EXHIBIT 3
EXCHANGE AGREEMENT
EXCHANGE AGREEMENT (this "Agreement"), dated as of August 13, 2004,
by and between Boots & Xxxxx International Well Control, Inc. (the "Company"), a
Delaware corporation and The Prudential Insurance Company of America, a New
Jersey corporation ("Prudential"). Capitalized terms used herein but not defined
herein are used as defined in the Restructuring Agreement (as defined below).
W I T N E S S E T H:
WHEREAS, the Company and Prudential are parties to the Subordinated
Note Restructuring Agreement, dated as of December 28, 2000 (as amended to the
date hereof, the "Restructuring Agreement"), as amended by the Amendment,
Consent and Waiver dated as of March 29, 2002, the Second Amendment, Consent and
Waiver dated as of June 29, 2002, the Third Amendment, Consent and Waiver dated
as of July 1, 2003, the Fourth Amendment, Consent and Waiver dated as of
November 14, 2003 and the Fifth Amendment, Consent and Waiver dated as of the
date hereof (the "Fifth Amendment"), pursuant to which Prudential agreed to
cancel and terminate the Preexisting Obligations in consideration for the
Company's fulfillment of its obligations set forth in the Restructuring
Agreement and delivery of the Company Closing Deliveries;
WHEREAS, the Company Closing Deliveries included, among other items,
the issuance and delivery of the Series E Stock, the Series G Stock and the
Warrants;
WHEREAS, Prudential currently holds: 582 shares of the Series E Stock
(the "Outstanding Series E Stock"); Warrants to purchase an aggregate of
9,672,598 shares of Common Stock (before giving effect to the Company's October
2, 2003 one for four reverse stock split, the "Outstanding Warrants"); accrued
but unpaid dividends (i) on the Series E Stock of $312,865 (the "Outstanding
Series E Accrued Dividend"), and (ii) on the Series G Stock of $264,447 (the
"Outstanding Series G Accrued Dividend" and, together with the Outstanding
Series E Accrued Dividend, the "Accrued Dividends");
WHEREAS, the Outstanding Series E Stock, the Outstanding Warrants and
the Accrued Dividends are collectively referred to herein as the "Outstanding
Securities"; and
WHEREAS, each of the Company and Prudential desires to enter into
this Agreement to recapitalize Prudential's holdings in securities of the
Company, exchanging the Outstanding Securities for Common Stock, subject to the
conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in this
Agreement, the parties to this Agreement mutually agree as follows:
1. EXCHANGE.
(a) Exchange of Securities. Effective immediately
following execution and delivery of this Agreement, Prudential shall
deliver to the Company, at the location specified in Section 1(b)
hereof, all of the certificated Outstanding Securities (including all
original stock certificates evidencing the Series E Stock and
original Warrants). Upon receipt of the certificated Outstanding
Securities from Prudential, and in exchange for all of the
Outstanding Securities (including the Accrued Dividends), the Company
shall immediately deliver to Prudential (collectively, the
"Exchange"): (i) an aggregate of 1,829,635 shares of Common Stock
(the "Shares") of which, (x) 1,559,791 shares of Common Stock (the
"DWAC Shares") shall be delivered to Prudential in the form and
manner set forth in Section 1(c) hereof and (y) the remaining 269,844
shares of Common Stock comprising the Shares shall be delivered to
Prudential in certificated form bearing a legend restricting
transfer; and (ii) the executed opinion of counsel to the Company
addressed to Prudential covering the items substantially in the form
of Exhibit A hereto (the "Opinion").
(b) Delivery of the Outstanding Securities to the Company.
The certificated Outstanding Securities shall be delivered on the
date hereof at the office of the Company's legal counsel: Xxxxxxxx &
Knight LLP, 000 Xxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000,
attention: Xxxxxxx X. Xxxxxx XX, Esq. Following receipt of such
certificated Outstanding Securities, the Shares shall be immediately
issued by the Company in the forms specified in Sections 1(a) and
1(c) hereof, and the Opinion shall be immediately delivered to
Prudential. The Company shall thereafter cancel and retire the
Outstanding Securities (including the Accrued Dividends), and all
claims Prudential may have to such securities shall be null, void and
of no further effect.
