.
(A) NOTICES. All notices, requests and other communications hereunder
must be in writing and will be deemed to have been duly given only if
delivered personally or by facsimile transmission or mailed (first
class postage prepaid) to the parties at the following addresses or
facsimile numbers: (i) if to the Holder, to the name, address and
facsimile number set forth in the Subscription and Suitability
Agreement executed in connection with the purchase of the Notes and
this Warrant or any other address or facsimile number delivered to the
Company in writing or to the name, address and facsimile number of any
transferee of this Warrant as set forth on the form of Assignment
attached hereto; and (ii) if to the Company, to IWC Services, Inc.,
2800 Post Oak Boulevard, Suite 6300, Houston, Texas, 77056
With respect to any other Holder of Shares, such notices, requests and
other communications shall be sent to the addresses set forth in the
stock transfer records regularly maintained by the Company. All such
notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given
upon delivery, (ii) if delivered by facsimile transmission to the
facsimile number as provided in this Section, be deemed given upon
receipt, and (iii) if delivered by mail in the manner described above
to the address as provided in this Section, be deemed given upon
receipt (in each case regardless of whether such notice, request or
other communication is received by any other Person to whom a copy of
such notice is to be delivered pursuant to this Section 15(b)). Any
party from time to time may change its address, facsimile number or
other information for the purpose of notices to that party by giving
notice specifying such change to the other parties hereto.
(B) WAIVER. Any term or condition of this Warrant may be waived at
any time by the Holder, but no such waiver shall be effective unless
set forth in a written instrument duly executed by or on behalf of the
Holder. No waiver by the Holder of any term or condition of this
Warrant, in any one or more instances, shall be deemed to be or
construed as a waiver of the same term or condition of this Warrant on
any future occasion.
(C) SUCCESSORS AND ASSIGNS. This Warrant inures to the benefit of and
is enforceable by the Holder hereof and the Holder's respective
successors and assigns.
(D) HEADINGS. The headings used in this Warrant have been inserted for
convenience of reference only and do not define or limit the
provisions hereof.
(E) INVALID PROVISIONS. If any provision of this Warrant is held to be
illegal, invalid or unenforceable under any present or future law, and
if the rights or obligations of the Holder hereof will not be
materially and adversely affected thereby, (i) such provision will be
fully severable, (ii) this Warrant will be construed and enforced as
if such illegal, invalid or unenforceable provision had never
comprised a part hereof, (iii) the remaining provisions of this
Warrant will remain in full force and effect and will not be affected
by the illegal, invalid or unenforceable provision or by its severance
herefrom and (iv) in lieu of such illegal, invalid or unenforceable
provision, there will be added automatically as a part of this Warrant
a legal, valid and enforceable provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible.
(F) GOVERNING LAW. This Warrant shall be governed by and construed in
accordance with the laws of the State of Texas, without giving effect
to the conflicts of laws principles thereof.
IN WITNESS WHEREOF, this Warrant has been duly executed and delivered by
the duly authorized officer of
Warrant
Page 12
<PAGE>
the Company as of the date first above written.
Attest: IWC SERVICES, INC.
_____________________________ __________________________________
Secretary By: Its:
[SEAL]
Warrant
Page 13
<PAGE>
IWC SERVICES, INC.
WARRANT EXERCISE FORM
Number of Warrants Exercised _____________________
The undersigned hereby irrevocably elects to exercise the right to purchase
represented by the within Warrant for, and to purchase thereunder,
_______________shares of the stock provided for therein, and requests that
certificates for such shares be issued in the name of:
_______________________________________
(Name and Social Security Number)
_______________________________________
(Street Address)
_______________________________________
(City, State, Zip Code)
and if said number of shares shall not be all the shares purchasable thereunder,
that a new Warrant for the balance remaining of the shares purchasable under the
within Warrant be registered in the name of the undersigned Warrantholder or his
Assignee as below indicated and delivered to the address stated below.
Dated:______________, 19____
_______________________________________
(Name of Warrantholder or Assignee)
_______________________________________
(Street Address)
_______________________________________
(City, State, Zip Code)
_______________________________________
(Signature of Warrantholder)
_______________________________________
(Signature of Warrantholder)
Warrant
Page 14
<PAGE>
ASSIGNMENT
(To Be Executed Only Upon the Assignment of the Warrant)
For Value Received, the undersigned hereby sells assigns and transfers unto:
________________________________________
(Name and Social Security Number of Assignee)
________________________________________
(Street Address)
________________________________________
(City, State, Zip Code)
the within Warrant, hereby irrevocably constituting and appointing
________________________________ as his true and lawful attorney in fact to
transfer said Warrant on the books of the Company, with full power of
substitution in the premises.
Dated: __________________, 19____
________________________________________
(Signature of Warrantholder)
________________________________________
(Signature of Warrantholder)
Note: The above signature must correspond with the name written upon the face
of this Warrant in every particular, without alteration or enlargement or any
change whatever unless this Warrant has been assigned.
Warrant
Page 15
<PAGE>
EXHIBIT 4.4
NONQUALIFIED STOCK OPTION AGREEMENT
1996 EMPLOYEES' STOCK OPTION PLAN OF
IWC SERVICES, INC.
(THE OPTIONS REPRESENTED HEREBY ARE PRESENTLY EXERCISABLE)
THIS OPTION AGREEMENT ("Option Agreement") dated and delivered to the
holder on this _____ day of __________, 1997, in Houston, Texas, is by and
between IWC SERVICES, INC., a Texas corporation (hereinafter called the
"Company"), and ________________ (hereinafter called "Optionee"):
RECITALS
The Board of Directors (the "Board") has determined that it would be in
the best interests of the Company and its stockholders to grant the option
provided for herein (the "Option") to Optionee pursuant to the Plan and the
terms set forth herein as an inducement to serve as an employee of the Company
and to provide Optionee with a proprietary interest in the future of the
Company;
NOW THEREFORE, in consideration of the mutual covenants hereinafter set
forth, the parties hereto agree as follows:
1. GRANT OF THE OPTION. The Company hereby grants to Optionee the right
and option to purchase, on the terms and conditions hereinafter set forth, all
or any part of an aggregate of _________ (_______) shares (the "Stock") of the
presently authorized but unissued common stock, par value $.01 per share, of the
Company (the "Common Stock"). The purchase price of the Stock subject to this
Option shall be $1.00 per share.
2. EXERCISE OF OPTION.
(a) Subject to Section 2(d) hereof, this Option may be exercised in whole
or in part, at any time or from time to time during the period commencing on the
date of the Option Agreement and ending on ________________ (ten years form the
Date of Grant). The Option is not transferable or assignable by the Optionee
other than by will or the laws of descent and distribution or pursuant to a
Qualified Domestic Relations Order, as defined in the Plan. During the
Optionee's lifetime, this Option shall be exercisable only by the Optionee.
(b) This Option may exercised by written notice of intent to exercise the
Option delivered to the Company at its principal office no fewer than five days
in advance of the effective date of the proposed exercise. Such notice shall be
accompanied by this Agreement, shall specify the number of shares of Common
Stock with respect to which the Option is being exercised and shall specify the
proposed effective date of such exercise. Such notice shall also be accompanied
by payment in full to the Company at its principal office of the option price
for the number of shares of the Common Stock with respect to which the Option is
then being exercised. The payment of the option price shall be made in cash or
by certified check, bank draft, or postal or express money order payable to the
order of the Company or, with the consent of the Board, in whole or in part, in
Common Stock which is owned by the Optionee and valued at its Fair Market Value
on the effective date of exercise. Any payment in shares of Common Stock shall
be effected by delivery of such shares to the Secretary of the Company, duly
endorsed in blank or accompanied by stock powers duly executed in blank,
together with any other documents or evidence as the Secretary of the Company
shall require from time to time.
1
<PAGE>
(c) Upon the Company's determination that the Option has been validly
exercised as to any of the Stock, the Secretary of the Company shall issue a
certificate or certificates in the Optionee's name for the number of shares set
forth in his written notice. However, the Company shall not be liabe to the
Optionee for damages relating to any delays in issuing the certificate(s) to
him, any loss of the certificate(s), or any mistakes or errors in the issuance
of the certificate(s) themselves.
(d) No Option shall be exercisable after the earliest of the following
dates:(i) May 6, 2007; (ii) 30 days after the termination of the employment of
the Optionee by reason of disability or death, (iii) the date of actual
termination of the employment of the Optionee, if the Optionee is terminated for
cause; or (iv) 30 days after the termination of the employment of the Optionee
for any reason other than as specified above.
3. TERM OF EMPLOYMENT. This Option shall not grant to Optionee any right
to continue
serving as an employee of the Company.
4. NOTICES: DELIVERIES. Any notice or delivery required to be given under
the terms of this Option Agreement shall be addressed to the Company in care of
its Secretary at its principal office, 5151 San Felipe, Suite 450, Houston,
Texas 77056, and any notice or delivery to be given to Optionee shall be
addressed to him a the address given by him beneath his signature hereto or such
other address as either party hereto may hereafter designate in writing to the
other. Any such notice or delivery shall be deemed to have been duly given when
addressed as aforesaid, registered or certified mail, and deposited (postage or
registration or certification fee prepaid) in a post office or branch post
office regularly maintained by the United States.
5. DISPUTES. As a condition of the granting of the Option hereby, the
Optionee and his heirs and successors agree that any dispute of disagreement
which may arise hereunder shall be determined by the Board in its sole
discretion and judgment, and that any such determination and any interpretation
by the Board of the terms of this Option shall be final and shall be binding and
conclusive, for all purposes, upon the Company, Optionee, his heirs and personal
representatives.
6. LEGEND ON CERTIFICATES. The certificate(s) representing the shares of
Stock purchased by exercise of this Option will be stamped or otherwise
imprinted with a legend in such form as the Company or its counsel may require
with respect to any applicable restrictions on the sale or transfer of such
shares and the stock transfer records of the Company will reflect stop-transfer
instructions with respect to such shares.
7. OPTION SUBJECT TO PLAN. This Option is subject to the Plan. In the
event of a conflict between any term or provision contained herein and a term or
provision of the Plan, the applicable term s and provisions of the Plan will
govern and prevail. All definitions of words and terms contained in the Plan
shall be aplicable to this Option.
8. MISCELLANEOUS.
(a) All decisions of the Board upon any questions arising under the Plan or
under this Option Agreement shall be conclusive.
2
<PAGE>
(b) Nothing herein contained shall affect Optionee's right to participate
in and receive benefits from and in accordance with the then current provisions
of any pension, insurance or other employee welfare plan or program of the
Company.
(c) Optionee agrees to make appropriate arrangements with the Company for
satisfaction of any applicable federal, state or local income tax withholding
requirements or like requirements, including the payment to the Company at the
time of exercise of the Option of all such taxes and requirements.
(d) Whenever the term "Optionee" is used herein under circumstances
applicable to any other person or persons to whom this Option, in accordance
with the provisions hereof, may be transferred, the word "Optionee" shall be
deemed to include such person or persons.
(e) Notwithstanding any of the other provisions hereof, Optionee agrees
that he will not exercise this Option and that the Company will not be obligated
to issue any of the Stock pursuant to this Option Agreement, if the exercise of
the Option or the issuance of such shares of Common Stock would constitute a
violation by the Optionee or by the Company of any provision of any law or
regulation of any governmental authority or national securities exchange. Upon
the acquisition of any Stock pursuant to the exercise of the Option herein
granted, Optionee will enter into such written representations, warranties and
agreements as the Company may reasonably request in order to comply with
applicable securities laws or with this Agreement.
(f) This Agreement shall be binding upon and inure to the benefit of any
successor or successors of the Company. The interpretation, performance and
enforcement of this Option Agreement shall be governed by the laws of the State
of Texas.
IN WITNESS WHEREOF, the Company has, as of the date and place first above
written, caused this Agreement to be executed on its behalf by the Officer whose
signature appears below and Optionee has hereunto set his hand as of the date
and place first above written, which date is the date of grant of this Option.
IWC SERVICES, INC. OPTIONEE
By:_____________________________ ____________________________________
L. H. Ramming, Chairman Signature
____________________________________
Name (Print)
____________________________________
Address
____________________________________
City, State
3
<PAGE>
NONQUALIFIED STOCK OPTION AGREEMENT
1996 EMPLOYEES' STOCK OPTION PLAN OF
IWC SERVICES, INC.
(THE OPTIONS REPRESENTED HEREBY WILL VEST AT THE RATE OF 20% PER YEAR)
THIS OPTION AGREEMENT ("Option Agreement") dated and delivered to the
holder on this ____ day of __________, 1997, in Houston, Texas, is by and
between IWC SERVICES, INC., a Texas corporation (hereinafter called the
"Company"), and ________________ (hereinafter called "Optionee"):
RECITALS
The Board of Directors (the "Board") has determined that it would be
in the best interests of the Company and its stockholders to grant the option
provided for herein (the "Option") to Optionee pursuant to the Plan and the
terms set forth herein as an inducement to serve as an employee of the Company
and to provide Optionee with a proprietary interest in the future of the
Company;
NOW THEREFORE, in consideration of the mutual covenants hereinafter set
forth, the parties hereto agree as follows:
1. GRANT OF THE OPTION. The Company hereby grants to Optionee the right and
option to purchase, on the terms and conditions hereinafter set forth, all or
any part of an aggregate of _________ (_______) shares (the "Stock") of the
presently authorized but unissued common stock, par value $.01 per share, of the
Company (the "Common Stock"). The purchase price of the Stock subject to this
Option shall be $1.00 per share.
2. EXERCISE OF OPTION.
(a) Subject to Sections 2(d) and 2(e) hereof, this Option may be exercised
in whole or in part, at any time or from time to time during the period
commencing on the date of the Option Agreement and ending on ________________
(ten years form the Date of Grant). The Option is not transferable or assignable
by the Optionee other than by will or the laws of descent and distribution or
pursuant to a Qualified Domestic Relations Order, as defined in the Plan. During
the Optionee's lifetime, this Option shall be exercisable only by the Optionee.
(b) This Option may exercised by written notice of intent to exercise the
Option delivered to the Company at its principal office no fewer than five days
in advance of the effective date of the proposed exercise. Such notice shall be
accompanied by this Agreement, shall specify the number of shares of Common
Stock with respect to which the Option is being exercised and shall specify the
proposed effective date of such exercise. Such notice shall also be accompanied
by payment in full to the Company at its principal office of the option price
for the number of shares of the Common Stock with respect to which the Option is
then being exercised. The payment of the option price shall be made in cash or
by certified check, bank draft, or postal or express money order payable to the
order of the Company or, with the consent of the Board, in whole or in part, in
Common Stock which is owned by the Optionee and valued at its Fair Market Value
on the effective date of exercise. Any payment in shares of Common Stock shall
be effected by delivery of such shares to the Secretary of the Company, duly
endorsed in blank or accompanied by stock powers duly executed in blank,
together with any other documents or evidence as the Secretary of the Company
shall require from time to time.
4
<PAGE>
(c) Upon the Company's determination that the Option has been validly
exercised as to any of the Stock, the Secretary of the Company shall issue a
certificate or certificates in the Optionee's name for the number of shares set
forth in his written notice. However, the Company shall not be liabe to the
Optionee for damages relating to any delays in issuing the certificate(s) to
him, any loss of the certificate(s), or any mistakes or errors in the issuance
of the certificate(s) themselves.
(d) The option represented hereby shall vest and become exercisable in
cumulative installments as follows: to the extent of 20% of the number of shares
originally granted on July 28, 1998; and to the extent of an additional 20% of
the number of shares originally granted on July 28, 1999, 2000, 2001, and 2002,
provided that the Board of Directors may, in its discretion, accelerate the
vesting date of all or any portion of the option granted hereby.
(e) No Option shall be exercisable after the earliest of the following
dates:(i) May 6, 2007; (ii) 30 days after the termination of the employment of
the Optionee by reason of disability or death, (iii) the date of actual
termination of the employment of the Optionee, if the Optionee is terminated for
cause; or (iv) 30 days after the termination of the employment of the Optionee
for any reason other than as specified above.
3. TERM OF EMPLOYMENT. This Option shall not grant to Optionee any right to
continue serving as an employee of the Company.
4. NOTICES: DELIVERIES. Any notice or delivery required to be given
under the terms of this Option Agreement shall be addressed to the Company in
care of its Secretary at its principal office, 5151 San Felipe, Suite 450,
Houston, Texas 77056, and any notice or delivery to be given to Optionee shall
be addressed to him a the address given by him beneath his signature hereto or
such other address as either party hereto may hereafter designate in writing to
the other. Any such notice or delivery shall be deemed to have been duly given
when addressed as aforesaid, registered or certified mail, and deposited
(postage or registration or certification fee prepaid) in a post office or
branch post office regularly maintained by the United States.
5. DISPUTES. As a condition of the granting of the Option hereby, the
Optionee and his heirs and successors agree that any dispute of disagreement
which may arise hereunder shall be determined by the Board in its sole
discretion and judgment, and that any such determination and any interpretation
by the Board of the terms of this Option shall be final and shall be binding and
conclusive, for all purposes, upon the Company, Optionee, his heirs and personal
representatives.
6. LEGEND ON CERTIFICATES. The certificate(s) representing the shares
of Stock purchased by exercise of this Option will be stamped or otherwise
imprinted with a legend in such form as the Company or its counsel may require
with respect to any applicable restrictions on the sale or transfer of such
shares and the stock transfer records of the Company will reflect stop-transfer
instructions with respect to such shares.
7. OPTION SUBJECT TO PLAN. This Option is subject to the Plan. In
the event of a conflict between any term or provision contained herein and a
term or provision of the Plan, the applicable term s and provisions of the Plan
will govern and prevail. All definitions of words and terms contained in the
Plan shall be aplicable to this Option.
5
<PAGE>
8. MISCELLANEOUS.
(a) All decisions of the Board upon any questions arising under the Plan or
under this Option Agreement shall be conclusive.
(b) Nothing herein contained shall affect Optionee's right to participate in
and receive benefits from and in accordance with the then current provisions of
any pension, insurance or other employee welfare plan or program of the Company.
