Document:

ex10_65.htm

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Exhibit
10.65

    

    FAR EAST
ENERGY CORPORATION

    SECOND
AMENDED AND RESTATED

    NONQUALIFIED
STOCK OPTION AGREEMENT

    

    Far East
Energy Corporation (the "Corporation") and Michael R.
McElwrath ("Participant") hereby agree to
amend and restate the stock option agreement previously entered into between the
Corporation and Participant on October 13, 2003,  as superseded by the
December 23, 2004 amended and restated option agreement (the "Amended Option
Agreement").  This amendment and restatement is made solely
with respect to those Options which vested after December 31, 2004 and the terms
of the Amended Option Agreement  shall remain in effect with respect
to all Options that vested prior to January 1, 2005.

     

    

    General
Information

    

       

    

    
      	
              Name:

            	
              Michael
      R. McElwrath

            
	 
      	 
      
	
              Award
      Date:

            	
              October
      13, 2003

            
	 
      	 
      
	
              Number
      of Shares

              Subject
      to Amended Option:

            	
              720,000

            
	 
      	 
      
	
              FMV
      on Award Date:

            	
              $1.30

               

            
	
              Exercise
      Prices:

            	
              $0.65
      for the 2008 Option and 2009 Option

              $1.30
      for the Remaining Option

            
	 
      	 
      
	
              Expiration
      Dates:

            	
              December
      31, 2008 for the 2008 Option

               

              December
      31, 2009 for the 2009 Option

               

              October
      13, 2013 for the Remaining Option

            

    

    

    

    
 

    

    

    

    
      
        
           

        

         

      

      
         

        
          

        

      

      
         

      

    

    

    

    

    

    FAR
EAST ENERGY CORPORATION

    SECOND
AMENDED AND RESTATED

    NONQUALIFIED
STOCK OPTION AGREEMENT

    

    

    THIS SECOND AMENDED AND RESTATED
NONQUALIFIED STOCK OPTION AGREEMENT (this "Agreement") is made as of this
27th day of December, 2007, by and between Far East Energy Corporation, a Nevada
corporation (the "Corporation"), and Michael R.
McElwrath ("Participant").

    

    WHEREAS, the Corporation and
the Participant previously entered into a Stock Option Agreement (the "Original Option Agreement")
dated as of October 13, 2003 (the "Award Date") setting forth the
grant of options to purchase 1,200,000 shares of common stock, par value $0.001
per share, of the Corporation (the "Common Stock") at an exercise
price per share of $0.65;

    

    WHEREAS, the Corporation and
the Participant previously entered into an Amended and Restated Nonqualified
Stock Option Agreement (the “Amended Option Agreement”)
dated December 23, 2004, which amended, restated and superseded the Original
Option Agreement;

    

    WHEREAS, the Participant has
entered into an Amended and Restated Employment Agreement (as amended, restated
and modified from time to time, the "Employment Agreement") dated
December 23, 2004 with the Corporation;

    

    WHEREAS, the
Corporation  and Participant acknowledge that  480,000
options granted under the Amended Option Agreement vested on or before December
31, 2004, and that 720,000 options granted under the Amended Option Agreement
vested on or after January 1, 2005 (the "Affected
Options");

    

    WHEREAS, the terms of the
480,000 options that vested prior to December 31, 2004 shall remain unmodified
and are governed in their entirety by the provisions of the Amended Option
Agreement;

    

    WHEREAS, the Participant
understands that the 720,000 options that vested after December 31, 2004 are
discounted Options subject to Section 409A ("Section 409A") of the U.S.
Internal Revenue Service Code of 1986, as amended (the "Code"), and that in order to
avoid the adverse tax consequences thereunder the Affected Options must be
brought into compliance with Section 409A;

    

    WHEREAS, the
Corporation  and Participant have elected to bring the Affected
Options into compliance by (i) establishing a payment schedule that complies
with Section 409A such that 60,000 the Affected Options will become exercisable
January 2, 2008 (the "2008
Option") and 160,000 of the Affected Options will become exercisable on
the on the first to occur of a (x) Separation from Service (as defined pursuant
to Section 409A and the Regulations issued thereunder), (y) Change in
Control  (as defined pursuant to Section 409A and the Regulations
issued thereunder) or (z) January 2, 2009 (the "2009 Option") as well as (ii)
repricing the per Share Exercise Price of 500,000 of the Affected Options from
$0.65 to $1.30, which was the fair market value of a share of Common Stock on
the date the Award was granted (the "Remaining Option");
and

    

    WHEREAS, by executing this
Agreement, the Corporation and Participant desire to amend, replace and
supersede the Amended Option Agreement and the Employment Agreement with respect
to the Affected Options.

    

    NOW, THEREFORE, in
consideration of the foregoing, of the mutual promises hereinafter set forth and
of such other good and valuable consideration, the receipt, adequacy and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, do hereby agree as follows:

    

    1.           Grant of Options; Defined
Terms.

    

    A.           Capitalized
terms used herein without definition shall have the meaning ascribed to such
terms in the Employment Agreement.

    

    B.           Participant
hereby (i) releases and surrenders to the Corporation 720,000 shares of
1,200,000 shares of Common Stock subject to the Amended Option Agreement and
(ii) acknowledges and agrees that the from and after the date hereof the Amended
Option Agreement shall represent an option to purchase, subject to the terms and
conditions of the Amended Option Agreement, up to 480,000 shares of Common
Stock.  Except as provided in this Section 1(B), the terms and
conditions of the Amended Option Agreement shall remain in full force and
effect.

    

    C.           Subject
to the terms and conditions hereinafter set forth, the Corporation, with the
approval and at the direction of the Compensation Committee of the Board of
Directors (the "Committee") of the
Corporation, and the Participant hereby acknowledges and agrees that the
Corporation granted to Participant, as of the Award Date, 720,000 Options to
purchase shares of Common Stock of the Corporation in accordance with the terms
of the Amended Option Agreement which are now covered by this
Agreement:

    

    (i)           the
2008 Option and the shares of Common Stock purchasable upon exercise of the 2008
Option (the "2008 Option
Shares") at a price of U.S.$0.65 per share (as may be adjusted in
accordance with Article 5, the "2008 Option
Price");

    

    (ii)           the
2009 Option and the shares of Common Stock purchasable upon exercise of the 2009
Option, (the "2009 Option
Shares") at a price of U.S.$0.65 per share (as may be adjusted in
accordance with Article 5, the "2009 Option Price");
and

    

    (iii)           the
Remaining Option and the shares of Common Stock purchasable upon exercise of the
Remaining Option (the "Remaining Option Shares") at a
price of U.S.$1.30 per share (as may be adjusted in accordance with Article 5,
the "Remaining Option
Price").

    

    The 2008
Option Shares, the 2009 Option Shares and the Remaining Option Shares are also
hereinafter referred to as the "Shares."  Each
Affected Option is intended by the parties hereto to be, and shall be treated
as, a nonqualified stock option (as such term is defined under Section 422 of
the Code.  Each of the 2008 Option Price, the 2009 Option Price and
the Remaining Option Price are also hereinafter referred to as an "Exercise Price."

    

    D.           As
of the date of this Agreement, the Affected Options are fully (100%)
vested.

    

    2.           Termination of Affected
Options.

    

    A.           To
comply with Section 409A, the 2008 Option and all rights hereunder with respect
thereto may not be exercised until a fixed date, January 2, 2008, and to the
extent such rights shall not have been exercised, shall terminate and become
null and void after December 31, 2008 (the "2008 Option
Term").

    

    B.           To
comply with Section 409A, the 2009 Option and all rights hereunder with respect
thereto may not be exercised until the first to occur of (i) the Participant’s
“Separation from Service” as such term is defined under Section 409A and the
Regulations issued thereunder, (ii) a “Change of Control” as such term is
defined under Section 409A and the Regulations issued thereunder and (iii)
January 2, 2009 and to the extent such rights shall not have been exercised,
shall terminate and become null and void after December 31, 2009 (the "2009 Option
Term").