(c) Delivery of the DWAC Shares to Prudential. The DWAC
Shares shall be delivered to Prudential pursuant to Section 1(a) in
street name without any restrictive legend or "stop transfer"
instructions restricting further transfer via the Depository Trust
Company's Deposits and Withdrawal at Custodian (DWAC) system to the
account of its DTC-participating broker at the address set forth on
Exhibit B hereto.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to Prudential as follows:
(a) Corporate Organization. The Company is a corporation
duly organized, validly existing, and in good standing, under the
laws of the State of Delaware, and has all requisite corporate power
and authority to conduct its business as it is now being conducted
and to own, lease and operate its property and assets.
(b) Capitalization. All the outstanding shares of capital
stock of the Company, including the Shares, have been duly authorized
and issued and are fully paid and nonassessable. The Shares are free
and clear of any preemptive rights, security interest, adverse
claims, liens or encumbrances and, additionally, in the case of the
DWAC Shares, such shares are free and clear of any restrictive legend
or "stop transfer" instructions restricting further transfer, and are
freely tradable by Prudential upon delivery. Prior to the Exchange,
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Prudential was the sole holder of (i) Series E Stock and of (ii) the
right to accrued but unpaid dividends on either Series E Stock or
Series G Stock.
(c) Issuance of the Outstanding Securities; No Transfers.
The Company issued the Outstanding Series E Stock and the Outstanding
Warrants on December 28, 2000, in connection with the closing of the
transactions contemplated by the Restructuring Agreement. The Accrued
Dividends were accrued pursuant to the terms of the respective series
of Preferred Stock to which they relate. The Company has not
recorded, nor been requested to record, a transfer of any of the
Outstanding Securities on its corporate records.
(d) Authorization. The Company has all requisite authority
and power to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by all required action
of the Company. This Agreement has been duly and validly executed and
delivered by the Company and, assuming this Agreement is duly
authorized, executed and delivered by Prudential, constitutes a valid
and binding agreement of the Company, enforceable against the Company
in accordance with its terms.
(e) Consents and Approvals; No Violations. Neither the
execution and delivery of this Agreement nor the Company's
consummation of the transactions contemplated hereby will (i)
conflict with or violate any provision of the Certificate of
Incorporation or By-Laws of the Company, (ii) require any consent of,
or filing with, or notification to, any governmental entity or stock
exchange by the Company, except such as shall have been previously
obtained, if any, (iii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or
acceleration of any obligation to repay) under, any of the terms,
conditions or provisions of any material obligation to which the
Company or any of its subsidiaries is a party or by which the Company
or any of its subsidiaries or any of their respective property or
assets may be bound, (iv) violate any material order of any
governmental entity or stock exchange applicable to the Company or
any of its subsidiaries, or (v) result in the creation of any
encumbrance against or with respect to the Shares or any assets of
Company or any of its subsidiaries.
(f) No Registration. Assuming the representations of
Prudential contained in this Agreement are true, correct and
complete, it is not necessary in connection with the Exchange, in the
manner contemplated by this Agreement, to register the Shares under
the Securities Act of 1933, as amended.
(g) Brokers and Finders. None of the Company nor any of
its subsidiaries nor any of their respective officers, directors or
employees has employed any broker or finder or incurred any liability
for any investment banking fees, brokerage fees, commissions or
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finders' fees in connection with the transactions contemplated by
this Agreement.
(h) No Material Nonpublic Information Disclosed. In the
course of the negotiation of this Agreement and the Fifth Amendment,
and other discussions or by any disclosure made hereby, since March
30, 2004, none of the Company nor, to the best of its knowledge, any
of its affiliates, directors, officers, employees or agents have
disclosed any material nonpublic information to Prudential or any of
its affiliates, directors, officers, employees or agents.
3. REPRESENTATIONS AND WARRANTIES OF PRUDENTIAL. Prudential
represents and warrants to the Company as follows:
(a) Issuance and Ownership of the Outstanding Securities;
No Transfers. Prudential received the Outstanding Series E Stock and
the Outstanding Warrants on December 28, 2000, in connection with the
closing of the transactions contemplated by the Restructuring
Agreement. Prudential has held such securities at all times since
such date. The Accrued Dividends were accrued pursuant to the terms
of the respective series of Preferred Stock to which they relate.
Prudential possesses full right, power and authority to sell, assign,
transfer and deliver the Outstanding Securities.
(b) Authorization. Prudential has all requisite authority
and power to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by all required action
of the Prudential. This Agreement has been duly and validly executed
and delivered by Prudential and, assuming this Agreement is duly
authorized, executed and delivered by the Company, constitutes a
valid and binding agreement of Prudential, enforceable against
Prudential in accordance with its terms.
