<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (date of earliest event reported): July 11, 1997
DLB OIL & GAS, INC.
(Exact name of registrant as specified in its charter)
OKLAHOMA
(State or other jurisdiction of incorporation or organization)
0-26484 73-1358299
(Commission File Number) (I.R.S. Employer
Identification No.)
1601 N.W. EXPRESSWAY, SUITE 700
OKLAHOMA CITY, OKLAHOMA 73118-1401
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 405-848-8808
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On July 11, 1997, the Second Amended Joint Plan of Reorganization under
Chapter 11 of the United States Bankruptcy Code, as proposed by DLB Oil and
Gas, Inc. ("DLB"), WRT Energy Corporation ("Debtor") and Wexford Management LLC
("Wexford") dated as of March 11, 1997 (as modified by the technical
modifications set forth in the Joint Motion for Approval of Technical
Modifications to the Plan of Reorganization and those announced at the
Confirmation hearing commencing on April 28, 1997, hereinafter referred to as
the "Plan"), of Debtor became effective pursuant to its terms and conditions.
In addition, the transactions contemplated by the Plan to occur on the
effective date of the Plan were consummated in accordance with the terms and
conditions of the Plan. Pursuant to the terms and conditions of the Plan, the
Debtor was merged with and into WRT Energy Corporation, now a Delaware
corporation ("WRT").
As a result of the consummation of the Plan, DLB acquired 10.35 million
shares, representing 51.6%, of the outstanding common stock of WRT. Of such
shares, 5.0 million shares were received by DLB for the contribution of the
West Cote Blanche Bay Assets purchased by DLB in March 1997 for approximately
$13.5 million and 1.7 million shares were received for a claim purchased from
Texaco in the same transaction for $6.0 million. In addition, 1.6 million
shares were issued in respect of certain credit obligations of WRT which DLB
had acquired for $6.6 million and 1.1 million shares were issued to DLB upon
its $3.8 million exercise of stock rights pursuant to an offering that was an
integral part of the plan. Also, 0.9 million shares were issued for the $2.6
million paid for capital expenditures and other allowed general unsecured
claims and liens. DLB used cash flow from operations and borrowings under its
credit facility with a bank group to fund its purchase of such credit
obligations and shares.
Pursuant to the Plan, Wexford acquired 1.84 million shares of WRT common
stock. Charles E. Davidson, the managing member of Wexford, is also Chairman of
DLB.
An additional 1.41 million shares, currently in escrow, will be
distributed upon resolution of certain post closing matters.
WRT owns interest in 19 fields in south Louisiana and controls
operations on essentially 100% of its production. As of December 31, 1996,
WRT's proved reserves, as estimated by Netherland, Sewell and Associates, Inc.,
totaled approximately 28.0 million barrels of oil equivalent.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Business Acquired
The financial statements required by this Item will be filed by
amendment or amendments of this Report as soon as practicably
available and no later than 60 days after the date of this
Report.
(b) Pro Forma Financial Information
The pro forma financial information required by this Item will be
filed by amendment or amendments of this Report as soon as
practicably available and no later than 60 days after the date of
this Report.
1
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(c) The following exhibits are filed with this report:
2.0 Warrant Agreement dated July 10, 1997
2.1 Registration Rights Agreement dated July 10, 1997
2.2 WRT's Restated Certificate of Incorporation
2.3 WRT's By-Laws
2.4 Commitment Agreement dated January 20, 1997
2.5 Subscription Rights Agreement
2.6 Liquidating Trust Agreement dated July 10, 1997
2.7 Disbursing Services Agreement dated May 2, 1997
2.8 Agreement and Plan of Merger dated July 10, 1997
2.9 Summary of the material terms of the Purchase, Sale
and Cooperation Agreement
2
<PAGE> 4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto authorized.
DLB Oil & Gas, Inc.
/s/ MIKE LIDDELL
-------------------------------------
Mike Liddell, Chief Executive Officer
Date: July 25, 1997
3
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EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXH. NO. EXHIBIT NAME NUMBERED PAGE
- -------- ------------ ---------------
<S> <C> <C>
2.0 Warrant Agreement dated July 10, 1997
2.1 Registration Rights Agreement dated July 10, 1997
2.2 Commitment Agreement dated January 20, 1997
2.3 Subscription Rights Agreement
2.4 Liquidating Trust Agreement dated July 10, 1997
</TABLE>
<PAGE> 1
EXHIBIT 2.0
WRT ENERGY CORPORATION
and
AMERICAN STOCK TRANSFER & TRUST COMPANY,
as Warrant Agent
WARRANT AGREEMENT
Dated as of July 10, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
WARRANT AGREEMENT
Section 1. Appointment of Warrant Agent.............................1
Section 2. Warrant Certificates.....................................1
Section 3. Execution of Warrant Certificates........................2
Section 4. Registration and Countersignature........................2
Section 5. Registration of Transfers and Exchanges..................3
Section 6. Terms of Warrants; Exercise of Warrants..................4
Section 7. Payment of Expenses, Taxes and Governmental Charges......6
Section 8. Mutilated or Missing Warrant Certificates................6
Section 9. Reservation of Warrant Shares............................7
Section 10. Obtaining Stock Exchange Listings........................7
Section 11. Exercise Price and Exercise Quantity.....................7
Section 12. Adjustment of Exercise Quantity..........................7
(a) Adjustment for Change in Capital Stock.......................7
(b) Adjustment for Rights Issue..................................8
(c) Adjustment for Other Distribution............................9
(d) Adjustment for Common Stock Issue............................10
(e) Adjustment for Convertible Securities Issue..................10
(f) Current Market Price.........................................11
(g) Consideration Received; Occurrence of Transactions...........11
(h) When De Minimis Adjustment May be Deferred...................12
(i) Notice of Adjustment.........................................13
(j) Notice of Certain Transactions...............................14
(k) Reorganization of the Company................................14
(l) Warrant Agent's Disclaimer...................................14
(m) When Adjustment is not Required..............................15
(o) Form of WRT Warrants and Warrant Certificates................15
(p) Readjustment of Exercise Quantity............................15
Section 13. Fractional Interests.....................................15
Section 14. Notices to Warrant Holders...............................16
Section 15. Merger, Consolidation or Change of Name of
Warrant Agent............................................17
Section 16. Warrant Agent............................................18
Section 17. Change of Warrant Agent..................................19
Section 18. Notices to the Company and Warrant Agent.................20
Section 19. Supplements, Amendments and Modifications................21
Section 20. Successors...............................................22
Section 21. Termination..............................................22
Section 22. Return of Unclaimed Cash or Property.....................22
Section 23. Governing Law............................................23
Section 24. Benefits of this Warrant Agreement.......................23
Section 25. Agreement of Warrant Holders.............................23
Section 26. Titles and Headings......................................24
Section 27. Certain Interpretive Matters.............................24
Section 28. Entire Agreement.........................................24
</TABLE>
-i-
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<TABLE>
<S> <C>
Section 29. Severability.............................................24
Section 30. Counterparts.............................................24
Section 31. Determinations of the Company's Board of Directors.......24
Section 32. Glossary of Terms........................................24
{Form of Warrant Certificate}....................................A-1
{Form of Warrant Certificate}....................................A-3
FORM OF ELECTION TO PURCHASE.....................................A-5
FORM OF ASSIGNMENT...............................................A-6
</TABLE>
-ii-
<PAGE> 4
WARRANT AGREEMENT
WARRANT AGREEMENT (the "Warrant Agreement"), dated as of July 10,
1997, by and between WRT Energy Corporation, a Delaware corporation (the
"Company"), and American Stock Transfer & Trust Company, a New York
corporation, as warrant agent (the "Warrant Agent"). Unless the context
requires otherwise, capitalized terms used herein without definition shall have
the same meanings specified in the Plan.
WITNESSETH:
WHEREAS, the Company proposes to issue, pursuant to the Debtor's and
DLBW's Second Amended Joint Plan of Reorganization Under Chapter 11 of the
United States Bankruptcy Code, dated March 11, 1997, as amended (the "Plan"),
up to 1,163,400 (the "Warrant Amount") WRT Warrants, as hereinafter described
(the "WRT Warrants"), to purchase shares of WRT Common Stock, $0.01 par value
per share, of the Company (the WRT Common Stock issuable on exercise of the WRT
Warrants being referred to herein as the "Warrant Shares");
WHEREAS, the Company desires that the Warrant Agent act on behalf of
the Company, and the Warrant Agent is willing so to act, in connection with the
issuance of Warrant Certificates (as defined below in Section 2) and other
matters as provided herein;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth herein, the parties hereto agree as follows:
Section 1. Appointment of Warrant Agent. The Company hereby
appoints the Warrant Agent to act as agent for the Company and the Warrant
Holders (as defined in Section 4) in accordance with the terms and conditions
set forth hereinafter in this Warrant Agreement, and the Warrant Agent hereby
accepts such appointment. The Warrant Agent shall have the powers and
authority granted to and conferred upon it in the Warrant Certificates (as
defined in Section 2) and such further powers and authority to act on behalf of
the Company as the Company may hereafter grant to or confer upon it. All terms
and provisions with respect to such powers and authority contained in the
Warrant Certificate are subject to and governed by the terms and provisions
hereof.
Section 2. Warrant Certificates. The certificates evidencing the
WRT Warrants (the "Warrant Certificates") to be delivered pursuant to this
Warrant Agreement shall be in registered form, substantially as set forth in
Exhibit A attached hereto. The Warrant Certificates may have such letters,
numbers or other marks of identification or designation and such legends or
endorsements printed, lithographed or engraved thereon as the officers of the
Company executing the same may approve (execution thereof to be conclusive
evidence of such approval) as are not inconsistent with the provisions of this
Warrant Agreement, or as may be required to comply with any law or with any
<PAGE> 5
rule or regulation made pursuant thereto or with any rule or regulation of any
stock exchange or other trading system including, but not limited to, the
National Association of Securities Dealers, Inc. ("NASD") Automated Quotation
System, on which the WRT Warrants may be listed or quoted, or to conform to
usage.
Section 3. Execution of Warrant Certificates. (a) Warrant
Certificates shall be signed on behalf of the Company by its Chairman of the
Board or its President or a Vice President under its corporate seal. Each such
signature upon the Warrant Certificates may be in the form of a facsimile
signature of any present or future Chairman of the Board, President or Vice
President and may be imprinted or otherwise reproduced on the Warrant
Certificates and for that purpose the Company may adopt and use the facsimile
signature of any person who shall have been Chairman of the Board, President or
Vice President, notwithstanding the fact that at the time the Warrant
Certificates shall be countersigned and delivered or disposed of he or she
shall have ceased to hold such office. The seal of the Company may be in the
form of a facsimile thereof and may be impressed, affixed, imprinted or
otherwise reproduced on the Warrant Certificates.
(b) Warrant Certificates shall be dated the date of
countersignature by the Warrant Agent. In case any officer of the Company who
shall have signed any of the Warrant Certificates shall cease to be such
officer before the Warrant Certificates so signed shall have been countersigned
by the Warrant Agent, or disposed of by the Company, such Warrant Certificates
nevertheless may be countersigned and delivered or disposed of as though such
person had not ceased to be such officer of the Company; and any Warrant
Certificate may be signed on behalf of the Company by any person who, at the
actual date of the execution of such Warrant Certificate, shall be a proper
officer of the Company to sign such Warrant Certificate, although at the date
of the execution of this Warrant Agreement any such person was not such an
officer.
Section 4. Registration and Countersignature. (a) The Warrant
Agent, on behalf of the Company, shall number and register the Warrant
Certificates in a register (the "Warrant Register") as they are issued by the
Company. The Warrant Register shall show the names and addresses of the
respective holders of the Warrant Certificates (individually, a "Warrant
Holder" and collectively, the "Warrant Holders") representing such Warrant
Holders' ownership of WRT Warrants, the number of WRT Warrants evidenced on its
face by each of the Warrant Certificates and the date of each of the Warrant
Certificates. The Warrant Register shall be kept at the office of the Warrant
Agent designated for such purpose and shall be in written form in the English
language or in any other form capable of being converted into such form within
a reasonable time.
(PAGE 2)
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(b) Subject to the limitations set forth in subsection (c) below,
Warrant Certificates shall be manually countersigned by the Warrant Agent and
shall not be valid for any purpose unless so countersigned. The Warrant Agent
shall, upon written instructions of the Chairman of the Board, the President, a
Vice President, the Treasurer or the Controller of the Company, initially
countersign, issue and deliver Warrant Certificates entitling the Warrant
Holders thereof to purchase the Warrant Shares and shall countersign and
deliver Warrant Certificates as otherwise provided in this Warrant Agreement.
(c) A number of Warrant Certificates up to the Warrant Amount may
be executed by the Company and delivered to the Warrant Agent upon the
execution of this Warrant Agreement or from time to time thereafter, evidencing
the right to receive an aggregate number of Warrant Shares equal to the Warrant
Amount. Subsequent to such original issuance of the Warrant Certificates, the
Warrant Agent shall countersign a Warrant Certificate only if the Warrant
Certificate is issued upon registration of transfer or in exchange or
substitution for one or more previously countersigned Warrant Certificates, as
hereinafter provided.
(d) In case at any time the name of the Warrant Agent shall be
changed (including by operation of Section 15) and at such time any of the
Warrant Certificates shall be countersigned but not delivered, the Warrant
Agent may adopt the countersignature under its prior name; and in case at that
time any of the Warrant Certificates shall not have been countersigned, the
Warrant Agent may countersign such Certificates either in its prior name or in
its changed name and in all such cases such Warrant Certificates shall have the
full force provided in the Warrant Certificates and in this Warrant Agreement.
(e) The Company, the Warrant Agent and all other persons may deem
and treat the registered Warrant Holder as the absolute owner of the Warrant
Certificates (notwithstanding any notation of ownership or other writing
thereon made by anyone) for all purposes and neither the Company, the Warrant
Agent nor any other person shall be affected by any notice to the contrary.
Section 5. Registration of Transfers and Exchanges. (a) The
Warrant Agent shall from time to time register the transfer of any outstanding
Warrant Certificates in the Warrant Register, upon surrender thereof (together
with the form of assignment set forth on the reverse side of the Warrant
Certificates duly filled in and signed, which signature shall be guaranteed by
an eligible guarantor institution (a bank, stockbroker, savings and loan
association or credit union with membership in an approved signature guarantee
medallion program) pursuant to Rule 17Ad-15 of the Securities Exchange Act of
1934, as amended (the "Exchange Act") to the Warrant Agent at its office
designated for such purpose accompanied (if so required by it or the Company)
by a written instrument or instruments of transfer (which shall be in a form
reasonably satisfactory to the Warrant Agent and the Company), duly executed by
the registered Warrant Holder or Warrant Holders thereof or by the duly
appointed legal representative thereof or by a duly authorized attorney. Upon
any such registration of transfer, a new Warrant Certificate or Warrant
(PAGE 3)
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Certificates (of like tenor and representing in the aggregate a like number of
WRT Warrants) shall be issued to the transferee(s) and the surrendered Warrant
Certificate or Warrant Certificates shall be canceled by the Warrant Agent.
Canceled Warrant Certificates shall thereafter be disposed of by such Warrant
Agent in a manner satisfactory to the Company.
(b) The Warrant Agent is hereby authorized to countersign, in
accordance with the provisions of Section 4 hereof and of this Section 5, the
new Warrant Certificates required pursuant to the provisions of this Section 5,
and the Company, whenever required by the Warrant Agent, will supply the
Warrant Agent with Warrant Certificates duly executed on behalf of the Company
for such purposes. The Company may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any exchange or registration of transfer of Warrant Certificates.
Section 6. Terms of Warrants; Exercise of Warrants. (a) Subject
to the terms of this Warrant Agreement, each Warrant Holder shall have the
right, which may be exercised commencing at 9:00 A.M., New York City time, on
the date of this Warrant Agreement and until 5:00 P.M., New York City time, on
July 10, 2002 (the "Expiration Time") to purchase from the Company the number
of fully paid and nonassessable Warrant Shares which the Warrant Holder may at
the time be entitled to receive (the "Exercise Quantity", as further defined in
Section 11) on exercise of such WRT Warrants and payment of the Exercise Price
(as defined in Section 11) then in effect for such Warrant Shares. Each WRT
Warrant not exercised prior to the Expiration Time shall become null and void
and all rights thereunder and all rights in respect thereof under this Warrant
Agreement and the Warrant Certificates shall cease as of such time. If the
Expiration Time shall not be a business day, then the Expiration Time shall be
on the next succeeding business day.
(b) A WRT Warrant may be exercised upon surrender to the Company
at the office of the Warrant Agent designated for such purpose of the Warrant
Certificate or Warrant Certificates evidencing the WRT Warrants to be exercised
with the form of election to purchase on the reverse thereof duly filled in and
signed, which signature shall be guaranteed by an eligible guarantor
institution (a bank, stockbroker, savings and loan association or credit union
with membership in an approved signature guarantee medallion program) pursuant
to Rule 17Ad-15 of the Exchange Act, and upon payment to the Warrant Agent for
the account of the Company of the Exercise Price for the number of Warrant
Shares in respect of which such WRT Warrants are then exercised. Payment of
the aggregate Exercise Price shall be made in cash or by certified or official
bank check to the order of the Warrant Agent, as Warrant Agent for the Company.
(c) Subject to the provisions of Section 7 hereof, upon such
surrender of WRT Warrants, delivery of required documents and payment of the
Exercise Price, the Company (or the surviving entity in the case of a Non-
Surviving Combination as defined in subsection (l) of Section 12 hereof) shall
issue and cause the Warrant Agent to deliver as described in subsection (d)
hereof a certificate or certificates for the number of full Warrant Shares (or
(PAGE 4)
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other cash or property to which the Warrant Holder is entitled) issuable (or
deliverable) upon the exercise of such WRT Warrants together with cash as
provided in Section 13; provided, however, that after the first public
announcement that any consolidation, merger or lease or sale of assets is
proposed to be effected by the Company as described in subsection (l) of
Section 12 hereof, or a tender offer or an exchange offer for shares of WRT
Common Stock shall be made, upon such surrender of WRT Warrants, delivery of
required documents and payment of the Exercise Price as aforesaid, the Company
shall, as soon as possible, but in any event not later than three (3) business
days thereafter, issue and cause to be delivered the full number of Warrant
Shares issuable upon the exercise of such WRT Warrants in the manner described
in this sentence together with cash as provided in Section 13. Such
certificate or certificates (or such other cash or property) shall be deemed to
have been issued (or delivered) and any person so designated to be named
therein shall be deemed to have become a holder of record of such Warrant
Shares (or such other cash or property) as of the date of the surrender of such
WRT Warrants, the delivery of required documents and payment of the Exercise
Price.
(d) As promptly as practicable after an exercise of WRT Warrants
in accordance with this Section 6, and in any event within three (3) business
days after such exercise, the Warrant Agent will (1) requisition from any
transfer agent for the WRT Common Stock (the "Transfer Agent") (or make
available, if the Warrant Agent is the Transfer Agent) certificates
representing the number of Warrant Shares to be purchased (and the Company
hereby irrevocably authorizes and directs the Warrant Agent to so requisition
and its Transfer Agent to comply with all such requests), (2) after receipt of
such certificates, cause the same to be delivered to or upon the order of the
Warrant Holder exercising such WRT Warrants, registered in such name or names
as may be designated by such Warrant Holder, (3) when appropriate, requisition
from the Company the amount of cash to be paid in lieu of the issuance of
fractional Warrant Shares or fractional interests in any other securities, as
the case may be, in accordance with the provisions of Section 13 and (4) when
appropriate, after receipt, deliver such cash to or upon the order of the
Warrant Holder exercising such WRT Warrants.
(e) Subject to the provisions of this Warrant Agreement and the
Warrant Certificates, the WRT Warrants shall be exercisable, at the election of
the Warrant Holders thereof, either in full or from time to time in part and,
in the event that a certificate evidencing WRT Warrants is exercised in respect
of fewer than all of the Warrant Shares issuable on such exercise at any time
prior to the Expiration Time, a new certificate evidencing the remaining WRT
Warrant or WRT Warrants will be issued, and the Warrant Agent is hereby
irrevocably authorized to countersign and to deliver the required new Warrant
Certificate or Warrant Certificates pursuant to the provisions of this Section
and of Sections 3 and 4 hereof, and the Company, whenever required by the
Warrant Agent, will supply the Warrant Agent with Warrant Certificates duly
executed on behalf of the Company for such purpose.
(PAGE 5)
<PAGE> 9
(f) All Warrant Certificates surrendered upon exercise of WRT
Warrants shall be canceled by the Warrant Agent. Such canceled Warrant
Certificates shall then be disposed of by the Warrant Agent in a manner
satisfactory to the Company. The Warrant Agent shall account promptly to the
Company with respect to WRT Warrants exercised and concurrently pay to the
Company all monies received by the Warrant Agent for the purchase of the
Warrant Shares through the exercise of such WRT Warrants.
(g) The Warrant Agent and the Transfer Agent shall keep copies of
this Warrant Agreement and any notices given or received hereunder available
for inspection by the Warrant Holders during normal business hours at each of
their offices. The Company shall supply the Warrant Agent and the Transfer
Agent from time to time with such numbers of copies of this Warrant Agreement
as the Warrant Agent and/or the Transfer Agent may request and the Company will
furnish to the Warrant Agent and the Transfer Agent a copy of all notices of
adjustments and certificates related thereto transmitted to each Warrant Holder
pursuant to Section 14 hereof.
(h) The Warrant Agent shall, from time to time, as promptly as
practicable, advise the Company of (1) the number of WRT Warrants delivered to
it in accordance with the terms and conditions of this Warrant Agreement and
the Warrant Certificates, (2) the instructions of each Warrant Holder with
respect to delivery of the Warrant Shares or other cash or property to which
such Warrant Holder is entitled upon such delivery, (3) the delivery of Warrant
Certificates evidencing the balance, if any, of the WRT Warrants remaining
after such delivery and (4) such other information as the Company shall
reasonably request.
(i) Warrant Holders, as such, shall not be entitled (1) to receive
any dividends in respect of such Warrant Holders' Warrant Shares, (2) to vote
or to receive notice of any meeting of the Company's stockholders for the
election of Directors or for any other matter whatsoever or (3) to otherwise
exercise any rights of, or to receive any notices delivered to, holders of WRT
Common Stock until such Warrant Holder surrenders its Warrant Certificate(s) to
the Warrant Agent, pays the Exercise Price and delivers all other required
documentation, all as set forth in this Warrant Agreement and the Warrant
Certificates, and the Warrant Shares in respect of such WRT Warrants are issued
to such Warrant Holder.
Section 7. Payment of Expenses, Taxes and Governmental Charges.
The Company will pay all expenses, documentary stamp taxes and other taxes and
charges attributable to the initial issuance of Warrant Shares upon the
exercise of WRT Warrants; provided, however, that the Company's obligations in
this regard will in all events be conditioned upon the Warrant Holder
cooperating with the Company and the Warrant Agent in any reasonable
arrangement designed to minimize or eliminate any such taxes or expenses; and
further, provided that the Company shall not be required to pay any tax or
other governmental charge which may be payable in respect of any transfer or
exchange of any WRT Warrants or Warrant Certificates, as the case may be,
(PAGE 6)
<PAGE> 10
including, without limitation, any transfer involved in the issuance of any
Warrant Shares. If any such transfer is involved, the Company shall not be
required to issue or deliver any Warrant Shares until such tax or other charge
shall have been paid or it has been established to the Company's satisfaction
that no such tax or other charge is due.
Section 8. Mutilated or Missing Warrant Certificates. In case any
of the Warrant Certificates shall be mutilated, lost, stolen or destroyed, the
Company may in its discretion issue and the Warrant Agent may countersign, in
exchange and substitution for and upon cancellation of the mutilated Warrant
Certificate, or in lieu of and substitution for the Warrant Certificate lost,
stolen or destroyed, a new Warrant Certificate of like tenor and representing
an equivalent number of WRT Warrants, but only upon receipt of evidence
satisfactory to the Company and the Warrant Agent of such loss, theft or
destruction of such Warrant Certificate and of an indemnity reasonably
satisfactory to the Company. Applicants for such substitute Warrant
Certificates shall also comply with such other reasonable regulations and pay
(prior to the issuance of any Warrant Certificates in accordance with this
Section 8) such other reasonable charges (including, without limitation, any
tax or other governmental charge that may be imposed in relation thereto and
the fees and expenses of the Warrant Agent in connection therewith) as the
Company or the Warrant Agent may prescribe.
Section 9. Reservation of Warrant Shares. The Company will at all
times reserve and keep available, free from preemptive rights, out of the
aggregate of its authorized but unissued WRT Common Stock or its authorized and
issued WRT Common Stock held in its treasury, for the purpose of enabling it to
satisfy any obligation to issue Warrant Shares upon exercise of WRT Warrants,
the maximum number of shares of WRT Common Stock which may then be deliverable
upon the exercise of all outstanding WRT Warrants.
Section 10. Obtaining Stock Exchange Listings. (a) The Company
will from time to time take all reasonable actions so that the WRT Warrants
will be listed or quoted on the same principal securities exchanges, the NASD
Automated Quotation System or other markets within the United States of
America, if any, as shares of WRT Common Stock are listed or quoted.
(b) The Company will take all such action as may be necessary to
ensure that all Warrant Shares delivered upon exercise of WRT Warrants, at the
time of delivery of the certificates for such Warrant Shares, will (subject to
payment of the Exercise Price) be duly and validly authorized and issued, fully
paid, nonassessable, free of preemptive rights and, subject to Section 7, free
from all taxes, liens, charges and security interests with respect to the issue
thereof and, if shares of WRT Common Stock are then listed on any national
securities exchange (as defined in the Exchange Act) or qualified for quotation
on the NASD Automated Quotation System, will be duly listed or qualified for
quotation thereon, as the case may be.
(PAGE 7)
<PAGE> 11
Section 11. Exercise Price and Exercise Quantity. Each new WRT
Warrant will initially represent the right to purchase one (1) share of WRT
Common Stock (the "Exercise Quantity") on the terms and subject to the
conditions set forth herein. The purchase price payable per share of WRT
Common Stock upon the exercise of each WRT Warrant will initially be Ten
Dollars ($10.00) (the "Exercise Price"). The Exercise Quantity and the
Exercise Price are subject to adjustment pursuant to the provisions of Section
12.
Section 12. Adjustment of Exercise Quantity. The Exercise Quantity
is subject to adjustment from time to time upon the occurrence of the events
enumerated in this Section 12.
(a) Adjustment for Change in Capital Stock. (1) Subject to
subsection (h), if the Company:
(i) pays a dividend or makes a distribution on WRT
Common Stock in shares of WRT Common Stock;
(ii) subdivides its outstanding shares of WRT Common
Stock into a greater number of shares;
(iii) combines its outstanding shares of WRT Common Stock
into a smaller number of shares; or
(iv) issues by reclassification of WRT Common Stock any
shares of its capital stock (including any such reclassification in
connection with a consolidation, merger, or other business
combination transaction in which the Company is the continuing or
surviving corporation);
then the Exercise Quantity in effect immediately prior to such action shall be
proportionately adjusted so that the Warrant Holder of any WRT Warrants
thereafter exercised may receive (A) in the case of a dividend or distribution,
the sum of (I) the number of Warrant Shares that, if such WRT Warrant had been
exercised immediately prior to such adjustment, such Warrant Holder would have
received upon such exercise and (II) the number and kind of additional shares
of capital stock that such Warrant Holder would have been entitled to receive
as a result of such dividend or distribution by virtue of its ownership of such
Warrant Shares, (B) in the case of a subdivision or combination, the number of
Warrant Shares that, if such WRT Warrant had been exercised immediately prior
to such adjustment, such Warrant Holder would have received upon such exercise,
adjusted to give effect to such subdivision or combination as if such Warrant
Shares had been subject thereto, or (C) in the case of an issuance in a
reclassification, the sum of (I) the number of Warrant Shares that, if such WRT
Warrant had been exercised immediately prior to such adjustment, such Warrant
Holder would have received upon such exercise, and retained after giving
effect to such reclassification as if such Warrant Shares had been subject
thereto and (II) the number and kind of additional shares of capital stock that
such Warrant Holder would have been entitled to receive as a result of such
reclassification as if such Warrant Shares had been subject thereto.
(PAGE 8)
<PAGE> 12
(2) An adjustment made pursuant to this subsection (a) will
become effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution in the case of a
dividend or distribution and will become effective immediately after the
effective date of such subdivision, combination, or reclassification in the
case of a subdivision, combination, or reclassification. Such adjustment shall
be made successively whenever any event listed above shall occur.
(3) If pursuant to any adjustment, a Warrant Holder, upon
its exercise of WRT Warrants, will receive shares of two or more classes of
capital stock of the Company, the Company's Board of Directors shall determine
the allocation of the Exercise Price between the classes of capital stock.
After such allocation, the exercise privilege and the Exercise Quantity of each
class of capital stock shall thereafter be subject to adjustment on terms
comparable to those applicable to WRT Common Stock in this Section.
(b) Adjustment for Rights Issue. (1) Subject to subsection (h),
if the Company distributes any rights, options or warrants to all holders of
its WRT Common Stock entitling them to purchase shares of WRT Common Stock at a
price per share less than the Current Market Price (as defined in subsection
(f)) per share as of the record date established for such distribution, the
Exercise Quantity shall be adjusted to the number that results from multiplying
the Exercise Quantity in effect immediately prior to such adjustment by a
fraction (not to be less than one), the numerator of which will be the number
of shares of WRT Common Stock outstanding on such record date plus the number
of additional shares of WRT Common Stock offered by such rights, options or
warrants for subscription or purchase and the denominator of which will be the
number of shares of WRT Common Stock outstanding on such record date plus the
number of shares of WRT Common Stock which the aggregate subscription or
purchase price of the total number of shares of WRT Common Stock so offered
would purchase at the Current Market Price per share of WRT Common Stock on
such record date.
(2) Such adjustment will be made whenever such rights,
options, or warrants are issued and will become effective immediately after the
record date for the determination of stockholders entitled to receive such
rights, options or warrants. In case such subscription or purchase price may
be paid in a consideration part or all of which is in a form other than cash,
the fair value of such consideration will be as determined by the Board of
Directors of the Company, whose good faith determination will be conclusive.
Except as provided in subsection (o), no further adjustments of the number of
Warrant Shares will be made upon the actual issue of shares of WRT Common Stock
upon exercise of such rights, options or warrants.
(c) Adjustment for Other Distribution. (1) Subject to subsection
(h), if the Company distributes to holders of its WRT Common Stock, as such,
(i) evidences of indebtedness or assets (excluding regular cash dividends or
cash distributions payable out of consolidated retained earnings) of the
Company or any corporation or other legal entity a majority of the voting
(PAGE 9)
<PAGE> 13
equity securities or equity interests of which are owned, directly or
indirectly, by the Company (a "Subsidiary"), (ii) shares of capital stock of
any Subsidiary, (iii) securities convertible into or exchangeable for capital
stock (including WRT Common Stock or capital stock of any other class) of the
Company or any Subsidiary (excluding those securities described in subsection
(b)) or (iv) any rights, options or warrants to purchase any of the foregoing
(excluding those securities described in subsection (b)) then the Exercise
Quantity will be adjusted to the number that results from multiplying the
Exercise Quantity in effect immediately prior to such adjustment by a fraction,
the numerator of which will be the Current Market Price per share of WRT Common
Stock on the record date for such distribution, and the denominator of which
will be such Current Market Price per share of WRT Common Stock less the fair
value (as determined in good faith by the Board of Directors of the Company,
whose determination will be conclusive) of the portion of the evidences of
indebtedness, assets, securities, rights, options or warrants so distributed on
account of one share of WRT Common Stock. Such adjustment will be made
whenever any such distribution is made and will become effective immediately
after the record date for the determination of stockholders entitled to receive
such distribution.
(2) Except as provided in subsection (o), no further
adjustments of the number of Warrant Shares will be made upon the actual
issuance of shares of WRT Common Stock upon conversion or exchange of such
securities convertible or exchangeable for shares of WRT Common Stock or upon
exercise of such rights, warrants or options for shares of WRT Common Stock.
Adjustments made pursuant to this subsection (c) shall be made successively
whenever any such distribution is made and shall become effective on the
effective date of any such distribution, retroactive to the record date for
such event.
(d) Adjustment for Common Stock Issue. (1) Subject to subsection
(h), if the Company issues shares of WRT Common Stock for a consideration per
share less than the Current Market Price per share as of the date the Company
fixes the offering price of such additional shares, the Exercise Quantity will
be adjusted to the number that results from multiplying the Exercise Quantity
immediately prior to such adjustment by a fraction, (not to be less than one),
the numerator of which will be the number of shares of WRT Common Stock
outstanding on such date plus the number of additional shares of WRT Common
Stock so issued, and the denominator of which will be the number of shares of
WRT Common Stock outstanding on such date plus the number of shares of WRT
Common Stock which the aggregate purchase price received by the Company for
such additional shares of WRT Common Stock would purchase at the Current Market
Price per share of WRT Common Stock on such date. Adjustments pursuant to this
subsection (d) shall be made successively whenever any such issuance is made
and shall become effective immediately after such issuance.
(2) This subsection (d) does not apply to:
(i) any of the transactions described in subsections
(a), (b), (c) or (e) of this Section 12;
(PAGE 10)
<PAGE> 14
(ii) the exercise of WRT Warrants, or the conversion
or exchange of other securities convertible or exchangeable for WRT
Common Stock; or
(iii) WRT Common Stock issued to stockholders of any
person which merges with or into the Company, or with or into a
subsidiary of the Company, in proportion to the stock holdings of
such person immediately prior to such merger.
(e) Adjustment for Convertible Securities Issue. (1) Subject to
subsection (h), if the Company issues any securities ("Convertible Securities")
convertible or exercisable into or exchangeable for WRT Common Stock (other
than securities issued in transactions described in subsections (a), (b), (c)
or (d) of this Section 12) for a consideration per share of WRT Common Stock
initially deliverable upon conversion, exercise or exchange of such securities
less than the Current Market Price per share as of the date of issuance of such
securities, then the Exercise Quantity will be adjusted to the number that
results from multiplying the Exercise Quantity immediately prior to such
adjustment by a fraction, (not to be less than one), the numerator of which
will be the number of shares of WRT Common Stock outstanding on such date plus
the number of additional shares of WRT Common Stock issuable upon such
conversion, exercise or exchange, and the denominator of which will be the
number of shares of WRT Common Stock outstanding on such date plus the number
of shares of WRT Common Stock which the aggregate conversion, exercise or
exchange price receivable by the Company for such additional shares of WRT
Common Stock would purchase at the Current Market Price per share of WRT Common
Stock on such date. In case such conversion, exercise or exchange price may be
paid in a consideration part or all of which is in a form other than cash, the
fair value of such consideration will be as determined by the Board of
Directors of the Company. Except as provided in subsection (o), no further
adjustment will be made upon the actual issue of shares of WRT Common Stock
upon conversion, exercise or exchange of Convertible Securities into or
exchangeable for shares of WRT Common Stock. Adjustments pursuant to this
subsection (e) shall be made successively whenever any such issuance is made
and shall become effective immediately after such issuance.
