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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant toss.240.14a-11(c) orss.240.14a-12
BOOTS & COOTS INTERNATIONAL WELL CONTROL, INC.
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0- 11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE> 2
BOOTS & COOTS INTERNATIONAL WELL CONTROL, INC.
September __, 2000
Dear Stockholder:
You are cordially invited to attend the annual meeting of
stockholders of Boots & Coots International Well Control, Inc. (the "Company")
to be held at 3:00 p.m., on Wednesday, October 25, 2000, at the J.W. Marriott,
5150 Westheimer Road, Houston, Texas 77056.
At this Annual Meeting, you will be asked to elect three Class I
directors to serve for a term of one year, three Class II directors to serve
for a term of two years and two Class III directors to serve for a term of
three years; to approve an amendment to the Company's Amended and Restated
Certificate of Incorporation, increasing from 50,000,000 to 125,000,000 the
number of authorized shares of common stock of the Company, par value $.00001
per share, and deleting provisions that prohibit the issuance of shares of
Common Stock and Preferred Stock to officers, directors and 10% stockholders
without a vote of a majority in interest of the disinterested stockholders of
the Company; and to approve the Company's 2000 Long Term Incentive Plan. The
board of directors recommends that you vote FOR these proposals.
Details regarding the matters to be acted upon at this meeting
appear in the accompanying Proxy Statement. Please give this material your
careful attention.
If you are a stockholder of record, please vote by completing,
signing and dating the accompanying proxy card and returning it in the enclosed
postage-prepaid envelope. It is important that your shares be voted whether or
not you attend the meeting in person. If you attend the meeting, you may vote
in person even if you have previously returned your proxy card. Your prompt
cooperation will be greatly appreciated.
Very truly yours,
Larry H. Ramming
Chairman of the Board
and Chief Executive Officer
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BOOTS & COOTS INTERNATIONAL WELL CONTROL, INC.
777 POST OAK BOULEVARD, SUITE 800
HOUSTON, TEXAS 77056
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD OCTOBER 25, 2000
To the Stockholders of Boots & Coots International Well Control, Inc.:
The Annual Meeting of Stockholders of Boots & Coots International Well
Control, Inc., a Delaware corporation (the "Company"), will be held on
Wednesday, October 25, 2000 at 3:00 p.m., local time, at the J.W. Marriott,
5150 Westheimer Road, Houston, Texas 77056, for the following purposes:
1. To elect eight directors into three classes of directors to serve as
follows: three Class I directors to serve for a term of one year, three Class
II directors to serve for a term of two years and two Class III directors to
serve for a term of three years or, in each case, until their successors are
elected and qualified.
2. To approve an amendment to the Company's Amended and Restated
Certificate of Incorporation, as amended, to (i) increase from 50,000,000 to
125,000,000, the number of authorized shares of common stock, par value $.00001
per share, of the Company and (ii) delete provisions that prohibit the issuance
of shares of Common Stock and Preferred Stock to officers, directors and 10%
stockholders without a vote of a majority in interest of the disinterested
stockholders of the Company.
3. To approve the Company's 2000 Long Term Incentive Plan.
4. To transact such other business as may properly come before the
meeting or any adjournments thereof.
Only stockholders of record at the close of business on September 7,
2000 are entitled to notice of and to vote at the meeting.
By Order of the Board of Directors,
LARRY H. RAMMING
Chairman of the Board
and Chief Executive Officer
September __, 2000
<PAGE> 4
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WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE
AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE. IF YOU DO ATTEND THE MEETING IN PERSON, YOU MAY WITHDRAW YOUR PROXY
AND VOTE IN PERSON. THE PROMPT RETURN OF PROXIES WILL ENSURE A QUORUM AND SAVE
THE COMPANY THE EXPENSE OF FURTHER SOLICITATION.
*******************************************************************************
BOOTS & COOTS INTERNATIONAL WELL CONTROL, INC.
777 POST OAK BOULEVARD, SUITE 800
HOUSTON, TEXAS 77056
PROXY STATEMENT
For Annual Meeting of Stockholders
To be Held on October 25, 2000
GENERAL
The accompanying proxy is solicited by the board of directors of Boots
& Coots International Well Control, Inc. (the "Company") for use at the annual
meeting of stockholders of the Company to be held at the time and place and for
the purposes set forth in the foregoing notice. The approximate date on which
this proxy statement and the accompanying proxy are first being sent to
stockholders is September 19, 2000.
The cost of soliciting proxies will be borne by the Company. The
Company has retained [_________________], a proxy solicitation firm located in
[_______________], to solicit proxies from brokers, banks, nominees,
institutional holders and individual holders for use at the meeting at a fee
not to exceed a total of [$__________], plus certain expenses. In addition, the
Company may use certain of its officers and employees (who will receive no
special compensation) to solicit proxies in person or by telephone, facsimile,
telegraph or similar means.
PROXIES
Shares represented by a proxy in the accompanying form, duly signed,
dated and returned to the Company and not revoked, will be voted at the meeting
in accordance with the directions given. If no direction is given, the shares
will be voted FOR the election of the nominees for directors named in the
accompanying form of proxy and in favor of the other proposals set forth in the
form of proxy. Any stockholder returning a proxy may revoke it at any time
before it has been exercised by giving written notice of such revocation to the
Secretary of the Company, by filing with the Company a proxy bearing a
subsequent date or by voting in person at the meeting.
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VOTING PROCEDURES AND TABULATION
The Company will appoint one or more inspectors of election to act at
the meeting and to make a written report of the meeting. Prior to or during the
meeting, the inspectors will sign an oath to perform their duties in an
impartial manner and to the best of their abilities. The inspectors will
ascertain the number of shares outstanding and the voting power of each of the
shares, determine the shares represented at the meeting and the validity of
proxies and ballots, count all votes and ballots and perform certain other
duties as required by law.
The inspectors will tabulate the number of votes cast for or withheld
as to the vote on each nominee for director and the number of votes cast for,
against or withheld, as well as the number of abstentions and broker non-votes,
as to the approval of the amendment to the Company's Amended and Restated
Certificate of Incorporation and the approval of the 2000 Long Term Incentive
Plan. Under Delaware law and the Company's Amended and Restated Certificate of
Incorporation (the "Certificate of Incorporation") and Bylaws, abstentions and
broker non-votes will have no effect on the voting on the election of
directors, provided a quorum is present, because directors are elected by a
plurality of the shares of stock present in person or by proxy at the meeting
and entitled to vote. An abstention with respect to the proposals to approve
the amendment to the Company's Certificate of Incorporation and the approval of
the 2000 Long Term Incentive Plan will effectively count as a vote against such
proposals. A broker non-vote or other limited proxy as to the proposals voted
on at the meeting will be counted towards a meeting quorum, but cannot be voted
on the proposals and therefore will not be considered a part of the voting
power with respect to each proposal. Thus, broker non-votes and limited proxies
have the effect of reducing the number of shares required to be voted in favor
of the proposals to approve the amendment to the Certificate of Incorporation
and approve the 2000 Long Term Incentive Plan.
VOTING SECURITIES
The voting securities of the Company outstanding include: (i) common
stock, par value $.00001 per share (the "Common Stock"); (ii) 10% Junior
Redeemable Convertible Preferred Stock ("Redeemable Preferred Stock"); (iii)
Series A Cumulative Senior Preferred Stock ("Series A Preferred Stock"); (iv)
Series B Convertible Preferred Stock ("Series B Preferred Stock"); (v) Series C
Convertible Junior Preferred Stock ("Series C Preferred Stock") and Series D
Cumulative Junior Preferred Stock ("Series D Preferred Stock"). Only the
holders of record of Common Stock, Redeemable Preferred Stock and Series B
Preferred Stock at the close of business on September 7, 2000, the record date
for the meeting (the "Record Date"), are entitled to vote on the election of
directors at the meeting. Only the holders of record of Common Stock;
Redeemable Preferred Stock; Series A Preferred Stock; Series B Preferred Stock;
and Series C Preferred Stock of the Company at the close of business on the
Record Date are entitled to vote on the approval of the amendment to the
Company's Certificate of Incorporation and the approval of the 2000 Long Term
Incentive Plan at the meeting. The holders of record of Series D Preferred
Stock are entitled to vote only on the amendment to the Company's Certificate
of Incorporation to delete the provisions that prohibit the issuance of shares
of Common Stock and Preferred Stock to officers, directors and 10% stockholders
without a vote of a majority in interest of the disinterested stockholders of
the Company. All holders of record of Common Stock; Redeemable Preferred Stock;
Series A Preferred Stock; Series B Preferred Stock; Series C Preferred Stock;
and Series D Preferred Stock of the Company on the Record Date are entitled to
notice of the meeting. On the Record Date, there were:
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(i) 31,274,877 shares of Common Stock outstanding and entitled to be voted at
the meeting; (ii) 21,600 shares of Redeemable Preferred Stock outstanding and
entitled to be voted at the meeting; (iii) 50,000 shares of Series A Preferred
Stock outstanding and entitled to be voted at the meeting; (iv) 56,888 shares
of Series B Preferred Stock outstanding and entitled to be voted at the
meeting; (v) 10,400 shares of Series C Preferred Stock outstanding and entitled
to be voted at the meeting and (vi) 3,000 shares of Series D Preferred Stock
outstanding. A majority of such shares, present in person or by proxy, is
necessary to constitute a quorum. Each share of Common Stock, Series A
Preferred Stock and Series D Preferred Stock is entitled to one vote. Each
share of Series B Preferred Stock is entitled to one hundred votes, and each
share of Redeemable Preferred Stock and Series C Preferred Stock is entitled to
one vote for each share of Common Stock into which it is convertible as of the
Record Date.
I. PROPOSALS
PROPOSAL 1: ELECTION OF DIRECTORS
The business and affairs of the Company are managed by the board of
directors, which exercises all corporate powers of the Company and establishes
broad corporate policies. The Bylaws of the Company provide that the entire
board of directors shall be not less than one nor more than ten, 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. The size of the
board of directors is currently fixed at eight members. At the meeting, eight
directors will be elected.
The Certificate of Incorporation of the Company divides the board of
directors into three classes. Directors are elected by plurality vote and
cumulative voting is not permitted. All duly submitted and unrevoked proxies
will be voted for the nominees for director selected by the board of directors,
except where authorization so to vote is withheld. If any nominee should become
unavailable for election for any presently unforeseen reason, the persons
designated as proxies will have full discretion to vote for another person
designated by the board of directors. Proxies cannot be voted for a greater
number of persons than the number of nominees for the office of director named
below. Directors are elected to serve until the annual meeting of stockholders
for the year in which their term expires and until their successors have been
elected and qualified, subject, however, to prior death, resignation,
retirement, disqualification or removal from office.
The nominees of the board of directors for directors of the Company are
named below. Each of the nominees has consented to serve as a director if
elected. All the nominees are presently directors of the Company and have
served continuously as directors since the date of their first election to the
board of directors. The following table sets forth certain information, as of
the Record Date, concerning the board of directors' nominees for election as
directors of the Company. For biographical information and information as to
the shares of capital stock of the Company beneficially owned by each nominee,
see Part II. Other Information.
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THE BOARD OF DIRECTORS RECOMMENDS
A VOTE "FOR" THE NOMINEES LISTED BELOW
<TABLE>
<CAPTION>
Year First Position and
Name of Elected Offices with Term to
Nominee Age Director the Company Class Expire
<S> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------------------
Larry H. 53 1997 Chairman of I First annual
Ramming the Board of meeting
Directors and
Chief
Executive
Officer
---------------------------------------------------------------------------------------------------------
Jerry L. 41 1998 Director, II Second
Winchester President and annual
Chief meeting
Operating
Officer
---------------------------------------------------------------------------------------------------------
Thomas L. 55 1998 Director I First annual
Easley (served as meeting
Vice
President and
Chief
Financial
Officer until
February 7,
2000
---------------------------------------------------------------------------------------------------------
Brian Krause 44 1997 Director, III Third annual
President of meeting
Emergency
Services
Operations
---------------------------------------------------------------------------------------------------------
K. Kirk Krist 41 1997 Director III Third annual
meeting
---------------------------------------------------------------------------------------------------------
W. Richard 46 1999 Director II Second
Anderson annual
meeting
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E. J. DiPaolo 47 1999 Director I First annual
meeting
---------------------------------------------------------------------------------------------------------
Tracy S. 40 2000 Director II Second
Turner annual
meeting
---------------------------------------------------------------------------------------------------------
</TABLE>
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There are no family relationships between any of the nominees or
between any of the nominees and any other directors or executive officer of the
Company.
PROPOSAL 2: AMENDMENT OF THE COMPANY'S
CERTIFICATE OF INCORPORATION
By written consent of the board of directors dated September 5, 2000,
the board of directors recommended and deemed advisable that the Company amend
the Company's Certificate of Incorporation, to (i) increase the number of
authorized shares of Common Stock, par value $.00001 per share, from 50,000,000
to 125,000,000 shares, and (ii) delete the provisions that prohibit the
issuance of shares of Common Stock and Preferred Stock to officers, directors
and 10% stockholders without a vote of a majority in interest of the
disinterested stockholders of the Company.
As of the Record Date, there were approximately 31,274,877 shares
issued and outstanding and approximately 18,391,840 shares reserved for future
issuance pursuant to outstanding options granted under the Company's stock
plans or warrants granted to investors. If the amendment to the Certificate of
Incorporation is approved, the board of directors will (i) have the authority
to issue approximately 75,333,283 additional shares of Common Stock without
further stockholder approval and (ii) have the authority to issue shares of
Common Stock to officers, directors and 10% stockholders without a vote of a
majority in interest of the disinterested stockholders of the Company. Although
the Company has not entered into any agreements or understandings to issue any
of the shares resulting from the amendment of the Certificate of Incorporation,
the board of directors believes the authorized number of shares of Common Stock
should be increased to provide sufficient shares for such corporate purposes as
may be determined by the board of directors to be necessary or desirable. These
purposes may include, without limitation: acquiring other businesses in
exchange for shares of the Company's Common Stock; raising capital through the
sale of Common Stock or securities convertible into Common Stock; and
attracting and retaining valuable employees by the issuance of additional stock
options, including additional shares reserved for future option grants under
the Company's stock plans. The board of directors considers the authorization
of additional shares of Common Stock advisable to ensure prompt availability of
shares for issuance should the occasion arise.
