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SETTLEMENT AGREEMENT
This Settlement Agreement ("Agreement" or "Settlement Agreement"), is
entered into by Boots & Coots International Well Control, Inc. ("Boots & Coots")
and the Donald and Shelley Moorehead Charitable Trust (the "Trust") on this day,
March 20, 2000. Boots & Coots and the Trust shall be referred to individually by
name or as the "Party," or collectively as the "Parties."
1. Acknowledgments. The Parties agree upon and acknowledge the
following facts as the basis for this Settlement Agreement:
A. Boots & Coots is a Delaware corporation that has 5,000,000
authorized shares of preferred stock ("Preferred Stock"), at
$.00001 par value.
B. 40,000 shares of the Preferred Stock are designated as 10%
Junior Redeemable Convertible Preferred Stock ("Junior
Preferred Stock"), and are issued to the Trust, a Texas Trust.
The shares of Junior Preferred Stock issued to the Trust are
convertible into common stock, $.00001 par value (the "Common
Stock") of Boots & Coots at $2.75 per share of Common Stock.
C. The Trust currently holds Warrant No. 1998-15 representing the
right to purchase 200,000 shares of Common Stock at an
exercise price of $5.00 per share (the "200,000 Share
Warrant").
D. Scotty D. Cook holds Warrant No. 6(a) representing the right
to purchase 40,000 shares of Common Stock at $1.20 per share.
E. Thomas J. Spackman, Jr. holds Warrant No. 6(b) representing
the right to purchase 20,000 shares of Common Stock at $1.20
per share.
F. Donald F. Moorehead holds Warrant No. 6(c) representing the
right to purchase 30,000 shares of Common Stock at $1.20 per
share .
G. George O. Moorehead holds Warrant No. 6 (d) representing the
right to purchase 10,000 shares of Common Stock at $1.20 per
share
Collective, holders (D) - (G) are referred to herein as,
the "100,000 Share Warrant."
H. Contemporaneously herewith, the Parties have entered into a
Lock Up Agreement restricting sales of Common Stock by the
Trust.
2. Agreements. In exchange for the mutual covenants, representations
and agreements set forth herein, the Parties agree to the following:
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A. Boots & Coots shall, upon the Trust's delivery to it of
certificates representing Junior Preferred Stock in accordance
with the conversion requirements of the Certificate of
Designation of Rights and Preferences relating thereto (the
"Designation"), in one or a series of partial conversions,
issue (i) 363,636 shares of Common Stock issuable upon the
conversion thereof in accordance with such Designation, and
(ii) an additional 952,153 shares of Common Stock issuable
upon the conversion thereof as an adjustment to the conversion
price thereof pursuant to this Settlement Agreement.
B. Boots & Coots shall issue to the Trust a Warrant to purchase
450,000 shares of Common Stock at an exercise price of $1.25
per share (the "450,000 Share Warrant").
C. Boots & Coots hereby modifies the exercise price of the
200,000 Share Warrant as follows: (i) the exercise price shall
be $1.25 per share as to 100,000 shares of Common Stock
covered by the 200,000 Share Warrant, and (ii) the exercise
price shall be $1.50 per share as to 100,000 shares of Common
Stock covered by the 200,000 Share Warrant.
D. Boots & Coots hereby modifies the permitted methods of payment
of the exercise price under the 200,000 Share Warrant and the
100,000 Share Warrant to include a cashless exercise option as
follows: the Trust may pay the exercise price for the shares
of Common Stock by giving notice to Boots & Coots that it is
exercising such warrant and authorizes Boots & Coots to
withhold from the issuance to the Trust (and to reduce the
amount of the warrant by) that number of shares which when
multiplied by the average closing sales price for the Common
Stock on the American Stock Exchange, bulletin board, NASDAQ,
or any other exchange, for the ten consecutive trading days
immediately preceding the date of notice of exercise is equal
to the aggregate exercise price for the shares being
purchased.
E. In exchange for the foregoing, the Trust executes and delivers
to Boots & Coots this Settlement Agreement and the Lock Up
Agreement attached hereto as Exhibit A.
F. That immediately following (no later than the end of business
as of the day following) any public sale by the Trust (or any
transferee of the Trust) of any shares of Common Stock
issuable upon the conversion of the Junior Preferred Stock
held by the Trust or the 200,000 share Warrant or the 100,000
Share Warrant, the Trust shall deliver, or cause to be
delivered, to Boots & Coots written evidence of the date of
such sale, the broker through whom such shares were sold, the
number of shares sold, and the aggregate purchase price
received with respect thereto. In the event that the Trust
shall sell shares of
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Common Stock in excess of the restrictions on transfer imposed
by the Lock Up Agreement, the Trust agrees that Boots & Coots
shall have the right to cancel and refuse to issue shares of
Common Stock otherwise issuable upon the exercise of the
100,000 Share Warrant, the 200,000 Share Warrant and the
450,000 Share Warrant in addition to pursuing whatever rights
it may have under law.
