EXECUTION COPY
THIRD AMENDMENT, CONSENT AND WAIVER
UNDER
SUBORDINATED NOTE RESTRUCTURING AGREEMENT
Third Amendment, Consent and Waiver (this "Third Amendment"), dated as
of July 1, 2003, to the Subordinated Note Restructuring Agreement, dated as of
December 28, 2000 (as amended to the date hereof, the "Restructuring Agreement")
among Boots & Xxxxx International Well Control Inc., a Delaware corporation,
(the "Company") and The Prudential Insurance Company of America ("Prudential"),
as amended by the Amendment, Consent and Waiver dated as of March 29, 2002 and
the Second Amendment, Consent and Waiver dated as of June 29, 2002, each among
the Company and Prudential (collectively, the "Prior Amendments"). Capitalized
terms used herein but not defined herein are used as defined in the
Restructuring Agreement.
W i t n e s s e t h:
Whereas, the Company and Prudential are parties to the Restructuring
Agreement pursuant to which Prudential agreed to cancel and terminate certain
11.28% Notes and the Warrant in consideration for the Company's fulfillment of
its obligations set forth in the Restructuring Agreement and the issuance by the
Company of Replacement Notes, the Replacement Warrant, the New Warrant and the
Preferred Stock;
Whereas, the Company failed to comply with the covenant set forth in
Section 6.10 of the Restructuring Agreement requiring newly formed subsidiaries
of the Company to execute a Subordinated Guaranty (the "Subsidiary Guarantee
Default");
Whereas, the Company failed to make cash dividend payments on certain
shares of the Company's Series E Cumulative Senior Preferred Stock ("Series E
Stock") and Series G Cumulative Convertible Preferred Stock ("Series G Stock")
in the amounts and for the period set forth on Exhibit A hereto ("Exhibit A"),
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which failure constitutes Events of Default pursuant to Section 8.1(vi) of the
Restructuring Agreement if not waived or deemed cured as provided therein (the
"Dividend Payments Default");
Whereas, the Company failed to make interest payments on certain Notes
in the amounts and for the period set forth on Exhibit A hereto, which
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constitute Events of Default pursuant to Section 8.1(ii) of the Restructuring
Agreement if not waived or deemed cured as provided therein (the "Interest
Payments Default");
Whereas, the Company failed to comply with certain financial covenants
under Sections 7.1(a) and 7.1(b) of the Restructuring Agreement for the twelve
month period ended March 31, 2003, which constitute Events of Default pursuant
to Section 8.1(xviii) of the Restructuring Agreement if not waived or deemed
cured as provided therein (the "Covenants Events of Default" and collectively
with the Subsidiary Guarantee Default, the Dividend Payments Default and the
Interest Payments Default, the "Current Defaults");
Whereas, the Company has requested that Prudential waive the Current
Defaults, effective, subject to the satisfaction of the conditions set forth in
Section 3 hereof, on the date hereof;
Whereas, the Company desires and Prudential agrees, subject to the
limitations and conditions set forth herein, (a) to waive the Current Defaults
and (b) amend the Restructuring Agreement as set forth herein; and
Whereas, the Company desires and Prudential agrees to defer payment of
accrued dividends, if any, owed to the holders of the Series E Stock, Series F
Stock, and Series G Stock that are due and payable or that will become due and
payable prior to December 31, 2003 (the "Dividend Payments") until March 31,
2004, upon which date the Dividend Payments will be due and payable in full.
Now, Therefore, in consideration of the premises and the covenants and
obligations contained herein the parties hereto agree as follows:
SECTION 1. WAIVER AND CONSENT
(a) Effective as of the date hereof, subject to the satisfaction
(or due waiver) of the conditions set forth in Section 3 (Conditions to the
Effectiveness of This Third Amendment) hereof, Prudential hereby waives the
following:
(i) the Current Defaults; provided, however, that the waiver
set forth in this clause (i) shall not excuse any failure to comply after
the date hereof under the Restructuring Agreement; and
(ii) compliance with each of (a) the provisions of Section
6.10 of the Restructuring Agreement with respect to Boots & Xxxxx Services,
Inc. ("Services"); (b) the failure to pay interest when due on the Notes as
specified on Exhibit A; (c) the financial covenants under Sections 7.1(a)
and 7.1(b) of the Restructuring Agreement for the twelve month period ended
March 31, 2003; and (d) the failure to pay the Dividend Payments when due
on the Series E Stock and Series G. Stock.