The issuance of additional shares of Common Stock could have the effect
of diluting earnings per share and book value per share, which could adversely
affect the Company's existing stockholders. In addition, the Company's
authorized but unissued shares of Common Stock could be used to make a change
in control of the Company more difficult or costly. Issuing additional shares
of Common Stock could have the effect of diluting stock ownership of the
persons seeking to obtain control of the Company. The Company is not aware,
however, of any pending or threatened efforts to obtain control of the Company
and the board of directors has no current intention to use the additional
shares of Common Stock in order to impede a takeover attempt.
The amendment of the Certificate of Incorporation to delete provisions
contained in Article IV (a) and (b) of the Certificate of Incorporation of the
Company that prohibit the Company from issuing Common Stock or Preferred Stock
to officers, directors and 10% stockholders unless pursuant to a plan approved
by stockholders or pursuant to the approval of a majority of the disinterested
stockholders will have the effect of permitting the Company to issue Common
Stock
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and Preferred Stock, including to persons that may already have a significant
ownership interest in the Company, subject to the approval of the board of
directors of the Company and not the stockholders. To the extent that the
charter provisions are intended to make a takeover of the Company less likely,
the board of directors believes that the existing provisions of Section 203 of
the Delaware General Corporation Law relating to certain transactions with
stockholders owning 15% or more of the voting securities of the Company provide
adequate protection. To the extent that the charter provisions are intended to
limit transactions with officers and directors, the board of directors believes
that the provisions of Section 144 of the Delaware General Corporation Law that
require disclosure of the material terms of the transaction to the board of
directors and approval by a majority of the disinterested directors, or that
the transaction be fair to the Company at the time is authorized, provide
adequate protection to the Company.
The amendment to the Certificate of Incorporation of the Company shall
be adopted upon receiving the affirmative vote of the holders of at least a
majority of the outstanding shares entitled to vote thereon.
Recommendation
FOR THE REASONS DESCRIBED ABOVE, THE BOARD OF DIRECTORS RECOMMENDS THAT
THE STOCKHOLDERS VOTE "FOR" THE PROPOSAL TO AMEND THE CERTIFICATE OF
INCORPORATION.
PROPOSAL 3: APPROVAL OF THE COMPANY'S
2000 LONG TERM INCENTIVE PLAN
INTRODUCTION
On September 5, 2000, the Board of Directors adopted, subject to the
approval of the stockholders of the Company, the 2000 Long Term Incentive Plan
(the "Plan"). The Board believes that stock and stock option plans provide an
important means of attracting, retaining and motivating key employees and
consultants and recommends that stockholders approve the Plan. As a result of
employee directors being eligible to receive options under the Plan, each
employee director has a personal interest in the approval of the Plan.
A copy of the Plan is attached to this Proxy Statement as Appendix A.
The following is a summary of the Plan only and is qualified in its entirety by
the copy of the Plan attached to this Proxy Statement.
SUMMARY OF THE PLAN
Purpose. The Plan is intended to promote the interests of the Company,
by providing the employees and consultants of the Company, who are largely
responsible for the management, growth and protection of the business of the
Company, with a proprietary interest in the Company.
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Stock Subject to the Plan. Under the Plan, the Committee may grant to
participants (i) options, (ii) shares of restricted stock, (iii) shares of
phantom stock, (iv) stock bonuses and (v) cash bonuses (collectively,
"Incentive Awards").
The Committee may grant options, shares of restricted stock, shares of
phantom stock and stock bonuses under the Plan with respect to a number of
shares of common stock that in the aggregate at any time does not exceed
6,000,000 shares of common stock; provided, however, that the maximum number of
shares of common stock for which options may be granted under the Plan to any
one participant during a calendar year shall be 1,000,000. The grant of a cash
bonus shall not reduce the number of shares of common stock with respect to
which options, shares of restricted stock, shares of phantom stock or stock
bonuses may be granted pursuant to the Plan.
If any outstanding option expires, terminates or is canceled for any
reason, the shares of common stock subject to the unexercised portion of such
option shall again be available for grant under the Plan. If any shares of
restricted stock or phantom stock, or any shares of common stock granted in a
stock bonus are forfeited or canceled for any reason, such shares shall again
be available for grant under the Plan.
Shares of common stock issued under the Plan may be either newly issued
or treasury shares, at the discretion of the Committee.
Administration. The Plan shall be administered by the compensation
committee of the Board of Directors, or such other committee as the Board of
Directors shall appoint from time to time, consisting of two or more persons
(the "Committee"), provided that each member of the Committee must be both (i)
a "non-employee director" within the meaning of Rule 16b-3 under the Securities
Exchange Act of 1934 (the "Exchange Act") and (ii) an "outside director" within
the meaning of Treasury Regulation Section 1.162-27(e)(3) interpreting Section
162(m) of the Internal Revenue Code of 1986 (the "Code"), or any successor
definitions that may be adopted. The members of the Committee shall be
appointed from time to time by, and shall serve at the discretion of, the Board
of Directors. The Committee shall from time to time designate the employees and
consultants of the Company who shall be granted incentive awards and the amount
and type of such incentive awards.
The Committee shall have full authority, subject to express provisions
of the Plan, to administer the Plan, to interpret the Plan, to adopt rules and
regulations relating to the Plan, to determine the terms and provisions of
Incentive Awards granted under the Plan and to make all other determinations
and perform such actions as the Committee deems necessary or advisable to
administer the Plan.
No member of the Committee shall be liable for any action, omission, or
determination relating to the Plan, and the Company shall indemnify and hold
harmless each member of the Committee and each other director or employee of
the Company to whom any duty or power relating to the administration or
interpretation of the Plan has been delegated from and against any cost or
expense (including attorneys' fees) or liability (including any sum paid in
settlement of a claim with the approval of the Committee) arising out of any
action, omission or determination relating to the Plan, unless, in either case,
such action, omission or determination was taken or made by such member,
director or employee in bad faith and without reasonable belief that it was in
the best interests of the Company.
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Eligibility. The persons who shall be eligible to receive Incentive
Awards pursuant to the Plan shall be such full-time employees and consultants
(whether full or part time) of the Company as the Committee, in its absolute
discretion, shall select from time to time. Notwithstanding the generality of
the foregoing, no employee or consultant of the Company shall be eligible to
receive Incentive Awards pursuant to this Plan if the employee or consultant is
also entitled to receive an Incentive Award under the terms of his employment
or consulting agreement with the Company, or any specialty incentive stock plan
adopted after the date hereof, unless such employment or consulting agreement
or specialty plan expressly provides otherwise.
Options. The Committee may grant options pursuant to the Plan, which
options shall be evidenced by agreements in such form as the Committee shall
from time to time approve. All Options granted under the Plan shall be clearly
identified in the agreement evidencing such options as either incentive stock
options or as non-qualified stock options.
The exercise price of any non-qualified stock option granted under the
Plan shall be such price as the Committee shall determine on the date on which
such non-qualified stock Option is granted; provided, that such price may not
be less than the greater of (i) 25% of the fair market value of a share of
Common Stock on the date on which such non-qualified stock option is granted or
(ii) the minimum price required by law. Except as specifically provided in the
Plan, the exercise price of any incentive stock option granted under the Plan
shall be not less than 100% of the fair market value of a share of common stock
on the date on which such incentive stock option is granted. Each option shall
be exercisable on such date or dates, during such period and for such number of
shares of common stock as shall be determined by the Committee; provided,
however, that no option shall be exercisable after the expiration of ten years
from the date such option was granted; and, provided, further, that each option
shall be subject to earlier termination, expiration or cancellation as provided
in the Plan.
An option shall be exercised by delivering notice to the Company's
principal office, to the attention of its Secretary, no fewer than five
business days in advance of the effective date of the proposed exercise.
Payment for shares of Common Stock purchased upon the exercise of an option
shall be made on the effective date of such exercise either (i) in cash, by
certified check, bank cashier's check or wire transfer or (ii) subject to the
approval of the Committee, in shares of Common Stock owned by the participant
and valued at their fair market value on the effective date of such exercise,
or (iii) partly in shares of Common Stock with the balance in cash, by
certified check, bank cashier's check or wire transfer. Any option granted
under the Plan may also be exercised by a broker-dealer acting on behalf of a
participant.
Restricted Stock. The Committee may grant shares of restricted stock
pursuant to the Plan. Each grant of shares of restricted stock shall be
evidenced by an agreement in such form as the Committee shall from time to time
approve. At the time of the grant of shares of restricted stock, the Committee
may impose such restrictions or conditions, not inconsistent with the
provisions of the Plan, to the vesting of such shares as it in its absolute
discretion deems appropriate.
Phantom Stock. The Committee may grant shares of phantom stock
pursuant to the Plan. Each grant of shares of phantom stock shall be evidenced
by an agreement in such form as the Committee shall from time to time approve.
At the time of the grant of shares of phantom stock, the Committee
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may impose such restrictions or conditions, not inconsistent with the
provisions of the Plan, to the vesting of such shares as it in its absolute
discretion deems appropriate.
Stock Bonuses. The Committee may, in its absolute discretion, grant
stock bonuses in such amounts as it shall determine from time to time. A stock
bonus shall be paid at such time and subject to such conditions as the
Committee shall determine at the time of the grant of such stock bonus.
Cash Bonuses. The Committee may, in its absolute discretion, grant in
connection with any grant of restricted stock or stock bonus or at any time
thereafter, a cash bonus, payable promptly after the date on which the
Participant is required to recognize income for federal income tax purposes in
connection with such restricted stock or stock bonus, in such amounts as the
Committee shall determine from time to time; provided, however, that in no
event shall the amount of a cash bonus exceed the fair market value of the
related shares of restricted stock or stock bonus on such date. A cash bonus
shall be subject to such conditions as the Committee shall determine at the
time of the grant of such cash bonus.
Amendment. The Board of Directors may at any time suspend or
discontinue the Plan or revise or amend it in any respect whatsoever, provided,
however, that without approval of the stockholders no revision or amendment
shall (i) except as specifically provided in the Plan, increase the number of
shares of common stock that may be issued under the Plan, (ii) materially
increase the benefits accruing to individuals holding Incentive Awards granted
pursuant to the Plan or (iii) materially modify the requirements as to
eligibility for participation in the Plan.
Effective Date and Term of Plan. The Plan was adopted by the Board of
Directors effective September 5, 2000, subject to approval by the stockholders
of the Company in accordance with applicable law, the requirements of Sections
162(m) and 422 of the Code and the requirements of Rule 16b-3 under Section
16(b) of the Exchange Act. No Incentive Award may be granted under the Plan
after September 5, 2010.
FEDERAL INCOME TAX CONSEQUENCES
The following summary is based upon an analysis of the Internal Revenue
Code (the "Code"), as currently in effect, and existing laws, judicial
decisions, administrative rulings, regulations and proposed regulations, all of
which are subject to change. Moreover, the following is only a summary of
federal income tax consequences and the federal income tax consequences to
participants may be either more or less favorable than those described below
depending on their particular circumstances.
Incentive Stock Options. No income will be recognized by an optionee
for federal income tax purposes upon the grant or exercise of an incentive
stock option. The basis of shares transferred to an optionee pursuant to the
exercise of an incentive stock option is the price paid for the shares. If the
optionee holds the shares for at least one year after the transfer of the
shares to the optionee and two years after the grant of the option, the
optionee will recognize capital gain or loss upon sale of the shares received
upon the exercise equal to the difference between the amount realized on the
sale and the basis of the stock. Generally, if the shares are not held for that
period, the optionee will recognize ordinary income upon disposition in an
amount equal to the excess of the fair market value of the shares on the date
of exercise over the amount paid for such shares, or if less (and if the
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disposition is a transaction in which loss, if any, will be recognized), the
gain on disposition. Any additional gain realized by the optionee upon such
disposition will be a capital gain.
The excess of the fair market value of shares received upon the
exercise of an incentive stock option over the option price for the shares is
an item of adjustment for the optionee for purposes of the alternative minimum
tax. Therefore, although no income is recognized upon exercise of an incentive
stock option, an optionee may be subject to alternative minimum tax as a result
of such exercise.
The Company is not entitled to a deduction upon the exercise of an
incentive stock option by an optionee. If the optionee disposes of the shares
received pursuant to such exercise prior to the expiration of one year
following transfer of the shares to the optionee or two years after grant of
the option, however, the Company may, subject to the deduction limitations
described below, deduct an amount equal to the ordinary income recognized by
the optionee upon disposition of the shares at the time such income is
recognized by the optionee.
If an optionee uses already owned shares of Common Stock to pay the
exercise price for shares under an incentive stock option, the resulting tax
consequences will depend upon whether the already owned shares of Common Stock
are "statutory option stock," and, if so, whether such statutory option stock
has been held by the optionee for the applicable holding period referred to in
Section 424(c)(3)(A) of the Code. In general, "statutory option stock" (as
defined in Section 424(c)(3)(B) of the Code) is any stock acquired through the
exercise of an incentive stock option or an option granted pursuant to an
employee stock purchase plan, but not stock acquired through the exercise of a
nonqualified stock option. If the stock is statutory option stock with respect
to which the applicable holding period has been satisfied, no income will be
recognized by the optionee upon the transfer of such stock in payment of the
exercise price of an incentive stock option. If the stock is not statutory
option stock, no income will be recognized by the optionee upon the transfer of
the stock unless the stock is not substantially vested within the meaning of
the regulations under Section 83 of the Code (in which event it appears that
the optionee will recognize ordinary income upon the transfer equal to the
amount by which the fair market value of the transferred shares exceeds their
basis). If the stock used to pay the exercise price of an incentive stock
option is statutory option stock with respect to which the applicable holding
period has not been satisfied, the transfer of such stock will be a
disqualifying disposition described in Section 421(b) of the Code which will
result in the recognition of ordinary income by the optionee in an amount equal
to the excess of the fair market value of the statutory option stock at the
time the incentive stock option covering such stock was exercised over the
amount paid for such stock. Under the present provisions of the Code, it is not
clear whether all shares received upon the exercise of an incentive stock
option with already- owned shares will be statutory option stock or how the
optionee's basis will be allocated among such shares.