(2) This subsection (e) does not apply to:
(i) Convertible Securities issued to stockholders of
any person which merges with or into the Company, or with or into a
subsidiary of the Company, in proportion to the stock holdings of
such person immediately prior to such merger;
(ii) convertible securities issued in a bona fide
public offering pursuant to a firm commitment underwriting; or
(iii) WRT Common Stock issuances to employees or
directors of the Company under or pursuant to employee benefit or
option plans approved by either the Board of Directors or
stockholders of the Company.
(PAGE 11)
<PAGE> 15
(f) Current Market Price. In subsections (b), (c), (d) and (e) of
this Section 12 the "Current Market Price" per share of WRT Common Stock as of
any date is the average of the Closing Prices (as defined below) of the WRT
Common Stock for 20 consecutive trading days commencing 30 trading days before
the date in question. "Closing Price" shall equal (1) the last reported sales
price of the WRT Common Stock on the principal national securities exchange on
which such WRT Common Stock is listed or admitted to trading or, if no such
reported sale takes place on such date, the average of the closing bid and
asked prices thereon, as reported in The Wall Street Journal, or (2) if such
WRT Common Stock shall not be listed or admitted to trading on a national
securities exchange, the last reported sales price on the NASD Automated
Quotation System or, if no such reported sale takes place on any such date, the
average of the closing bid and asked prices thereon, as reported in The Wall
Street Journal, or (3) if such WRT Common Stock shall not be quoted on the NASD
Automated Quotation System nor listed or admitted to trading on a national
securities exchange, then the average of the closing bid and asked prices, as
reported by The Wall Street Journal for the over-the-counter market in which
such WRT Common Stock is traded. In the absence of one or more such
quotations, the Board of Directors of the Company shall determine the Closing
Price on the basis of such quotations or other facts as it considers
appropriate.
(g) Consideration Received; Occurrence of Transactions. (1) For
purposes of any computation respecting consideration received pursuant to
subsections (d) and (e) of this Section 12, the following shall apply:
(i) in the case of the issuance of shares of WRT
Common Stock for cash, the consideration shall be the amount of such
cash, provided that in no case shall any deduction be made for any
commissions, discounts or other expenses incurred by the Company for
any underwriting of the issue or otherwise in connection therewith;
(ii) in the case of the issuance of shares of WRT
Common Stock for a consideration in whole or in part other than cash,
the consideration other than cash shall be deemed to be the fair
market value thereof as determined in good faith by the Company's
Board of Directors (irrespective of the accounting treatment
thereof), whose determination shall be conclusive, and described in a
report of the Company's Board of Directors which shall be filed with
the Warrant Agent; and
(iii) in the case of the issuance of securities
convertible into or exchangeable for shares, the aggregate
consideration received therefor shall be deemed to be the
consideration received by the Company for the issuance of such
securities plus the additional minimum consideration, if any, to be
received by the Company upon the conversion or exchange thereof (the
consideration in each case to be determined in the same manner as
provided in clauses (1) and (2) of this subsection).
(PAGE 12)
<PAGE> 16
(2) For the purpose of any adjustment made pursuant to this
Section 12, any specified event shall be deemed to have occurred at the close
of business on the date of its occurrence.
(h) When De Minimis Adjustment May Be Deferred. (1) No adjustment
in the Exercise Quantity need be made unless the adjustment would require an
increase or decrease of at least 1.0% in the Exercise Quantity. Any
adjustments that are not made shall be carried forward and made at the time and
together with the next subsequent adjustment which, together with any
adjustments so carried forward, would require an increase or decrease of 1.0%
or more in the number of Warrant Shares purchasable upon the hypothetical
exercise of a WRT Warrant. All calculations with respect to the number of
Warrant Shares will be made to the nearest one-hundredth (1/100th) of a share.
(2) No adjustment in the Exercise Quantity will be made
under subsections (b), (c) or (e) of this Section 12 if the Company issues or
distributes to each Warrant Holder the shares, rights, options, warrants,
convertible or exchangeable securities, evidences of indebtedness, assets or
other securities referred to in the applicable subsection that such Warrant
Holder would have been entitled to receive had the WRT Warrants been exercised
prior to the happening of such event on the record date with respect thereto
(provided that, in any case in which such Warrant Holder would have been so
entitled to receive a fractional interest in any such securities or assets, the
Company may distribute to such Warrant Holder in lieu of such fractional
interest cash in an amount equal to the fair value of such fractional interest
as determined in good faith by the Board of Directors of the Company).
(3) No adjustment in the Exercise Quantity will be made on
account of: (i) any issuance of shares of WRT Common Stock or of options,
rights, or warrants to purchase, or securities convertible into or exchangeable
for, shares of WRT Common Stock, pursuant to or in satisfaction of any
obligation under the Plan, (ii) any issuance of shares of WRT Common Stock upon
the exercise of options, rights or warrants or upon the conversion or exchange
of convertible or exchangeable securities, in either case issued pursuant to or
in satisfaction of any obligation under the Plan outstanding as of the date
hereof, (iii) any issuance of shares of WRT Common Stock, or of options, rights
or warrants to purchase, or securities exchangeable for or convertible into,
shares of WRT Common Stock, in accordance with any plan for the benefit of the
employees or Directors of the Company or any of its Subsidiaries existing as of
the date hereof or any other plan adopted by the Directors of the Company for
the benefit of the employees or Directors of the Company or any of its
Subsidiaries, (iv) any issuance of shares of WRT Common Stock in connection
with a Company-sponsored plan for reinvestment of dividends or interest, (v)
any issuance of WRT Subscription Common Stock (as defined in the WRT
Subscription Rights Agreement described hereafter), or other common stock
subscription rights, if any, pursuant to the WRT Subscription Rights Agreement
or any similar successor or replacement common stock subscription rights
agreement or (vi) any issuance of shares of WRT Common Stock or securities
convertible into or exchangeable for shares of WRT Common Stock pursuant to an
underwritten public offering for a price per share
(PAGE 13)
<PAGE> 17
of WRT Common Stock in the case of an issuance of shares of WRT Common Stock,
or for a price per share of WRT Common Stock initially delivered upon
conversion or exchange of such securities, that is equal to or greater than 95%
of the Closing Price per share of WRT Common Stock on the date the offering,
conversion or exchange price of such additional shares of WRT Common Stock is
first fixed. No adjustment in the number of Warrant Shares will be made for a
change in the par value of the shares of WRT Common Stock.
(i) Whenever the Exercise Quantity is adjusted, as provided
herein, the Exercise Price payable upon exercise of each WRT Warrant shall be
adjusted by multiplying such Exercise Price immediately prior to such
adjustment by a fraction, the numerator of which shall be the number of Warrant
Shares purchasable upon the exercise of each WRT Warrant immediately prior to
such adjustment, and the denominator of which shall be the number of Warrant
Shares purchasable immediately thereafter.
(j) Notice of Adjustment. Whenever the Exercise Quantity and
Exercise Price are adjusted, the Company shall provide the notices required by
Section 14 hereof.
(k) Notice of Certain Transactions. If:
(1) the Company takes any action that would require an
adjustment in the Exercise Quantity pursuant to subsections (a), (b), (c), (d)
or (e) of this Section 12; or
(2) the Company takes any action that would require a
supplemental Warrant Agreement pursuant to subsection (l) of this Section 12;
then, the Company shall mail to the Warrant Agent and shall cause the Warrant
Agent to send to the Warrant Holders a notice stating the proposed record date
for a dividend or distribution or the proposed effective date of a subdivision,
combination, reclassification, consolidation, merger, transfer, lease,
liquidation or dissolution. The Company shall mail the notice at least 30
business days before such date.
(l) Reorganization of the Company. (1) If the Company effects a
Non-Surviving Combination (as defined below), upon consummation of such
transaction the WRT Warrants shall automatically become exercisable for the
kind and amount of securities, cash or other assets which the Warrant Holder
would have owned immediately after the consolidation, merger or other business
combination if the Warrant Holder had exercised the WRT Warrant immediately
before the effective date of the transaction. Concurrently with the
consummation of such transaction, the corporation formed by or surviving any
such consolidation, merger or other business combination if other than the
Company, or the person to which such sale or conveyance shall have been made,
shall enter into a supplemental Warrant Agreement so providing and further
providing for adjustments which shall be as nearly equivalent as may be
(PAGE 14)
<PAGE> 18
practicable to the adjustments provided for in this Section. The successor
company shall mail to Warrant Holders a notice describing the supplemental
Warrant Agreement. If the issuer of securities deliverable upon exercise of
WRT Warrants under the supplemental Warrant Agreement is an affiliate of the
former, surviving, transferee or lessee corporation, that issuer shall join in
the supplemental Warrant Agreement.
(2) For purposes of this Warrant Agreement, "Non-Surviving
Combination" means any merger, consolidation or other business combination by
the Company with one or more other persons in which any such other person is
the survivor, or a sale of all or substantially all of the assets of the
Company to one or more such other persons (in one transaction or in two or more
related transactions), and with respect to which cash and/or non-cash
consideration is to be distributed to holders of WRT Common Stock; provided
that if any such merger, consolidation, sale of assets or other business
combination, in which the holders of WRT Common Stock receive cash or non-cash
consideration in exchange for their WRT Common Stock, is structured so that the
Company is the surviving entity, such transaction shall nevertheless be deemed
a Non-Surviving Combination.
(m) Warrant Agent's Disclaimer. The Warrant Agent has no duty to
determine when an adjustment under this Section 12 should be made, how it
should be made or what it should be. The Warrant Agent has no duty to
determine whether any provisions of a supplemental Warrant Agreement under
subsection (l) of this Section 12 are correct. The Warrant Agent makes no
representation as to the validity or value of any securities or assets issued
upon exercise of WRT Warrants. The Warrant Agent shall not be responsible for
the Company's failure to comply with this Section.
(n) When Adjustment is not Required. If the Company shall take a
record of the holders of WRT Common Stock for the purpose of entitling them to
receive a dividend or distribution or subscription or purchase rights and
shall, thereafter and before the distribution to stockholders thereof, legally
abandon its plan to pay or deliver such dividend, distribution, subscription or
purchase rights, then thereafter no adjustment shall be required by reason of
the taking of such record and any such adjustment previously made in respect
thereof shall be rescinded and annulled.
(o) Form of WRT Warrants and Warrant Certificates. Irrespective
of any adjustments in the Exercise Quantity, other WRT Warrants and Warrant
Certificates theretofore or thereafter issued may continue to express the same
price and number and kind of Warrant Shares as are stated in the WRT Warrants
initially issuable pursuant to this Warrant Agreement.
(p) Readjustment of Exercise Quantity and Exercise Price. Upon
the expiration of any rights, options, warrants or conversion or exchange
privileges, if any thereof have not been exercised, the Exercise Quantity and
(PAGE 15)
<PAGE> 19
the Exercise Price will, upon such expiration, be readjusted and will
thereafter be such as it would have been had it been originally adjusted (or
had the original adjustment not been required, as the case may be) as if (1)
the only shares of WRT Common Stock so issued were the shares of WRT Common
Stock, if any, actually issued or sold upon the exercise of such rights,
options, warrants or conversion or exchange rights and (2) such shares of WRT
Common Stock, if any, were issued or sold, or the consideration actually
received by the Company upon such exercise, conversion or exchange plus the
aggregate consideration, if any, actually received by the Company for the
issuance, sale or grant of all such rights, options, warrants, or conversion or
exchange rights whether or not exercised; provided, however, that no such
readjustment will have the effect of decreasing the Exercise Quantity or
increasing the Exercise Price by an amount in excess of the amount of the
adjustment initially made in respect of the issuance, sale or grant of such
rights, options, warrants or conversion or exchange privileges.
Section 13. Fractional Interests. Neither the Company nor the
Warrant Agent shall be required to issue fractional Warrant Shares or
fractional interests in any other securities on the exercise of WRT Warrants.
If more than one WRT Warrant shall be presented for exercise in full at the
same time by the same Warrant Holder, the number of full Warrant Shares which
shall be issuable upon the exercise thereof shall be computed on the basis of
the aggregate number of Warrant Shares purchasable on exercise of the WRT
Warrants so presented. If any fraction of a Warrant Share or fractional
interests in any other securities would, except for the provisions of this
Section 13, be issuable on the exercise of any WRT Warrants (or specified
portion thereof), the Company shall pay an amount in cash equal to the Closing
Price (as defined in subsection (f) of Section 12 hereof) or, in the case of
fractional interests in any other securities, the fair value of such interests,
as determined by the Company's Board of Directors, on the day immediately
preceding the date the WRT Warrant is presented for exercise, multiplied by
such fraction or fractional interests, as the case may be.
Section 14. Notices to Warrant Holders. (a) Upon the
determination of the Exercise Quantity provided in Section 12, the Company
shall promptly thereafter (1) cause to be filed with the Warrant Agent a
certificate of the Company's Board of Directors setting forth the Exercise
Quantity and Exercise Price and setting forth in reasonable detail the method
of calculation and the facts upon which such calculations were based and
setting forth the number of Warrant Shares (or portion thereof) issuable upon
exercise of a WRT Warrant and the Exercise Price thereof after such adjustments
which certificate shall be conclusive evidence of the correctness of the
matters set forth therein and (2) cause to be given to each of the registered
Warrant Holders at each Warrant Holders' address appearing on the Warrant
Register written notice of such determinations by first class mail, postage
prepaid. Upon any adjustment of the Exercise Quantity and Exercise Price
pursuant to Section 12, the Company shall promptly thereafter (1) cause to be
filed with the Warrant Agent a certificate of the Company's independent public
accountants setting forth the Exercise Quantity and Exercise Price
(PAGE 16)
<PAGE> 20
after such adjustment and setting forth in reasonable detail the method of
calculation and the facts upon which such calculations are based and setting
forth the number of Warrant Shares (or portion thereof) issuable after such
adjustment in the Exercise Quantity, upon exercise of a WRT Warrant and payment
of the Exercise Price, which certificate shall be conclusive evidence of the
correctness of the matters set forth therein and (2) cause to be given to each
of the registered Warrant Holders at each Warrant Holders' address appearing on
the Warrant Register written notice of such adjustments by first-class mail,
postage prepaid. Where appropriate, such notice may be given in advance and
included as a part of the notice required to be mailed under the other
provisions of this Section 14.
(b) In case:
(i) the Company shall authorize the issuance to all holders
of shares of WRT Common Stock of rights, options or warrants to
subscribe for or purchase shares of WRT Common Stock or of any other
subscription rights or warrants; or
(ii) the Company shall authorize the distribution to all
holders of shares of WRT Common Stock of evidences of its
indebtedness or assets (other than cash dividends or cash
distributions payable out of consolidated earnings or earned surplus
or dividends payable in shares of WRT Common Stock or distributions
referred to in subsection (a) of Section 12 hereof); or
(iii) of any consolidation or merger to which the Company is
a party and for which approval of any stockholders of the Company is
required, or of the conveyance or transfer of the properties and
assets of the Company substantially as an entirety, or of any
reclassification or change of WRT Common Stock issuable upon
exercise of the WRT Warrants (other than a change in par value, or
from par value to no par value, or from no par value to par value,
or as a result of a subdivision or combination), or a tender offer
or exchange offer for shares of WRT Common Stock; or
(iv) of the voluntary or involuntary dissolution,
liquidation or winding up of the Company; or
(v) the Company proposes to take any action (other than
actions of the character described in Section 12(a)) which would
require an adjustment of the Exercise Quantity pursuant to Section
12;
then the Company shall cause to be filed with the Warrant Agent and shall cause
to be given to each of the registered Warrant Holders at each Warrant Holders'
address appearing on the Warrant Register, at least 15 days prior to the
applicable record date, or promptly in the case of events for which there is no
record date, by first-class mail, postage prepaid, a written notice stating (1)
the date as of which the holders of record of shares of WRT Common Stock that
will be entitled to receive any such rights, options, warrants or
(PAGE 17)
<PAGE> 21
distribution are to be determined, or (2) the initial expiration date set forth
in any tender offer or exchange offer for shares of WRT Common Stock or (3) the
date on which any such consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding up is expected to become effective or
consummated, and the date as of which it is expected that holders of record of
shares of WRT Common Stock shall be entitled to exchange such shares for
securities or other property, if any, deliverable upon such reclassification,
consolidation, merger, conveyance, transfer, dissolution, liquidation or
winding up.
Section 15. Merger, Consolidation or Change of Name of Warrant
Agent. Any corporation into which the Warrant Agent may be merged or with
which it may be consolidated, or any corporation resulting from any merger or
consolidation to which the Warrant Agent shall be a party, or any corporation
succeeding to the corporate trust or shareholder services business of the
Warrant Agent, shall be the successor to the Warrant Agent hereunder without
the execution or filing of any paper or any further act on the part of any of
the parties hereto, provided that such corporation would be eligible for
appointment as a successor Warrant Agent under the provisions of Section 17.
In case at the time such successor to the Warrant Agent shall succeed to the
agency created by this Warrant Agreement, and in case at that time any of the
Warrant Certificates shall have been countersigned but not delivered, any such
successor to the Warrant Agent may adopt the countersignature of the original
Warrant Agent; and in case at that time any of the Warrant Certificates shall
not have been countersigned, any successor to the Warrant Agent may countersign
such Warrant Certificates either in the name of the predecessor Warrant Agent
or in the name of the successor to the Warrant Agent; and in all such cases
such Warrant Certificates shall have the full force and effect provided in the
Warrant Certificates and in this Warrant Agreement.
Section 16. Warrant Agent. The Warrant Agent hereby certifies
that it complies with the requirements of the NASD National Market System
governing transfer agents and registrars, and further undertakes the duties and
obligations imposed by this Warrant Agreement upon the following terms and
conditions, by all of which the Company and the Warrant Holders, by their
acceptance thereof, shall be bound:
(1) The statements contained herein and in the Warrant
Certificates shall be taken as statements of the Company, and the Warrant Agent
assumes no responsibility for the correctness of any of the same except such as
describe the Warrant Agent or action taken or to be taken by it. The Warrant
Agent assumes no responsibility with respect to the distribution of the Warrant
Certificates except as otherwise provided herein.
(2) The Warrant Agent shall not be responsible for any
failure of the Company to comply with any of the covenants contained in this
Warrant Agreement or in the Warrant Certificates to be complied with by the
Company; provided, however, that the Warrant Agent will be liable pursuant to
this Warrant Agreement for its own, its attorneys' or agents' negligence, bad
faith or willful misconduct.
(PAGE 18)
<PAGE> 22
(3) The Warrant Agent shall incur no liability or
responsibility to the Company or to any Warrant Holder for any action taken in
reliance on any Warrant Certificate, certificate of shares, notice, resolution,
waiver, consent, order, certificate or other paper, document or instrument
reasonably and in good faith believed by it to be genuine and to have been
signed, sent or presented by the proper party or parties.
(4) The Warrant Agent need not investigate any fact or
matter stated in any of the foregoing and need not verify the accuracy of the
contents thereof or whether procedures specified by or pursuant to the
provisions of this Warrant Agreement have been followed.
(5) The Company agrees to pay to the Warrant Agent
reasonable compensation for all services rendered by the Warrant Agent in the
execution of this Warrant Agreement, to reimburse the Warrant Agent for all
expenses, taxes and governmental charges and other charges of any kind and
nature incurred by the Warrant Agent in the execution of this Warrant Agreement
and to indemnify the Warrant Agent and save it harmless against all
liabilities, including judgments, costs and reasonable counsel fees, for
anything done or omitted by the Warrant Agent in the execution of this Warrant
Agreement except as a result of the Warrant Agent's or its attorneys' or
agents' direct or indirect negligence, bad faith or willful misconduct.
(6) The Warrant Agent shall be under no obligation to
institute any action, suit or legal proceeding or to take any other action
likely to involve expense unless the Company or one or more registered Warrant
Holders shall furnish the Warrant Agent with reasonable security and indemnity
for any costs and expenses which may be incurred, but this provision shall not
affect the power of the Warrant Agent to take such action as it may consider
proper, whether with or without any such security or indemnity. All rights of
action under this Warrant Agreement or under any of the WRT Warrants may be
enforced by the Warrant Agent without the possession of any of the Warrant
Certificates or the production thereof at any trial or other proceeding
relative thereto, and any such action, suit or proceeding instituted by the
Warrant Agent shall be brought in its name as Warrant Agent and any recovery of
judgment shall be for the ratable benefit of the registered Warrant Holders, as
their respective rights or interests may appear.
(7) The Warrant Agent, and any stockholder, director,
officer or employee of it, may buy, sell or deal in any of the WRT Warrants or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not
the Warrant Agent under this Agreement. Nothing herein shall preclude the
Warrant Agent from acting in any other capacity for the Company or for any
other legal entity.
(8) The Warrant Agent shall act hereunder solely as agent
for the Company, and its duties shall be determined solely by the provisions
hereof. The Company will perform, execute, acknowledge and deliver or cause to
be performed, executed, acknowledged and delivered all such further and
(PAGE 19)
<PAGE> 23
other acts, instruments and assurances as may reasonably be required by the
Warrant Agent for the carrying out or performing by the Warrant Agent of the
provisions of this Warrant Agreement.
(9) The Warrant Agent shall not at any time be under any
duty or responsibility to any Warrant Holder to make or cause to be made any
adjustment of the number of the Warrant Shares or other securities or property
deliverable as provided in this Warrant Agreement, or to determine whether any
facts exist which may require any of such adjustments, or with respect to the
nature or extent of any such adjustments, when made, or with respect to the
method employed in making the same. The Warrant Agent shall not be accountable
with respect to the validity or value or the kind or amount of any Warrant
Shares or of any securities or property which may at any time be issued or
delivered upon the exercise of any WRT Warrant or with respect to whether any
such Warrant Shares or other securities will when issued be validly issued,
fully paid and nonassessable, and makes no representation with respect thereto.
(10) The Warrant Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder
from any one of the Chairman of the Board, the President or any Vice President
of the Company, and to apply to such officers for advice or instructions in
connection with its duties, and it will not be liable for any action taken or
suffered to be taken by it in good faith in accordance with instructions of any
such officer.
Section 17. Change of Warrant Agent. (a) The Warrant Agent may at
any time resign as such agent by giving three (3) months' prior written notice
to the Company, each Transfer Agent, if any, and to the Warrant Holders, unless
the Company agrees to accept less notice of such intention, specifying the date
on which its desired resignation shall become effective. The Warrant Agent or
its successors, if any, may be removed at any time, with or without cause, upon
thirty (30) calendar days' prior written notice by the Company mailed to the
Warrant Agent or its successor, as the case may be, and to each Transfer Agent,
if any, specifying such removal and the date when it shall become effective.
Any resignation or removal shall not take effect until the appointment by the
Company, as hereinafter provided, of a successor Warrant Agent (which shall be
a bank or trust company organized under the laws of the United States or any
state thereof and authorized under the laws of the jurisdiction of its
organization to exercise corporate trust powers) and the acceptance of such
appointment by such successor Warrant Agent. The obligations of the Company
under this Warrant Agreement shall continue to the extent set forth herein
notwithstanding the resignation or removal of the Warrant Agent.
(b) In case at any time the Warrant Agent shall resign, or
shall be removed, or shall become incapable of acting, or shall be adjudged a
bankrupt or insolvent, or a receiver or liquidator of the Warrant Agent or of
its property shall be appointed, or any public officer shall take charge or
control of the Warrant Agent or of its property or affairs for the purpose of
(PAGE 20)
<PAGE> 24
rehabilitation, conservation or liquidation, a successor Warrant Agent,
qualified as aforesaid, shall be appointed by the Company by an instrument in
writing, filed with the successor Warrant Agent, and, upon acceptance by the
latter of such appointment, the Warrant Agent so succeeded shall cease to be
Warrant Agent hereunder.
(c) Any successor Warrant Agent appointed hereunder shall
execute, acknowledge and deliver to its predecessor and to the Company an
instrument accepting such appointment hereunder, and thereupon such successor
Warrant Agent, without further act, deed or conveyance, shall become vested
with all the authority, rights, powers, immunities, duties and obligations of
such predecessor with like effect as if originally named as Warrant Agent
hereunder, and such predecessor, upon payment of its charges and disbursements
then unpaid, shall thereupon become obligated to transfer, deliver and pay
over, and such successor Warrant Agent shall be entitled to receive, all
monies, securities and other property on deposit with or held by such
predecessor as Warrant Agent hereunder.
(d) If the Company shall fail to make any appointment as
provided in this Section 17 within a period of 30 days, then any registered
Warrant Holder may apply to any court of competent jurisdiction for the
appointment of a successor to the Warrant Agent. Pending appointment of a
successor Warrant Agent, either by the Company or by such a court, the duties
of the Warrant Agent shall be carried out by the Company.
Section 18. Notices to the Company and Warrant Agent. (a) Any
notice or demand authorized by this Warrant Agreement to be given or made by
the Warrant Agent or any registered Warrant Holder to or on the Company shall
be sufficiently given or made when and if deposited in the mail, first-class or
registered mail, postage prepaid, addressed (until another address is filed in
writing by the Company with the Warrant Agent), as follows:
WRT Energy Corporation
3303 FM 1960 West
Houston, Texas 77068
Attention: Mr. Gary C. Hanna
With Copies To:
Schulte Roth & Zabel LLP
900 Third Avenue
New York, New York 10022
Attention: Jeffrey S. Sabin, Esq.
(b) In case the Company shall fail to maintain such office or
agency or shall fail to give such notice of the location or of any change in
the location thereof, presentations may be made and notices and demands may be
served at the principal office of the Warrant Agent.
(PAGE 21)
<PAGE> 25
(c) Any notice pursuant to this Warrant Agreement to be given by
the Company or any registered Warrant Holder to the Warrant Agent shall be
sufficiently given when and if deposited in the mail, first-class or registered
mail, postage prepaid, addressed (until another address is filed in writing by
the Warrant Agent with the Company) to the Warrant Agent as follows:
American Stock Transfer & Trust Company
40 Wall Street, 46th Floor
New York, New York 10005
Attention: Investment Management and
and Trust Services
(d) Any notice pursuant to this Warrant Agreement to be given by
the Company or the Warrant Agent to any Warrant Holder shall be sufficiently
given when and if deposited in the mail, first-class or registered mail,
postage prepaid, addressed to the Warrant Holder at the Warrant Holder's
address as it appears on the Warrant Register. The Company hereby irrevocably
authorizes the Warrant Agent, in the name and at the expense of the Company,
upon the written request of the Company, to mail any such notice to the Warrant
Holders upon receipt thereof from the Company. Any notice which is mailed in
the manner herein provided shall be presumed to have been duly given and
received when mailed, whether or not the Warrant Holder receives the notice.
Neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Warrant Holder shall affect the sufficiency of such notice
with respect to any other Warrant Holder.
Section 19. Supplements, Amendments and Modifications. The Company
and the Warrant Agent may from time to time supplement, amend or modify this
Warrant Agreement without the approval of or giving of any notice to any
Warrant Holder in order to cure any ambiguity or to correct or supplement any
provision contained herein which may be defective or inconsistent with any
other provision herein and which shall not in any way adversely affect the
interests of the Warrant Holders, or to make any other provisions in regard to
matters or questions arising hereunder which the Company and the Warrant Agent
may deem necessary or desirable and which shall not in any way adversely affect
the interests of the Warrant Holders. The Company and the Warrant Agent may
from time to time supplement, amend or modify this Warrant Agreement, with the
consent of Warrant Holders of at least 50% of the WRT Warrants then
outstanding, for any other for purpose; provided, however, that the Company or
the Warrant Agent, as the case may be, shall provide three (3) months' prior
written notice, in accordance with the provisions of Section 18, of such intent
to supplement, amend or modify this Warrant Agreement. Any such supplement,
amendment or modification effected pursuant to and in accordance with the
provisions of this Section 19 will be binding upon all Warrant Holders and upon
each future Warrant Holder, the Company and the Warrant Agent. In the event of
any such supplement, amendment or modification, the Company will give prompt
notice thereof to all Warrant Holders and, if appropriate, notation thereof
will be made on all Warrant Certificates thereafter surrendered for
registration of transfer or exchange.
(PAGE 22)
<PAGE> 26
Section 20. Successors. All the covenants and provisions of this
Warrant Agreement by or for the benefit of the Company, the Warrant Agent or
the Warrant Holders shall bind and inure to the benefit of their respective
successors and assigns hereunder; provided, however, that no provision of this
Warrant Agreement shall be assignable or delegable by either the Company, the
Warrant Agent or the Warrant Holders as the case may be, without the prior
written consent of the Company, the Warrant Agent or the Warrant Holders, as
the case may be, given upon their receipt of thirty (30) calendar days' notice
of the person or entity intending such assignment or delegation, describing
such intent. In the absence of such prior written consent, any purported
assignment or delegation of any right or obligation hereunder will be null and
void. For purposes of this Section 20, written consent of Warrant Holders of
at least 50% of the WRT Warrants then outstanding, shall constitute the written
consent of all of the Warrant Holders. Notwithstanding the provisions of this
Section 20, Warrant Holders and their respective successors and assigns need
not obtain the written consent of the other Warrant Holders in order to
effectuate a valid assignment or delegation as provided herein.
Section 21. Termination. This Warrant Agreement shall terminate
after the Expiration Time. Notwithstanding the foregoing, this Warrant
Agreement will terminate on any earlier date if all WRT Warrants have been
exercised. The provisions of Section 16 shall survive such termination.
Section 22. Return of Unclaimed Cash or Property. Notwithstanding
any provision of this Warrant Agreement, cash or other property (including,
without limitation, Warrant Shares) deposited with or paid to the Warrant Agent
for distribution or issuance to Warrant Holders, but remaining unclaimed by the
Warrant Holders for two years after the date upon which such Warrant Holders
became entitled to receive such cash or other property, as the case may be,
shall be repaid to the Company by the Warrant Agent on demand, and when such
repayment is made all liability of the Warrant Agent shall thereupon cease with
respect to such cash or property; and any Warrant Holder shall thereafter look
only to the Company for any payment or distribution which such Warrant Holder
may be entitled to collect; provided, however, that the Warrant Agent, before
being required to make any such repayment, may, at the expense of the Company,
cause to be published once, in a newspaper acceptable to the Company, notice
that such cash or property remains unclaimed and that, after a date specified
therein, which shall not be less than 30 calendar days from the date of such
publication, any unclaimed balance of such cash or property then remaining will
be repaid to the Company.
Section 23. Governing Law. THIS WARRANT AGREEMENT AND EACH WARRANT
CERTIFICATE ISSUED HEREUNDER SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE
LAWS OF THE STATE OF NEW YORK AND FOR ALL PURPOSES SHALL BE CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF SAID STATE.
(PAGE 23)
<PAGE> 27
Section 24. Benefits of this Warrant Agreement. This Warrant
Agreement shall be for the sole and exclusive benefit of the Company, the
Warrant Agent and the registered Warrant Holders. Nothing in this Warrant
Agreement shall be construed to give to any person or corporation other than
the Company, the Warrant Agent and the registered Warrant Holders any legal or
equitable right, remedy or claim under this Warrant Agreement. Section 25.
Agreement of Warrant Holders. Every Warrant Holder by accepting a Warrant
Certificate consents and agrees with the Company and the Warrant Agent and with
every other Warrant Holder that:
(1) The Warrant Certificates are transferable only in
accordance with the terms of this Warrant Agreement and only on the Warrant
Register of the Warrant Agent if surrendered at the principal office of the
Warrant Agent designated for such purpose, duly endorsed or accompanied by a
proper instrument of transfer, and otherwise in compliance with Section 2;
(2) Such Warrant Holder expressly waives any right to
receive any fractional WRT Warrants and any fractional securities upon exercise
or exchange of a WRT Warrant; and
(3) Notwithstanding anything in this WRT Agreement to the
contrary, neither the Company nor the Warrant Agent will have any liability to
any Warrant Holder or other person as a result of its inability to perform any
of its obligations under this WRT Agreement by reason of any preliminary or
permanent injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative
agency or commission, or any statute, rule, regulation or executive order
promulgated or enacted by any governmental authority, prohibiting or otherwise
restraining performance of such obligation; provided, however, that the Company
will use reasonable efforts to have any such order, decree or ruling lifted or
otherwise overturned as soon as possible.
Section 26. Titles and Headings. Titles and headings to Sections
herein are inserted for convenience of reference only, and are not intended to
be a part of or to affect the meaning or interpretation of this Agreement.
Section 27. Certain Interpretive Matters. No provision of this
Warrant Agreement will be interpreted in favor of, or against, any party hereto
by reason of the extent to which such party or its counsel participated in the
drafting thereof or by reason of the extent to which any such provision is
inconsistent with any prior draft hereof or thereof.
Section 28. Entire Agreement. This Warrant Agreement and the Plan,
together with their Exhibits, constitutes the entire agreement among the
parties hereto with respect to the subject matter hereof, and there are no
agreements among the parties hereto with respect thereto except as expressly
set forth herein or therein.
(PAGE 24)
<PAGE> 28
Section 29. Severability. In case any provision contained in this
Warrant Agreement is invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions will not in any way be affected
or impaired thereby. The Company and the Warrant Agent will endeavor in good
faith to replace the invalid, illegal or unenforceable provisions with valid,
legal and enforceable provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.
Section 30. Counterparts. This Warrant Agreement may be executed
in any number of counterparts and each of such counterparts shall for all
purposes be deemed to be an original, and all such counterparts shall together
constitute but one and the same instrument.
Section 31. Determinations of the Company's Board of Directors. All
determinations by the Company's Board of Directors provided for in this Warrant
Agreement shall be conclusive, final and binding absent manifest error.
(PAGE 25)
<PAGE> 29
Section 32. Glossary of Terms. The Following Capitalized terms are
defined in the Sections referenced below:
<TABLE>
<CAPTION>
Capitalized Term Section
<S> <C>
"Closing Price" 12(f)
"Company" Recitals
"Convertible Securities" 12(e)
"Current Market Price" 12(f)
"Exercise Price" 11
"Exercise Quantity" 11
"Expiration Time" 6(a)
"NASD" 2
"WRT Common Stock" Recitals
"WRT Warrants" Recitals
"Non-Surviving Combination" 12(k)(2)
"Plan" Recitals
"Subsidiary" 12(c)
"Transfer Agent" 6(d)
"Warrant Agent" Recitals
"Warrant Agreement" Recitals
"Warrant Amount" Recitals
"Warrant Certificates" 2
"Warrant Holder" 4(a)
"Warrant Register" 4(a)
"Warrant Shares" Recitals
</TABLE>
(PAGE 26)
<PAGE> 30
IN WITNESS WHEREOF, the parties hereto have caused this Warrant
Agreement to be duly executed, as of the day and year first above written.