(c) Optionee agrees to make appropriate arrangements with the Company for
satisfaction of any applicable federal, state or local income tax withholding
requirements or like requirements, including the payment to the Company at the
time of exercise of the Option of all such taxes and requirements.
(d) Whenever the term "Optionee" is used herein under circumstances
applicable to any other person or persons to whom this Option, in accordance
with the provisions hereof, may be transferred, the word "Optionee" shall be
deemed to include such person or persons.
(e) Notwithstanding any of the other provisions hereof, Optionee agrees that
he will not exercise this Option and that the Company will not be obligated to
issue any of the Stock pursuant to this Option Agreement, if the exercise of the
Option or the issuance of such shares of Common Stock would constitute a
violation by the Optionee or by the Company of any provision of any law or
regulation of any governmental authority or national securities exchange. Upon
the acquisition of any Stock pursuant to the exercise of the Option herein
granted, Optionee will enter into such written representations, warranties and
agreements as the Company may reasonably request in order to comply with
applicable securities laws or with this Agreement.
(f) This Agreement shall be binding upon and inure to the benefit of any
successor or successors of the Company. The interpretation, performance and
enforcement of this Option Agreement shall be governed by the laws of the State
of Texas.
IN WITNESS WHEREOF, the Company has, as of the date and place first above
written, caused this Agreement to be executed on its behalf by the Officer whose
signature appears below and Optionee has hereunto set his hand as of the date
and place first above written, which date is the date of grant of this Option.
IWC SERVICES, INC. OPTIONEE
By:________________________________ ____________________________________
L. H. Ramming, Chairman Signature
____________________________________
Name (Print)
____________________________________
Address
6
<PAGE>
____________________________________
City, State
7
<PAGE>
EXHIBIT 4.5
CONTRACTUAL STOCK OPTION AGREEMENT
OF
IWC SERVICES, INC.
THIS OPTION AGREEMENT ("Option Agreement"), is executed and effective this
7th day of May, 1997, in Houston, Texas between IWC SERVICES, INC., a Texas
corporation (hereinafter called the "Company"), and _____________________
(hereinafter called "Optionee"):
RECITALS
The Optionee has rendered substantial services to the Company under the
terms of an agreement which provides, in part, that the Optionee will be
entitled to receive a 2-year option to purchase __________ (_________) shares of
the Company's $0.01 par value Common Stock at a price of $1.00 per share (the
"Option");
The Board of Directors (the "Board") has determined that all conditions
precedent to the issuance of the Option have been satisfied;
NOW THEREFORE, in consideration of the mutual covenants hereinafter set
forth, the parties hereto agree as follows:
1. GRANT OF THE OPTION. The Company hereby grants to Optionee the right
and option to purchase, on the terms and conditions hereinafter set forth, all
or any part of an aggregate of ___________ (________) shares (the "Stock") of
the presently authorized but unissued common stock, par value $.01 per share, of
the Company (the "Common Stock"). The purchase price of the Stock subject to
this Option shall be $1.00 per share.
2. EXERCISE OF OPTION.
(a) Subject to Section 2(b) hereof, this Option may be exercised in whole
or in part, at any time or from time to time during the period commencing on the
Date of Grant and ending two years from the Date of Grant. The Option is not
transferable or assignable by the Optionee other than by will or the laws of
descent and distribution or pursuant to a Qualified Domestic Relations Order.
During the Optionee's lifetime, this Option shall be exercisable only by the
Optionee.
1
<PAGE>
(b) This Option may be exercised, in whole or in part, at any time after
the Date of Grant and prior to the second anniversary of the Date of Grant.
Notwithstanding the generality of the foregoing, this Option may not be
exercised prior to the registration of the Stock with the Securities and
Exchange Commission and any applicable state agencies. However, this condition
may be waived by the Board if it determines that such registration is not
necessary in order to legally issue shares of Stock to Optionee.
(c) This Option may be exercised by written notice of intent to exercise
the Option delivered to the Company at its principal office no fewer than five
days in advance of the effective date of the proposed exercise. Such notice
shall be accompanied by this Agreement, shall specify the number of shares of
Common Stock with respect to which the Option is being exercised and shall
specify the proposed effective date of such exercise. Such notice shall also be
accompanied by payment in full to the Company at its principal office of the
option price for the number of shares of the Common Stock with respect to which
the Option is then being exercised. The payment of the option price shall be
made in cash or by certified check, bank draft, or postal or express money order
payable to the order of the Company or, with the consent of the Board, in whole
or in part in Common Stock which is owned by the Optionee and valued at its Fair
Market Value on the effective date of exercise. Any payment in shares of Common
Stock shall be effected by delivery of such shares to the Secretary of the
Company, duly endorsed in blank or accompanied by stock powers duly executed in
blank, together with any other documents or evidence as the Secretary of the
Company shall require from time to time.
(d) Upon the Company's determination that the Option has been validly
exercised as to any of the Stock, the Secretary of the Company shall cause the
Company's transfer agent to issue a certificate or certificates in the
Optionee's name for the number of shares set forth in his written notice.
However, the Company shall not be liable to the Optionee for damages relating to
any delays in issuing the certificate(s) to him, any loss of the certificate(s),
or any mistakes or errors in the issuance of the certificate(s) or in the
certificate(s) them-selves.
3. ADJUSTMENTS FOR MERGER OR REORGANIZATION, ETC. In the case of any
merger of the Company with or into another corporation or the conveyance of all
or substantially all of the assets of the Company into another corporation in
which the shareholders of the Company are to receive cash, securities or other
consideration for their shares, each Option shall thereafter be exercisable to
purchase the number of shares of stock or other securities or property to which
a holder of the number of shares of Common Stock underlying such Option might
have been converted immediately prior to such merger or conveyance would have
been entitled upon such merger or conveyance.
4. NOTICES; DELIVERIES. Any notice or delivery required to be given under
the terms of this Option Agreement shall be addressed to the Company in care of
its Secretary at its principal office and any notice or delivery to be given to
Optionee shall be addressed to him at the address given by him beneath his
signature hereto or such other address as either party hereto may hereafter
designate in writing to the other. Any such notice or delivery shall be deemed
to have
2
<PAGE>
been duly given when addressed as aforesaid, registered or certified mail, and
deposited (postage or registration or certification fee prepaid) in a post
office or branch post office regularly maintained by the United States.
5. DISPUTES. As a condition of the granting of the Option hereby, the
Optionee and his heirs and successors agree that any dispute or disagreement
which may arise hereunder shall be determined by the Board in its sole
discretion and judgment, and that any such determination and any interpretation
by the Board of the terms of this Option shall be final and shall be binding and
conclu-sive, for all purposes, upon the Company, Optionee, his heirs and
personal representatives.
6. MISCELLANEOUS.
(a) All decisions of the Board upon any questions arising under this Option
Agreement shall be conclusive.
(b) Optionee agrees to make appropriate arrangements with the Company for
satisfaction of any applicable federal, state or local income tax, withholding
requirements or like requirements, including the payment to the Company at the
time of exercise of the Option of all such taxes and requirements.
(c) Whenever the term "Optionee" is used herein under circumstances
applicable to any other person or persons to whom this Option, in accordance
with the provisions hereof, may be transferred, the word "Optionee" shall be
deemed to include such person or persons.
(d) Notwithstanding any of the other provisions hereof, Optionee agrees
that he will not exercise this Option and that the Company will not be obligated
to issue any of the Stock pursuant to this Option Agreement, if the exercise of
the Option or the issuance of such shares of Common Stock would constitute a
violation by the Optionee or by the Company of any provision of any law or
regulation of any governmental authority or national securities exchange. Upon
the acquisition of any Stock pursuant to the exercise of the Option herein
granted, Optionee will enter into such written representations, warranties and
agreements as the Company may reasonably request in order to comply with
applicable securities laws or with this Agreement.
(e) This Agreement shall be binding upon and inure to the benefit of any
successor or successors of the Company.
(f) The interpretation, performance and enforcement of this Option
Agreement shall be governed by the laws of the State of Texas.
IN WITNESS WHEREOF, the Company has, as of the date and place first above
written, caused this Agreement to be executed on its behalf by its Chairman,
President or any
3
<PAGE>
Vice President and Optionee has hereunto set his hand as of the date and place
first above written, which date is the date of grant of this Option.
IWC SERVICES, INC. OPTIONEE
By: _________________________________ ____________________________________
L. H. Ramming, Chairman
____________________________________
Name
____________________________________
Street Address
____________________________________
City, State Zip
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EXHIBIT 9.1
VOTING TRUST AGREEMENT
This Agreement is made on ______________________________, 1995, by and
among the undersigned shareholders of IWC Services, Inc. ("Company") and Larry
Ramming, Charles T. Phillips and Raymond Henry, ("Trustees"), for the purpose of
creating a Voting Trust of certain of the shares of Company.
ARTICLE I
CONSIDERATION AND PURPOSE OF TRUST
1.01. Consideration. The parties named below enter into this Voting Trust
Agreement in consideration of their mutual promises.
1.02. Purpose of Trust. The parties enter into this Voting Trust
Agreement for the purpose of concentrating the vote of the shares represented
under this Agreement into a clear and definite policy of management under the
direction of the Trustees.
ARTICLE II
PARTIES AND EFFECTIVE DATE
2.01. Parties. The parties to this Agreement are:
(A) The "Shareholders" and the "Voting Trust Certificate Holders"
who subscribe their names to this Agreement or who become registered holders or
bearers of Voting Trust Certificates pursuant to the terms of this Agreement.
The term "Shareholders" as used in this Agreement refers to the shareholders of
Company who are parties to this Agreement and who have not yet had Voting Trust
Certificates issued to them. The term "Voting Trust Certificate Holders" as used
in this Agreement refers to the shareholders of Company who are parties to this
Agreement and who have had Voting Trust Certificates issued to them, and to
those who become registered holders or bearers of Voting Trust Certificates
pursuant to the terms of this Agreement.
(B) Larry Ramming, Charles T. Phillips, and Raymond Henry, referred
to in this Agreement as the Trustees.
2.02. Effective Date. This Agreement will become effective when signed by
all of the persons owning shares of the Company made subject to this agreement
and set forth below and by the Trustees.
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ARTICLE III
TRUSTEES
3.01. Number and Term of Trustees. There will be three Trustees of this
voting trust. The first Trustees are the individuals name above. Their
successors will be appointed as provided below. The Trustees will serve for the
entire term of the Trust in the absence of their removal, resignation, or death.
3.02. Death of Trustees. The rights and duties of a Trustee shall
terminate on his death, and no interest in any property owned or held by the
trust nor any of the rights or duties of the Trustee may be transferred by will,
devise, succession, or in any manner except as provided in this Agreement. The
heirs, administrators, and executors of the Trustees shall, however, have the
right and duty to convey any property held by the Trustees to the remaining
successor Trustees.
3.03. Resignation. Any Trustee may resign by giving notice of his
resignation to the remaining Trustees.
3.04. Removal. Any Trustee may be removed at any time by a majority of
the Trustees or by seventy-five percent (75%) of the Voting Trust Certificate
Holders.
3.05. Successor Trustees. In the event of the death, resignation,
removal, or incapacity to act of any Trustee, a successor or successors may be
elected by a majority vote of the Voting Trust Certificate Holders.
ARTICLE IV
DEPOSIT AND TRANSFER OF SHARES
ISSUANCE AND TRANSFER OF
VOTING TRUST CERTIFICATES
4.01. Deposit of Shares. On the execution of this Agreement, the
Shareholders shall deposit with the Trustees share certificates for all shares
of the Company owned by them. All of these share certificates shall be endorsed
in blank or to the Trustees and be accompanied by instruments of transfer that
will enable the Trustees to cause the share certificates to be transferred to
the name of the Trustees.
4.02. Transfer of Shares to Trustees. All share certificates of the
Company delivered to the
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Trustees shall be surrendered by the Trustees to the Company and canceled. New
share certificates shall be issued in the name of the Trustees. The new share
certificates shall state that they are issued pursuant to this Agreement. That
fact shall also be noted in the Company's stock transfer records in the entry of
the Trustee's ownership of the shares.
4.03. Transfer of Shares to Successor Trustees. Notwithstanding any
changes in the identity of the Trustees, the certificates for shares standing in
the name of the Trustees may be endorsed and transferred by any successor
Trustee or Trustees with the same effect as if endorsed and transferred by the
Trustees who have ceased to act. The Trustees are authorized and empowered to
cause any further transfer of the shares that may be necessary because of any
change in persons holding the office of Trustee.
4.04. No Sale of Shares. Despite the provisions herein, the Trustees have
no authority to sell or otherwise dispose of, or encumber, any of the shares
deposited pursuant to this Agreement.
4.05. Voting Trust Certificate. When the Company receives the share
certificates and transfers them to the name of the Trustees, the Trustees shall
hold the share certificates subject to the terms of this Agreement, and the
Trustees shall issue and deliver Voting Trust Certificates to the surrendering
shareholders, in the form of Exhibit A to this Agreement.
4.06. Transfer of Voting Trust Certificates. The Voting Trust
Certificates shall be transferable only as provided in the Certificates and in
this Agreement, and on payment of any charges payable at the time of transfer.
All transfers shall be recorded in the Certificate Book. Any transfer made of
any Voting Trust Certificate shall vest in the transferee all rights of the
transferor and shall subject the transferee to the same limitations as those
imposed upon the transferor by the terms of the voting Trust Certificate and by
this Agreement. The Trustees shall deliver Voting Trust Certificates to the
transferee for the number of shares represented by the Voting Trust Certificate
so transferred.
4.07. Proof of Ownership. The Trustees shall not be required to recognize
any transfer of a Voting Trust Certificate not made in accordance with the
provisions of this Agreement. The Trustees may treat the Voting Trust
Certificate Holders as the absolute owners and holders of the Voting Trust
Certificate and as having all of the rights and interests represented by them
for all purposes, and the Trustees shall not be bound or affected by any notice
to the contrary.
4.08. Replacement of Certificates. If a Voting Trust Certificate becomes
mutilated, destroyed, stolen or lost, the Trustees, in their discretion, may
issue a new \Voting Trust Certificate of like tenor and denomination in exchange
and substitution for and on cancellation of the prior Certificate. The
applicant for a substituted Voting Trust Certificate shall furnish to the
Trustees evidence of the destruction, theft, or loss of the Certificate
satisfactory to them, in their discretion. The applicant shall also furnish
indemnity satisfactory to the Trustees or their agents.
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ARTICLE V
VOTING AND ACTIONS BY TRUSTEES
5.01. Voting of Shares. While the Trustees hold shares deposited
pursuant to the provisions of this Agreement, they shall possess and in their
unrestricted discretion shall be entitled to exercise in person or by their
nominees, agents, attorneys-in-fact, or proxies all rights and powers or
absolute owners and to vote, assent or consent with respect to those rights and
powers and to take part in and consent to any corporate or shareholders'
actions, except those specified below. The Trustees shall not vote in favor of
the sale of all or substantially all of the assets of the Company or for any
merger, consolidation, reorganization or dissolution, except with the consent of
the owners of two-thirds or more, in interest, of the Voting Trust Certificates.
No other person shall have any voting rights in respect to the shares so long as
this Agreement is in effect and the shares are registered in the names of the
Trustees. The Trustees shall receive any dividends or distributions made in
connection with the stock.
5.02. Voting Interest of Company. In voting shares of stock or in
doing any act regarding the control or management of the Company or its affairs,
as holder of the stock deposited pursuant to this Agreement, the Trustees shall
exercise their best judgment in the interest of the Company to the end that its
affairs shall be properly managed, but they assume no responsibility regarding
management or any action taken by management in pursuance of their consent to
the action as shareholders or in pursuance of their vote.
5.03. Majority Action of Trustees. All actions to be taken on any
question arising between the Trustees, except as otherwise expressly provided in
this Agreement, shall from time to time be determined by the vote or agreement
of the majority of the Trustees then in office, either at a meeting of the
Trustees, or, with or without a meeting, by a writing signed by the majority.
The Trustees may provide for the authentification of evidence of any action
taken by them. Any Trustee may vote in person or by proxy given to any other
Trustee.
5.04. Meeting With Certificate Holders. If any question arises on
which the Trustees desire the opinion of the Voting Trust Certificate Holders,
the Trustees may call a meeting for this purpose. At the meeting, the owners of
two-thirds or more, in interest, of the Voting Trust Certificates may determine
the manner in which they desire the Trustees to act, and the Trustees shall be
bound to act in the manner designated. The Trustees shall not be called upon or
expected to take any action as a result of this meeting unless and until they
have been fully indemnified against all lost, damage, claim, or injury to which
they might be subjected, either by reason of their action or by reason of their
position as Trustees under this Agreement.
5.05. Trustees' Relationship With Company. Any Trustee, his family,
employees or agents, and any firm, corporation, trust or association of which
the Trustee may be a trustee, stockholder,
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director, officer, member, agent, or employee, may contract with or be or become
pecuniarily interested, directly or indirectly, in any matter or transaction to
which the Company may be a party or in which it may be concerned, as fully and
freely as though the Trustee was not a Trustee pursuant to this Agreement. The
Trustees, their family, employees, or agents may act as directors or officers of
the Company or of any subsidiary or controlled or affiliated corporation.
5.06. Compensation of Trustees. The Trustees shall serve without
compensation.
5.07. Expenses. The Trustees are expressly authorized to incur and
pay those reasonable charges and expenses that they may deem necessary and
proper for administering this Agreement. The Voting Trust Certificate Holders
agree to reimburse and indemnify the Trustees for all claims, expenses and
liabilities incurred by them in connection with the discharge of their duties
under this Agreement. Any such claims, expenses, or liabilities shall be
charged to the Voting Trust Certificate Holders pro rata, and may be deducted
from dividends or other distributions to them, or may be made a charge payable
as a condition to the delivery of shares in exchange for Voting Trust
Certificates, and the Trustees shall be entitled to a lien for this charge on
the shares, funds, or other property in their possession or in the possession of
the Company.