Nonqualified Stock Options. No income will be recognized by an optionee
for federal income tax purposes upon the grant of a nonqualified stock option.
Upon exercise of a nonqualified stock option, the optionee will recognize
ordinary income in an amount equal to the excess of the fair market value of
the shares on the date of exercise over the amount paid for such shares. Income
recognized upon the exercise of a nonqualified stock option will be considered
compensation subject to withholding at the time the income is recognized, and,
therefore, the Company must make the necessary arrangements with the optionee
to ensure that the amount of the tax required to be
10
<PAGE> 14
withheld is available for payment. Nonqualified stock options are designed to
provide the Company with a deduction equal to the amount of ordinary income
recognized by the optionee at the time of such recognition by the optionee,
subject to the deduction limitations described below.
The basis of shares transferred to an optionee pursuant to exercise of
a nonqualified stock option is the price paid for such shares plus an amount
equal to any income recognized by the optionee as a result of the exercise of
the option. If an optionee thereafter sells shares acquired upon exercise of a
nonqualified stock option, any amount realized over the basis of the shares
will constitute capital gain to the optionee for federal income tax purposes.
If an optionee uses already owned shares of Common Stock to pay the
exercise price for shares under a nonqualified stock option, the number of
shares received pursuant to the nonqualified stock option which is equal to the
number of shares delivered in payment of the exercise price will be considered
received in a nontaxable exchange, and the fair market value of the remaining
shares received by the optionee upon the exercise will be taxable to the
optionee as ordinary income. If the already owned shares of Common Stock are
not "statutory option stock" or are statutory option stock with respect to
which the applicable holding period referred to in Section 424(c)(3)(A) of the
Code has been satisfied, the shares received pursuant to the exercise of the
nonqualified stock option will not be statutory option stock and the optionee's
basis in the number of shares received in exchange for the shares delivered in
payment of the exercise price will be equal to the basis of the shares
delivered in payment. The basis of the remaining shares received upon the
exercise will be equal to the fair market value of the shares. However, if the
already owned shares of Common Stock are statutory option stock with respect to
which the applicable holding period has not been satisfied, it is not presently
clear whether the exercise will be considered a disqualifying disposition of
the statutory option stock, whether the shares received upon such exercise will
be statutory option stock or how the optionee's basis will be allocated among
the shares received.
Restricted Stock. If the restrictions on an award of shares of
restricted stock are of a nature that the shares are both subject to a
substantial risk of forfeiture and are not freely transferable within the
meaning of Section 83 of the Code, the participant will not recognize income
for federal income tax purposes at the time of the award unless such
participant affirmatively elects to include the fair market value of the shares
of restricted stock on the date of the award, less any amount paid therefor, in
gross income for the year of the award pursuant to Section 83(b) of the Code.
In the absence of such an election, the participant will be required to include
in income for federal income tax purposes in the year in which occurs the date
the shares either become freely transferable or are no longer subject to a
substantial risk of forfeiture within the meaning of Section 83 of the Code,
the fair market value of the shares of restricted stock on such date, less any
amount paid therefor. The Company will be entitled to a deduction at the time
of income recognition to the participant in an amount equal to the amount the
participant is required to include in income with respect to the shares,
subject to the deduction limitations described below. If a Section 83(b)
election is made within 30 days after the date the restricted stock is
received, the participant will recognize ordinary income at the time of the
receipt of the restricted stock and the Company will be entitled to a
corresponding deduction equal to the fair market value (determined without
regard to applicable restrictions other than nonlapse restrictions) of the
shares at such time less the amount paid, if any, by the participant for the
restricted stock. If a Section 83(b) election is made, no additional income
will be recognized by the participant upon the lapse of restrictions on the
restricted stock, but, if the restricted stock is subsequently forfeited, the
participant may not deduct the income that was
11
<PAGE> 15
recognized pursuant to the Section 83(b) election at the time of the receipt of
the restricted stock. Dividends paid to a participant holding restricted stock
before the expiration of the restriction period will be additional compensation
taxable as ordinary income to the participant, unless the participant made an
election under Section 83(b). Subject to the deduction limitations described
below, the Company generally will be entitled to a corresponding tax deduction
equal to the dividends includable in the participant's income as compensation.
If the participant has made a Section 83(b) election, the dividends will be
dividend income, rather than additional compensation, to the participant.
If the restrictions on an award of restricted stock are not of a nature
that such shares are both subject to a substantial risk of forfeiture and not
freely transferable, within the meaning of Section 83 of the Code, the
participant will recognize ordinary income for federal income tax purposes at
the time of the award in an amount equal to the fair market value of the shares
of restricted stock on the date of the award, less any amount paid therefor.
The Company will be entitled to a deduction at such time in an amount equal to
the amount the participant is required to include in income with respect to the
shares, subject to the deduction limitations described below.
Phantom Stock. There will be no federal income tax consequences to
either the participant or the Company upon the grant of phantom stock.
Generally, a participant will recognize ordinary income subject to withholding
upon the receipt of payment pursuant to a phantom stock award in an amount
equal to the aggregate amount of cash received. Subject to the deduction
limitations described below, the Company generally will be entitled to a
corresponding tax deduction equal to the amount includable in the participant's
income.
Stock Bonus. Generally, the participant will recognize ordinary income
subject to withholding upon the receipt of a stock bonus in an amount equal to
the fair market value of the Common Stock. Subject to the deduction limitations
described below, the Company generally will be entitled to a corresponding tax
deduction equal to the amount includable in the participant's income.
Cash Bonus. Generally, the participant will recognize ordinary income
subject to withholding upon the receipt of a cash bonus in an amount equal to
the aggregate amount of cash received. Subject to the deduction limitations
described below, the Company generally will be entitled to a corresponding tax
deduction equal to the amount of cash bonus includible in the participant's
income.
Limitations on the Company's Compensation Deduction. Section 162(m) of
the Code limits the deduction which the Company may take for otherwise
deductible compensation payable to certain executive officers of the Company to
the extent that compensation paid to such officers for such year exceeds $1
million, unless such compensation is performance-based, is approved by the
Company's stockholders and meets certain other criteria. Compensation
attributable to a stock option or a stock appreciation right is deemed to
satisfy the requirements for performance-based compensation if (i) the grant or
award is made by the Committee; (ii) the plan under which the option or right
is granted states the maximum number of shares with respect to which options or
rights may be granted during a specified period to any employee; and (iii)
under the terms of the option or right, the amount of compensation the employee
could receive is based solely on an increase in the value of the stock after
the date of the grant or award. The Plan has been designed to enable awards of
12
<PAGE> 16
options and limited rights granted by the Committee to qualify as
performance-based compensation for purposes of Section 162(m) of the Code.
In addition, Section 280G of the Code limits the deduction which the
Company may take for otherwise deductible compensation payable to certain
individuals if such compensation constitutes an "excess parachute payment."
Very generally, excess parachute payments arise from certain payments made to
disqualified individuals which are in the nature of compensation and are
contingent on certain changes in ownership or control of the Company.
Disqualified individuals for this purpose include certain employees and
independent contractors who are officers, stockholders or highly-compensated
individuals. Accelerated vesting or payment of awards under the Plan upon a
change in ownership or control of the Company could result in excess parachute
payments. In addition to the deduction limitation applicable to the Company, a
disqualified individual receiving an excess parachute payment is subject to a
20% excise tax on the amount thereof.
The above summary relates to U.S. federal income tax consequences only
and applies to U.S. citizens and foreign persons who are U.S. residents for
U.S. federal income tax purposes. The U.S. federal income tax consequences
associated with the issuance of Common Stock to nonresident aliens depends upon
a number of factors, including whether such issuance is considered to be U.S.
source income and whether the provisions of any treaty are applicable. The
acquisition, ownership or disposition of shares of Common Stock may also have
tax consequences under various state and foreign laws. Since these tax
consequences, as well as the federal income tax consequences described above,
may vary from person to person depending upon the particular facts and
circumstances involved, each participant should consult such participant's own
tax advisor with respect to the federal income tax consequences of the
acquisition of Common Stock under the Plan, and also with respect to any tax
consequences under applicable state and foreign laws.
The Plan is not subject to the provisions of the Employee Retirement
Income Security Act of 1974 and is not qualified under Section 401(a) of the
Code.
REQUIRED AFFIRMATIVE VOTE
Provided a quorum is present, the affirmative vote of the holders of at
least a majority of the shares of capital stock of the Company present or
represented and voting at the meeting shall be required to approve the Plan.
RECOMMENDATION
FOR THE REASONS DESCRIBED ABOVE, THE BOARD OF DIRECTORS RECOMMENDS A
VOTE "FOR" THE PROPOSAL TO APPROVE THE PLAN.
II. OTHER INFORMATION
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
13
<PAGE> 17
The following tables list the names and ages of each director and/or
executive officer of the Company.
NAME AGE POSITION
---- --- --------
Larry H. Ramming 53 Chairman of the Board of Directors
Chief Executive Officer
Brian Krause 44 Director
President of Emergency Services Operations
K. Kirk Krist 41 Director
Jerry L. Winchester 41 Director
President and Chief Operating Officer
Dewitt H. Edwards 41 Executive Vice President -- Administration
Thomas L. Easley 55 Director (Vice President & Chief Financial
Officer Through February 7, 2000)
E. J. DiPaolo 47 Director
W. Richard Anderson 46 Director
Tracy S. Turner 40 Director
BIOGRAPHIES OF EXECUTIVE OFFICERS AND DIRECTORS
Larry H. Ramming has served as the Chairman of the Board of
Directors and Chief Executive Officer of the Company since the acquisition of
IWC Services by the Company on July 29, 1997. Previously Mr. Ramming was
actively involved in mortgage banking and the packaging and resale of mortgage
notes, consumer loans and other debt instruments for over 15 years. In
addition, Mr. Ramming has been an active venture capital investor.
Brian Krause has served as the President of IWC Services, Inc. (Well
Control Business Unit) and as a Director of the Company 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 Company. Before
joining the group that founded IWC Services, Mr. Krause was employed for 18
years by the Red Adair Company, Houston, Texas. 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. 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 the Company's board of
directors since the acquisition of IWC Services by the Company on July 29,
1997. Mr. Krist also serves on the Audit Committee. Mr. Krist has been a
self-employed oil and gas investor and venture capitalist since 1982.
14
<PAGE> 18
Jerry L. Winchester has served as President and Chief Operating
Officer of the Company since November 1, 1998. Before assuming this position,
Mr. Winchester was employed by Halliburton Energy Services since 1981 in
positions of increasing responsibility, most recently as Global Manager -- Well
Control, Coil Tubing and Special Services.
Dewitt H. Edwards has served as Executive Vice President of the
Company since September 1, 1998. Before assuming this position, Mr. Edwards
served in various supervisory capacities with Halliburton Energy Services from
1979 to 1998, most recently as Operations Manager -- North American Region
Resources Management.
Thomas L. Easley served as Vice President and Chief Financial
Officer of the Company since the acquisition of IWC Services by the Company on
July 29, 1997 through February 7, 2000, at which time he resigned to pursue
another business activity. From May 1995 through July 1996, Mr. Easley served
as Vice President and Chief Financial Officer of DI Industries, Inc. a publicly
held oil and gas drilling contractor with operations in the U.S., Mexico,
Central America and South America. Previously, from June 1992 through May 1995,
he served as Vice President -- Finance of Huthnance International, Inc., a
closely held offshore oil and gas drilling contractor. Since February 7, 2000,
Mr. Easley has served as Executive Vice President -- Finance & Administration
of Grant Geophysical, Inc., a closely-held seismic data acquisition and
processing company.
E. J. "Jed" DiPaolo has served as a director since May 1999. Mr.
DiPaolo also serves on the Audit Committee. Mr. DiPaolo is Senior Vice
President, Global Business Development of Halliburton Energy Services, having
responsibility for all worldwide business development activities. Mr. DiPaolo
has been employed at Halliburton Energy Services since 1976 in progressive
positions of responsibility.
W. Richard Anderson has served as a director since August 1999. Mr.
Anderson also serves on the Audit Committee. Mr. Anderson is the President,
Chief Financial Officer and a director of Prime Natural Resources, a
closely-held oil and gas exploration and production company. Prior to his
employment at Prime, he was employed by Hein & Associates LLP, a certified
public accounting firm, where he served as a partner from 1989 to January 1995
and as a managing partner from January 1995 until October 1998.
Tracy Scott Turner has served as a director since August 2000. Mr.
Turner is also currently a principal at Geneva Associates, L.L.C., a merchant
bank. In addition, Mr. Turner is the founding principal of Interra Ventures,
L.L.C., a merchant bank which focuses on Internet and telecommunications and
energy related investments. From 1993 to 1996, Mr. Turner served as a Senior
Vice President of the Private Placement Group for ABN AMRO Bank. From 1986 to
1993, he was a Managing Director in the Private Placement Group for Canadian
Imperial Bank of Commerce. Mr. Turner has investment and sits on the board of
directors of Rio Bravo Exploration and Production. He also currently sits on
the board of directors of Wetland Environmental Technologies, L.L.C., Golfport,
Inc., Early Warning Corporation, Direct Digital Communications, ParaComm, Inc.
and Clean Air Research and Environmental and is a principal of Turner Land and
Cattle Company and Southern Capital Partners, L.L.C.
15
<PAGE> 19
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires directors and officers of
the Company, and persons who own more than 10 percent of the Common Stock, to
file with the SEC initial reports of ownership and reports of changes in
ownership of the Common Stock. Directors, officers and more than 10 percent
stockholders are required by SEC regulations to furnish the Company with copies
of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies
of such reports furnished to the Company and written representations that no
other reports were required, during the year ended December 31, 1999, all of
its directors, officers and more than 10 percent beneficial owners complied
with all applicable Section 16(a) filing requirements.
COMMITTEES AND BOARD MEETINGS
As permitted by the Bylaws of the Company, the board of directors
has designated from its members a compensation committee and an audit
committees. The Company does not have a standing nominating committee of the
board of directors or any other committee that performs a similar function.