WRT ENERGY CORPORATION
By:
---------------------------------
Title:
------------------------------
{SEAL}
Attest:
--------------------
AMERICAN STOCK TRANSFER &
TRUST COMPANY
By:
---------------------------------
Title:
------------------------------
{SEAL}
Attest:
(PAGE 27)
<PAGE> 31
EXHIBIT A
{Form of Warrant Certificate}
WARRANTS TO ACQUIRE NEW WRT COMMON STOCK
PAR VALUE $0.01 PER SHARE OF WRT ENERGY CORPORATION
EXERCISABLE ON OR AFTER JULY 11, 1997 THROUGH JULY 10, 2002
NO. ________
This Warrant Certificate certifies that , or
registered assigns, is the registered holder of WRT Warrants (the
"WRT Warrants") expiring at 5:00 P.M., New York City time, on July 10, 2002 or,
if such date is not a business day, the next succeeding business day (the
"Expiration Time") to purchase WRT Common Stock, par value $0.01 per share (the
"WRT Common Stock"), of WRT Energy Corporation, a Delaware corporation (the
"Company"). The WRT Common Stock issuable upon exercise of WRT Warrants is
hereinafter referred to as the "Warrant Shares". Subject to the immediately
succeeding paragraph, each WRT Warrant entitles the holder upon exercise to
purchase from the Company on or before the Expiration Time one (1) fully paid
and nonassessable share of WRT Common Stock per WRT Warrant (the "Exercise
Quantity") at an initial exercise price equal to Ten Dollars ($10.00) payable
per Warrant Share (the "Exercise Price"). Such purchase shall be payable in
lawful money of the United States of America in cash or by certified or
official bank check to the order of the Warrant Agent at the office or agency
of the Warrant Agent, but only subject to the conditions set forth herein and
in the Warrant Agreement referred to on the reverse side hereof. The Exercise
Quantity and the Exercise Price are subject to adjustment upon the occurrence
of certain events set forth in the Warrant Agreement. Upon determination of
the adjusted Exercise Quantity, the Company shall cause to be given to each of
the registered holders of the Warrant Certificates at his address appearing on
the Warrant Register, written notice of such determination by first-class mail,
postage prepaid. Terms used herein but not otherwise defined shall have the
meanings set forth in the Warrant Agreement.
No WRT Warrant may be exercised before 9:00 A.M., New York City time,
on July 11, 1997 or after the Expiration Time and to the extent not exercised
by such time such WRT Warrants remaining shall become void.
Reference is hereby made to the further provisions of this Warrant
Certificate set forth on the reverse hereof and such further provisions shall
for all purposes have the same effect as though fully set forth at this place.
This Warrant Certificate shall not be valid unless countersigned by the Warrant
Agent, as such term is used in the Warrant Agreement.
(PAGE A-1)
<PAGE> 32
THIS WARRANT CERTIFICATE SHALL BE GOVERNED AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate
to be signed by its two of its officers thereunto authorized and has caused its
corporate seal to be affixed hereunto or imprinted hereon.
Dated: , 1997 WRT ENERGY CORPORATION
------------------
By:
--------------------------
Name:
Title:
Countersigned:
- -------------------------------------
as Warrant Agent
By:
----------------------------------
Authorized Signature
(PAGE A-2)
<PAGE> 33
{Form of Warrant Certificate}
{Reverse}
The WRT Warrants evidenced by this Warrant Certificate are part of a
duly authorized issue of up to [___________] WRT Warrants expiring at 5:00
P.M., New York City time, on July 10, 2002 or, if such date is not a business
day, the next succeeding business day (the "Expiration Time"), entitling the
holder on exercise to purchase shares of WRT Common Stock, par value $0.01 per
share of the Company (the "WRT Common Stock"), and are issued or to be issued
pursuant to a Warrant Agreement dated as of July 10, 1997 (the "Warrant
Agreement"), duly executed and delivered by the Company to American Stock
transfer & Trust Company, a New York corporation, as warrant agent (the
"Warrant Agent"), which Warrant Agreement is hereby incorporated by reference
in and made a part of this instrument and is hereby referred to for a
description of the rights, limitation of rights, obligations, duties and
immunities thereunder of the Warrant Agent, the Company and the Warrant Holders
(the words "Warrant Holders" or "Warrant Holder" meaning the registered holders
or registered holder) of the WRT Warrants. A copy of the Warrant Agreement may
be obtained by the Warrant Holder hereof upon written request to the Company.
WRT Warrants may be exercised at any time on and after 9:00 A.M., New
York City time, on July 11, 1997 and on or before the Expiration Time. The
Warrant Holder of WRT Warrants evidenced by this Warrant Certificate may
exercise them by surrendering this Warrant Certificate, with the form of
election to purchase set forth hereon properly completed and executed, together
with payment of the Exercise Price in cash or by certified or official bank
check to the order of the Warrant Agent and the other required documentation.
In the event that upon any exercise of WRT Warrants evidenced hereby the number
of WRT Warrants exercised shall be less than the total number of WRT Warrants
evidenced hereby, there shall be issued to the Warrant Holder hereof or his
assignee a new Warrant Certificate evidencing the number of WRT Warrants not
exercised. No adjustment shall be made for any dividends on any WRT Common
Stock issuable upon exercise of this WRT Warrant.
The Warrant Agreement provides that upon the occurrence of certain
events the Exercise Quantity and the Exercise Price set forth on the face
hereof may, subject to certain conditions, be adjusted. No fractions of a
share of WRT Common Stock will be issued upon the exercise of any WRT Warrant,
but the Company will pay the cash value thereof determined as provided in the
Warrant Agreement.
Warrant Certificates, when surrendered at the office of the Warrant
Agent by the registered Warrant Holder thereof in person or by legal
representative or attorney duly authorized in writing, may be exchanged, in the
manner and subject to the limitations provided in the Warrant Agreement, but
without payment of any service charge, for another Warrant Certificate or
Warrant Certificates of like tenor evidencing in the aggregate a like number of
WRT Warrants.
(PAGE A-3)
<PAGE> 34
Upon due presentation for registration of transfer of this Warrant
Certificate at the office of the Warrant Agent a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like
number of WRT Warrants shall be issued to the transferee in exchange for this
Warrant Certificate, subject to the limitations provided in the Warrant
Agreement, without charge except for any tax or other governmental charge
imposed in connection therewith.
(PAGE A-4)
<PAGE> 35
FORM OF ELECTION TO PURCHASE
(To Be Executed Upon Exercise of WRT Warrants)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to receive ______ shares of WRT Common
Stock and herewith tenders payment for such shares to the order of
__________________________ in the amount of $ in cash or by
certified or official bank check in accordance with the terms hereof. The
undersigned requests that a certificate for such shares be registered in the
name of ___________________________, whose address is ______________________
and that such shares be delivered to ___________________________, whose address
is ____________________________.
Please insert social security or other identifying number: ___________________
If said number of shares is less than all of the shares of WRT Common Stock
purchasable hereunder, the undersigned requests that a new Warrant Certificate
representing the remaining balance of such shares be registered in the name of
____________________________, whose address is _________________________, and
that such Warrant Certificate be delivered to ______________________________,
whose address is _____________________________.
Please insert social security or other identifying number: ___________________
Dated: _________ ___
Signature: ________________________
Note: The above signature must
correspond with the name as written
upon the face of this Warrant
Certificate in every particular,
without alteration or enlargement
or any change whatever.
Signature Guaranteed By:
____________________________________
Note: Signatures must be guaranteed
by an eligible guarantor institution
(a bank, stockbroker, savings and
loan association or credit union
with membership in an approved
signature guarantee medallion
program) pursuant to Rule 17A-d-15
of the Exchange Act
(PAGE A-5)
<PAGE> 36
FORM OF ASSIGNMENT
(To Be Executed Upon Assignment of the WRT Warrants)
For value received _________________________________________________
hereby sells, assigns and transfers unto _____________________________________
the WRT Warrants represented by this Warrant Certificate, together with all
right, title and interest therein, and do hereby irrevocably constitute and
appoint _____________________________________________________________________,
attorney, to transfer this Warrant Certificate on the books of the Company,
with full power of substitution.
Dated: _____________ ___
Signature: _________________________
Note: The above signature must
correspond with the name as written
upon the face of this Warrant
Certificate in every particular,
without alteration or enlargement or
any change whatever.
Signature Guaranteed By:
_____________________________________
Note: Signatures must be guaranteed
by an eligible guarantor institution
(a bank, stockbroker, savings and
loan association or credit union with
membership in an approved signature
guarantee medallion program) pursuant
to Rule 17A-d-15 of the Exchange Act
(PAGE A-6)
<PAGE> 1
EXHIBIT 2.1
EXECUTION COPY
REGISTRATION RIGHTS AGREEMENT
by and among
WRT ENERGY CORPORATION,
DLB OIL & GAS, INC.
and
WEXFORD MANAGEMENT LLC
Dated as of July 10, 1997
(PAGE)
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
1. DEFINITIONS.....................................................
2. REGISTRATION UNDER THE SECURITIES ACT...........................
2.1 DEMAND REGISTRATION........................................
2.2 INCIDENTAL REGISTRATION....................................
2.3 SHELF REGISTRATION.........................................
2.4 EXPENSES...................................................
2.5 UNDERWRITTEN OFFERINGS.....................................
2.6 POSTPONEMENTS..............................................
3. HOLDBACK ARRANGEMENTS...........................................
3.1 RESTRICTIONS ON SALE BY HOLDERS............................
3.2 RESTRICTIONS ON SALE BY THE COMPANY AND OTHERS.............
4. REGISTRATION PROCEDURES.........................................
4.1 OBLIGATIONS OF THE COMPANY.................................
4.2 SELLER INFORMATION.........................................
4.3 NOTICE TO DISCONTINUE......................................
5. INDEMNIFICATION; CONTRIBUTION...................................
5.1 INDEMNIFICATION BY THE COMPANY.............................
5.2 INDEMNIFICATION BY HOLDERS.................................
5.3 CONDUCT OF INDEMNIFICATION PROCEEDINGS.....................
5.4 CONTRIBUTION...............................................
5.5 OTHER INDEMNIFICATION......................................
5.6 INDEMNIFICATION PAYMENTS...................................
6. GENERAL.........................................................
6.1 ADJUSTMENTS AFFECTING REGISTRABLE SECURITIES...............
6.2 REGISTRATION RIGHTS TO OTHERS..............................
6.3 AMENDMENTS AND WAIVERS.....................................
6.4 NOTICES....................................................
6.5 SUCCESSORS AND ASSIGNS.....................................
6.6 COUNTERPARTS...............................................
6.7 DESCRIPTIVE HEADINGS, ETC..................................
6.8 SEVERABILITY...............................................
6.9 GOVERNING LAW..............................................
6.10 REMEDIES; SPECIFIC PERFORMANCE............................
6.11 ENTIRE AGREEMENT..........................................
6.12 NOMINEES FOR BENEFICIAL OWNERS............................
6.13 CONSENT TO JURISDICTION...................................
6.14 FURTHER ASSURANCES........................................
6.15 NO INCONSISTENT AGREEMENTS................................
6.16 CONSTRUCTION..............................................
</TABLE>
<PAGE> 3
REGISTRATION RIGHTS AGREEMENT (this or the "Agreement") dated as of
July 10, 1997, by and among WRT Energy Corporation, a Delaware corporation (the
"Company"), DLB Oil & Gas, Inc., an Oklahoma corporation ("DLB"), and Wexford
Management LLC, a Delaware limited liability company, on behalf of its
affiliated investment funds ("Wexford").
W I T N E S S E T H :
WHEREAS, the predecessor to the Company has emerged from bankruptcy
pursuant to Chapter 11 of the United States Bankruptcy Code;
WHEREAS, pursuant to the Debtor's and DLBW's First Amended Joint Plan
of Reorganization Under Chapter 11 of the United States Bankruptcy Code (the
"Reorganization Plan"), DLB and Wexford were issued and acquired certain
securities of the Company;
WHEREAS, the Company has entered into (i) a Commitment Agreement,
dated as of January 20, 1997, by and among the Company, DLB and Wexford (the
"Commitment Agreement") and (ii) a Subscription Rights Agreement, dated as of
May 5, 1997, by and between the Company and the Disbursing Agent (as therein
defined) (the "Subscription Agreement"), pursuant to which the Company issued
and DLB and Wexford acquired those certain securities of the Company; and
WHEREAS, in order to induce DLB and Wexford to enter into the
Commitment Agreement and to participate in the Subscription Agreement, the
Company agreed to provide certain registration rights on the terms and subject
to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, and for other good and valuable consideration the
receipt and sufficiency of which is hereby acknowledged, and intending to be
legally bound hereby, the parties hereto agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms shall have the
following meanings:
"Affiliate" shall mean (i) with respect to any Person, any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such Person and (ii) with respect to any
individual, shall also mean the spouse, sibling, child, step-child, grandchild,
niece, nephew or parent of such Person, or the spouse thereof.
"Agents" shall have the meaning set forth in Section 5.1.
"Agreement" shall have the meaning set forth in the preamble.
"Blackout Notice" shall have the meaning set forth in Section
2.6.
"Blackout Period" shall have the meaning set forth in Section
2.6.
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"Claims" shall have the meaning set forth in Section 5.1.
"Commitment Agreement" shall have the meaning set forth in the
preamble.
"Common Shares" shall mean shares of common stock, par value
$0.01 per share, of the Company.
"Company" shall have the meaning set forth in the preamble and
shall also include the Company's successors.
"Demand Registration" shall mean a registration required to be
effected by the Company, pursuant to Section 2.1.
"DLB" shall have the meaning set forth in the preamble.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended from time to time, and the rules and regulations thereunder, or any
similar or successor statute.
"Holders" shall mean each of DLB and Wexford for so long as
either of them owns any Registrable Securities and such of their respective
heirs, successors and permitted assigns who acquire Registrable Securities,
directly or indirectly, from either DLB or Wexford (or any subsequent Holder),
for so long as such heirs, successors and permitted assigns own any Registrable
Securities.
"Holders' Counsel" shall mean, for purposes of this Agreement,
one firm of counsel (per registration) to the Holders participating in such
registration, which counsel shall be selected (i) in the case of a Demand
Registration, by the Initiating Holder and (ii) in all other cases, by the
Holders of a majority of the Registrable Securities requested to be included in
an Incidental Registration.
"Holders of the Registration" shall mean, with respect to a
particular registration, one or more Holders who would hold the Registrable
Securities to be included in such registration. "Incidental Registration"
shall mean a registration required to be effected by the Company pursuant to
Section 2.2.
"Initiating Holder" shall mean, with respect to a particular
registration, the Holder who initiated the Request for such registration.
"Inspectors" shall have the meaning set forth in Section 4.1(g).
"NASD" shall mean the National Association of Securities
Dealers, Inc.
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"Person" shall mean any individual, firm, partnership,
corporation, trust, joint venture, association, joint stock company, limited
liability company, unincorporated organization or any other entity or
organization, including a government or agency or political subdivision
thereof, and shall include any successor (by merger or otherwise) of such
entity.
"Prospectus" shall mean the prospectus included in a
Registration Statement (including, without limitation, any preliminary
prospectus and any prospectus that includes any information previously omitted
from a prospectus filed as part of an effective registration statement in
reliance upon Rule 430A promulgated under the Securities Act), and any such
Prospectus as amended or supplemented by any prospectus supplement, and all
other amendments and supplements to such Prospectus, including post-effective
amendments, and in each case including all material incorporated by reference
(or deemed to be incorporated by reference) therein.
"Records" shall have the meaning set forth in Section 4.1(g).
"Registrable Securities" shall mean (i) any Common Shares issued
and delivered to the Holders pursuant to the Reorganization Plan, the
Commitment Agreement and the Subscription Agreement; (ii) any Common Shares
otherwise or hereafter purchased or acquired by the Holders or their Affiliates
and (iii) any other securities of the Company (or any successor or assign of
the Company, whether by merger, consolidation, sale of assets or otherwise)
which may be issued or issuable to the Holders with respect to, in exchange
for, or in substitution of, Registrable Securities referenced in clauses (i)
and (ii) above by reason of any dividend or stock split, combination of shares,
merger, consolidation, recapitalization, reclassification, reorganization, sale
of assets or similar transaction. As to any particular Registrable Securities,
such securities shall cease to be Registrable Securities when (A) a
registration statement with respect to the sale of such securities shall have
been declared effective under the Securities Act and such securities shall have
been disposed of in accordance with such registration statement, (B) such
securities are sold pursuant to Rule 144 (or any similar provisions then in
force) under the Securities Act, (C) such securities have been otherwise
transferred, a new certificate or other evidence of ownership for them not
bearing the legend restricting further transfer shall have been delivered by
the Company and subsequent public distribution of them shall not require
registration under the Securities Act, or (D) such securities shall have ceased
to be outstanding.
"Registration Expenses" shall mean any and all expenses incident
to performance of or compliance with this Agreement by the Company and its
subsidiaries, including, without limitation (i) all SEC, stock exchange, NASD
and other registration, listing and filing fees, (ii) all fees and expenses
incurred in connection with compliance with state securities or blue sky laws
and compliance with the rules of any stock exchange (including fees and
disbursements of counsel in connection with such compliance and the
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preparation of a blue sky memorandum and legal investment survey), (iii) all
expenses of any Persons in preparing or assisting in preparing, word
processing, printing, distributing, mailing and delivering any Registration
Statement, any Prospectus, any underwriting agreements, transmittal letters,
securities sales agreements, securities certificates and other documents
relating to the performance of or compliance with this Agreement, (iv) the fees
and disbursements of counsel for the Company, (v) the fees and disbursements of
Holders' Counsel, (vi) the fees and disbursements of all independent public
accountants (including the expenses of any audit and/or "cold comfort" letters)
and the fees and expenses of other Persons, including experts, retained by the
Company, (vii) the expenses incurred in connection with making road show
presentations and holding meetings with potential investors to facilitate the
distribution and sale of Registrable Securities which are customarily borne by
the issuer, (viii) any fees and disbursements of underwriters customarily paid
by issuers or sellers of securities, (ix) premiums and other costs of policies
of insurance against liabilities arising out of the public offering of the
Registrable Securities being registered and (x) all internal expenses of the
Company (including all salaries and expenses of officers and employees
performing legal or accounting duties); provided, however, Registration
Expenses shall not include discounts and commissions payable to underwriters,
selling brokers, dealer managers or other similar Persons engaged in the
distribution of any of the Registrable Securities; and provided, further, that
in any case where Registration Expenses are not to be borne by the Company,
such expenses shall not include salaries of Company personnel or general
overhead expenses of the Company, auditing fees, premiums or other expenses
relating to liability insurance required by underwriters of the Company or
other expenses for the preparation of financial statements or other data
normally prepared by the Company in the ordinary course of its business or
which the Company would have incurred in any event; and provided, further, that
in the event the Company shall, in accordance with Section 2.2 or Section 2.6
hereof, not register any securities with respect to which it had given written
notice of its intention to register to Holders, notwithstanding anything to the
contrary in the foregoing, all of the costs incurred by the Holders in
connection with such registration shall be deemed to be Registration Expenses.
"Registration Statement" shall mean a registration statement of
the Company which covers any Registrable Securities requested to be included
therein pursuant to the provisions of this Agreement on an appropriate form and
in accordance with the Securities Act and all amendments and supplements to
such registration statement, including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference (or deemed to be incorporated by reference)
therein.
"Reorganization Plan" shall have the meaning set forth in the
preamble.
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"Request" shall have the meaning set forth in Section 2.1(a).
"SEC" shall mean the Securities and Exchange Commission, or any
successor agency having jurisdiction to enforce the Securities Act.
"Securities Act" shall mean the Securities Act of 1933, as
amended from time to time, and the rules and regulations thereunder, or any
similar or successor statute.
"Shelf Registration" shall have the meaning set forth in Section
2.1(a).
"Subscription Agreement" shall have the meaning set forth in the
preamble.
"Underwriters" shall mean the underwriters, if any, of the
offering being registered under the Securities Act.
"Underwritten Offering" shall mean a sale of securities of the
Company to an Underwriter or Underwriters for reoffering to the public.
"Wexford" shall have the meaning set forth in the preamble.
"Withdrawn Demand Registration" shall have the meaning set forth
in Section 2.1(a).
"Withdrawn Request" shall have the meaning set forth in Section
2.1(a).
2. REGISTRATION UNDER THE SECURITIES ACT
2.1 Demand Registration.
(a) Right to Demand Registration. (i) At any time or from time to
time the Holders holding at least 20% of the Registrable Securities shall have
the right to request in writing (a "Request") that the Company register all or
part of such Holder's Registrable Securities by filing with the SEC a
Registration Statement.
(ii) The Request shall specify the amount of Registrable Securities
intended to be disposed of by each such Holder and the intended method of
disposition thereof.
(iii) As promptly as practicable, but no later than ten (10) days
after receipt of a Request, the Company shall give written notice of such
requested registration to all Holders.
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(iv) Subject to Section 2.1(b), the Company shall include in a
Demand Registration (A) the Registrable Securities intended to be disposed of
by the Initiating Holder and (B) the Registrable Securities intended to be
disposed of by any other Holder, if any, which shall have made a written
request (which request shall specify the amount of Registrable Securities to be
registered and the intended method of disposition thereof) to the Company for
inclusion thereof in such registration within twenty (20) days after the
receipt of such written notice from the Company.
(v) The Company shall, as expeditiously as possible following a
Request, use its best efforts to cause to be filed with the SEC a Registration
Statement providing for the registration under the Securities Act of the
Registrable Securities which the Company has been so requested to register by
all such Holders, to the extent necessary to permit the disposition of such
Registrable Securities so to be registered in accordance with the intended
methods of disposition thereof specified in such Request or further requests
(including, without limitation, by means of a shelf registration pursuant to
Rule 415 under the Securities Act (a "Shelf Registration") if so requested and
if the Company is then eligible to use such a registration). The Company shall
use its best efforts to have such Registration Statement declared effective by
the SEC as soon as practicable thereafter and to keep such Registration
Statement continuously effective for the period specified in Section 4.1(b).
(vi) A Request may be withdrawn prior to the filing of the
Registration Statement by the Holders of the Registration (a "Withdrawn
Request") and a Registration Statement may be withdrawn prior to the
effectiveness thereof by the Holders of the Registration (a "Withdrawn Demand
Registration"). The registration rights granted pursuant to the provisions of
this Section 2.1 shall be in addition to the registration rights granted
pursuant to the other provisions of this Section 2.
(b) Priority in Demand Registrations. If a Demand Registration
involves an Underwritten Offering, and the sole or lead managing Underwriter,
as the case may be, of such Underwritten Offering shall advise the Company in
writing (with a copy to each Holder requesting registration) on or before the
date five days prior to the date then scheduled for such offering that, in its
opinion, the amount of Registrable Securities requested to be included in such
Demand Registration exceeds the number which can be sold in such offering
within a price range acceptable to the Holders of the Registration (such
writing to state the basis of such opinion and the approximate number of
Registrable Securities which may be included in such offering), the Company
shall include in such Demand Registration, to the extent of the number which
the Company is so advised may be included in such offering, the Registrable
Securities requested to be included in the Demand Registration by the Holders
allocated pro rata in proportion to the number of Registrable Securities
requested to be included in such Demand Registration by each of them. In the
event the Company shall not, by virtue of this Section 2.1(b), include in any
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Demand Registration all of the Registrable Securities of any Holder requesting
to be included in such Demand Registration, such Holder may, upon written
notice to the Company given within five days of the time such Holder first is
notified of such matter, reduce the amount of Registrable Securities it desires
to have included in such Demand Registration, whereupon only the Registrable
Securities, if any, it desires to have included will be so included and the
Holder not so reducing shall be entitled to a corresponding increase in the
amount of Registrable Securities to be included in such Demand Registration.
(c) Underwriting; Selection of Underwriters. (i) If the Initiating
Holder so elects, the offering of Registrable Securities pursuant to a Demand
Registration shall be in the form of a firm commitment Underwritten Offering;
and such Initiating Holder may require that the other Holders, if any,
participating in such registration sell its Registrable Securities to the
Underwriters at the same price and on the same terms of underwriting applicable
to the Initiating Holder.
(ii) If any Demand Registration involves an Underwritten Offering,
the sole or managing Underwriters and any additional investment bankers and
managers to be used in connection with such registration shall be selected by
the Initiating Holder, subject to the approval of the Company (such approval
not to be unreasonably withheld).
(d) Registration of Other Securities. Whenever the Company shall
effect a Demand Registration, no securities other than the Registrable
Securities shall be covered by the related registration or offering unless the
Holders of a majority of the Registrable Securities requested to be included in
such Demand Registration shall have consented in writing to the inclusion of
such other securities.
(e) Other Registrations. During the period (i) beginning on the
date of a Request and (ii) ending on the date that is 90 days after the date
that a Registration Statement filed pursuant to such Request has been declared
effective by the SEC or, if the Holders shall withdraw such Request or such
Registration Statement, on the date of such Withdrawn Request or such Withdrawn
Registration Statement, the Company shall not, without the consent of the
Holders of a majority of the Registrable Securities requested to be included in
such Demand Registration, file a registration statement pertaining to any other
securities of the Company.
(f) Registration Statement Form. Registrations under this Section
2.1 shall be on such appropriate registration form of the SEC (i) as shall be
selected by the Initiating Holder, and (ii) which shall be available for the
sale of Registrable Securities in accordance with the intended method or
methods of disposition specified in the requests for registration.
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2.2 Incidental Registration
(a) Right to Include Registrable Securities. (i) If the Company at
any time or from time to time proposes to register any of its securities under
the Securities Act (other than in a registration on Forms S-4 or S-8 or any
successor form to such forms) whether or not pursuant to registration rights
granted to other holders of its securities and whether or not for sale for its
own account (and other than pursuant to Section 2.1), the Company shall deliver
prompt written notice (which notice shall be given at least thirty (30) days
prior to such proposed registration) to the Holders of its intention to
undertake such registration, describing in reasonable detail the proposed
registration and distribution (including the anticipated range of the proposed
offering price, the class and number of securities proposed to be registered
and the distribution arrangements) and of the Holders' right to participate in
such registration under this Section 2.2 as hereinafter provided.
(ii) Subject to the other provisions of this Section 2.2(a) and
Section 2.2(b), upon the written request of any Holder (which request shall
specify the amount of Registrable Securities to be registered and the intended
method of disposition thereof) made within twenty (20) days after the receipt
of such written notice, the Company shall include in such registration all
Registrable Securities requested by any Holder to be so registered (an
"Incidental Registration"), to the extent requisite to permit the disposition
(in accordance with the intended distribution arrangements thereof as
aforesaid) of the Registrable Securities so to be registered, by inclusion of
such Registrable Securities in the Registration Statement which covers the
securities which the Company proposes to register and shall use its best
efforts cause such Registration Statement to become and remain effective with
respect to such Registrable Securities in accordance with the registration
procedures set forth in Section 4.
(iii) If an Incidental Registration involves an Underwritten
Offering, immediately upon notification to the Company from the Underwriter of
the price at which such securities are to be sold, the Company shall so advise
each participating Holder.
(iv) The Holders requesting inclusion in an Incidental Registration
may, at any time prior to the effective date of the Registration Statement (and
for any reason), revoke such request by delivering written notice to the
Company revoking such requested inclusion.
(v) If at any time after giving written notice of its intention to
register any securities and prior to the effective date of the Registration
Statement filed in connection with such registration, the Company shall
determine for any reason not to register or to delay registration of such
securities, the Company may, at its election, give written notice of such
determination to the Holders and, thereupon, (A) in the case of a determination
not to register, the Company shall be relieved of its obligation to register
any Registrable Securities in connection with such registration (but not from
its obligation to pay the Registration Expenses incurred in
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connection therewith), without prejudice, however, to the rights of Holders to
cause such registration to be effected as a registration under Section 2.1 and
(B) in the case of a determination to delay such registration, the Company
shall be permitted to delay the registration of such Registrable Securities for
the same period as the delay in registering such other securities; provided,
however, that if such delay shall extend beyond one hundred and twenty (120)
days from the date the Company received a request to include Registrable
Securities in such Incidental Registration, then the Company shall again give
all Holders the opportunity to participate therein and shall follow the
notification procedures set forth in the preceding paragraph.
(vi) There is no limitation on the number of such Incidental
Registrations pursuant to this Section 2.2 which the Company is obligated to
effect.
(vii) The registration rights granted pursuant to the provisions of
this Section 2.2 shall be in addition to the registration rights granted
pursuant to the other provisions of this Section 2.
(b) Priority in Incidental Registration. If an Incidental
Registration involves an Underwritten Offering on a firm commitment basis, and
the sole or the lead managing Underwriter, as the case may be, of such
Underwritten Offering shall advise the Company in writing (with a copy to each
Holder requesting registration) on or before the date five days prior to the
date then scheduled for such offering that, in its opinion, the amount of
securities (including Registrable Securities) requested to be included in such
registration exceeds the amount which can be sold in such offering without
materially interfering with the successful marketing of the securities being
offered (such writing to state the basis of such opinion and the approximate
number of such securities which may be included in such offering without such
effect), the Company shall include in such registration, to the extent of the
number which the Company is so advised may be included in such offering without
such effect, (i) in the case of a registration initiated by the Company, (A)
first, the securities that the Company proposes to register for its own account
(but solely to the extent that the proceeds thereof shall not be used to
purchase Common Shares or other securities of the Company), (B) second, the
Registrable Securities requested to be included in such registration by the
Holders, allocated pro rata in proportion to the number of Registrable
Securities requested to be included in such registration by each of them and
(C) third, other securities of the Company to be registered on behalf of any
other Person and (ii) in the case of a registration initiated by a Person other
than the Company, (A) first, the securities requested to be included in such
registration by the Persons initiating such registration, allocated pro rata in
proportion to the number of securities requested to be included in such
registration by each of them and (B) second, the Registrable Securities that
the Holders propose to register, allocated pro rata in proportion to the number
of securities requested to be included in such registration by each of them,
(C) third, the securities that the Company proposes to register for its own
account; and (D) fourth, other securities of the Company to be registered on
behalf of any other Person; provided, however, that in the event the Company
will not, by virtue of this Section 2.2(b),
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include in any such registration all of the Registrable Securities of any
Holder requested to be included in such registration, such Holder may, upon
written notice to the Company given within three days of the time such Holder
first is notified of such matter, reduce the amount of Registrable Securities
it desires to have included in such registration, whereupon only the
Registrable Securities, if any, it desires to have included will be so included
and any other Holder shall be entitled to a corresponding increase in the
amount of Registrable Securities to be included in such registration on the
same terms as set forth above.
2.3 Shelf Registration. If a request made pursuant to Section 2.1 is for
a Shelf Registration, the Company shall use its best efforts to keep the Shelf
Registration continuously effective through the date on which all of the
Registrable Securities covered by such Shelf Registration may be sold pursuant
to Rule 144(k) under the Securities Act (or any successor provision having
similar effect); provided, however, that prior to the termination of such Shelf
Registration, the Company shall first furnish to each Holder participating in
such Shelf Registration (i) an opinion, in form and substance satisfactory to
the Holders of the Registration, of counsel for the Company satisfactory to the
Holders of the Registration stating that such Registrable Securities are freely
salable pursuant to Rule 144(k) under the Securities Act (or any successor
provision having similar effect) or (ii) a letter from the staff of the SEC
stating that the SEC would not recommend enforcement action if the Registrable
Securities included in such Shelf Registration were sold in a public sale other
than pursuant to an effective registration statement.
2.4 Expenses. The Company shall pay all Registration Expenses in
connection with any Demand Registration, Incidental Registration or Shelf
Registration, whether or not such registration shall become effective and
whether or not all Registrable Securities originally requested to be included
in such registration are withdrawn or otherwise ultimately not included in such
registration. Each Holder shall pay all discounts and commissions payable to
underwriters, selling brokers, managers or other similar Persons engaged in the
distribution of such Holder's Registrable Securities pursuant to any
registration pursuant to this Section 2.
2.5 Underwritten Offerings.
(a) Demand Underwritten Offerings. If requested by the sole or lead
managing Underwriter for any Underwritten Offering effected pursuant to a
Demand Registration, the Company shall enter into a customary underwriting
agreement with the Underwriters for such offering, such agreement to be
reasonably satisfactory in substance and form to each Holder participating in
such offering and to contain such representations and warranties by the Company
and such other terms as are generally prevailing in agreements of that type,
including, without limitation, indemnification and contribution to the effect
and to the extent provided in Section 5.
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(b) Holders to be Parties to Underwriting Agreement. The Holders of
such Registrable Securities to be distributed by Underwriters in an
Underwritten Offering contemplated by Section 2 shall be parties to the
underwriting agreement between the Company and such Underwriters and may, at
such Holders' option, require that any or all of the representations and
warranties by, and the other agreements on the part of, the Company to and for
the benefit of such Underwriters shall also be made to and for the benefit of
such Holders and that any or all of the conditions precedent to the obligations
of such Underwriters under such underwriting agreement be conditions precedent
to the obligations of such Holders; provided, however, that the Company shall
not be required to make any representations or warranties with respect to
written information specifically provided by a selling Holder for inclusion in
the Registration Statement.
(c) Underwritten Registration. Notwithstanding anything herein to
the contrary, no Holder may participate in any underwritten registration
hereunder unless such Holder (i) agrees to sell its securities on the same
terms and conditions provided in any underwritten arrangements approved by the
Persons entitled hereunder to approve such arrangement and (ii) accurately
completes and executes in a timely manner all questionnaires, powers of
attorney, indemnities, custody agreements, underwriting agreements and other
documents reasonably required under the terms of such underwriting
arrangements.
2.6 Postponements. (a) The Company shall be entitled to postpone a
Demand Registration and to require the Holders of Registrable Securities to
discontinue the disposition of their securities covered by a Shelf Registration
during any Blackout Period (as defined below) (i) if the Board of Directors of
the Company determines in good faith that effecting such a registration or
continuing such disposition at such time would have a material adverse effect
upon a proposed sale of all (or substantially all) of the assets of the Company
or a merger, reorganization, recapitalization or similar current transaction
materially affecting the capital structure or equity ownership of the Company,
(ii) if the Company is in possession of material information which the Board of
Directors of the Company determines in good faith is not in the best interests
of the Company to disclose in a registration statement at such time or (iii) if
the Company has delivered a notice pursuant to Section 2.2 that it is
undertaking an underwritten offering in which the Holders will be entitled to
exercise their incidental registration rights; provided, however, that the
Company may only delay a Demand Registration and require the Holders to
discontinue the disposition of their securities covered by a Shelf Registration
pursuant to this Section 2.6 for a reasonable period of time not to exceed 180
days (or such earlier time as such transaction is consummated or no longer
proposed or the material information has been made public) (the "Blackout
Period").
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(b) There shall not be more than one Blackout Period in any 12-month
period.
(c) The Company shall promptly notify the Holders in writing (a
"Blackout Notice") of any decision to postpone a Demand Registration or to
discontinue sales of Registrable Securities covered by a Shelf Registration
pursuant to this Section 2.6 and shall include a general statement of the
reason for such postponement, an approximation of the anticipated delay and an
undertaking by the Company promptly to notify the Holders as soon as a Demand
Registration may be effected or sales of Registrable Securities covered by a
Shelf Registration may resume.
(d) In making any determination to initiate or terminate a Blackout
Period, the Company shall not be required to consult with or obtain the consent
of any Holder, and any such determination shall be the Company's sole
responsibility.
