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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
SECURITIES EXCHANGE ACT OF 1934
----------------------------
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): JANUARY 19, 2000
FORCENERGY INC
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 0-26444 65-0429338
(STATE OR OTHER JURISDICTION (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER
OF INCORPORATION) IDENTIFICATION NO.)
2730 S.W. 3RD AVENUE
SUITE 800
MIAMI, FLORIDA 33129-2356
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(305) 856-8500
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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ITEM 3. BANKRUPTCY OR RECEIVERSHIP
The following information is being furnished with respect to the order
confirming the First Amended Joint Plan of Reorganization dated October 26,
1999, as modified (the "Plan") of Forcenergy Inc ("Forcenergy") and Forcenergy
Resources Inc. ("Resources" and together with Forcenergy, the "Debtors").
(1) The order confirming the Plan was signed by the United States
Bankruptcy Court for the Eastern District of Louisiana (the "Court") on January
19, 2000, and was entered into the Court's docket on January 19, 2000.
(2) Pursuant to the terms of the Plan, the Debtors' business operations
shall continue through the on-going development, exploitation, exploration,
acquisition and production of oil and natural gas. The Plan designates 11
classes of Claims and Equity Interests according to their differing nature and
priority as established under the United States Bankruptcy Code. Capitalized
terms used in this summary and not defined herein are given the meaning
attributed to them in the Plan, which is attached as Exhibit 2.1. The following
is a fair summarization of other material features of the Plan, the terms of
which are incorporated by reference herein. To the extent, if any, that this
summary conflicts with the terms of the Plan, the terms of the Plan shall
control.
All existing shares of Forcenergy common stock (the "Old Common
Stock"), options, warrants, and any other instruments evidencing ownership
interest, or the right to acquire ownership interest, in Forcenergy will be
extinguished and retired. Holders of Forcenergy Equity Interests will receive a
pro rata share of (i) 960,000 shares of New Forcenergy Common Stock, (ii) the
Four Year Warrants, and (iii) the Five Year Warrants, less in each case the
number of shares of New Forcenergy Common Stock and the number of Warrants held
in the Reserve in respect of Disputed Forcenergy Equity Interests. Forcenergy
will retain its Equity Interest in Resources.
The Plan provides that holders of Allowed General Unsecured Claims will
receive 23,040,000 shares of New Forcenergy Common Stock on a pro rata basis.
The Plan provides that Reorganized Forcenergy may establish a Reserve
for Disputed Claims. Reorganized Forcenergy currently expects to establish the
Reserve with shares of New Forcenergy Common Stock otherwise issuable to holders
of Allowed General Unsecured Claims and will not include such shares in the
distributions of shares of New Forcenergy Common Stock on the Initial
Distribution Date.
Unclassified Claims, consisting of (1) Allowed Administrative Expense
Claims, (2) Allowed Professional Compensation and Reimbursement Claims and (3)
Allowed Priority Tax Claims, will be paid in full, in cash on the later of the
first business day on which the Plan becomes effective (the "Effective Date")
and the date the Claim becomes an Allowed Claim, or within ten days thereafter.
Other Priority Claims will be paid in full, in cash on the later of the
Effective Date and the date the Claim becomes an Allowed Other Priority Claim,
or within ten days thereafter.
Secured Tax Claims will be paid in full, in cash on the later of the
Effective Date and the date the Claim becomes an Allowed Secured Tax Claim, or
within ten days thereafter, including any
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interest on the Claim required to be paid under Section 506(b) of the United
States Bankruptcy Code. Each holder of an Allowed Secured Tax Claim will retain
a Lien (or replacement lien as may be contemplated under nonbankruptcy law)
until full and final payment of the Claim, at which time the Lien will be deemed
null and void and unenforceable for all purposes.
The Secured Bank Group Claim will be satisfied by the issuance and
delivery of the New Senior Credit Facility. The New Senior Credit Facility
consists of: a $250,000,000 revolving credit facility (of which an estimated
$210,000,000 will be advanced to Reorganized Forcenergy on the Effective Date)
and a $70,000,000 term loan.