5.08. Trustees' Liability. No Trustee shall be liable for acts or
defaults of any other Trustee or for acts or defaults of any agent or other
Trustee. The Trustees shall be free from liability in acting upon any paper,
document or signature believed by them to be genuine and to have been signed by
the proper party. The Trustees shall not be liable for any error of judgment
nor for any act done or omitted, nor for any mistake of fact or law, nor for
anything that they may do or refrain from doing in good faith, nor generally
shall the Trustees have any accountability pursuant to this Agreement, except
that each Trustee shall be liable for his or her own willful default or gross
negligence. The Trustees may be advised by legal counsel, and any action under
this Agreement taken or suffered in good faith by them in accordance with the
opinion of counsel shall be conclusive on the parties to this Agreement, and the
Trustees shall be fully protected and be subject to no liability in respect to
any action taken or suffered under this Agreement.
ARTICLE VI
DIVIDEND AND DISTRIBUTION RIGHTS
OF CERTIFICATE HOLDERS
6.01. Cash Dividends. Each Voting Trust Certificate Holder shall be
entitled to receive from time to time payments equal to the amount of cash
dividends, if any, collected or received by the Trustees on the shares in regard
to which Voting Trust Certificates were issued, less the deductions set forth
herein. These payments shall be made, as soon as practicable after the receipt
of the dividends, to the Voting Trust Certificate Holders at the close of
business on the record date determined pursuant to the provisions herein.
Instead of receiving cash dividends, the Trustees may
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instruct the Company in writing to pay the dividends directly to the Holders.
When these instructions are given to the Company, all liability of the Trustees
with regard to the dividends shall cease, until the instructions are revoked.
The Trustees may at any time revoke the instructions and by written notice to
the company direct it to make dividend payments to the Trustees.
6.02. Share Dividends. If the Trustees receive as a dividend or
other distribution on any shares of stock held by them under this Agreement, any
additional shares of the Company, the Trustees shall hold the additional shares
subject to this Agreement for the benefit of the Voting Trust Certificate
Holders in proportion to their respective interests, and the shares shall become
subject to all of the terms and conditions of this Agreement to the same extent
as if they were originally deposited under it. The Trustees may, in their
discretion, issue Voting Trust Certificates in respect of those shares to the
Voting Trust Certificate Holders on the record date as determined herein.
6.03. Distributions on Liquidation. In the event of the dissolution
or total or partial liquidation of the Company, the Trustees shall receive the
money, securities, rights, or property to which Shareholders of the Company are
entitled, and shall distribute it among the Voting Trust Certificate Holders in
proportion to their interests.
6.04. Other Distributions to Shareholders. If at any time during the
continuation of this Agreement the Trustees shall receive or collect any money
(other than in payment of cash dividends) through a distribution by the Company
to its shareholders or shall receive any property (other than shares of stock of
the Company) through a distribution by the Company to is shareholders, the
Trustees shall distribute it to the Voting Trust Certificate Holders in
proportion to their interests on the record date as determined herein.
6.05. Deductions from Distributions. There shall be deducted and
withheld from every distribution of every kind under this Agreement any taxes,
assessments, or other charges that may be required by law to be deducted or
withheld, as well as expenses and charges incurred as set forth herein, to the
extent such remain unreimbursed.
6.06. Record Date For Distributions. The Trustees may, if they deem
it advisable, fix a date not exceeding twenty (20) days preceding any date for
the payment or distribution of dividends or for the distribution of assets or
rights as a record date for the determination of the Voting Trust Certificate
Holders entitled to receive the payment or distribution, and the Voting Trust
Certificate Holders of record on that date shall be exclusively entitled to
participate in the payments or distributions. If the Trustees fail to fix a
record date, the date of payment or distribution of dividends or the
distribution of assets or rights shall constitute the record date for the
determination of the Voting Trust Certificate Holders entitled to receive the
payment or distribution.
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ARTICLE VII
BOOKS AND RECORDS
7.01. Records of Shares. The Trustees shall maintain a record of all
share certificates of the Company that are transferred to the Trustees,
indicating the name in which the stock was held, the date of issuance of the
stock, the class and series of the stock, the number of shares, and the number
of the certificates representing those shares. They shall also maintain a
record of the date on which he or she received any share certificates and the
date on which they were delivered to the corporation for transfer to the
Trustees. The Trustees shall receive and hold the new share certificates issued
by the Company in the name of the Trustees.
7.02. Records of Trust Certificates. The Trustees shall maintain a
record showing the names and addresses of the Voting Trust Certificate Holders.
The record shall show the number of Certificates held by each person. The
record shall show the dates on which the Voting Trust Certificates were issued,
canceled, transferred, or replaced. The record shall be open to inspection by
any of the parties to this Agreement or their successors at any reasonable time.
7.03. Books of Accounts. The Trustees shall maintain a Book of
Accounts showing all sums of money received by the Trustees, all disbursements
made by the Trustees, and all obligations incurred by the Trustees that are
unpaid.
7.04. Other Records. The Trustees shall maintain such other books
and records as are necessary or desirable in the performance of their duties
herein.
7.05. Inspection of Records. The Trustees shall deposit a
counterpart of this Agreement with the Company at its registered office, and the
Agreement shall be subject to the same right of examination by a Shareholder of
the Company, in person or by agent or attorney, as are the books and records of
the Company.
ARTICLE VIII
TERMS OF TRUST
8.01 Irrevocability of Trust. The Trust created by this Agreement is
expressly declared to be irrevocable, except as otherwise provided in this
Agreement.
8.02. Termination. This Agreement may be terminated by instruments
in writing executed by a majority of the Trustees, or upon one year prior
written notice by instruments in writing executed by two-thirds of the
beneficial interests in the Trust.
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8.03. Return of Share Certificates After Termination. Within thirty
(30) days after the termination of this Agreement, the Trustees shall deliver to
the Voting Trust Certificate Holders share certificates representing the number
of shares in respect of which the Voting Trust Certificates were issued in
exchange for the Voting Trust Certificates properly endorsed, and upon payment
by the persons entitled to receive the share certificates of any money due
hereunder.
8.04. Final Accounting. Within sixty (60) days after termination of
the Trust, the Trustees shall render a final accounting to the Voting Trust
Certificate Holders and to the Company, and shall distribute any funds or other
assets held by them to the parties entitled to them.
ARTICLE IX
MISCELLANEOUS
9.01. Place of Performance. This Agreement is made, executed, and
entered into at Harris County, Texas, and it is mutually agreed that the
performance of all parts of this contract shall be made in Harris County, Texas.
9.02. Governing Law. This Agreement is intended by the parties to be
governed by and construed in accordance with the laws of the State of Texas.
9.03. Severability of Provisions. If any provision hereof should be
determined to be invalid, the invalidity shall not affect the validity of the
remainder of the Agreement.
9.04. Construction by Trustees. The Trustees are authorized and
empowered to construe this Agreement. Their reasonable construction made in
good faith shall be conclusive and binding on the Voting Trust Certificate
Holders and on all parties to this Agreement.
9.05. Notice to Voting Trust Certificate Holders. Any notice to be
given to a Voting Trust Certificate Holder shall be sufficiently given if
mailed, postage prepaid, to the Holder at the address appearing in the books and
records of the Trust with respect to the Holder. Every notice so given shall be
effective whether or not received, and notice shall for all purposes be deemed
to have been given on the date of its mailing.
9.06. Meetings of Voting Trust Certificate Holders. A meeting of the
Voting Trust Certificate Holders may be called at any time by the Trustees upon
three (3) days notice. The notice shall contain a statement of the matters to be
considered at the meeting. At any meeting, a quorum consisting of at least
fifty percent (50%) in interest of the Voting Trust Certificate Holders must be
present before a vote shall be taken on any matter before the meeting. Each
Voting Trust Certificate Holder may vote at any meeting in person or by proxy.
Each Voting Trust Certificate Holder shall
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have one vote for each share represented by his or her Certificate. Action may
be taken on any of the matters covered in this Agreement by the written consent
of a sufficient number of the Voting Trust Certificate Holders to take such
action.
9.07. Execution of Counterparts. This Agreement shall be prepared in
multiple counterparts. All signatures may be affixed to one copy or to separate
copies, and when all copies are received, signed by all of the parties, they
shall constitute one agreement that is not otherwise separable or divisible.
The Trustees shall keep all signed copies and shall conform one copy to show
all signatures.
9.08. Amendment of Agreement. If the Trustees deem it advisable at
any time to amend this Agreement, they shall call a special meeting of Voting
Trust Certificate Holders for that purpose. At the meeting, the Trustees must
submit the amendment to the Voting Trust Certificate Holders of the then
outstanding Voting Trust Certificates for their approval. Notice of the time
and place of the meeting shall be given in the manner set forth above, and shall
contain a copy of the proposed amendment. If, at the meeting or any adjournment
of the meeting, the proposed amendment is approved by the affirmative vote of
the Voting Trust Certificate Holders representing a majority of the shares held
by the Trust, the proposed amendment so approved shall become a part of this
Agreement as if originally incorporated in it.
9.09. Advise of Counsel. Each of the parties agrees and represents
that he has been represented by his own counsel with regard to the execution of
this Agreement or, if acting without counsel, that he has had adequate
opportunity and has been encouraged to seek the advise of his own counsel prior
to the execution of this Agreement.
9.10. Share Certificates. Each share certificate representing shares
held by the parties to this Agreement shall contain a statement that the shares
represented by the certificate are subject to the provisions of a Voting Trust
Agreement and shall contain a statement that a counterpart of the Voting Trust
Agreement has been deposited with the Company at is registered office.
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TRUSTEES SHAREHOLDERS
_____________________________________ _____________________________________
Larry Ramming
_____________________________________ _____________________________________
Charles T. Phillips
_____________________________________ _____________________________________
Raymond Henry
_____________________________________
_____________________________________
_____________________________________
_____________________________________
_____________________________________
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VOTING TRUST CERTIFICATE
IWC SERVICES, INC.
CERTIFICATE NO._________________ NUMBER OF SHARES_________________
This Certificate certifies that the undersigned Trustees have received
stock certificates representing the above stated number of shares of common
stock of IWC Services, Inc. (The Company) from ______________________________,
referred to in this Certificate as the Certificate Holder, duly endorsed to the
undersigned Trustees, to be held by the Trustees pursuant to the terms and
conditions of the Voting Trust Agreement (The Agreement) dated _______________,
1995. A copy of the Voting Trust Agreement has been delivered to the Certificate
Holder, and an additional copy of the Agreement has been delivered to the
Certificate Holder, and an additional copy of the Agreement is on file at the
registered office of the Company. The Certificate Holder is entitled to receive
payments or distributions as specified in the Agreement, and to the delivery of
a certificate for the number of shares stated above on the termination of the
Voting Trust Agreement, in accordance with its provisions.
The Certificate Holder, by his acceptance of this certificate, agrees to be
bound by all of the provisions of the Voting Trust Agreement as fully as if the
terms of the Agreement were set forth in full in this Certificate.
Issued on ______________________________________, 1995.
TRUSTEES
_____________________________________
Larry Ramming
_____________________________________
Charles T. Phillips
_____________________________________
Raymond Henry
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EXHIBIT 10.1
ALLIANCE AGREEMENT
THIS AGREEMENT is made to be effective as of the 19th day of September, 1995, by
and between:
IWC Services, Inc., a Texas, U.S.A. corporation with offices located at: 2800
Post Oak Blvd., Transco Tower Suite 6300, Houston, Texas 77056 ("IWC"),
represented herein by its President, Brian Krause; and
Halliburton Energy Services, a Division of Halliburton Company, a Delaware
corporation with offices located at: 5151 San Felipe, Houston, Texas 77056
("HES") represented herein by its Executive Vice President, Mr. W.J. Zeringue,
(each of HES or IWC being sometimes herein referred to individually as a "Party"
or collectively as the "Parties") for the purposes, causes and considerations
enumerated hereinafter.
WITNESSETH, that
WHEREAS, HES is recognized as an industry leader in the business of furnishing
certain services, including pumping, cementing, snubbing, tools, production
enhancement, coiled tubing and related services under contract to operating
companies in the domestic and international oil and gas industry; and
WHEREAS, IWC is recognized as an industry leader in the business of furnishing
oil and gas well firefighting, well capping and certain specialized well control
services and applications, under contract to operating companies in the domestic
and international oil and gas industry; and
WHEREAS, both HES and IWC are currently active in furnishing their respective
services to the Well Control Services ("WCS") market. Said WCS market includes
both the servicing of certain wells during well control events or "blowouts" and
the engineering or planning involved with these efforts pre or post event; and
WHEREAS, both HES and IWC recognize that their respective strengths and
capabilities relative to WCS are complementary and supportive of, and not in
competition with, each other and that an alliance of their efforts in pursuing
the WCS market offers mutual advantages and economies of scale; and
WHEREAS, HES and IWC have agreed that it is in their mutual best interests to
enter into a Strategic Alliance (the "Alliance"), to maximize their respective
capabilities and business potential in providing high quality Well Control
services to the oil and gas industry, combining their respective strengths,
tools, equipment, market presence and expertise.
<PAGE>
NOW, THEREFORE, the Parties hereto, acting through their duly authorized
representatives, have agreed to form and administer the Alliance pursuant to
the terms and conditions contained herein.
I: SCOPE
1.1 Subject only to any specific exceptions which may be contained in this
Agreement, the Alliance shall be an exclusive alliance between HES and IWC, for
the purpose of pursuing the WCS market on a global, or world-wide, basis. The
exclusivity provided for herein shall apply to all projects related to Well
Control Services, both on land and offshore, whether performed domestically or
in the international market and whether such project is generated by HES or IWC
The use of the term "Alliance" in describing activities to be conducted by the
Parties pursuant to this Agreement, shall be construed to mean only activities
to be conducted jointly by the Parties for their mutual benefit. As more fully
set forth in Section 2. 4 hereof, the "Alliance" is not a separate entity but
is merely intended to be a descriptive term to refer to the Parties when
conducting combined operations under this Agreement.
1.2 It is recognized by the Parties that an exclusive Alliance will require
that both HES and IWC develop and cultivate a good faith course of dealing and
a teamwork relationship which is based on common objectives, mutual respect and
the highest degree of trust. In that regard, the Parties covenant and agree
that, in considering one's own best interests in any given situation related to
the Alliance, the best interests of the Alliance as a whole shall also be taken
into account.
1.3 To the extent that either Party is unable, or unwilling, to give full
support to the efforts of the Alliance in a given instance, such Party shall
notify the other Party of any such constraints and the Parties agree to work to
minimize the affect of such constraints on the Alliance. It is the stated
intent of both HES and IWC, in executing this Agreement, to put forth their
respective best efforts to make the Alliance work for their mutual benefit and
it is recognized that only through cooperation and the full and unfettered
exchange of information can the mutual operations be conducted most
effectively.
1.4 It is incumbent upon the Parties to closely communicate and coordinate
regarding job planning and performance of contracts. It is recognized that each
Party has available a finite amount of tools, equipment and personnel resources
to service the contractual commitments of the Parties pursuant to the Alliance
and neither Party will commit to the scheduling of any job without the prior
concurrence of the other. In the event an excessive number of jobs is scheduled
simultaneously, and either Party is unable to provide sufficient equipment and
personnel to perform the work to the quality standards set by the Alliance,
then for the performance of specific jobs, such Party shall have the right to
temporarily align itself with a third
<PAGE>
party, if possible, to supplement its resources and enable it to conduct the
Work under the Alliance; provided that, such action will only be taken after
conferring with the other Party.
1.5 In the event either Party is unable, or fails for any reason, to provide
its equipment and/or personnel for projects to which the Alliance has been
committed, the other Party may align itself with any other party or entity to
perform the contracted services without throwing this Agreement into default;
provided that prior to taking any such action, the Parties shall meet in an
attempt to resolve any problem which may be affecting the Party which is
temporarily unable to perform In the event of frequent occurrences of such
problems, which materially affects the performance of the Alliance, the Parties
may agree to an early termination of this Agreement.
1.6 In the formation of this Alliance, the Parties have agreed that it is their
mutual intent to furnish services to the WCS related marketplace which are
price competitive and of the highest possible quality. It is, further, the
intent of the Parties to develop improved equipment and techniques for
providing superior quality services to the customers of the Alliance.
Notwithstanding the fact that HES will normally be the Lead Contractor (as
hereinafter defined), and IWC will normally be subcontracted to HES, each Party
is responsible for the performance and quality of its own respective services
as furnished to the WCS Alliance.
1.7 The exclusive nature of this Agreement shall not prohibit either Party from
providing WCS related services, either alone or in concert with others, at the
specific request of Operators as defined herein, without participation by the
other Party. Further, nothing contained herein shall be construed to prohibit
either Party from continuing to provide its equipment and services to the
marketplace, either alone or in concert with others, so long as such activities
do not involve Well Control related services.
II: RELATIONS BETWEEN THE PARTIES
2.1 In conducting operations pursuant to the Alliance, it is anticipated that
HES will, normally, act as the primary marketer and lead contractor ("Lead
Contractor"), in concluding arrangements and performing operations for
operating companies ("Operators") and other customers served by the Alliance
("Contracts"). As Lead Contractor, HES shall be responsible to the operator for
the entire operation, including the services furnished by IWC, and IWC will act
as a Subcontractor to HES; provided, however, that such matters will be
evaluated on a case-by-case basis and, if determined to be in the best
interests of the Parties, or if otherwise appropriate, IWC may act as the Lead
Contractor in a given instance. In all circumstances where a blowout or fire
has occurred, IWC shall be in charge of activities on site until the event has
been controlled, or the Operators direct otherwise.
<PAGE>
2.2 Notwithstanding the provisions of the immediately preceding clause, the
Parties agree that, regardless of which Party is the Lead Contractor for a
given project, in the provision of services pursuant to the Alliance, as
contemplated by this Agreement, such services shall only be bid and furnished
subject to the terms of this Agreement, unless the Parties mutually agree
otherwise.
2.3 In the event the Operator under any Contract insists on the right to
contract the services of IWC and HES separately, each Party may agree to a
separate Contract with such Operator, but the Parties shall continue to work
together under this Agreement as if only one Contract were in place, in order
to maintain the maximum operational efficiency of the Alliance. In the event
that an Operator desires to contract for the services of one Party, while
excluding the other Party, for services related to Well Control application,
both Parties shall meet in an attempt to resolve any problem which may be
causing the Operator to exclude one of the Parties, failing which, the Party
with whom the Operator has agreed to contract shall be free to contract to
provide such services, or to reject the work.