G. Boots & Coots agrees that its failure to render, or to cause
its counsel to render, a legal opinion to its transfer agent
(within a reasonable time after the receipt of a request and
completed customary Rule 144 paperwork) that the legend may be
removed from shares of Common Stock issued to the Trust upon
the conversion of the Junior Preferred Stock as agreed herein,
shall entitle the Trust to liquidated damages equal to the
difference between (i) the Trust's $1,000,000 of invested
capital plus a 10% annual rate of return from April 9, 1998
and (ii) proceeds from the Trust's sales of shares of Common
Stock issued upon the conversion of the Junior Preferred
Stock.
3. Settlement. As to each and every possible allegation that could be
asserted by Boots & Coots, there is dispute, doubt, disagreement, and
controversy including but not limited to Boots & Coots' liability for damages,
costs, and attorney's fees. Accordingly, the Trust and Boots & Coots have
decided to avoid litigation, and now desire to enter into a compromise agreement
regarding all claims which could possibly have been asserted. Therefore, in
consideration of the mutual promises expressed herein and in the Lock Up
Agreement, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged and confessed, the Trust voluntarily
and knowingly executes this Agreement with the express intent of being bound to
all obligations, terms and conditions contained herein.
4. No Admission of Liability. The Parties have entered into this
Settlement Agreement solely for the purpose of avoiding the nuisance, risk and
expense of litigation over disputed and doubtful claims. This Settlement
Agreement is not intended and should not be construed as an admission of
liability by Boots & Coots because all such liability is expressly denied by
each Party.
5. Release by the Trust. In consideration of the receipt of covenants
agreements described above, the Trust, for itself and its trustees,
beneficiaries, agents, legal representatives, successors and assigns, hereby
releases, discharges, indemnifies and holds Boots & Coots, its officers,
directors, employees, shareholders, agents, subsidiaries, successors and assigns
(collectively, the "Boots & Coots Released Parties") harmless from any and all
claims, demands, actions, judgments and causes of action of whatever nature or
character which it could have asserted, or which may be asserted by any person,
trust, firm, partnership, corporation or business entity claiming by, through or
under the Trust, and arising out of any claims that the Trust has or ever had
relating to the Boots & Coots Released Parties, all of which claims are being
released in this Agreement. The provisions of this paragraph apply even if such
claims, demands, judgments, actions and causes of action were caused in whole or
in part by any act, omission, negligence, gross negligence, breach of contract,
intentional conduct, violation of statute or common law, breach of warranty,
tort or conduct of any type by the Boots & Coots Released Parties. In further
consideration of the receipt of settlement amount as above described, the Trust
agrees to indemnify and hold the Boots & Coots Released Parties harmless from
all claims for contribution or indemnity, whether
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asserted now or in the future, and the reasonable and necessary costs, including
attorney's fees, incurred in defense of any such claim, that any person, trust,
trustee, firm, partnership, corporation or business entity has or may have or
assert against the Boots & Coots Released Parties in any way relating to the
Trust's purchase or ownership of the securities of Boots & Coots or the
transactions contemplated herein.
6. Representations and Warranties by Boots & Coots. Boots & Coots
hereby represents and warrants to the Trust the following:
A. Organization and Good Standing. Boots & Coots is a corporation
duly organized, validly existing and in good standing under
the laws of Delaware.
B. Power and Authorization. The execution, delivery and
performance by Boots & Coots of this Agreement is within Boots
& Coots' legal authority and require no authorization,
consent, approval, license, exemption of or filing or
registration with any court or governmental department,
commission, board, bureau, agency or instrumentality of
government which has not been obtained. Larry H. Ramming is
the Chief Executive Officer and Chairman of the Board of
Directors of Boots & Coots and he has full authority to bind
Boots & Coots.
C. Binding Obligations. This Agreement is the legal, valid and
binding obligation of Boots & Coots and is enforceable against
Boots & Coots in accordance with its terms.
D. After April 9, 2000, Boots & Coots will, or will cause its
counsel to, within a reasonable time after request and the
receipt of completed customary Rule 144(k) paperwork,
authorize the removal of the above legend from shares of
Common Stock issuable upon conversion of the Junior Preferred
Stock.