(e) Each Holder shall treat all notices received from the Company
pursuant to this Section 2.6 in the strictest confidence and shall not
disseminate such information.
(f) If the Company shall postpone the filing of a Registration
Statement, the Holders who were to participate therein shall have the right to
withdraw the request for registration. Any such withdrawal shall be made by
giving written notice to the Company within thirty (30) days after the Blackout
Notice.
(g) If a Blackout Notice is made, the Blackout Period so initiated
shall be in effect, even if the request for registration is subsequently
withdrawn by the Holders.
2.7 Inclusion of Information. The Company agrees to include in any
Registration Statement under this Agreement all information which any selling
Holder, upon advice of counsel, shall reasonably request.
3. HOLDBACK ARRANGEMENTS
3.1 Restrictions on Sale by Holders. Each Holder agrees, by
acquisition of such Registrable Securities, if timely requested in writing by
the sole or lead managing Underwriter in an Underwritten Offering of any
Registrable Securities, not to effect any public sale or distribution,
including a sale pursuant to Rule 144 (or any successor provision having
similar effect) under the Securities Act of any Registrable Securities or any
other equity security of the Company (or any security convertible into or
exchangeable or exercisable for any equity security of the Company) (except as
part of such underwritten registration), during the nine business days (as such
term is used in Rule 10b-6 under the Exchange Act) prior to, and during the
time period reasonably requested by the sole or lead managing Underwriter not
to exceed 180 days, beginning on the effective date of the applicable
Registration Statement.
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3.2 Restrictions on Sale by the Company and Others. The Company
agrees (i) if timely requested in writing by the sole or lead managing
Underwriter in an Underwritten Offering of any Registrable Securities, not to
effect any public sale or distribution of any of the Company's equity
securities (or any security convertible into or exchangeable or exercisable for
any of the Company's equity securities) during the nine business days (as such
term is used in Rule 10b-6 under the Exchange Act) prior to, and during the
time period reasonably requested by the sole or lead managing Underwriter not
to exceed 180 days, beginning on the effective date of the applicable
Registration Statement (except as part of such underwritten registration or
pursuant to registrations on Forms S-4 or S-8 or any successor form to such
forms) and (ii) it will cause each of its directors, officers and holders of
five percent (5%) or more of its Common Shares purchased from the Company at
any time after the date of this Agreement (other than in a registered public
offering) to so agree.
4. REGISTRATION PROCEDURES
4.1 Obligations of the Company. Whenever the Company is required to
effect the registration of Registrable Securities under the Securities Act
pursuant to Section 2 of this Agreement, the Company shall, as expeditiously as
possible:
(a) prepare and file with the SEC (promptly, and in any event
within ninety (90) days after receipt of a request to register Registrable
Securities pursuant to a Registration Statement) the requisite Registration
Statement to effect such registration, which Registration Statement shall
comply as to form in all material respects with the requirements of the
applicable form and include all financial statements required by the SEC to be
filed therewith, and the Company shall use its best efforts to cause such
Registration Statement to become effective (provided, that the Company may
discontinue any registration of its securities that are not Registrable
Securities, and, under the circumstances specified in Section 2.2, its
securities that are Registrable Securities); provided, however, that before
filing a Registration Statement or Prospectus or any amendments or supplements
thereto, or comparable statements under securities or blue sky laws of any
jurisdiction, the Company shall (i) provide Holders' Counsel and any other
Inspector with an adequate and appropriate opportunity to participate in the
preparation of such Registration Statement and each Prospectus included therein
(and each amendment or supplement thereto or comparable statement) to be filed
with the SEC, which documents shall be subject to the review and comment of
Holders' Counsel, (ii) not file any such Registration Statement or Prospectus
(or amendment or supplement thereto or comparable statement) with the SEC to
which Holder's Counsel, any selling Holder or any other Inspector shall have
reasonably objected on the grounds that such filing does not comply in all
material respects with the requirements of the Securities Act or of the rules
or regulations thereunder; and (iii) notify Holders' Counsel and each Holder
selling Registrable Securities pursuant to such Registration Statement of any
stop order issued or threatened by the SEC and take all reasonable action
required to prevent the entry of such stop order or to remove it if entered;
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(b) prepare and file with the SEC such amendments and
supplements to such Registration Statement and the Prospectus used in
connection therewith as may be necessary (i) to keep such Registration
Statement effective and (ii) to comply with the provisions of the Securities
Act with respect to the disposition of all Registrable Securities covered by
such Registration Statement, in each case until such time as all of such
Registrable Securities have been disposed of in accordance with the intended
methods of disposition by the seller(s) thereof set forth in such Registration
Statement; provided, that except with respect to any Shelf Registration, such
period need not extend beyond nine (9) months after the effective date of the
Registration Statement; and provided further, that with respect to any Shelf
Registration, such period need not extend beyond the time period provided in
Section 2.3, and which periods, in any event, shall terminate when all
Registrable Securities covered by such Registration Statement have been sold
(but not before the expiration of the ninety (90) day period referred to in
Section 4(3) of the Securities Act and Rule 174 thereunder, if applicable);
(c) furnish, without charge, to each Holder selling such
Registrable Securities and each Underwriter, if any, of the securities covered
by such Registration Statement, such number of copies of such Registration
Statement, each amendment and supplement thereto (in each case including all
exhibits), and the Prospectus included in such Registration Statement
(including each preliminary Prospectus) in conformity with the requirements of
the Securities Act, and other documents, as such selling Holder and Underwriter
may reasonably request in order to facilitate the public sale or other
disposition of the Registrable Securities owned by such selling Holder (the
Company hereby consenting to the use in accordance with applicable law of each
such Registration Statement (or amendment or post-effective amendment thereto)
and each such Prospectus (or preliminary prospectus or supplement thereto) by
each such Holder selling Registrable Securities and the Underwriters, if any,
in connection with the offering and sale of the Registrable Securities covered
by such Registration Statement or Prospectus);
(d) prior to any public offering of Registrable Securities, use
its best efforts to register or qualify all Registrable Securities and other
securities covered by such Registration Statement under such other securities
or blue sky laws of such jurisdictions as any Holder selling Registrable
Securities covered by such Registration Statement or the sole or lead managing
Underwriter, if any, may reasonably request (provided such registration or
qualification shall be required), and continue such registration or
qualification in effect in each such jurisdiction for as long as such
Registration Statement remains in effect (including through new filings or
amendments or renewals), and do any and all other acts and things which may be
necessary or advisable to enable any such selling Holder to consummate the
disposition in such jurisdictions of the Registrable Securities owned by such
selling Holder; provided, however, that the Company shall not be required to
(i) qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 4.1(d), (ii) subject
itself to taxation in any such jurisdiction or (iii) consent to general service
of process in any such jurisdiction;
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(e) use its best efforts to obtain all other approvals,
consents, exemptions or authorizations from such governmental agencies or
authorities as may be necessary to enable the Holders selling such Registrable
Securities to consummate their disposition;
(f) promptly notify each Holder of Registrable Securities
covered by such Registration Statement and the sole or lead managing
Underwriter, if any: (i) when the Registration Statement, any pre-effective
amendment, the Prospectus or any prospectus supplement related thereto or post-
effective amendment to the Registration Statement has been filed and, with
respect to the Registration Statement or any post-effective amendment, when the
same has become effective, (ii) of any request by the SEC or any state
securities or blue sky authority for amendments or supplements to the
Registration Statement or the Prospectus related thereto or for additional
information, (iii) of the issuance by the SEC of any stop order suspending the
effectiveness of the Registration Statement or the initiation or threat of any
proceedings for that purpose, (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification of any
Registrable Securities for sale under the securities or blue sky laws of any
jurisdiction or the initiation of any proceeding for such purpose, (v) of the
existence of any fact of which the Company becomes aware or the happening of
any event which results in (A) the Registration Statement containing an untrue
statement of a material fact or omitting to state a material fact required to
be stated therein or necessary to make any statements therein not misleading or
(B) the Prospectus included in such Registration Statement containing an untrue
statement of a material fact or omitting to state a material fact required to
be stated therein or necessary to make any statements therein, in the light of
the circumstances under which they were made, not misleading, (vi) if at any
time the representations and warranties contemplated by Section 2.5(b) cease to
be true and correct in all material respects and (vii) of the Company's
reasonable determination that a post-effective amendment to a Registration
Statement would be appropriate or that there exists circumstances not yet
disclosed to the public which make further sales under such Registration
Statement inadvisable pending such disclosure and post-effective amendment;
and, if the notification relates to an event described in any of the clauses
(ii) through (vii) of this Section 4.1(f), the Company shall promptly prepare a
supplement or post-effective amendment to such Registration Statement or
related Prospectus or any document incorporated therein by reference or file
any other required document so that (1) such Registration Statement shall not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading and (2) as thereafter delivered to the purchasers of the
Registrable Securities being sold thereunder, such Prospectus shall not include
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein in
the light of the circumstances under which they were made not misleading (and
shall furnish to each such Holder and each Underwriter, if any, a reasonable
number of copies of such Prospectus so supplemented or amended);
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(g) make available for inspection by any Holder selling
Registrable Securities, any sole or lead managing Underwriter participating in
any disposition pursuant to such Registration Statement, Holders' Counsel and
any attorney, accountant or other agent retained by any such seller or any
Underwriter (each, an "Inspector" and, collectively, the "Inspectors"), all
financial and other records, pertinent corporate documents and properties of
the Company and any subsidiaries thereof as may be in existence at such time
(collectively, the "Records") as shall be necessary, in the opinion of such
Holders' and such Underwriters' respective counsel, to enable them to exercise
their due diligence responsibility and to conduct a reasonable investigation
within the meaning of the Securities Act, and cause the Company's and any
subsidiaries' officers, directors and employees, and the independent public
accountants of the Company, to supply all information reasonably requested by
any such Inspectors in connection with such Registration Statement;
(h) obtain an opinion from the Company's counsel and a "cold
comfort" letter from the Company's independent public accountants who have
certified the Company's financial statements included or incorporated by
reference in such Registration Statement, in each case dated the effective date
of such Registration Statement (and if such registration involves an
Underwritten Offering, dated the date of the closing under the underwriting
agreement), in customary form and covering such matters as are customarily
covered by such opinions and "cold comfort" letters delivered to underwriters
in underwritten public offerings, which opinion and letter shall be reasonably
satisfactory to the sole or lead managing Underwriter, if any, and to the
Holders of the Registration, and furnish to each Holder participating in the
offering and to each Underwriter, if any, a copy of such opinion and letter
addressed to such Holder (in the case of the opinion) and Underwriter (in the
case of the opinion and the "cold comfort" letter);
(i) provide a CUSIP number for all Registrable Securities and
provide and cause to be maintained a transfer agent and registrar for all such
Registrable Securities covered by such Registration Statement not later than
the effectiveness of such Registration Statement;
(j) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC and any other governmental agency
or authority having jurisdiction over the offering, and make available to its
security holders, as soon as reasonably practicable but no later than ninety
(90) days after the end of any 12-month period, an earnings statement (i)
commencing at the end of any month in which Registrable Securities are sold to
Underwriters in an Underwritten Offering and (ii) commencing with the first day
of the Company's calendar month next succeeding each sale of Registrable
Securities after the effective date of a Registration Statement, which
statement shall cover such 12-month periods, in a manner which satisfies the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;
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<PAGE> 19
(k) use its best efforts to cause all such Registrable
Securities to be listed (i) on the same principal securities exchanges, the
NASD Automated Quotation System or other markets within the United States of
America, if any, as shares of the Company's securities are then listed or
quoted or (ii) if securities of the Company are not at the time listed or
quoted on any such exchanges or markets (or if the listing of Registrable
Securities is not permitted under the rules of each such exchanges or markets
on which the Company's securities are then listed or quoted), then on a
national securities exchange designated by the Holders;
(l) keep each Holder selling Registrable Securities advised in
writing as to the initiation and progress of any registration under Section 2
hereunder;
(m) enter into and perform customary agreements (including, if
applicable, an underwriting agreement in customary form) and provide officers'
certificates and other customary closing documents;
(n) cooperate with each Holder selling Registrable Securities
and each Underwriter participating in the disposition of such Registrable
Securities and their respective counsel in connection with any filings required
to be made with the NASD and make reasonably available its employees and
personnel and otherwise provide reasonable assistance to the Underwriters
(taking into account the needs of the Company's businesses and the requirements
of the marketing process) in the marketing of Registrable Securities in any
Underwritten Offering;
(o) furnish to each Holder selling Registrable Securities and
the sole or lead managing Underwriter, if any, without charge, at least one
manually-signed copy of the Registration Statement and any post-effective
amendments thereto, including financial statements and schedules, all documents
incorporated therein by reference and all exhibits (including those deemed to
be incorporated by reference);
(p) cooperate with the Holders selling such Registrable
Securities and the sole or lead managing Underwriter, if any, to facilitate the
timely preparation and delivery of certificates not bearing any restrictive
legends representing the Registrable Securities to be sold, and cause such
Registrable Securities to be issued in such denominations and registered in
such names in accordance with the underwriting agreement prior to any sale of
Registrable Securities to the Underwriters or, if not an Underwritten Offering,
in accordance with the instructions of the Holders selling the Registrable
Securities at least three business days prior to any sale of Registrable
Securities;
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(q) if requested by the sole or lead managing Underwriter or
any Holder selling Registrable Securities, immediately incorporate in a
prospectus supplement or post-effective amendment such information concerning
such Holder, the Underwriters or the intended method of distribution as the
sole or lead managing Underwriter or the selling Holder reasonably requests to
be included therein and as is appropriate in the reasonable judgment of the
Company, including, without limitation, information with respect to the number
of shares of the Registrable Securities being sold to the Underwriters, the
purchase price being paid therefor by such Underwriters and with respect to any
other terms of the Underwritten Offering of the Registrable Securities to be
sold in such offering; make all required filings of such Prospectus supplement
or post-effective amendment as soon as notified of the matters to be
incorporated in such Prospectus supplement or post-effective amendment; and
supplement or make amendments to any Registration Statement if requested by the
sole or lead managing Underwriter of such Registrable Securities; and
(r) use its best efforts to take all other steps necessary to
expedite or facilitate the registration and disposition of the Registrable
Securities contemplated hereby.
4.2 Seller Information. The Company may require each Holder selling
Registrable Securities as to which any registration is being effected to
furnish to the Company such information regarding such seller and the
distribution of such securities as the Company may from time to time reasonably
request in writing; provided, that such information shall be used only in
connection with such registration.
If any Registration Statement or comparable statement under
"blue sky" laws refers to any Holder by name or otherwise as the Holder of any
securities of the Company, then such Holder shall have the right to require (i)
the insertion therein of language, in form and substance satisfactory to such
Holder and the Company, to the effect that the holding by such Holder of such
securities is not to be construed as a recommendation by such Holder of the
investment quality of the Company's securities covered thereby and that such
holding does not imply that such Holder will assist in meeting any future
financial requirements of the Company and (ii) in the event that such reference
to such Holder by name or otherwise is not in the judgment of the Company, as
advised by counsel, required by the Securities Act or any similar federal
statute or any state "blue sky" or securities law then in force, the deletion
of the reference to such Holder.
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4.3 Notice to Discontinue. Each Holder agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 4.1(f)(ii) through
(vii), such Holder shall forthwith discontinue disposition of Registrable
Securities pursuant to the Registration Statement covering such Registrable
Securities until such Holder's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 4.1(f) and, if so directed by the
Company, such Holder shall deliver to the Company (at the Company's expense)
all copies, other than permanent file copies, then in such Holder's possession
of the Prospectus covering such Registrable Securities which is current at the
time of receipt of such notice. If the Company shall give any such notice, the
Company shall extend the period during which such Registration Statement shall
be maintained effective pursuant to this Agreement (including, without
limitation, the period referred to in Section 4.1(b)) by the number of days
during the period from and including the date of the giving of such notice
pursuant to Section 4.1(f) to and including the date when the Holder shall have
received the copies of the supplemented or amended prospectus contemplated by
and meeting the requirements of Section 4.1(f).
5. INDEMNIFICATION; CONTRIBUTION.
5.1 Indemnification by the Company. The Company agrees to indemnify and
hold harmless, to the fullest extent permitted by law, each Holder, its
officers, directors, partners, members, shareholders, employees, Affiliates and
agents (collectively, "Agents") and each Person who controls such Holder
(within the meaning of the Securities Act) and its Agents with respect to each
registration which has been effected pursuant to this Agreement, against any
and all losses, claims, damages or liabilities, joint or several, actions or
proceedings (whether commenced or threatened) in respect thereof, and expenses
(as incurred or suffered and including, but not limited to, any and all
expenses incurred in investigating, preparing or defending any litigation or
proceeding, whether commenced or threatened, and the reasonable fees,
disbursements and other charges of legal counsel) in respect thereof
(collectively, "Claims"), insofar as such Claims arise out of or are based upon
any untrue or alleged untrue statement of a material fact contained in any
Registration Statement, Prospectus (including any preliminary, final or summary
prospectus and any amendment or supplement thereto), offering circular or other
document (including any related registration statement, notification or the
like) related to any such registration or any omission or alleged omission to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that the Company will not
be liable in any such case to the extent that any such Claims arise out of or
are based upon any untrue statement or alleged untrue statement of a material
fact or omission or alleged omission of a material fact so made in reliance
upon and in conformity with written information furnished to the Company in an
instrument duly executed by such Holder specifically stating that it was
expressly for use therein. The Company shall also indemnify any Underwriters
of the Registrable Securities, their Agents and each Person who controls any
such Underwriter (within the meaning of the Securities Act) to the same extent
as provided above with respect to the
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indemnification of the Holders. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of any Person who
may be entitled to indemnification pursuant to this Section 5 and shall survive
the transfer of securities by such Holder or Underwriter.
5.2 Indemnification by Holders. Each Holder selling Registrable
Securities agrees to, severally and not jointly, indemnify and hold harmless,
to the fullest extent permitted by law, the Company, its directors and
officers, each other Person who participates as an Underwriter in the offering
or sale of such Registrable Securities and its Agents and each Person who
controls the Company or any such Underwriter (within the meaning of the
Securities Act) and its Agents against any and all Claims, insofar as such
Claims arise out of or are based upon any untrue or alleged untrue statement of
a material fact contained in any Registration Statement, Prospectus (including
any preliminary, final or summary prospectus and any amendment or supplement
thereto), offering circular or other document related to such registration, or
any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in reliance upon and
in conformity with written information furnished to the Company in an
instrument duly executed by such Holder specifically stating that it was
expressly for use therein; provided, however, that the aggregate amount which
any such Holder shall be required to pay pursuant to this Section 5.2 shall in
no event be greater than the amount of the net proceeds received by such Holder
upon the sale of the Registrable Securities pursuant to the Registration
Statement giving rise to such Claims less all amounts previously paid by such
Holder with respect to any such Claims. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of such
indemnified party and shall survive the transfer of such securities by such
Holder or Underwriter.
5.3 Conduct of Indemnification Proceedings. Promptly after receipt by an
indemnified party of notice of any Claim or the commencement of any action or
proceeding involving a Claim under this Section 5, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party pursuant to Section 5, (i) notify the indemnifying party in writing of
the Claim or the commencement of such action or proceeding; provided, that the
failure of any indemnified party to provide such notice shall not relieve the
indemnifying party of its obligations under this Section 5, except to the
extent the indemnifying party is materially and actually prejudiced thereby and
shall not relieve the indemnifying party from any liability which it may have
to any indemnified party otherwise than under this Section 5 and (ii) permit
such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party; provided, however, that any
indemnified party shall have the right to employ separate counsel and to
participate in the defense of such claim, but the fees and expenses of such
counsel shall be at the expense of such indemnified party unless (A) the
indemnifying party has agreed in writing to pay such fees and expenses, (B) the
indemnifying
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party shall have failed to assume the defense of such claim and employ counsel
reasonably satisfactory to such indemnified party within ten (10) days after
receiving notice from such indemnified party that the indemnified party
believes it has failed to do so, (C) in the reasonable judgment of any such
indemnified party, based upon advice of counsel, a conflict of interest may
exist between such indemnified party and the indemnifying party with respect to
such claims (in which case, if the indemnified party notifies the indemnifying
party in writing that it elects to employ separate counsel at the expense of
the indemnifying party, the indemnifying party shall not have the right to
assume the defense of such claim on behalf of such indemnified party) or (D)
such indemnified party is a defendant in an action or proceeding which is also
brought against the indemnifying party and reasonably shall have concluded that
there may be one or more legal defenses available to such indemnified party
which are not available to the indemnifying party. No indemnifying party shall
be liable for any settlement of any such claim or action effected without its
written consent, which consent shall not be unreasonably withheld. In
addition, without the consent of the indemnified party (which consent shall not
be unreasonably withheld), no indemnifying party shall be permitted to consent
to entry of any judgment with respect to, or to effect the settlement or
compromise of any pending or threatened action or claim in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified party is an actual or potential party to such action or claim),
unless such settlement, compromise or judgment (1) includes an unconditional
release of the indemnified party from all liability arising out of such action
or claim, (2) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of any indemnified party and
(3) does not provide for any action on the part of any party other than the
payment of money damages which is to be paid in full by the indemnifying party.
5.4 Contribution. (a) If the indemnification provided for in Section
5.1 or 5.2 from the indemnifying party for any reason is unavailable to (other
than by reason of exceptions provided therein), or is insufficient to hold
harmless, an indemnified party hereunder in respect of any Claim, then the
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such Claim in such proportion as is appropriate to reflect the relative
fault of the indemnifying party, on the one hand, and the indemnified party, on
the other hand, in connection with the actions which resulted in such Claim, as
well as any other relevant equitable considerations. The relative fault of
such indemnifying party and indemnified party shall be determined by reference
to, among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact, has been made by, or relates to information supplied by,
such indemnifying party or indemnified party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action. If, however, the foregoing allocation is not permitted by applicable
law, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party in such proportion as is appropriate to
reflect not only such relative faults but also the relative benefits of the
indemnifying party and the indemnified party as well as any other relevant
equitable considerations.
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(b) The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 5.4 were determined by pro
rata allocation or by any other method of allocation which does not take into
account the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by a party as a result of any Claim
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth in Section 5.3, any legal or other fees,
costs or expenses reasonably incurred by such party in connection with any
investigation or proceeding. Notwithstanding anything in this Section 5.4 to
the contrary, no indemnifying party (other than the Company) shall be required
pursuant to this Section 5.4 to contribute any amount in excess of the net
proceeds received by such indemnifying party from the sale of the Registrable
Securities pursuant to the Registration Statement giving rise to such Claims,
less all amounts previously paid by such indemnifying party with respect to
such Claims. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
5.5 Other Indemnification. Indemnification equivalent to that specified
in the preceding Sections 5.1 and 5.2 shall be given by the Company and each
Holder selling Registrable Securities with respect to any required registration
or other qualification of securities under any Federal or state law or
regulation of any governmental authority, other than the Securities Act. The
indemnity agreements contained herein shall be in addition to any other rights
to indemnification or contribution which any indemnified party may have
pursuant to law or contract.
5.6 Indemnification Payments. The Company shall make advances to the
indemnified parties hereunder of any expenses incurred by such parties in
connection with any proceeding or investigation, as and when bills are received
or any expense is incurred.
6. GENERAL
6.1 Adjustments Affecting Registrable Securities. The Company agrees
that it shall not effect or permit to occur any combination or subdivision of
shares which would adversely affect the ability of the Holder of any
Registrable Securities to include such Registrable Securities in any
registration contemplated by this Agreement or the marketability of such
Registrable Securities in any such registration.
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6.2 Registration Rights to Others. The Company has not previously
entered into an agreement with respect to its securities granting any
registration rights to any Person. If the Company shall at any time hereafter
provide to any holder of any securities of the Company rights with respect to
the registration of such securities under the Securities Act, (i) such rights
shall not be in conflict with or adversely affect any of the rights provided in
this Agreement to the Holders and (ii) if such rights are provided on terms or
conditions more favorable to such holder than the terms and conditions provided
in this Agreement, the Company shall provide (by way of amendment to this
Agreement or otherwise) such more favorable terms or conditions to the Holders.
6.3 Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given, without the written consent of the Company and the Holders; provided,
however, that nothing herein shall prohibit any amendment, modification,
supplement, waiver or consent the effect of which is limited only to such
Holder who has agreed to such amendment, modification, supplement, waiver or
consent.
6.4 Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, telecopier, any
courier guaranteeing overnight delivery or first class registered or certified
mail, return receipt requested, postage prepaid, addressed to the applicable
party at the address set forth below or such other address as may hereafter be
designated in writing by such party to the other parties in accordance with the
provisions of this Section:
(i) If to the Company, to:
WRT Energy Corporation
3303 FM 1960 West, Suite 460
Houston, Texas 77057
Attn: Mr. Gary C. Hanna
Telecopy: (281) 583-0219
Telephone: (281) 583-8958
With a copy to:
Schulte Roth & Zabel LLP
900 Third Avenue
New York, NY 10022
Attn: Jeffrey S. Sabin, Esq.
Telecopy: (212) 593-5955
Telephone: (212) 756-2290
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(ii) If to DLB or Wexford, to:
DLB Oil & Gas, Inc.
1601 N.W. Expressway
Suite 700
Oklahoma City, OK 73118-1401
Attn: Mark Liddell
Telecopy: (405) 848-9449
Telephone: (405) 848-8808
and
Wexford Management LLC
411 West Putnam Avenue
Greenwich, CT 06830
Attn: Arthur Amron, Esq.
Telecopy: (203) 862-7461
Telephone: (203) 862-7400
With a copy to:
Schulte Roth & Zabel LLP
900 Third Avenue
New York, NY 10022
Attn: Jeffrey S. Sabin, Esq.
Telecopy: (212) 593-5955
Telephone: (212) 756-2290
All such notices and communications shall be deemed to have been duly given: at
the time delivered by hand, if personally delivered; when receipt is
acknowledged, if telecopied; on the next business day, if timely delivered to a
courier guaranteeing overnight delivery; and five days after being deposited in
the mail, if sent first class or certified mail, return receipt requested,
postage prepaid.
6.5 Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective heirs, successors
and permitted assigns. Neither this Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason hereof shall be
assignable by either the Company or Holder without the consent of the other
parties hereto, except to another Holder; provided, however, that this
Agreement and any right, remedy, obligation or liability arising hereunder or
by reason hereof shall be assignable at the discretion of DLB or Wexford in
connection with the sale or other transfer of any or all of their Registrable
Securities without the consent of any other party hereto. In the event any
heir, successor or permitted assign of any Holder shall take and hold any
Registrable Securities of such Holder, then such heir, successor or permitted
assign (i) shall promptly notify the Company and (ii) upon taking and holding
such Registrable Securities, such heir, successor or permitted assign shall
automatically be entitled to receive the benefits of and be conclusively deemed
to have agreed to be bound by and to perform all of the terms and
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provisions of this Agreement (and shall, for all purposes, be deemed a Holder
under this Agreement). For purposes of this Agreement, "successor" for any
entity other than a natural person shall mean a successor to such entity as a
result of such entity's merger, consolidation, liquidation, dissolution, sale
of substantially all of its assets, or similar transaction.
6.6 Counterparts. This Agreement may be executed in two or more
counterparts, each of which, when so executed and delivered, shall be deemed to
be an original, but all of which counterparts, taken together, shall constitute
one and the same instrument.
6.7 Descriptive Headings, Etc. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning of terms contained herein. Unless the context of this Agreement
otherwise requires: (1) words of any gender shall be deemed to include each
other gender; (2) words using the singular or plural number shall also include
the plural or singular number, respectively; (3) the words "hereof", "herein"
and "hereunder" and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement, and Section and paragraph references are to the Sections and
paragraphs of this Agreement unless otherwise specified; (4) the word
"including" and words of similar import when used in this Agreement shall mean
"including, without limitation," unless otherwise specified; (5) "or" is not
exclusive; and (6) provisions apply to successive events and transactions.
6.8 Severability. In the event that any one or more of the provisions,
paragraphs, words, clauses, phrases or sentences contained herein, or the
application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision, paragraph, word, clause, phrase or
sentence in every other respect and of the other remaining provisions,
paragraphs, words, clauses, phrases or sentences hereof shall not be in any way
impaired, it being intended that all rights, powers and privileges of the
parties hereto shall be enforceable to the fullest extent permitted by law.
6.9 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO
THE CONFLICTS OF LAW PRINCIPLES THEREOF).
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<PAGE> 28
6.10 Remedies; Specific Performance. The parties hereto acknowledge that
money damages may not be an adequate remedy at law if any party fails to
perform in any material respect any of its obligations hereunder, and
accordingly agree that each party, in addition to any other remedy to which it
may be entitled at law or in equity, shall be entitled to seek to compel
specific performance of the obligations of any other party under this
Agreement, without the posting of any bond, in accordance with the terms and
conditions of this Agreement in any court of the United States or any State
thereof having jurisdiction pursuant to Section 6.13 hereof, and if any action
should be brought in equity to enforce any of the provisions of this Agreement,
none of the parties hereto shall raise the defense that there is an adequate
remedy at law. Except as otherwise provided by law, a delay or omission by a
party hereto in exercising any right or remedy accruing upon any such breach
shall not impair the right or remedy or constitute a waiver of or acquiescence
in any such breach. No remedy shall be exclusive of any other remedy. All
available remedies shall be cumulative.
6.11 Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect
of the subject matter contained herein. There are no restrictions, promises or
undertakings, other than those set forth or referred to herein. This Agreement
supersedes all prior agreements and understandings between the Company and the
other parties to this Agreement with respect to such subject matter.
6.12 Nominees for Beneficial Owners. In the event that any Registrable
Securities are held by a nominee for the beneficial owner thereof, the
beneficial owner thereof may, at its election in writing delivered to the
Company, be treated as the holder of such Registrable Securities for purposes
of any request or other action by any holder or holders of Registrable
Securities pursuant to this Agreement or any determination of any number or
percentage of shares of Registrable Securities held by any holder or holders of
Registrable Securities contemplated by this Agreement. If the beneficial owner
of any Registrable Securities so elects, the Company may require assurances
reasonably satisfactory to it of such owner's beneficial ownership of such
Registrable Securities.
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6.13 Consent to Jurisdiction. Each party to this Agreement hereby
irrevocably agrees that any legal action, suit or proceeding arising out of or
relating to this Agreement or any agreements or transactions contemplated
hereby may be brought in any federal court of the Southern District of New York
or any state court located in New York County, State of New York, and hereby
expressly submits to the personal jurisdiction and venue of such courts for the
purposes thereof and irrevocably waives any claim (by way of motion, as a
defense or otherwise) of improper venue, that it is not subject personally to
the jurisdiction of such court, that such courts are an inconvenient forum or
that this Agreement or the subject matter may not be enforced in or by such
court. Each party hereby irrevocably consents to the service of process of any
of the aforementioned courts in any such action, suit or proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, to
the address set forth or provided for in Section 6.4 of this Agreement, such
service to become effective ten (10) days after such mailing. Nothing herein
contained shall be deemed to affect the right of any party to serve process in
any manner permitted by law or commence legal proceedings or otherwise proceed
against any other party in any other jurisdiction to enforce judgments obtained
in any action, suit or proceeding brought pursuant to this Section.
6.14 Further Assurances. Each party hereto shall do and perform or cause
to be done and performed all such further acts and things and shall execute and
deliver all such other agreements, certificates, instruments and documents as
any other party hereto reasonably may request in order to carry out the intent
and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
6.15 No Inconsistent Agreements. The Company will not hereafter enter
into any agreement which is inconsistent with the rights granted to the Holders
in this Agreement.
6.16 Construction. The Company, DLB and Wexford acknowledge that each of
them has had the benefit of legal counsel of its own choice and has been
afforded an opportunity to review this Agreement with its legal counsel and
that this Agreement shall be construed as if jointly drafted by the Company,
DLB and Wexford.
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<PAGE> 30
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first written above.
WRT ENERGY CORPORATION
\-------------------------------\
By:
Title:
DLB OIL & GAS, INC.
\-------------------------------\
By:
Title:
WEXFORD MANAGEMENT LLC
\-------------------------------\
By:
Title:
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<PAGE> 1
EXHIBIT 2.2
EXECUTION COPY
COMMITMENT AGREEMENT
COMMITMENT AGREEMENT, dated as of January 20, 1997, by and among WRT
Energy Corporation ("WRT"), a Texas corporation and a debtor and debtor-in-
possession in that certain voluntary proceeding under Chapter 11 of the
Bankruptcy Code referred to below, DLB Oil & Gas, Inc., an Oklahoma corporation
("DLB"), the investment funds listed on the signature page hereof (the "Wexford
Funds") and Wexford Management LLC, a Connecticut limited liability company, in
its capacity as investment manager and as agent for the Wexford Funds
("Wexford"; DLB and Wexford are collectively referred to herein as "DLBW").
Unless the context otherwise requires, all capitalized terms defined in the
Plan (as defined below) and not otherwise defined herein shall have the same
meanings herein as in the Plan.