2.4 Notwithstanding any provision hereof which may indicate otherwise, it is
the specific intent of the Parties that this Agreement and the Alliance created
hereby is to be construed only as a business alliance between two independent
business entities and is not, nor shall it be deemed to be, a separate entity
or a partnership or any similar arrangement, nor shall any master/servant or
employer/employee relationship be created between the Parties. Each Party
hereto is an independent contractor and each Party shall control the methods
and means by which its own services are provided through the Alliance, pursuant
to this Agreement.
2.5 Each Party hereto shall remain responsible for the payment of its own taxes
and, by executing this Agreement, neither Party shall be deemed to accept any
responsibility for the payment of any taxes accruing to the other Party,
whether under this Agreement or otherwise, and each Party shall release,
protect, defend, indemnify and hold the other Party harmless in that regard.
2.6 The employees of HES shall not be deemed to be the employees, servants or
agents of IWC, nor shall the employees of IWC be deemed to be the employees,
servants or agents of HES. The Parties may, from time-to-time, "second" or
contract employees to one another for specific projects of mutual benefit to
the Alliance However, each Party shall be, and shall remain, fully responsible
for its own employees and for any contract or seconded personnel furnished by
it including, but not limited to, the payment of all salaries, wages, bonuses
and all employment related taxes, benefits, insurance and medical costs and
each Party agrees to release, protect, defend, indemnify and hold the other
Party harmless in that regard.
<PAGE>
2.7 Each Party hereby covenants and agrees with the other Party that it will
make no attempt to recruit, nor offer employment to the employees of the other
Party during the term of this Alliance, and for a period of one (1) year
following the termination of this Agreement, except with the prior written
approval of such other Party.
III: PREPARATION OF BIDS/CONTRACTING
3.1 In bidding jobs to be performed pursuant to this Agreement, it is
anticipated that HES will normally be the Lead Contractor and, accordingly,
will handle such bid submittals. However, it is recognized that the input of
IWC in the evaluation of the bid and the preparation of the wel1 plan is
critical. IWC shall be fully responsible for the costing and other preparations
required for its portion of any bid to be submitted. HES agrees that, upon
receipt by it of any bid materials, the same shall be forwarded to IWC
immediately upon such receipt so that IWC shall have the maximum amount of time
possible, under the circumstances, to prepare its portion of the bid.
3.2 As indicated throughout this Agreement, it is the intent of the Parties to
have full and open communication regarding the information necessary to conduct
business and operations pursuant to the Alliance in an effective manner. Such
unfettered exchange of information is of the utmost importance in the
preparation of bids, and is equally applicable to market analyses, customer
surveys, strategic planning, technical support and development, and tool and
personnel scheduling.
3.3 Both Parties agree that, in the preparation of their respective portions of
any bid, each will put forth its best efforts to bid such job competitively
with the then existing market, consistent with existing market rates and
consistent with prudent business practices. The Party acting as Lead Contractor
agrees that, in its preparation of the total bid package, it will not change or
otherwise modify any part of the Subcontractor's portion of the bid without the
Subcontractor's prior knowledge and specific approval.
3.4 HES recognizes that IWC, in the provision of its tools and services,
requires that the operator fully reimburse it for any of its tools and
equipment lost on location, and HES agrees that such consideration shall be an
integral part of any bid submitted pursuant to the Alliance, unless IWC
otherwise agrees. To the extent such loss-of-equipment coverage is not extended
by the Operator under any Contract, and IWC has not agreed to same, HES agrees
that it shall not be responsible to IWC for the full replacement cost of such
tools and equipment damaged or lost on, or in transit to, the job or well
location.
3.5 The Party designated as the Lead Contractor shall, unless otherwise agreed
between the Parties, take the contract with the operator in its own name, with
the other Party assuming the role of "Subcontractor" to the Lead Contractor.
It is
<PAGE>
agreed by the Parties that any Contracts entered into with any Operator shall
preferably be on terms and conditions which are acceptable to both HES and IWC.
3.6 Each bid tender will be handled on a case-by-case basis, but it is intended
that every bid related to well control services shall require the involvement
of both Parties, and the Lead Contractor will seek the approval of the
Subcontractor to all bid terms and conditions. If the Subcontractor objects to
a Contract provision and the Lead Contractor agrees, the objection will be
proposed to the Operator. If the Lead Contractor disagrees with the position
taken by the Subcontractor, or if the Operator rejects the objection, the Lead
Contractor may elect, in its sole discretion, to assume the additional
liability vis-a-vis the Subcontractor; provided that, in the event the Lead
Contractor elects to not accept such additional liability, then the Parties may
agree to not submit a bid.
IV: PERFORMANCE OF SERVICES
4.1 The portion of Well Control services to be provided and performed by each
Party shall be as follows:
(a) HES will be responsible for providing and/or operating:
(i) the required snubbing or hydraulic workover units, pumping, logging,
wireline, directional drilling, BAWD, LWD, SDL, pressure control and ancillary
equipment, including all surface control equipment, tubulars and job
consumables;
(ii) engineering services and support (other than as provided by IWC);
(iii) overall project management and well supervision;
(iv) primary marketing and business development for the Alliance;
(v) the use of HES (or related Halliburton) support facilities in the areas
where specific projects are to be performed by the Alliance;
(vi) logistical arrangements to/from the well site or location, and from/to
point of origin; and
(vii) obtain/provide all required governmental and regulatory permits and
certifications.
(b) IWC will be responsible for providing and/or operating:
(i) the expertise and all required tools necessary for capping or replacement of
damaged well head or pressure control equipment, oil or gas well firefighting
<PAGE>
operations including but not limited to removal of damaged drilling or
production equipment and ancillary services;
(ii) firefighting equipment, i.e., fire pumps, monitors and manifolding; pipe
cutting or crimping equipment; blowout preventer or capping stacks or
assemblies; and other services required as requested;
(iii) engineering support, including contingency and safety case planning
hydraulic well modeling and computations;
(iv) technical support to operations, including well plans and project
technical feasibility evaluations;
(v) field supervision of well control or critical well operations as required;
(vi) technica1 support to marketing, including technical presentations to
customers and to industry; and
(vii) provide capping / firefighting techniques, as developed and as available.
4.2 For new markets and applications, developed pursuant to the Alliance; for
work brought to the Alliance by IWC; for work where the Operator specifically
requests IWC; and where IWC personnel or equipment is necessary during the
course of any well control operation, IWC shall have the preferential right to
furnish a1l personnel and equipment necessary.
4.3 Both Parties recognize the necessity of developing and providing the highest
quality of well control services, with optimum operating efficiency and at the
lowest possible cost and both HES and IWC agree to put forth their individual
best efforts and covenant to communicate and cooperate to jointly improve the
services provided by the Alliance and to be competitive in the well control
market.
4.4 It is recognized that well control techniques are in a mature stage of
industry development and that, from time-to-time, the Parties may wish to pursue
the development of specific well control related tools, techniques, technology,
either solely, jointly or with others, for the benefit of the Alliance. In such
instances, the Parties will agree, in advance, to a specific Business
Plan/Budget ("Budgets") related to such development. The Budget will include,
but will not necessarily be limited to, approved expenditures; respective
contributions of funds and/or services to the development; and the respective
rights of the Parties following the completion of any such development. Any
invention, idea or discovery developed individually by either Party, pursuant to
said collaboration, shall be the sole property of said Party. Where solely owned
by one Party, the other Party shall be entitled to seek a license to said idea,
invention or discovery pursuant to Section 8.4 hereof.
<PAGE>
4.5 Each Party has represented to the other that, given sufficient notice and,
to the extent adequate equipment and personnel are available to it, each is
capable of providing its equipment, tools and services in any locale, foreign
or domestic and for operations both on land and offshore and that, accordingly,
it is anticipated that this Alliance shall have the potential of furnishing
services in all areas, subject to any laws which may restrict a Party from
providing its services. However, in the event one Party does not care to, or is
unable to, meet the tool and/or personnel requirements for specific work, then
the provisions of Section 1.4, related to permissible alignment with a third
party, will be applicable.
4.6 Notwithstanding the above representations, it is recognized that, from
time-to-time, operations may be contemplated by the Alliance in an area where
one or the other of the Parties - or neither of the Parties - may be registered
to do business. In such event, to the extent possible, the prime Contract shall
be taken in the name of the Party registered to do business in such
jurisdiction. In the event neither Party is so registered, and registration is
required, the Parties agree to discuss the situation and to take the steps
dictated by the circumstances. To the extent possible, the costs of such
registration (and subsequent de-registration costs) shall be factored into the
bid price.
4.7 In conducting operations in foreign jurisdictions, it is recognized that,
from time-to-time, the Alliance may operate in a country where each Party has an
agency or similar representative arrangement and that such agreement(s) may
require that a fee be paid to such local representative. In such event, the
operation shall be conducted through the agent of the Lead Contractor (unless
otherwise mutually agreed) and the Subcontracting Party shall be responsible for
arrangements with his own agent. It is agreed that any fees Payable by such
Subcontracting Party shall be included in his rates under the Contract.
4.8 Notwithstanding the provisions of Section 2.5, any taxes payable due to
operations of the Alliance, by either Party, in any jurisdiction wherein the
registration considerations addressed in Section 4.6 may apply, shall be pro-
rated between the Parties in the same proportion as their revenues generated
from that project.
4.9 In conducting operations in areas where import/export duties, customs duties
and related fees are payable on tools and/or equipment required for the work,
such fees, duties and related costs and expenses (whether related to original
tools/equipment or replacements therefor) shall be negotiated as a part of the
Contract on behalf of both Parties.
V: CONFLICTS OF INTEREST
5.1 HES has been considering entering into the blowout control / oil well
firefighting business as to compete with other companies offering similar
products
<PAGE>
or services similar to those offered by HES. Entering such business, however,
would require substantial research, resources, personnel and time to develop. In
view of the current market opportunities for well control services and the
capabilities immediately available from IWC in this area, HES has decided to
enter into this Alliance with IWC. Since such a project would not be in keeping
with the spirit and intent of this Agreement, HES covenants that it will not
pursue such specific development project, either alone or through third
parties, for the duration of this Agreement. HES further agrees that, during
the term of this Agreement, no Halliburton related entity will conduct research
or development of techniques relating to those presently offered by IWC,
without the prior knowledge and agreement of IWC. However, any technology
and/or tools developed by the HES well Control Services Group, which have a use
in well control applications, will be made available to IWC, under reasonable
licensing arrangements, for its use pursuant to the Alliance. Likewise, any
technology and/or tools developed by IWC, which have a use in well control
applications, will be made available to HES, under reasonable licensing
arrangements, for its use pursuant to the Alliance.
5.2 HES and IWC may, by mutual agreement, elect to collaborate and cooperate in
the Joint development of specific well control related tools and techniques,
conceived by either Party, either solely or jointly with others, for the
benefit of the Alliance. Any invention, idea or discovery developed by the
Parties, pursuant to said collaboration, shall be joint property of the
Parties. Any invention, idea or discovery developed individually by either
Party, pursuant to said collaboration, shall be the sole property of said
Party. Where solely owned by one Party, the other Party may seek a license to
said idea, invention, or discovery pursuant to Section 8.4 hereof.
5.3 In their relations with third parties, including operators and other
customers pursuant to the Alliance, the Parties recognize that there will always
be the possibility of having conflicts develop between their respective
interests. Each Party covenants with the other to not knowingly commit any act
which might jeopardize the rights of the other Party hereto. Each Party agrees
to avoid any impropriety in dealing with third parties which might reflect
adversely on the other Party or on the Alliance.
5.4 The Parties agree that neither of them will give, grant or furnish to any
party, whether a customer or not, any gift, gratuity, bribe or other inducement
or illegal payment which might adversely affect the operations of the Parties
jointly under the Alliance, or which would otherwise be contrary to law.
5.5 For any WCS operations planned or performed by the Parties pursuant to this
Agreement and the Alliance, the Parties agree that equal credit and visibility
will always be accorded to both Parties regarding advertising, customer contacts
and information, presentations to technical organizations, news releases and
related publicity. Each Party agrees that it will not make, publish, exhibit,
<PAGE>
authorize or release any advertising, presentations to technical organizations
or publications, news releases and related publicity referring to the other
Party, without the other Party's prior consent. Provided, however either Party
shall have the right, during the term of this Alliance, to use the tag line
reference to the Alliance set forth on exhibit "__", in connection with any
advertising, presentation, news release and related publicity.
VX: LIABILITY / INDEMNITIES
6.1 In conducting operations pursuant to the Alliance, the Parties shall
endeavor, to the extent possible through negotiations, to execute Contracts
with third parties which provide for the allocation and assumption of risk,
indemnity obligations and other matters which are consistent with those set
forth in this Agreement.
6.2 It is recognized that, in dealings with Operators, the ability to negotiate
favorable terms is not always available. The Lead contractor shall be primarily
responsible for the negotiation of contracts with Operators on terms which are
acceptable to him but, as stated hereinabove, it is an integral part of this
Agreement that neither Party hereto may commit the other Party to any contract
terms or conditions, without the express written agreement of such other Party
thereto.
6.3 As between the Parties, the provisions of this Agreement shall govern all
relations between them, but such provisions shall not confer any rights unto
any person or entity who is not a Party hereto.
6.4 Each Party agrees to release, protect, defend, indemnify and hold the other
Party harmless from and against a1l claims, demands, causes of action and costs
(including attorney's fees and associated legal expenses) arising out of or
pertaining to operations pursuant to this Agreement in favor of its own
employees, officers, directors, servants, agents or invitees for bodily injury,
illness or death, or damage to or loss of their property, without regard to the
cause or causes thereof or to the fault, negligence or strict liability of any
party (including, without limitation, the fault, negligence or strict
liability, to any degree of the indemnified Party), or to the unseaworthiness
of any vessels or craft or to pre-existing conditions.
6.5 Except as may be specifically provided otherwise herein to the contrary,
each Party agrees to release, protect, defend, indemnify and hold the other
Party harmless from and against any and all claims, demands, causes of action
and costs (including reasonable attorney's fees and associated legal expenses)
arising out of or pertaining to operations pursuant to this Agreement in favor
of such Party, for loss of, damage to or loss of use of said Party's own
equipment and materials, without regard to the cause or causes thereof, or to
the fault, negligence or strict liability of any party (including, without
limitation, the fault, negligence or strict liability, to
<PAGE>
any degree, of the indemnified Party), or to the unseaworthiness of any vessels
or craft or to pre-existing conditions
6.6 It is agreed that, to the extent possible in each case, all provisions of
indemnity and holding harmless provided by third parties, pursuant to Contracts
with such third parties, shall be "passed through" to the Party who is in the
role of Subcontractor under such Contract. It is the specific intent that all
indemnity protection obtained from Operators or other third parties shall
insure to the benefit of both Parties to this Agreement.
6.7 Neither Party shall be responsible or liable to the other Party for any
direct, indirect, punitive or consequential damage, including, without
limitation, those related to loss of profits, loss of production, loss of
business or business opportunity or similar losses, and each Party agrees to
release, indemnify and hold the other harmless in that regard.
6.8 To the extent that any Contract with an operator requires the Lead
Contractor to indemnify the operator against claims arising out of or
pertaining to operations pursuant to this Agreement in favor of the
Subcontractor's employees, officers, directors, servants, agents or invitees
for bodily injury, illness or death, or damage to or loss of their property, or
in favor of the Subcontractor for loss of, damage to or loss of use of the
Subcontractor's equipment and materials; Subcontractor agrees, to the extent
consistent with this Agreement, to give the same indemnity in favor of said
indemnified parties.
6.9 Except as may be agreed upon in writing by the Parties, in connection with
any particular Contract, each Party agrees to release, protect, defend,
indemnify and hold the other Party harmless from and against any and all claims,
demands, causes of actions and costs (including attorney's fees and associated
legal expenses) arising out of or pertaining to operations pursuant to this
Agreement in favor of any third party for bodily injury, illness or death, or
damage to or loss of their property, to the extent caused by the fault,
negligence or willful misconduct of the indemnifying Party.
VII: INSURANCE
7.1 Each Party shall be responsible for carrying and maintaining its own
insurance to cover its operations pursuant to the Alliance and the liabilities
and obligations it has assumed under any contracts and this Agreement. Each
Party shall furnish the other with details of its insurance coverage and each
shall furnish the other with the necessary and appropriate Certificates of
Insurance prior to the commencement of operations under this Agreement and under
any Contract and shall timely furnish renewal Certificates, when required.
<PAGE>
7.2 Specifically, the Insurance Certificates furnished by each Party to the
other shall include the following:
(a) the types, amounts and effective dates of such coverage;
(b) a commitment that such coverages shall not be materially changed, modified
or canceled without giving the Certificate holder at least thirty (30) days
prior written notice; and
(c) endorsements to the effect that, to the extent of the liabilities
specifically assumed by the Named insured under this Agreement and under any
Contract with an Operator, the certificate holder (as well as any Operator, if
called for under the Contract) shall be named as an additional insured on all
of such policies (except Workers Compensation) and, to that same extent, the
Named Insured shall cause the underwriters of such policies to waive all rights
of subrogation.
Attached hereto as Exhibit "A", is a listing of the minimum required insurance
coverages to be furnished by each Party. The stated limits are minimum limits
only and are not intended to limit the liability of either Party or to limit
the scope or amount of the indemnities given by each Party to the other in
Article VI hereof.
7.3 It is anticipated that the insurance requirements of individual Operators
may vary from Contract to Contract and that each Party may have to furnish
Certificates of Insurance for each Contract. It is recognized that arbitrary or
unusual insurance requirements may be encountered from time-to-time and that
each Party will, of necessity, require input into the negotiation of the final
insurance provisions. Accordingly, it is agreed that neither Party, when acting
in the role of Lead Contractor, shall commit to furnish specific insurance
coverage under any third party Contract without first obtaining the concurrence
of the other Party; provided, however, that such Lead Contracting Party may, in
its discretion, elect to agree to any insurance requirements contained in any
contract, which are different from or in excess of the insurance agreed to be
furnished by the other Party, by assuming for itself and on behalf of the other
Party, any difference or excess.