During 1999, the board of directors held (4) four meetings. All directors
attended 100% of such meetings held during the period in which such director
served. The current committees of the board of directors, the composition and
functions thereof and the number of meetings held in 1999 are as set forth
below:
Compensation Committee. In 1999, the members of the compensation
committee were K. Kirk Krist and Jerry L. Winchester. The committee met (2) two
times during 1999. The role of the compensation committee is to review the
performance of officers, including those officers who are also members of the
board of directors, and to set their compensation. The committee also
supervises and administers the Company's stock ownership plans and all other
compensation and benefit policies, practices and plans of the Company.
Audit Committee. In 1999, the members of the audit committee were W.
Richard Anderson, K. Kirk Krist and E.J. "Jed" DiPaolo. All members of the
committee are "independent" as such term is defined in Section 121(A) of the
American Stock Exchange's listing standards. During 1999, the audit committee
met (3) three times. The role of the committee is to review, with the Company's
auditors, the scope of the audit procedures to be applied in the conduct of the
annual audit as well as the results of the annual audit. On June 13, 2000, the
board of directors adopted a charter for the audit committee. A copy of the
audit committee charter is annexed hereto as Appendix B and is incorporated
herein by this reference.
AUDIT COMMITTEE REPORT
We have reviewed and discussed the audited financial statements for
the fiscal year ended December 31, 1999, with the Company's management. We have
also discussed with Arthur Andersen LLP the matters required to be discussed by
SAS 61 (Codification of Statements on Auditing Standards, AU ss. 380), as may
be modified or supplemented, and have received the written
16
<PAGE> 20
disclosures and the letter from Arthur Andersen LLP required by Independence
Standards Board Standard No. 1 (Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees), as may be modified or
supplemented. We have also discussed with Arthur Andersen LLP its independence.
Based on the above review and discussions, we recommend to the board of
directors that the audited financial statements be included in the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1999.
The Audit Committee:
W. Richard Anderson
K. Kirk Krist
E. J. "Jed" DiPaolo
EXECUTIVE COMPENSATION
Boots & Coots International Well Control, Inc. is a holding company,
all of the business activities of which is conducted by its subsidiaries.
The Summary Compensation Table below sets forth the cash and
non-cash compensation information for the twelve month period ended December
31, 1997, the six month transition period from July 1, 1997 to December 31,
1997, and the years ended December 31, 1998 and 1999, for the Chief Executive
Officer and the four other most highly paid executive officers whose salary and
bonus earned for services rendered to the Company exceeded $100,000 for the
years ended December 31, 1998 and 1999. Calendar year annual compensation
disclosures reflect amounts paid by the Company and IWC Services, Inc., prior
to its acquisition by the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION
COMPENSATION AWARDS
------------ ------
RESTRICTED ALL
NAME AND STOCK OTHER
PRINCIPAL POSITION PERIOD SALARY BONUS AWARDS COMPENSATION
------------------ ------ ------ ----- ------ ------------
<S> <C> <C> <C> <C> <C>
Larry H. Ramming..... 1999 $280,624 -- -- --
Chairman of the 1998 287,000 -- -- --
Board
and Chief Executive 1997 98,565 $2,604 -- --
Officer
7/1- 59,945 2,604 -- --
12/31/97
Jerry Winchester........ 1999 262,000 -- -- --
</TABLE>
17
<PAGE> 21
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION
COMPENSATION AWARDS
------------ ------
RESTRICTED ALL
NAME AND STOCK OTHER
PRINCIPAL POSITION PERIOD SALARY BONUS AWARDS COMPENSATION
------------------ ------ ------ ----- ------ ------------
<S> <C> <C> <C> <C> <C>
President, Boots & 11/1- 43,666 -- -- --
Coots Group 12/31/98
Brian Krause.............. 1999 162,000 -- -- --
President, IWC 1998 145,000 -- -- --
Services, Inc.
1997 95,081 -- -- --
7/1- 55,261 -- -- --
12/31/97
Dewitt H. Edwards.... 1999 162,000 -- -- --
Executive Vice 9/1- 54,000 -- -- --
President 12/31/98
Thomas L. Easley...... 1999 210,925 -- -- --
Through February 7,
2000,
Vice President and 1998 155,833 -- -- --
Chief Financial 1997 133,725 -- -- --
Officer
7/1- 92,850 -- -- --
12/31/97
</TABLE>
The following tables sets forth additional information with respect
to stock options granted in 1999 under the Company's Incentive Plan to the
named executive officers.
18
<PAGE> 22
OPTION GRANTS 1999
<TABLE>
<CAPTION>
INDIVIDUAL
GRANTS
---------------------------------------------------------------------------------------
% OF TOTAL
OPTIONS
GRANTED EXERCISED OR
OPTIONS TO EMPLOYEES BASE PRICE EXPIRATION
NAME GRANTED IN FISCAL YEAR ($/SHARE) DATE
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Larry H. Ramming 750,000(1) 60% $1.55 05/03/09
---------------------------------------------------------------------------------------
Thomas L. Easley 500,000(2) 40% 1.55 05/03/09
---------------------------------------------------------------------------------------
</TABLE>
(1) As discussed in Note M -- Events Subsequent to December 31, 1999
included in the Consolidated Financial Statements enclosed in the
Company's Annual Report on Form 10-K for the year ended December 31,
1999, which has been distributed along with this Proxy Statement, in
April 2000, Mr. Ramming voluntarily contributed these options to the
Company in exchange for the commitment by the Company to issue,
subject to availability of authorized but unissued or committed
shares of Common Stock, replacement options that may be exercised at
$0.75 per share. This act was taken to make available additional
authorized but unissued and uncommitted shares of the Company's
Common Stock in connection with financing transactions completed
subsequent to December 31, 1999.
(2) As a result of Mr. Easley's resignation as an officer of the
Company effective February 7, 2000, the above options have lapsed.
The following table sets forth information with respect to the unexercised
options to purchase shares of Common Stock which were granted in 1999 or a
prior year to the named executive officers and held by them at December 31,
1999. None of the named executive officers exercised any stock options during
1999.
AGGREGATED OPTION EXERCISES IN 1999
AND 1999 YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT YEAR END OPTIONS AT YEAR END
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C>
Larry H. Ramming......... 750,000 -- -- --
Thomas L. Easley............ 500,000 -- -- --
Jerry L. Winchester........ 400,000 600,000 -- --
DeWitt H. Edwards........ 200,000 80,000 -- --
</TABLE>
As discussed in Note M -- Events Subsequent to December 31, 1999
included in the Consolidated Financial Statements enclosed in the Company's
Annual Report on Form 10-K for the
19
<PAGE> 23
year ended December 31, 1999, in April 2000 Messrs. Ramming, Winchester and
Edwards each voluntarily contributed these options to the Company in exchange
for the commitment by the Company to issue, subject to availability of
authorized but unissued or committed shares of Common Stock, replacement
options that may be exercised at $0.75 per share. This act was taken to make
available additional authorized but unissued and uncommitted shares of the
Company's Common Stock in connection with financing transactions completed
subsequent to December 31, 1999.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the board of directors of the Company
in fiscal year 1999 was composed of K. Kirk Krist and Jerry L. Winchester.
Mr. Winchester joined the Company as President and Chief Executive Officer
effective November 1, 1998. During 1999, Mr. Krist constituted the
Compensation Committee. During the last completed fiscal year, none of the
Company's executive officers served as a board member or member of a
compensation committee or similar body for another company that had an
executive officer serving as a member of the Company's board of directors or
Compensation Committee.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE
COMPENSATION
The Compensation Committee, which is responsible for both the
establishment and administration of the policies that govern both annual
compensation and stock ownership programs for the Company, has furnished the
following report of executive compensation. The Compensation Committee did
participate in the determination of executive officer compensation.
Determination of Executive Officer Compensation. The Compensation
Committee is developing compensation policies designed to align the
compensation paid to the executive officers with the Company's overall business
strategy, values and management initiatives. These policies will be designed
to: (i) reward executives for long-term strategic management which results in
the enhancement of shareholder values; (ii) support a performance-oriented
environment which rewards achievement of both internal Company goals and
enhanced Company performance compared to performance levels of comparable
companies in the industry, and (iii) attract and retain executives whose
abilities are critical to the long-term success and competitiveness of the
Company. The Company's executive officers have been compensated to date
pursuant to the items of their employment agreements.
Determination of the Chief Executive Officer's Compensation. As
Chief Executive Officer, Mr. Ramming is compensated pursuant to an employment
agreement described under "Employment Agreements" below. Mr. Ramming's
compensation to date, including the Employment Contract entered into effective
April 1, 1999, has been based on previously completed equity and debt financing
and business acquisitions in which Mr. Ramming played a critical role, as well
as Mr. Ramming's extensive involvement in financing efforts.
The Compensation Committee:
20
<PAGE> 24
Jerry L. Winchester
K. Kirk Krist
EMPLOYMENT ARRANGEMENTS
Mr. Ramming, the Company's Chairman and Chief Executive Officer,
through 1997 was actively involved in a number of independent business
activities and through such date did not devote his full time to the affairs of
the Company. Mr. Ramming executed effective as of August 1, 1997, a one year
employment agreement with the Company which allowed for his outside activities
provided that he devoted such time to the Company's affairs as was reasonably
necessary for the performance of his duties, with such activities not to be
competitive with the Company's business and not to materially adversely affect
his performance as an officer and director of the Company. Through December 31,
1997 Mr. Ramming's employment arrangement provided for an annual salary of
$125,000 and an annual automobile allowance of $12,000. Effective January 1,
1998, Mr. Ramming agreed to prospectively curtail all material outside business
activities and under this interim employment arrangement, his annual salary was
increased to $275,000. A five-year contract, effective April 1, 1999, was
entered into with Mr. Ramming, which provided for an annual salary of $300,000
and an annual automobile allowance of $18,000. In August 1999, as a result of
the Company's financial condition, Mr. Ramming voluntarily agreed to a deferral
of payment of 25% of his monthly salary and vehicle allowance. Such deferral
continued though May 2000. In connection with the employment contract entered
in 1999, Mr. Ramming was granted an option to purchase up to 750,000 shares of
the Company's Common Stock at a per share price of $1.55 (85% of the last bid
price of such common stock on the American Stock Exchange on the date
immediately preceding the contract effectiveness date). The options vest
ratably over five years at the anniversary date of the employment contract,
conditioned upon continued employment at the time of each vesting and subject
to immediate vesting based upon change of control which occurred.
In May 2000, Mr. Ramming agreed to the cancellation of this option
as well as options related to this loan and financing provided to the company
in order to provide additional available shares of Common Stock for warrants to
be issued in connection with additional financings. The Company agreed to issue
Mr. Ramming an equivalent number of stock options in the future, subject to
availability of authorized and unissued or committed common shares.
Mr. Winchester serves as President and Chief Operating Officer of
the Company. Mr. Winchester's employment agreement, which was effective as of
November 1, 1998, provides for an annual salary of $250,000 and an annual
automobile allowance of $12,000. In addition, Mr. Winchester was granted an
option to purchase up to 1,000,000 shares of common stock of the Company at a
per share price of $1.91 (85% of the last bid price of such common stock on the
American Stock Exchange on the date immediately preceding the contract
effectiveness date). 200,000 of such options vested upon execution of this
contract. The balance vests at the rate of 200,000 options per year at the
anniversary date, conditioned upon continued employment at the time of each
vesting. In May 2000, Mr. Winchester agreed to the cancellation of this option
in order to provide additional available shares of Common Stock for warrants to
be issued in connection with additional financings. The Company agreed to issue
Mr. Winchester an equivalent number of stock options in the future, subject to
availability of authorized and unissued or committed common stock.
21
<PAGE> 25
Mr. Easley served as Chief Financial Officer of the Company during
1996 and 1997 and performed certain other services, including sourcing and
conducting due diligence on certain acquisition prospects and raising debt and
equity capital, pursuant to a consulting arrangement with the Company. Mr.
Easley's interim employment arrangement, which was effective as of March 1,
1998, provided for an annual salary of $175,000 and an annual automobile
allowance of $12,000. A five-year contract, effective April 1, 1999, was
entered into with Mr. Easley, which provided for an annual salary of $225,000
and an annual automobile allowance of $18,000. In August 1999, as a result of
the Company's financial condition, Mr. Easley voluntarily agreed to a deferral
of payment of the increased monthly salary from $175,000 to $225,000. Such
deferral continued though the current date hereof. In connection with the
employment contract entered in 1999, Mr. Easley was granted an option to
purchase up to 500,000 shares of the Company's common stock at a per share
price of $1.55 (85% of the last bid price of such common stock on the American
Stock Exchange on the date immediately preceding the contract effectiveness
date). The options vest ratably over five years at the anniversary date of the
employment contract, conditioned upon continued employment at the time of each
vesting. As a result of Mr. Easley's resignation, this option has now expired.
Mr. Edwards serves as Executive Vice President of the Company. Mr.
Edwards' employment agreement, which was effective as of September 1, 1998,
provides for an annual salary of $150,000 and an annual automobile allowance of
$12,000. In addition, Mr. Edwards was granted an option to purchase up to
100,000 shares of common stock of the Company at a per share price of $3.29
(85% of the last bid price of such common stock on the American Stock Exchange
immediately preceding the contract effectiveness date). 20,000 of such options
vested upon execution of this contract. The balance vests at the rate of 20,000
options per year at the anniversary date, conditioned upon continued employment
at the time of each vesting. In May 2000, Mr. Edwards agreed to the
cancellation of this option in order to provide additional available shares of
Common Stock for warrants to be issued in connection with additional
financings. The Company agreed to issue Mr. Edwards an equivalent number of
stock options in the future, subject to availability of authorized and unissued
or committed common shares.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company receive $250 for
their attendance at each board of directors and committee meeting and are
reimbursed for their travel, lodging and out-of- pocket expenses incurred in
connection with attending such meetings.
1997 Outside Directors' Option Plan. On November 12, 1997, the board
of directors of the Company adopted the 1997 Outside Directors' Option Plan
(the "Directors' Plan") and the Company's stockholders approved such plan on
December 8, 1997. The Directors' Plan provides for the issuance each year of an
option to purchase 15,000 shares of Common Stock to each member of the board of
directors who is not an employee of the Company. The purpose of the Directors'
Plan is to encourage the continued service of outside directors and to provide
them with additional incentive to assist the Company in achieving its growth
objectives. Options may be exercised over a five-year period with the initial
right to exercise starting one year from the date of the grant, provided the
director has not resigned or been removed for cause by the board of directors
prior to such date. After one year from the date of the grant, options
outstanding under the Directors' Plan may be
22
<PAGE> 26
exercised regardless of whether the individual continues to serve as a
director. Options granted under the Directors' Plan are not transferable except
by will or by operation of law. Options to purchase 45,000 shares of Common
Stock have been granted under the Directors' Plan at an exercise price of $4.25
per share.