Miscellaneous Secured Claims will be treated in two ways:
(1) Senior Miscellaneous Secured Claims will be paid in full, in
cash on the later of the Effective Date and the date the Claim becomes
an Allowed Senior Miscellaneous Secured Claim, or within ten days
thereafter, and
(2) Junior Miscellaneous Secured Claims, at the sole option of the
Reorganized Debtors, (a) will be paid in full, in cash on the later of
the Effective Date and the date the Claim becomes an Allowed Junior
Miscellaneous Secured Claim, or within ten days thereafter, (b) will be
paid over 3-1/2 years in equal annual installments of principal in an
aggregate amount of such Allowed Junior Miscellaneous Secured Claim
with interest at a fixed rate of 8% per annum, or (c) will be satisfied
in full by the abandonment of all Collateral securing such Allowed
Junior Miscellaneous Secured Claim.
The Debtors do not anticipate abandoning any Collateral that are
Mineral Leases. Any Collateral abandoned to the holder of an Allowed Junior
Miscellaneous Secured Claim will be subject to any valid Liens existing as of
March 21, 1999. Any Collateral held by a holder of an Allowed Junior
Miscellaneous Secured Claim will remain Collateral until the Claim is paid in
full. The amount of any such Junior Miscellaneous Secured Claim will be
determined according to the procedures set forth in Section 4B(b) of the Plan.
Alternatively, holders of certain Junior Miscellaneous Secured Claims will have
the option, subject to the approval of the Court, of having their Junior
Miscellaneous Secured Claims deemed Allowed Claims in amounts set forth in
Exhibit "1" of the Plan and receiving cash on the Effective Date in amounts
ranging from 80% to 85% of the Claim.
Allowed Interior Claims were satisfied pursuant to the terms of the MMS
Order, which was previously entered by the Court. Allowed Governmental Mineral
Lessor Claims will be satisfied on substantially the same basis, as more
particularly described in Section 4.5(c) of the Plan.
The rights of issuers of surety bonds on behalf of Forcenergy under
contracts issued prior to and after the commencement of the bankruptcy
proceedings will remain in full force and effect and unimpaired under the Plan.
Convenience Claims will be paid in cash on the later of the Effective
Date and the date the Claim becomes an Allowed Convenience Claim, or within ten
(10) days thereafter.
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Each holder of an Allowed Intercompany Claim will receive one dollar on
account of its Claim and such Intercompany Claim will be discharged and
released.
(3) The number of shares of Old Common Stock outstanding as of January
19, 2000, the date of the confirmation order, was 24,756,738, and an additional
58,308 shares of Old Common Stock were reserved for issuance to holders of
stock of Convest and Edisto that have not yet been tendered for exchange. Upon
consummation of the Plan, 24,000,000 shares of New Forcenergy Common Stock will
be issued and outstanding, consisting of: 23,040,000 shares to the holders of
Allowed General Unsecured Claims and 960,000 to the holders of Forcenergy Equity
Interests. Reorganized Forcenergy currently expects that it will hold in the
Reserve a portion of the shares of New Forcenergy Common Stock otherwise
issuable to holders of Allowed General Unsecured Claims and will not include
such shares in the distribution of shares of New Forcenergy Common Stock to
holders of Allowed General Unsecured Claims on the Initial Distribution Date.
Reorganized Forcenergy will also issue Rights and 40,000 shares of Subscription
Preferred Stock and the Subscription Warrants in connection with the Rights
Offering to holders of Allowed General Unsecured Claims. Reorganized Forcenergy
has reserved 480,000 shares of New Forcenergy Common Stock for issuance upon the
exercise of the Warrants, 480,000 shares of New Forcenergy Common Stock for
issuance pursuant to the New Employee Stock Purchase Plan, 3,000,000 shares of
New Forcenergy Common Stock for issuance under the New Stock Option Plan,
including 1,328,127 shares in connection with the Employee Stock Options, and
1,800,000 shares of New Forcenergy Common Stock for issuance upon the exercise
of the Subscription Warrants.
(4) Information as to the assets and liabilities of Forcenergy as of
November 30, 1999, the closest practicable date to the date the order confirming
the Plan was entered, is set forth in Forcenergy's unaudited consolidated
balance sheet included herein as Exhibit 99.1.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibit
2.1 First Amended Joint Plan of Reorganization of
Forcenergy Inc and Forcenergy Resources Inc. dated October 26,
1999.
2.2 Motion for Authority to File Debtors' Second Immaterial
Modification
2.3 Debtors' Joint Plan Supplement dated November 8, 1999 (forms
of reorganization documents)
2.4 Motion to Substitute Revised Warrant Agreements to be Filed as
Part of Debtor's Amended Plan Supplement dated December 10,
1999.
2.5 Findings of Fact and Conclusions of Law and Order Confirming
the Joint Plan of Reorganization of Forcenergy Inc and
Forcenergy Resources Inc. dated January 19, 2000.