7.4 Each Party shall be fully responsible for the payment of any premiums
related to its own insurances and for the payment of all deductibles pertaining
thereto, and each shall indemnify the other in that regard.
VIII: CONFIDENTIALITY
8.1 It is recognized that in conducting operations on behalf of the Alliance
pursuant to this Agreement, each of the Parties will, from time-to-time, come
into the possession of knowledge which is proprietary to the other, and which
such other Party seeks to protect as "Confidential Information." Each Party,
recognizes that
<PAGE>
such Confidential Information may be highly sensitive and the wrongful
disclosure thereof could cause irreparable harm to the owner thereof. Both
Parties recognize that the field of well control services is highly competitive
and that the wrongful disclosure of Confidential Information belonging to the
other Party could damage both such other Party and the Alliance created hereby.
Therefore, the Parties specifically covenant and agree that each will treat the
Confidential Information belonging to the other with the same degree of care it
uses to protect Confidential Information of a similar nature.
8.2 The Parties further recognize that each of them is, or may be, a party to
confidentiality agreements with other parties and that the maintaining of
absolute confidentiality in such circumstances may be difficult. However, each
Party agrees and covenants that it will not knowingly cause or induce the other
Party to commit a material breach of such third party confidentiality
agreements.
8.3 Each Party agrees to protect, defend, indemnify and hold the other Party
harmless from and against any claims by third parties for the infringement, or
alleged infringement of any patents used by said Party under this Agreement;
provided, however, that patent rights, trade secrets, or other know-how related
to well control services which are held, or claimed to be held, by either Party
shall not be asserted against the other Party, provided said other Party has
obtained a license to practice said patent rights, trade secrets, or other
know-how.
8.4 In the event that, as a result of operations conducted by the Parties
pursuant to this Alliance, the Parties agree to jointly develop any patentable
tools, equipment, processes or methods, the Parties agree that the intellectual
property rights to any such inventions or tools, etc., shall be as follows: Any
invention, idea, or discovery jointly developed by the Parties, pursuant to said
collaboration, shall be the joint property of the Parties. Any invention, idea
or discovery developed individually by either Party, pursuant to said
collaboration, shall be the sole property of said Party. To the extent of either
Party's interest in such inventions, the other Party shall be granted a fully
paid-up, non-terminable, royalty-free license which rights shall extend beyond
the termination of this Agreement.
8.5 Notwithstanding any provision of this Agreement which may appear to the
contrary, neither Party shall be prohibited from continuing to work
independently on specific tool and equipment technology development which is
specific to the business and services supplied by such Party.
8.6 In conducting operations pursuant to this Agreement, the Parties recognize
that they may, from time-to-time, individually or collectively, use tools,
equipment, methods or processes which are subject to intellectual property
claims by third parties, which claims are considered by the Parties to be
unfounded or unenforceable. The Parties recognize that the use of such
intellectual property could serve to subject the Parties acting under the
Alliance to joint and several
<PAGE>
liability for claims for infringement. In the event such claims are lodged, the
Parties agree to mutually cooperate in the investigation and/or defense of such
claims to the mutual benefit of the Alliance.
IX: COSTS/BILLINGS/PAYMENT
9.1 Each Party is responsible for its own expenses in relation to this Alliance
and each is responsible for the development of its own rates and specific terms
relative to bids and customer quotations.
9.2 By prior agreement, the Parties may collaborate to consolidate costs and
prices in the manner most efficient to allow for cost reductions, or may
establish a cost and profit sharing formula in order to increase
competitiveness.
9.3 It is recognized that, as well control applications are changing and
continuing to evolve, each well control project will have specific
circumstances which will require that rates and terms for each project be set
on a case-by-case basis.
9.4 It is recognized that the Lead Contracting Party will, normally, submit the
total Alliance related billings to the operator in its own name and on the
basis of the Lead Contractor's contracted rates and related terms. Regardless
of the method and amount of billings by the Lead Contractor and the payment
performance of the Operator, the Subcontractor will be paid in full for its
services as invoiced within fifty (50) days of the date of his invoice, or
within fifteen (15) days of the Lead Contractor's receipt of payment from the
Operator, whichever is sooner. Prior to the actual invoicing by the
Subcontractor, the authorized representatives of the Parties will have met to
review and approve the basis for the Subcontractor's invoice.
9.5 In the event all, or any portion of any billing to the Operator shal1 be
disputed by the Operator, the Lead Contractor shall be primarily responsible for
resolving such dispute. At the request of the Lead Contractor, the Subcontractor
shall render all possible, reasonable assistance in helping to resolve any
dispute which may relate to services furnished by the Subcontractor. If the
Operator's dispute does not relate to the Subcontractor's services, the Lead
Contractor shall pay the Subcontractor its charges in accordance with the terms
of this Agreement. If the Operator's dispute does relate to the Subcontractor's
performance, then the Lead Contractor will pay the Subcontractor for the
undisputed portion in accordance with the terms of this Agreement and both the
Lead Contractor and the Subcontractor will work together to resolve the disputed
portion with the Operator. Neither Party shall have the authority to settle, or
compromise, any disputed portion of any invoice which relates to the services
provided by the other Party, without such other Party's concurrence.
<PAGE>
9.6 Except as specifically provided herein, neither Party shall be responsible,
one to the other, for the payment of invoices for services rendered under the
Alliance, or for payment of third party charges incurred by the other Party.
X: TERM/TERMINATION
10.1 This Agreement, once executed by the Parties, shall be effective as of the
date first shown above and shall remain in full force and effect for an
indefinite period until terminated in accordance with the terms hereof;
provided, however that this Agreement may be terminated prior to the fifth
(5th) anniversary hereof only for cause, or by mutual agreement between the
Parties.
10.2 Any notice of the desire of either Party to terminate this Agreement,
shall be in writing and shall be effective six (6) months from the date
thereof, unless the Parties jointly agree to some other time period. It is
specifically agreed that it is the intent of the Parties to exhaust all
reasonable means of reconciliation of any difference, prior to resorting to
termination.
10.3 Cause for termination shall be limited (i) to a fundamental breach by one
of the Parties hereto of the provisions of this Agreement; (ii) to a change in
business circumstances of either of the Parties; (iii) to a failure of the
Alliance to generate economically viable business; or (iv) to the failure of
either Party to engage in good faith dealing hereunder.
10.4 Termination of this Agreement, for any reason whatsoever, shall not affect
any term hereof which should reasonably survive such termination nor shall such
termination serve to adversely affect any rights, duties or obligations which
may have accrued to either Party prior to such termination.
10.5 In the event any services are being performed or are to be performed under
any Contract with an operator executed prior to the termination date of this
Agreement, this Agreement shall continue in full force and effect until the
completion of the services.
XI: WAIVERS/AMENDMENTS
11.1 No provision of this Agreement shall be, nor shall same be deemed to be,
waived by either Party hereto unless the waiver is done in writing and signed by
the Party to be charged.
11.2 No waiver of any provision in a given instance shall be deemed to be a
continuing waiver, unless done in writing.
11.3 This Agreement may be amended only by a written amendment, executed by the
authorized representatives of both Parties hereto.
<PAGE>
11.4 Any written amendment, when executed, shall be attached to this Agreement
and shall become a part hereof for all purposes.
XII: GOVERNING LAW/ARBITRATION
12.1 THE RELATIONS BETWEEN THE PARTIES HERETO (AND THE PERFORMANCE OF
OBLIGATIONS PURSUANT HERETO, WHEREVER SAME MAY BE PERFORMED) SHALL BE GOVERNED
BY THE GENERAL MARITIME LAW OF THE UNITED STATES, AND IF SUCH LAW SHOULD BE
INAPPLICABLE TO ANY SITUATION, BY THE LAWS OF THE STATE OF TEXAS, NOT
INCLUDING, HOWEVER, ANY OF THE CONFLICTS OF LAW RULES OF EITHER SYSTEM WHICH
MIGHT REFER ANY DISPUTE TO THE LAWS OF ANY OTHER JURISDICTION.
12.2 It is agreed that the proper venue for the resolution of any dispute
arising hereunder, which is not settled in another manner, shall be the United
States District Court of the Southern District of Texas, sitting in Houston,
Harris County, Texas.
12.3 The Parties agree that they shall attempt to resolve any disputes between
them on an amicable basis, prior to the filing of litigious pleadings of any
kind. All disputes, of any nature whatsoever, shall be handled by informal
negotiation, in the first instance. In the event any such dispute is not
resolved within sixty (60) days of the first notice of the dispute, the Parties
agree to retain the services of a professional mediator to attempt to resolve
the dispute, but the total time allotted to such mediation shall not consume
more than thirty (30) days.
12.4 In the event mediation is not successful, either Party (or both Parties)
may call for Arbitration to settle the dispute, by serving written notice to the
other Party. Said Arbitration shall be binding and finally determinative of the
dispute, unless both Parties agree for it to be non-binding.
12.5 Any Arbitration conducted pursuant to this Agreement shall be conducted in
accordance with the Rules of the International Chamber of Commerce and, unless
the Parties mutually agree to some other venue, shall be held in Houston, Texas.
The cost of the Arbitration proceedings shall be allocated between the Parties
in whatever proportion the arbitrator deems just under the circumstances and
shall be enforceable in the jurisdiction provided in section 12.2 hereof.
12.6 The Parties further agree that Arbitration proceedings must be instituted
within one (1) year after the dispute or claimed controversy came to light, and
that the failure to institute such proceedings within such period shall
constitute an absolute bar to the institution of such proceedings and a waiver
of all claims regarding such dispute or controversy.
<PAGE>
XIII: NOTICES
13.1 All notices required to be given under this Agreement shall be well and
truly given if sent by registered mail (return receipt requested); facsimile;
courier; or hand delivery, to the respective addresses shown below:
For HES:
Halliburton Energy Services
5151 San Felipe
Houston, Texas 77056
TEL: (713) 840-2700
FAX: (713) 840-2798
ATTENTION: President
For IWC:
IWC Services, Inc.
2800 Post Oak Blvd.
Transco Tower Suite 6300
Houston, Texas 77056
TEL: (713) 621-7911
FAX: (713) 621-07988
ATTENTION: Brian Krause
13.2 Either Party may, from time-to-time, by advice to the other Party at the
address given above, change its address for notice.
13.3 Any notice given pursuant hereto shall be considered given at the time of
verifiable receipt.
XIV: GENERAL
14.1 This Agreement is applicable to all business units, districts, divisions,
partnerships and/or other alliances in which either Party has a business
interest (the "Affiliates").
14.2. In relation to the rights and obligations of each Party hereunder, it is
specifically the intent of the Parties that all indemnities given hereunder
shall include the indemnitee's parent, subsidiary and affiliated companies or
entities, and the directors, officers, employees, servants and agents of any of
them.
14.3. Except to the extent inconsistent with, or in conflict with, any U.S.
laws, both Parties agree that they will comply with and abide by all laws, rules
and regulations, whether governmental, legal or contractual and that, in
conducting
<PAGE>
operations pursuant to the Alliance, each Party shall be, and shall remain,
fully responsible for its own compliance with such laws, rules and regulations.
Each Party agrees to release, protect, defends indemnify and hold the other
Party harmless from all claims, demands and causes of action arising from the
failure of the indemnifying party to so comply, whether or not said
indemnifying Party is named a party defendant to any action.
14.4. The Parties acknowledge that in entering into this Agreement and the
Alliance created hereby, they are entering into a relationship which is
difficult to define in all details prior to the commencement of activities
hereunder. It is likely that situations will arise which have not been
anticipated by the Parties and which may not be fully or adequately covered by
this Agreement. In any such event, the Parties agree, in the spirit of mutual
trust and cooperation which is stated throughout this Agreement, to each put
forth his best efforts to address and resolve any such matters in keeping with
the basic intent of the Alliance.
14.5 The Parties recognize that activities outside the United States may be
performed by subsidiaries and affiliated companies of the Parties, and each
Party will cause its subsidiaries and affiliated companies to perform the
activities consistent with the terms and conditions of this Agreement.
14.6 The Parties recognize that, once operations pursuant to the Alliance are
established, the withdrawal or sale of the business or assets of either Party
related to the Alliance could have adverse effects on the other Party hereto.
Accordingly, in an effort to minimize the consequences of such a sale or
transfer of the assets or business of one Party on the other Party, the Parties
have agreed to keep each other fully advised of any plans to sell or offers to
purchase which may affect operations pursuant to the Alliance.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by
their duly authorized representatives, in duplicate original counterparts, to be
effective as of the date first shown above
Halliburton Energy Services, IWC Services, Inc.
A Division of Halliburton Company
By: /s/ W. J. Zeringue By: /s/ Brian Krause
-------------------------------- --------------------------------
Name: W. J. Zeringue Name: Brian Krause
Title: Executive Vice President Title: President
Date: Date:
<PAGE>
EXHIBIT "A"
TO THAT CERTAIN
ALLIANCE AGREEMENT
BY AND BETWEEN
HALLIBURTON ENERGY SERVICES ("HES")
AND
IWC SERVICES, INC ("IWC")
DATED
To support, but not in limitation of, the indemnities and other obligations
assumed by the respective parties under the Alliance Agreement, HES and IWC
shall each furnish the following policies of insurance:
1. General Requirements:
(A) Worker's Compensation/Employer's Liability (including Longshoreman's and
Harbor Worker's Coverage) for the employees of the named insured Party engaged
in the performance of services under the Alliance, as required by the laws of
the place of hire and of the applicable jurisdiction where the work is to be
performed.
The Employer's Liability Section to have a minimum limit of U.S. $1,000,000.00.
(B) Comprehensive Genera1 Liability (including contractual Liability coverage
for the indemnities and obligations assumed by the named insured Party under
the Alliance Agreement) and to include coverage for suits by the employee of a
Party against the other Party or his employees and covering for general third
party liability.
The CGL policy to have a minimum U.S. $1,000,000.00 combined single limit per
occurrence.
(C) Automobile Public Liability, covering all owned, non-owned or hired vehicles
used in the performance of services under the Alliance:
The policy to provide coverage in the minimum amount of U.S. $1,000,000.00
combined single limit for domestic U.S. operations and sufficient to meet the
statutory requirements of any foreign jurisdiction wherein operations are
conducted.
(D) Excess Liability in the minimum amount of U.S. $10,000,000.00 excess of
the coverages provided in (A), (B) and (C) above.
<PAGE>
(E) Each Party shall require its contractors and/or subcontractors (excepting
the Parties herein) to maintain insurance coverage which is appropriate to the
nature of the work to be performed by such parties.
(P) As provided in Section 1.2, each Party shall provide the other with
certificate(s) of Insurance which contain the proper endorsements. It is
specifically agreed that the requirement for each Party to name the other Party
as an additional insured and to waive subrogation is not intended to confer any
rights to coverage for obligations and liabilities assumed by the additional
insured Party.
II. Special Considerations:
(A) It is recognized that, in concluding contracts with operators, such
contracts may contain unusual or special additional insurance requirements
and/or liability or indemnity provisions which will require additional
coverage(s). The Parties recognize and agree that the above stated limits are
minimum limits only, which may be adjusted to meet specific contract
requirements.
(B) Notwithstanding the fact that the above insurances are primarily intended to
support the liabilities and obligation assumed by the Parties between
themselves, it is recognized that, in specific contracts with Operators, the
Parties may receive indemnity protection from the operator. To the extent
reasonable and possible in a given situation, the Parties shall endeavor to look
to such indemnity protection from the Operator in the first instance, without,
however, derogating from the mutual protection afforded by one Party to the
other.
<PAGE>
EXHIBIT "B"
TO THAT CERTAIN
ALLIANCE AGREEMENT
BY AND BETWEEN
HALLLIBURTON ENERGY SERVICES ("HES")
AND
INTERNATIONAL WELL CONTROL, INC. ("IWC")
DATED______________
A: ITEMS CLAIMED AS PROPRIETARY OR CONFIDENTIAL INFORMATION BY IWC:
B: ITEMS CLAIMED AS PROPRIETARY OR CONFIDENTIAL INFORMATION BY HES:
<PAGE>
SPECIAL MEETING OF THE BOARD OF DIRECTORS
OF
IWC SERVICES, INC.
On October 12, 1995, at 10:00 a.m., at the offices of the company at 2800
Post Oak Boulevard, Suite 6300, Houston, Texas, a special meeting of the Board
of Directors of IWC Services, Inc. was held pursuant to notice as provided in
the By-Laws of the company. After discussion, on motion duly made and seconded,
it was:
RESOLVED, that IWC Services, Inc. establish a subsidiary corporation to be
domiciled in Grand Cayman to be known as International Well Control, Ltd.
and
FURTHER RESOLVED, that the initial board of directors of International
Well Control Ltd. shall consist of Mr. Brian Krause, and Mr. Z. Hakim and
that Mr. Krause shall serve as Chairman of the Board of Directors, Mr.
Hakim shall serve as President and
FURTHER RESOLVED, that IWC de Venezuela, C. A. be organized as a
subsidiary of International Well Control Ltd., with Mr. Brian Krause, Mr.
Danny Clayton and Mr. Z. Hakim as the initial Board of Directors and with
Mr. Hakim to serve as Chairman and Mr. Clayton to serve as President; and
FURTHER RESOLVED, that Mr. Z. Hakim is authorized and directed to take
such actions, and execute such documents, on behalf of IWC Services, Inc.
as may be necessary to incorporate IWC de Venezuela, C. A. and to
accomplish the intent of these resolutions.
There being no further business to come before the meeting, the meeting was
adjourned.
/s/ L. H. Ramming
-------------------------------
L. H. Ramming, Chairman
Attest:
/s/ ???????????????