    

    C.           To
comply with Section 409A, the Remaining Option and all rights hereunder with
respect thereto, to the extent such rights shall not have been exercised, shall
terminate and become null and void after October 13, 2013 (the "Remaining Option
Term").

    

    Each of
the 2008 Option Term, the 2009 Option Term and the Remaining Option Term are
also hereinafter referred to as an "Option Term," and collectively
as the "Option
Terms."

    

    3.           Exercise of
Option.

    

    A.           Participant
may exercise the Affected Options with respect to all or any part of the number
of Shares then exercisable hereunder by giving the Secretary of the Corporation
written notice of intent to exercise.  The notice of exercise shall
specify the number of Shares as to which Participant is exercising and the date
of exercise thereof, which date shall be not less than five (5) days after the
giving of such notice (unless an earlier time shall have been mutually agreed
upon in writing).   All or any portion of the 2008 Option may be
exercised by Participant at any time beginning on January 2, 2008 and ending on
December 31, 2008.  All or any portion of the 2009 Option may be
exercised by Participant at any time beginning on January 2, 2009 and ending on
December 31, 2009.  All or any portion of the Remaining Option may be
exercised by Participant at any time on or before October 13, 2013.

    

    B.           Notwithstanding
anything contained in this Article 3 to the contrary, each Affected Option may
be exercised only in compliance with all applicable securities laws and only by
(i) Participant’s completion, execution and delivery to the Corporation of a
notice of exercise and, if required by the Corporation, an "investment letter"
as supplied by the Corporation and (ii) the payment to the Corporation, as
provided in Article 3D hereof, of an amount equal to the amount obtained by
multiplying the Exercise Price of such Affected Option by the number of Shares
being purchased pursuant to such exercise as shall be specified by Participant
in such notice of exercise.

    

    C.           Within
three years following Participant’s termination of employment, Participant or
Participant’s estate, executors or administrators, or personal or legal
representatives, as the case may be, shall be entitled to exercise any Affected
Options  that are or become exercisable within three years following
Participant's termination of employment (but not beyond any Option Term) and all
such Affected Options not excised within such three year period shall be
forfeited.  Any person, other than Participant, so desiring to
exercise Participant's Affected Options shall be required, as a condition to the
exercise of the Affected Options, to furnish to the Corporation such
documentation as the Corporation shall deem satisfactory to evidence the
authority of such person to exercise the Affected Options on behalf of
Participant.  In the event of the exercise of such Affected Options by
Participant's estate, executors or administrators, or personal or legal
representatives, all references herein to Participant shall, to the extent
applicable, be deemed to refer to and include such estate, executors or
administrators, or personal or legal representatives, as the case may
be.

    

    D.           Each
Exercise Price shall be paid in full by Participant for the Shares purchased on
or before the exercise date specified in the notice of exercise, at
Participant's option, in one or a combination of the following
methods:  (i) in cash or by electronic funds transfer; (ii) by check
payable to the order of the Corporation; (iii) if authorized by the Board of
Directors of the Corporation (the "Board"), or the Committee, by
a promissory note of the Participant; (iv) by notice and third party payment in
such manner as may be authorized by the Board or the Committee; (v) by the
delivery of shares of Common Stock of the Corporation already owned by the
Participant; or (vi) pursuant to a "cashless exercise" procedure (the "Cashless Exercise Right")
pursuant to which the Participant shall surrender to the Corporation such
Affected Option and a notice of exercise, duly completed and executed by the
Participant to evidence the exercise of the Cashless Exercise Right by
authorizing the Corporation to withhold from issuance a number of Shares
issuable upon such exercise of such Affected Option which, when multiplied by
the Fair Market Value (as defined below) of such Shares, is equal to the
aggregate Exercise Price of such Affected Option (and such withheld Shares shall
no longer be issuable under such Option).  Shares of Common Stock used
to satisfy the Exercise Price of an Affected Option shall be valued at their
Fair Market Value on the date of exercise.

    

    E.           The
"Fair Market Value"
shall be determined as follows:

    

    (a)  if
the security at issue is listed on a national securities exchange or admitted to
unlisted trading privileges on such an exchange or quoted on either the National
Market System or the Small Cap Market of the automated quotation service
operated by The Nasdaq Stock Market, Inc., the Fair Market Value shall be the
last reported sale price of that security on such exchange or system on the day
for which the Fair Market Value is to be determined or, if no such sale is made
on such day, the average of the highest closing bid and lowest asked price for
such day on such exchange or system; or

    

    (b)  if
the security at issue is not so listed or quoted or admitted to unlisted trading
privileges, the Fair Market Value shall be the average of the last reported
highest bid and lowest asked prices quoted on the Electronic Bulletin Board
operated by The Nasdaq Stock Market, Inc., or, if not so quoted, then by the
National Quotation Bureau, Inc. on the last business day prior to the day for
which the Fair Market Value is to be determined; or

    

    (c)  if
the security at issue is not so listed or quoted or admitted to unlisted trading
privileges and bid and asked prices are not reported, the Fair Market Value
shall be determined in such reasonable manner as may be prescribed from time to
time by the Board.

    

    F.           Upon
the exercise of all or any portion of an Affected Option by Participant, or as
soon thereafter as is practicable, the Corporation shall issue and deliver to
Participant (or to any broker or, if acceptable to the Corporation, to any other
person designated by Participant) a certificate or certificates evidencing such
number of Shares as Participant has elected to purchase.  Such
certificate or certificates shall be registered in the name of Participant (or
the designated broker or other person) and, if applicable, shall bear an
appropriate investment warranty legend, any legend required by an applicable
securities law, rule or regulation and, if applicable, a legend referring to the
restrictions provided hereunder and under the Employment Agreement and any
legend required by applicable law.  Upon the exercise of an Affected
Option and the issuance and delivery of such certificate or certificates,
Participant (or the person to whom such stock certificates are registered) shall
have all the rights of a stockholder with respect to such Shares and to receive
all dividends or other distributions paid or made with respect
thereto.  In the event that the capital stock of the Corporation is
converted in whole or in part into securities of any other entity, a
determination as to whether the securities of the other entity so received (if
any) shall be subject to the restrictions set forth in this Agreement shall be
made solely by the other entity.

    

    4.           Rights
Prior to Exercise.   Participant
shall have no equity interest in the Corporation or any voting, dividend,
liquidation or dissolution rights with respect to any capital stock of the
Corporation solely by reason of having an Affected Option or having executed
this Agreement.  Prior to the exercise of all or a portion of the
Affected Options, as set forth in Article 3A hereof, and the issuance and
delivery of a certificate or certificates evidencing the Shares purchased
pursuant to the exercise of all or a portion of such Affected Options,
Participant shall have no interest in, or any voting, dividend, liquidation or
dissolution rights with respect to, the Shares, except to the extent that
Participant has exercised all or a portion of such Affected Options and has been
issued and received delivery of a certificate or certificates evidencing the
Shares purchased pursuant to such exercise.