In May 2000, the directors agreed to the cancellation of their
options in order to provide additional available shares of common stock for
warrants to be issued in connection with additional financing. The Company
agreed to issue the directors an equivalent number of stock options in the
future, subject to availability of authorized and issued or committed common
shares. The Company will record compensation expense related to these options
when these options are reissued if and when the market price of the Company's
stock exceeds the exercise price.
The following graph compares the Company's total stockholder return
on its Common Stock for the years ended December 31, 1997, 1998 and 1999 with
the Standard & Poors' 500 Stock Index and the Standard & Poors' Energy
Composite Index over the same period.
[PERFORMANCE GRAPH]
12/97 12/98 12/99
------ ------ ------
Boots & Coots International Well Control, Inc. 100.00 77.40 11.29
S&P 500 Index 100.00 128.60 153.97
S&P Energy Composite Index 100.00 100.50 118.40
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth, as of July 14, 2000, information
regarding the ownership of Common Stock of the Company owned by (i) each person
(or "group" within the meaning of Section 13(d)(3) of the Security Exchange Act
of 1934) known by the Company to own beneficially more than 5% of the Common
Stock; (ii) each director of the Company, (iii) each of the named executive
officers and (iv) all executive officers and directors of the Company as a
group.
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNER (1) BENEFICIAL OWNERSHIP OF CLASS
*Larry H. Ramming .................... 590,000 1.2%
*Brian Krause ........................ -- *
Jerry L. Winchester ................. 4,000(3) *
K. Kirk Krist ....................... 237,400(4) *
Thomas L. Easley .................... 200 *
23
<PAGE> 27
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNER (1) BENEFICIAL OWNERSHIP OF CLASS
E. J. Dipaolo ...................... -- *
W. Richard Anderson ................ -- *
DeWitt H. Edwards .................. -- *
Specialty Finance Fund I, LLC ...... 8,147,058(4) 16.4%
Fritz Voelker ...................... 1,560,000(5) 3.1
Paul Moore ......................... 1,860,000(6) 3.7
Tracy Turner ....................... 1,160,000(5) 2.3
All executive officers and directors
as a group (eight persons) ......... 831,600 1.7%
-----------------------
* less than 1%
The above table gives effect to the voluntary contribution of stock
options in April 2000 and insofar as Mr. Krist is concerned his contribution of
Common Stock to the Company in exchange for shares of Convertible Preferred
Stock, as discussed in Note M -- Events Subsequent to December 31, 1999
included in the accompanying Consolidated Financial Statements.
(1) Unless otherwise noted, the business address for purposes hereof for
each person listed is 777 Post Oak Boulevard, Suite 800, Houston,
Texas 77056. Beneficial owners have sole voting and investment power
with respect to the shares unless otherwise noted.
(2) Includes options to purchase 3,000 shares of common stock.
(3) Includes options to purchase 3,000 shares of common stock.
(4) Includes warrants to purchase 8,000,000 shares of common stock
acquired pursuant to a participation interest in the senior secured
credit facility.
(5) Includes warrants to purchase 1,160,000 shares of common stock.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On April 30, 1998, The Company's major individual shareholder
Chairman and Chief Executive Officer, Larry H. Ramming, loaned $7,000,000 to
the Company to retire certain bridge financing. As of December 31, 1999,
interest (10%) and extension (2%) expenses aggregating $337,000 and principal
payments of $6,431,000 have been paid to Mr. Ramming. As further consideration
for the certain bridge financing, Mr. Ramming was eligible to be granted
2,000,000
24
<PAGE> 28
options to purchase common stock at a per share price of $0.75 subject to
issuance and availability of authorized and unissued or committed common shares
which was voluntarily deferred in exchange for the commitment of the Company to
issue subject to availability of authorized but unissued or committed shares of
common stock in the Company. This act was taken to make available additional
authorized but unissued and uncommitted shares of the Company's Common Stock in
connection with financing transactions completed subsequent to December 31,
1999. At December 31, 1999, the remaining principal balance on this note, which
was voluntarily subordinated to the Company's senior secured debt, is $569,000.
Accrued interest and accrued but unpaid extension fees aggregate $270,000.
Management believes the terms and conditions of Mr. Ramming's loan to the
Company are favorable to those that could have been negotiated with outside
parties.
In 1998 the Company entered into an agreement with a company
controlled by Mr. Ramming to have available for charter, on a 24 hour per day,
365 days per year stand-by status, a jet aircraft and full time stand-by crew
to be utilized in connection with the Company's mobilization of personnel and
selected equipment for emergency response well control and spill containment
and remediation spills, which in those events are billed to the utilizing
customer at a rate of company cost plus a service fee mark up and for other
corporate purposes as needed. During 1998 and 1999, a total of $399,000 and
$128,000, respectively, was paid pursuant to such charter arrangement, based on
rates comparable to those available from third party aircraft charter operators
for comparable charter arrangements. This arrangement was terminated during the
second quarter of 1999.
STOCKHOLDER PROPOSALS AND OTHER MATTERS
Stockholder proposals for inclusion in the Company's proxy materials
for the 2001 Annual Meeting of Stockholders must be received by the Company at
its offices at 777 Post Oak Boulevard, Suite 800, Houston, Texas, addressed to
the Secretary of the Company, not less than 120 days in advance of the date
(month and day only) this Proxy Statement is first distributed to stockholders;
provided, that if the 2001 Annual Meeting of Stockholders is changed by more
than 30 days from the presently contemplated date, proposals must be so
received a reasonable time in advance of the meeting.
The board of directors does not intend to present any other matters
at the meeting and knows of no other matters that will be presented; however,
if any other matter properly comes before the meeting, the persons named in the
enclosed proxy intend to vote thereon according to their best judgment.
INDEPENDENT AUDITORS
The board of directors has retained the firm of Arthur Andersen
LLP("AA"), independent certified public accountants, to serve as auditors for
the fiscal year ending December 31, 2000. AA has served as the Company's
accountants since January 1999. It is expected that a member of AA will be
present at the meeting with the opportunity to make a statement if so desired
and will be available to respond to appropriate questions.
25
<PAGE> 29
ANNUAL REPORT
The Company has provided without charge to each person whose proxy
is solicited hereby a copy of the 1999 Annual Report of the Company, which
includes the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1999 (including the consolidated financial statements) filed with
the SEC. Additional copies of the Annual Report may be obtained without charge
upon written request to the Company, Boots & Coots International Well Control,
Inc., 777 Post Oak Boulevard, Suite 800, Houston, Texas 77056 Attention:
Corporate Secretary.
By Order of the Board of Directors
Larry H. Ramming, Chairman of the Board
and Chief Executive Officer
26
<PAGE> 30
APPENDIX A
BOOTS & COOTS INTERNATIONAL WELL CONTROL, INC.
2000 LONG TERM INCENTIVE PLAN
1. PURPOSE OF THE PLAN
This 2000 Long Term Incentive Plan is intended to promote the
interests of Boots & Coots International Well Control, Inc., a Delaware
corporation (the "Company"), by providing the employees and consultants of the
Company, who are largely responsible for the management, growth and protection
of the business of the Company, with a proprietary interest in the Company.
2. DEFINITIONS
As used in the Plan, the following definitions apply to the terms
indicated below:
(a) "Board of Directors" shall mean the Board of
Directors of the Company.
(b) "Cause," when used in connection with the termination
of a Participant's employment or service (in the case of a
consultant) with the Company, shall mean the termination of the
Participant's employment or service by the Company by reason of (i)
the conviction of the Participant by a court of competent
jurisdiction as to which no further appeal can be taken of a crime
involving moral turpitude; (ii) the proven commission by the
Participant of an act of fraud upon the Company; (iii) the willful
and proven misappropriation of any funds or property of the Company
by the Participant; (iv) the willful, continued and unreasonable
failure by the Participant to perform duties assigned to him and
agreed to by him; (v) the knowing engagement by the Participant in
any direct, material conflict of interest with the Company without
compliance with the Company's conflict of interest policy, if any,
then in effect; (vi) the knowing engagement by the Participant,
without the written approval of the Board of Directors, in any
activity which competes with the business of the Company or which
would result in a material injury to the Company; or (vii) the
knowing engagement in any activity which would constitute a material
violation of the provisions of the Company's Policies and Procedures
Manual, if any, then in effect.
(c) "Cash Bonus" shall mean an award of a bonus payable
in cash pursuant to Section 10 hereof.
(d) "Change in Control" shall mean:
(i) a "change in control" of the Company, as
that term is contemplated in the federal securities
laws; or
(ii) the occurrence of any of the following
events:
(A) any Person becomes,
after the effective date of this
Plan the "beneficial owner" (as
defined in Rule 13d-3 promulgated
<PAGE> 31
under the Exchange Act), directly or
indirectly, of securities of the
Company representing 20% or more of
the combined voting power of the
Company's then outstanding
securities; provided, that the
acquisition of additional voting
securities, after the effective date
of this Plan, by any Person who is,
as of the effective date of this
Plan, the beneficial owner, directly
or indirectly, of 20% or more of the
combined voting power of the
Company's then outstanding
securities, shall not constitute a
"Change in Control" of the Company
for purposes of this Section 2(d)
(B) a majority of
individuals who are nominated by the
Board of Directors for election to
the Board of Directors on any date,
fail to be elected to the Board of
Directors as a direct or indirect
result of any proxy fight or
contested election for positions on
the Board of Directors, or
(C) the sale, lease,
transfer or other disposition of all
or substantially all of the assets of
the Company (other than to a
wholly-owned subsidiary of the
Company).
(e) "Code" shall mean the Internal Revenue Code of 1986,
as amended from time to time.
(f) "Committee" shall mean the Compensation Committee of
the Board of Directors or such other committee as the Board of
Directors shall appoint from time to time to administer the Plan.
(g) "Common Stock" shall mean the Company's Common Stock,
par value $.00001 per share.
(h) "Company" shall mean Boots & Coots International Well
Control, Inc., a Delaware corporation, each of its Subsidiaries,
and its successors.
(i) "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended from time to time.
(j) The "Fair Market Value" of a share of Common Stock on
any date shall be (i) the closing sale price on the immediately
preceding business day of a share of Common Stock as reported on the
principal securities exchange on which shares of Common Stock are
then listed or admitted to trading or (ii) if not so reported, the
average of the closing bid and asked prices for a share of Common
Stock on the immediately preceding business day as quoted on the
National Association of Securities Dealers Automated Quotation
System ("NASDAQ"), or (iii) if not quoted on NASDAQ, the average of
the closing bid and asked prices for a share of Common Stock as
quoted by the National Quotation Bureau's "Pink Sheets" or the
National Association of Securities Dealers' OTC Bulletin Board
System. If the price of a share of Common Stock shall not be so
reported, the Fair Market Value of a share of Common Stock shall be
determined by the Committee in its absolute discretion.
<PAGE> 32
(k) "Incentive Award" shall mean an Option, a share of
Restricted Stock, a share of Phantom Stock, a Stock Bonus or Cash
Bonus granted pursuant to the terms of the Plan.
(l) "Incentive Stock Option" shall mean an Option which is
an "incentive stock option" within the meaning of Section 422 of the
Code and which is identified as an Incentive Stock Option in the
agreement by which it is evidenced.
(m) "Issue Date" shall mean the date established by the
Committee on which certificates representing shares of Restricted
Stock shall be issued by the Company pursuant to the terms of
Section 7(d) hereof.
(n) "Non-Qualified Stock Option" shall mean an Option
which is not an Incentive Stock Option and which is identified as a
Non-Qualified Stock Option in the agreement by which it is
evidenced.
(o) "Option" shall mean an option to purchase shares of
Common Stock of the Company granted pursuant to Section 6 hereof.
Each Option shall be identified as either an Incentive Stock Option
or a Non-Qualified Stock Option in the agreement by which it is
evidenced.
(p) "Participant" shall mean a full-time employee or a
consultant (whether full or part time) of the Company who is
eligible to participate in the Plan and to whom an Incentive Award
is granted pursuant to the Plan.
(q) "Person" shall mean a "person," as such term is used
in Sections 13(d) and 14(d) of the Exchange Act, and the rules and
regulations in effect from time to time thereunder.
(r) A share of "Phantom Stock" shall represent the right
to receive in cash the Fair Market Value of a share of Common Stock
of the Company, which right is granted pursuant to Section 8 hereof
and subject to the terms and conditions contained therein.
(s) "Plan" shall mean the Boots & Coots International
Well Control, Inc. 2000 Long Term Incentive Plan, as amended from
time to time.
(t) "Qualified Domestic Relations Order" shall mean a
qualified domestic relations order as defined in the Code, in Title
I of the Employee Retirement Income Security Act, or in the rules
and regulations as may be in effect from time to time thereunder.
(u) A share of "Restricted Stock" shall mean a share of
Common Stock which is granted pursuant to the terms of Section 7
hereof and which is subject to the restrictions set forth in Section
7(c) hereof for so long as such restrictions continue to apply to
such share.
(v) "Securities Act" shall mean the Securities Act of
1933, as amended from time to time.
(w) "Stock Bonus" shall mean a grant of a bonus payable in
shares of Common Stock pursuant to Section 9 hereof.
<PAGE> 33
(x) "Subsidiary" or "Subsidiaries" shall mean any and all
corporations in which at the pertinent time the Company owns,
directly or indirectly, stock vested with 50% or more of the total
combined voting power of all classes of stock of such corporations
within the meaning of Section 424(f) of the Code.
(y) "Vesting Date" shall mean the date established by the
Committee on which a share of Restricted Stock or Phantom Stock may
vest.
3. STOCK SUBJECT TO THE PLAN
Under the Plan, the Committee may grant to Participants (i) Options,
(ii) shares of Restricted Stock, (iii) shares of Phantom Stock, (iv) Stock
Bonuses and (v) Cash Bonuses.