(b) Effective as of the date hereof, subject to the satisfaction
(or due waiver) of the conditions set forth in Section 3 (Conditions to the
Effectiveness of This Third Amendment) hereof, Prudential agrees to defer the
payment of the Dividend Payments, without any late payment penalty thereon, and
that the Dividend Payments will be paid on March 31, 2004.
SECTION 2. AMENDMENTS TO THE RESTRUCTURING AGREEMENT
The Restructuring Agreement is, effective as of the date hereof and
subject to the satisfaction (or due waiver) of the conditions set forth in
Section 3 (Conditions to the Continued Effectiveness of this Third Amendment)
hereof, hereby amended as follows:
(a) The Recitals are amended by inserting immediately before
Section 1 the following sentence:
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"Capitalized terms used herein and not otherwise defined have the meaning
specified in Section 11."
(b) Section 1.2 (Credit Facility Payment) is amended by (i)
substituting for number "500,000" provided therein with the number "250,000",
(ii) inserting immediately after the sum "$250,000" the words "either (i)", and
(iii) inserting immediately after the wire transfer
information the following words: "or (ii) by issuing to you
Credit Facility Notes in an aggregate principal amount of
$150,000 and payment in immediately available funds by wire
transfer to the above account of the balance of $100,000,
provided, that no such cash payment shall be due prior to
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August 1, 2003."
The Credit Facility Note issued pursuant to this Section 1.2 shall
have the same terms of the Senior subordinated notes issued hereinafter and
shall for all purpose be considered senior subordinated note under this
Agreement."
(c) Section 2.1 (Authorization of Issue of Notes) is amended by
deleting the second and third sentences thereof beginning with the words "The
term Note".
(d) Section 3 (Transfer of Securities) is amended by inserting new
Sections 3.5 and 3.6, each to read in its entirety as follows:
"3.5 MANDATORY PREPAYMENT. (a) Effective after July 1, 2003, and
commencing the quarter ended September 30, 2003, the Company shall prepay the
amounts outstanding under the Notes on a date which is 45 days after the last
day of each of the Company's first three fiscal quarters and 90 days after the
last day of the Company's last fiscal quarter, in an amount equal to the Excess
Cash for such fiscal quarter.
(b) Any prepayments made by the Company shall be applied as
follows: first, to repay any outstanding interest on the Notes and second, to
repay the outstanding principal balance of the Notes until all Notes shall have
been paid in full.
3.6 OPTION TO PAY INTEREST IN KIND. So long as no Default or Event of
Default shall have occurred and be continuing or would result therefrom, the
Company may elect to make payments of interest accrued on Notes that become due
and payable during the period commencing on April 1, 2003 and ending on and
including December 31, 2003 by issuance and delivery to the holders thereof PIK
Notes in principal amount equal to such interest payments not later then on the
date such interest payments become due and payable.
Any PIK Note issued pursuant to this Section 3.6 shall have the same
terms as the senior subordinated notes issued hereunder and shall for all
purposes be considered senior subordinated note under this Agreement."
(e) Section 7.1(a) (Total Debt to EBITDA Ratio) is deleted in its
entirety and replaced by inserting a new Section 7.1(a), to read in its entirety
as follows:
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"(a) Total Debt to EBITDA Ratio. The ratio of Total Debt to EBITDA,
measured on a calendar quarter-end basis for the twelve month period ending on
the last day of each calendar quarter, commencing with the calendar quarter
ending on March 31, 2004, to be greater than 3.0 to 1.0."
(f) Section 7.1(b) (EBITDA to Consolidated Interest Expense) is
amended by replacing "December 31, 2001" therein with "December 31, 2003".
(g) Section 7.3(b)(ii) (Limitation on Indebtedness) is amended by
substituting for the number "6,000,000" provided therein with the number
"3,000,000".
(h) Section 7.3(b)(iv) (Limitation on Indebtedness) is amended (i)
by inserting immediately after the words "outstanding on the Date of Closing"
the words "or outstanding as of July 1, 2003, as the case may be", (ii)
substituting for the word "and" immediately prior to the words "described in the
Prudential Letter" with the words "and/or", and (iii) inserting after the words
"Existing Senior Credit Facility" the words "outstanding on July 1, 2003".