    

    5.           Adjustment of Purchase and
Number of Shares.

    

    A.           Adjustment.  The
number and kind of securities purchasable upon the exercise of an Affected
Option and the Exercise Price of such Affected Option shall be subject to
adjustment from time to time upon the happening of certain events as
follows:

    

    (a)           Reclassification,
Consolidation or Merger.  At any time while an Affected Option
remains outstanding and unexpired, in case of (i) any reclassification or change
of outstanding securities issuable upon exercise of an Affected Option (other
than a change in par value, or from par value to no par value per share, or from
no par value per share to par value or as a result of a subdivision or
combination of outstanding securities issuable upon the exercise of such
Option), (ii) any consolidation or merger of the Corporation with or into
another corporation (other than a merger with another corporation in which the
Corporation is a continuing corporation and which does not result in any
reclassification or change, other than a change in par value, or from par value
to no par value per share, or from no par value per share to par value, or as a
result of a subdivision or combination of outstanding securities issuable upon
the exercise of such Option), or (iii) any sale or transfer to another
corporation of the property of the Corporation as an entirety or substantially
as an entirety, the Corporation, or such successor or purchasing corporation, as
the case may be, shall without payment of any additional consideration
therefore, execute new Affected Options providing that the holder of these
Affected Options shall have the right to exercise such new Affected Options
(upon terms not less favorable to the holder than those then applicable to these
Affected Options) and to receive upon such exercise, in lieu of each share of
Common Stock theretofore issuable upon exercise of these Affected Options, the
kind and amount of shares of stock, other securities, money or property
receivable upon such reclassification, change, consolidation, merger, sale or
transfer.  Such new Affected Options shall provide for adjustments
which shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Section 5A.  The provisions of this Section 5A(a)
shall similarly apply to successive reclassifications, changes, consolidations,
mergers, sales and transfers.

    

    (b)           Subdivision or Combination
of Shares.   If the Corporation at any time while an Affected
Option remains outstanding and unexpired, shall subdivide or combine its capital
stock, the Exercise Price of such Affected Option shall be proportionately
reduced, in case of subdivision of such shares as of the effective date of such
subdivision, or, if the Corporation shall take a record of holders of its
capital stock for the purpose of so subdividing, as of such record date,
whichever is earlier, or shall be proportionately increased, in the case of
combination of such shares, as of the effective date of such combination, or, if
the Corporation shall take a record of holders of its capital stock for the
purpose of so combining, as of such record date,  whichever is
earlier.

    

    (c)           Stock
Dividends.  If the Corporation at any time which an Affected
Option is outstanding and unexpired shall pay a dividend in shares of, or make
other distribution of shares of, its capital stock, then the Exercise Price of
such Affected Option shall be adjusted, as of the date the Corporation shall
take a record of the holders of its capital stock for the purpose of receiving
such dividend or other distribution (or if no such record is taken, as at the
date of such payment or other distribution), to that price determined by
multiplying the Exercise Price of such Affected Option in effect immediately
prior to such payment or other distribution by a fraction (i) the numerator of
which shall be the total number of shares of capital stock outstanding
immediately prior to such dividend or distribution, and (ii) the denominator of
which shall be the total number of shares of capital stock outstanding
immediately after such dividend or distribution.  The provisions of
this Section 5A(c) shall not apply under any of the circumstances for which an
adjustment is provided in Section 5A(a) or 5A(b).

    

    (d)           Liquidating Dividends,
Etc.  If the Corporation at any time while an Affected Option
is outstanding and unexpired makes a distribution of its assets to the holders
of its capital stock as a dividend in liquidation or by way of return of capital
or other than as a dividend payable out of earnings or surplus legally available
for dividends under applicable law or any distribution to such holders made in
respect of the sale of all or substantially all of the Corporation’s assets
(other than under the circumstances provided for in the Sections 5A(a) through
(c)), the holder of such Affected Option shall be entitled to receive upon the
exercise hereof, in addition to the shares of Common Stock receivable upon such
exercise, and without payment of any consideration other than the Exercise Price
of such Option, an amount in cash equal to the value of such distribution per
share of Common Stock multiplied by the number of shares of Common Stock which,
on the record date for such distribution, are issuable upon exercise of such
Affected Option (with no further adjustment being made following any event which
causes a subsequent adjustment in the number of shares of Common Stock issuable
upon the exercise hereof), and an appropriate provision therefor should be made
a part of any such distribution.  The value of a distribution which is
paid in other than cash shall be determined in good faith by the
Board.

    

    B.           Notice
of Adjustments.   Whenever any of the Exercise Price of an
Affected Option or the number of shares of Common Stock purchasable under the
terms of such Affected Option at that Exercise Price shall be adjusted pursuant
to Section 5A hereof, the Corporation shall promptly make a certificate signed
by its Chief Executive Officer, President or a Vice President and by its
Treasurer or Assistant Treasurer or its Secretary or Assistant Secretary,
setting forth in reasonable detail the event requiring the adjustment, the
amount of the adjustment, the method by which such adjustment was calculated
(including a description of the basis upon which the Board made any
determination hereunder), and the Exercise Price and number of shares of Common
Stock purchasable at that Exercise Price after giving effect to such adjustment,
and shall promptly cause copies of such certificate to be mailed (by First Class
and Postage Prepaid) to the registered holder of such Option.

    

    6.           Headings.   The
headings and other captions contained in this Agreement are for convenience of
reference only, and shall not be used in interpreting, construing or enforcing
any of the provisions of this Agreement.

    

    7.           Entire
Agreement.  This Agreement,
together with the Employment Agreement, sets forth all of the promises,
agreements, conditions, understandings, warranties and representations between
the parties hereto with respect to the Affected Options and the Shares, and
there are no promises, agreements, conditions, understandings, warranties or
representations, oral or written, express or implied, between them with respect
to the Affected Options and the Shares,  other than as set forth
herein and in the Employment Agreement.  Any and all prior agreements
between the parties hereto with respect to any stock acquisition rights
regarding the Affected Options and the Shares are hereby
revoked.  This Agreement, together with the Employment Agreement, is,
and is intended by the parties to be, an integration of any and all prior
agreements or understandings, oral or written, with respect to the Affected
Options and the Shares.

    

    8.           Notices.   Any and all
notices provided for herein shall be sufficient if in writing, and sent by hand
delivery, by an overnight delivery service that produces a signed receipt
evidencing delivery or by certified or registered mail (return receipt requested
and first class postage prepaid), in the case of the Corporation, to its
principal office, and in the case of Participant, to Participant's address as
shown on the Corporation's records.

    

    9.           Invalid
or Unenforceable Provisions.   The
provisions of this Agreement shall be deemed severable, and the invalidity or
unenforceability of any one or more of the provisions hereof shall not affect
the validity and enforceability of the other provisions
hereof.  Participant agrees that the breach or alleged breach by the
Corporation of (a) any covenant contained in another agreement (if any) between
the Corporation and Participant or (b) any obligation owed to Participant by the
Corporation, shall not affect the validity or enforceability of the covenants
and agreements of Participant set forth herein.

    

    10.           Modifications.   No change
or modification of this Agreement shall be valid unless the same is in writing
and signed by the parties hereto; provided, however, that
Participant hereby covenants and agrees to execute any amendment to this
Agreement which shall be required or desirable (in the opinion of the
Corporation or its counsel) in order to comply with any rule or regulation
promulgated or proposed under the Code by the Internal Revenue
Service.

    

    11.           Incorporation
of Employment Agreement by Reference.  The Options
granted under the Amended Option Agreement were granted pursuant to the terms of
the Employment Agreement, the terms of which are incorporated herein by
reference, however, notwithstanding the forgoing, the provisions of this
Agreement shall control with respect to the Affected Options.  To the
extent that any conflict may exist between Section 2(B) or Section 12 of this
Agreement and any term or provision of the Employment Agreement, Section 2(B) or
Section 12, as the case may be, of this Agreement shall control.

    

    12.           Change of
Control.  To the extent the
2009 Option shall become exercisable pursuant to a Change in Control the
definition of a “Change of Control” for the 2009 Option shall be the definition
set forth under Section 409A and the Regulations issued thereunder.

    

    13.           Governing
Law.  The validity,
construction, interpretation and effect of this Agreement shall exclusively be
governed by and determined in accordance with the laws of Texas (other than the
conflicts-of-law or choice-of-law rules thereof), except to the extent preempted
by federal law, which solely to the extent of such preemption shall
govern.  Venue shall lie only in the State and Federal Courts in and
for the County of Harris, Texas, as to all disputes arising under this
Agreement, and such venue is hereby consented to by the Corporation and
Participant.

    

    14.           Counterparts.  This Agreement
may be executed in counterparts, each of which, when taken together, shall
constitute one original agreement.