- -----------------------------
Secretary
<PAGE>
EXHIBIT 10.2
EMPLOYMENT AGREEMENT
BOOTS & COOTS INTERNATIONAL WELL CONTROL, INC., and its subsidiaries, HELL
FIGHTERS, INC., IWC SERVICES de VENZUELA, C.A., BOOTS & COOTS de VENEZUELA,
S.A., BOOTS & COOTS OVERSEAS, LTD. and INTERNATIONAL WELL CONTROL, LTD. ("Boots
& Coots") hereby employs L. H. RAMMING (hereinafter referred to as "Employee")
to continue to be employed and serve as Chairman of the Board and Chief
Executive Officer of Boots & Coots, effective August 1, 1997, on the following
terms and conditions:
WITNESSETH
1. Duties. Employee shall perform such services regarding the operations of
Boots & Coots as the Board of Directors may from time to time request. Employee
shall at all times faithfully, with diligence, and to the best of his ability,
experience and talents, perform all the duties that may be required of and from
him pursuant to the terms of this letter agreement. It is expressly understood
and agreed that in the performance of his duties and obligations hereunder,
Employee shall at all times, be subject to the direction and control of the
Board of Directors of Boots & Coots. It is understood and agreed between the
parties that Employee is actively involved in a number of independent business
activities and will not devote his full time to the affairs of Boots & Coots.
Employee agrees to devotes such of his time to the affairs of Boots & Coots as
is reasonably necessary for the performance of his duties as established by the
Board of Directors and further agrees to limit his independent business
activities to those that do not materially adversely affedt his performance of
his duties as an officer and director of Boots & Coots.
2. Term. The employement contemplated by this letter agreement shall commence
on August 1, 1997 and continue for a term of one (1) year.
3. Compensation. In consideration of the work and other services that Employee
performs for Boots & Coots hereunder, Boots & Coots shall pay Employee the
following:
a) Base Salary. During the term hereof, Boots & Coots shall pay
Employee a gross annual salary of $125,000, payable semi-monthly in
accordance with the company's normal payroll policies, subject to
withholding for federal income tax, social security, state and local
taxes, if any, and any other sums that Boots & Coots may be legally
required to withhold.
b) Automobile Allowance. Boots & Coots shall pay Employee the sum of
$1,000 per month, in accordance with its normal payroll policies, as
reimbursement for use by Employee of his automobile in connection with
the performance of
<PAGE>
Employee's duties hereunder.
c) Incentive Stock Plan. Boots & Coots has proposed to adopt an
Employee Incentive Stock Plan that will provide for the award of stock
and stock options to employees of the company on the basis of merit in
connection with the performance of an employee's duties with the
company. Employee shall participate in any incentive awards made by
the Board of Directors pursuant to such plan.
d) Retirement Plan. Boots & Coots has proposed to adopt a defined
contribution retirement plan permitting employees to contribute a
percentage of their annual salary to a managed retirement plan. The
amount of such contribution shall be the lesser of 10% of an
employee's annual salary, or the maximum permitted by law. Boots &
Coots will match employee's annual contribution to such a retirement
plan by an equal contribution denominated in common stock of Boots &
Coots.
e) Insurance. Boots & Coots will provide Employee with coverage under
a policy of hospitalization and major medical insurance at no cost to
the Employee. Such of Employee's dependants may be covered under such
insurance policy, subject to the terms of such policy, at the expense
of Employee. Boots and Coots will provide life insurance coverage in
amount of $50,000 and short term disability insurance coverage in an
amount to be determined by the company. Employee acknowledges that
Boots & Coots may seek to secure a policy of Key Man life insurance on
the life of Employee, with death benefits payable to the company.
Employee agrees to cooperate with the company in securing the same.
4. Expenses. Boots & Coots shall reimburse Employee for all reasonable
expenses and disbursements incurred by Employee, and approved by appropriate
designees of the Executive Committee, in the performance of his duties
hereunder, including expenses for entertainment and travel, as are consistent
with the policies and procedures of Boots & Coots. Travel and other expenses
from Employee's home to company's office are not included.
5. Confidential Information. Employee acknowledges that in the course of
employment by Boots & Coots, Employee will receive certain trade secrets and
confidential information belonging to the company which Boots & Coots desires to
protect as confidential. For the purposes of this letter agreement, the term
"confidential information" shall mean information of any nature and in any form
which at the time is not generally known to those persons engaged in business
similar to that conducted by Boots & Coots. Employee agrees that such
information is confidential and that the will not reveal such information to
anyone othe than officers, directors and employees of Boots & Coots. Upon
termination of employment, for any reason, Employee shall surrender to Boots &
Coots all papers, documents and other property of Boots & Coots.
6. Agreement Not To Solicit. During the term hereof and for a period of two
years after the termination of employment hereunder (the "Termination Date"),
regardless of how terminated,
<PAGE>
Employee will not, singly, jointly, or as a partner, member, contractor,
employee or agent of any partnership or as an officer, director, employee,
agent, contractor, stockholder or investor in any other entity or in any other
capacity, directly or indirectly:
a) induce, or attempt to induce, any person or party who, on the
Termination Date is employed by or affiliated with Boots & Coots or at
any dime during the term of this covenant is, or may be, or becomes an
employee of or affiliated with Boots & Coots, to terminate his, her or
its employment or affiliation with Boots & Coots;
b) induce, or attempt to induce, any person, business or entity which
is or becomes a customer or supplier of Boots & Coots, or which
otherwise is a contracting party with Boots & Coots, as of the
Termination Date, or at any time during the term hereof, to terminate
any written or oral agreement or understanding with Boots & Coots, or
to interfere in any manner with any relationship between Boots & Coots
and such customer or supplier;
c) employ or otherwise engage in any capacity any person who at the
Termination Date or at any time during the period two years prior
thereto was employed, or otherwise engaged, in any capacity by Boots &
Coots and who, by reason thereof is or is reasonable likely to be in
possission of any confidential information.
Employee acknowledges and agrees that the provisions of this paragraph
constitute a material, mutually bargained for portion of this consideration to
be delivered under this letter agreement and that it is a condition precedent to
the creation and existence of Boots & Coots obligations hereunder.
7. Termination for Cause. Boots & Coots may terminate employment of Employee
under this letter agreement if any of the following occur:
a) the death of Employee;
b) the Employee becomes, in the good faith opinion of Boots & Coots,
physically or mentally disabled, for a period of more than thirty (30)
consecutive days, or for a period of more than sixty (60) days in the
aggregate during a twelve (12) month period, to extent he is unable to
perform his duties hereunder;
c) the Employee breaches any material provision of this letter
agreement;
d) the Employee fails, or refuses to comply with the policies,
standards or regulations of Boots & Coots; or
e) the Employee engages in conduct, if not in connection with the
performance of his duties hereunder, which would result in serious
prejudice to the interests of Boots & Coots if he were retained as an
employee.
<PAGE>
In the event of a termination for cause pursuant to the provisions of this
letter agreement, Boots & Coots shall give a written statement to Employee
specifying the event causing such termination, and the termination will be
immediately effective. In the event of a termination for cause pursuant to the
provision above, this letter agreement shall be wholly terminated and Employee
shall not be entitled to any further compensation or any other benefits provided
for herein, and shall not be entitled to serverance pay. However, any of the
provisions of this letter agreement relating to activities and conduct after the
termination of the employment relationship between Boots & Coots and Employee
shall remain in full force and effect, and be enforceable as provided for
herein.
8. Notices. All notices or other communications pursuant to this contract may
be given by personal delivery, or by certified mail, addressed to the home
office of Boots & Coots or to the last known address of Employee. Notices given
by personal delivery shall be deemed given at the time of delivery, and notices
sent by certified mail shall be deemed given when deposited with the U. S. Post
Office.
9. Entirety of Agreement. This letter agreement contains the entire
understanding of the parties and all of the covenants and agreements between the
parties with respect to the employment.
10. Governing Law. This letter agreement shall be construed and enforced in
accordance with, and be governed by, the laws of the State of Texas.
11. Waiver. The failure of either party to enforce any rights hereunder shall
not be deemed to be a waiver of such rights, unless such waiver is an express
written waiver which has been signed by the waiving party. Waiver of one breach
shall not be deemed a waiver of any other breach of the same or any other
provision hereof.
12. Assignment. This letter agreement shall not be assignable by Employee. In
the event of a future disposition of the properties and business of Boots &
Coots by merger, consolidation, sale of assets, or otherwise, then Boots & Coots
may assign this letter agreement and all of its rights and obligations to the
acquiring or surviving entity; provided that any such entity shall assume all of
the obligations of Boots & Coots hereunder.
13. Arbitration. Any dispute, controversy or claim arising out of or relating
to this letter agreement shall be submitted to and finally settled by binding
arbitration to be held in Houston, Texas, in accordance with the rules of the
American Arbitration Association in effect on the date of this letter agreement,
and judgment upon the award rendered by the arbitrator(s) may be entered in any
court having jurisdiction thereof. All agreements contemplated herein to be
<PAGE>
entered into to which the parties hereto are parties shall contain provisions
which provide that all claims, actions or disputes pursuant to, or related to,
such agreements shall be submitted to binding arbitration.
DATED, this ____ day of _____________, 1997.
BOOTS & COOTS INTERNATIONAL EMPLOYEE
WELL CONTROL, INC.
By:__________________________________ ___________________________________
<PAGE>
EXHIBIT 10.3
EMPLOYMENT CONTRACT
IWC SERVICES, INC, d/b/a INTERNATIONAL WELL CONTROL, and its wholly owned
subsidiaries, IWC DE VENEZUELA and HELL FIGHTERS, INC, referred to together in
this Contract as Employer, hereby employs Raymond Henry, referred to in this
Contract as Employee, who accepts employment on the following terms and
conditions:
1. TERM OF EMPLOYMENT. By this Contract, Employer employs Employee, and
Employee accepts employment with Employer, for a period of five (5) years
beginning on the 1st day of July, 1995, unless sooner terminated as provided
herein. This Contract shall be automatically renewed for successive additional
two (2) year terms unless notice of termination is given in writing by either
party to the other party at least thirty (30) days prior to the expiration of
the initial term or any such renewal term.
2. DUTIES OF EMPLOYEE. Employee shall perform such duties and responsibilities
as are assigned to Employee by Employer. Employee may be assigned duties and
responsibilities related to the affairs of any or all of IWC SERVICES, INC., IWC
DE VENEZUELA, or HELL FIGHTERS, INC. Nothing herein shall be construed to
require Employer to maintain Employee in the designated position or any
particular position for the entire term of this Agreement, and such position may
be changed from time to time as directed by the Board of Directors or management
of Employer. Employee shall devote substantially all of his time to Employer
and shall exclusively conduct the business of Employer. The expenditure of
reasonable amounts of time by the Employee for personal, charitable or
professional activities shall not be a breach of this Agreement, provided such
activities do not materially interfere with the services required to be rendered
by Employee under this Agreement, and are not contrary to the business or other
interests of the Employer. Employee recognizes and acknowledges that the
principal business of Employer is fighting fires at oil and gas well sites,
providing consulting services and developing blowout contingency plans to, and
for, oil and gas operators. The Employee will be required to travel
extensively, and for long periods of time, including overseas and to undeveloped
and remote parts of the world. The Employee further recognizes and acknowledges
that the duties to which he will be assigned may be hazardous and expose the
Employee to the dangers associated with such activities, and that the
compensation provided for herein is calculated to compensate Employee for
exposure to such hazardous situations.
<PAGE>
3. COMPENSATION.
A. Base Salary. As compensation for services rendered pursuant to this
Contract, Employee shall be paid by Employer a salary of not less than
$80,000.00 per year, paid in regular installments not less often than semi-
monthly in accordance with the payroll policies of the Employer, during the term
of employment. Nothing herein shall preclude the parties from mutually agreeing
to pay compensation in excess of that set forth above for all or any part of the
term.
B. Incentive Pay/Profit Sharing. In addition to the base salary as
provided above, Employee shall participate in Employer's Incentive Pay/Profit
Sharing Plan ("Plan"). The plan provides that twenty percent (20%) of the net
profits of Employer, after providing a ten percent (10%) return to shareholders,
be established a fund for distribution to employees of Employer pursuant to the
Plan. Each employee participant in the Plan shall be credited with a number of
"base points", the sum of which is currently eighty (80), to be used in
determining the dollar amount of the employee's participation in the Plan.
Twenty (20) additional "points" shall be credited to employee participants each
year by the executive committee of the Board of Directors of Employer, based
upon performance. At the end of each calendar year, the fund will be divided by
the number of "points" of the employee participants and will be distributed
accordingly. Each employee shall have five (5) "base points" during the term of
his employment. Nothing herein, however, shall prevent Employer from
periodically revising or altering such compensation for all employee
participants..
C. Stock Rights. In addition to the compensation set forth above,
Employer will issue to Employee a certificate representing 10,000 shares of the
common stock of IWC Services, Inc., effective July 1, 1995, for the purchase
price of $100.00 which the parties agree is the fair value thereof at the time
of this agreement. Such stock will be subject to the terms of a Voting Trust
Agreement, a copy of which is attached hereto as Exhibit A. Employee agrees to
execute the Voting Trust Agreement and will be bound by all of the terms therof.
4. REIMBURSEMENT OF BUSINESS EXPENSES. Employee is authorized to incur
reasonable business expenses in conducting the business of Employer. Employer
may from time to time adopt policies and procedures specifying the nature and
amount of expenses that will be considered reasonable, and the statements
contained in such policies and procedures shall be considered conclusive as to
such matters. Employer will reimburse Employee for such actual, out of pocket
expenses, upon the Employee's presentation and itemized account of such expenses
in the form required by the then properly adopted policies and procedures of
Employer.
5. EMPLOYEE BENEFITS. During the term hereof, Employee shall be entitled to
participate in all employee benefit plans from time to time made available to
employees of Employer, including any retirement plan, profit sharing plan, group
life, health, diability or accident insurance plan, vacation, sick leave, or
other benefit plan on the same basis as other employees in similar positions..
<PAGE>
6. REPRESENTATIONS AND WARRANTIES OF EMPLOYEE. Employee represents and
warrants to Employer that:
A. Employee is under no contractual or other restriction or obligation
compliance with which is inconsistent with the execution of this Agreement, the
performance of Employee's obligations hereunder, or the other rights of the
Employer hereunder.
B. Employee has no physical or mental disability that would hinder the
performance of Employee's obligations under this Agreement.
7. CONFIDENTIAL INFORMATION. Employee acknowledges that in the course of
employment by Employer, Employee will receive certain trade secrets and
confidential information belonging to Employer which Employer desires to protect
as confidential. For the purposes of the Agreement, the term "confidential
information" shall mean information of any nature and in any form which at the
time is not generally known to those persons engaged in business similiar to
that conducted by Employer. Employee agrees that such information is
confidential and that he will not reveal such information to anyone other than
officers, employees and directors of Employer. Upon termination of employment
for any reason whatsoever, whether or not in breach of this Contract, Employee
shall surrender to Employer all papers, documents and other property of
Employer.
8. OBLIGATION OF LOYALTY TO EMPLOYER. During the term of employment by
Employer, Employee agrees that he will not:
A. Make a statement or perform any act intended to advance an interest of
any existing or prospective competitor of the Employer in any way; that will or
may injure the Employer in any way; or solicit or encourage any other employee
of Employer to do any such act;
B. Inform any existing or potential customer, supplier or creditor of the
Employer that Employee intends to resign; or make any statement or do any act
intended to cause any existing or potential customer, supplier or creditor of
Employer to learn of Employee's intention to resign; or
C. Discuss with any existing or potential customer, supplier or creditor
of the Employer the present or future availablity of services provided by a
business that competes with or where such services are competitive with services
that the Employer provides.
<PAGE>
9. AGREEMENT NOT TO COMPETE.
A. Scope of Agreement Not to Compete. Employee hereby agrees that during
the term of this Agreement, and for one (1) year thereafter, unless terminated
for cause, Employee will not, directly or indirectly, be employed by, or provide
consulting, advise, or services to, any business, individual, firm, partnership
or corporation, other than Employer herein, which is engaged in the oil or gas
well control or firefighting business. Employer and Employee acknowledge and
agree that the geographic scope of this covenant is worldwide, for the time
period set forth herein, in recognition of the worldwide market served by
Employer.
B. Consideration for Agreement Not to Compete. Employer and Employee
recognize and agree that the total consideration provided for herein, including
in particular the stock rights provided to Employee herein, are paid, in part,
to Employee in consideration of this agreement not to compete, and that if this
agreement not to compete were not a part of this Agreement, such stock rights
would not be granted herein.
C. Survival of Agreement Not to Compete After Termination of This
Agreement. This Agreement not to compete shall survive the termination of this
Agreement, unless such termination is for cause.
D. Enforcement of Agreement Not to Compete. In the event of a breach of
the agreement not to compete by Employee, Employer may pursue any and all
remedies available to it under law or equity. Employee agrees and acknowledges
that a breach of the agreement not to compete by Employee will result in
continuing and irreparable harm to Employer for which there would be no adequate
remedy at law, and that injunctive relief would be appropriate.
10. TERMINATION OF EMPLOYMENT FOR CAUSE.
A. Basis for Termination for Cause. Employer may terminate employment of
Employee under this provision if any of the following occur:
(1) The death of Employee;
(2) The Employee becomes, in good faith opinion of the Employer, physically
or mentally disabled, for a period of more than thirty (30) consecutive days, or
for a period of more than sixty (60) days in the aggregate during a twelve (12)
month period, to perform his duties on a full time basis;
(3) Employee breaches any material provision of this Contract;
(4) Employee commits, is arrested or officially charged with any felony, or
any crime involving moral turpitde, which, in the good faith opinion of
Employer, would impair Employee's ability to perform his duties hereunder or
would impair the business reputation of the Employer;
<PAGE>
(5) Employee misappropriates any funds or property of Employer;
(6) Employee fails or refuses to comply with the policies, standards or
regulations of Employer; or
(7) Employee engages in conduct, even if not in connection with the
performance of his duties hereunder, which would result in serious prejudice to
the interests of Employer if he were retained as an employe.
B. Statement of Termination for Cause. In the event of termination for
cause pursuant to this provision, Employer shall give a written statement to
Employee, specifying the event causing such termination, and the termination
will be immediately effective.
C. Compensation Upon Termination for Cause. In the event of a termination
for cause pursuant to the provision above, this Agreement shall be wholly
terminated and Employee shall not be entitled to any further compensation or
other benefits provided for herein, and shall not be entitled to severance pay.
However, any of the provisions of this Agreement relating to activities and
conduct after the end of the employment relationship between Employer and
Employee shall remain in full force and effect, and be enforceable as provided
for herein.