The Committee may grant Options, shares of Restricted Stock, shares
of Phantom Stock and Stock Bonuses under the Plan with respect to a number of
shares of Common Stock that in the aggregate at any time does not exceed
6,000,000 shares of Common Stock; provided, however, that the maximum number of
shares of Common Stock for which Options may be granted under the Plan to any
one Participant during a calendar year shall be 1,000,000.
The grant of a Cash Bonus shall not reduce the number of shares of
Common Stock with respect to which Options, shares of Restricted Stock, shares
of Phantom Stock or Stock Bonuses may be granted pursuant to the Plan.
If any outstanding Option expires, terminates or is canceled for any
reason, the shares of Common Stock subject to the unexercised portion of such
Option shall again be available for grant under the Plan. If any shares of
Restricted Stock or Phantom Stock, or any shares of Common Stock granted in a
Stock Bonus are forfeited or canceled for any reason, such shares shall again
be available for grant under the Plan.
Shares of Common Stock issued under the Plan may be either newly
issued or treasury shares, at the discretion of the Committee.
4. ADMINISTRATION OF THE PLAN
The Plan shall be administered by a Committee of the Board of
Directors consisting of two or more persons, all of whom shall be both (i) a
"Non-Employee Director" within the meaning of Rule 16b-3 promulgated under the
Exchange Act and (ii) an "outside director" within the meaning of the
definition of such term as contained in Treasury Regulation Section
1.162-27(e)(3) interpreting Section 162(m) of the Code, or any successor
definitions that may be adopted. The members of the Committee shall be
appointed from time to time by, and shall serve at the discretion of, the Board
of Directors. The Committee shall from time to time designate the employees and
consultants of the Company who shall be granted Incentive Awards and the amount
and type of such Incentive Awards.
The Committee shall have full authority to administer the Plan,
including authority to interpret and construe any provision of the Plan and the
terms of any Incentive Award issued under it and to adopt such rules and
regulations for administering the Plan as it may deem necessary. Decisions of
the Committee shall be final and binding on all parties.
<PAGE> 34
The Committee may, in its absolute discretion (i) accelerate the
date on which any Option granted under the Plan becomes exercisable, (ii)
extend the date on which any Option granted under the Plan ceases to be
exercisable, (iii) accelerate the Vesting Date or Issue Date, or waive any
condition imposed pursuant to Section 7(b) hereof, with respect to any share of
Restricted Stock granted under the Plan and (iv) accelerate the Vesting Date or
waive any condition imposed pursuant to Section 8 hereof, with respect to any
share of Phantom Stock granted under the Plan.
In addition, the Committee may, in its absolute discretion, grant
Incentive Awards to Participants on the condition that such Participants
surrender to the Committee for cancellation such other Incentive Awards
(including, without limitation, Incentive Awards with higher exercise prices)
as the Committee specifies. Notwithstanding Section 3 hereof, Incentive Awards
granted on the condition of surrender of outstanding Incentive Awards shall not
count against the limits set forth in such Section 3 until such time as such
Incentive Awards are surrendered.
Whether an authorized leave of absence, or absence in military or
government service, shall constitute termination of employment or service shall
be determined by the Committee in its absolute discretion.
No member of the Committee shall be liable for any action, omission,
or determination relating to the Plan, and the Company shall indemnify and hold
harmless each member of the Committee and each other director or employee of
the Company to whom any duty or power relating to the administration or
interpretation of the Plan has been delegated from and against any cost or
expense (including attorneys' fees) or liability (including any sum paid in
settlement of a claim with the approval of the Committee) arising out of any
action, omission or determination relating to the Plan, unless, in either case,
such action, omission or determination was taken or made by such member,
director or employee in bad faith and without reasonable belief that it was in
the best interests of the Company.
5. ELIGIBILITY
The persons who shall be eligible to receive Incentive Awards
pursuant to the Plan shall be such full-time employees and consultants (whether
full or part time) of the Company as the Committee, in its absolute discretion,
shall select from time to time. Notwithstanding the generality of the
foregoing, no employee or consultant of the Company shall be eligible to
receive Incentive Awards pursuant to this Plan if such person is also entitled
to receive an Incentive Award under the terms of his employment or consulting
agreement with the Company, or any specialty long term incentive plan or
incentive stock plan adopted after the date hereof, unless such employment or
consulting agreement or specialty plan expressly provides otherwise.
6. OPTIONS
The Committee may grant Options pursuant to the Plan, which Options
shall be evidenced by agreements in such form as the Committee shall from time
to time approve. Options shall comply with and be subject to the following
terms and conditions:
(a) Identification of Options
<PAGE> 35
All Options granted under the Plan shall be clearly
identified in the agreement evidencing such Options as
either Incentive Stock Options or as Non-Qualified Stock
Options. Consultants shall not be entitled to receive
Incentive Stock Options.
(b) Exercise Price
The exercise price of any Non-Qualified Stock Option
granted under the Plan shall be such price as the
Committee shall determine on the date on which such Non-
Qualified Stock Option is granted; provided, that such
price may not be less than the greater of (i) 25% of the
Fair Market Value of a share of Common Stock on the date
on which such Non-Qualified Stock Option is granted or
(ii) the minimum price required by law. Except as provided
in Section 6(d) hereof, the exercise price of any
Incentive Stock Option granted under the Plan shall be not
less than 100% of the Fair Market Value of a share of
Common Stock on the date on which such Incentive Stock
Option is granted.
(c) Term and Exercise of Options
(1) Each Option shall be exercisable on such date or
dates, during such period and for such number of
shares of Common Stock as shall be determined by
the Committee on the day on which such Option is
granted and set forth in the agreement
evidencing the Option; provided, however, that
no Option shall be exercisable after the
expiration of ten years from the date such
Option was granted; and, provided, further, that
each Option shall be subject to earlier
termination, expiration or cancellation as
provided in the Plan.
(2) Each Option shall be exercisable in whole or in
part with respect to whole shares of Common
Stock. The partial exercise of an Option shall
not cause the expiration, termination or
cancellation of the remaining portion thereof.
Upon the partial exercise of an Option, the
agreement evidencing such Option shall be
returned to the Participant exercising such
Option together with the delivery of the
certificates described in Section 6(c)(5)
hereof.
(3) An Option shall be exercised by delivering
notice to the Company's principal office, to the
attention of its Secretary, no fewer than five
business days in advance of the effective date
of the proposed exercise. Such notice shall be
accompanied by the agreement evidencing the
Option, shall specify the number of shares of
Common Stock with respect to which the Option is
being exercised and the effective date of the
proposed exercise, and shall be signed by the
Participant. The Participant may withdraw such
notice at any time prior to the close of
business on the business day immediately
preceding the effective date of the proposed
exercise, in which case such agreement shall be
returned to the Participant. Payment for shares
of Common Stock purchased upon the exercise of
an Option shall be made on the effective date of
such exercise either (i) in cash, by certified
check, bank cashier's check or wire transfer or
(ii) subject to the approval of the Committee,
by tendering previously acquired nonforfeitable,
unrestricted shares of Common Stock that have
been held by the Participant for at least six
months and that have an
<PAGE> 36
aggregate Fair Market Value at the time of
exercise equal to the total exercise price
(including an actual or deemed multiple series
of exchanges of such shares), or (iii) partly in
shares of Common Stock with the balance in cash,
by certified check, bank cashier's check or wire
transfer. Any payment in shares of Common Stock
shall be effected by the 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 and evidences as the Secretary of the
Company shall require from time to time.
(4) Any Option granted under the Plan may be
exercised by a broker-dealer acting on behalf of
a Participant if (i) the broker-dealer has
received from the Participant or the Company a
duly endorsed agreement evidencing such Option
and instructions signed by the Participant
requesting the Company to deliver the shares of
Common Stock subject to such Option to the
broker- dealer on behalf of the Participant and
specifying the account into which such shares
should be deposited, (ii) adequate provision has
been made with respect to the payment of any
withholding taxes due upon such exercise, and
(iii) the broker-dealer and the Participant have
otherwise complied with Section 220.3(e)(4) of
Regulation T, 12 CFR Part 220.
(5) Certificates for shares of Common Stock
purchased upon the exercise of an Option shall
be issued in the name of the Participant and
delivered to the Participant as soon as
practicable following the effective date on
which the Option is exercised; provided,
however, that such delivery shall be effected
for all purposes when a stock transfer agent of
the Company shall have deposited such
certificates in the United States mail,
addressed to the Participant.
(6) During the lifetime of a Participant each Option
granted to him shall be exercisable only by him.
No Option shall be assignable or transferable
otherwise than by will or by the laws of descent
and distribution.
(d) Limitations on Grant of Incentive Stock Options
(1) The aggregate Fair Market Value of shares of
Common Stock with respect to which "incentive
stock options" (within the meaning of Section
422, without regard to Section 422(d) of the
Code) are exercisable for the first time by a
Participant during any calendar year under the
Plan (and any other stock option plan of the
Company, or any subsidiary of the Company) shall
not exceed $100,000. Such Fair Market Value
shall be determined as of the date on which each
such Incentive Stock Option is granted. If such
aggregate Fair Market Value of shares of Common
Stock underlying such Incentive Stock Options
exceeds $100,000, then Incentive Stock Options
granted hereunder to such Participant shall, to
the extent and in the order required by
Regulations promulgated under the Code (or any
other authority having the force of
Regulations), automatically be deemed to be
Non-Qualified Stock Options, but all other terms
and provisions of such Incentive Stock Options
shall remain unchanged. In the absence of such
Regulations (and authority),
<PAGE> 37
or if such Regulations (or authority) require or
permit a designation of the options which shall
cease to constitute Incentive Stock Options,
Incentive Stock Options shall, to the extent of
such excess and in the order in which they were
granted, automatically be deemed to be
Non-Qualified Stock Options, but all other terms
and provisions of such Incentive Stock Options
shall remain unchanged.
(2) No Incentive Stock Option may be granted to an
individual if, at the time of the proposed
grant, such individual owns, directly or
indirectly (based on the attribution rules in
Section 424(d) of the Code) stock possessing
more than ten percent of the total combined
voting power of all classes of stock of the
Company or any of its subsidiaries, unless (i)
the exercise price of such Incentive Stock
Option is at least 110% of the Fair Market Value
of a share of Common Stock at the time such
Incentive Stock Option is granted and (ii) such
Incentive Stock Option is not exercisable after
the expiration of five years from the date such
Incentive Stock Option is granted.
(e) Effect of Termination of Employment or Service
(1) If the employment or service of a Participant
with the Company shall terminate for any reason
other than Cause, "permanent and total
disability" (within the meaning of Section
22(e)(3) of the Code), the voluntary retirement
of an employee in accordance with the Company's
retirement policy as then in effect, the death
of the Participant, then (i) Options granted to
such Participant, to the extent that they were
exercisable at the time of such termination,
shall remain exercisable until the expiration of
one month after such termination, on which date
they shall expire, and (ii) Options granted to
such Participant, to the extent that they were
not exercisable at the time of such termination,
shall expire at the close of business on the
date of such termination; provided, however,
that no Option shall be exercisable after the
expiration of its term.
(2) If the employment or service of a Participant
with the Company shall terminate as a result of
the "permanent and total disability" (within the
meaning of Section 22(e)(3) of the Code) of the
Participant, the voluntary retirement of an
employee in accordance with the Company's
retirement policy as then in effect, or the
death of the Participant, then (i) Options
granted to such Participant, to the extent that
they were exercisable at the time of such
termination, shall remain exercisable until the
expiration of one year after such termination,
on which date they shall expire, and (ii)
Options granted to such Participant, to the
extent that they were not exercisable at the
time of such termination, shall expire at the
close of business on the date of such
termination; provided, however, that no Option
shall be exercisable after the expiration of its
term.
(3) In the event of the termination of a
Participant's employment or service for Cause,
all outstanding Options granted to such
Participant shall expire at the commencement of
business on the date of such termination.
<PAGE> 38
(f) Acceleration of Exercise Date Upon Change in Control
Upon the occurrence of a Change in Control, each Option
granted under the Plan and outstanding at such time shall
become fully and immediately exercisable and shall remain
exercisable until its expiration, termination or
cancellation pursuant to the terms of the Plan.
7. RESTRICTED STOCK
The Committee may grant shares of Restricted Stock pursuant to the
Plan. Each grant of shares of Restricted Stock shall be evidenced by an
agreement in such form as the Committee shall from time to time approve. Each
grant of shares of Restricted Stock shall comply with and be subject to the
following terms and conditions:
(a) Issue Date and Vesting Date
At the time of the grant of shares of Restricted Stock,
the Committee shall establish an Issue Date or Issue Dates
and a Vesting Date or Vesting Dates with respect to such
shares. The Committee may divide such shares into classes
and assign a different Issue Date and/or Vesting Date for
each class. Except as provided in Sections 7(c) and 7(f)
hereof, upon the occurrence of the Issue Date with respect
to a share of Restricted Stock, a share of Restricted
Stock shall be issued in accordance with the provisions of
Section 7(d) hereof. Provided that all conditions to the
vesting of a share of Restricted Stock imposed pursuant to
Section 7(b) hereof are satisfied, and except as provided
in Sections 7(c) and 7(f) hereof, upon the occurrence of
the Vesting Date with respect to a share of Restricted
Stock, such share shall vest and the restrictions of
Section 7(c) hereof shall cease to apply to such share.
(b) Conditions to Vesting
At the time of the grant of shares of Restricted Stock,
the Committee may impose such restrictions or conditions,
not inconsistent with the provisions hereof, to the
vesting of such shares as it in its absolute discretion
deems appropriate. By way of example and not by way of
limitation, the Committee may require, as a condition to
the vesting of any class or classes of shares of
Restricted Stock, that the Participant or the Company
achieve certain performance criteria, such criteria to be
specified by the Committee at the time of the grant of
such shares.
(c) Restrictions on Transfer Prior to Vesting
Prior to the vesting of a share of Restricted Stock, no
transfer of a Participant's rights with respect to such
share, whether voluntary or involuntary, by operation of
law or otherwise, shall vest the transferee with any
interest or right in or with respect to such share, but
immediately upon any attempt to transfer such rights, such
share, and all of the rights related thereto, shall be
forfeited by the Participant and the transfer shall be of
no force or effect.