99.1 Unaudited consolidated balance sheet of Forcenergy as of
November 30, 1999.
99.2 Press Release issued on January 19, 2000.
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SIGNATURE
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 thereunto duly authorized.
FORCENERGY INC
By: /s/ E. JOSEPH GRADY
----------------------------------------
E. Joseph Grady, Vice President and Chief
Financial Officer
Date: January 25, 2000
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
NUMBER
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2.1 First Amended Joint Plan of Reorganization of Forcenergy Inc
and Forcenergy Resources Inc. dated October 26, 1999.
2.2 Motion for Authority to File Debtors' Second Immaterial
Modification
2.3 Debtors' Joint Plan Supplement dated November 8, 1999 (forms
of reorganization documents)
2.4 Motion to Substitute Revised Warrant Agreements to be Filed as
Part of Debtor's Amended Plan Supplement dated December 10,
1999.
2.5 Findings of Fact and Conclusions of Law and Order Confirming
the Joint Plan of Reorganization of Forcenergy Inc and
Forcenergy Resources Inc. dated January 19, 2000.
99.1 Consolidated balance sheet of Forcenergy as of November 30,
1999.
99.2 Press Release issued on January 19, 2000.
</TABLE>
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UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF LOUISIANA
IN RE: : CASE NO. 99-11391 "A"
:
FORCENERGY INC : CHAPTER 11
:
Debtor. :
:
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:
IN RE: : Jointly Administered with
:
FORCENERGY RESOURCES INC. : CASE NO. 99-11392 "A"
:
Debtor. : CHAPTER 11
DEBTORS' FIRST AMENDED JOINT PLAN OF REORGANIZATION
UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
ANDREWS & KURTH L.L.P.
Hugh Ray
James Donnell
Douglas Walter
600 Travis, Suite 4200
Houston, Texas 77002
(713) 220-4200
and
HELLER, DRAPER, HAYDEN & HORN, L.L.C.
Jan M. Hayden
650 Poydras Center, Suite 2500
New Orleans, Louisiana 70130-6103
(504) 568-1888
Attorneys for the Debtors
Dated: New Orleans, Louisiana
October 26, 1999
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TABLE OF CONTENTS
<TABLE>
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ARTICLE I DEFINITIONS AND CONSTRUCTION OF TERMS................................1
1.1 Administrative Expense Claim..................................................1
1.2 Allowed.......................................................................2
1.3 Amended Forcenergy Bylaws.....................................................2
1.4 Amended Forcenergy Certificate of Incorporation...............................2
1.5 Amended Resources Bylaws......................................................2
1.6 Amended Resources Certificate of Incorporation................................2
1.7 BLM...........................................................................2
1.8 Ballot........................................................................2
1.9 Bank Group....................................................................2
1.10 Bank Group Claim..............................................................3
1.11 Bankers Trust.................................................................3
1.12 Bankruptcy Code...............................................................3
1.13 Bankruptcy Court..............................................................3
1.14 Bankruptcy Rules..............................................................3
1.15 Bonding Entities..............................................................3
1.16 Bonding Entity Claim..........................................................3
1.17 Business Day..................................................................3
1.18 Cash..........................................................................3
1.19 Cash Collateral Order.........................................................3
1.20 Cause of Action...............................................................3
1.21 Chapter 11 Cases..............................................................3
1.22 Claim.........................................................................3
1.23 Claimant......................................................................3
1.24 Claims Register...............................................................4
1.25 Class.........................................................................4
1.26 Collateral....................................................................4
1.27 Commitment Agreement..........................................................4
1.28 Commencement Date.............................................................4
1.29 Confirmation Date.............................................................4
1.30 Confirmation Hearing..........................................................4
1.31 Confirmation Order............................................................4
1.32 Convenience Claim.............................................................4
1.33 Cramdown Security Agreement...................................................4
1.34 Creditors' Committee..........................................................4
1.35 Debtors.......................................................................5
1.36 Debtors in Possession.........................................................5
1.37 Developers....................................................................5
1.38 Disclosure Statement..........................................................5
1.39 Disputed......................................................................5
1.40 Disputed Claim Amount.........................................................5
1.41 Disputed Claims Subscription Escrow Account ..................................5
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1.42 Disputed Claims Subscription Purchase Price .............................. . .5
1.43 Effective Date................................................................5
1.44 Eligible Claim Amount .......................................................5
1.45 Employee Options..............................................................6
1.46 Employment Agreements.........................................................6
