HWC ENERGY SERVICES, INC.
HYDRAULIC WELL CONTROL, LLC
c/o Oil States International, Inc.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
March 3, 2006
Boots & Xxxxx International Well Control, Inc.
HWC Acquisition, LLC
HWC Merger Corporation
c/o Boots & Xxxxx International Well Control, Inc.
00000 X. Xxxxxxx-Xxxxxxx
Xxxxxxx, Xxxxx 00000
Ladies and Gentlemen:
Reference is hereby made to that certain Transaction Agreement (the
"Transaction Agreement") dated as of November 21, 2005 by and among Boots &
Xxxxx International Well Control, Inc. ("Parent"), HWC Acquisition, LLC ("Merger
Sub"), HWC Merger Corporation ("Acquisition Sub"), Hydraulic Well Control, LLC
("HWC LLC") and HWC Energy Services, Inc. ("Seller"), pursuant to which, among
other things, Parent will acquire the Target Subsidiaries from Seller. Parent,
Merger Sub, Acquisition Sub, HWC LLC and Seller now desire to enter into this
letter agreement to evidence certain agreements relating to the transactions
contemplated by the Transaction Agreement (the "Transactions"). Capitalized
terms that are used but not defined herein shall have the meanings set forth in
the Transaction Agreement.
Pursuant to Section 7.5 of the Transaction Agreement, it is a condition to
the obligations of Seller and HWC LLC to consummate the Transactions that Parent
shall have taken all necessary corporate and other actions to increase the size
of the Board of Directors of Parent to a total of eight members and to appoint
(i) three individuals designated by Seller and reasonably acceptable to Parent
and (ii) one individual designated by Parent to replace an existing member of
Parent's Board of Directors, which person is reasonably acceptable to Seller,
with such appointments to be effective immediately following the Effective Time.
In connection with the Closing (which shall occur on the date of this
letter agreement) and pursuant to Section 7.5 of the Transaction Agreement,
Seller has designated Xxxxxxx X. Xxxxxxx and Xxxxx X. Xxxxxx (the "Designated
Individuals") to serve on Parent's Board of Directors and Parent has taken all
necessary corporate and other actions to appoint the Designated Individuals to
Parent's Board of Directors effective immediately following the Effective Time.
Parent has accepted the designation of the Designated Individuals for
appointment to Parent's Board of Directors, and Parent's Board of Directors has
determined that each of the Designated Individuals is independent of Parent for
purposes of service on Parent's Board of Directors in accordance with the
applicable listing standards of the American Stock Exchange (the "AMEX"). In
order to consummate the Closing on the date hereof, Seller hereby
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desires to waive its right to appoint a third individual for appointment to
Parent's Board of Directors at the Closing as contemplated by Section 7.5 of the
Transaction Agreement.
In consideration for such waiver and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Seller and Parent hereby agree as follows:
1. Director Designation. Following the Closing, Parent shall take all
necessary corporate and other actions to appoint one additional individual
designated by Seller and reasonably acceptable to Parent to Parent's Board of
Directors as promptly as practicable following the designation of such
individual by Seller. Seller shall make such designation no later than 12 months
from the date hereof. Notwithstanding the foregoing, Seller shall be entitled at
any time during such 12-month period to relinquish its right to designate such
additional individual for appointment to Parent's Board of Directors by
providing notice to Parent of such relinquishment in accordance with Section
11.1 of the Transaction Agreement. If Seller has not made such designation prior
to the expiration of such 12-month period, Seller shall be deemed to have
relinquished its right to designate such additional individual for appointment
to Parent's Board of Directors.
2. Working Capital Calculation. For purposes of calculating the working
capital adjustments contemplated by Section 2.1 of the Transaction Agreement,
(i) the Closing Date shall be deemed to be March 1, 2006 and the Closing shall
be deemed to have occurred at 12:00 a.m. Houston, Texas time on such date and
(ii) current assets attributable to foreign currencies shall be determined in
accordance with GAAP and consistent with Seller's past practices and otherwise
in accordance with the Transaction Agreement, including without limitation the
translation of such foreign currencies into U.S. dollars at locally mandated
exchange rates without any deduction or other adjustment. Any cash payments made
in respect of Working Capital as provided in Section 2.1 of the Transaction
Agreement shall be denominated in U.S. dollars.
3. IWC Merger.
(a) Immediately prior to the consummation of the HWC LLC Merger,
Parent shall cause IWC Services, Inc., a Texas corporation and wholly owned
subsidiary of Parent ("IWC"), to be converted into a Texas limited
liability company in accordance with the applicable provisions of the Texas
Business Corporation Act and the Texas Limited Liability Company Act.
(b) Immediately following the consummation of the Upstream Merger as
contemplated by Section 1.3 of the Transaction Agreement, the Upstream
Surviving Company shall be merged with and into IWC, with IWC being the
surviving entity (the "IWC Merger"). The IWC Merger shall have the effect
set forth in that certain Agreement and Plan of Merger dated as of the date
hereof between IWC and Merger Sub and as otherwise provided in the
applicable provisions of State Law and the Texas Business Organizations
Code.
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(b) For purposes of Section 6.8 of the Transaction Agreement,
references to "Upstream Surviving Company" therein shall be deemed to refer
instead to IWC following the IWC Merger.
4. Incorporation. The provisions of Sections 11.1, 11.3, 11.4, 11.5, 11.6,
11.9, 11.10 and 11.12 of the Transaction Agreement are hereby incorporated
herein and shall be deemed to be part of this letter agreement; provided that
references therein to the "Agreement" shall be deemed to refer to this letter
agreement.
[Remainder of page intentionally left blank.]
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If you are in agreement with the foregoing, please execute three copies of
this letter agreement in the space indicated below and return two of such copies
to Seller at the address noted above.
Very truly yours,
HWC ENERGY SERVICES, INC.
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice President, Secretary and
Treasurer
HYDRAULIC WELL CONTROL, LLC
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice President and
Assistant Secretary
Accepted and agreed to as of the date
first set forth above:
BOOTS & XXXXX INTERNATIONAL
WELL CONTROL, INC.
By: /s/ Xxxxx Xxxxxxxxxx
---------------------------------
Name: Xxxxx Xxxxxxxxxx
Title: President and
Chief Executive officer
HWC ACQUISITION, LLC
By: /s/ Xxxxx Xxxxxxxxxx
---------------------------------
Name: Xxxxx Xxxxxxxxxx
Title: President and
Chief Executive officer
HWC MERGER CORPORATION
By: /s/ Xxxxx Xxxxxxxxxx
---------------------------------
Name: Xxxxx Xxxxxxxxxx
Title: President and
Chief Executive officer
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