    

    15.           Amendment
and Restatement.  This Agreement
constitutes an amendment, modification and restatement of the Amended Agreement
solely with respect to the Affected Options and this Agreement contains the
entire understanding between the parties hereto and supersedes the Amended
Option Agreement with respect to the Affected Options.

    

    [SIGNATURE
PAGE FOLLOWS.]

    

    
      
        
           

        

         

      

      
         

        
          

        

      

      
         

      

    

    

    IN WITNESS WHEREOF, the
Corporation has caused its duly authorized officer to execute and attest to this
Agreement, and to apply the corporate seal hereto, and Participant has placed
his or her signature hereon, effective as of the date first written
above.

    

    CORPORATION:

    

    FAR
EAST ENERGY CORPORATION

    

    

    By: /s/ Randall D.
Keys                                                                

           Randall
D. Keys, Chief Financial Officer

    

    

    PARTICIPANT:

    

    

    By: /s/ Michael R.
McElwrath                                                                

           Michael
R. McElwrathex10_20.htm

    
      

    

    FOURTH
AMENDMENT TO CREDIT AND SECURITY AGREEMENT

     

    THIS
FOURTH AMENDMENT TO CREDIT AND SECURITY AGREEMENT (this “Amendment”),
dated as of October 31, 2007, is made by and among IWC SERVICES, LLC, a Texas
limited liability company (“Existing
Borrower”), STASSCO
PRESSURE CONTROL, L.L.C., a Wyoming limited liability company (“New
Borrower” and together with Existing Borrower being jointly and
severally, “Borrower”),
Boots & Coots International Well Control, Inc., a Delaware corporation
(“BNC”)
and WELLS FARGO BANK,
National Association (“Lender”),
acting through its WELLS FARGO
BUSINESS CREDIT operating division.

     

    RECITALS

     

    Existing
Borrower, BNC and Lender are parties to the Credit and Security Agreement dated
as of March 3, 2006 (as amended, restated, amended and restated or extended
from time to time, the “Credit
Agreement”).

     

    Existing
Borrower has requested that certain amendments be made to the Credit Agreement
as more particularly set forth herein, which Lender is willing to make pursuant
to the terms and conditions set forth herein.

     

    Additionally,
Existing Borrower has requested that Lender consent to the acquisition of all
Equity Interests in Snubco USA Inc., a Wyoming corporation, StassCo Holdings,
Inc., a Wyoming corporation and New Borrower pursuant to, and in accordance
with, that certain Stock Purchase Agreement dated as of July 31, 2007 among
Snubco Well Services, Ltd., a Canadian corporation, James M. Stasinos, David M.
Piaia, John D. Piaia, the Steven J. Hennessy Retirement Plan Trust dated June
15, 2005, New Borrower, Snubco USA Inc., StassCo Holdings, Inc, Snubco Pressure
Control International, Ltd. and Existing Borrower (the “Acquisition”).

     

    NOW,
THEREFORE, in consideration of the premises and of the mutual covenants and
agreements herein contained, it is agreed as follows:

     

    1.           Joinder, Assumption and
Consent.

     

    (a)           New
Borrower hereby joins in, assumes, adopts and becomes a co-debtor and a
co-obligor with respect to the Obligations under the Credit Agreement and all of
the other Loan Documents, and New Borrower hereby joins in, assumes, adopts and
becomes a co-debtor and a co-obligor with respect to the Obligations
(irrespective of when such Obligations first arose) under the Credit Agreement
and all of the other Credit Documents with respect to Existing
Borrower.  Without limiting the foregoing, New Borrower hereby agrees
to (i) all of the terms and conditions contained in the Credit Agreement
and the other Loan Documents with the same legal effect as if it was an original
signatory thereto, including, without limitation, (x) the grant to Lender
of a continuing general Lien upon, and security interest in, all of the
Collateral in which New Borrower has rights as security for the Obligations and
(y) the promises to pay the Obligations in full, if not due earlier in
accordance with the Credit Agreement, on the Maturity Date, and (ii) be,
together with the other Existing Borrower, jointly and severally liable for all
present and future Obligations subject to the provisions of Section 2 of
this Amendment.

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    (b)           Without
limiting the foregoing, Borrowers hereby acknowledge and agree that, as of the
date hereof, the outstanding principal balance of the Equipment Term Advance
equals $6,190,012 and of all Revolving Advances equals $0 and that each such
outstanding principal balance is payable in accordance with the Credit Agreement
and other Loan Documents without setoff, counterclaim, deduction, recoupment or
defense.

     

    (c)           Existing
Borrower and Lender consent to the joinder of New Borrower to the Credit
Agreement and all of the other Loan Documents, as more fully described
above.

     

    2.           Acknowledgement of Joint and
Several Liability, Cross-Guaranty and Contribution Rights; Guaranty
Enforcement.

     

    (a)           Each
Borrower acknowledges and agrees that it is, and shall be, jointly and severally
liable for all of the Obligations under the Loan Documents, and any amendment,
modification, waiver, consent or other agreement which affects the Obligations
shall be deemed to affect the Obligations of all Borrowers on a joint and
several basis unless expressly specified otherwise.  Each Borrower
expressly understands, agrees and acknowledges that (i) Borrowers are all
Affiliates, (ii) each Borrower desires to have the availability of one
common credit facility pursuant to the Credit Agreement instead of separate
credit facilities, (iii) each Borrower has requested that Lender extend
such a common credit facility on the terms of the Credit Agreement, as amended
hereby, (iv) Lender will be lending against, and relying on a Lien upon,
all of Borrowers’ assets even though the proceeds of any particular Advance may
not be advanced directly to a particular Borrower, (v) each Borrower will
nonetheless benefit by the making of all such Advances by each Lender and the
availability of a single credit facility of a size greater than each could
independently warrant, (vi) all of the representations, warranties,
covenants, obligations, conditions, agreements and other terms contained in the
Advance Documents to which any Borrower is a party shall be applicable to and
shall be binding upon each Borrower, unless otherwise expressly provided herein,
and (vii) Borrowers have each executed or joined the Credit Agreement (as
amended hereby and from time to time) and the Notes, if any, as co-obligors of
the Credit Agreement (as amended hereby and from time to time) and the Notes, if
any, and that it would not be able to obtain the credit provided by Lender under
the Credit Agreement (as amended hereby and from time to time) without the
financial support provided by the other Borrowers.

     

    (b)           Each
Borrower hereby guarantees the prompt payment and performance in full of all
Obligations, which Obligations shall be immediately due and payable on the
Maturity Date (except as otherwise provided in the Credit Agreement (as amended
hereby)).  Such guarantee constitutes a guarantee of payment and not
of collection.  Each Borrower’s obligations under the Credit Agreement
(as amended hereby and from time to time) shall, to the fullest extent permitted
by law, be unconditional irrespective of (i) the validity or
enforceability, avoidance or subordination of the Obligations of any other
Credit Party or of any promissory note or other document evidencing all or any
part of the Obligations of any other Credit Party, (ii) the absence of any
attempt to collect the Obligations from any other Credit Party, or any other
security therefor, or the absence of any other action to enforce the same,
(iii) the waiver, consent, extension, forbearance or granting of any
indulgence by Lender with respect to any provision of any instrument evidencing
the Obligations of any other Credit Party or any part thereof, or any other
agreement now or hereafter executed by any other Credit Party and delivered to
Lender, (iv) the failure by Lender to take any steps to perfect and
maintain its security interest in, or to preserve its rights to, any security or
collateral for the Obligations of any other Credit Party, (v) Lender’s
election, in any proceeding instituted under the Bankruptcy Code, of the
application of Section 1111(b)(2) of the Bankruptcy Code, (vi) any
borrowing or grant of a security interest by any other Credit Party, as
debtor-in-possession under Section 364 of the Bankruptcy Code, (vii) the
disallowance of all or any portion of Lender’s claim(s) for the repayment of the
Obligations of any other Credit Party under Section 502 of the Bankruptcy Code
or (viii) any other circumstances which might constitute a legal or
equitable discharge or defense of a guarantor or of any other Credit Party
(other than actual indefeasible payment in full in cash).  With
respect to any Borrower’s Obligations arising as a result of the joint and
several liability of Borrowers hereunder with respect to Advances or other
extensions of credit made to any of the other Borrowers hereunder, such Borrower
hereby forever waives any right to enforce any right of subrogation or any
remedy which Lender now has or may hereafter have against any other Credit
Party, or any endorser of all or any part of the Obligations, and any benefit
of, and any right to participate in, any security or collateral given to Lender
to secure payment of the Obligations or any other liability of any Borrower to
Lender.  During the existence of any Event of Default, Lender may
proceed directly and at once, without notice, against any Borrower to collect
and recover the full amount, or any portion of the Obligations, without first
proceeding against any other Credit Party or any other Person, or against any
security or collateral for the Obligations.  Each Borrower consents
and agrees that Lender shall be under no obligation to marshal any assets in
favor of any Credit Party or against or in payment of any or all of the
Obligations.