7. Representations and Warranties by the Trust. The Trust hereby
represents and warrants to Boots & Coots the following:
A. Organization and Good Standing. The Trust is a trust duly
organized and validly existing under the laws of the State of
Texas.
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B. Power and Authorization. The execution, delivery and
performance by the Trust of this Agreement and the Lock Up
Agreement are within the Trust's legal authority, require no
authorization, consent, approval, license, exemption of or
filing or registration with any court or governmental
department, commission, board, bureau, agency or
instrumentality of government. Don Moorehead and Shelley
Moorehead are the trustees of the Trust and have the full
authority to execute and deliver this Agreement and the Lock
Up Agreement.
C. Binding Obligations. This Agreement and the Lock Up Agreement
constitute legal, valid and binding obligations of the Trust
and are enforceable against the Trust, its trustees and
beneficiaries, in accordance with their respective terms.
D. Accredited Investor. The Trust is an "Accredited Investor"
within the meaning of Rule 501 of the Securities Act.
E. Binding Obligations. The Trust understands and agrees that
each shares of Common Stock issued to it will bear the
following legend:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, OR ANY STATE
SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED UNLESS
THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT
COVERING SUCH SECURITIES OR THE ISSUER RECEIVES AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO IT STATING THAT SUCH SALE
OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS
DELIVERY REQUIREMENTS OF SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS."
E. No Assignment. The Trust has not assigned, mortgaged or
transferred to any person or entity all or any portion of the
claims which it may assert against Boots & Coots or the Boots
& Coots Released Parties which are being released herein.
7. Miscellaneous.
A. This Agreement is binding upon each party hereto and its
officers, directors, shareholders, trustees, employees,
beneficiaries, agents, legal representatives, successors and
assigns, and the provisions of this Agreement shall inure to
the benefit of these parties.
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B. In the event that any one or more of the provisions of this
Agreement shall, for any reason, be held invalid, illegal, or
unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this
Agreement.
C. The validity, effect and construction of this Agreement shall
be governed by the laws of the State of Texas. Any suit
arising under or in connection with this Agreement, including
but not limited to any proceeding to enforce or construe the
terms of this Agreement, shall be brought in Dallas County,
Texas, and no where else. In any such proceeding, the
prevailing party shall be entitled to reasonable and necessary
attorneys fees and costs.
D. This Agreement and the Lock Up Agreement embody the entire
settlement agreement between the Parties as to the subject
matter hereof, and merge and supersede all prior discussions,
agreements and understandings of every kind and nature among
them. No party shall be bound by any condition, definition,
warranty or representation, other than as expressly set forth
or provided for in this Agreement or the Lock Up Agreement.
E. This Agreement may not be amended, modified, waived or
terminated orally or discharged except by a writing signed by
the Parties.
F. This Agreement shall not be construed in favor of or against
any Party on the basis that the Party did or did not author
this Agreement or any attachment related to it. It is intended
that this Agreement shall be comprehensive in nature and shall
be construed liberally to effect its purposes.
G. Article and Section headings used in this Agreement are for
convenience only and shall not affect the construction.
H. Each Party warrants that (a) before signing this Agreement, it
consulted with his or her own counsel regarding the contents
of this Agreement; (b) it voluntarily executed this Agreement
only after having fully understood and after willingly
accepting each and every term and condition described herein;
and, (c) that no other Party, nor anyone else acting on its
behalf, has made any promise or representation regarding this
settlement which is not expressly stated in this Agreement or
the Lock Up Agreement.
I. This Agreement shall be executed in multiple counterparts.
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J. This Agreement shall be binding on the Parties effective as of
the date hereof.
K. All notices and/or the tender of any other document or item
required herein shall be valid only if sent by First Class,
Certified, United States Mail to each Party at the following
addresses:
(i) Notices to Boots & Coots:
Larry H. Ramming, Chief Executive Officer &
Chairman
Boots & Coots International Well Control,
Inc.
515 San Felipe, Suite 450
Houston, TX 77056
(ii) Notices to the Trust
Thomas Spackman, President
Founders Equity Group, Inc.
2602 McKinney Ave., Suite 220
Dallas, TX 75204
Any Party to this Agreement may change its address for notice
purposes by notifying all other Parties of its new notice
address in writing by First Class, Certified, United States
Mail.
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WHEREFORE, with the intent of being fully bound by each and
every obligation, term and condition contained herein, the Parties have
this day executed this Agreement.
BOOTS & COOTS INTERNATIONAL
WELL CONTROL, INC.
By:
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Name:
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Title:
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DONALD AND SHELLEY MOOREHEAD
CHARITABLE TRUST
By:
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Shelley Moorehead, Trustee