(c) Consents and Approvals; No Violations. Neither the
execution and delivery of this Agreement nor Prudential's
consummation of the transactions contemplated hereby will (a)
conflict with or violate any provision of the governing documents of
Prudential, (b) require any consent of, or filing with, or
notification to, any governmental entity or stock exchange by
Prudential, other than the amendment to Prudential's Schedule 13D
filing with the Securities and Exchange Commission with respect to
its holding of securities of the Company, and except such consents,
filings or notifications as shall have been previously obtained, if
any, (c) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise
to any right of termination, cancellation or acceleration of any
obligation to repay) under, any of the terms, conditions or
provisions of any material obligation to which Prudential is a party
or by which Prudential or any of its subsidiaries or any of their
respective property or assets may be bound, (d) violate any material
order of any governmental entity or stock exchange applicable to
Prudential or any of its subsidiaries, or (e) result in the creation
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of any encumbrance against or with respect to the Shares or any
assets Prudential.
(d) Brokers and Finders. Neither Prudential nor any of its
affiliates, nor any of their respective officers, directors or
employees has employed any broker or finder or incurred any liability
for any investment banking fees, brokerage fees, commissions or
finders' fees in connection with the transactions contemplated by
this Agreement.
4. TERMINATION OF PARTICIPATION RIGHTS AGREEMENT.
(a) Participation Rights Agreement. Effective upon
delivery and confirmation of the Shares by the Company to Prudential,
the Participation Rights Agreement shall be terminated, and all
rights of any party thereunder shall be null, void and of no further
effect.
5. AGREEMENTS OF THE COMPANY AND PRUDENTIAL.
(a) Further Assurances. Subject to the terms and
conditions herein provided, each of the Company and Prudential agrees
to use its commercially reasonable efforts to take, or cause to be
taken, all action, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations
to consummate and make effective the transactions contemplated by
this Agreement. If at any time after the date hereof any further
action is necessary or desirable to carry out the purposes of this
Agreement, the parties hereto shall, at their own respective expense,
take or cause to be taken all such necessary action, including,
without limitation, the execution and delivery of such further
instruments and documents as may be reasonably requested by any party
for such purposes or otherwise to consummate and make effective the
transactions contemplated hereby.
(b) Confidentiality. The Company and Prudential expressly
agree that the provisions of Section 12.8 of the Restructuring
Agreement shall hereby apply to the disclosure of information by any
of the Company and Prudential pursuant to this Agreement.
(c) Effect on the Restructuring Agreement. The execution,
delivery and effectiveness of this Agreement shall not, except as
expressly provided herein, operate as a waiver of any right, power or
remedy of Prudential under any of the Note Documents, nor constitute
a waiver or amendment of any other provision of any of the Note
Documents or for any purpose except as expressly set forth herein.
(d) Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties in
separate counterparts, each of which when so executed shall be deemed
to be an original and all of which taken together shall constitute
one and the same agreement. Signature pages may be detached from
multiple separate counterparts and attached to a single counterpart
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so that all signature pages are attached to the same document.
Delivery of an executed counterpart by telecopy shall be effective as
delivery of a manually executed counterpart of this Agreement.
(e) Governing Law. This Agreement shall be governed by and
construed in accordance with the law of the State of New York.
(f) Section Titles. The section titles contained in this
Agreement are and shall be without substantive meaning or content of
any kind whatsoever and are not a part of the agreement between the
parties hereto.
(g) Notices. All communications and notices hereunder
shall be given as provided in the Restructuring Agreement.
(h) Severability. The fact that any term or provision of
this Agreement is held invalid, illegal or unenforceable as to any
person in any situation in any jurisdiction shall not affect the
validity, enforceability or legality of the remaining terms or
provisions hereof or the validity, enforceability or legality of such
offending term or provision in any other situation or jurisdiction or
as applied to any person.
(i) Successors. The terms of this Agreement shall be
binding upon, and shall inure to the benefit of, the parties hereto
and their respective successors and assigns.
(j) Waiver of Jury Trial. Each of the parties hereto
irrevocably waives trial by jury in any action or proceeding with
respect to This Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Exchange
Agreement to be executed by their respective officers and general partners
thereunto duly authorized on the date first written above.
BOOTS & XXXXX INTERNATIONAL WELL CONTROL, INC.
By: /s/ Xxxxx Xxxxxxxxxx
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Name: Xxxxx Xxxxxxxxxx
Title: President and Chief Executive Officer
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
By: /s/ Xxxxxxxxx X. Xxxxxx
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Name: Xxxxxxxxx X. Xxxxxx
Title: Vice President
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