1.47 Equity Interest...............................................................6
1.48 Estates.......................................................................6
1.49 Exercised Disputed Claims ....................................................6
1.50 Exercising Claimant.......................................................... 6
1.51 Farmout Agreements, Easements, and Surface Rights.............................6
1.52 Final Order...................................................................6
1.53 Five Year Warrants............................................................6
1.54 Forcenergy....................................................................6
1.55 Forcenergy Equity Interest....................................................6
1.56 Forcenergy Operating Agreements...............................................7
1.57 Four Year Warrants............................................................7
1.58 General Unsecured Claim.......................................................7
1.59 Governmental Mineral Lessor...................................................7
1.60 Hilcorp.......................................................................7
1.61 Hilcorp Agreement.............................................................7
1.62 Hilcorp Break-Up Expense Reimbursement........................................7
1.63 Hilcorp Sale Motion...........................................................7
1.64 Initial Distribution Date.....................................................7
1.65 Indemnification Agreements....................................................7
1.66 Insured Claim.................................................................7
1.67 Intercompany Claim............................................................8
1.68 Interior......................................................................8
1.69 Joint Operating Agreements....................................................8
1.70 Junior Miscellaneous Secured Claim............................................8
1.71 Lien..........................................................................8
1.72 MMS...........................................................................8
1.73 MMS Order.....................................................................8
1.74 Master Service Agreements.....................................................8
1.75 Mineral Leases................................................................8
1.76 Miscellaneous Secured Claims..................................................8
1.77 New Employee Stock Purchase Plan..............................................8
1.78 New Forcenergy Common Stock...................................................8
1.79 New Senior Credit Facility....................................................8
1.80 New Stock Option Plan.........................................................9
1.81 Office Leases.................................................................9
1.82 Oil and Gas Purchase Contracts................................................9
1.83 Other Priority Claim..........................................................9
1.84 Plan..........................................................................9
1.85 Plan Supplement...............................................................9
1.86 Planet........................................................................9
</TABLE>
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1.87 Preferred Stock...............................................................9
1.88 Priority Tax Claim............................................................9
1.89 Pro Rata Share................................................................9
1.90 Quarter.......................................................................9
1.91 RLI..........................................................................10
1.92 Record Date..................................................................10
1.93 Registration Rights Agreement................................................10
1.94 Reorganized Debtors..........................................................10
1.95 Reorganized Forcenergy.......................................................10
1.96 Reorganized Resources........................................................10
1.97 Reserve......................................................................10
1.98 Resources....................................................................10
1.99 Resources Equity Interest....................................................10
1.100 Rights Offering .............................................................10
1.101 Schedules....................................................................10
1.102 Secured Bank Group Claim.....................................................10
1.103 Secured Claim................................................................10
1.104 Secured Cramdown Note........................................................11
1.105 Secured Tax Claim............................................................11
1.106 Security Interest............................................................11
1.107 Seismic Contracts............................................................11
1.108 Senior Credit Facility.......................................................11
1.109 Senior Miscellaneous Secured Claim...........................................11
1.110 Senior Subordinated Note Indentures..........................................11
1.111 Senior Subordinated Notes....................................................11
1.112 Sierra.......................................................................11
1.113 Standby Purchasers ..........................................................11
1.114 Subscription Preferred Stock ................................................11
1.115 Subscription Preferred Stock Designation.....................................11
1.116 Subscription Rights .........................................................12
1.117 Subscription Rights Election Deadline .......................................12
1.118 Subscription Rights Election Form............................................12