(d) Issuance of Certificates
<PAGE> 39
(1) Except as provided in Sections 7(c) or 7(f)
hereof, reasonably promptly after the Issue Date
with respect to shares of Restricted Stock, the
Company shall cause to be issued a stock
certificate, registered in the name of the
Participant to whom such shares were granted,
evidencing such shares; provided, however, that
the Company shall not cause to be issued such a
stock certificates unless it has received a
stock power duly endorsed in blank with respect
to such shares. Each such stock certificate
shall bear the following legend:
The transferability of this
certificate and the shares of stock
represented hereby are subject to the
restrictions, terms and conditions
(including forfeiture and
restrictions against transfer)
contained in the Boots & Coots
International Well Control, Inc.--
2000 Long Term Incentive Plan and an
Agreement entered into between the
registered owner of such shares and
Boots & Coots International Well
Control, Inc. A copy of the Plan and
Agreement is on file in the office of
the Secretary of Boots & Coots
International Well Control, Inc., 777
Post Oak Blvd., Suite 800, Houston,
Texas 77056.
Such legend shall not be removed from the
certificate evidencing such shares until such
shares vest pursuant to the terms hereof.
(2) Each certificate issued pursuant to Paragraph 7
(d)(1) hereof, together with the stock powers
relating to the shares of Restricted Stock
evidenced by such certificate, shall be held by
the Company. The Company shall issue to the
Participant a receipt evidencing the
certificates held by it which are registered in
the name of the Participant.
(e) Consequences Upon Vesting
Upon the vesting of a share of Restricted Stock pursuant
to the terms hereof, the restrictions of Section 7(c)
hereof shall cease to apply to such share. Reasonably
promptly after a share of Restricted Stock vests pursuant
to the terms hereof, the Company shall cause to be issued
and delivered to the Participant to whom such shares were
granted, a certificate evidencing such share, free of the
legend set forth in Paragraph 7 (d)(1) hereof, together
with any other property of the Participant held by Company
pursuant to Section 7(d) hereof; provided, however, that
such delivery shall be effected for all purposes when the
Company shall have deposited such certificate and other
property in the United States mail, addressed to the
Participant.
(f) Effect of Termination of Employment or Service
(1) If the employment or service of a Participant
with the Company shall terminate for any reason
other than Cause prior to the vesting of shares
of Restricted Stock granted to such Participant,
a portion of such shares, to the extent not
forfeited or canceled on or prior to such
termination pursuant to any provision hereof,
shall vest on the date of such termination. The
portion
<PAGE> 40
referred to in the preceding sentence shall be
determined by the Committee at the time of the
grant of such shares of Restricted Stock and may
be based on the achievement of any conditions
imposed by the Committee with respect to such
shares pursuant to Section 7(b). Such portion
may equal zero.
(2) In the event of the termination of a
Participant's employment or service for Cause,
all shares of Restricted Stock granted to such
Participant which have not vested as of the date
of such termination shall immediately be
forfeited.
(g) Effect of Change in Control
Upon the occurrence of a Change in Control, all shares of
Restricted Stock which have not theretofore vested
(including those with respect to which the Issue Date has
not yet occurred) shall immediately vest.
8. PHANTOM STOCK
The Committee may grant shares of Phantom Stock pursuant to the
Plan. Each grant of shares of Phantom Stock shall be evidenced by an agreement
in such form as the Committee shall from time to time approve. Each grant of
shares of Phantom Stock shall comply with and be subject to the following terms
and conditions:
(a) Vesting Date
At the time of the grant of shares of Phantom Stock, the
Committee shall establish a Vesting Date or Vesting Dates
with respect to such shares. The Committee may divide such
shares into classes and assign a different Vesting Date
for each class. Provided that all conditions to the
vesting of a share of Phantom Stock imposed pursuant to
Section 8(c) hereof are satisfied, and except as provided
in Section 8(d) hereof, upon the occurrence of the Vesting
Date with respect to a share of Phantom Stock, such share
shall vest.
(b) Benefit Upon Vesting
Upon the vesting of a share of Phantom Stock, a
Participant shall be entitled to receive in cash, within
90 days of the date on which such share vests, an amount
in cash in a lump sum equal to the sum of (i) the Fair
Market Value of a share of Common Stock of the Company on
the date on which such share of Phantom Stock vests and
(ii) the aggregate amount of cash dividends paid with
respect to a share of Common Stock of the Company during
the period commencing on the date on which the share of
Phantom Stock was granted and terminating on the date on
which such share vests.
(c) Conditions to Vesting
At the time of the grant of shares of Phantom Stock, the
Committee may impose such restrictions or conditions, not
inconsistent with the provisions hereof, to the vesting of
such shares as it, in its absolute discretion deems
appropriate. By way of example
<PAGE> 41
and not by way of limitation, the Committee may require,
as a condition to the vesting of any class or classes of
shares of Phantom Stock, that the Participant or the
Company achieve certain performance criteria, such
criteria to be specified by the Committee at the time of
the grant of such shares.
(d) Effect of Termination of Employment or Service
(1) If the employment or service of a Participant
with the Company shall terminate for any reason
other than Cause prior to the vesting of shares
of Phantom Stock granted to such Participant a
portion of such shares, to the extent not
forfeited or canceled on or prior to such
termination pursuant to any provision hereof,
shall vest on the date of such termination. The
portion referred to in the preceding sentence
shall be determined by the Committee at the time
of the grant of such shares of Phantom Stock and
may be based on the achievement of any
conditions imposed by the Committee with respect
to such shares pursuant to Section 8(c). Such
portion may equal zero.
(2) In the event of the termination of a
Participant's employment or service for Cause,
all shares of Phantom Stock granted to such
Participant which have not vested as of the date
of such termination shall immediately be
forfeited.
(e) Effect of Change in Control
Upon the occurrence of a Change in Control, all shares of
Phantom Stock which have not theretofore vested shall
immediately vest.
9. STOCK BONUSES
The Committee may, in its absolute discretion, grant Stock Bonuses
in such amounts as it shall determine from time to time. A Stock Bonus shall be
paid at such time and subject to such conditions as the Committee shall
determine at the time of the grant of such Stock Bonus. Certificates for shares
of Common Stock granted as a Stock Bonus shall be issued in the name of the
Participant to whom such grant was made and delivered to such Participant as
soon as practicable after the date on which such Stock Bonus is required to be
paid.
10. CASH BONUSES
The Committee may, in its absolute discretion, grant in connection
with any grant of Restricted Stock or Stock Bonus or at any time thereafter, a
cash bonus, payable promptly after the date on which the Participant is
required to recognize income for federal income tax purposes in connection with
such Restricted Stock or Stock Bonus, in such amounts as the Committee shall
determine from time to time; provided, however, that in no event shall the
amount of a Cash Bonus exceed the Fair Market Value of the related shares of
Restricted Stock or Stock Bonus on such date. A Cash Bonus shall be subject to
such conditions as the Committee shall determine at the time of the grant of
such Cash Bonus.
<PAGE> 42
11. ADJUSTMENT UPON CHANGES IN COMMON STOCK
(a) Outstanding Restricted Stock and Phantom Stock
Unless the Committee in its absolute discretion otherwise
determines, if a Participant receives any securities or
other property (including dividends paid in cash) with
respect to a share of Restricted Stock, the Issue Date
with respect to which occurs prior to such event, but
which has not vested as of the date of such event, as a
result of any dividend, stock split recapitalization,
merger, consolidation, combination, exchange of shares or
otherwise, such securities or other property will not vest
until such share of Restricted Stock vests, and shall be
held by the Company pursuant to Paragraph 7 (d) (2)
hereof. The Committee may, in its absolute discretion,
adjust any grant of shares of Restricted Stock, the Issue
Date with respect to which has not occurred as of the date
of the occurrence of any of the following events, or any
grant of shares of Phantom Stock, to reflect any dividend,
stock split, recapitalization, merger, consolidation,
combination, exchange of shares or similar corporate
change as the Committee may deem appropriate to prevent
the enlargement or dilution of rights of Participants
under the grant.
(b) Outstanding Options, Increase or Decrease in Issued
Shares Without Consideration.
Subject to any required action by the shareholders of the
Company, in the event of any increase or decrease in the
number of issued shares of Common Stock resulting from a
subdivision or consolidation of shares of Common Stock or
the payment of a stock dividend (but only on the shares of
Common Stock), or any other increase or decrease in the
number of such shares effected without receipt of
consideration by the Company, the Committee shall
proportionally adjust the number of shares and the
exercise price per share of Common Stock subject to each
outstanding Option.
(c) Outstanding Options, Certain Mergers
Subject to any required action by the shareholders of the
Company, if the Company shall be the surviving corporation
in any merger or consolidation (except a merger of
consolidation as a result of which the holders of shares
of Common Stock receive securities of another
corporation), each Option outstanding on the date of such
merger or consolidation shall entitle the Participant to
acquire upon exercise the securities which a holder of the
number of shares of Common Stock subject to such Option
would have received in such merger or consolidation.
(d) Outstanding Options, Certain Other Transactions
In the event of a dissolution or liquidation of the
Company, a sale of all or substantially all of the
Company's assets, a merger or consolidation involving the
Company in which the Company is not the surviving
corporation or a merger or consolidation involving the
Company in which the Company is the surviving corporation
but the holders of shares of Common Stock receive
securities of another
<PAGE> 43
corporation and/or other property, including cash, the
Committee shall, in its absolute discretion, have the
power to:
(1) cancel, effective immediately prior to the
occurrence of such event, each Option
outstanding immediately prior to such event
(whether or not then exercisable), and, in full
consideration of such cancellation, pay to the
Participant to whom such Option was granted an
amount in cash, for each share of Common Stock
subject to such Option equal to the excess of
(A) the value, as determined by the Committee in
its absolute discretion, of the property
(including cash) received by the holder of a
share of Common Stock as a result of such event
over (B) the exercise price of such Option; or
(2) provide for the exchange of each Option
outstanding immediately prior to such event
(whether or not then exercisable) for an option
on some or all of the property for which such
Option is exchanged and, incident thereto, make
an equitable adjustment as determined by the
Committee in its absolute discretion in the
exercise price of the option, or the number of
shares or amount of property subject to the
option or, if appropriate, provide for a cash
payment to the Participant to whom such Option
was granted in partial consideration for the
exchange of the Option.
(e) Outstanding Options/Other Changes
In the event of any change in the capitalization of the
Company or corporate change other than those specifically
referred to in Sections 11(b), (c) or (d) hereof, the
Committee may, in its absolute discretion, make such
adjustments in the number and class of shares subject to
Options outstanding on the date on which such change
occurs and in the per share exercise price of each such
Option as the Committee may consider appropriate to
prevent dilution or enlargement of rights.
(f) No Other Rights
Except as expressly provided in the Plan, no Participant
shall have any rights by reason of any subdivision or
consolidation of shares of stock of any class, the payment
of any dividend, any increase or decrease in the number of
shares of stock of any class or any dissolution,
liquidation, merger or consolidation of the Company or any
other corporation. Except as expressly provided in the
Plan, no issuance by the Company of shares of stock of any
class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason
thereof shall be made with respect to, the number of
shares of Common Stock subject to an Incentive Award or
the exercise price of any Option.
12. RIGHTS AS A SHAREHOLDER
No person shall have any rights as a shareholder with respect to any
shares of Common Stock covered by or relating to any Incentive Award granted
pursuant to this Plan until the date of the issuance of a stock certificate
with respect to such shares. Except as otherwise expressly provided
<PAGE> 44
in Section 11 hereof, no adjustment to any Incentive Award shall be made for
dividends or other rights for which the record date occurs prior to the date
such stock certificate is issued.
13. NO SPECIAL EMPLOYMENT RIGHTS; NO RIGHT TO INCENTIVE AWARD
Nothing contained in the Plan or any Incentive Award shall confer
upon any Participant any right with respect to the continuation of his
employment or service by the Company or interfere in any way with the right of
the Company, subject to the terms of any separate employment or consulting
agreement to the contrary, at any time to terminate such employment or service
or to increase or decrease the compensation of the Participant from the rate in
existence at the time of the grant of an Incentive Award.
No person shall have any claim or right to receive an Incentive
Award hereunder. The Committee's granting of an Incentive Award to a
Participant at any time shall neither require the Committee to grant an
Incentive Award to such Participant or any other Participant or other person at
any time nor preclude the Committee from making subsequent grants to such
Participant or any other Participant or other person.
14. SECURITIES MATTERS
(a) The Company shall be under no obligation to effect the
registration pursuant to the Securities Act of any shares of Common
Stock to be issued hereunder or to effect similar compliance under
any state laws. Notwithstanding anything herein to the contrary, the
Company shall not be obligated to cause to be issued or delivered
any certificates evidencing shares of Common Stock pursuant to the
Plan unless and until the Company is advised by its counsel that the
issuance and delivery of such certificates is in compliance with all
applicable laws, regulations of governmental authority and the
requirements of any securities exchange on which shares of Common
Stock are traded. The Committee may require, as a condition of the
issuance and delivery of certificates evidencing shares of Common
Stock pursuant to the terms hereof, that the recipient of such
shares make such covenants, agreements and representations, and that
such certificates bear such legends, as the Committee, in its sole
discretion, deems necessary or desirable.
(b) The exercise of any Option granted hereunder shall
only be effective at such time as counsel to the Company shall have
determined that the issuance and delivery of shares of Common Stock
pursuant to such exercise is in compliance with all applicable laws,
regulations of governmental authorities and the requirements of any
securities exchange on which shares of Common Stock are traded. The
Company may, in its sole discretion, defer the effectiveness of any
exercise of an Option granted hereunder in order to allow the
issuance of shares of Common Stock pursuant thereto to be made
pursuant to registration or an exemption from registration or other
methods for compliance available under federal or state securities
laws. The Company shall inform the Participant in writing of its
decision to defer the effectiveness of the exercise of an Option
granted hereunder. During the period that the effectiveness of the
exercise of an Option has been deferred, the Participant may, by
written notice, withdraw such exercise and obtain the refund of any
amount paid with respect thereto.