W I T N E S S E T H:
WHEREAS, on February 14, 1996, WRT filed a voluntary petition for
relief under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court (the
United States Bankruptcy Court for the Western District of Louisiana,
Lafayette-Opelousas Division), commencing the Chapter 11 Case (Case No. 96BK-
50212);
WHEREAS, since the commencement of the Chapter 11 Case, WRT has
operated its business and held its assets and properties as a debtor-in-
possession under Section 1107 of the Bankruptcy Code;
WHEREAS, on October 22, 1996, WRT accepted and signed the proposal
submitted by DLBW on October 16, 1996 (the "DLBW Proposal") providing the terms
of a proposed capital investment in, and plan of reorganization for, WRT;
WHEREAS, by order dated December 24, 1996 (the "Expense Order"), the
Bankruptcy Court approved the reimbursement by WRT of certain of the third-
party expenses incurred DLBW in connection with the DLBW Proposal;
WHEREAS, subsequent to WRT's execution of the DLBW Proposal, DLB
commenced negotiations with Texaco and TEPI regarding, inter alia, (i) the
claim asserted by Texaco and TEPI against WRT and its affiliates (the "Texaco
Claim"), (ii) the WCBB Assets and (iii) the CAOA;
WHEREAS, the intent of the parties to those negotiations was that WRT
would purchase the WCBB Assets from Texaco and TEPI;
WHEREAS, DLB has represented and WRT believes that Texaco and TEPI
have insisted that, because of concerns over WRT's financial status certain
time exigencies and other matters relating to that certain Global Settlement
Agreement, DLB be in the chain of title of the WCBB Assets and furthermore that
DLB guarantee, for Texaco's and TEPI's benefit, the cost of performance of
certain plugging and abandonment obligations with respect to the WCBB Assets
should New WRT fail to perform those obligations;
(page) 1
<PAGE> 2
WHEREAS, as a result of the negotiations, Texaco, TEPI and DLB
reached an agreement embodied in the Purchase, Sale and Exchange Agreement
pursuant to which, inter alia, (i) DLB will purchase the Texaco Claim, (ii) as
required by Texaco and TEPI, DLB will purchase the WCBB Assets from TEPI, and
(iii) DLB will guarantee (the "P&A Guarantee") the performance of all plugging
and abandonment obligations related to both the WCBB assets and WRT's interests
in West Cote Blanche Bay Field and, in order to implement the P&A Guarantee,
will pay into a trust (the "P&A Trust") established for the benefit of the
State of Louisiana, $1,000,000 on or before the Effective Date and certain
other amounts;
WHEREAS, on January 20, 1997, WRT and DLBW have jointly filed the
Plan, which Plan contemplates, inter alia, (i) the issuance to WRT's unsecured
creditors, on account of their Allowed Claims, an aggregate of 10 million
shares of New WRT Common Stock, (ii) the issuance to WRT's unsecured creditors,
on account of their Allowed Claims, of the right to purchase an additional
three million eight hundred thousand shares of New WRT Common Stock at a
purchase price of $3.50 per share (the "Rights Offering"), (iii) the exercise
by DLBW of its rights to purchase New WRT Common Stock pursuant to the Rights
Offering on account of its Allowed Claims, (iv) the purchase by DLBW of all
shares of New WRT Common Stock not otherwise purchased pursuant to the Rights
Offering, and (v) pursuant to the Transfer and Exchange Agreement, as part of
the Plan, (a) the transfer by DLB of the WCBB Assets to WRT, (b) as
consideration for the transfer of the WCBB Assets, the issuance by DLB of the
P&A Guarantee and the making by DLB of payments into the P&A Trust, (1) the
delivery to DLB of (A) 5 million shares of New WRT Common Stock and (B) the
number of shares of New WRT Common Stock obtained by dividing the net amount of
capital expenditures incurred by DLB as of the Effective Date as owner of the
WCBB Assets and/or operator of the Shallow Contract Area, to the extent not
disapproved by the Bankruptcy Court, by a purchase price of $3.50 per share,
(2) transfer by WRT to DLB of the Buyer's Leasehold and Facilities and (3) the
assumption by DLB of the Assumed Obligations, and (c) the payment in full of
the Texaco Claim;
WHEREAS, WRT desires that DLB and Wexford enter into this Commitment
Agreement in order to evidence their respective commitments and obligations;
and
WHEREAS, WRT, DLB and Wexford are willing to enter into this
Commitment Agreement upon the terms and conditions hereinafter set forth;
NOW THEREFORE, in consideration of the premises and for other good
and valuable consideration, receipt of which is hereby acknowledged, the
parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
As used herein, the following terms shall have the meanings set forth
in this Article I, in addition to the other capitalized terms defined in the
Plan.
(page) 2
<PAGE> 3
"Closing" shall mean the closing of the transactions contemplated by
this Commitment Agreement.
"Environmental Laws" shall mean all federal, state, local and foreign
laws and regulations relating to pollution or the environment (including,
without limitation, ambient air, surface water, ground water, land surface or
subsurface strata), including, without limitation, laws and regulations
relating to emissions, discharges, releases or threatened releases of Materials
of Environmental Concern, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Materials of Environmental Concern.
"Extant Bidder" shall mean each Person who (a) had, as of October 16,
1996, submitted to Jefferies & Company, Inc., as part of the formal auction of
WRT conducted by Jefferies & Company, Inc., either (i) a bid to purchase all or
any material part of the assets of WRT or (ii) a proposal for a plan of
reorganization for WRT or (b) was specifically identified as providing the
financing for such bid or proposed plan. An "Extant Bidder" shall not include
(x) any combination of an Extant Bidder with one or more Persons that are not
Extant Bidders, (y) any combination of two or more Extant Bidders or (z) any
combination of two or more Extant Bidders with one or more Persons that are not
Extant Bidders.
"GAAP" shall mean generally accepted accounting principles,
consistently applied.
"Material Adverse Effect" shall mean, in connection with WRT or any
of its Subsidiaries, any change or effect that is materially adverse to the
business, operations, properties (including intangible properties), condition
(financial or otherwise), prospects or assets or liabilities of WRT and its
Subsidiaries taken as a whole.
"Materials of Environmental Concern" shall mean hazardous substances
as defined under the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. Section 9601, et seq. and hazardous wastes as defined
under the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et
seq. and petroleum and petroleum products and such other chemicals, materials
or substances as are listed as "hazardous wastes", "hazardous materials",
"toxic substances", or words of similar import under any similar federal,
state, local or foreign laws.
"Permitted Liens" shall mean liens:
(a) for taxes, assessments or governmental charges or levies
if the same shall not at the time be delinquent or thereafter can be paid
without penalty or (if foreclosure, distraint, sale or other similar
proceedings shall not have been commenced) are being contested in good faith
and by appropriate proceedings diligently conducted, and such reserve or other
appropriate provision, if any, as shall be required by GAAP shall have been
made therefor;
(page) 3
<PAGE> 4
(b) of mechanics and materialmen for sums not yet due or
being contested in good faith and by appropriate proceedings diligently
conducted, if such reserve or other appropriate provision, if any, as shall be
required by GAAP shall have been made therefor; or
(c) constituting easements, rights of way, restrictions and
other similar encumbrances, not interfering in a material respect with the
ordinary conduct of the business of WRT and not materially detracting from the
value or current or intended use of the property to which they are applicable.
"Plan" shall mean the Debtor's and DLBW's First Amended Joint Plan of
Reorganization Under Chapter 11 of the United States Bankruptcy Code, dated as
of January 20, 1997, attached hereto as Exhibit A, as may be amended with the
consent of DLB and Wexford.
"Subsidiary" shall mean any corporation or other entity, a majority
of the shares of capital stock or other equity interests of which are owned,
directly or indirectly, by WRT.
ARTICLE II
THE CLOSING
Section 2.01. Obligations of DLB and Wexford. In reliance upon the
representation, warranties, covenants and agreements of WRT and upon the terms
and subject to the conditions of this Commitment Agreement:
(a) DLB and Wexford, jointly and severally, agree to
subscribe for and purchase at the Closing from New WRT, in the amount
determined pursuant to the Plan and the New WRT Subscription Rights Agreement,
(i) their full pro rata share of the New WRT Subscription Common Stock granted
to DLB and Wexford pursuant to the Plan and the New WRT Subscription Rights
Agreement on account of any and all Claims and (ii) all of the remaining New
WRT Subscription Common Stock not otherwise subscribed for and purchased as a
result of either Unexercised Subscription Rights pursuant to the Plan or the
failure of the Rights Offering to occur (the "Backstop Shares"), and WRT agrees
to cause New WRT and the Disbursing Agent to issue and sell to DLB and Wexford
such New WRT Subscription Common Stock. Such New WRT Subscription Common Stock
shall be paid for in the amount of its related Subscription Purchase Price in
the manner provided for in the Plan.
(b) DLB and Wexford, jointly and severally, agree to pay at
the Closing to New WRT an amount of cash equal to the Disputed Subscription
Purchase Price (or such lesser amount with respect to Exercised Disputed Claims
as may be required pursuant to the Plan). Such payment shall be made by wire
transfer of immediately available funds to such account as WRT shall designate
in writing at least two (2) Business Days prior to the Closing.
(c) DLB agrees to execute the Transfer and Exchange
Agreement and, in accordance with its terms, and the terms of the Plan,
transfer the WCBB Assets to New WRT and designate New WRT as operator of the
Shallow Contract Area. In exchange for the transfer of the WCBB Assets to New
(page) 4
<PAGE> 5
WRT, the issuance of the P&A Guarantee and the payments into the P&A Trust, (i)
DLB shall receive at the Closing (A) 5 million shares of New WRT Common Stock
and (B) the number of shares of New WRT Common Stock obtained by dividing the
amount of capital expenditures incurred by DLB (net of any net cash received by
DLB as owner of the WCBB Assets or as operator of the Shallow Contract Area) as
of the Effective Date as owner of the WCBB Assets and/or operator of the
Shallow Contract Area, to the extent not disapproved by the Bankruptcy Court,
by a purchase price of $3.50 per share (collectively, the "WCBB Shares") and
(ii) WRT shall transfer to DLB the Buyer's Leasehold and Facilities.
(d) At the discretion of DLB and Wexford, the payments due
WRT or New WRT under this Section 2.01 may be offset against any or all
payments that DLB, Wexford or the Wexford Funds would otherwise receive under
the Plan on the Effective Date.
(e) DLB and Wexford each agree to (i) vote all Claims held
by them to accept the Plan, and (ii) exercise any and all rights that they have
under the Plan on account of all Claims held by them in Classes C-1 through C-
16 (including, without limitation, the Texaco Claim) (such Claims being the
"Exchangeable Claims") to elect to receive a Distribution of New WRT Common
Stock in lieu of a Distribution of Cash.
Section 2.02. Obligations of WRT. WRT agrees that it shall:
(a) In connection with the sale of the WCBB Assets by Texaco
and TEPI to DLB, WRT will (i) consent to the designation by Texaco and TEPI of
DLB (or its designee) as operator of the Shallow Contract Area under the CAOA
provided that DLB (or its designee) shall have become qualified as an operator
under Louisiana law; and (ii) waive any preference rights that WRT may have
under the CAOA arising from or related to such sale.
(b) Provide Texaco and TEPI with the ability to use certain
facilities in connection with TEPI's operation of the portion of the producing
Contract Area under, and as defined in the CAOA other than the Shallow Contract
Area, the use of such facilities to be on terms to be agreed.
(c) Execute the Transfer and Exchange Agreement and, in
accordance with its terms, (i) deliver to DLB on the Effective Date the WCBB
Shares and (ii) transfer to DLB on the Effective Date the Buyer's Leasehold and
Facilities.
Section 2.03. Closing. (a) The Closing shall take place at the
offices of Schulte Roth & Zabel LLP, 900 Third Avenue, New York, New York, or
at such other location as the parties may agree, on the Effective Date.
(page) 5
<PAGE> 6
(b) At the Closing:
(i) New WRT shall deliver to DLB and Wexford, jointly and
severally, certificates of New WRT Common Stock representing DLB's and
Wexford's pro rata portion of the New WRT Common Stock distributed to holders
of Allowed General Unsecured Claims pursuant to the Plan, in definitive form
and registered in the name(s) specified in writing by DLB and Wexford at least
two (2) Business Days prior to the Closing;
(ii) New WRT shall deliver to DLB and Wexford, jointly and
severally, against payment therefor, certificates of New WRT Subscription
Common Stock, in definitive form and registered in the name(s) specified in
writing by DLB and Wexford at least two (2) Business Days prior to the Closing,
representing DLB's and Wexford's pro rata portion of the New WRT Subscription
Common Stock subscribed for and purchased pursuant to Section 2.01(a)(i) hereof
and the Backstop Shares subscribed for and purchased pursuant to Section
2.01(a)(ii) hereof;
(iii) New WRT shall deliver to DLB, certificates of New WRT
Common Stock, in definitive form and registered in the name(s) specified in
writing by DLB at least two (2) Business Days prior to the Closing,
representing the WCBB Shares;
(iv) Pursuant to the terms of the Plan, WRT shall deliver
to DLB and Wexford, jointly and severally, certificates of New WRT Common Stock
to be distributed to them under the Plan on account of the Exchangeable Claims.
(v) New WRT shall issue, and the Disbursing Agent shall
reserve, shares of New WRT Subscription Common Stock representing the Disputed
New WRT Subscription Common Stock to be held by the Disbursing Agent in a
Disputed Claims Reserve Account.
(c) At the Closing, each party to this Commitment Agreement
shall deliver to the other parties such other documents, instruments and
writings as may be required to be delivered in accordance with this Commitment
Agreement or as may be reasonably requested by such other party.
Section 2.04. Reliance by WRT and New WRT. Each of WRT and New WRT
shall be entitled to rely on and assume that it has fully satisfied its
obligations to both DLB and Wexford through any payment made or document
delivered to DLB and Wexford in accordance with any provision of this
Commitment Agreement; provided that such payment or delivery is made in the
manner specified by DLB and Wexford. The division of any such payment or
sharing of any such document shall be the sole responsibility of DLB and
Wexford and WRT shall have no obligations or liabilities relating thereto.
(page) 6
<PAGE> 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF WRT
WRT hereby represents and warrants, as of the execution and delivery
hereof, to DLB & Wexford as follows:
Section 3.01. Organization and Qualification. WRT is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Texas, and has full power and authority to own, operate
and lease its properties and to carry on its business as now being conducted.
WRT is duly qualified to do business as a foreign corporation in each
jurisdiction set forth on Schedule 3.01 hereto. Such jurisdictions are the
only jurisdictions in which the nature of WRT's properties and/or business
makes such qualification necessary, except where the failure to so qualify
would not have a Material Adverse Effect.
Section 3.02. Subsidiaries. Except for WRT Technology, Inc., WRT
does not have any Subsidiaries and, except as set forth on Schedule 3.02
hereto, to the best of its knowledge WRT is not a partner or joint venturer
with any person in any enterprise or undertaking. As of the Closing, New WRT
will have no Subsidiaries.
Section 3.03. Authority, Authorization and Validity. Subject to
approval of this Commitment Agreement by the Bankruptcy Court and the issuance
of the Confirmation Order, WRT has full power and authority to execute, deliver
and perform this Commitment Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this
Commitment Agreement by WRT, and the consummation by WRT of the transactions
contemplated hereby to be performed by WRT, have been duly authorized by all
requisite action of its Board of Directors and, if required, shareholders of
WRT, and this Commitment Agreement constitutes the valid and binding obligation
of WRT, enforceable against WRT in accordance with its terms, subject, where
applicable, to entry of the Confirmation Order.
Section 3.04. Capitalization. (a) Except as set forth on
Schedule 3.04 hereto, as of the date of this Commitment Agreement, there are no
outstanding securities of WRT or any of its Subsidiaries or any outstanding
subscriptions, options, warrants, calls or other commitments or agreements
(other than this Commitment Agreement) to which WRT is a party or by which it
is bound requiring the issuance by WRT of additional shares of capital stock or
other securities.
(b) The securities set forth on Schedule 3.04 hereto are
duly authorized, validly issued, fully paid and non-assessable and are free of
preemptive rights and entitle the holders thereof to all the rights of a holder
of such securities in accordance with the certificate of incorporation and by-
laws of WRT and the laws of the State of Texas.
(page) 7
<PAGE> 8
(c) The shares of New WRT Common Stock to be issued by New
WRT pursuant to this Commitment Agreement and/or the Plan, or upon exercise of
the New WRT Warrants pursuant to the New WRT Warrant Agreement, when so issued
as provided in the Plan and/or this Commitment Agreement, or pursuant to the
new WRT Warrant Agreement, as the case may be, will be duly authorized, validly
issued, fully paid and non-assessable and free of preemptive rights and will
entitle the holders thereof to all of the rights of a holder of New WRT Common
Stock in accordance with the New WRT Certificate of Incorporation, the New WRT
By-Laws and the laws of the State of Delaware.
Section 3.05. Approvals and Consents. Except for (i) approval by
the Bankruptcy Court of the provisions of this Commitment Agreement, (ii) any
required filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976
(the "HSR Act") and the expiration or earlier termination of the applicable
waiting periods thereunder, and (iii) the issuance of the Confirmation Order,
no consent, approval, order or authorization of, and no registration,
declaration or filing with, any federal, state, local or foreign government or
governmental authority is required to be made or obtained by WRT in connection
with the execution and delivery by WRT of this Commitment Agreement or the
consummation by WRT of the transactions contemplated hereby to be performed by
WRT.
Section 3.06. No Conflicts. From and after the Effective Date,
the consummation of the Plan and the transactions contemplated thereby and
hereby will not conflict with, violate or result in any breach of any of the
terms, conditions or provisions of, or constitute a default under or result in
the creation of a lien (other than Permitted Liens), or the acceleration of any
obligation or the loss of a benefit under, (i) the New WRT Certificate of
Incorporation or the New WRT By-Laws, (ii) any note, indenture, deed of trust,
material lease, or other material instrument, contract or agreement to which
New WRT may then be a party or by which it or its respective properties and
assets may then be bound, or (iii) any law, ordinance, rule or regulation of
any government or governmental authority or judgment, order or decree of any
court or governmental authority.
Section 3.07. SEC Reports, Financial Statements. (a) WRT has
heretofore delivered to DLB and Wexford copies of (i) its Annual Report on Form
10-K for the fiscal year ended December 31, 1995 (the "WRT 10-K"), (ii) its
proxy or information statements relating to meetings of, or actions taken
without a meeting by, the stockholders of WRT held since January 1, 1996 and
(iii) all of the other reports, statements and schedules filed with the
Securities and Exchange Commission (the "Commission") since January 1, 1996.
(b) The WRT 10-K (i) was filed with the Commission on or
about June 12, 1996 and (ii) except as described in the Disclosure Statement
and the exhibits thereto, at the time of filing thereof did not contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements made therein, in light of the circumstances
under which they were made, not misleading. As of its filing date, each such
other report or statement filed pursuant to the Securities Exchange Act of
(page) 8
<PAGE> 9
1934, as amended (the "Exchange Act"), complied as to form in all material
respects with the Exchange Act and did not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading.
(c) No event has occurred since the filing of the WRT 10-K
which would necessitate the filing by WRT with the Commission of a Current
Report on Form 8-K, other than events with respect to which such a Current
Report on Form 8-K has been filed with the Commission and delivered to DLB and
Wexford and a Current Report on Form 8-K which will be filed to report the
transactions contemplated hereby.
Section 3.08. Financial Statement. The audited consolidated balance
sheets of WRT and Subsidiaries as of December 31, 1995 and 1994, and the
related consolidated statements of operations, stockholders' equity (deficit)
and cash flows for each of the three fiscal years in the period ended December
31, 1995 (the "Historical WRT Financial Statements"), and, except as described
in the Disclosure Statement and the exhibits thereto, all financial statements
contained in any periodic or other report of WRT, or filed with the Commission
after the date of the WRT 10-K and prior to the Effective Date, (i) did and
will fairly present, as of the relevant dates and/or for the relevant periods
set forth therein, the consolidated financial position, results of operations,
changes in stockholders' equity (deficit) (in the case of annual financial
statements) and changes in the consolidated financial position of WRT and
Subsidiaries, subject in the case of statements for interim periods to normal
year-end adjustments; (ii) were and will be prepared in accordance with GAAP
applied on a basis consistent with prior periods, except as indicated in the
notes thereto, and subject, in the case of audited financial statements, to the
qualifications stated in the report thereon of KPMG Peat Marwick LLP; and (iii)
contained and will contain notes, if required, which were and will be true,
accurate and complete in all material respects.
Section 3.09. Disclosure Statement. On January 21, 1997, WRT and
DLBW filed with the Bankruptcy Court an amended disclosure statement pursuant
to Section 1125 of the Bankruptcy Code. Such amended disclosure statement, in
the form approved by the Bankruptcy Court for use by WRT and DLBW in the
solicitation of acceptances or rejections of the Plan, is herein called the
"Disclosure Statement." The Disclosure Statement, as of the Mailing Date (as
hereinafter defined), will contain "adequate information" (as defined in
Section 1125(a)(1) of the Bankruptcy Code) with respect to the Plan, and will
describe accurately in all material respects the provisions of the Plan and
this Commitment Agreement.
Section 3.10. Indebtedness, Liabilities and Obligations. Except
as set forth on Schedule 3.10 hereto and except for such as will be fully
discharged and extinguished upon confirmation of the Plan without any
distribution in respect thereof by WRT, any Subsidiary of WRT or New WRT,
neither WRT nor any subsidiary of WRT has any indebtedness, liabilities
(actual, contingent or other), obligations or commitments, contingent or
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otherwise, or any of the foregoing (material or otherwise) which are otherwise
required to be disclosed in the Historical WRT Financial Statements or in a
disclosure statement prepared in accordance with the Bankruptcy Code, which are
not either (i) fairly and adequately reflected in the Historical WRT Financial
Statements or described in the notes thereto, or (ii) described in the
Disclosure Statement. Any indebtedness, liabilities, obligations or
commitments which are not required to be so disclosed are not in the aggregate
material to the business, operations or financial condition of WRT or any
Subsidiary of WRT, taken as a whole.
Section 3.11. Taxes. Complete and correct copies of the federal
income tax returns, and all amendments thereto, for the years ended December
31, 1993, 1994 and 1995, heretofore filed by WRT with the Internal Revenue
Service for the taxable years then ended, have been delivered to DLB and
Wexford. For purposes of this Commitment Agreement, the term "tax" shall
include all federal, state, local and foreign taxes, assessments, levies,
imposts, duties, license fees, registration fees, withholding or other
governmental charges and any interest or penalty on, and any addition to, any
of the foregoing and any right to a credit or deduction against, or a reduction
of, any of the foregoing, and "tax return" means any return, report, statement
or other document relating to any tax. Except as set forth on Schedule 3.11
hereto, (i) WRT and each Subsidiary have filed all tax returns required to be
filed, all such tax returns are correct and complete and all taxes shown to be
due on such tax returns have been paid, (ii) there are no material unpaid taxes
which have given rise to a lien on the properties and assets of WRT, except
liens for taxes not yet due and payable, (iii) all material taxes not yet due
and payable which require accrual in accordance with applicable financial
accounting practices have been properly accrued on the books of account of WRT
and, if applicable with respect to periods ended on or prior to December 31,
1995, reflected in the Historical WRT Financial Statements, (iv) the charges,
accruals and reserves shown in the Historical WRT Financial Statements, if any,
in respect of taxes for all fiscal periods covered thereby are adequate in all
material respects with respect to such periods, and there are not pending or
known to WRT proposed assessments by any taxing authority for additional taxes
for which WRT does not have adequate book reserves for any such fiscal period ,
(v) since the date of the Historical WRT Financial Statements, neither WRT nor
any Subsidiary has incurred any liability for taxes other than in the ordinary
course of business, (vi) no audits or administrative or judicial proceedings
are pending or threatened with respect to WRT or any Subsidiary, (vii) neither
WRT nor any Subsidiary is liable for taxes of another Person under Treasury
Regulation 1.1502-6, as transferee or successor, by contract or otherwise,
(viii) there are no unexpired waivers of applicable statutes of limitation, or
extensions thereof, with respect to any taxes, (ix) all monies required to be
withheld by WRT from employees for income taxes, social security, unemployment
insurance taxes, or similar taxes or assessments have been collected or
withheld and either paid to the respective governmental agencies or set aside
in accounts for such purpose.
Section 3.12. Properties. Except as otherwise provided in
Section 3.21 hereto:
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(a) There is set forth in the Schedules a correct and
complete list of all material items of real property, including leased
property, and any material buildings, structures and improvements thereon or
therein, which are owned or used by WRT or any of its Subsidiaries. With
respect to any material real property of WRT or any of its Subsidiaries,
including any leased property, and any material buildings, structures and
improvements located thereon or therein, such buildings, fixtures and
improvements, and the present use thereof, comply in all material respects with
all zoning laws, ordinances and regulations of the governmental or other
authorities having jurisdiction thereof, including provisions relating to
permissible nonconforming uses, if any, and such premises are not affected, nor
to the best of WRT's knowledge threatened, by any condemnation or eminent
domain proceeding. All material leases of real or personal property by WRT or
any of its Subsidiaries, are, except as a result solely of the pendency of the
Chapter 11 Case, valid and subsisting leases and, except as contemplated by
this Commitment Agreement or the Plan, or terminated in the ordinary course of
business or in accordance with their terms, from and after the Effective Date
and the consummation of the transactions contemplated hereby, will continue to
entitle New WRT to the use and possession of the real or personal property
purported to be covered thereby for the terms specified in such leases and for
the purposes for which such real or personal property is now used.
(b) WRT has good title to all property and assets (whether
real or personal, tangible or intangible) reflected in the WRT Historical
Financial Statements or acquired after the date thereof. None of such property
or assets is subject to any lien, mortgage, claim, interest, charge, security
interest or other encumbrance or adverse interest of any nature whatsoever
("Liens"), except:
(i) Liens disclosed in the WRT Historical Financial
Statements;
(ii) Permitted Liens; or
(iii) Liens which do not materially detract from the
value or materially interfere with any present or intended use of such property
or assets.
(c) There are no developments affecting any such property or
assets (whether real or personal) pending or, to the knowledge of WRT,
threatened which might materially detract from the value of such property or
assets or materially interfere with any present or intended use of any such
property or assets.
Section 3.13. Contracts and Agreements. Except as set forth on
Schedule 3.13 hereto, the Schedules set forth a correct and complete list of
all contracts, agreements, leases and instruments to which WRT or any of its
Subsidiaries is a party or by which it is or its properties or assets are bound
(i) that provide for potential payment or receipt (or the provision of services
or products having a value) to or from WRT or any of its Subsidiaries
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in excess of $50,000 or are otherwise material to the financial condition,
operations, business, assets and liabilities of WRT, (ii) that pertain to
employment or severance benefits for any officer or director of WRT or any of
its Subsidiaries or for any employee of WRT or any of its Subsidiaries to whom
such contracts, agreements or instruments provide employment benefits of more
than $100,000 per year, including in the form of stock distributions or
distributions-in-kind, or severance benefits of more than $50,000, including in
the form of stock distributions and distributions-in-kind, other than employees
covered by collective bargaining contracts with trade unions, a list of whom
has heretofore been provided to DLB and Wexford, (iii) that cover or relate to
the lease or charter of vessels, or (iv) that will be assumed by WRT pursuant
to the Plan. Neither WRT, nor any of its Subsidiaries nor, to WRT's knowledge
but without investigation, any other party to any such contract, commitment,
undertaking, agreement or instrument to which WRT or any of such Subsidiaries
is a party is in material default thereunder except as a result of the pendency
of the Chapter 11 Case or as disclosed in the Disclosure Statement, and except
as so disclosed or as may result solely from the pendency of the Chapter 11
Case, each such contract, commitment, undertaking, agreement and instrument is
in full force and effect and is valid and legally binding. WRT is not in
violation of, or in default with respect to, any term of its certificate of
incorporation or by-laws.
Section 3.14. Insurance. WRT maintains policies of fire,
liability, business interruption and other forms of insurance covering its
properties, businesses, officers and directors against such losses and risks as
are generally insured against by companies in the same or similar businesses in
such amounts as are adequate to prevent WRT from being a co-insurer within the
terms of such policies, except to the extent such status as a co-insurer may
result solely from the provision in the policies of deductibles not in excess
of those customarily contained in policies of companies in the same or similar
businesses or solely from claims in excess of policy limits. Set forth on
Schedule 3.14 hereto is a correct and complete list of all such insurance
policies currently maintained by WRT. Each such policy is in full force and
effect and will remain in full force and effect following consummation of the
Plan. No such policy has premiums in arrears and no notice of cancellation or
termination has been received with respect to any such policy.
Section 3.15. Litigation. Except as set forth on the Schedules,
there is no suit, action, proceeding or governmental investigation pending or,
to the best of the knowledge of WRT, threatened against WRT or any of its
Subsidiaries (other than any suit, action or proceeding in which WRT or any of
such Subsidiaries is the plaintiff and in which no counterclaim or cross-claim
against WRT or any of such Subsidiaries has been filed) nor has WRT or any of
such Subsidiaries or any of their respective officers or directors been subject
to any suit, action, proceeding or governmental investigation as a result of
which any such officer or director is or may be entitled to indemnification by
WRT or any of such Subsidiaries, except for suits, actions or proceedings
(other than suits, actions or proceedings commenced by any government or
governmental authority) which if resolved adversely to WRT or
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any of such Subsidiaries would not in the aggregate have a Material Adverse
Effect or which in any manner challenges or seeks to prevent, enjoin, alter or
materially delay the transactions contemplated hereby. Except as so disclosed,
there is not outstanding against WRT or any of such Subsidiaries any judgment,
decree, injunction, rule or order of any court, government, department,
commission, agency, instrumentality or arbitrator, nor is WRT or any of such
Subsidiaries in violation of any applicable law, regulation, ordinance, order,
injunction, decree or requirement of any governmental body or court which
violation would have a Material Adverse Effect.
Section 3.16. Employee Benefits. WRT has delivered to DLB and
Wexford a true and complete copy of its employee benefit plans and programs
(including, without limitation, any of the foregoing covering retirees)
maintained by WRT or its Subsidiaries (the "Benefit Plans"). Neither WRT, its
Subsidiaries nor any entity treated as a single employer with WRT or its
Subsidiaries under Sections 414(b), (c), (m) or (o) of the Internal Revenue
Code of 1986, as amended (the "Code"), sponsors, maintains or contributes to
any Benefit Plan that is subject to Title IV of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), including any "multiemployer plan"
within the meaning of Section 4001(a)(3) of ERISA or, within the preceding five
(5) years, sponsored, maintained or contributed to any such Benefit Plan. None
of the Benefit Plans, and neither WRT nor its Subsidiaries, have any liability
with respect to medical or life insurance coverage for retirees or other
terminated employees, other than as required under Section 4980B of the Code.
Each Benefit Plan has been administered and maintained in compliance with all
applicable laws, including, without limitation, ERISA and the Code, and in
accordance with its terms. No nonexempt "prohibited transaction" (as defined
in Section 406 of ERISA and Section 4975 of the Code) has occurred with respect
to any Benefit Plan. WRT and its Subsidiaries have complied with all
reporting, disclosure and other obligations as may be imposed under all
applicable laws by reason of the operation of any Benefit Plan. The terms of
each Benefit Plan permit the sponsor to amend, modify or terminate each such
Benefit Plan and no representations, written or oral, would limit the ability
of WRT or its Subsidiaries to amend, modify or terminate any Benefit Plan.
With respect to each Benefit Plan intended to qualify under Section 401(a) of
the Code, the Internal Revenue Service has issued a favorable determination
letter that such Benefit Plan is qualified under Section 401(a) of the Code and
such Benefit Plan is exempt from federal taxation under Section 501(a) of the
Code; a copy of the most recent of all such determination letters has been made
available to DLB and Wexford and nothing has occurred since the date of such
letter that could reasonably be expected to cause any such Benefit Plan to lose
such qualification or exemption.
Section 3.17. Absence of Certain Changes. Since the date of the WRT
Historical Financial Statements and except as disclosed in the WRT 10-K or the
Disclosure Statement, the business of WRT has been conducted in the ordinary
course consistent with past practices and there has not been:
(i) any event, occurrence, development or state of
circumstances or facts which has had or could reasonably be expected to have a
Material Adverse Effect;
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(ii) any declaration, setting aside or payment of any
dividend or other distribution with respect to any shares of capital stock of
WRT, or any repurchase, redemption or other acquisition by WRT or any
Subsidiary of any outstanding shares of capital stock or other securities of,
or other ownership interests in, WRT or any Subsidiary;
(iii) any amendment of any material term of any
outstanding security of WRT or any Subsidiary;
(iv) any incurrence, assumption or guarantee by WRT or
any Subsidiary of any indebtedness for borrowed money;
(v) any creation or assumption by WRT or any Subsidiary
of any Lien on any material asset other than in the ordinary course of business
consistent with past practices;
(vi) any making of any loan, advance or capital
contributions to or investment in any Person;
(vii) any damage, destruction or other casualty loss
(whether or not covered by insurance) affecting the business or assets of WRT
or any Subsidiary which, individually or in the aggregate, has had or would
reasonably be expected to have a Material Adverse Effect;
(viii) any transaction or commitment made, or any
contract or agreement entered into, by WRT or any Subsidiary relating to its
assets or business (including the acquisition or disposition of any assets) or
any relinquishment by WRT or any Subsidiary of any contract or other right, in
either case, material to WRT and its Subsidiaries, taken as a whole, other than
transactions and commitments in the ordinary course of business consistent with
past practices and those contemplated by this Commitment Agreement;
(ix) any (A) employment, deferred compensation,
severance, retirement or other similar agreement entered into with any
director, officer or employee of WRT or any Subsidiary (or any amendment to any
such existing agreement), (B) grant of any severance or termination pay to any
director, officer or employee of WRT or any Subsidiary, or (C) change in
compensation or other benefits payable to any director, officer or employee of
WRT or any Subsidiary pursuant to any severance or retirement plans or policies
thereof;
(x) any labor dispute, other than routine individual
grievances, or any activity or proceeding by a labor union or representative
thereof to organize any employees of WRT or any Subsidiary, which employee was
not previously subject to a collective bargaining agreement, or any lockouts,
strikes, slowdowns, work stoppages or threats thereof by or with respect to any
employees of WRT or any Subsidiary; or
(xi) any agreement to do any of the forgoing.
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Section 3.18. Environmental Matters. (a) WRT and its Subsidiaries
have obtained all permits, licenses and other authorizations, and have made all
registrations and given all notifications, that are required with respect to
the operation of their respective businesses under all applicable Environmental
Laws other than those permits, licenses, other authorizations, registrations
and notifications the failure of which to obtain or make, individually or in
the aggregate, would not have a Material Adverse Effect.
(b) WRT and its Subsidiaries are in compliance in all
material respects with all terms and conditions of the required permits,
licenses and other authorizations referred to in paragraph (a) above, and are
also in compliance in all material respects with any other limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in the Environmental Laws or contained in
any regulation, code, plan, order, decree, judgment, injunction, settlement
agreement, notice or demand letter issued, entered, promulgated or approved
thereunder, other than where the failure to be in such compliance, individually
or in the aggregate, would not have a Material Adverse Effect.
(c) There is no civil, criminal or administrative action,
suit, demand, claim, hearing, notice of violation, investigation, proceeding,
notice or demand letter (collectively "Actions") pending or, to the knowledge
of WRT, threatened against WRT or any of its Subsidiaries (including without
limitations, any claims made against or with respect to the Buyer's Leasehold
and Facilities) relating in any way to Environmental Laws or any regulation,
code, plan, order, decree, judgment, injunction, notice or demand letter
issued, entered, promulgated or approved thereunder other than Actions that, if
determined adversely to WRT or such Subsidiaries, would not reasonably be
expected to have a Material Adverse Effect.
Section 3.19. Intellectual Property. (a) Set forth on Schedule
3.19 hereto is a correct and complete list of all patent rights or licenses or
other rights to use patent rights, inventions, trademarks, service marks, trade
names and copyrights owned by WRT or its Subsidiaries. WRT and its
Subsidiaries own or possess adequate patent rights or licenses or other rights
to use patent rights, inventions, trademarks, service marks, trade names and
copyrights used or necessary to conduct the general business now operated by
them and neither WRT nor any of its Subsidiaries has received any notice of
infringement or conflict with asserted rights of others with respect to any
patent, patent rights, inventions, trademarks, service marks, trade names or
copyrights which, individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect.
(b) None of the processes and formulae, research and
development results and other know-how of WRT or any Subsidiary, the value of
which to WRT or such Subsidiary is contingent upon maintenance of the
confidentiality thereof, has been disclosed by WRT or any Subsidiary to any
Person other than employees, representatives and agents of WRT or any
Subsidiary all of whom are bound by written confidentiality agreements.
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Section 3.20 Licenses and Permits. Schedule 3.20 correctly
describes each license, franchise, permit or other similar authorization
affecting, or relating in any way to, the assets or business of WRT and its
Subsidiaries (the "Permits") together with the name of the government agency or
entity issuing such Permit. Such Permits are valid and in full force and
effect and none of the Permits will be terminated or impaired or become
terminable, in whole or in part, as a result of the transactions contemplated
hereby.