1.119 Subscription Rights Purchase Price ..........................................12
1.120 Subscription Rights Record Date..............................................12
1.121 Subscription Warrants .......................................................12
1.122 Subscription Warrant Agreement...............................................12
1.123 Subsequent Distribution Date.................................................12
1.124 Surplus Distributions........................................................12
1.125 Unexercised Subscription Rights .............................................12
1.126 Underwriters.................................................................12
1.127 Unsecured Claim..............................................................12
1.128 Warrants.....................................................................13
1.129 Warrant Agreements...........................................................13
1.130 Interpretation; Application of Definitions and Rules of Construction.........13
</TABLE>
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ARTICLE II TREATMENT OF ADMINISTRATIVE EXPENSE CLAIMS
AND PRIORITY TAX CLAIMS...................................................13
2.1 Administrative Expense Claims.................................................13
2.2 Professional Compensation and Reimbursement Claims............................13
2.3 Priority Tax Claims...........................................................14
2.4 Hilcorp Break-Up Expense Reimbursement and Adjustments........................14
2.5 Statutory Fees Due the United States Trustee..................................14
ARTICLE III CLASSIFICATION OF CLAIMS AND EQUITY INTERESTS.............................14
ARTICLE IV TREATMENT OF CLAIMS AND EQUITY INTERESTS..................................15
4.1 CLASS 1 -- OTHER PRIORITY CLAIMS..............................................15
4.2 CLASS 2 -- SECURED TAX CLAIMS.................................................15
4.3 CLASS 3 -- SECURED BANK GROUP CLAIM...........................................16
4.4 CLASS 4 -- MISCELLANEOUS SECURED CLAIMS.......................................17
4.5 CLASS 5 -- INTERIOR CLAIMS AND GOVERNMENTAL
MINERAL LESSOR CLAIMS........................................20
4.6 CLASS 6 -- BONDING ENTITY CLAIMS..............................................21
4.7 CLASS 7 -- CONVENIENCE CLAIMS.................................................21
4.8 CLASS 8 -- GENERAL UNSECURED CLAIMS...........................................22
4.9 CLASS 9 -- INTERCOMPANY CLAIMS................................................22
4.10 CLASS 10-- FORCENERGY EQUITY INTERESTS........................................22
4.11 CLASS 11-- RESOURCES EQUITY INTERESTS.........................................23
ARTICLE V PROVISIONS REGARDING VOTING AND DISTRIBUTIONS UNDER
THE PLAN AND TREATMENT OF DISPUTED, CONTINGENT
AND UNLIQUIDATED ADMINISTRATIVE EXPENSE CLAIMS, CLAIMS
AND EQUITY INTERESTS......................................................23
5.1 Voting of Claims and Equity Interests.........................................23
5.2 Nonconsensual Confirmation....................................................23
5.3 Method of Distributions Under the Plan........................................23
5.4 Objections to and Resolution of Administrative Expense Claims,
Claims and Equity Interests..................................................26
5.5 Distributions Relating to Allowed Insured Claims..............................26
5.6 Cancellation and Surrender of Existing Securities and Agreements..............26
5.7 Record Date for Distributions to Holders of Senior Subordinated Notes.........27
5.8 Cancellation of Senior Subordinated Note Indentures...........................27
5.9 Termination of Bankers Trust's Duties.........................................27
5.10 Fees and Expenses of Bankers Trust............................................27
5.11 Registration of New Forcenergy Common Stock...................................28
5.12 Listing of New Forcenergy Common Stock........................................28
5.13 Issuance of Subscription Preferred Stock and Subscription Warrants............28
5.14 Waiver of Subordination.......................................................28
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ARTICLE VI EXECUTORY CONTRACTS AND UNEXPIRED LEASES..................................28
6.1 Assumption or Rejection of Executory Contracts and Unexpired Leases...........28
6.2 Compensation and Benefit Programs.............................................32
6.3 Motion to Assume and Assign (Hilcorp Sale Motion).............................32
ARTICLE VII PROVISIONS REGARDING CORPORATE GOVERNANCE
AND MANAGEMENT OF THE REORGANIZED DEBTORS.................................32
7.1 General.......................................................................32
7.2 Meetings of Stockholders of Reorganized Debtors...............................32
7.3 Directors and Officers of the Reorganized Debtors.............................32
7.4 Amended Bylaws and Amended Certificates of Incorporation......................33
7.5 Issuance of New Securities....................................................34
7.6 Adoption of New Stock Option Plan.............................................34
7.7 Adoption of New Employee Stock Purchase Plan..................................34
7.8 Execution of Subscription Preferred Stock Designation.........................34
7.9 Execution of Subscription Warrant Agreement...................................34
7.10 Investment Guidelines.........................................................34
7.11 Execution of Warrant Agreements...............................................35
7.12 Execution of Registration Rights Agreement....................................35
7.13 Employee Options..............................................................35
7.14 Employment Agreements.........................................................35
7.15 Retention Bonuses.............................................................36
7.16 Success Bonuses...............................................................36
7.17 Execution of Commitment Agreement.............................................36
