EXHIBIT 10.23
PARTICIPATION RIGHTS AGREEMENT
PARTICIPATION RIGHTS AGREEMENT, dated as of July 23, 1998, by and
among BOOTS & XXXXX INTERNATIONAL WELL CONTROL, INC., a Delaware corporation
(the "COMPANY"), THE PRUDENTIAL INSURANCE COMPANY OF AMERICA (the "PURCHASER")
and the holders of the Company's common stock, par value $0.00001 per share (the
"COMMON STOCK") listed in Schedule I attached hereto (each a "STOCKHOLDER" and
collectively the "STOCKHOLDERS").
1. Background; Term. The Company and the Purchaser have entered into a
Subordinated Note and Warrant Purchase Agreement (the "PURCHASE AGREEMENT"),
dated as of the date hereof, pursuant to which the Company has agreed, among
other things, to issue and sell its Common Stock Purchase Warrants (the
"WARRANTS"), evidencing rights to purchase an aggregate of [3,165,396] shares
(subject to adjustment as provided therein) of Common Stock. This Agreement
shall become effective upon the issuance of such Warrants and shall terminate
(i) with respect to shares of Common Stock issued upon the exercise of the
Warrants, three years after the issuance of such shares, and (ii) with respect
to any other shares of Common Stock or Common Stock Equivalents, three years
after the issuance thereof.
2. Transfers of Common Stock.
2.1 Rights of Participation.
(a) Participation Offer. Except as provided in Section 2.1(c), if
any Stockholder or any Affiliate thereof (other than the Company or a
Subsidiary), or if the Company, proposes to sell or otherwise transfer for value
shares of the Common Stock or Common Stock Equivalents (each such Stockholder,
each such Affiliate thereof and the Company being referred to herein as a
"TRANSFEROR"), which shares of the Common Stock or Common Stock Equivalents:
(i) in the case of any sale or other transfer for value by any
Transferor other than the Company, together with all shares of the Common
Stock or Common Stock Equivalents sold or otherwise transferred for value,
whether in one transaction or in a series of related transactions, by such
Transferor and all other Transferors (other than the Company), constitute
at least 10% of the Fully Diluted Common Stock, or
(ii) in the case of any sale or other transfer for value by any
Transferor (including the Company), together with all shares of the Common
Stock or Common Stock Equivalents sold or otherwise transferred for value,
whether in one transaction or in a series of related transactions, by such
Transferor and all other Transferors (including the Company), constitute at
least 30% of the Fully Diluted Common Stock,
then such Transferor shall offer (the "PARTICIPATION OFFER") to include in
the proposed sale or other transfer a number of shares of Common Stock or
Common Stock Equivalents (regardless of whether such securities are of the
same class being sold or otherwise transferred by the Transferor)
designated by each Tagalong Holder, not to exceed, in respect of such
Tagalong Holder, the number of shares equal to the product of (y) the
aggregate number of shares of Common Stock or Common Stock Equivalents to
be sold or otherwise transferred by the Transferor to the proposed
transferee and (z) a fraction, the numerator of which shall be the number
of shares of Fully Diluted Common Stock held by such Tagalong Holder and
the denominator of which shall be the number of shares of Fully Diluted
Common Stock held by the Transferor and all Tagalong Holders. The
Transferor shall give written notice to each Tagalong Holder of the
Participation Offer (the "PARTICIPATION OFFER NOTICE") at least 30 days
prior to the proposed sale or other transfer. The Participation Offer
Notice shall specify the proposed transferee, the number of shares of
Common Stock or Common Stock Equivalents to be sold or otherwise
transferred to such transferee, the amount and type of consideration to be
received therefor, and the place and date on which the sale or other
transfer is to be consummated.
(b) Exercise. Each Tagalong Holder who wishes to include shares of
Common Stock or Common Stock Equivalents in the proposed sale or other transfer
in accordance with this Section 2.1 shall so notify the Transferor not more than
15 days after the date of receipt of the Participation Offer Notice. The
Participation Offer shall be conditioned upon the Transferor's sale or other
transfer of shares pursuant to the transactions contemplated in the
Participation Offer Notice with the transferee named therein. If any Tagalong
Holder or Holders have accepted the Participation Offer, the Transferor shall
reduce to the extent necessary the number of shares it otherwise would have sold
or transferred in the proposed sale or other transfer so as to permit such
Tagalong Holder or Holders to sell or otherwise transfer the number of shares
that it or they are entitled to sell or otherwise transfer under this Section
2.1, and the Transferor and such Tagalong Holder or Holders shall sell or
otherwise transfer the number of shares specified in the Participation Offer to
the proposed transferee in accordance with the terms of such sale or other
transfer set forth in the Participation Offer Notice.
(c) Excepted Transfers. Section 2.1(a) and Section 2.1(b) shall not
apply to any sale pursuant to a public offering registered pursuant to the
Securities Act, any sale pursuant to Rule 144 under the Securities Act (as such
rule may be amended from time to time) or to any sale or other transfer for
value by a Transferor (other than the Company or a Subsidiary) to an Affiliate
thereof (other than the Company or a Subsidiary) or to any sale or other
transfer for value by the Company as consideration for the acquisition of a
business or property.
2.2 Restrictive Legend. Contemporaneously with the execution and
delivery of this Agreement, each certificate representing shares of presently
outstanding Common Stock held by a Stockholder shall be stamped or otherwise
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imprinted with a legend (or shall be exchanged for certificates bearing a
legend) in substantially the following form:
"The shares represented by this certificate are subject to certain
restrictions set forth in a Participation Rights Agreement dated as of July
23, 1998 among the Corporation, The Prudential Insurance Company of America
and the holders of the Corporation's outstanding Common Stock parties
thereto, and such shares may not be transferred except in compliance with
such restrictions. Such Participation Rights Agreement is on file at the
office of the Corporation and a copy thereof will be furnished without
charge to the holder of the shares represented by this certificate upon
written request."