     

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

    (c)           Each
Borrower is obligated to repay the Obligations as a joint and several obligor
under the Credit Agreement and the other Loan Documents.  To the
extent that any Borrower shall, under the Credit Agreement (as amended hereby
and from time to time) as a joint and several obligor, repay any of the
Obligations constituting Advances made to another Borrower hereunder or other
Obligations incurred directly and primarily by any other Borrower (an “Accommodation
Payment”), then the Borrower making such Accommodation Payment shall be
entitled to contribution and indemnification from, and be reimbursed by, each of
the other Borrowers in an amount, for each of such other Borrowers, equal to a
fraction of such Accommodation Payment, the numerator of which fraction is such
other Borrower’s Allocable Amount and the denominator of which is the sum of the
Allocable Amounts of all of the Borrowers.  As of any date of
determination, the “Allocable Amount” of each Borrower shall be equal to the
maximum amount of liability for Accommodation Payments which could be asserted
against such Borrower hereunder without (i) rendering such Borrower
“insolvent” within the meaning of Section 101(31) of the Bankruptcy Code,
Section 2 of the Uniform Fraudulent Transfer Act (“UFTA”)
or Section 2 of the Uniform Fraudulent Conveyance Act (“UFCA”),
(ii) leaving such Borrower with unreasonably small capital or assets,
within the meaning of Section 548 of the Bankruptcy Code, Section 4 of the
UFTA or Section 5 of the UFCA, or (iii) leaving such Borrower unable
to pay its debts as they become due within the meaning of Section 548 of the
Bankruptcy Code, Section 4 of the UFTA or Section 5 of the
UFCA.  All rights and claims of contribution, indemnification, and
reimbursement under this Section shall be subordinate in right of payment to the
prior indefeasible payment in full in cash of the Obligations, the expiration or
termination of all issued and outstanding Letters of Credit and the termination
of the Credit Agreement.  The provisions of this Section shall, to the
extent inconsistent with any provision in any Loan Document, supersede such
inconsistent provision.

     

    
      
         

      

      
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    (d)           If
(i) any court holds that Borrowers are guarantors and not jointly and
severally liable as principal obligors or (ii) bankruptcy or reorganization
proceedings at any time are instituted by or against any Borrower under any
Debtor Relief Law, then each Borrower hereby:  (A) expressly and
irrevocably waives, to the fullest extent possible, except as otherwise provided
in Section 2(c)
hereof, on behalf of such Borrower, any and all rights at law or in equity to
subrogation, reimbursement, exoneration, contribution, indemnification, set off
or any other rights that could accrue to a surety against a principal, to a
guarantor against a maker or obligor, to an accommodation party against the
party accommodated, to a holder or transferee against a maker, or to the holder
of a claim against any Person, and which such Borrower may have or hereafter
acquire against any Person in connection with or as a result of such Borrower’s
execution, delivery and/or performance of the Credit Agreement, or any other
documents to which such Borrower is a party or otherwise; (B) expressly and
irrevocably waives any “claim” (as such term is defined in the Bankruptcy Code)
of any kind against any other Borrower, and further agrees that it shall not
have or assert any such rights against any Person (including any surety), either
directly or as an attempted set off to any action commenced against such
Borrower by Lender or any other Person; and (C) acknowledges and agrees
(I) that this waiver is intended to benefit Lender and shall not limit or
otherwise affect such Borrower’s liability hereunder or the enforceability of
the Credit Agreement (as amended hereby or from time to time), and
(II) that Lender and their successors and assigns are intended
beneficiaries of this waiver, and the agreements set forth in this Section and
their rights under this Section shall survive payment in full of the
Obligations, the expiration and termination of all issued and outstanding
Letters of Credit and the termination of the Credit Agreement.

     

    (e)           EACH
CREDIT PARTY WAIVES THE FILING OF A CLAIM WITH A COURT IN THE EVENT OF
RECEIVERSHIP OR BANKRUPTCY OF ANY OTHER CREDIT PARTY, AND WAIVES EVERY DEFENSE,
CAUSE OF ACTION, COUNTERCLAIM OR SETOFF WHICH ANY CREDIT PARTY MAY NOW HAVE OR
HEREAFTER MAY HAVE TO ANY ACTION BY LENDER IN ENFORCING THE CREDIT AGREEMENT,
INCLUDING, WITHOUT LIMITATION, EVERY DEFENSE, COUNTERCLAIM OR SETOFF WHICH SUCH
CREDIT PARTY MAY NOW HAVE, OR HEREAFTER MAY HAVE, AGAINST ANOTHER CREDIT PARTY
OR ANY OTHER PARTY LIABLE TO LENDER IN ANY MANNER.  AS FURTHER
SECURITY, ANY AND ALL DEBTS AND LIABILITIES NOW OR HEREAFTER ARISING AND OWING
TO ANY CREDIT PARTY BY ANY OTHER CREDIT PARTY, OR TO ANY OTHER PARTY LIABLE TO
LENDER, ARE HEREBY SUBORDINATED TO LENDER’S CLAIMS AND UPON THE OCCURRENCE OF AN
EVENT OF DEFAULT ARE ASSIGNED TO LENDER.  EACH CREDIT PARTY RATIFIES
AND CONFIRMS WHATEVER LENDER MAY DO PURSUANT TO THE TERMS HEREOF, AND AGREES
THAT LENDER SHALL NOT BE LIABLE FOR ANY ERROR IN JUDGMENT OR MISTAKES OF FACT OR
LAW.  EACH CREDIT PARTY HEREBY AGREES THAT IT MAY BE JOINED AS A PARTY
DEFENDANT IN ANY LEGAL PROCEEDING (INCLUDING, BUT NOT LIMITED TO, A FORECLOSURE
PROCEEDING) INSTITUTED BY LENDER AGAINST ANY OTHER CREDIT PARTY.

     

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

    (f)           Should
a claim be made upon Lender at any time for repayment of any amount received by
Lender in payment of the Obligations, or any part thereof, whether received from
any Credit Party or received by Lender as the proceeds of Collateral, by reason
of:  (1) any judgment, decree or order of any court or
administrative body having jurisdiction over Lender or any of their property, or
(2) any settlement or compromise of any such claim effected by Lender, in
its sole discretion, with the claimant (including a Credit Party), each Credit
Party shall remain liable to Lender for the amount so repaid to the same extent
as if such amount had never originally been received by Lender, notwithstanding
any termination hereof or the cancellation of any note or other instrument
evidencing any of the Obligations.

     

    (g)           To
the extent that any payment to, or realization by, Lender on the Obligations
exceeds the limitations of this Section and is otherwise subject to avoidance
and recovery in any such proceeding, the amount subject to avoidance shall in
all events be limited to the amount by which such actual payment or realization
exceeds such limitation, and the Credit Agreement as limited shall in all events
remain in full force and effect and be fully enforceable against such Credit
Party.  This Section is intended solely to reserve the rights of
Lender against each Credit Party, in such proceeding to the maximum extent
permitted by applicable Debtor Relief Laws and no Credit Party, guarantor of the
Obligations or other Person shall have any right, claim or defense under this
Section that would not otherwise be available under applicable Debtor Relief
Laws in such proceeding.