(i) Section 11 (Definitions) is amended by inserting the
definitions of "Credit Facility Note", "Excess Cash", "Note" and "PIK Note",
each in its appropriate alphabetical order and each to read in its entirety as
follows:
"CREDIT FACILITY NOTE" shall mean the note referred to in Section 1.2.
"EXCESS CASH" shall mean, for the Company for any quarter, the excess,
if any, of cash and cash equivalents of the Company, as recorded on the
Company's balance sheet in accordance with GAAP, at the last day of each of the
Company's fiscal quarter over $2,000,000 minus the sum of optional cash
principal payments on the Senior Debt during a period of 45 days after the last
day of each of the Company's first three fiscal quarters and 90 days after the
last day of the Company's last fiscal quarter (but only to the extent that the
principal amounts of Senior Debt are permanently reduced by the amount of such
prepayments). It is acknowledged that the Company's accounts receivables do not
constitute cash or cash equivalents.
"NOTE" shall mean each senior subordinated note delivered pursuant to
any provision of this Restructuring Agreement, the Credit Facility Note, each
PIK Note and each senior subordinated note delivered in substitution or exchange
for any other Note pursuant to any such provision.
"PIK NOTE" shall mean any senior subordinated note delivered as
payment of interest on any other Note."
(j) Section 12.18 (Transfer Restrictions) is amended by deleting
the last sentence thereof, beginning with the words "At no time may you".
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SECTION 3. CONDITIONS TO THE EFFECTIVENESS OF THIS THIRD AMENDMENT
This Third Amendment shall be effective as of the date hereof,
provided that each of the following conditions shall have been satisfied by the
Company or duly waived by Prudential (the "Effective Date"):
(a) Prudential shall have received each of the following, each
delivered and dated (if applicable) on or before the Effective Date (unless
otherwise agreed by Prudential), in form and substance satisfactory to
Prudential:
(i) This Third Amendment, duly executed by the Company and
each Domestic Subsidiary of the Company, with the exception of ITS Supply
Corporation and Boots & Xxxxx Special Services, Inc.;
(ii) PIK Note dated March 31, 2003 in the aggregate principal
amount of $1,932,667, payable on December 30, 2005, from the Company in the form
of Exhibit B hereto;
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(iii) PIK Note dated March 31, 2003 in the aggregate
principal amount of $276,264, payable on December 30, 2005, from the Company, in
the form of Exhibit C hereto;
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(iv) Credit Facility Note dated July 1, 2003 in the aggregate
principal amount of $150,000, payable on December 30, 2005, from the Company, in
the form of Exhibit D hereto;
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(v) A Subordinated Guaranty Agreement (the "Guaranty") duly
executed by Services;
(vi) True and correct copies, certified by the Secretary or
Assistant Secretary of Company, of the First Amended and Restated Certificate of
Designation of Rights and Preferences Relating to Series E Cumulative Senior
Preferred Stock of the Company as set forth in ExhibitE attached hereto and
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evidence of the filing of such document with, and acceptance by, the Secretary
of State of the State of Delaware;
(vii) Certificates of the Secretary or an Assistant Secretary
of each the Company and each Domestic Subsidiary certifying the names and true
signatures of each officer who has been authorized to execute and deliver this
Third Amendment, the Credit Facility Note and the PIK Notes to be issued
hereunder, the Guaranty, as applicable, or any other document required hereunder
to be executed and delivered by or on behalf of the Company, each Domestic
Subsidiary, or Services;
(viii) a favorable opinion of Xxxxxxxx & Knight, LLP, counsel
to the Transaction Parties, substantially in the form of Exhibit F attached
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hereto, and addressing such other matters incident to the matters herein
contemplated as Prudential may reasonably request; and
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(b) Such additional documentation as Prudential may reasonably
require.