Each certificate issued upon the direct or indirect transfer of any such
outstanding Common Stock held by a Stockholder shall also be stamped or
otherwise imprinted with the foregoing legend.
2.3 Effect of Violation. Any purported transfer of Common Stock or
Common Stock Equivalents which is not permitted by this Agreement or which is in
violation of this Agreement shall be void and of no force and effect whatsoever.
3. Definitions. As used herein, unless the context otherwise requires,
the following terms have the following respective meanings:
Affiliate: (a) With respect to any Person, any other Person who,
directly or indirectly, is in control of, is controlled by, or is under
common control with, such Person, and (b) with respect to any individual,
any other individual who is related by blood, adoption or marriage or any
trust of which such first-named individual is a settlor, trustee or
beneficiary. As used herein, the term "control" means possession, directly
or indirectly, of the power to direct or cause the direction of the
management or policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
Agreement: This Participation Rights Agreement, as the same may be
amended from time to time.
Common Stock: As defined in the introductory paragraph of this
Agreement.
Common Stock Equivalents: All options, rights or warrants to
purchase shares of Common Stock, all securities convertible into or
exchangeable for shares of Common Stock, all shares of Common Stock into
which shares of Common Stock of another class have been converted and all
shares of stock or other securities of the Company into which Common Stock
(or Common Stock Equivalents) have been converted.
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Company: As defined in the introductory paragraph of this Agreement.
Fully Diluted Common Stock: At any time, the then outstanding Common
Stock plus (without duplication) all shares of Common Stock issuable,
whether at such time or upon the passage of time or the occurrence of
future events, upon the exercise, conversion or exchange of all then
outstanding options, rights or warrants (including, without limitation, the
Warrants) or securities convertible into or exchangeable for Common Stock.
Participation Offer: As defined in Section 2.1(a).
Participation Offer Notice: As defined in Section 2.1(a).
Person: A corporation, an association, a partnership, a limited
liability company, a business, an individual, a governmental or political
subdivision thereof or a governmental agency.
Purchase Agreement: As defined in Section 1.
Purchaser: As defined in the introductory paragraph of this
Agreement.
Required Holders: Any holder or holders of 66__% (by number of shares
of Common Stock issued or issuable) of the Warrants or of Common Stock
issued upon the exercise of Warrants.
Securities Act: The Securities Act of 1933, as amended, or any
successor statute thereto.
Stockholders: The parties to this Agreement who are record or
beneficial owners of any shares of Common Stock.
Subsidiary: As defined in the Purchase Agreement.
Tagalong Holder: Any holder of (i) Warrants or (ii) Common Stock
issued upon the exercise of Warrants.
Transferor: As defined in Section 2.1(a).
Warrants: As defined in Section 1.
4. Agreement. A copy of this Agreement shall be filed with the permanent
records of the Company and shall be kept at all times at the principal place of
business of the Company.
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5. Further Assurances. Each party agrees to do, or cause to be done,
such further acts and to execute and deliver, or to cause to be executed and
delivered, such further agreements, instruments, certificates and other
documents as may be necessary or appropriate to effectuate and carry out the
purposes of this Agreement.
6. Amendments and Waivers. This Agreement may be amended and the
Stockholders and the Company may take any action herein prohibited or omit to
perform any act herein required to be performed, only if the prior written
consent of the Required Holders to such amendment, action or omission to act
shall have been obtained.
7. Notices. All notices or other communications provided for hereunder
shall be in writing and sent by first class mail or nationwide overnight
delivery service (with charges prepaid) and (a) if addressed to a Tagalong
Holder, addressed to such Tagalong Holder in the manner set forth in the
Purchase Agreement, or at such other address as such Tagalong Holder shall have
furnished to the other parties hereto in writing, (b) if addressed to the
Company, addressed to it at 0000 Xxx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000,
Attention: Chief Financial Officer, or at such other address, or to the
attention of such other officer, as the Company shall have furnished to the
other parties hereto in writing, or (c) if to any Stockholder or any other
Transferor (other than the Company), addressed to such Stockholder at its
address set forth in Schedule I hereto, or at such other address as such party
shall have furnished to the other parties hereto in writing.
8. Assignment. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and their respective heirs,
executors, administrators, personal representatives, successors and assigns. In
the event that a Stockholder transfers any Common Stock or Common Stock
Equivalents to an Affiliate (other than the Company), such Stockholder shall
cause such Affiliate to comply with the terms of this Agreement. In addition,
and whether or not any express assignment shall have been made, the provisions
of this Agreement which are for the benefit of the Purchaser shall also be for
the benefit of and enforceable by any subsequent Tagalong Holder.
9. Descriptive Headings. The descriptive headings of the several
sections and paragraphs of this Agreement are inserted for reference only and
shall not limit or otherwise affect the meaning hereof.
10. Specific Performance. The parties hereto recognize and agree that
money damages may be insufficient to compensate the Tagalong Holders for
breaches by the Company or the Stockholders of the terms hereof and,
consequently, that the equitable remedy of specific performance of the terms
hereof will be available in the event of any such breach.
11. Governing Law. This Agreement shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
the State of New York.
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12. Counterparts. This Agreement may be executed simultaneously in any
number of counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have executed this Agreement, or
caused this Agreement to be executed and delivered by their respective officers
thereunto duly authorized, as of the date first above written.
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: Vice President
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Xxxxxx X. Xxxxxx
SCHEDULE I
STOCKHOLDERS
Xxxxx X. Xxxxxxx
Xxxxxxx Xxxxx
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Xxxxxx X. Xxxxxx