Section 3.21 Labor Matters. Neither WRT nor any of its
Subsidiaries are, or, within the preceding three (3) years, have been, parties
to any collective bargaining agreements covering employees or former employees.
WRT and its Subsidiaries are in compliance with all applicable labor and
employment laws, except where the failure so to comply could not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.
To the best of the knowledge of WRT, no employee or former employee has a
reasonable basis for any action against WRT or its Subsidiaries arising out of
any statute, ordinance or regulation relating to discrimination in employment
practices.
Section 3.22 Oil and Gas Representations. (a) Royalties and
Rentals; Full Force and Effect. The oil, gas and mineral lease forming a
portion of the Buyer's Leasehold and Facilities is in full force and effect.
WRT has paid, or has caused to be paid, timely all royalties, rentals or other
payments due under the Buyer's Leasehold and Facilities except for those
payments which are subject to a bona fide dispute and which will not result in
grounds for cancellation of any portion of the Buyer's Leasehold and Facilities
and has taken or has caused to be taken all necessary action required to
preserve the Buyer's Leasehold and Facilities in full force and effect. WRT
has not received any demand (which has not been satisfied) from, nor is it a
party to any dispute concerning the Buyer's Leasehold and Facilities, and, to
WRT's knowledge, no other person owning an interest in the Buyer's Leasehold
and Facilities has received any such demand or is a party to any such dispute.
Additionally, there has not occurred any event, fact or circumstance which with
the lapse of time or the giving of notice, or both, would constitute a breach
or default on behalf of WRT or, to the knowledge of WRT, on behalf of any other
party, under the oil, gas and mineral lease forming a part of the Buyer's
Leasehold and Facilities.
(b) Prepayment Arrangements. WRT is not obligated by
virtue of any prepayment arrangement under any contract for the sale of
hydrocarbons containing a take-or-pay or similar provision, or a production
payment or of any other prepayment arrangement, to deliver hydrocarbons whose
production is or may be attributable to the Buyer's Leasehold and Facilities at
some future time without then or thereafter having the right to receive and
retain full payment therefor.
(c) Call on Production. No party has any call upon, option
to purchase or other preferential purchase right with respect to hydrocarbon
production from or attributable to the Buyer's Leasehold and Facilities.
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(d) Oil and Gas Taxes. All ad valorem, property,
production, excise, severance, windfall profits and other similar taxes and
assessments based on or measured by the ownership of the Buyer's Leasehold and
Facilities or the production of hydrocarbons or the receipt of proceeds
therefrom for all years prior to the year 1997, which are not foreclosed by
reason of the expiration of any applicable statutes of limitation or the
receipt of any closing letters from relevant taxing authorities, have been
properly paid, and all such taxes and assessments which become due and payable
prior to Closing shall be properly paid by WRT.
(e) Liens; Claims; Litigation. There are no liens, claims
or demands or suits, actions or other proceedings pending or, to the knowledge
of WRT, threatened before any court or governmental body or agency or arbitral
body which could result in impairment or loss of WRT's title to any part of the
Buyer's Leasehold and Facilities or the value thereof or which might hinder or
impede the operation of the Buyer's Leasehold and Facilities.
(f) Condition of Personal Property. Except as disclosed to
DLB, all of the equipment, facilities, fixtures, appurtenances and other
personal property which form a part of the Buyers Leasehold and Facilities have
been maintained in a state of repair that is adequate for normal operations,
and are in good working order.
(g) Accuracy of Data. All of the written data, including
production records, computer printouts and other such data, whether similar or
dissimilar, at the time furnished by WRT to DLB, in conjunction with DLB's
evaluation of the Buyer's Leasehold and Facilities, was complete to the best of
WRT's knowledge, and the information reported therein was not materially false,
and it did not omit any material fact necessary to make the reported
information not misleading. WRT has no knowledge of any matter which
materially and adversely affects (or may materially and adversely affect) the
operations, prospects or condition of any portion of the Buyer's Leasehold and
Facilities, which has not been set forth in this Agreement or in the Schedules
thereto.
(h) Title. Seller owns Defensible Title (as hereinafter
defined) to no less than the net revenue interest and no more than the working
interest in the oil, gas and mineral lease forming a part of the Buyer's
Leasehold and Facilities as is set forth in Schedule 3.22. The term
"Defensible Title" as used herein shall mean, as to the Buyer's Leasehold and
Facilities, such title that (1) entitles WRT to receive a percentage of all
oil, gas and other hydrocarbon minerals which are produced, saved and marketed
from or attributable to the Buyer's Leasehold and Facilities not less than the
interest shown as the net revenue interest of WRT on Schedule 3.22 hereto,
without reduction, suspension or termination for the productive life of Buyer's
Leasehold and Facilities; (2) obligates WRT to bear a percentage of the costs
and expenses relating to operations on the maintenance and development of the
Buyer's Leasehold and Facilities not greater than the
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interest shown as the working interest of WRT on Schedule 3.22 hereto, without
increase for the productive life of the Buyer's Leasehold and Facilities
(unless the net revenue interest increases at least proportionately); and (3)
is free and clear of all production payments, debts, liens, mortgages, security
interests, contract obligations, restrictions on transferability, preferential
purchase rights, claims, defects and encumbrances except for the Permitted
Encumbrances (as hereinafter defined). The term "Permitted Encumbrances" as
used herein shall mean:
(1) liens securing amounts not yet owing for taxes;
(2) mechanic's, materialmen's, repairmen's or similar
liens or charges which relate to obligations not yet delinquent or the validity
of which is being contested in good faith;
(3) liens of a form and scope customary in the oil and
gas industry under operating agreements and other similar instruments and
agreements;
(4) such defects or irregularities, if any, in the
title to the Buyer's Leasehold and Facilities that individually or in the
aggregate do not impair the Buyer's Leasehold and Facilities or the value
thereof, affect the obligation of WRT under this Agreement or materially
adversely affect the use of the Buyer's Leasehold and Facilities; and
(5) royalties, overriding royalties, production
payments and other burdens on production from or attributable to the Buyer's
Leasehold and Facilities that are usual and customary in the oil and gas
industry and that have been taken into account in the net revenue interests set
forth in Schedule 3.22.
(j) Licenses and Permits; Filings. All authorizations,
licenses and permits required under federal, state and local laws have been
obtained, and all filings necessary to obtain such authorizations, licenses and
permits have been made, to own and operate the Buyer's Leasehold and Facilities
as presently being owned and operated. Such authorizations, licenses, permits
and filings are in full force and effect, and no material violations exist with
respect to any of the same, and WRT has not received notice of any violation of
or investigation relating thereto.
(k) AFE's and Other Extant Obligations. There are no
outstanding authorities for expenditure or other contracts or agreements,
except that certain Global Settlement by and among the State of Louisiana,
Texaco, Inc. and the Louisiana Land and Exploration Company, dated February 22,
1994, that;
(l) require the drilling of wells or other material
development operations in order to earn or to continue to hold all or any
portion of the Buyer's Leasehold and Facilities; or
(2) obligate WRT to make payments of any material
amounts in connection with drilling of wells or other material capital
expenditures affecting the Buyer's Leasehold and Facilities.
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(l) Wells, Plugging and Abandonment. There are no wells
located on the Buyer's Leasehold and Facilities, or bottom-holed under the
Buyer's Leasehold and Facilities, which are currently producing, or capable of
producing, hydrocarbons. All wells located on, or bottom-holed under, the
Buyer's Leasehold and Facilities have been plugged and abandoned in accordance
with all applicable laws, ordinances, rules, regulations and permits of any
governmental body or agency having jurisdiction thereover; and there are no
wells located on, or bottom-holed under, the Buyer's Leasehold and Facilities
that WRT, the subject operator or any other party owning an interest in the
Buyer's Leasehold and Facilities is obligated by order or other action of any
governmental body or agency to plug and abandon within a time certain.
(m) Existing Documents. For purposes of this Agreement,
the term "Existing Documents" shall mean all the oil, gas and other mineral
leases, assignments or other instruments or agreements that comprise the
Buyer's Leasehold and Facilities and all contractually binding arrangements to
which the Buyer's Leasehold and Facilities may be subject and which will be
binding on the Buyer's Leasehold and Facilities or DLB after closing
(including, without limitation, oil, gas and farm-in agreements, option
agreements, forced pooling orders, assignments of production payments, unit
agreements, joint operating agreements, balancing agreements, unit operating
agreements, production contracts, processing contracts, gas sales contracts,
marketing and transportation contracts and division orders). With respect to
the Buyer's Leasehold and Facilities and insofar as the following could
materially prevent DLB from receiving the proceeds of production attributable
to, or otherwise receiving the economic benefits deriving from, the Buyer's
Leasehold and Facilities or result in he cancellation of DLBW's interest
therein, (i) all Existing Documents are in full force and effect and are the
valid and legally binding obligations of the parties thereto and are
enforceable in accordance with their respective terms, except as may result
from the pendency of the Chapter 11 Case or as disclosed in the Disclosure
Statement; (ii) WRT is not in material breach or default with respect to any of
its obligations pursuant to any such Existing Documents or any regulations
incorporated therein or governing same, except as a result of the pendency of
the Chapter 11 Case or as disclosed in the Disclosure Statement; and (iii) all
payments (including, without limitation, royalties, delay rentals, shut-in
royalties and valid calls under unit or operating agreements) and obligations
due thereunder have been made and satisfied by or on behalf of WRT.
Section 3.23. Full Disclosure. WRT has disclosed to DLB and Wexford
all material facts concerning WRT's and its Subsidiaries assets, business,
operations, financial condition and prospects. No representation or warranty
by WRT in this Commitment Agreement and no statement made by WRT contained in
the Plan, the Disclosure Statement (other than statements made by DLBW therein)
or any document delivered or to be delivered by or on behalf of WRT to DLB and
Wexford in accordance with this Commitment Agreement contained or will contain
any untrue statement of material fact or omitted or will omit to state a
material fact necessary to make the statements contained in this Commitment
Agreement or in any such document, in light of the circumstances under which
they were made, not misleading.
(page) 19
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF DLB AND WEXFORD
Section 4.01. Representations and Warranties of DLB. DLB hereby
represents and warrants to, and covenants and agrees with, WRT and Wexford that
(i) this Commitment Agreement has been duly authorized by DLB and has been duly
executed and delivered on its behalf and constitutes the valid and binding
obligation of DLB, enforceable against DLB in accordance with its terms,
subject, as to enforceability, to bankruptcy, insolvency, moratorium,
reorganization and similar laws affecting creditors' rights generally and to
general principles of equity, whether considered in a proceeding at law or in
equity, (ii) it has and will have full power and authority to contribute at the
closing the funds required pursuant to Article II hereof to the capital of New
WRT, (iii) the execution and delivery by DLB of this Commitment Agreement, and
the consummation by DLB of the transactions contemplated hereby, will not, to
the best of DLB's knowledge, conflict with, violate, or result in any breach
of, any of the terms, conditions or provisions of, or constitute a default
under, or result in the creation of a lien on, or the acceleration of any
obligation or the loss of a benefit under, (I) DLB's certificate of
incorporation or by-laws, (II) any note, indenture, deed of trust, material
lease, or other material instrument, contract or agreement to which DLB may
then be a party or by which it or its respective properties and assets may then
be bound, or (III) any law, ordinance, rule or regulation of any government or
governmental authority or judgment, order or decree of any court or
governmental authority, (iv) subject to such filings as may be required under
the Exchange Act, the HSR Act and the entry of the Confirmation Order, all
consents, approvals, orders and authorizations of, and all registrations,
declarations and filings with, any federal or state government or governmental
authority required to be made or obtained by DLB for the consummation by it of
the transactions contemplated hereby have been made or obtained or will be made
or obtained prior to the Effective Date and (v) the information provided by DLB
in writing expressly for inclusion in the Disclosure Statement does not, and
will not, contain an untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
Section 4.02 Representations and Warranties of Wexford. Wexford
hereby represents and warrants to, and covenants and agrees with, WRT and DLB
that (i) this Commitment Agreement has been duly authorized by Wexford in its
capacity as investment manager for the Wexford Funds and, if necessary, by each
of the Wexford Funds, has been duly executed and delivered on its behalf and
constitutes the valid and binding obligation of the Wexford Funds, enforceable
against the Wexford Funds in accordance with its terms, subject, as to
enforceability, to bankruptcy, insolvency, moratorium, reorganization and
similar laws affecting creditors' rights generally and to general principles of
equity, whether considered in a proceeding at law or in equity, (ii) the
Wexford Funds have and will have full power and authority to contribute at the
Closing the funds required pursuant to Article II hereof to the capital of new
WRT, (iii) the execution and delivery by Wexford and the
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Wexford Funds of this Commitment Agreement, and the consummation by the Wexford
Funds of the transactions contemplated hereby, will not, to the best of
Wexford's knowledge, conflict with, violate, or result in any breach of, any of
the terms, conditions or provisions of, or constitute a default under, or
result in the creation of a lien on, or the acceleration of any obligation or
the loss of a benefit under, (I) Wexford's operating agreement or the
partnership agreements of the Wexford Funds, (II) any note, indenture, deed of
trust, material lease, or other material instrument, contract or agreement to
which Wexford or the Wexford Funds may then be a party or by which they or
their respective properties and assets may then be bound, or (III) any law,
ordinance, rule or regulation of any government or governmental authority or
judgment, order or decree of any court or governmental authority, (iv) subject
to such filings as may be required under the Exchange Act, the HSR Act and the
entry of the Confirmation Order, all consents, approvals, orders and
authorizations of, and all registrations, declarations and filings with, any
federal or state government or governmental authority required to be made or
obtained by Wexford for the consummation by it of the transactions contemplated
hereby have been made or obtained or will be made or obtained prior to the
Effective Date and (v) the information provided by Wexford in writing expressly
for inclusion in the Disclosure Statement does not, and will not, contain an
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading.
Section 4.03. Financing. DLB and the Wexford Funds have, or will
have prior to the Closing, sufficient cash, available lines of credit or other
sources of immediately available funds to enable it to make payment of the
funds required pursuant to Article II hereof and any other amounts to be paid
by it hereunder.
Section 4.04. Purchase for Investment. DLB and the Wexford Funds
are purchasing the New WRT Common Stock and the New WRT Subscription Common
Stock for investment for their own respective accounts and not with a view to,
or for sale in connection with, any distribution thereof in violation of the
Securities Act of 1933, as amended. DLB, Wexford and the Wexford Funds(either
alone or together with their advisors) have sufficient knowledge and experience
in financial and business matters so as to be capable of evaluating the merits
and risks of its investments in the New WRT Common Stock and the New WRT
Subscription Common Stock and are capable of bearing the economic risks of such
investment.
Section 4.05. Litigation. There is no action, suit, investigation
or proceeding pending against, or to the knowledge of DLB, Wexford or the
Wexford Funds threatened against or affecting, DLB, Wexford or the Wexford
Funds before any court or arbitrator or any governmental body, agency or
official which in any manner challenges or seeks to prevent, enjoin, alter or
materially delay the transactions contemplated by this Commitment Agreement.
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ARTICLE V
COVENANTS OF WRT
WRT covenants and agrees with DLB and Wexford that, from and after
the date hereof and until the Effective Date, except as otherwise expressly
provided herein or in the Plan and subject to the terms and conditions hereof:
Section 5.01 Conduct of Business. (a) WRT shall carry on its
business diligently and consistent with good business practice, maintain its
properties in customary repair, order and condition, ordinary wear and tear
excepted, and use all reasonable commercial efforts to maintain and preserve
its business organization.
(b) WRT will not (i) take or agree or commit to take any
action that would make any representation and warranty of WRT hereunder
inaccurate in any material respect at, or as of any time prior to, the
Effective Date or (ii) omit or agree or commit to omit to take any action
necessary to prevent any such representation or warranty from being inaccurate
in any material respect at any such time.
Section 5.02 Actions in the Chapter 11 Case.
(a) Subject to its fiduciary obligations as debtor-in-
possession in the Chapter 11 Case, WRT shall use its best efforts, diligently
and in good faith, to cause the Plan to be confirmed by the Bankruptcy Court.
Without limiting the application of the foregoing sentence, so long as this
Commitment Agreement is in full force and effect, WRT will not propose or in
any way support any plan that fails to provide for the full payment in cash at
the Closing of the Texaco Claim. WRT shall not amend the Plan or permit the
Plan to be amended without the prior written consent of DLB and Wexford and,
upon the request of DLB and Wexford, shall promptly file with the Bankruptcy
Court all such amendments to the Plan and to the Disclosure Statement or any
exhibit to the Plan or Disclosure Statement as are necessary in order to give
effect to the provisions of this Commitment Agreement. Subject to the
confirmation of the Plan, WRT shall take all actions not inconsistent with the
terms of this Commitment Agreement that are necessary or appropriate in order
to effect the consummation of the Plan and the transactions contemplated by
this Commitment Agreement.
(b) Promptly after the execution and delivery hereof, WRT
shall make such filings (which shall be in form and substance satisfactory to
DLB and Wexford) with the Bankruptcy Court as are necessary in order to obtain
the approval of the Bankruptcy Court of the terms and provisions of this
Commitment Agreement on or before entry of an order approving the Disclosure
Statement, including, without limitation, the provisions of Sections 10.02 and
10.03 hereof. WRT shall use its best efforts, diligently and in good faith, to
obtain such approval as promptly as practicable and shall submit a motion for
such approval, substantially in the form of Exhibit B hereto, to the Bankruptcy
Court no later than the close of business on January 28, 1997.
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(c) WRT shall use its best efforts, diligently and in good
faith, to file with the Bankruptcy Court and to prosecute objections to all
Claims that WRT, DLB or Wexford believes in good faith are subject to objection
in whole or in part, including, without limitation, objections to the amount of
such Claims and to any lien, mortgage or other security interest asserted with
respect to such Claims, and shall not settle any such objection except with the
consent of DLB and Wexford, which consent shall not be unreasonably withheld.
(d) WRT shall not take any actions or omit to take any
actions that are inconsistent with the provisions of this Commitment Agreement
or that interfere in any manner with the provisions of this Commitment
Agreement.
(e) WRT shall exercise all reasonable efforts, diligently
and in good faith, to have the New WRT Common Stock qualified, prior to the
Effective Date, for quotation on the NASDAQ system upon issuance thereof.
Section 5.03 Negative Covenants. WRT will not, except as
expressly or specifically contemplated by this Commitment Agreement or as
expressly and specifically permitted in the Plan, engage in any of the
following activities or transactions without the express written consent of DLB
and Wexford, which shall not be unreasonably withheld:
(a) propose or in any way support any plan of reorganization
for WRT other than the Plan;
(b) sell, lease, dispose of or transfer, or agree to sell,
lease, dispose of or transfer, any material leases or any other material assets
or rights, or cancel or agree to cancel any material liabilities owed to WRT;
(c) issue, sell, deliver or agree to issue, sell or deliver
any shares of capital stock, bonds, debentures, notes or other corporate
securities of which WRT is the issuer or grantor, or grant or issue, or agree
to grant or issue, any options, warrants, bonuses or other similar rights
calling for the issuance of such securities;
(d) borrow, or agree to borrow, any funds or voluntarily
incur, or assume or become subject to, whether directly or by way of guarantee
or otherwise, any obligation or liability for borrowed money;
(e) except for (i) Permitted Liens and (ii) leases entered
into in the ordinary course of business and not otherwise prohibited hereby,
mortgage, pledge or otherwise encumber any part of its assets;
(f) enter, or agree to enter, into any agreement or
arrangement (i) granting any rights of first refusal or similar preferential
rights to purchase any assets of WRT, other than in the ordinary course of
business and with respect to non-material assets, or (ii) requiring the consent
of any Person to the consummation of any of the transactions contemplated by
this Commitment Agreement or the Plan;
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(g) breach, amend (other than in the ordinary course of
business consistent with past practices) or terminate (other than in accordance
with its terms) any material agreement, contract or instrument to which WRT is
a party;
(h) merge or consolidate with or into any other Person,
acquire control or acquire any capital shares or other securities of any other
Person, or take any steps incidental to or in furtherance of any such actions,
whether by entering into an agreement providing therefor or otherwise;
(i) enter into any material contract, arrangement or
agreement (other than contracts, agreements or arrangements entered into in the
ordinary course of business consistent with past practices);
(j) except as required by law or by GAAP, made any material
alteration in the manner of keeping its books, accounts or records or in the
accounting practices reflected therein;
(k) enter into any material transaction or acquire any
capital assets other than in the ordinary course of business consistent with
past practices;
(l) reject any executory contract or unexpired lease with
respect to which the damages resulting from such rejection would exceed
$50,000;
(m) amend its certificate of incorporation or by-laws or
change its authorized or outstanding capital stock;
(n) except in amounts that individually or in the aggregate
are not material, (i) grant to any director or officer or to any employee or
consultant any increase in compensation in any form, (ii) grant to any such
person any severance or termination pay or benefit, or (iii) make any loan or
advance to, or enter into, amend, modify, terminate or renew any compensation
benefit or employment agreement or arrangement with, any such person; or
(o) take any other action inconsistent with the terms of
this Commitment Agreement or the Plan or that could reasonably be expected to
impair the consummation of the transactions contemplated hereby or thereby.
Section 5.04 Delivery of Certain Documents.
(a) WRT shall promptly furnish to DLB and Wexford from the
date hereof until the Effective Date a copy of each such report, including
financial statements and schedules, hereafter filed by WRT pursuant to the
Exchange Act, and all material documents served upon or served by WRT in
connection with the Chapter 11 Case or any action or proceeding which may be
initiated with respect to any transaction contemplated by this Commitment
Agreement.
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(b) WRT shall give DLB and Wexford and their respective
accountants, counsel and other designated representatives access during normal
business hours throughout the period from the date hereof to the Effective Date
to all premises, books, records and other information of and concerning WRT
(including, without limitation, all work papers relating to tax and accounting
information used in connection with the preparation of financial statements and
tax returns), and shall cause its officers and managerial employees to furnish
to DLB and Wexford such financial and operating data and other information with
respect to its business and properties as either may reasonably request. No
investigation made by or information furnished to DLB or Wexford pursuant to
this Commitment Agreement shall be deemed to impact DLB's and Wexford's ability
to rely on any representations or warranties by WRT or the conditions to the
obligations of the parties to consummate the transactions contemplated by this
Commitment Agreement.
Section 5.05 Notification. WRT shall promptly notify DLB and
Wexford of (a) the occurrence of any change, event or condition that has had,
or could reasonably be expected to have, an effect on the Closing or a Material
Adverse Effect, (b) the commencement or threat of commencement of any
litigation that might reasonably be expected to have a Material Adverse Effect
or that relate to the consummation of the transactions contemplated by this
Commitment Agreement or the Plan, (c) any notice or other communication from
any Person alleging that the consent of such Person is or may be required in
connection with the consummation of the transactions contemplated by this
Commitment Agreement or the Plan, (d) any notice or other communication from
any governmental or regulatory agency or authority in connection with the
transactions contemplated by this Commitment Agreement or the Plan or (e) any
change in the senior management of WRT.
Section 5.06. Updating Disclosures. From time to time through
the Effective Date, WRT will promptly deliver to DLB and Wexford any
information concerning events subsequent to the date of this Commitment
Agreement or which becomes available to WRT after the date hereof which is
necessary to supplement the representations and warranties of WRT contained
herein, in order that such representations and warranties are kept current,
complete and accurate in all material respects. Such delivery shall, to the
extent of any new disclosure the substance of which has had or could be
reasonably expected to have a Material Adverse Effect, provide DLB and Wexford
the right to terminate this Commitment Agreement or pursue any other legal
remedy hereunder.
Section 5.07. Maintenance of Insurance. Through the Effective
Date, WRT will keep in force substantially the same kinds and amounts of
insurance which is carried as of the date hereof.
Section 5.08 Government Filings. WRT will (i) duly and timely
file (subject to authorized extensions) all reports or returns required to be
filed with federal authorities and all material reports and returns required to
be filed with state, foreign, local or other authorities, (ii) except as
contemplated by the Plan, unless contesting such in good faith and having
established adequate book reserves therefor, promptly pay, as and when due,
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all federal, state, local and foreign taxes, assessments and governmental
charges to the extent such taxes, assessments and charges constitute expenses
of administration under Section 503 of the Bankruptcy Code and (iii) duly
observe and conform to all lawful requirements of any governmental authority
relating to any of its properties or to the operation and conduct of its
business and to all covenants, terms and conditions upon, or under which, any
of its properties are held where the failure so to observe, conform or comply
would have a Material Adverse Effect.
Section 5.09 Management Reports. Subject to its fiduciary duties
as debtor-in-possession, WRT shall prepare, consistently with its current
practice, and deliver to DLB and Wexford copies of its monthly operating
statements, variance reports and other internal reports and documents,
simultaneously with the customary internal circulation thereof within WRT.
Section 5.10 Board Meetings. WRT shall give DLB and Wexford at
least two days' prior notice of any board meeting or meeting of a committee of
the board and, subject to WRT's fiduciary duties as a debtor-in-possession, DLB
and Wexford each shall have the right to have a representative attend all such
meetings.
Section 5.11 Further Assurances. WRT shall (a) execute and
deliver such instruments and take such other actions as DLB and Wexford may
reasonably require in order to carry out the intent and purpose of this
Commitment Agreement and the Plan, (b) use its best efforts, diligently and in
good faith, to obtain any consents required herein to be obtained, (c) subject
to its fiduciary duties as debtor-in-possession, diligently support this
Commitment Agreement and the Plan in any proceeding before the Bankruptcy Court
or any other governmental or regulatory authority whose approval of the
transaction contemplated hereby and by the Plan is required, (d) subject to its
fiduciary duties as debtor-in-possession, use its best efforts, diligently and
in good faith, to oppose any litigation that seeks to restrain or prohibit the
consummation of the transactions contemplated hereby or by the Plan or which
would have a Material Adverse Effect and (e) use its best efforts, diligently
and in good faith, to cause the conditions precedent set forth in Article IX
hereof to be satisfied.
ARTICLE VI
COVENANTS OF DLB AND WEXFORD
Section 6.01 General Covenants. Each of DLB and Wexford, jointly
and severally, covenants and agrees, subject to the terms and conditions
hereof, that they will (a) execute and deliver such instruments and take such
other actions as WRT may reasonably require in order to carry out the intent
and purpose of this Commitment Agreement and the Plan, (b) use their best
efforts, diligently and in good faith, to obtain any consents required herein
to be obtained by them, (c) diligently support this Commitment Agreement and
the Plan in any proceeding before the Bankruptcy Court or any
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other governmental or regulatory authority whose approval of the transaction
contemplated hereby and by the Plan is required, (d) vote the Claims held by
them in favor of the confirmation of the Plan, (e) use their best efforts,
diligently and in good faith, to oppose any litigation that seeks to restrain
or prohibit the consummation of the transactions contemplated hereby or by the
Plan and (f) use their best efforts, diligently and in good faith, to cause the
conditions precedent set forth in Article VIII hereof to be satisfied.
ARTICLE VII
COVENANTS OF WRT, DLB AND WEXFORD
WRT, DLB and Wexford agree that:
Section 7.01 Best Efforts. Subject to the terms and conditions
of this Commitment Agreement, WRT, DLB and Wexford will use their best efforts
to take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary or desirable under applicable laws and regulations to
consummate the transactions contemplated by this Commitment Agreement. WRT,
DLB and Wexford agree to execute and deliver such other documents,
certificates, agreements and other writings and to take such other actions as
may be necessary or desirable in order to consummate or implement expeditiously
the transactions contemplated by this Commitment Agreement.
Section 7.02 Certain Filings. WRT, DLB and Wexford shall
cooperate with one another (i) in determining whether any action by or in
respect of, or filing with, any governmental body, agency, official or
authority is required, or any actions, consents, approvals or waivers are
required to be obtained from parties to any material contracts, in connection
with the consummation of the transactions contemplated by this Commitment
Agreement and (ii) in taking such actions or making any such filings,
furnishing information required in connection therewith and seeking timely to
obtain any such actions, consents, approvals or waivers.
Section 7.03 Public Announcements. The parties agree to consult
with each other before making any press release or making any public statement
with respect to this Commitment Agreement or the transactions contemplated
hereby and, except as may be required by applicable law or any listing
agreement with any national securities exchange, will not issue any such press
release or make any such public statement prior to such consultation.
Section 7.04 Confidential Treatment. Each of DLB and Wexford,
severally and not jointly, on the one hand and WRT on the other hand agrees
that all non-public information provided or made available to it or any of its
affiliates by or on behalf of the other party hereunder or pursuant hereto
shall be kept confidential and shall not be used by it or such affiliates for
any purpose other than in connection with the transactions contemplated by this
Commitment Agreement; provided, however that the foregoing shall not apply to
any such information which becomes publicly available (i) other than
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through breach of this Section 7.04, (ii) from a third party not under a
confidentiality obligation to the parties hereto or (iii) because it is
included in the Disclosure Statement as required pursuant to Section 1125 of
the Bankruptcy Code.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF WRT
Section 8.01. Conditions Precedent to WRT's Obligations. The
obligations of WRT to consummate the transactions contemplated by this
Commitment Agreement, including, without limitation, to issue shares of New WRT
Common Stock and New WRT Subscription Common Stock as provided herein and in
the Plan at the times herein and therein provided, shall be subject to the
satisfaction, or to the waiver by WRT, of each of the following conditions:
(a) The Bankruptcy Court shall have entered the Confirmation
Order.
(b) At the Effective Date, all required consents and
approvals of any governmental agency, authority, commission or other party
shall have been obtained and the same shall be in full force and effect, any
applicable waiting period (and any extension thereof) applicable to the
consummation of the Plan under the HSR Act shall have expired or been earlier
terminated and no preliminary or permanent injunction or other order, decree or
ruling barring consummation of the Plan shall have been entered with respect to
or in connection with any application under the HSR Act.
(c) The representations and warranties of DLB and Wexford
contained herein shall have been true and correct when made, and shall be true
and correct in all material respects on and as of the Effective Date, as if
made by DLB and Wexford, respectively, on and as of such date.
(h) At the Effective Date, each of DLB and Wexford shall
have complied or shall concurrently comply with each covenant and agreement
required herein to be complied with by it on or prior to the Effective Date.
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF DLB AND WEXFORD
Section 9.01. Conditions to Respective Obligations of DLB and
Wexford. The joint and several obligations of DLB and Wexford to consummate
the transactions contemplated by this Commitment Agreement, including, without
limitation, to make or effect or cause to be made or effected, the payments
required pursuant to Article II hereof at the times therein provided, shall be
subject to the satisfaction, or to the waiver by each of DLB and Wexford
(except as expressly provided in this Section 9.01), of each of the following
conditions:
(a) Prior to the Effective Date, there shall have been
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approved pursuant to an order of the Bankruptcy Court (which order,
contemplated to be the Confirmation Order, shall have become a Final Order) the
issuance to DLB and Wexford of the shares of New WRT Common Stock and New WRT
Subscription Common Stock issuable to DLB and Wexford, the payment in full of
the Texaco Claim and all the other provisions of Article II hereof and at the
Effective Date, no action, suit or proceeding by or before any court,
governmental agency or other tribunal shall be pending or threatened against
WRT, DLB or Wexford, arising out of or with respect to the transactions
contemplated by this Commitment Agreement, the Plan or the Disclosure
Statement.
(b) The Bankruptcy Court shall have entered the Confirmation
Order, which order shall have become a Final Order, and such Final Order shall
contain, inter alia, provisions approving the amount of the fees and expenses
paid or payable to DLB and Wexford and shall be in form and substance
satisfactory to each of DLB and Wexford.
(c) Prior to the initial date of mailing of the Disclosure
Statement, as approved by the Bankruptcy Court to the creditors and
shareholders of WRT (the "Mailing Date"), the Bankruptcy Court shall have
entered an order (which order shall become a Final Order) approving certain
provisions of this Commitment Agreement, including, without limitation,
Sections 2.02(a) and (b), 10.02 and 10.03 and Articles V and VII.
(d) At the Effective Date, no action, suit or proceeding by
or before any court, governmental agency or other tribunal shall be pending or
threatened, other than those actions, suits and proceedings described in the
Schedules, against WRT the adverse determination of which would have a Material
Adverse Effect.
(e) From the date hereof through and including the Effective
Date, there shall have been no material adverse change in the business,
properties, financial condition, results of operations or prospects of WRT or
New WRT.
(f) All consents and approvals of any governmental agency,
authority, commission or other party shall have been obtained and the same
shall be in full force and effect on and as of the Effective Date, any waiting
period (and any extension thereof) applicable to the consummation of the Plan
under the HSR Act shall have expired or been earlier terminated and no
preliminary or permanent injunction or other order, decree or ruling barring
consummation of the Plan shall have been entered with respect to or in
connection with any application under the HSR Act.
(g) The representations and warranties of WRT contained
herein shall have been true and correct when made, and shall be true and
correct in all material respects on and as of the Effective Date, as if made by
New WRT on and as of such date, and DLB and Wexford shall have received a
certificate of an executive officer of New WRT to such effect.
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(h) At the Effective Date, each of WRT and New WRT shall
have complied or shall concurrently comply with each covenant and agreement
required herein to be complied with by it on or prior to the Effective Date,
and DLB and Wexford have received a certificate of an executive officer of New
WRT to such effect.
(i) At the Effective Date, the New WRT Certificate of
Incorporation shall have been duly adopted and filed with the Secretary of
State for the State of Delaware and the New WRT By-Laws shall have been duly
adopted and each shall contain provisions acceptable to DLB and Wexford.
(j) The Registration Rights Agreement, the New WRT
Subscription Rights Agreement and the Administrative Services Agreement shall
have been executed and delivered by the parties thereto and such agreements
shall contain substantially the terms described in the Disclosure Statement,
and all Exhibits and Schedules to the Plan and Disclosure Statement shall be in
form and substance reasonably satisfactory to each of DLB and Wexford.
(k) The Louisiana State Mineral Board shall have executed a
consent to the transfer of the WCBB Assets to DLB (or its designee) pursuant to
the terms of the Purchase, Sale and Exchange Agreement.
(l) There shall not have occurred (i) any material adverse
change in the condition of the financial markets generally, in the United
States, or in the worldwide market for geophysical services, or any outbreak of
hostilities if such hostilities materially adversely affect the oil markets or
the market for geophysical services or involve the United States, or other
national or international calamity or crisis the effect of which shall be such
as to make it, in the reasonable judgment of DLB and Wexford, impracticable to
consummate the transactions contemplated hereby to be consummated at the
Effective Date, or (ii) any suspension in trading in any securities of WRT or
New WRT by the Commission or any national or regional securities exchange, or
the establishment of minimum or maximum prices for trading, or maximum ranges
for prices for securities, by said exchange or by order of the Commission or
any other government authority, or any declaration of a banking moratorium by
Federal, New York or Texas authorities.
(m) DLB and Wexford shall have received an opinion, dated
the Effective Date, of Sheinfeld, Maley & Kay, P.C., counsel to WRT, in form
and substance satisfactory to DLB and Wexford.