(c) Corporate and Other Proceedings. All corporate and other
proceedings, and all documents, instruments and other legal matters in
connection with the transactions contemplated by this Third Amendment shall be
satisfactory in all respects to Prudential;
(d) Representations and Warranties. Each of the representations
and warranties contained in Article 9 (Representations, Covenants and
Warranties) of the Restructuring Agreement, the other Note Documents or in any
certificate, document or financial or other statement furnished at any time or
in connection therewith, as amended and restated by the additional disclosures
set forth on the disclosure schedules attached hereto as Exhibit G with titles
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corresponding to the specific section in the Restructuring Agreement,
("Disclosure Schedules") are true and correct in all material respects on and as
of the date hereof, in each case, as if made on and as of the date hereof and
except to the extent that such representations and warranties specifically
relate to a specific date, in which case such representations and warranties
shall be true and correct in all material respects as of such specific date;
provided, however, that references therein to the "Agreement" shall be deemed to
refer to the Restructuring Agreement as amended by the Prior Amendments and
after giving effect to the amendments, consents and waivers set forth herein;
and
(e) No Default or Event of Default. After giving effect to this
Third Amendment, no Default or Event of Default (except for those that may have
been duly waived) shall have occurred and be continuing.
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS
On and as of the date hereof, after giving effect to this Third
Amendment, the Company hereby represents, warrants and covenants to Prudential
as follows:
(a) This Third Amendment has been duly authorized, executed and
delivered by the Company and each Domestic Subsidiary of the Company and
constitutes a legal, valid and binding obligation of the Company and each
Domestic Subsidiary of the Company, enforceable against the Company and each
Domestic Subsidiary of the Company in accordance with its terms.
(b) The Restructuring Agreement as amended by the Prior Amendments
and after giving effect to the amendments, consents and waivers set forth herein
constitutes the legal, valid and binding obligation of the Company and each
Domestic Subsidiary of the Company, enforceable against the Company and each
Domestic Subsidiary of the Company in accordance with its terms.
(c) Subject to the disclosures set forth on the Disclosure
Schedules, each of the representations and warranties contained in this Third
Amendment, Article 9 (Representations, Covenants and Warranties) of the
Restructuring Agreement, the other Note Documents or in any certificate,
document or financial or other statement furnished at any time under or in
connection therewith are true and correct in all material respects on and as of
the
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date hereof, as if made on and as of the date hereof and except to the extent
that such representations and warranties specifically relate to a specific date,
in which case such representations and warranties shall be true and correct in
all material respects as of such specific date; provided, however, that
references therein to the "Agreement" shall be deemed to refer to the
Restructuring Agreement as amended by the Prior Amendments and after giving
effect to the amendments, consents and waivers set forth herein.
(d) No Default or Event of Default has occurred and is continuing
(except for those that are duly waived).
(e) No litigation has been commenced against any Transaction Party
seeking to restraint or enjoin (whether temporarily, preliminarily or
permanently) the performance of any action by any Transaction Party required or
contemplated by this Third Amendment, the Restructuring Agreement or any Note
Document, in each case as amended by the Prior Amendments and after giving
effect to the amendments, consents and waivers set forth herein (if applicable).
(f) In the course of the negotiation of this Third Amendment and
other discussions or by any disclosure made hereby, including in the Disclosure
Schedules, since April 1, 2003, 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 that would be required to
be disclosed in an annual report on Form 10-K under the Securities Exchange Act
of 1934, as amended, or in a prospectus of the Company pursuant to an effective
registration statement on Form S-1 under the Securities Act of 1933, as amended.
(g) By the close of business on August 1, 2003, Prudential shall
have received (i) the credit facility payment required by Section 1.2 of the
Restructuring Agreement, as amended by this Third Amendment, and (ii) all costs
and expenses of Prudential incurred in connection with the transactions
contemplated by this Third Amendment, including reasonable legal fees and
expenses relating to such transactions, reasonable expenses incurred in
conducting due diligence investigations and reviews and other reasonable
out-of-pocket expenses incurred by Prudential or its outside counsel in an
amount of $30,000 in immediately available funds by wire transfer to the
following account (the "Wiring Account"):
Bank of New York
New York, NY
Account Name: Prudential Managed Account
ABA #000-00-000
Acct. #000-0000-000
SECTION 5. RELEASE
In further consideration for Prudential's execution of this Third
Amendment, the Company and each other Transaction Party hereby releases
Prudential and its respective Affiliates, officers, employees, directors, agents
and advisors (collectively, the "Releasees") from any and all claims, demands,
liabilities, responsibilities, disputes, causes of action
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(whether at law or equity) and obligations of any nature whatsoever, whether
liquidated or unliquidated, known or unknown, matured or unmatured, fixed or
contingent that any of the Transaction Parties may have against any Releasee and
that arise from or relate to the Obligations, any Note Document or any document,
dealing or other matter in connection with any of the Note Documents, and any
third party liable in whole or in part for any of the Obligations, in each case
to the extent arising (a) on or prior to the date hereof or (b) out of, or
relating to, actions, dealings or other matters occurring on or prior the date
hereof (including, without limitation, any actions or inactions of any Releasee
prior to the date hereof).