11. NOTICES. All notices or other communications pursuant to this contract may
be given by personal delivery, or by certified mail, addressed to the home
office of Employer or to the last known address of Employee. Notices given by
personal delivery shall be deemed given at the time of delivery, and notices
sent by certified mail shall be deemed given when deposited with the U.S. Post
Office.
12. ENTIRETY OF AGREEMENT. This Contract contains the entire understanding of
the parties and all of the covenants and agreements between the parties with
respect to the employment.
13. GOVERNING LAW. This Contract shall be construed and enforced in accordance
with, and governed by, the laws of the State of Texas.
14. WAIVER. The failure of either party to enforce any rights hereunder shall
not be deemed to be a waiver of such rights, unless such waiver is an express
written waiver which has been signed by the waiving party. Waiver of one breach
shall not be deemed a waive of any other breach of the same or any other
provision hereof.
15. ASSIGNMENT. This Agreement shall not be assignable by Employee. A change
<PAGE>
in ownership of the stock of Employer shall not affect the validity of the
Agreement. In the event of a future disposition of the properties and
businesses of Employer by merger, consolidation, sale of assets, or otherwise,
then the Employer may assign the Agreement and all of its rights and
obligations to the acquiring or surviving entity; provided that such entity
shall assume of the obligations of Employer hereunder.
Dated this ____ day of ______________, 1997, to be effective as of July 1, 1995.
EMPLOYEE: EMPLOYER:
IWC SERVICES, INC. D/B/A INTERNATIONAL
WELL CONTROL AND ITS SUBSIDIARIES,
IWC DE VENEZUELA AND HELL FIGHTERS, INC.
____________________________________ By:_____________________________________
Raymond Henry
<PAGE>
EXHIBIT 10.4
EMPLOYMENT CONTRACT
HELL FIGHTERS, INC, referred to in this Contract as Employer, hereby
employs Brian Krause, referred to in this Contract as Employee, who accepts
employment on the following terms and conditions:
1. TERM OF EMPLOYMENT. By this Contract, Employer employs Employee, and
Employee accepts employment with Employer, for a period of five (5) years
beginning on the 1st day of June, 1995, unless sooner terminated as provided
herein. This Contract shall be automatically renewed for successive additional
two (2) year terms unless notice of termination is given in writing by either
party to the other party at least thirty (90) days prior to the expiration of
the initial term or any such renewal term.
2. DUTIES OF EMPLOYEE. Employee shall perform such duties and responsibilities
as are assigned to Employee by Employer. Employee may be assigned duties and
responsibilities related to the affairs of HELL FIGHTERS, INC. Nothing herein
shall be construed to require Employer to maintain Employee in the designated
position or any particular position for the entire term of this Agreement, and
such position may be changed from time to time as directed by the Board of
Directors or management of Employer. Employee shall devote substantially all of
his time to Employer and shall exclusively conduct the business of Employer.
The expenditure of reasonable amounts of time by the Employee for personal,
charitable or professional activities shall not be a breach of this Agreement,
provided such activities do not materially interfere with the services required
to be rendered by Employee under this Agreement, and are not contrary to the
business or other interests of the Employer. Employee recognizes and
acknowledges that the principal business of Employer is fighting fires at oil
and gas well sites, providing consulting services and developing blowout
contingency plans to, and for, oil and gas operators. The Employee will be
required to travel extensively, and for long periods of time, including overseas
and to undeveloped and remote parts of the world. The Employee further
recognizes and acknowledges that the duties to which he will be assigned may be
hazardous and expose the Employee to the dangers associated with such
activities, and that the compensation provided for herein is calculated to
compensate Employee for exposure to such hazardous situations.
3. COMPENSATION.
A. Base Salary. As compensation for services rendered pursuant to this
Contract, Employee shall be paid by Employer a salary of not less than
$80,000.00 per year, paid in regular installments not less often than semi-
monthly in accordance with the payroll policies of the Employer, during the term
of employment. Nothing herein shall preclude the parties from mutually agreeing
to pay compensation in excess of that set forth above for all or any part of the
term.
<PAGE>
B. Incentive Pay/Profit Sharing. In addition to the base salary as
provided above, Employee shall participate in Employer's Incentive Pay/Profit
Sharing Plan ("Plan"). The plan provides that twenty percent (20%) of the net
profits of Employer, after providing a ten percent (10%) return to shareholders,
be established a fund for distribution to employees of Employer pursuant to the
Plan. Each employee participant in the Plan shall be credited with a number of
"base points", the sum of which is currently eighty (80), to be used in
determining the dollar amount of the employee's participation in the Plan.
Twenty (20) additional "points" shall be credited to employee participants each
year by the executive committee of the Board of Directors of Employer, based
upon performance. At the end of each calendar year, the fund will be divided by
the number of "points" of the employee participants and will be distributed
accordingly. Each employee shall have five (5) "base points" during the term of
his employment. Nothing herein, however, shall prevent Employer from
periodically revising or altering such compensation for all employee
participants.
C. Stock Rights. In addition to the compensation set forth above,
Employer will issue to Employee a certificate representing 10,000 shares of the
common stock of Hell Fighters, Inc. for the purchase price of $100.00 which the
parties agree is the fair value thereof at the time of this agreement. Such
stock will be subject to the terms of a Voting Trust Agreement, a copy of which
is attached hereto as Exhibit A. Employee agrees to execute the Voting Trust
Agreement and will be bound by all of the terms of such agreement.
4. REIMBURSEMENT OF BUSINESS EXPENSES. Employee is authorized to incur
reasonable business expenses in conducting the business of Employer. Employer
may from time to time adopt policies and procedures specifying the nature and
amount of expenses that will be considered reasonable, and the statements
contained in such policies and procedures shall be considered conclusive as to
such matters. Employer will reimburse Employee for such actual, out of pocket
expenses, upon the Employee's presentation and itemized account of such expenses
in the form required by the then properly adopted policies and procedures of
Employer.
5. EMPLOYEE BENEFITS. During the term hereof, Employee shall be entitled to
participate in all employee benefit plans from time to time made available to
employees of Employer, including any retirement plan, profit sharing plan, group
life, health, disability or accident insurance plan, vacation, sick leave, or
other benefit plan on the same basis as other employees in similar positions.
6. REPRESENTATIONS AND WARRANTIES OF EMPLOYEE. Employee represents and
warrants to Employer that:
A. Employee is under no contractual or other restriction or obligation
compliance with which is inconsistent with the execution of this Agreement, the
performance of Employee's obligations hereunder, or the other rights of the
Employer hereunder.
B. Employee has no physical or mental disability that would hinder the
performance of Employee's obligations under this Agreement.
2
<PAGE>
7. CONFIDENTIAL INFORMATION. Employee acknowledges that in the course of
employment by Employer, Employee will receive certain trade secrets and
confidential information belonging to Employer which Employer desires to protect
as confidential. For the purposes of the Agreement, the term "confidential
information" shall mean information of any nature and in any form which at the
time is not generally known to those persons engaged in business similar to that
conducted by Employer. Employee agrees that such information is confidential
and that he will not reveal such information to anyone other than officers,
employees and directors of Employer. Upon termination of employment for any
reason whatsoever, whether or not in breach of this Contract, Employee shall
surrender to Employer all papers, documents and other property of Employer.
8. OBLIGATION OF LOYALTY TO EMPLOYER. During the term of employment by
Employer, Employee agrees that he will not:
A. Make a statement or perform any act intended to advance an interest of
any existing or prospective competitor of the Employer in any way; that will or
may injure the Employer in any way; or solicit or encourage any other employee
of Employer to do any such act;
B. Inform any existing or potential customer, supplier or creditor of the
Employer that Employee intends to resign; or make any statement or do any act
intended to cause any existing or potential customer, supplier or creditor of
Employer to learn of Employee's intention to resign; or
C. Discuss with any existing or potential customer, supplier or creditor
of the Employer the present or future availability of services provided by a
business that competes with or where such services are competitive with services
that the Employer provides.
9. AGREEMENT NOT TO COMPETE.
A. Scope of Agreement Not to Compete. Employee hereby agrees that during
the term of this Agreement, and for one (1) year thereafter, Employee will not,
directly or indirectly, be employed by, or provide consulting, advise, or
services to, any business, individual, firm, partnership or corporation, other
than Employer herein, which is engaged in the oil or gas well control or
firefighting business. Employer and Employee acknowledge and agree that the
geographic scope of this covenant is worldwide, for the time period set forth
herein, in recognition of the worldwide market served by Employer.
B. Consideration for Agreement Not to Compete. Employer and Employee
recognize and agree that the total consideration provided for herein, including
in particular the stock rights provided to Employee herein, are paid, in part,
to Employee in consideration of this agreement not to compete, and that if this
agreement not to compete were not a part of this Agreement, such stock rights
would not be granted herein.
3
<PAGE>
C. Survival of Agreement Not to Compete After Termination of This
Agreement. This Agreement not to compete shall survive the termination, whether
for cause or for expiration of its term, of this Agreement.
D. Enforcement of Agreement Not to Compete. In the event of a breach of
the agreement not to compete by Employee, Employer may pursue any and all
remedies available to it under law or equity. Employee agrees and acknowledges
that a breach of the agreement not to compete by Employee will result in
continuing and irreparable harm to Employer for which there would be no adequate
remedy at law, and that injunctive relief would be appropriate.
10. TERMINATION OF EMPLOYMENT FOR CAUSE.
A. Basis for Termination for Cause. Employer may terminate employment of
Employee under this provision if any of the following occur:
(1) The death of Employee;
(2) The Employee becomes, in good faith opinion of the Employer, physically
or mentally disabled, for a period of more than thirty (30) consecutive days, or
for a period of more than sixty (60) days in the aggregate during a twelve (12)
month period, to perform his duties on a full time basis;
(3) Employee breaches any material provision of this Contract;
(4) Employee misappropriates any funds or property of Employer;
(5) Employee fails or refuses to comply with the policies, standards or
regulations of Employer; or
(6) Employee engages in conduct, even if not in connection with the
performance of his duties hereunder, which would result in serious prejudice to
the interests of Employer if he were retained as an employee.
B. Statement of Termination for Cause. In the event of termination for
cause pursuant to this provision, Employer shall give a written statement to
Employee, specifying the event causing such termination, and the termination
will be immediately effective.
C. Compensation Upon Termination for Cause. In the event of a termination
for cause pursuant to the provision above, this Agreement shall be wholly
terminated and Employee shall not be entitled to any further compensation or
other benefits provided for herein, and shall
4
<PAGE>
not be entitled to severance pay. However, any of the provisions of this
Agreement relating to activities and conduct after the end of the employment
relationship between Employer and Employee shall remain in full force and
effect, and be enforceable as provided for herein.
11. NOTICES. All notices or other communications pursuant to this contract may
be given by personal delivery, or by certified mail, addressed to the home
office of Employer or to the last known address of Employee. Notices given by
personal delivery shall be deemed given at the time of delivery, and notices
sent by certified mail shall be deemed given when deposited with the U.S. Post
Office.
12. ENTIRETY OF AGREEMENT. This Contract contains the entire understanding of
the parties and all of the covenants and agreements between the parties with
respect to the employment.
13. GOVERNING LAW. This Contract shall be construed and enforced in accordance
with, and governed by, the laws of the State of Texas.
14. WAIVER. The failure of either party to enforce any rights hereunder shall
not be deemed to be a waiver of such rights, unless such waiver is an express
written waiver which has been signed by the waiving party. Waiver of one breach
shall not be deemed a waive of any other breach of the same or any other
provision hereof.
15. ASSIGNMENT. This Agreement shall not be assignable by Employee. A change
in ownership of the stock of Employer shall not affect the validity of the
Agreement. In the event of a future disposition of the properties and
businesses of Employer by merger, consolidation, sale of assets, or otherwise,
then the Employer may assign the Agreement and all of its rights and obligations
to the acquiring or surviving entity; provided that such entity shall assume of
the obligations of Employer hereunder.
Dated this ________ day of ____________________, 1995.
EMPLOYEE: EMPLOYER:
HELL FIGHTERS, INC.:
____________________________________ By:__________________________________
5
<PAGE>
EXHIBIT 10.5
EMPLOYMENT CONTRACT
IWC SERVICES, INC, d/b/a INTERNATIONAL WELL CONTROL, and its wholly owned
subsidiaries, IWC DE VENEZUELA and HELL FIGHTERS, INC, referred to together in
this Contract as Employer, hereby employs Richard Hatteberg, referred to in this
Contract as Employee, who accepts employment on the following terms and
conditions:
1. TERM OF EMPLOYMENT. By this Contract, Employer employs Employee, and
Employee accepts employment with Employer, for a period of five (5) years
beginning on the 1st day of July, 1995, unless sooner terminated as provided
herein. This Contract shall be automatically renewed for successive additional
two (2) year terms unless notice of termination is given in writing by either
party to the other party at least thirty (30) days prior to the expiration of
the initial term or any such renewal term.
2. DUTIES OF EMPLOYEE. Employee shall perform such duties and responsibilities
as are assigned to Employee by Employer. Employee may be assigned duties and
responsibilities related to the affairs of any or all of IWC SERVICES, INC., IWC
DE VENEZUELA, or HELL FIGHTERS, INC. Nothing herein shall be construed to
require Employer to maintain Employee in the designated position or any
particular position for the entire term of this Agreement, and such position may
be changed from time to time as directed by the Board of Directors or management
of Employer. Employee shall devote substantially all of his time to Employer
and shall exclusively conduct the business of Employer. The expenditure of
reasonable amounts of time by the Employee for personal, charitable or
professional activities shall not be a breach of this Agreement, provided such
activities do not materially interfere with the services required to be rendered
by Employee under this Agreement, and are not contrary to the business or other
interests of the Employer. Employee recognizes and acknowledges that the
principal business of Employer is fighting fires at oil and gas well sites,
providing consulting services and developing blowout contingency plans to, and
for, oil and gas operators. The Employee will be required to travel
extensively, and for long periods of time, including overseas and to undeveloped
and remote parts of the world. The Employee further recognizes and acknowledges
that the duties to which he will be assigned may be hazardous and expose the
Employee to the dangers associated with such activities, and that the
compensation provided for herein is calculated to compensate Employee for
exposure to such hazardous situations.
<PAGE>
3. COMPENSATION.
A. Base Salary. As compensation for services rendered pursuant to this
Contract, Employee shall be paid by Employer a salary of not less than
$80,000.00 per year, paid in regular installments not less often than semi-
monthly in accordance with the payroll policies of the Employer, during the term
of employment. Nothing herein shall preclude the parties from mutually agreeing
to pay compensation in excess of that set forth above for all or any part of the
term.
B. Incentive Pay/Profit Sharing. In addition to the base salary as
provided above, Employee shall participate in Employer's Incentive Pay/Profit
Sharing Plan ("Plan"). The plan provides that twenty percent (20%) of the net
profits of Employer, after providing a ten percent (10%) return to shareholders,
be established a fund for distribution to employees of Employer pursuant to the
Plan. Each employee participant in the Plan shall be credited with a number of
"base points", the sum of which is currently eighty (80), to be used in
determining the dollar amount of the employee's participation in the Plan.
Twenty (20) additional "points" shall be credited to employee participants each
year by the executive committee of the Board of Directors of Employer, based
upon performance. At the end of each calendar year, the fund will be divided by
the number of "points" of the employee participants and will be distributed
accordingly. Each employee shall have five (5) "base points" during the term of
his employment. Nothing herein, however, shall prevent Employer from
periodically revising or altering such compensation for all employee
participants..
C. Stock Rights. In addition to the compensation set forth above,
Employer will issue to Employee a certificate representing 10,000 shares of the
common stock of IWC Services, Inc., effective July 1, 1995, for the purchase
price of $100.00 which the parties agree is the fair value thereof at the time
of this agreement. Such stock will be subject to the terms of a Voting Trust
Agreement, a copy of which is attached hereto as Exhibit A. Employee agrees to
execute the Voting Trust Agreement and will be bound by all of the terms therof.
4. REIMBURSEMENT OF BUSINESS EXPENSES. Employee is authorized to incur
reasonable business expenses in conducting the business of Employer. Employer
may from time to time adopt policies and procedures specifying the nature and
amount of expenses that will be considered reasonable, and the statements
contained in such policies and procedures shall be considered conclusive as to
such matters. Employer will reimburse Employee for such actual, out of pocket
expenses, upon the Employee's presentation and itemized account of such expenses
in the form required by the then properly adopted policies and procedures of
Employer.
5. EMPLOYEE BENEFITS. During the term hereof, Employee shall be entitled to
participate in all employee benefit plans from time to time made available to
employees of Employer, including any retirement plan, profit sharing plan, group
life, health, diability or accident insurance plan, vacation, sick leave, or
other benefit plan on the same basis as other employees in similar positions.
<PAGE>
6. REPRESENTATIONS AND WARRANTIES OF EMPLOYEE. Employee represents and
warrants to Employer that:
A. Employee is under no contractual or other restriction or obligation
compliance with which is inconsistent with the execution of this Agreement, the
performance of Employee's obligations hereunder, or the other rights of the
Employer hereunder.
B. Employee has no physical or mental disability that would hinder the
performance of Employee's obligations under this Agreement.
7. CONFIDENTIAL INFORMATION. Employee acknowledges that in the course of
employment by Employer, Employee will receive certain trade secrets and
confidential information belonging to Employer which Employer desires to protect
as confidential. For the purposes of the Agreement, the term "confidential
information" shall mean information of any nature and in any form which at the
time is not generally known to those persons engaged in business similiar to
that conducted by Employer. Employee agrees that such information is
confidential and that he will not reveal such information to anyone other than
officers, employees and directors of Employer. Upon termination of employment
for any reason whatsoever, whether or not in breach of this Contract, Employee
shall surrender to Employer all papers, documents and other property of
Employer.
8. OBLIGATION OF LOYALTY TO EMPLOYER. During the term of employment by
Employer, Employee agrees that he will not:
A. Make a statement or perform any act intended to advance an interest of
any existing or prospective competitor of the Employer in any way; that will or
may injure the Employer in any way; or solicit or encourage any other employee
of Employer to do any such act;
B. Inform any existing or potential customer, supplier or creditor of the
Employer that Employee intends to resign; or make any statement or do any act
intended to cause any existing or potential customer, supplier or creditor of
Employer to learn of Employee's intention to resign; or
C. Discuss with any existing or potential customer, supplier or creditor
of the Employer the present or future availablity of services provided by a
business that competes with or where such services are competitive with services
that the Employer provides.