     

    3.           Amendments to the Credit
Agreement.  Upon satisfaction of the Conditions Precedent, the
Credit Agreement shall be amended as follows to be effective as of September 30,
2007:

     

    (a)           The
definition of “Borrower” set forth in Section 1.1 of
the Credit Agreement is hereby amended and restated to read as
follows:

     

    “Borrower”
means, collectively, IWC Services and StassCo Pressure Control, LLC, a Wyoming
limited liability company (“StassCo”);
provided, however, for purposes
of (i) identifying any Loan Document executed and delivered on or before
October 1, 2007 and separately defined under this Agreement, any reference
to “Borrower” in such definition shall refer to IWC Services only, provided further that
nothing in the foregoing proviso shall limit StassCo’s liability as a “Borrower”
under each Loan Document and (ii) the definition of “Collateral” and each
defined term incorporated into that definition, the term “Borrower” shall be
deemed to read “any Borrower”.

     

    
      
         

      

      
        -5-

        
          

        

      

      
         

      

    

    (b)           Part
(b) of the definition of “Change of Control” set forth in Section 1.1 of
the Credit Agreement is hereby amended and restated to read as
follows:

     

    (b)           IWC
Services, Snubco USA Inc., a Wyoming corporation, StassCo Holdings, Inc., a
Wyoming corporation, StassCo or any other Domestic Subsidiary of BNC (other than
an Inactive Subsidiary that has merged into another Domestic Subsidiary in
accordance with this Agreement) ceases to be a wholly-owned Subsidiary of
BNC;

     

    (c)           The
definition of “Debt Service Coverage Ratio” set forth in Section 1.1 of
the Credit Agreement is hereby amended and restated to read as
follows:

     

    “Debt
Service Coverage Ratio” means, at any time of determination, the ratio of
(i) the sum of (A) EBITDA of BNC and its Subsidiaries on a
consolidated basis for the twelve (12) calendar months preceding the
determination date (including the calendar month in which the determination date
occurs), minus (B) Unfinanced Capital Expenditures of BNC and its
Subsidiaries on a consolidated basis for the twelve (12) calendar months
preceding the determination date (including the calendar month in which the
determination date occurs) (provided that the
Unfinanced Capital Expenditures of BNC and its Subsidiaries on a consolidated
basis for the fiscal year ending December 31, 2007 shall be deemed equal to zero
for purposes of this clause) to (ii) (a) the Interest Expense for the
twelve (12) calendar months preceding the determination date (including the
calendar month in which the determination date occurs), plus (b) the Current
Maturities of Long Term Debt of BNC and its Subsidiaries as of the determination
date (provided
the foregoing clause (ii)(b) shall not include for purposes of this definition
the final principal payment due to Lender on Maturity Date for the repayment of
outstanding principal amount of the Equipment Advance).

     

    (d)           The
definition of “Domestic Subsidiary” set forth in Section 1.1 of
the Credit Agreement is hereby amended and restated to read as
follows:

     

    “Domestic
Subsidiary” means any Subsidiary of BNC, Borrower, Snubco USA Inc., a
Wyoming corporation or StassCo Holdings, Inc., a Wyoming corporation, organized
under the laws of the United States or any political subdivision
thereof.

     

    (e)           Clause
(xix) appearing in the definition of “Eligible Accounts” set forth in Section 1.1 of
the Credit Agreement is hereby amended and restated and to add clause (xx)
immediately thereafter, in each case, to read as follows:

     

    (xix)        Accounts
of StassCo until such time as Lender has completed its field examination of
Borrowers and has been satisfied with the results of such field examination in
its sole discretion (unless otherwise agreed to in writing by Lender at its sole
option and in its sole discretion); and

     

    
      
         

      

      
        -6-

        
          

        

      

      
         

      

    

    (xx)          Accounts,
or portions thereof, otherwise deemed ineligible by Lender in its sole
discretion.

     

    (f)           The
definition of “Eligible Unbilled Accounts” set forth in Section 1.1 of
the Credit Agreement is hereby amended and restated to read as
follows:

     

    “Eligible
Unbilled Accounts” means all Accounts of a Borrower that would otherwise
constitute Eligible Accounts but for such Borrower not yet having received
approval from the applicable governmental authority as to the work and services
performed that gives rise to the Account.  However, if (i) a Borrower
has received the approval, (ii) the governmental authority denies the approval
or (iii) a Borrower does not unconditionally receive the approval within ninety
(90) days of the creation of the Account, then the Account shall not constitute
an Eligible Unbilled Account.  The Accounts of StassCo shall not
constitute Eligible Unbilled Accounts until such time as Lender has completed
its field examination of StassCo and has been satisfied with the results of such
field examination in its sole discretion (unless otherwise agreed to in writing
by Lender at its sole option and in its sole discretion).

     

    (g)           The
last paragraph appearing in the definitions of “Revolving Loan Margin”, “Term
Loan Margin” and “Unused Line Fee Rate” set forth in Section 1.1 of the
Credit Agreement is hereby amended and restated to read as follows:

     

    If, as a
result of any restatement of or other adjustment to the financial statements of
BNC and its Subsidiaries or for any other reason, Lender determines that (a) the
Senior Debt to EBITDA Ratio as calculated by or on behalf of a Credit Party as
of any applicable date was inaccurate and (b) a proper calculation of the Senior
Debt to EBITDA Ratio would have resulted in different pricing or fees for any
period, then (i) if the proper calculation of the Senior Debt to EBITDA Ratio
would have resulted in higher pricing or fees for such period, Borrowers shall
automatically and retroactively be obligated to pay to Lender promptly on demand
by Lender, an amount equal to the excess of the amount of interest and fees that
should have been paid for such period over the amount of interest and fees
actually paid for such period (provided that if, as
a result of any restatement or other event a proper calculation of the Senior
Debt to EBITDA Ratio would have resulted in higher pricing for one or more
periods and lower pricing for one or more other periods (due to the shifting of
income or expenses form one period to another period or any similar reason),
then the amount payable by Borrowers pursuant to this clause (i) shall be based
upon the excess, if any, of the amount of interest and fees that should have
been paid for all applicable periods over the amount of interest and fees paid
for all such periods); and (ii) if the proper calculation of the Senior Debt to
EBITDA Ratio would have resulted in lower pricing for such period, Lender shall
have no obligation to repay any interest or fees to Borrowers.  All
calculations of the Senior Debt to EBITDA Ratio shall be rounded to the nearest
hundredth decimal point.

     

    
      
         

      

      
        -7-

        
          

        

      

      
         

      

    

    (h)           Section 1.1 of the
Credit Agreement shall be amended by adding the following new definitions in
their respective proper alphabetical order:

     

    “Debtor
Relief Law” shall mean, collectively, the Bankruptcy Code and all other
applicable liquidation, conservatorship, bankruptcy, moratorium, rearrangement,
receivership, insolvency, reorganization or similar debtor relief laws from time
to time in effect affecting the rights of creditors generally, as amended from
time to time.

     

    “Transaction
Document” means all documents executed or delivered in connection with
the Transactions.

     

    “Transactions”
means, collectively, (i) the HWC Transactions and (ii) the transactions
consummated pursuant to that certain Stock Purchase Agreement dated as of July
31, 2007 among Snubco Well Services, Ltd., a Canadian corporation, James M.
Stasinos, David M. Piaia, John D. Piaia, the Steven J. Hennessy Retirement Plan
Trust dated June 15, 2005, IWC Services, Snubco USA Inc., StassCo Holdings, Inc,
Snubco Pressure Control International, Ltd. and StassCo (the “StassCo
Transaction”).