SECTION 6. EFFECT ON THE NOTE DOCUMENTS
(a) Except as expressly amended or waived above, all of the terms
and provisions of the Restructuring Agreement (including the Affirmative and
Negative Covenants set forth therein) and all other Note Documents are and shall
remain in full force and effect and are hereby ratified and confirmed. THE
COMPANY AND PRUDENTIAL EXPRESSLY AGREE THAT THE PROVISIONS OF SECTION 12.8 OF
THE RESTRUCTURING AGREEMENT APPLY TO THE DISCLOSURE OF INFORMATION BY THE
COMPANY PURSUANT TO THIS THIRD AMENDMENT.
(b) The execution, delivery and effectiveness of this Third
Amendment 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.
(c) This Third Amendment is a Note Document.
SECTION 7. CONSENT OF DOMESTIC SUBSIDIARIES
Each of Services and each Domestic Subsidiary of the Company hereby
consents to this Third Amendment and agrees that the terms hereof shall not
affect in any way its obligations and liabilities under the Note Documents (as
amended and otherwise expressly modified hereby), all of which obligations and
liabilities shall remain in full force and effect and each of which is hereby
reaffirmed (as amended and otherwise expressly modified hereby).
SECTION 8. EXECUTION IN COUNTERPARTS
This Third Amendment 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 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 Third Amendment.
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Section 9. Governing Law
This Third Amendment shall be governed by and construed in accordance
with the law of the State of New York.
SECTION 10. SECTION TITLES
The section titles contained in this Third Amendment 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, except when used to reference a
section. Any reference to the number of a clause, sub-clause or subsection of
any Note Document immediately followed by a reference in parenthesis to the
title of the section of such Note Document containing such clause, sub-clause or
subsection is a reference to such clause, sub-clause or subsection and not to
the entire section; provided, however, that, in case of direct conflict between
the reference to the title and the reference to the number of such section, the
reference to the title shall govern absent manifest error. If any reference to
the number of a section (but not to any clause, sub-clause or subsection
thereof) of any Note Document is followed immediately by a reference in
parenthesis to the title of a section of any Note Document, the title reference
shall govern in case of direct conflict absent manifest error.
SECTION 11. NOTICES
All communications and notices hereunder shall be given as provided in
the Restructuring Agreement or, as the case may be, the Subordinated Guaranty
Agreement.
SECTION 12. SEVERABILITY
The fact that any term or provision of this Third Amendment 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
SECTION 13. SUCCESSORS
The terms of this Third Amendment shall be binding upon, and shall
inure to the benefit of, the parties hereto and their respective successors and
assigns.
SECTION 14. WAIVER OF JURY TRIAL
Each of the parties hereto irrevocably waives trial by jury in any
action or proceeding with respect to This Third Amendment or any other Note
Document.
[Signature Pages Follow]
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IN WITNESS WHEREOF, the parties hereto have caused This Third
Amendment 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:
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Name:
Title:
The Prudential Insurance Company of America,
By:
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Name:
Title:
Acknowledged and Agreed by:
Domestic Subsidiaries:
Boots & Xxxxx Special Services, Inc.
By: ______________________________
Name:
Title:
Elmagco, Inc.
By: ______________________________
Name:
Title:
Hell Fighters, Inc.
By: ______________________________
Name:
Title:
[Signature Page to Consent and Waiver Under Subordinated Note Restructuring
Agreement]
IWC Engineering, Inc.
By: ______________________________
Name:
Title:
IWC Services, Inc.
By: ______________________________
Name:
Title:
Boots & Xxxxx Services, Inc.
By: ______________________________
Name:
Title:
[Signature Page to Consent and Waiver Under Subordinated Note Restructuring
Agreement]