<PAGE>
9. AGREEMENT NOT TO COMPETE.
A. Scope of Agreement Not to Compete. Employee hereby agrees that during
the term of this Agreement, and for one (1) year thereafter, unless terminated
for cause, Employee will not, directly or indirectly, be employed by, or provide
consulting, advise, or services to, any business, individual, firm, partnership
or corporation, other than Employer herein, which is engaged in the oil or gas
well control or firefighting business. Employer and Employee acknowledge and
agree that the geographic scope of this covenant is worldwide, for the time
period set forth herein, in recognition of the worldwide market served by
Employer.
B. Consideration for Agreement Not to Compete. Employer and Employee
recognize and agree that the total consideration provided for herein, including
in particular the stock rights provided to Employee herein, are paid, in part,
to Employee in consideration of this agreement not to compete, and that if this
agreement not to compete were not a part of this Agreement, such stock rights
would not be granted herein.
C. Survival of Agreement Not to Compete After Termination of This
Agreement. This Agreement not to compete shall survive the termination of this
Agreement, unless such termination is for cause.
D. Enforcement of Agreement Not to Compete. In the event of a breach of
the agreement not to compete by Employee, Employer may pursue any and all
remedies available to it under law or equity. Employee agrees and acknowledges
that a breach of the agreement not to compete by Employee will result in
continuing and irreparable harm to Employer for which there would be no adequate
remedy at law, and that injunctive relief would be appropriate.
10. TERMINATION OF EMPLOYMENT FOR CAUSE.
A. Basis for Termination for Cause. Employer may terminate employment of
Employee under this provision if any of the following occur:
(1) The death of Employee;
(2) The Employee becomes, in good faith opinion of the Employer, physically
or mentally disabled, for a period of more than thirty (30) consecutive days, or
for a period of more than sixty (60) days in the aggregate during a twelve (12)
month period, to perform his duties on a full time basis;
(3) Employee breaches any material provision of this Contract;
(4) Employee commits, is arrested or officially charged with any felony, or
any crime involving moral turpitde, which, in the good faith opinion of
Employer, would impair Employee's ability to perform his duties hereunder or
would impair the business reputation of the Employer;
<PAGE>
(5) Employee misappropriates any funds or property of Employer;
(6) Employee fails or refuses to comply with the policies, standards or
regulations of Employer; or
(7) Employee engages in conduct, even if not in connection with the
performance of his duties hereunder, which would result in serious prejudice to
the interests of Employer if he were retained as an employe.
B. Statement of Termination for Cause. In the event of termination for
cause pursuant to this provision, Employer shall give a written statement to
Employee, specifying the event causing such termination, and the termination
will be immediately effective.
C. Compensation Upon Termination for Cause. In the event of a termination
for cause pursuant to the provision above, this Agreement shall be wholly
terminated and Employee shall not be entitled to any further compensation or
other benefits provided for herein, and shall not be entitled to severance pay.
However, any of the provisions of this Agreement relating to activities and
conduct after the end of the employment relationship between Employer and
Employee shall remain in full force and effect, and be enforceable as provided
for herein.
11. NOTICES. All notices or other communications pursuant to this contract may
be given by personal delivery, or by certified mail, addressed to the home
office of Employer or to the last known address of Employee. Notices given by
personal delivery shall be deemed given at the time of delivery, and notices
sent by certified mail shall be deemed given when deposited with the U.S. Post
Office.
12. ENTIRETY OF AGREEMENT. This Contract contains the entire understanding of
the parties and all of the covenants and agreements between the parties with
respect to the employment.
13. GOVERNING LAW. This Contract shall be construed and enforced in accordance
with, and governed by, the laws of the State of Texas.
14. WAIVER. The failure of either party to enforce any rights hereunder shall
not be deemed to be a waiver of such rights, unless such waiver is an express
written waiver which has been signed by the waiving party. Waiver of one breach
shall not be deemed a waive of any other breach of the same or any other
provision hereof.
15. ASSIGNMENT. This Agreement shall not be assignable by Employee. A change
in
<PAGE>
ownership of the stock of Employer shall not affect the validity of the
Agreement. In the event of a future disposition of the properties and businesses
of Employer by merger, consolidation, sale of assets, or otherwise, then the
Employer may assign the Agreement and all of its rights and obligations to the
acquiring or surviving entity; provided that such entity shall assume of the
obligations of Employer hereunder.
Dated this ____ day of ______________, 1997, to be effective as of July 1, 1995.
EMPLOYEE: EMPLOYER:
IWC SERVICES, INC. D/B/A INTERNATIONAL
WELL CONTROL AND ITS SUBSIDIARIES,
IWC DE VENEZUELA AND HELL FIGHTERS, INC.
____________________________________ By:____________________________________
Richard Hatteberg
<PAGE>
EXHIBIT 10.6
EMPLOYMENT CONTRACT
IWC SERVICES, INC, d/b/a INTERNATIONAL WELL CONTROL, and its wholly owned
subsidiaries, IWC DE VENEZUELA and HELL FIGHTERS, INC, referred to together in
this Contract as Employer, hereby employs Danny R. Clayton, referred to in this
Contract as Employee, who accepts employment on the following terms and
conditions:
1. TERM OF EMPLOYMENT. By this Contract, Employer employs Employee, and
Employee accepts employment with Employer, for a period of five (5) years
beginning on the 1st day of June, 1995, unless sooner terminated as provided
herein. This Contract shall be automatically renewed for successive additional
two (2) year terms unless notice of termination is given in writing by either
party to the other party at least thirty (90) days prior to the expiration of
the initial term or any such renewal term.
2. DUTIES OF EMPLOYEE. Employee shall perform such duties and responsibilities
as are assigned to Employee by Employer. Employee may be assigned duties and
responsibilities related to the affairs of any or all of IWC SERVICES, INC., IWC
DE VENEZUELA, or HELL FIGHTERS, INC. Nothing herein shall be construed to
require Employer to maintain Employee in the designated position or any
particular position for the entire term of this Agreement, and such position may
be changed from time to time as directed by the Board of Directors or management
of Employer. Employee shall devote substantially all of his time to Employer
and shall exclusively conduct the business of Employer. The expenditure of
reasonable amounts of time by the Employee for personal, charitable or
professional activities shall not be a breach of this Agreement, provided such
activities do not materially interfere with the services required to be rendered
by Employee under this Agreement, and are not contrary to the business or other
interests of the Employer. Employee recognizes and acknowledges that the
principal business of Employer is fighting fires at oil and gas well sites,
providing consulting services and developing blowout contingency plans to, and
for, oil and gas operators. The Employee will be required to travel
extensively, and for long periods of time, including overseas and to undeveloped
and remote parts of the world. The Employee further recognizes and acknowledges
that the duties to which he will be assigned may be hazardous and expose the
Employee to the dangers associated with such activities, and that the
compensation provided for herein is calculated to compensate Employee for
exposure to such hazardous situations.
<PAGE>
3. COMPENSATION.
A. Base Salary. As compensation for services rendered pursuant to this
Contract, Employee shall be paid by Employer a salary of not less than
$80,000.00 per year, paid in regular installments not less often than semi-
monthly in accordance with the payroll policies of the Employer, during the term
of employment. Nothing herein shall preclude the parties from mutually agreeing
to pay compensation in excess of that set forth above for all or any part of the
term.
B. Incentive Pay/Profit Sharing. In addition to the base salary as
provided above, Employee shall participate in Employer's Incentive Pay/Profit
Sharing Plan ("Plan"). The plan provides that twenty percent (20%) of the net
profits of Employer, after providing a ten percent (10%) return to shareholders,
be established a fund for distribution to employees of Employer pursuant to the
Plan. Each employee participant in the Plan shall be credited with a number of
"base points", the sum of which is currently eighty (80), to be used in
determining the dollar amount of the employee's participation in the Plan.
Twenty (20) additional "points" shall be credited to employee participants each
year by the executive committee of the Board of Directors of Employer, based
upon performance. At the end of each calendar year, the fund will be divided by
the number of "points" of the employee participants and will be distributed
accordingly. Each employee shall have five (5) "base points" during the term of
his employment. Nothing herein, however, shall prevent Employer from
periodically revising or altering such compensation for all employee
participants..
C. Site Pay. Employee shall participate in the Site Pay Program
previuosly adopted by the Company.
D. Stock Rights. In addition to the compensation set forth above,
Employer will issue to Employee a certificate representing 10,000 shares of the
common stock of IWC Services, Inc. for the purchase price of $100.00 which the
parties agree is the fair value thereof at the time of this agreement. Such
stock will be subject to the terms of a Shareholders Agreement, a copy of which
is attached hereto as Exhibit A and a Voting Trust Agreement, a copy of which is
attached hereto as Exhibit B. Employee agrees to execute the Shareholders
Agreement and the Voting Trust Agreement and will be bound by all of the terms
of each agreement.
4. REIMBURSEMENT OF BUSINESS EXPENSES. Employee is authorized to incur
reasonable business expenses in conducting the business of Employer. Employer
may from time to time adopt policies and procedures specifying the nature and
amount of expenses that will be considered reasonable, and the statements
contained in such policies and procedures shall be considered conclusive as to
such matters. Employer will reimburse Employee for such actual, out of pocket
expenses, upon the Employee's presentation and itemized account of such expenses
in the form required by the then properly adopted policies and procedures of
Employer.
5. EMPLOYEE BENEFITS. During the term hereof, Employee shall be entitled to
<PAGE>
participate in all employee benefit plans from time to time made available to
employees of Employer, including any retirement plan, profit sharing plan, group
life, health, diability or accident insurance plan, vacation, sick leave, or
other benefit plan on the same basis as other employees in similar positions..
6. REPRESENTATIONS AND WARRANTIES OF EMPLOYEE. Employee represents and
warrants to Employer that:
A. Employee is under no contractual or other restriction or obligation
compliance with which is inconsistent with the execution of this Agreement, the
performance of Employee's obligations hereunder, or the other rights of the
Employer hereunder.
B. Employee has no physical or mental disability that would hinder the
performance of Employee's obligations under this Agreement.
7. CONFIDENTIAL INFORMATION. Employee acknowledges that in the course of
employment by Employer, Employee will receive certain trade secrets and
confidential information belonging to Employer which Employer desires to protect
as confidential. For the purposes of the Agreement, the term "confidential
information" shall mean information of any nature and in any form which at the
time is not generally known to those persons engaged in business similiar to
that conducted by Employer. Employee agrees that such information is
confidential and that he will not reveal such information to anyone other than
officers, employees and directors of Employer. Upon termination of employment
for any reason whatsoever, whether or not in breach of this Contract, Employee
shall surrender to Employer all papers, documents and other property of
Employer.
8. OBLIGATION OF LOYALTY TO EMPLOYER. During the term of employment by
Employer, Employee agrees that he will not:
A. Make a statement or perform any act intended to advance an interest of
any existing or prospective competitor of the Employer in any way; that will or
may injure the Employer in any way; or solicit or encourage any other employee
of Employer to do any such act;
B. Inform any existing or potential customer, supplier or creditor of the
Employer that Employee intends to resign; or make any statement or do any act
intended to cause any existing or potential customer, supplier or creditor of
Employer to learn of Employee's intention to resign; or
C. Discuss with any existing or potential customer, supplier or creditor
of the Employer the present or future availablity of services provided by a
business that competes with or where such services are competitive with services
that the Employer provides.
<PAGE>
9. AGREEMENT NOT TO COMPETE.
A. Scope of Agreement Not to Compete. Employee hereby agrees that during
the term of this Agreement, and for one (1) year thereafter, Employee will not,
directly or indirectly, be employed by, or provide consulting, advise, or
services to, any business, individual, firm, partnership or corporation, other
than Employer herein, which is engaged in the oil or gas well control or
firefighting business. Employer and Employee acknowledge and agree that the
geographic scope of this covenant is worldwide, for the time period set forth
herein, in recognition of the worldwide market served by Employer.
B. Consideration for Agreement Not to Compete. Employer and Employee
recognize and agree that the total consideration provided for herein, including
in particular the stock rights provided to Employee herein, are paid, in part,
to Employee in consideration of this agreement not to compete, and that if this
agreement not to compete were not a part of this Agreement, such stock rights
would not be granted herein.
C. Survival of Agreement Not to Compete After Termination of This
Agreement. This Agreement not to compete shall survive the termination, whether
for cause or for expiration of its term, of this Agreement.
D. Enforcement of Agreement Not to Compete. In the event of a breach of
the agreement not to compete by Employee, Employer may pursue any and all
remedies available to it under law or equity. Employee agrees and acknowledges
that a breach of the agreement not to compete by Employee will result in
continuing and irreparable harm to Employer for which there would be no adequate
remedy at law, and that injunctive relief would be appropriate.
10. TERMINATION OF EMPLOYMENT FOR CAUSE.
A. Basis for Termination for Cause. Employer may terminate employment of
Employee under this provision if any of the following occur:
(1) The death of Employee;
(2) The Employee becomes, in good faith opinion of the Employer, physically
or mentally disabled, for a period of more than thirty (30) consecutive days, or
for a period of more than sixty (60) days in the aggregate during a twelve (12)
month period, to perform his duties on a full time basis;
(3) Employee breaches any material provision of this Contract;
(4) Employee commits, is arrested or officially charged with any felony, or
any crime
<PAGE>
involving moral turpitde, which, in the good faith opinion of
Employer, would impair Employee's ability to perform his duties hereunder or
would impair the business reputation of the Employer;
(5) Employee misappropriates any funds or property of Employer;
(6) Employee fails or refuses to comply with the policies, standards or
regulations of Employer; or
(7) Employee engages in conduct, even if not in connection with the
performance of his duties hereunder, which would result in serious prejudice to
the interests of Employer if he were retained as an employe.
B. Statement of Termination for Cause. In the event of termination for
cause pursuant to this provision, Employer shall give a written statement to
Employee, specifying the event causing such termination, and the termination
will be immediately effective.
C. Compensation Upon Termination for Cause. In the event of a termination
for cause pursuant to the provision above, this Agreement shall be wholly
terminated and Employee shall not be entitled to any further compensation or
other benefits provided for herein, and shall not be entitled to severance pay.
However, any of the provisions of this Agreement relating to activities and
conduct after the end of the employment relationship between Employer and
Employee shall remain in full force and effect, and be enforceable as provided
for herein.
11. NOTICES. All notices or other communications pursuant to this contract may
be given by personal delivery, or by certified mail, addressed to the home
office of Employer or to the last known address of Employee. Notices given by
personal delivery shall be deemed given at the time of delivery, and notices
sent by certified mail shall be deemed given when deposited with the U.S. Post
Office.
12. ENTIRETY OF AGREEMENT. This Contract contains the entire understanding of
the parties and all of the covenants and agreements between the parties with
respect to the employment.
13. GOVERNING LAW. This Contract shall be construed and enforced in accordance
with, and governed by, the laws of the State of Texas.
14. WAIVER. The failure of either party to enforce any rights hereunder shall
not be deemed to be a waiver of such rights, unless such waiver is an express
written waiver which has been signed by the waiving party. Waiver of one breach
shall not be deemed a waive of any other breach of the same or any other
provision hereof.
<PAGE>
15. ASSIGNMENT. This Agreement shall not be assignable by Employee. A change
in ownership of the stock of Employer shall not affect the validity of the
Agreement. In the event of a future disposition of the properties and businesses
of Employer by merger, consolidation, sale of assets, or otherwise, then the
Employer may assign the Agreement and all of its rights and obligations to the
acquiring or surviving entity; provided that such entity shall assume of the
obligations of Employer hereunder.
Dated this ____ day of _____________________, 1995.
EMPLOYEE: EMPLOYER:
IWC SERVICES, INC. D/B/A INTERNATIONAL
WELL CONTROL AND ITS SUBSIDIARIES,
IWC DE VENEZUELA AND HELL FIGHTERS, INC.
___________________________________ BY:_____________________________________
Danny R. Clayton
<PAGE>
EXHIBIT 16.1
Securities and Exchange Commission
450 5th Street N.W.
Washington, D.C. 20549
Ladies and Gentlemen:
We have read and agree with the comments in Item 4 of Form 8-K of Boots & Coots
International Well Control, Inc. (formerly Havenwood Ventures, Inc.) of August
13, 1997.
/s/ Cordovano and Company, P.C.
Cordovano and Company, P.C.
Denver, Colorado
August 13, 1997
<PAGE>
[Letterhead of Hein + Associates appears here]
August 13, 1997
Securities and Exchange Commission
Washington, D.C. 20549
We have engaged as principal accountants for Boots & Coots International Well
Control, Inc. (Commission File No. 33-22097-NY) to audit the consolidated
financial statements of Boots & Coots International Well Control, Inc. as of and
for the year ended June 30, 1997. We have read Boots & Coots International Well
Control, Inc.'s statements included under Item 4 of its Form 8-K dated August
13, 1997, and we agree with such statements.
Respectfully,
/s/ HEIN + ASSOCIATES LLP
Hein + Associates LLP
KRG/keg
<PAGE>
EXHIBIT 24.1 TO FORM 8-K
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the use in this Current Report on Form 8-K of our report dated
July 8, 1997, relating to the consolidated balance sheets of IWC Services, Inc.
and Subsidiaries as of June 30, 1996 and April 30, 1997, and the related
consolidated statements of operations, shareholders' equity and cash flows for
the period from May 4, 1995 (inception) through June 30, 1995, the year ended
June 30, 1996, and the ten months ended April 30, 1997. We also consent to the
use in this Current Report on Form 8-K of our report dated June 25, 1997,
relating to the consolidated balance sheets of Boots & Coots, L.P. and
Subsidiaries as of December 31, 1995 and 1996, and the related consolidated
statements of operations, partners' capital, and cash flows for the years then
ended.
/s/ HEIN & ASSOCIATES LLP
Hein & Associates LLP
August 13, 1997