15. WITHHOLDING TAXES
<PAGE> 45
Whenever shares of Common Stock are to be issued upon the exercise
of an Option, the occurrence of the Issue Date or Vesting Date with respect to
a share of Restricted Stock or the payment of a Stock Bonus, the Company shall
have the right to require the Participant to remit to the Company in cash an
amount sufficient to satisfy federal, state and local withholding tax
requirements, if any, attributable to such exercise, occurrence or payment
prior to the delivery of any certificate or certificates for such shares. In
addition, upon the grant of a Cash Bonus or the making of a payment with
respect to a share of Phantom Stock, the Company shall have the right to
withhold from any cash payment required to be made pursuant thereto an amount
sufficient to satisfy the federal, state and local withholding tax
requirements, if any, attributable to such exercise or grant. No payment shall
be made and no shares of Common Stock shall be issued pursuant to any Incentive
Award unless and until the applicable tax withholding obligations have been
satisfied.
16. AMENDMENT OF THE PLAN
The Board of Directors may at any time suspend or discontinue the
Plan or revise or amend it in any respect whatsoever; provided, however, that
without approval of the shareholders no revision or amendment shall (i) except
as provided in Section 11 hereof, increase the number of shares of Common Stock
that may be issued as Incentive Options under the Plan, (ii) materially
increase the benefits accruing to individuals holding Incentive Awards granted
pursuant to the Plan or (iii) materially modify the requirements as to
eligibility for participation in the Plan.
17. NO OBLIGATION TO EXERCISE
The grant to a Participant of an Option shall impose no obligation
upon such Participant to exercise such Option.
18. TRANSFERS UPON DEATH
Upon the death of a Participant, outstanding Incentive Awards
granted to such Participant may be exercised only by the executors or
administrators of the Participant's estate or by any person or persons who
shall have acquired such right to exercise by will or by the laws of descent
and distribution. No transfer by will or the laws of descent and distribution
of any Incentive Award, or the right to exercise any Incentive Award, shall be
effective to bind the Company unless the Committee shall have been furnished
with (a) written notice thereof and with a copy of the will and/or such
evidence as the Committee may deem necessary to establish the validity of the
transfer and (b) an agreement by the transferee to comply with all the terms
and conditions of the Incentive Award that are or would have been applicable to
the Participant and to be bound by the acknowledgments made by the Participant
in connection with the grant of the Incentive Award.
19. EXPENSES AND RECEIPTS
The expenses of the Plan shall be paid by the Company. Any proceeds
received by the Company in connection with any Incentive Award will be used for
general corporate purposes.
20. FAILURE TO COMPLY
In addition to the remedies of the Company elsewhere provided for
herein, failure by a Participant to comply with any of the terms and conditions
of the Plan or the agreement executed by
<PAGE> 46
such Participant evidencing an Incentive Award, unless such failure is remedied
by such Participant within ten days after having been notified of such failure
by the Committee, shall be grounds for the cancellation and forfeiture of such
Incentive Award, in whole or in part as the Committee, in its absolute
discretion, may determine.
21. EFFECTIVE DATE AND TERM OF PLAN
The Plan was adopted by the Board of Directors effective September
5, 2000, subject to approval by the shareholders of the Company in accordance
with applicable law, the requirements of Sections 162(m) and 422 of the Code,
and the requirements of Rule 16b-3 under Section 16(b) of the Exchange Act. No
Incentive Award may be granted under the Plan after September 5, 2010.
Incentive Awards may be granted under the Plan at any time prior to the receipt
of such shareholder approval; provided, however, that each such grant shall be
subject to such approval. Without limitation on the foregoing, no Option may be
exercised prior to the receipt of such approval, no share certificate shall be
issued pursuant to a grant of Restricted Stock or Stock Bonus prior to the
receipt of such approval and no Cash Bonus or payment with respect to a share
of Phantom Stock shall be paid prior to the receipt of such approval. If the
Plan is not approved by the Company's shareholders, then the Plan and all
Incentive Awards then outstanding hereunder shall forthwith automatically
terminate and be of no force and effect.
<PAGE> 47
IN WITNESS WHEREOF, this Plan has been executed in Houston, Texas
this 5th day of September, 2000.
BOOTS & COOTS INTERNATIONAL WELL
CONTROL, INC.
By______________________________
Name:___________________________
Title:__________________________
<PAGE> 48
APPENDIX B
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS OF
BOOTS & COOTS INTERNATIONAL WELL CONTROL, INC.
CHARTER
I. PURPOSE
This Charter ("Charter") shall govern the operations of the Audit Committee
("Committee") of the Board of Directors ("Board") of Boots & Coots
International Well Control, Inc., a Delaware corporation ("Corporation"). The
purpose of the Charter is to assist and direct the Board in fulfilling its
oversight responsibilities by conducting thorough reviews of: financial
statements and reports provided by the Corporation to the government or to the
public; the Corporation's systems of internal controls regarding finance,
accounting, and the Corporation's auditing, accounting and financial reporting
processes generally. Consistent with this purpose, the Committee shall
encourage continuous improvement of, and shall foster adherence to, the
Corporation's policies, procedures and practices at all levels. The Committee's
primary responsibilities are to:
o Monitor the Corporation's financial reporting processes
and systems of internal controls regarding finance and
accounting.
o Monitor the independence and performance of the Corporation's
independent auditors.
o Provide an avenue of communication among the Board, the
independent auditors, and financial and senior management
of the Corporation.
In discharging its oversight role, the Committee is empowered to investigate
any matter brought to its attention with full access to all books, records,
facilities, and personnel of the Corporation and, for this purpose, to retain
on behalf of the Committee outside counsel or other experts.
II. COMPOSITION
The Committee shall be comprised of three or more directors. Except as provided
below, each member of the Committee shall be independent and free from any
relationship that, in the opinion of the Board, would interfere with the
exercise of that person's independent judgment as a member of the Committee,
and each member of the Committee shall meet all requirements for independence
promulgated by the American Stock Exchange, as applicable to the Corporation.
Notwithstanding the foregoing, one member of the Committee may be a person that
does not meet the independence requirements of the American Stock Exchange
provided that the Board determines it to be in the best interests of the
Corporation and its shareholders that such person serve on the Committee, and
the Board discloses the reasons for the determination in the Corporation's next
annual proxy statement.
Each member of the Committee shall be able to read and understand fundamental
financial statements, and at least one member shall have past employment
experience in finance or
<PAGE> 49
accounting, requisite professional certification in accounting, or comparable
experience or background that results in that member's financial
sophistication.
Members of the Committee shall be elected by the Board at the annual meeting of
the Board to serve until their successors are duly elected and qualified. If a
member is unable to serve a full term, the Board shall select a replacement.
Unless a Chairman is elected by the full Board, the members of the Committee
shall designate a Chairman by majority vote of the full Committee.
III. MEETINGS
The Committee shall meet at least four times annually, and more frequently as
circumstances dictate. The Committee, or its Chairman, shall communicate each
quarter with the independent auditors and management to review the
Corporation=s interim financial statements in accordance with Section V.2.,
below. The Committee shall meet at least annually with management and the
independent auditors in accordance with Section V.3., below. Such meetings and
communications shall be, either in person or by conference telephone call, and
shall be separate or together, at the discretion of the Committee.
IV. ACCOUNTABILITY
The independent auditor=s shall be ultimately accountable to the Board and the
Committee, as representatives of the Corporation's shareholders. The Committee
shall have ultimate authority and responsibility to select, evaluate, and,
where appropriate, replace the independent auditors.
V. RESPONSIBILITIES
The responsibility of the Committee shall be to oversee the Corporation=s
financial reporting process on behalf of the Board and to report the results of
such oversight activities to the Board and to the shareholders of the
Corporation. The responsibility of management is to prepare the Corporation=s
financial statements. The responsibility of the independent auditors is to
audit those financial statements. To fulfill its responsibilities the Committee
shall:
DOCUMENTS/REPORTS REVIEW
1. Review and reassess the adequacy of this Charter, at least annually, as
conditions dictate.
2. Prior to filing, review each Form 10-Q Quarterly Report for the
Corporation with management and the independent auditors, in accordance
with Statement on Auditing Standards No. 71 ("SAS No. 71"), and
considering Statement on Auditing Standards No. 61 ("SAS No. 61"), as
amended by SAS 90, as it relates to interim financial information.
3. Prior to filing, review and discuss the audited financial statements of
the Corporation with management and the independent auditors, with
specific attention to those matters required to be discussed by SAS No.
61, as amended by SAS 90.
<PAGE> 50
4. Receive that formal written statement required by Independence Standards
Board Standard No. 1 ("ISB Standard No. 1") from the independent auditors
and discuss with them that statement and their independence from
management and the Corporation.
5. Based on the review and discussions set forth above, determine whether to
recommend to the Board that the audited financial statements of the
Corporation be included in its Annual Report on Form 10-K for filing with
the Securities and Exchange Commission.
6. Ascertain whether the members of the Committee continue to be independent
(as heretofore defined) with respect to management and the Corporation.
7. Review as received the regular internal reports to management prepared by
the financial staff and discuss them with management as necessary.
8. Review the appointment and replacement of the senior internal audit
executive.
INDEPENDENT AUDITORS
9. Prior to commencement of work on the annual audit by the independent
auditors, discuss with them the overall scope and plan for their audit and
discuss with management and the independent auditors the adequacy and
effectiveness of the Corporation=s accounting and financial controls.
10. Review and recommend annually to the Board the selection of the
Corporation=s independent auditors.
FINANCIAL REPORTING PROCESSES
11. Review and discuss with the independent auditors their evaluation of the
Corporation=s financial reporting processes, both internal and external.
12. Review and discuss with the independent auditors= their judgment about the
quality and appropriateness of the Corporation=s accounting principles as
applied in its financial reporting.
PROCESS IMPROVEMENT
13. Review and discuss with the independent auditors and management the extent
to which changes or improvements in financial or accounting practices, as
approved by the Committee, have been or can be implemented.
<PAGE> 51
LEGAL MATTERS
14. Review, with the Corporation=s counsel (a) legal compliance matters and
(b) other legal matters that could have an impact on the Corporation=s
financial statements.
<PAGE> 52
PROXY
BOOTS & COOTS INTERNATIONAL WELL CONTROL, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF BOOTS & COOTS
INTERNATIONAL WELL CONTROL, INC.
The undersigned hereby appoints Larry H. Ramming and Jerry L.
Winchester, and each of them, as proxies for the undersigned, with full power
to appoint a substitute, and hereby authorizes each to represent and to vote,
as designated below, all shares of the (i) common stock, par value $.00001 per
share; (ii) 10% Junior Redeemable Convertible Preferred Stock, par value $.0001
per share; (iii) Series A Cumulative Senior Preferred Stock, par value $.0001
per share; (iv) Series B Convertible Preferred Stock, par value $.0001 per
share; (v) Series C Convertible Junior Preferred Stock, par value $.0001 per
share or (vi) Series D Cumulative Junior Preferred Stock, par value $.00001 per
share, of Boots & Coots International Well Control, Inc. (the "Company"), which
the undersigned is entitled to vote at the Annual Meeting of the Stockholders
of the Company to be held at the J.W. Marriott, 5150 Westheimer Road, Houston,
Texas 77056, on Wednesday, October 25, 2000, at 3:00 p.m., local time (the
"Meeting"), or at any and all postponements, continuations or adjournments
thereof.
Only holders of record of the Company's capital stock at the close
of business on September 7, 2000, will be entitled to notice of and to vote at
the Meeting or any adjournments thereof, notwithstanding the transfer of any
stock on the books of the Company after such record date. THIS PROXY WHEN
PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
THE PROPOSALS. In their discretion, proxies named above are authorized to vote
upon such other business as may properly come before the Meeting or any
adjournment or postponement thereof.
The Board recommends a vote FOR the proposals.
1. Proposal to elect eight directors into three classes of Directors to
serve as follows: three Class I directors for a term of one year,
three Class II directors for a term of two years and two Class III
directors for a term of three years or until their successors are
elected and qualified. The Board of Directors recommends a vote for
the following nominees: Class I: (1) Larry H. Ramming , (2) Edward J.
DiPaolo and (3) Thomas L. Easley; Class II: (4) Jerry L. Winchester,
(5) W. Richard Anderson and (6) Tracy S. Turner; and Class III: (7)
Brian Krause and (8) K. Kirk Krist.
FOR ALL NOMINEES [_] WITHHOLD ALL NOMINEES [_]
WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE THE
NUMBER(S) OF NOMINEE(S) BELOW [_]
Use Number Only: __________________________
2. Proposal to amend the Company's Amended and Restated Certificate of
Incorporation to:
(i) increase the number of authorized shares of common stock, par
value $.00001 per share, of the Company from 50,000,000 to 125,000,000
FOR [_] AGAINST [_] ABSTAIN [_]
and (ii) delete provisions that prohibit the issuance of shares of
Common Stock and Preferred Stock to officers, directors and 10%
stockholders without a vote of a majority in interest of the
disinterested stockholders of the Company.
FOR [_] AGAINST [_] ABSTAIN [_]
3. Proposal to approve the 2000 Long Term Incentive Plan.
FOR [_] AGAINST [_] ABSTAIN [_]
[_] Mark here for address change and note below.
<PAGE> 53
PLEASE READ INSTRUCTIONS ON THE REVERSE SIDE AND EXECUTE
Please sign below exactly as name appears on this Proxy Form. If
shares are registered in more than one name, the signatures of all such persons
are required. A corporation should sign in its full corporate name by a duly
authorized officer, stating his title. Trustees, guardians, executors and
administrators should sign in their official capacity, giving their full title
as such. If a partnership, please sign in the partnership name by authorized
persons.
The undersigned acknowledges receipt of the Notice of said Annual
Meeting and the Proxy Statement dated __________________, 2000 by signing this
proxy.
_ _
| | ----------------------------------
(Number of Shares)
(Paste mailing label from
Transfer Agent here)
--------------------------------------
(Signature of Stockholder)
|_ _|
Dated: ____________, 2000 --------------------------------------
(Additional Signatures, if held jointly)
--------------------------------------
(Title or Authority, if applicable)
Please mark boxes /X/ in ink. Sign, date and return this Proxy Form promptly
using the enclosed envelope.
Change of Address:
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