     

    (i)           Each
of use of the term “HWC Transaction Document” outside of Section 1.1 of the
Credit Agreement shall be amended to read “Transaction Document”.

     

    (j)           Section 2.4(a)(i) of
Credit Agreement is hereby amended to replace “$2,000,000” with
“$4,000,000”.

     

    (k)          The
name and address of Debtor and Secured Party set forth in Section 3.6 of the
Credit Agreement is hereby amended to read as follows:

     

    Name and
address of Debtor:

    

    IWC
Services, LLC

    c/o Boots
& Coots International Well Control, Inc.

    7908 N.
Sam Houston Parkway, 5th
Floor

    Houston,
TX 77064

    Federal
Employer Identification No.  76-0475739

    Organizational
Identification No.  136090400

    

    StassCo
Pressure Control, LLC

    c/o Boots
& Coots International Well Control, Inc.

    7908 N.
Sam Houston Parkway, 5th
Floor

    Houston,
TX 77064

    Federal
Employer Identification No. 32-0154211

    Organizational
Identification No. 2005-000495988

    
      
         

      

      
        -8-

        
          

        

      

      
         

      

    

    Name and
address of Secured Party:

    Wells
Fargo Bank, National Association

    4975
Preston Park Blvd.

    Suite
270

    Plano,
Texas  75093

     

    (l)           Section 6.2(a) of
Credit Agreement is hereby amended and restated to read as follows:

     

    (a)           Minimum Book Net
Worth.  BNC and its Subsidiaries will on a consolidated basis
maintain, during the period commencing on October 31, 2007 and continuing thereafter
until the Maturity Date, a Book Net Worth, determined as of the end of each
fiscal month in such period, in an amount not less than
$55,000,000.

     

    (m)           The
notice address for Lender, BNC and each Borrower for purposes of Section 8.3 of the
Credit Agreement shall be (until such time as this address may be further
changed pursuant to Section
8.3):

     

    BNC and
each Borrower:

    

    c/o Boots
& Coots International Well Control, Inc.

    7908 N.
Sam Houston Parkway, 5th
Floor

    Houston,
TX 77064

    Telecopier:
(281) 931-8884

    Attention:
Brian Keith, General Counsel

    e-mail:
bkeith@boots-coots.com

    

    Lender:

    

    Wells
Fargo Bank, National Association,

    acting
through its Wells Fargo Business Credit operating division

    4975
Preston Park Blvd.

    Suite
270

    Plano,
Texas  75093

    Telecopier:
(972) 867-7838

    Attention:  John
Wattinger

    e-mail:  john.wattinger@wellsfargo.com

    

    (n)           All
references to “San Antonio” and “Bexar County” in the Credit Agreement shall be
amended to read “Dallas” and “Dallas County”, respectively.

     

    (o)           Schedules
5.1, 5.2, 5.5, 5.18, 5.22, as attached to the Credit Agreement shall be amended,
restated and replaced with the corresponding Schedule attached
hereto.

     

    4.           Designation of Location for
Payment under each Note.  Lender designates its address of
Wells Fargo Bank, National Association, acting through its Wells Fargo Business
Credit operating division, 4975 Preston Park Blvd., Suite 270, Plano,
Texas  75093 as its current designated location for payments with
respect to each Note.

     

    
      
         

      

      
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    5.           Consent and
Waiver.  Upon satisfaction of the Conditions Precedent, Lender
(i) consents to the consummation of the Acquisition and (ii) grants this
one-time and limited waiver of any Default or Event of Default arising under
Section 6.18 of
the Credit Agreement solely on account of the consummation of the Acquisition as
of July 31, 2007.

     

    6.           No Other Changes.
Except as explicitly amended by this Amendment, all of the terms and conditions
of the Credit Agreement and the other Loan Documents shall remain in full force
and effect.

     

    7.           Conditions Precedent.
This Amendment shall be effective when Lender shall have received an executed
original hereof, together with each of the following, each in substance and form
acceptable to Lender in its sole discretion (these conditions being
collectively, the “Conditions
Precedent”):

     

    (a)           Originals
of the Acknowledgment and Agreement of Guarantors and the Acknowledgment and
Agreement of Subordinated Creditor set forth at the end of this Amendment, duly
executed by each Guarantor and the Subordinated Creditor.

     

    (b)           All
representations and warranties made under this Amendment shall be true, correct
and complete.

     

    (c)           In
consideration for entering into this Amendment, Lender shall have received from
Borrower in immediately available funds an amendment fee of $5,000, which fee
shall be duly earned and nonrefundable upon execution of this
Amendment.

     

    (d)           Lender
shall have received all items deliverable pursuant to the checklist prepared in
connection with this Amendment.

     

    (e)           Such
other matters as Lender may require in its Permitted Discretion.

     

    8.           Representations and
Warranties.  Each Borrower hereby represents and warrants to
Lender as follows:

     

    (a)           Each
Borrower and each Guarantor have all requisite power and authority to execute
this Amendment and the Acknowledgement and Agreement of Guarantors, as
applicable and to perform all of their respective obligations under this
Amendment, the Loan Documents (as amended by this Amendment) and the
Acknowledgement and Agreement of Guarantors, and this Amendment and the
Acknowledgement and Agreement of Guarantors have been duly executed and
delivered by Borrowers and the Guarantors, as applicable, and constitute the legal, valid and
binding obligations of such parties, enforceable in accordance with their
respective terms.

     

    (b)           The
execution, delivery and performance by Borrowers and Guarantors of this
Amendment, the Loan Documents (as amended by this Amendment) and the
Acknowledgement and Agreement of Guarantors have been duly authorized by all
necessary action and do not (i) require any authorization, consent or
approval by any governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, (ii) violate any provision of any
law, rule or regulation or of any order, writ, injunction or decree presently in
effect, having applicability to any Borrower or any Guarantor, or any governing
document of any Borrower or any Guarantor, or (iii) result in a breach of
or constitute a default under any indenture or loan or credit agreement or any
other agreement, lease or instrument to which any Borrower or any Guarantor is a
party or by which it or its properties may be bound or affected.

     

    
      
         

      

      
        -10-

        
          

        

      

      
         

      

    

    (c)           No
Default or Event of Default exists under the Credit Agreement before or after
giving effect to this Amendment.

     

    (d)           All
of the representations and warranties contained in Article V of the Credit
Agreement are correct on and as of the date hereof as though made on and as of
such date, except to the extent that such representations and warranties relate
solely to an earlier date.

     

    9.           References.  All
references in the Credit Agreement to “this Agreement” shall be deemed to refer
to the Credit Agreement as amended hereby; and any and all references in the
Security Documents to the Credit Agreement shall be deemed to refer to the
Credit Agreement as amended hereby.

     

    10.           No
Waiver.  The execution of this Amendment and acceptance of any
documents related hereto shall not be deemed to be a waiver of any Default or
Event of Default (other than any Default or Event of Default arising under Section 6.18 of the
Credit Agreement solely on account of the consummation of the Acquisition as of
July 31, 2007) under the Credit Agreement or breach, default or event of default
under any Security Document or other document held by Lender, whether or not
known to Lender and whether or not existing on the date of this
Amendment.

     

    11.           Ratification.  Except
as specifically amended hereby, the Credit Agreement and the other Loan
Documents shall remain in full force and effect and hereby are ratified and
confirmed by each Borrower and each Guarantor as so amended.  Each
Borrower and each Guarantor hereby ratify and confirm all of the Obligations
pursuant to the Credit Agreement and other Loan Documents to which it is a party
and confirm and ratify the liens and security interests granted in favor of
Lender in the Collateral to secure the repayment and performance of all
Obligations.