Section 9.02. Waivers. On the date (which shall not be prior to 15
days after entry of an order confirming the Plan) on which WRT notifies DLB and
Wexford that the remaining conditions to the obligations of DLB and Wexford set
forth in Section 9.01 hereof have been satisfied or waived and WRT delivers all
such instruments, certificates and opinions in appropriate form as required
under this Commitment Agreement, DLB and Wexford shall determine whether the
conditions set forth in Sections 9.01(d), 9.01(g) and 9.01(k) have been
satisfied, or if such conditions have not been satisfied shall determine
whether or not to waive the same, and shall notify New WRT of the results of
said determination and in the event that all of such conditions are not
satisfied or waived, the Effective Date shall not occur and the parties hereto
shall have such right and obligations as are expressly set forth herein.
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ARTICLE X
MISCELLANEOUS
Section 10.01. Compliance with Plan. Without limiting the
obligations of WRT under this Commitment Agreement, WRT hereby covenants and
agrees with DLB and Wexford that it will comply in all respects with the
provisions of the Plan from and after the entry by the Bankruptcy Court of the
Confirmation Order with the same force and effect as if such provisions were
set forth in full herein.
Section 10.02. Break-Up Fee. If (a) WRT breaches in any material
respect any of its covenants or obligations under this Commitment Agreement or
the Plan, (b) WRT reaches an agreement in principle with respect to, accepts a
commitment for the purchase of, contracts to sell or sells WRT or a material
portion of its assets or operations, or, pursuant to a plan of reorganization
or otherwise, debt or equity securities of WRT, to any person other than an
Extant Bidder, DLB and Wexford or persons approved by DLB and Wexford, or WRT
terminates this Commitment Agreement for any reason other than as a result of a
material breach hereof by DLB and Wexford or (c) a plan of reorganization for
WRT other than the Plan or a plan proposed solely by an Extant Bidder is
confirmed (collectively, a "Break-Up Event"), then (x) DLB and Wexford shall
have the right to terminate this Commitment Agreement or pursue any other legal
remedy hereunder and (y) WRT shall immediately pay to DLB and Wexford, in
addition to the reimbursement of out-of-pocket expenses set forth in Section
10.03 hereof, a fee (the "Break-Up Fee") in the amount of $700,000, payable
following written demand therefor by DLB and Wexford; provided, however, that
the Break-Up Fee shall not be payable if (x) any of the conditions precedent
contained in this Commitment Agreement or the Plan is not met or (y) DLB and
Wexford breaches any of their covenants or obligations under this Commitment
Agreement. The Break-Up Fee shall be an administrative expense claim under
Section 503(b)(1)(A) of the Bankruptcy Code payable at the time all other such
administrative expenses are paid (other than professional fees and
administrative expenses paid in the ordinary course). The Break-Up Fee shall
be payable to DLB and Wexford if, and only if, at the occurrence of the Break-
Up Event, DLB and Wexford shall have not theretofore exercised any right or
stated its intent to terminate or not perform its obligations under this
Commitment Agreement, except as a consequence of the failure of WRT to perform
its material covenants or obligations under this Commitment Agreement or the
Plan.
Section 10.03. Expense Reimbursement. The reasonable out-of-pocket
expenses (including, without limitation, the reasonable fees and expenses of
counsel and other advisors to DLB and Wexford) incurred in connection with the
preparation, negotiation and consummation of this Commitment Agreement, the
Plan and all related documents and transactions shall be for WRT's account and
shall be an allowed administrative expense claim under Section 503(b)(1)(A) of
the Bankruptcy Code, whether or not the transactions contemplated by this
Commitment Agreement are consummated; provided, however, that if such
transactions are not consummated as a result of the material breach by DLB and
Wexford of their covenants or obligations under this Commitment Agreement, WRT
(page) 31
<PAGE> 32
shall have no obligation to pay the fees and expenses of DLB and Wexford.
Payment of such reasonable out-of-pocket costs and expenses shall be made from
time to time promptly, and in no event later than 15 days, following written
demand therefor by DLB and Wexford accompanied by appropriate invoices, except
that the fees and expenses incurred by DLB and Wexford prior to October 22,
1996 shall be paid only if the Bankruptcy Court enters an order, which may be
the Confirmation Order, approving such fees and expenses. Any costs and
expenses paid to DLB and Wexford for which it is not eligible pursuant to the
proviso in the first sentence of this Section 10.03 shall be promptly returned
to WRT. The obligation of WRT to reimburse DLB and Wexford for their
reasonable out-of-pocket costs and expenses shall not exceed $1,000,000 in
excess of any and all out-of-pocket expenses of DLB and Wexford the
reimbursement of which has already been approved by the Bankruptcy Court
pursuant to the Expense Order, (whether or not DLB and Wexford have actually
sought or obtained reimbursement of any or all of such amount). DLB and
Wexford will not seek, as part of the expense reimbursement provided pursuant
to this Section 10.03, reimbursement of expenses incurred by it (a) in
connection with the negotiation and closing of any consensual arrangement among
Texaco, DLB and WRT relating to WCBB and (b) in connection with any litigation
between WRT and Texaco related to WCBB and Texaco's claims related thereto.
Section 10.04. Liquidated Damages. If DLB or Wexford breaches in
any material respect any of its covenants or obligations under this Commitment
Agreement, then DLB and Wexford shall pay to WRT liquidated damages in the
amount of $700,000, payable following written demand therefor by WRT. The
payment of such liquidated damages shall be in addition to any other remedies
available to WRT as a result of such breach.
Section 10.05. Waivers. Any failure of WRT, DLB or Wexford to
comply with any obligation, covenant, agreement or condition herein may be
expressly waived by the party to which such obligation, covenant or agreement
is owed or for whose benefit such condition exists to the extent permitted
under applicable law. Any such waiver shall be in a writing signed by an
officer or agent of the party giving such waiver thereunto duly authorized.
Any waiver or any failure to insist upon strict compliance with any such
obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure.
Section 10.06. Brokers and Finders; Expenses. Except for Jefferies
& Company, Inc., which will be compensated as described in the Disclosure
Statement, each of WRT, DLB and Wexford represents and warrants to the others
of them that no broker or finder (including any of its officers, directors or
agents) is entitled to any brokerage or finder's fee or other commission from
it based on agreements, arrangements or undertakings made by it in connection
with this Commitment Agreement or the transactions contemplated hereby. Except
as otherwise provided in this Commitment Agreement, each party shall bear its
own costs and expenses in connection herewith.
(page)32
<PAGE> 33
Section 10.07. Notices. Any notice, demand, claim or other
communications under this Commitment Agreement shall be in writing and shall be
deemed to have been given upon personal delivery thereof, or upon receipt
thereof if sent by registered mail, return receipt requested, postage prepaid,
or upon confirmation of delivery thereof by courier service, if sent by
recognized overnight courier service, to the respective address of the parties
set forth below (or such other address as a party may specify by notice given
as herein provided):
If to WRT, to:
WRT Energy Corporation
Attention: Mr. Raymond P. Landry
5718 Westheimer, Suite 1201
Houston, Texas 77057
Copy to:
Sheinfeld, Maley, & Kay, P.C.
Attention: Joel P. Kay, Esq.
1001 Fannin Street, Suite 3700
Houston, Texas 77002-6797
If to DLB, Wexford and the Wexford Funds, to:
DLB Oil & Gas, Inc.
Attention: Mark Liddell
1601 N.W. Expressway, Suite 700
Oklahoma City, OK 73118-1401
- and -
Wexford Management LLC
Attention: Arthur Amron, Esq.
411 West Putnam Avenue
Greenwich, CT 06830
Copy to:
Schulte Roth & Zabel LLP
Attention: Jeffrey S. Sabin, Esq.
900 Third Avenue
New York, New York 10022
Section 10.08. Successors and Assigns. This Commitment Agreement
and all the provisions hereof shall be binding upon and inure to the benefit of
the parties hereto and their respective successors (including, without
(page) 33
<PAGE> 34
limitation, any trustee of WRT and New WRT) and permitted assigns, but neither
this Commitment Agreement nor any of the rights, interests or obligations
hereunder may be assigned by any of the parties hereto without the prior
written consent of the other parties.
Section 10.9. Headings. The headings of the Articles and Sections of
this Commitment Agreement are inserted for convenience only and shall not
affect the interpretation hereof.
Section 10.10. Entire Agreement. This Commitment Agreement, the New
WRT Subscription Rights Agreement, the Administrative Services Agreement and
the Plan (including the Exhibits and Schedules hereto and thereto) contains the
entire understanding of the parties hereto with respect to the subject matter
hereof. There are no restrictions promises, representations, warranties,
covenants, or undertakings among the parties relating to the subject matter
hereof other than those expressly set forth or referred to herein or therein,
subject to the approval of the Bankruptcy Court. This Commitment Agreement
supersedes all prior agreements and understandings among the parties with
respect to the subject matter hereof. In the event of any inconsistency
between the term and provisions of this Commitment Agreement and the terms and
provisions of the Plan, then, and in such event, the terms and provisions of
this Commitment Agreement shall control.
Section 10.11. Counterpart. This Commitment Agreement may be
executed in two or more counterparts, and each such counterpart shall be deemed
an original but all such counterparts together shall constitute one and the
same agreement.
Section 10.12. Governing Law. Except to the extent inconsistent
with the Bankruptcy Code, this Commitment Agreement and the legal relations
between the parties hereto shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York, without giving effect to
the provisions, principles or policies thereof respecting conflict or choice of
laws.
Section 10.13. Survival. The representations and warranties of the
parties hereto shall survive only until the Effective Date but not thereafter.
Section 10.14. Effectiveness of Agreement. The provisions of this
Commitment Agreement shall become effective upon the entry by the Bankruptcy
Court of an order approving the terms and conditions hereof; provided, however,
that the provisions of Sections 5.02(b), 5.02(d) and 7.04 hereof shall be
effective upon the execution and delivery hereof.
(page) 34
<PAGE> 35
IN WITNESS WHEREOF, the parties hereto have caused this Commitment
Agreement to be duly executed by their officers, partners or agents thereunto
duly authorized as of the day and year first above written.
WRT ENERGY CORPORATION, INC., Debtor
and Debtor-in-Possession
By: /s/ Raymond Landry
-----------------------------------------
Name:
Title:
DLB OIL & GAS, INC.
By: /s/ Mark Liddell
-----------------------------------------
Name:
Title:
WEXFORD MANAGEMENT LLC
By: /s/ Charles Davidson
-----------------------------------------
Name:
Title:
WEXFORD MANAGEMENT LLC, as agent for:
WEXFORD CAPITAL PARTNERS II, L.P.
WEXFORD OVERSEAS PARTNERS I, L.P.
WEXFORD SPECIAL SITUATIONS 1996, L.P.
WEXFORD SPECIAL SITUATIONS 1996
INSTITUTIONAL, L.P.
WEXFORD-EURIS SPECIAL SITUATIONS 1996, L.P.
WEXFORD SPECIAL SITUATIONS 1996, LIMITED
By: /s/ Charles Davidson
-----------------------------------------
Name:
Title:
(page) 35
<PAGE> 1
EXHIBIT 2.3
SUBSCRIPTION RIGHTS AGREEMENT
SUBSCRIPTION RIGHTS AGREEMENT (the "Agreement"), dated as of , 1997,
by and between WRT Energy Corporation, a Texas corporation (the "Company"),
and (the "Disbursing Agent") acting on behalf of the Holders
(defined below).
W I T N E S S E T H:
WHEREAS, on February 14, 1996, the Company filed a voluntary petition
for relief under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court
commencing the Chapter 11 Case (Case No. 96BK-50212);
WHEREAS, since the commencement of the Chapter 11 Case, the Company
has operated its business and held its assets and properties as a debtor-in-
possession under Section 1107 of the Bankruptcy Code;
WHEREAS, in order to emerge from bankruptcy, Debtor's and DLBW's
[First] Amended Joint Plan of Reorganization Under Chapter 11 of the United
States Bankruptcy Code (the "Plan") has been filed with the Bankruptcy Court;
WHEREAS, certain creditors of the Company will possess claims on the
Subscription Rights Record Date that are not secured by assets of the Company,
such claims having been classified in the Plan as Allowed Claims in Class D-3
(the "Claims Holders") or as Disputed Claims within or potentially within Class
D-3 (the "Disputed Claims Holders"; and together with the Claims Holders, the
"Holders");
WHEREAS, in connection with the execution and delivery of the Plan,
the Company will issue up to [4,000,000] common stock purchase rights as
hereinafter described (the "Subscription Rights") to purchase up to an
aggregate of [4,000,000] shares of New WRT Subscription Common Stock to the
Claims Holders and up to [ ] common stock purchase rights as
hereinafter described (the "Disputed Subscription Rights") to purchase up to an
aggregate of [ ] shares of Disputed New WRT Subscription Common Stock to
the Disputed Claims Holders, as is fully set forth in Articles 18.2 and 29 of
the Plan;
WHEREAS, the Disbursing Agent has been approved by the Bankruptcy
Court to receive on behalf of the Claims Holders the shares of New WRT
Subscription Common Stock and on behalf of the Disputed Claims Holders the
Disputed New WRT Subscription Common Stock and to disburse such shares to the
Holders as provided for in the Plan;
NOW, THEREFORE, in consideration of the foregoing and for the purpose
of defining the terms and provisions of the Subscription Rights, the Disputed
Subscription Rights and the respective rights and obligations thereunder of the
Company and the Holders, the parties hereto hereby agrees as follows:
(PAGE) 1
<PAGE> 2
SECTION 1
DEFINITIONS
All capitalized terms used herein and not otherwise defined herein
shall have the meanings ascribed to such terms in the Plan.
SECTION 2
INITIAL ISSUANCE OF RIGHTS; TRANSFER OF RIGHTS
2.1 Initial Issuance of Rights. On and after the Subscription
Rights Record Date, the Subscription Rights and the Disputed Subscription
Rights shall be issued or deemed issued to the Holders in accordance with
Article 29 of the Plan. On the Subscription Rights Record Date, the Company
shall distribute to each Holder an election form (the "Subscription Rights
Election Form") which form shall state, among other things, the number of
Subscription Rights and/or Disputed Subscription Rights that such Holder is
entitled to. The Subscription Rights and the Disputed Subscription Rights
shall be evidenced, subject to the provisions of Section 3 hereof, by the
registration of the Holders in the Subscription Rights Register (as defined in
Section 3 hereof) and not by separate certificates.
2.2 Transfer of Rights. The Subscription Rights and Disputed
Subscription Rights registered in the names of the Holders shall not be
transferable.
SECTION 3
REGISTRATION OF RIGHTS
The Subscription Rights and Disputed Subscription Rights issued to
Holders shall be registered in a register (the "Subscription Rights Register")
on the Subscription Rights Record Date. The Company and New WRT shall keep the
Subscription Rights Register at its principal office in Houston, Texas. The
Subscription Rights Register shall show the names and addresses of the Holders
and the number of Subscription Rights and/or Disputed Subscription Rights held
by each Holder. The Company and New WRT shall be entitled to treat the Holder
of any Subscription Rights or Disputed Subscription Rights as the owner in fact
thereof for all purposes and shall not be bound to recognize any equitable or
other claim to or interest in such Subscription Rights or Disputed Subscription
Rights on the part of any other person, notwithstanding any notice to the
Company or New WRT to the contrary.
(PAGE) 2
<PAGE> 3
SECTION 4
TERM OF RIGHTS; EXERCISE OF SUBSCRIPTION RIGHTS; EXERCISE OF
DISPUTED SUBSCRIPTION RIGHTS; FAILURE TO PROPERLY EXERCISE;
DIVIDENDS; DE MINIMUS DISTRIBUTIONS
4.1 Term of Subscription Rights. (a) Subject to the terms of this
Agreement, each Holder shall have the right until the Subscription Rights
Election Deadline to subscribe to purchase from the Company the number of fully
paid and nonassessable shares of New WRT Subscription Common Stock and Disputed
New WRT Subscription Common Stock representing such Holder's Interim Pro Rata
Share (with any fractions being rounded down to the nearest whole number) upon
surrender to the Disbursing Agent of (a) a duly completed and executed
Subscription Rights Election Form which shall include (i) the name of the
Holder, (ii) an election to exercise the right of purchase represented by the
Subscription Rights and/or Disputed Subscription Rights, (iii) the number of
shares of New WRT Subscription Common Stock and/or Disputed New WRT
Subscription Common Stock to be purchased, (iv) the names, addresses and social
security numbers of the individuals to receive the certificates of such shares
and (v) the signature of the Holder (which signature shall be guaranteed by a
bank or trust company located in the United States or a broker or dealer that
is a member of a national securities exchange); and (b) payment of the
Subscription Purchase Price and/or the Disputed Subscription Purchase Price to
the Disbursing Agent in immediately available funds either by wire transfer to
the Subscription Rights Reserve Account in accordance with the wire
instructions set forth on the Subscription Rights Election Form or by certified
or bank check made payable in accordance with the instructions set forth on the
Subscription Rights Election Form.
(b) In order for any exercise of rights to be considered, the
Subscription Rights Election Form and the Subscription Purchase Price and/or
the Disputed Subscription Purchase Price must be received by the Disbursing
Agent on or before the Subscription Rights Election Deadline. To the extent
that the Subscription Rights Election Form or the Subscription Purchase Price
and/or the Disputed Subscription Purchase Price for any Holder is received
after the Subscription Rights Election Deadline, such Holder shall be deemed to
have not exercised its Subscription Rights and/or Disputed Subscription Rights
and the Disbursing Agent shall promptly return to the applicable Holders any
Subscription Purchase Price and/or any Disputed Subscription Purchase Price
received on behalf of such Holders.
4.2 Exercise of Subscription Rights. Subject to Section 5 hereof,
after such delivery of the Subscription Rights Election Form exercising the
Subscription Rights and payment of the Subscription Purchase Price to the
Disbursing Agent as aforesaid, New WRT shall issue and the Disbursing Agent
shall cause to be delivered as soon as practicable on or after the Effective
Date, but in no event more than ten (10) Business Days after the Effective
Date, to the address(es) and in such name(s) as the Claims Holder shall have
designated in the applicable Subscription Rights Election Form, a certificate
or certificates for the number of full shares of New WRT Subscription Common
Stock so purchased upon the exercise of such Subscription Rights. Such
certificate or certificates shall be deemed to have been issued and any person
so designated to be named therein shall be deemed to have become a holder of
record of such shares of New WRT Subscription Common Stock as of the Effective
Date. [The rights of purchase represented by the Subscription Rights shall be
(PAGE) 3
<PAGE> 4
exercisable, at the election of the Claims Holders thereof, either is full or
from time to time in part, but in no event after the Subscription Rights
Election Deadline].
4.3 Exercise of Disputed Subscription Rights. (a) Subject to
Section 5 hereof, after such delivery of the Subscription Rights Election Form
exercising the Disputed Subscription Rights and payment of the Disputed
Subscription Purchase Price to the Disbursing Agent as aforesaid, New WRT shall
issue and the Disbursing Agent shall cause to be delivered as soon as
practicable on or after such time (a "Determination Date") as all or any
portion of an Exercised Disputed Claim becomes an Allowed Claim (an "Allowed
Disputed Claim"), but in no event more than ten (10) Business Days after such
Determination Date, (i) to the address(es) and in such name(s) as the Disputed
Claims Holder shall have designated in the Subscription Rights Election Form, a
certificate or certificates for the number of full shares (with any fractions
being rounded down to the nearest whole number) of Disputed New WRT
Subscription Common Stock that equals the number of shares so purchased upon
the exercise of the Disputed Subscription Rights that have become an Allowed
Disputed Claim, and (ii) to DLBW, the Disputed Subscription Purchase Price for
the Disputed New WRT Subscription Common Stock so delivered to the Holder.
Such certificate or certificates shall be deemed to have been issued and any
person so designated to be named therein shall be deemed to have become a
holder of record of such shares of Disputed New WRT Subscription Common Stock
as of the Determination Date. [The rights of purchase represented by the
Disputed Subscription Rights shall be exercisable, at the election of the
Disputed Claims Holders thereof, either is full or from time to time in part,
but in no event after the Subscription Rights Election Deadline].
(b) Subject to Section 5 hereof, after such delivery of the
Subscription Rights Election Form exercising the Disputed Subscription Rights
and payment of the Disputed Subscription Purchase Price to the Disbursing Agent
as aforesaid, New WRT shall issue and the Disbursing Agent shall cause to be
delivered as soon as practicable on or after any time (a "Denial Date") as all
or any portion of an Exercised Disputed Claim is determined not to be an
Allowed Claim (a "Denied Disputed Claim"), but in no event more than ten (10)
Business Days after such Denial Date, (i) to the address(es) and in such
name(s) as DLBW shall have designated, a certificate or certificates for the
number of full shares (with any fractions being rounded down to the nearest
whole number) of Disputed New WRT Subscription Common Stock that equals the
number of shares that the Disputed Claims Holder elected to purchase upon the
exercise of the Disputed Subscription Rights that have become a Denied Disputed
Claim and (ii) to the applicable Disputed Claims Holder, the Disputed
Subscription Purchase Price for the Disputed New WRT Subscription Common Stock
so delivered to DLBW. Such certificate or certificates shall be deemed to have
been issued and any person so designated to be named therein shall be deemed to
have become a holder of record of such shares of Disputed New WRT Subscription
Common Stock as of the Denial Date.
4.4 Failure to Properly Exercise. (a) If any Holder exercising
Subscription Rights or Disputed Subscription Rights does not indicate on the
Subscription Rights Election Form the number of Subscription Rights and/or
(PAGE) 4
<PAGE> 5
Disputed Subscription Rights being exercised, or does not forward full payment
of the aggregate Subscription Purchase Price and/or Disputed Subscription
Purchase Price for the number of Subscription Rights and/or Disputed
Subscription Rights that the Holder indicates are being exercised, then the
Holder shall be deemed to have exercised the Subscription Rights and/or
Disputed Subscription Rights with respect to the maximum number of Subscription
Rights and/or Disputed Subscription Rights that may be exercised for the
aggregate Subscription Purchase Price and/or Disputed Subscription Purchase
Price delivered by the Holder.
(b) To the extent that the aggregate payment delivered by the
Holder exceeds the appropriate Subscription Purchase Price and Disputed
Subscription Purchase Price, such excess payment shall be returned promptly to
the Holder.
(c) If any Holder is exercising both Subscription Rights and
Disputed Subscription Rights, then the payment received shall first be applied
to the exercise of Subscription Rights and to the extent that the payment
exceeds the Subscription Purchase Price, the excess shall then be applied to
the exercise of Disputed Subscription Rights.
4.5 Dividends. All dividends or distributions on account of shares
of Disputed New WRT Subscription Common Stock shall be held in trust by the
Disbursing Agent and shall be distributed along with the applicable shares of
Disputed New WRT Subscription Common Stock.
4.6 De Minimus Distributions. No Holder whose Interim Pro Rata
Share of the Subscription Rights and/or Disputed Subscription Rights would
entitle such Holder to purchase fewer than five (5) shares of New WRT
Subscription Common Stock and Disputed New WRT Subscription Common Stock shall
be entitled to receive any Subscription Rights and/or Disputed Subscription
Rights pursuant to this Agreement or the Plan.
SECTION 5
PAYMENT OF TAXES
The Company and New WRT shall pay all documentary stamp taxes, if
any, attributable to the initial issuance of shares of New WRT Subscription
Common Stock issuable upon the exercise of Subscription Rights and the initial
issuance of shares of Disputed New WRT Subscription Common Stock issuable upon
the exercise of Disputed Subscription Rights to the Holders; provided, however,
that the Company and New WRT shall not be required to pay, and the Holders
shall pay, any tax or taxes that may be payable in respect of any transfer
involved in the issue or delivery of any certificates for shares of New WRT
Subscription Common Stock and/or Disputed New WRT Subscription Common Stock in
a name other than that of the registered Holder of the Subscription Rights
and/or Disputed Subscription Rights that were exercised.
(PAGE) 5
<PAGE> 6
SECTION 6
ISSUANCE OF NEW WRT SUBSCRIPTION COMMON STOCK AND DISPUTED
NEW WRT SUBSCRIPTION COMMON STOCK
6.1 Issuance of New WRT Subscription Common Stock. On the
Effective Date, New WRT shall issue out of its authorized common stock
[4,000,000] shares of New WRT Subscription Common Stock. Such shares shall be
delivered to the Disbursing Agent for distribution as provided in Section 4.2
hereof and in Article 29 of the Plan.
6.2 Issuance of Disputed New WRT Subscription Common Stock. On any
applicable Determination Date or Denial Date, New WRT shall issue out of its
authorized common stock shares of Disputed New WRT Subscription Common Stock
equal to the number of shares represented by an Allowed Disputed Claim or a
Denied Disputed Claim on such date. Such shares shall be delivered to the
Disbursing Agent for distribution as provided in Section 4.3 hereof and in
Article 29 of the Plan.
6.3 Issuance of New WRT Common Stock By Transfer Agent. The
Disbursing Agent is hereby irrevocably authorized to requisition from time to
time from New WRT and the transfer agent for the New WRT Subscription Common
Stock and the Disputed New WRT Subscription Common Stock (the "Transfer Agent")
stock certificates in the name of the Holders receiving such shares upon the
exercise of the Subscription Rights and/or the Disputed Subscription Rights in
accordance with the terms of this Agreement.
SECTION 7
RESERVATION OF SHARES OF DISPUTED NEW WRT SUBSCRIPTION COMMON STOCK
On the Effective Date and at all times until all outstanding Disputed
Subscription Rights shall either have become an Allowed Disputed Claim or a
Denied Disputed Claim (the "Final Determination Date"), New WRT shall reserve
out of its authorized New WRT Common Stock a number of shares sufficient to
provide for the exercise of the right of purchase represented by the
outstanding Disputed Subscription Rights. The Transfer Agent and every
subsequent transfer agent for any shares of New WRT's capital stock issuable
upon the exercise of any of the rights of purchase aforesaid will be
irrevocably authorized and directed at all times to reserve such number of
authorized shares as shall be requisite for such purpose. New WRT will keep a
copy of this Agreement on file with the Transfer Agent and with every
subsequent transfer agent for any shares of New WRT's capital stock issuable
upon the exercise of the rights of purchase represented by the Disputed
Subscription Rights. Promptly after the Final Determination Date, New WRT
shall certify to the Transfer Agent that all Disputed New WRT Subscription
Common Stock has been distributed by the Disbursing Agent and thereafter no
shares shall be subject to reservation in respect of such Disputed Subscription
Rights.
(PAGE) 6
<PAGE> 7
SECTION 8
NO RIGHTS AS STOCKHOLDERS
Nothing contained in this Agreement or in any of the Subscription
Rights or Disputed Subscription Rights shall be construed as conferring upon
the Holders the right to vote or to receive dividends or to consent to or to
receive notice as stockholders in respect of any meeting of stockholders for
the election of directors of the Company or New WRT or any other matter, or any
rights whatsoever as stockholders of the Company or New WRT.
SECTION 9
INSPECTION OF RIGHTS AGREEMENT
The Company shall keep copies of this Agreement, any notices given or
received hereunder and any other documents related hereto and required to be
held by the Company available for inspection by the Holders during normal
business hours at its principal office in Houston, Texas.
SECTION 10
METHOD OF DELIVERY
The method of delivery of the Subscription Rights Election Form and
the payment of the Subscription Purchase Price and/or the Disputed Subscription
Price to the Disbursing Agent are at the election and risk of the Holders.
Holders are urged to allow a sufficient amount of time to ensure delivery of
the Subscription Rights Election Form and the Subscription Purchase Price
and/or the Disputed Subscription Price to the Disbursing Agent.
SECTION 11
FAILURE OF EFFECTIVE DATE TO OCCUR
On and after the Subscription Rights Election Deadline, if the
Company or New WRT determines in its sole discretion that it is unlikely that
there will be an Effective Date under the Plan, then the Company or New WRT
shall instruct the Disbursing Agent to return the Subscription Purchase Price
and/or the Disputed Subscription Purchase Price to the Holders.
SECTION 12
INTEREST
No interest shall accrue and be payable hereunder at any time with
respect to funds delivered in payment of the Subscription Purchase Price and
the Disputed Subscription Purchase Price.
(PAGE) 7
<PAGE> 8
SECTION 13
VALIDITY OF EXERCISES
All questions concerning the timeliness, validity, form and
eligibility of any exercise of Subscription Rights and Disputed Subscription
Rights will be determined by the Company or New WRT, in its sole discretion,
whose determination shall be final and binding. The Company and New WRT
reserve the absolute right to reject any subscription if such subscription is
not in proper form or if the acceptance thereof or the issuance of New WRT
Subscription Common Stock or Disputed New WRT Subscription Common Stock
pursuant thereto could, in the opinion of the Company's or New WRT's counsel,
be deemed unlawful. The Company also reserves the right to waive any defect
with regard to any particular subscription or to reject any purported
subscription by reason of any defect or irregularity in such exercise. Neither
the Company, New WRT nor the Disbursing Agent shall be under any duty to give
notification of any defects or irregularities in subscriptions, nor shall any
of them incur any liability for failure to give such notification.
SECTION 14
NO REVOCATION
After any Holder has exercised any Subscription Right and/or any
Disputed Subscription Right, such exercise may not be revoked by such Holder.
SECTION 15
NOTICES
Any notice, demand, claim or other communications under this
Agreement shall be in writing and shall be deemed to have been given upon
personal delivery thereof, or upon receipt thereof if sent by registered mail,
return receipt requested, postage prepaid, or upon confirmation of delivery
thereof by courier service, if sent by recognized overnight courier service, to
the respective address of the parties set forth below (or such other address as
a party may specify by notice given as herein provided):
(a) If to the Company or New WRT, to:
WRT Energy Corporation
5718 Westheimer, Suite 1201
Houston, Texas 77057
Attention: Mr. Raymond P. Landry
Copies to:
Sheinfeld, Maley, & Kay, P.C.
1001 Fannin Street, Suite 3700
Houston, Texas 77002-6797
Attention: Joel P. Kay, Esq.
(PAGE) 8
<PAGE> 9
and
Schulte Roth & Zabel LLP
900 Third Avenue
New York, New York 10022
Attention: Jeffrey S. Sabin, Esq.
(b) If to the Disbursing Agent, to:
______________________
______________________
______________________
Attention: ___________
(c) If to any Holder, to:
The address of such Holder as
reflected in the Rights Register.
SECTION 16
SUPPLEMENTS AND AMENDMENTS
The Company may from time to time supplement or amend this Agreement
without the approval of any Holder in order to cure any ambiguity or to correct
or supplement any provision contained herein that may be defective or
inconsistent with any other provisions herein or to make any other provisions
with regard to matters or questions arising hereunder that the Company may deem
necessary or desirable and that shall not adversely affect the interests of the
Holders.
SECTION 17
SUCCESSORS
This Agreement and all the provisions hereof shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
(including, without limitation, any trustee of the Company and New WRT) and
permitted assigns, but neither this Agreement nor any of the rights, interests
or obligations hereunder may be assigned by any of the parties hereto without
the prior written consent of the other parties.
SECTION 18
APPLICABLE LAW
Except to the extent inconsistent with the Bankruptcy Code, this
Agreement and the legal relations between the parties hereto shall be governed
by, and construed and enforced in accordance with, the laws of the State of New
York, without giving effect to the provisions, principles or policies thereof
respecting conflict or choice of laws.
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SECTION 19
BENEFITS OF THIS AGREEMENT
Nothing in this Agreement shall be construed to give any person or
corporation other than the Company, New WRT and the Holders any legal or
equitable right, remedy or claim under the Agreement; and this Agreement shall
be for the sole and exclusive benefit of the Company, New WRT, the Holders and
their respective successors and assigns hereunder.
SECTION 20
COUNTERPARTS
This Agreement may be executed in any number of counterparts and each
of such counterparts shall for all purposes be deemed to be an original, and
all such counterparts shall together constitute but one and the same
instrument.
SECTION 21
CAPTIONS
The captions of the Sections and Subsections of this Agreement have
been inserted for convenience only and shall not affect the interpretation
hereof.
SECTION 22
SEVERABILITY
In the event any term, provision, covenant or restriction of this
Agreement shall, for any reason, be held by a court of competent jurisdiction
to be invalid, illegal, void or unenforceable, such invalidity, illegality or
unenforceability shall not affect any other term or provision of this Agreement
and the remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated. It is hereby stipulated and declared to be
the intention of the Company and the Holders that they would have executed the
remaining terms, provisions, covenants and restrictions of this Agreement
without including any of such provisions that may be hereafter declared
invalid, illegal, void or unenforceable.
(PAGE) 10
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
WRT ENERGY CORPORATION
By:
--------------------------------------
Name:
Title:
, as Disbursing
------------------
Agent
By:
--------------------------------------
Name:
Title:
(PAGE) 11
<PAGE> 1
EXHIBIT 2.4
LIQUIDATING TRUST AGREEMENT
This LIQUIDATING TRUST AGREEMENT, dated as of July 10, 1997 (the
"Agreement"), is by and among WRT Energy Corporation ("the Debtor") and Goldin
Associates L.L.C., as Trustee (the "Trustee").
RECITALS
WHEREAS, on or about May 2, 1997, the United States Bankruptcy Court
for the Western District of Louisiana, Lafayette-Opelousas Division (the
"Bankruptcy Court") entered an order confirming the Second Amended Joint Plan
of Reorganization Under Chapter 11 of the United States Bankruptcy Code, dated
March 11, 1997 and as amended on April 28, 1997 (as may thereafter be amended,
restated or otherwise modified, the "Plan"), filed by the Debtor, DLB Oil &
Gas, Inc. and Wexford Management LLC; and
WHEREAS, pursuant to the Plan, (i) the Debtor's Causes of Action
(other than the Marine Equipment Causes of Action and the Tri-Deck Causes of
Action) (collectively, the "Trust Actions"), (ii) the distribution of the net
proceeds realized from the prosecution of the Trust Actions (the "Proceeds")
and (iii) the net proceeds, if any, realized from the sale of any equipment,
title to which is obtained by New WRT as a result of the Marine Equipment
Causes of Action, sold within six months following such acquisition of title
(the "MEC Proceeds"), has been, on the date hereof, assigned to the WRT
Creditors Liquidation Trust created by this Agreement (the "Trust"), on behalf
of and for the benefit of the holders of Allowed Claims in Class D-3 under the
Plan and each of their respective successors, heirs and assigns (collectively,
the "Beneficiaries"), by the Debtor in accordance with sections 1123(b)(3)(B)
and 1145(a)(1) of the Bankruptcy Code; and
WHEREAS, the Trust is being created pursuant to this Agreement for
the sole purpose of coordinating the prosecution, direction, settlement or
expeditious compromise of the Trust Actions on behalf of and for the benefit of
the Beneficiaries and to distribute the Proceeds to the Beneficiaries in
accordance herewith; and
WHEREAS, pursuant to Article 33.15 of the Plan, the Debtor is deemed
to have granted, assigned, transferred, conveyed and delivered to the Trustee,
on behalf of and for the benefit of the Beneficiaries, control of, and all of
the Debtor's right, title and interest in, the Trust Actions and to the
Proceeds and, the MEC Proceeds; and
WHEREAS, pursuant to Article 33.16 of the Plan, the costs of the
Trust shall be funded by a one time capital contribution (the "Initial
Contribution") of $3 million to be made by New WRT; and
WHEREAS, Bankruptcy Court shall have jurisdiction over the Trust, the
Trustee, the Trust Actions and the remaining Trust Assets, as provided herein.