     

    12.           Release.  EACH
BORROWER, AND EACH GUARANTOR BY SIGNING THE ACKNOWLEDGMENT AND AGREEMENT OF
GUARANTORS SET FORTH BELOW, EACH HEREBY ABSOLUTELY AND UNCONDITIONALLY RELEASES
AND FOREVER DISCHARGES LENDER, AND ANY AND ALL PARTICIPANTS, PARENT
CORPORATIONS, SUBSIDIARY CORPORATIONS, AFFILIATED CORPORATIONS, INSURERS,
INDEMNITORS, SUCCESSORS AND ASSIGNS THEREOF, TOGETHER WITH ALL OF THE PRESENT
AND FORMER DIRECTORS, OFFICERS, ATTORNEYS, AGENTS AND EMPLOYEES OF ANY OF THE
FOREGOING, FROM ANY AND ALL CLAIMS, DEMANDS OR CAUSES OF ACTION OF ANY KIND,
NATURE OR DESCRIPTION, WHETHER ARISING IN LAW OR EQUITY OR UPON CONTRACT OR TORT
OR UNDER ANY STATE OR FEDERAL LAW OR OTHERWISE, WHICH BORROWER OR SUCH GUARANTOR
HAS HAD, NOW HAS OR HAS MADE CLAIM TO HAVE AGAINST ANY SUCH PERSON FOR OR BY
REASON OF ANY ACT, OMISSION, MATTER, CAUSE OR THING WHATSOEVER ARISING FROM THE
BEGINNING OF TIME TO AND INCLUDING THE DATE OF EXECUTION OF THIS AMENDMENT,
WHETHER SUCH CLAIMS, DEMANDS AND CAUSES OF ACTION ARE MATURED OR UNMATURED OR
KNOWN OR UNKNOWN, INCLUDING,
WITHOUT LIMITATION, ALL CLAIMS, DEMANDS OR CAUSES OF ACTION ARISING IN WHOLE OR
PART FROM THE NEGLIGENCE OR STRICT LIABLITY OF LENDER OR ANY OTHER RELEASED
PARTY.

     

    
      
         

      

      
        -11-

        
          

        

      

      
         

      

    

    13.           Severability.  If
any term or provision of this Amendment is adjudicated to be invalid under
applicable laws or regulations, such provision shall be inapplicable to the
extent of such invalidity without affecting the validity or enforceability of
the remainder of this Amendment which shall be given effect so far as
possible.

     

    14.           Binding
Effect.  This Amendment shall be binding upon and inure to the
benefit of Borrowers and Lender and their respective successors and assigns,
except that Borrowers shall not have the right to assign any rights thereunder
or any interest therein without Lender’s prior written consent.

     

    15.           Costs and
Expenses.  Each Borrower hereby reaffirms its agreement under
the Credit Agreement to pay or reimburse Lender on demand for all costs and
expenses incurred by Lender in connection with the Loan Documents, including
without limitation all reasonable fees and disbursements of legal counsel.
Without limiting the generality of the foregoing, each Borrower specifically
agrees to pay all fees and disbursements of counsel to Lender for the services
performed by such counsel in connection with the preparation of this Amendment
and the documents and instruments incidental hereto.  Each Borrower
hereby agrees that Lender may, at any time or from time to time in its sole
discretion and without further authorization by a Borrower, make a loan to a
Borrower under the Credit Agreement, or apply the proceeds of any loan, for the
purpose of paying any such fees, disbursements, costs and expenses.

     

    16.           Miscellaneous.  This
Amendment, the Acknowledgment and Agreement of Guarantors and the Acknowledgment
and Agreement of Subordinated Creditor (i) may be executed in any
number of counterparts, each of which when so executed and delivered shall be
deemed an original and all of which counterparts, taken together, shall
constitute one and the same instrument and (ii) AND THE OTHER LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES,
AND  THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE
PARTIES.  Capitalized terms used in this Amendment and the
Acknowledgments attached hereto have the meanings given to them in the Credit
Agreement unless otherwise specified.  This Amendment shall be
governed and construed in accordance with the laws of the State of
Texas.

     

    
      
         

      

      
        -12-

        
          

        

      

      
         

      

    

    [SIGNATURE PAGE
FOLLOWS]

    
      
         

      

      
        -13-

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed as of the date first written above.

     

    

    
      	
              BOOTS & COOTS INTERNATIONAL
      WELL CONTROL, INC., a Delaware corporation

            	 
	 
      	 
      	 
	
              IWC SERVICES, LLC, a
      Texas limited liability company

            	 
	 
      	 
      	 
	
              STASSCO PRESSURE CONTROL,
      L.L.C., a Wyoming limited liability company

            	 
	
              By:

            	
              /s/
      Jerry Winchester

            	 
	
              Name:

            	
              Jerry
      Winchester

            	 
	
              Title:

            	
              President
      and CEO

            	 
	 	 	 
	
              WELLS FARGO BANK, NATIONAL
      ASSOCIATION, acting through its Wells

            	 
	
              Fargo
      Business Credit operating division

            	 
	 
      	 
      	 
	
              By:

            	
              /s/
      John Wattinger

            	 
	
              Name:

            	
              John
      Wattinger

            	 
	
              Title:

            	
              Vice
      President

            	 

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    ACKNOWLEDGMENT
AND AGREEMENT OF GUARANTORS

     

    Each
undersigned, each a guarantor of the indebtedness and other obligations of
Borrower to Lender pursuant to a separate Guaranty each dated on or about
March 3, 2006, or of even date herewith, as the case may be (each a “Guaranty”),
hereby (i) acknowledges receipt of the foregoing Amendment;
(ii) consents to (and agrees to be bound by) the terms (including, without
limitation, the release set forth in Section 12 of
the Amendment) and execution thereof; (iii) reaffirms its obligations to
Lender pursuant to the terms of its Guaranty and any other Loan Documents to
which it is a party; and (iv) acknowledges that Lender may amend, restate,
extend, renew or otherwise modify the Credit Agreement and any indebtedness or
agreement of a Borrower, or enter into any agreement or extend additional or
other credit accommodations, without notifying or obtaining the consent of the
undersigned and without impairing the liability of the undersigned under its
Guaranty for all of a Borrower’s present and future indebtedness and other
obligations to Lender.

     

    This
Acknowledgment and Agreement by Guarantors shall constitute a part of the
foregoing Amendment.

     

    BOOTS
& COOTS INTERNATIONAL WELL CONTROL, INC.

    BOOTS
& COOTS SERVICES, INC.

    BOOTS
& COOTS SPECIAL SERVICES, INC.

    ELMAGCO,
INC.

    HELL
FIGHTERS, INC.

    HWC
LIMITED

    IWC
ENGINEERING, INC.

    SNUBCO
USA INC.

    STASSCO
HOLDINGS, INC.

    

    

    By: /s/
Jerry Winchester

    Name:
Jerry Winchester

    Title:
President and CEO of each entity above

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    ACKNOWLEDGMENT
AND AGREEMENT OF SUBORDINATED CREDITORS

     

    The
undersigned, a subordinated creditor of BNC pursuant to each Senior Subordinated
Promissory Note, hereby (i) acknowledges receipt of the foregoing
Amendment; (ii) consents to the terms and execution thereof;
(iii) reaffirms the terms of each Senior Subordinated Promissory Note; and
(iv) acknowledges that Lender may amend, restate, extend, renew or
otherwise modify the Loan Documents and any indebtedness or agreement of a
Borrower or enter into any agreement or extend additional or other credit
accommodations (in each case subject to any limitations set forth in the
respective Senior Subordinated Promissory Note), without notifying or obtaining
the consent of the undersigned except as may be expressly required under the
terms of each Senior Subordinated Promissory Note.

     

    This
Acknowledgment and Agreement of Subordinated Creditors shall constitute a part
of the foregoing Amendment.

     

    
      	
              OIL
      STATES ENERGY SERVICES, INC.

            	 
	
              (formerly
      known as HWC Energy Services, Inc.)

            	 
	 
      	 
      	 
	 	 	 
	
              By:

            	
              /s/Cindy
      B. Taylor

            	 
	 
      	
              Cindy
      B. Taylor, President

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