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DECLARATION OF TRUST
NOW THEREFORE, in order to declare the terms and conditions hereof,
and in consideration of the Recitals, and of other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
and subject to the terms and conditions of the Plan and this Agreement, New WRT
has executed this Agreement and absolutely and irrevocably assigns to the
Trustee, and to its successors and assigns, on behalf of and for the benefit
of the Beneficiaries, the Initial Contribution and all right, title and
interest of New WRT in the Trust Actions, the Proceeds and the MEC Proceeds;
TO HAVE AND TO HOLD unto the Trustee and its successors in trust;
PROVIDED, HOWEVER, that upon termination of the Trust in accordance
with Section 4.01 hereof, this Agreement shall cease, terminate and be of no
further force and effect.
IT IS HEREBY FURTHER COVENANTED AND DECLARED, that the Trust Actions,
the Proceeds, the Initial Contribution, the MEC Proceeds and all other property
held from time to time by the Trustee under this Agreement and any earnings
thereon (collectively, the "Trust Assets") are to be held and applied by the
Trustee solely for the benefit of the Beneficiaries and for no other party,
subject to the further covenants, conditions and terms hereinafter set forth.
ARTICLE I
DEFINITIONS
1.01 Certain Terms Defined. Terms defined in the Plan, and not
otherwise defined herein, shall, when used herein (including in the Recitals
hereto), have the meanings ascribed to such terms in the Plan.
1.02 Meanings of Other Terms. Except where the context otherwise
requires, words importing the masculine gender include the feminine and the
neuter, if appropriate, words importing the singular number shall include the
plural number and vice versa and words importing persons shall include firms,
associations, corporations and other entities. All references herein to
Articles, Sections and other subdivisions, unless referring specifically to the
Plan or provisions of the Bankruptcy Code, Bankruptcy Rules or other law,
statute or regulation, refer to the corresponding Articles, Sections and other
subdivisions of this Agreement, and the words herein and words of similar
import refer to this Agreement as a whole and not to any particular Article,
Section or subdivisions of this Agreement.
ARTICLE II
TRUSTEE'S ACCEPTANCE
2.01 Acceptance. The Trustee accepts the Trust created by this
Agreement and the transfer and assignment to the Trust, on behalf of and for
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<PAGE> 3
the benefit of the holders of Allowed Class D-3 Claims and New WRT, of the
Initial Contribution, the Trust Actions, the Proceeds, and the MEC Proceeds as
set forth in the Plan, and agrees to observe and perform the Trust, upon and
subject to the terms and conditions set forth herein and in the Plan.
2.02 Purpose of Trust. The sole purpose of this Agreement is to
implement Articles 33.15 and 33.16 of the Plan by providing for the vesting in
the Trustee of the ownership of and the responsibility for the protection and
conservation of the Trust Assets on behalf of and for the benefit of the
Beneficiaries. Such responsibility shall be limited to the retention and
enforcement of the Trust Actions by the Trustee on behalf of and for the
benefit of the Beneficiaries, including the powers with respect thereto set
forth in Article VII hereof, the collection of the Proceeds, the temporary
investment thereof and other Trust moneys, including, but not limited to, the
Initial Contribution, as provided in Section 7.03 hereof, the payment of the
costs and expenses of Trust Actions, the making of any other payments provided
to be made from the Trust as set forth in the Plan and this Agreement and the
distribution of the Proceeds, any income earned thereon and other Trust moneys
to the Beneficiaries in accordance with the provisions of the Plan and this
Agreement.
2.03 Incidents of Ownership. The Beneficiaries shall be the sole
beneficiaries of the Trust and the Trustee shall retain only such incidents of
ownership as are necessary to undertake the actions and transactions authorized
herein on their behalf.
ARTICLE III
BENEFICIARIES
3.01 Beneficial Interests. The interest of each Beneficiary in
the Trust Assets (the "Beneficial Interest") shall be determined in the
following manner: (i) New WRT shall have a Beneficial Interest equal to 12% of
the Trust Assets; and (ii) each holder of an Allowed Claim in Class D-3 under
the Plan shall hold a share, as calculated pursuant to the provisions set forth
herein, of an aggregate Beneficial Interest equal to 88% of the Trust Assets.
3.02 Certificates. (a) Beneficial Interests shall be evidenced
by Certificates of Beneficial Interest, in form and substance as set forth in
Exhibit A annexed hereto (the "Certificate"). Certificates shall be issued by
the Trustee in units of Beneficial Interest totaling 15,681,818 in number (the
"Units"). The Trustee shall issue one Certificate to each Beneficiary in a
denomination equal to the aggregate number of Units held by such Beneficiary
or, alternatively, at the request of the Beneficiary or at the option of the
Trustee, the Trustee may issue multiple Certificates to any Beneficiary which
Certificates shall, in the aggregate, equal the total number of Units held by
such Beneficiary. Notwithstanding the foregoing, the Trustee shall also issue
Certificates in a like manner to the Disbursing Agent to be held by it in trust
on behalf of and for the benefit of holders of (i) Disputed Claims which would
be classified as Class D-3 Claims under the Plan if Allowed (collectively, the
"Disputed Claims"), and (ii) to the extent such Disputed Claims are disallowed,
Allowed Claims, as provided herein.
(page) 3
<PAGE> 4
(b) As of the date hereof, New WRT has delivered to the
Trustee (i) a list of the names and addresses of each Person entitled to
receive Certificates as of the Effective Date in accordance with the Plan and
this Agreement and (ii) a list of the names and addresses of each Person
holding a Disputed Claim. The Trustee shall, as soon as practicable hereafter,
(x) issue and deliver Certificates to New WRT for 1,881,818 Units which is the
full Beneficial Interest held by New WRT, (y) issue and deliver Certificates to
each holder of Allowed Claims in Class D-3 of the Plan for a number of Units
evidencing each such holder's Beneficial Interest equal to the aggregate number
of shares of New WRT Common Stock received by such holder pursuant to Article
18.1 of the Plan and the number of shares of New WRT Subscription Common Stock
received by such holder as of the Effective Date pursuant to the exercise by
such holder of New WRT Subscription Rights (including Oversubscription Rights)
pursuant to the Rights Offering, and (z) issue and deliver Certificates to the
Disbursing Agent for a number of Units equal to the difference between
15,681,818 Units and the aggregate number of Units issued pursuant to clauses
(x) and (y) of this Section 3.02(b), to be held by the Disbursing Agent in
trust on behalf of and for the benefit of the holders of Disputed Claims which
become Allowed Claims and, to the extent that Disputed Claims are disallowed,
the holders of Allowed Claims, all as provided for in the Disbursing Agent
Agreement and the Plan (the Beneficiaries, their successors and assigns and the
Disbursing Agent, in its capacity as a holder of Units pursuant to clause (z)
of this sentence, are hereinafter collectively referred to as the "Unit
Holders").
(c) Certificates of each Unit Holder shall be recorded and
set forth in a register (the "Register") maintained by the Trustee or a duly
authorized agent of the Trustee expressly for such purpose.
(d) Beneficiaries may assign all or a portion of their Units
of Beneficial Interest as represented by their Certificates. The transfer of a
Certificate or any portion thereof shall be recorded in the Register using the
following procedure: (i) the holder of the Certificate shall present it to the
Trustee together with a written request to transfer all or a portion thereof to
the assignee; (ii) the Trustee shall issue a new Certificate to the assignee
for a number of Units equal to the number of Units being assigned; and (iii)
the Trustee shall, if necessary, issue a new Certificate to the original holder
for a number of Units equal to the number of Units being retained by such
holder. Notwithstanding any provision herein to the contrary, the Trustee may
refuse to record a transfer made pursuant to this Section 3.02(d) if it
reasonably believes that such a transfer may constitute a violation of
applicable laws or may subject the Beneficiaries or the Trust to adverse tax
consequences.
(e) If a Unit Holder claims that a Certificate has been
lost, destroyed or wrongfully taken, the Trustee shall issue and deliver to
such Unit Holder a replacement Certificate. The Trustee may require such Unit
Holder to provide an indemnity bond or other form of indemnity sufficient in
the Trustee's reasonable judgment to protect the Trustee from any loss which it
may suffer if the Certificate is replaced. The Trustee shall charge such Unit
Holder for its expenses in replacing a Certificate which has been mutilated,
lost, destroyed or wrongfully taken.
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<PAGE> 5
(f) Fractional Units shall not be issued or disbursed.
Whenever the issuance or distribution of a fractional Unit would otherwise be
called for, the actual distribution of Units shall reflect a rounding down to
the nearest whole Unit.
3.03 Conflicting Claims. If any conflicting claims or demands
are made or asserted with respect to the Beneficial Interest represented by a
Certificate, or if there is any disagreement between the assignees,
transferees, heirs, representatives or legatees succeeding to all or a part of
a Beneficial Interest resulting in adverse claims or demands being made in
connection with such Interest, then, in any of such events, the Trustee shall
be entitled, at its sole election, to refuse to comply with any such
conflicting claims or demands. In so refusing, the Trustee may elect to make
no payment or distribution with respect to the Beneficial Interest represented
by the claims or demands involved, or any part thereof and to refer such
conflicting claims or demands to the Bankruptcy Court, which shall have
exclusive jurisdiction over resolution of such conflicting claims or demands.
In so doing, the Trustee shall not be or become liable to any of such parties
for its refusal to comply with any of such conflicting claims or demands, nor
shall the Trustee be liable for interest on any funds which it may so withhold.
The Trustee shall be entitled to refuse to act until either (i) the rights of
the adverse claimants have been adjudicated by a Final Order of the Bankruptcy
Court or (ii) all differences have been resolved by a valid written agreement
among all of such parties and the Trustee, which agreement shall include a
complete release of the Trustee.
3.04 Rights of Beneficiaries. Each Beneficiary shall be entitled
to participation in the rights and benefits due to a Beneficiary hereunder
according to its Beneficial Interest. Each Beneficiary shall take and hold the
same subject to all the terms and provisions of this Agreement. The interest
of a Beneficiary is hereby declared and shall be in all respects personal
property. Upon the death of an individual who is a Beneficiary, his interest
shall pass as personal property to his legal representative and such death
shall in no way terminate or affect the validity of this Agreement. Upon the
merger, consolidation or other similar transaction involving a Beneficiary that
is not an individual, such Beneficiary's interest shall be transferred by
operation of law and such transaction shall in no way terminate or affect the
validity of this Agreement. Except as expressly provided hereunder, a
Beneficiary shall have no title to, right to, possession of, management of or
control of the Trust. No widower, widow, heir or devisee of any individual who
may be a Beneficiary and no bankruptcy trustee, receiver or similar person of
any Beneficiary shall have any right, statutory or otherwise (including any
right of dower, homestead or inheritance, or of partition, as applicable), in
any property whatever forming a part of the Trust, but the whole title to all
the Trust's assets shall be vested in the Trustee and the sole interest of the
Beneficiaries shall be the rights and benefits given to such persons under this
Agreement and the Plan.
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ARTICLE IV
DURATION AND TERMINATION OF TRUST
4.01 Duration. The existence of the Trust shall terminate on the
earlier of: (a) the date on which all of the Trust Assets have been liquidated
and the proceeds thereof distributed to the Beneficiaries, or (b) three years
after the Effective Date; provided, however, that the Trustee may extend the
term of the Trust, provided that he receives Bankruptcy Court approval for
cause within six months from the beginning of the extended term.
Notwithstanding anything to the contrary in this Agreement, in no event shall
the Trustee unduly prolong the duration of the Trust, and the Trustee shall at
all times endeavor to prosecute, direct, settle or compromise expeditiously the
Trust Actions, so as to distribute the Proceeds to the Beneficiaries and
terminate the Trust as soon as practicable in accordance with this Agreement.
4.02 Termination by Beneficiaries. The Trust may not be
terminated at any time by the Beneficiaries.
4.03 Continuance of Trust for Winding Up. After the termination
of the Trust and solely for the purpose of liquidating and winding up the
affairs of the Trust, the Trustee shall continue to act as such until its
duties have been fully performed. Upon distribution of all Proceeds, the MEC
Proceeds and any investment income earned on Trust Assets not used to pay
expenses associated with prosecution of the Trust Actions (collectively, the
"Distributable Proceeds") and any remaining moneys or other assets, the Trustee
shall retain the books, records and files which shall have been delivered to or
created by the Trustee. At the Trustee's discretion, all of such records and
documents may be destroyed at any time after six years from the distribution of
all Distributable Proceeds (unless such records and documents are necessary to
fulfill the Trustee's obligations pursuant to Section 5.06 hereunder). Except
as otherwise specifically provided herein, upon the distribution of all
Distributable Proceeds, the Trustee shall be deemed discharged and have no
further duties or obligations hereunder except to account to the Beneficiaries
as provided in Section 5.03 hereof and as may be imposed on the Trustee by
virtue of Section 5.06 and Article VI hereof.
ARTICLE V
ADMINISTRATION OF TRUST ESTATE
5.01 Payment of Claims, Expenses and Liabilities. The Trustee
shall pay from the Trust Assets all claims, expenses, charges, liabilities and
obligations of the Trust as contemplated by this Agreement and as required by
law.
5.02 Distributions. (a) The Trustee shall make distributions to
the Unit Holders of the Distributable Proceeds in accordance with the
provisions of this Agreement at each such time as the Trustee has available at
least $500,000 in Distributable Proceeds for distribution to the Unit Holders;
provided, however, that, notwithstanding the foregoing, the Trustee must make
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a distribution of all Distributable Proceeds to the Unit Holders at least once
per year after taking into account any payments that must be made in accordance
with Section 5.01 hereof and after retaining such moneys as it determines is
necessary to pay the on-going costs and expenses of prosecuting the Trust
Actions, provided, further, that, notwithstanding the preceding clause, the
Trustee must distribute at least 50% of the Distributable Proceeds on an annual
basis. The Trustee shall distribute or cause to be distributed to the Unit
Holders the Distributable Proceeds in an amount equal to each Unit Holder's pro
rata share of such Distributable Proceeds as based on the number of Units held
by each Unit Holder. Notwithstanding any provision herein to the contrary, the
Trustee shall make a final distribution of the Distributable Proceeds and any
remaining trust moneys and other Trust Assets in accordance with the terms of
this Agreement prior to the termination of the Trust in accordance with Section
4.01 hereof.
(b) No distribution shall be required to be made hereunder
to any Unit Holder unless such Unit Holder is to receive at least $50 or unless
such distribution is the final distribution to such holder pursuant to the Plan
and this Agreement. Any such distribution not made in accordance with the
provisions of this Section 5.02(b) shall be retained by the Trustee in an
interest bearing account and shall be held in trust for the relevant Unit
Holder until the earlier of (i) the date the next distribution is scheduled to
be made to such Unit Holder, provided, however, that such subsequent
distribution, taken together with amounts retained hereby, equals at least $50,
or (ii) the final distribution to such Unit Holder.
5.03 Reports. The Trustee shall file with the Court: (a)
unaudited quarterly financial reports and an audited annual financial report
regarding the financial condition and results of operation of the Trust, and
(b) a quarterly report concerning the status of all Trust Actions which have
been filed with a court of competent jurisdiction. The Trustee shall provide a
copy of such reports to any Unit Holder at such Unit Holder's request and cost.
If the Trust becomes subject to the registration requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), the Trustee shall cause
the Trust to register pursuant to, and comply with the applicable reporting
requirements of, the Exchange Act and will issue reports to Unit Holders in
accordance therewith.
5.04 Notice of Change of Address. Each Unit Holder shall be
responsible for providing the Trustee with written notice of any change in
address. The Trustee is not obligated to make any effort to determine the
correct address of a Unit Holder.
5.05 Fiscal Year. The fiscal year of the Trust shall be the
calendar year.
5.06 Books and Records. The Trustee shall maintain, in respect
of the Trust and the Unit Holders, books and records relating to the assets and
the income of the Trust and the payment of expenses of the Trust, in such
detail and for such period of time as may be necessary to enable it to make
full and proper reports in respect thereof in accordance with the provisions of
Section 5.03 and Article VI hereof and to comply with applicable provisions of
law.
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5.07 Undeliverable Property. (a) If any distribution to a
Beneficiary of Certificates or Distributable Proceeds is returned to the Trust
as undeliverable, no further distribution thereof shall be made unless and
until the Trust is notified in writing of such Beneficiary's then current
address within the time period specified in Section 5.07(b). For purposes of
this Agreement, undeliverable distributions shall include checks (as of the
date of their issuance) sent to a Beneficiary, respecting distributions to such
Beneficiary, which checks have not been cashed within six months following the
date of issuance of such checks. Undeliverable distributions shall remain in
the possession of the Trust until the earlier of (i) such time as the relevant
distribution becomes deliverable and (ii) the time period specified in Section
5.07(b).
(b) Any Beneficiary that does not assert a claim for an
undeliverable distribution of Certificates or Distributable Proceeds held by
the Trust within the later of (i) two years after the date hereof or (ii) one
year after the date such distribution was originally made (but in no event
longer than six months after all of the Distributable Proceeds have been
distributed except for undeliverable distributions), shall no longer have any
claim to or interest in such undeliverable distribution and shall forever be
barred from receiving any further distributions under this Agreement. In such
cases, title to and all Beneficial Interests in any such undeliverable
distributions shall revert to or remain in the trust and shall be redistributed
in accordance with Section 5.01(a) of this Agreement.
5.08 Cash Payments. All payments required to be made by the
Trustee to the Unit Holders shall be made in Cash denominated in U.S. dollars
and, if in check form, drawn on a domestic bank selected by the Trustee.
ARTICLE VI
TAX MATTERS
6.01 The Debtor, New WRT, the Beneficiaries and the Disbursing
Agent shall treat the transfer to the Trust the Initial Contribution, the Trust
Actions, and the right to receive any MEC Proceeds for the benefit of the
holders of Allowed Class D-3 Claims and New WRT, for all purposes of the
Internal Revenue Code of 1986, as amended (the "Code"), as a transfer of a pro
rata portion of the Initial Contribution, the Trust Actions and the right to
receive the MEC Proceeds to holders of Allowed Class D-3 Claims to the extent
that such creditors are Beneficiaries followed by a deemed transfer of such pro
rata portion by holders of Allowed Class D-3 Claims to the Trust and a transfer
of the remainder of the Initial Contribution, the Trust Actions and the right
to receive the MEC Proceeds by New WRT to the Trust.
6.02 For all federal income tax purposes, the Beneficiaries will
be treated as the grantors and deemed owners of the Trust. The Trustee will
file returns for the Trust as a grantor trust pursuant to Section 1.671-4(a) of
the Income Tax Regulations and will issue to the Unit Holders appropriate tax
forms and statements required under the Code and Treasury Regulations to permit
each Unit Holder to report and pay tax on its share of the Trust's taxable
income.
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6.03 For all federal income tax purposes, the Trust Actions and
the right to receive MEC Proceeds will be treated by the Debtor, New WRT, the
Beneficiaries, the Disbursing Agent and the Trustee as having had no value at
the time of their transfer to the Trusts on behalf and for the benefit of the
Beneficiaries.
6.04 The Trustee will take such actions as are necessary to make
certain that all of the Trust's taxable income (including, but not limited to,
all Proceeds, MEC Proceeds and earnings, if any, on Trust Assets) will be
subject to federal income tax on a current basis. In accordance therewith, the
Trustee will provide the Disbursing Agent with the appropriate tax information
so that the Disbursing Agent can pay federal, state and local income tax in
accordance with the Disbursing Agent Agreement. A Beneficiary which receives
distributions with respect to which the Disbursing Agent has paid federal
income tax pursuant to this Section 6.04 shall be treated for all other
purposes of this Agreement and the Plan as having received a distribution equal
to the amount of tax paid on its behalf by the Disbursing Agent.
ARTICLE VII
POWERS OF AND LIMITATIONS ON THE TRUSTEE
7.01 Powers of the Trustee. Without limiting, but subject to the
remaining provisions herein, the Trustee shall be expressly authorized to:
(a) execute any documents and take any other actions related
to, or in connection with, the liquidation of the Trust Assets and the exercise
of the Trustee's powers granted herein;
(b) hold legal title to any and all rights of the
Beneficiaries in or arising from the Trust Assets;
(c) protect and enforce the rights to the Trust Assets
vested in the Trustee by this Agreement by any method deemed appropriate
including, without limitation, by judicial proceedings or pursuant to any
applicable bankruptcy, insolvency, moratorium or similar law and general
principles of equity;
(d) deliver the Certificates and distributions on account of
the Certificates to the Unit Holders in accordance with this Agreement;
(e) have exclusive power to prosecute the Trust Actions;
(f) have exclusive power to settle or otherwise compromise
the Trust Actions, subject, however, to Bankruptcy Court approval;
(g) file, if necessary, any and all tax information returns
with respect to the Trust and pay taxes properly payable by the Trust, if any,
and make distributions to the Beneficiaries net of such taxes;
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(h) make all necessary filings in accordance with any
applicable law, statute or regulation, including, but not limited to, the
Exchange Act;
(i) determine and satisfy any and all ordinary course
liabilities created, incurred or assumed by the Trust;
(j) pay all ordinary course expenses and make all other
payment relating to the Trust;
(k) retain and pay professionals, including but not limited
to attorneys, necessary to carry out its obligations hereunder;
(l) invest moneys received by the Trust or otherwise held by
the Trust in accordance with Section 7.03 hereof; and
(m) in the event that the Trustee determines that the
Beneficiaries or the Trust may, will or have become subject to adverse tax
consequences, in its sole discretion, take such actions that will, or are
intended to, alleviate such adverse tax consequences.
7.02 Limitations on Trustee. (a) The Trustee shall not at
any time, on behalf of the Trust or the Beneficiaries, (i) enter into or engage
in any trade or business, (ii) take any steps to facilitate the development of
an active trading market for the Certificates, (iii) make a market for the
Certificates or encourage others to do so, (iv) list the Certificates on a
national securities exchange or the Nasdaq Stock Market or (v) collect or
publish information about prices at which the Certificates are transferred.
(b) No part of the Trust Assets shall be used or disposed of
by the Trustee in furtherance of any trade or business. The Trustee shall, on
behalf of the Trust, hold the Trust out as a trust in the process of
liquidation and not as an investment company. The Trustee shall be restricted
to the enforcement on behalf of and for the benefit of the Beneficiaries of the
Trust Actions, the payments and distribution of the Proceeds for the purpose
set forth in this Agreement and the conservation and protection of the Trust
Assets and the administration thereof in accordance with the provisions of this
Agreement.
7.03 Investment of Trust Moneys. The Trustee shall invest the
moneys received by the Trust or otherwise held in the Trust Estate in (i)
short-term certificates of deposit or money market accounts maintained by or
issued by domestic banks having in excess of $1 billion in capital and surplus
and one of the two highest ratings given by both Moody's and Standard & Poors,
(ii) insured demand deposit accounts or certificates of deposit maintained by
or issued by any savings institution or commercial bank insured by the United
States government or any agency thereof and (iii) short-term marketable direct
obligations of, or guaranteed as to principal and interest by, the United
States government or any agency thereof; provided, however, that the maturities
of any of the foregoing shall not exceed 30 days.
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ARTICLE VIII
CONCERNING THE TRUSTEE
8.01 Generally. The Trustee accepts and undertakes to discharge
the Trust created by this Agreement upon the terms and conditions hereof. The
Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in its exercise as a
prudent man would exercise or use under the circumstances in the conduct of its
own affairs. No provisions of this Agreement shall be construed to relieve the
Trustee from liability for its own recklessness or its own intentional or
willful and wanton misconduct resulting in personal gain, except that:
(a) the Trustee shall not be liable for any action taken in
good faith in reliance upon the advice of professionals;
(b) the Trustee shall not be liable except for the
performance of such duties and obligations as are specifically set forth in
this Agreement, and no implied covenants or obligations shall be read into
this Agreement against the Trustee; and
(c) the Trustee shall not be liable for any error of
judgment made in good faith.
8.02 Reliance by Trustee. Except as otherwise provided in this
Agreement:
(a) the Trustee may rely and shall be protected in acting
upon any resolution, statement, instrument, opinion, report, notice, request,
consent, order or other paper or document reasonably believed by the Trustee to
be genuine and to have been signed or presented by the proper party or parties;
(b) the Trustee may consult with independent legal counsel
to be selected by it and the advice or opinion of such counsel shall be full
and complete personal protection to the Trustee and agents of the Trust in
respect of any action taken or suffered by it in good faith and in reliance on,
or in accordance with, such advice or opinion; and
(c) persons dealing with the Trustee shall look only to the
Trust Assets to satisfy any liability incurred by the Trustee to such person in
carrying out the terms of this Agreement, and the Trustee shall have no
personal or individual obligation to satisfy any such liability.
8.03 Liability to Third Persons. No Beneficiary shall be subject
to any personal liability whatsoever, in tort, contract or otherwise, to any
person in connection with the Trust Assets or the affairs of the Trust, and no
Trustee or agent of the Trust shall be subject to any personal liability
whatsoever, in tort, contract or otherwise, to any person in connection with
the Trust Assets or the affairs of this Trust, except for its
(page) 11
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own recklessness or its own intentional or willful and wanton misconduct
resulting in personal gain; and all such persons shall look solely to the Trust
Assets for satisfaction of claims of any nature arising in connection with
affairs of the Trust. Nothing in this Section 8.03 shall be deemed to release
any Beneficiary from any actions or omissions occurring prior to the
Confirmation Date.
8.04 Nonliability of Trustee for Acts of Others. Nothing
contained in this Trust Agreement shall be deemed to be an assumption by the
Trustee of any of the liabilities, obligations or duties of any of the other
parties hereto or of the Debtor or New WRT; and shall not be deemed to be or
contain a covenant or agreement by the Trustee to assume or accept any such
liability, obligation or duty. Any successor Trustee may accept and rely upon
any accounting made by or on behalf of any predecessor Trustee hereunder, and
any statement or representation made as to the assets comprising the Trust
Assets or as to any other fact bearing upon the prior administration of the
Trust. A Trustee shall not be liable for having accepted and relied upon such
accounting, statement or representation if it is later proved to be incomplete,
inaccurate or untrue. A Trustee or successor Trustee shall not be liable for
any act or omission of any predecessor Trustee, nor have a duty to enforce any
claims against any predecessor Trustee on account of any such act or omission.
8.05 Indemnity. The Trustee, its employees, officers, directors
and principals (collectively, the "Indemnified Parties") shall be indemnified
by the Trust from any losses, claims, damages, liabilities or expenses
(including, without limitation, reasonable attorneys' fees, disbursements and
related expenses) which the Indemnified Parties may incur or to which the
Indemnified Parties may become subject in connection with any action, suit,
proceeding or investigation brought by or threatened against the Indemnified
Parties on account of the acts or omissions of the Trustee in its capacity as
such, including, without limitation, the Trust Actions, provided, however, that
the Trust shall not be liable to indemnify the Indemnified Parties for any of
its acts or omissions constituting fraud, gross negligence or willful
misconduct, and, provided further, that nothing in this Section 8.05 shall be
deemed to restrict the Trustee's right to receive an indemnity based on acts or
omissions taken in accordance with the provisions of Sections 8.01 and 8.02
hereof. Notwithstanding any provision herein to the contrary, the Indemnified
Parties shall be entitled to obtain advances from the Trust to cover their
expenses of defending themselves in any action brought against them as a result
of the acts or omissions of the Trustee in its capacity as such, provided,
however, that the Indemnified Parties receiving such advances shall repay the
amounts so advanced to the Trust upon the entry of a Final Order finding that
such Indemnified Parties were not entitled to any indemnity under the
provisions of this Section 8.05.
8.06 Bond. The Trustee shall serve without bond.
(page) 12
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ARTICLE IX
COMPENSATION OF TRUSTEE
9.01 Amount of Compensation. The Trustee shall receive
compensation for its services in accordance with the terms set forth in that
certain letter agreement dated as of July 10, 1997 between the Debtor and the
Trustee.
9.02 Expenses. The Trustee shall be entitled to reimburse itself
from the Trust for all reasonable out-of-pocket expenses actually incurred by
it in the performance of its duties in accordance with this Agreement.
ARTICLE X
TRUSTEE AND SUCCESSOR TRUSTEES
10.01 Generally. The Trustee shall initially be Goldin
Associates, L.L.C. The Trustee represents that it is a limited liability
corporation organized under the laws of the State of New York. If the Trustee
shall ever change its name or reorganize, reincorporate or merge with or into
or consolidate with any other entity, such Trustee shall be deemed to be a
continuing entity and shall continue to act as a Trustee hereunder with the
same liabilities, duties, powers, rights, titles, discretions and privileges as
are herein specified for a Trustee.
10.02 Resignation or Removal. The Trustee may resign and be
discharged from the trusts hereby created by giving at least 30 days prior
written notice thereof to each of the Beneficiaries. Such resignation shall
become effective on the later to occur of (a) the date specified in such
written notice, or (b) the effective date of the appointment of a successor
Trustee in accordance with Section 10.04 hereof and such successor's acceptance
of such appointment.
10.03 Removal. The Trustee may be removed, with or without cause,
by vote of Beneficiaries holding a majority of the total outstanding Units held
by Beneficiaries. Such resignation shall become effective on the later to
occur of (a) the date such action is taken by the Beneficiaries, or (b) the
effective date of the appointment of a successor Trustee in accordance with
Section 10.04 hereof and such successor's acceptance of such appointment, but
in no event more than thirty days after action is taken by the Beneficiaries.
10.04 Appointment of Successor. In the event of the death,
resignation, removal, incompetency, bankruptcy or insolvency of the Trustee, a
vacancy shall be deemed to exist and a successor shall be appointed by a vote
of the Beneficiaries who hold in the aggregate in excess of 50% of the total
outstanding number of Units held by Beneficiaries present at a meeting of all
Beneficiaries held after at least thirty days' written notice to each
Beneficiary.
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<PAGE> 14
10.05 Meeting. A meeting to be held pursuant to Sections 10.03
or 10.04 may be called by Beneficiaries holding at least 10% of the Units or,
alternatively, by the Bankruptcy Court.
10.06 Acceptance of Appointment by Successor Trustee. The death,
resignation, removal, incompetency, bankruptcy or insolvency of the Trustee
shall not operate to terminate the Trust created by this Agreement or to revoke
any existing agency created pursuant to the terms of this Agreement or
invalidate any action theretofore taken by the Trustee. Any successor Trustee
appointed hereunder shall execute an instrument accepting its appointment and
shall deliver one counterpart thereof to the Bankruptcy Court for filing, and,
in case of the Trustees resignation, to the retiring Trustee. Thereupon, such
successor shall, without any further act, become vested with all the
liabilities, duties, powers, rights, title, discretion and privileges of its
predecessor in the Trust with like effect as if originally named Trustee and
shall be deemed appointed pursuant to Section 1123(b) (3) (B) of the Bankruptcy
Code to retain and enforce the Trust Actions for the benefit of the
Beneficiaries. The retiring Trustee shall duly assign, transfer and deliver to
such successor all property and money held by such retiring Trustee hereunder
and shall, as directed by the Bankruptcy Court or reasonably requested by such
successor, execute and deliver an instrument or instruments conveying and
transferring to such successor upon the trust herein expressed, all the
liabilities, duties, powers, rights, title, discretion and privileges of such
retiring Trustee.
ARTICLE XI
CONCERNING THE BENEFICIARIES
11.01 No Suits by Beneficiaries. No Beneficiary shall have any
right by virtue of any provision of this Agreement to institute any action or
proceeding at law or in equity against any party other than the Trustee upon or
under or with respect to the Trust Assets.
11.02 Requirement of Undertaking. The Trustee may request the
Bankruptcy Court to require, in any suit for the enforcement of any right or
remedy under this Agreement, or in any suit against the Trustee for any action
taken or omitted by it as Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, including reasonable
attorneys' fees, against any party litigant in such suit; provided. however,
that the provisions of this Section 11.02 shall not apply to any suit by the
Trustee.
ARTICLE XII
JURISDICTION
The parties agree that the Bankruptcy Court shall have jurisdiction
over the Trust, the Trustee, the Trust Actions and the remaining Trust Assets,
including, without limitation, jurisdiction to determine all controversies and
disputes arising under or in connection with this Agreement. Nevertheless,
the Trustee shall have power and authority to bring any action in any court of
competent jurisdiction to prosecute the Trust Actions. (page) 14
<PAGE> 15
ARTICLE XIII
MISCELLANEOUS PROVISIONS
13.01 Construction. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York and the United
States of America; provided that the Trust and any interpretation or
enforcement of the provisions of this Agreement shall be subject to the
jurisdiction of the Bankruptcy Court as contemplated by Article XII hereof.
The Trustee's interpretation of the provisions of this Agreement and the
provisions of the Plan as they relate to the prosecution of the Trust Actions
shall be deemed conclusive in the absence of a contrary interpretation of the
Bankruptcy Court.
13.02 Severability. In the event any provision of this Agreement
or the application thereof to any person or circumstances shall be determined
by Final Order of a court of proper jurisdiction to be invalid or unenforceable
to any extent, the remainder of this Agreement or the application of such
provision to persons or circumstances or in jurisdictions other than those as
to or in which it is held invalid or unenforceable, shall not be affected
thereby, and each provision of this Agreement shall be valid and enforced to
the fullest extent permitted by law.
13.03 Cooperation. New WRT shall provide the Trustee, at no cost
to the Trustee, the Trust or the Beneficiaries, with such access to its books,
records and employees as the Trustee may reasonably request for the purpose of
performing its duties and exercising its duties hereunder, including, without
limitation, to assist the Trustee in prosecuting the Trust Actions.
13.04 Notices. Any notice or other communication required or
permitted to be made in accordance with this Agreement shall be in writing and
shall be deemed to have been sufficiently given, for all purposes, if delivered
personally or by telex or other telegraphic means or mailed by first class
mail:
(i) if to the Trustee, at 767 Fifth Avenue, 28th floor, New
York, New York 10153, attention: Mr. Harrison J. Goldin.
(ii) if to any Beneficiary, to the last known business or
residential address of such Beneficiary, as the case may be, reflected in the
Trustee's records.
(iii) if to New WRT, at: 3303 FM 1960 West, Houston, Texas
77068, Attn: Mr. Gary C. Hanna.
13.05 Headings. The headings contained in this Agreement are
solely for convenience of reference and shall not affect the meaning or
interpretation of this Agreement or of any term or provision hereof.
(page) 15
<PAGE> 16
13.06 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original, but such
counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
or caused this Agreement to be duly executed by their respective officers and
the Trustee herein has executed this Agreement, as Trustee, effective as of
the date first above written.
WRT Energy Corporation
By:
--------------------------------
Name:
Title:
Goldin Associates, L.L.C.
By:
--------------------------------
Name:
Title:
(page) 16