7.18 Bankruptcy Code Section 1145..................................................36
ARTICLE VIII IMPLEMENTATION AND EFFECT OF CONFIRMATION OF PLAN.........................36
8.1 New Senior Credit Facility....................................................36
8.2 Subscription Preferred Stock and Subscription Warrants........................37
8.3 Internal Funding..............................................................37
8.4 Revesting of Assets...........................................................37
8.5 Causes of Action..............................................................37
8.6 Discharge of Debtors..........................................................37
8.7 Injunction....................................................................38
8.8 Release.......................................................................38
ARTICLE IX THE RIGHTS OFFERING.......................................................38
9.1 Issuance of Subscription Preferred Stock and Subscription Warrants............38
9.2 Distribution of Subscription Rights ..........................................38
9.3 Exercise of Subscription Rights...............................................39
9.4 Backstop by Standby Purchasers................................................39
9.5 Distribution of Subscription Preferred Stock and Subscription Warrants .......39
9.6 Procedures with Respect to Disputed Claims ...................................39
9.7 No Interest...................................................................40
9.8 Validity of Exercise of Subscription Rights...................................40
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ARTICLE X EFFECTIVENESS OF THE PLAN.................................................41
10.1 Conditions Precedent to Effectiveness.........................................41
10.2 Effect of Failure of Conditions...............................................42
10.3 Waiver of Conditions..........................................................43
ARTICLE XI RETENTION OF JURISDICTION.................................................43
ARTICLE XII MISCELLANEOUS PROVISIONS..................................................45
12.1 Effectuating Documents and Further Transactions...............................45
12.2 Corporate Action..............................................................45
12.3 Exemption from Transfer Taxes.................................................45
12.4 Injunction Regarding Worthless Stock Deduction................................46
12.5 Exculpation...................................................................46
12.6 Termination of Committees.....................................................46
12.7 Post-Confirmation Date Fees and Expenses......................................46
12.8 Payment of Statutory Fees Due the United States Trustee.......................46
12.9 Amendment or Modification of the Plan.........................................46
12.10 Severability..................................................................47
12.11 Revocation or Withdrawal of the Plan..........................................47
12.12 Binding Effect................................................................47
12.13 Notices.......................................................................47
12.14 Governing Law.................................................................48
12.15 Withholding and Reporting Requirements........................................48
12.16 Plan Supplement...............................................................49
12.17 Allocation of Plan Distributions Between Principal and Interest...............50
12.18 Headings......................................................................50
12.19 Exhibits......................................................................50
12.20 Filing of Additional Documents................................................50
</TABLE>
EXHIBITS
Exhibit "1" - Description of Warrants
Exhibit "2" - Description of New Senior Credit Facility
Exhibit "3" - Description of Rights Offering
Exhibit "4" - Schedule of Holders of Senior Miscellaneous Secured Claims
Exhibit "5" - Schedule of Holders of Junior Miscellaneous Secured Claims
(Non-Louisiana Liens)
Exhibit "6" - Schedule of Holders of Junior Miscellaneous Secured Claims
(Louisiana Liens)
Exhibit "7" - Schedule of Rejected Joint Operating Agreements
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Exhibit "8" - Schedule of Assumed Master Service Agreements
Exhibit "9" - Schedule of Rejected Seismic Contracts
Exhibit "10" - Schedule of Rejected Oil and Gas Purchase Contracts
Exhibit "11" - Schedule of Rejected Miscellaneous Contracts
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EXHIBIT 2.1
UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF LOUISIANA
IN RE: : CASE NO. 99-11391 "A"
:
FORCENERGY INC : CHAPTER 11
:
Debtor. :
:
- ----------------------------------------------
:
IN RE: : Jointly Administered with
:
FORCENERGY RESOURCES INC. : CASE NO. 99-11392 "A"
:
Debtor. : CHAPTER 11
DEBTORS' FIRST AMENDED JOINT PLAN OF REORGANIZATION
UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
---------------------------------------
Forcenergy Inc and Forcenergy Resources Inc. propose the
following first amended joint plan of reorganization under Section 1121(a) of
Title 11 of the United States Code:
ARTICLE I
DEFINITIONS AND CONSTRUCTION OF TERMS
-------------------------------------
Definitions. As used herein, the following terms have the respective
meanings specified below, unless the context otherwise requires:
1.1 Administrative Expense Claim means any right to payment
constituting a cost or expense of administration of any of the Chapter 11 Cases
under Sections 503(b) and 507(a)(1) of the Bankruptcy Code, including, without
limitation, any actual and necessary costs and expenses of preserving the
estates of the Debtors, any actual and necessary costs and expenses of operating
the business of the Debtors, any indebtedness or obligations incurred or assumed
by the Debtors in Possession in connection with the conduct of their business,
including, without limitation, for the acquisition or lease of property or an
interest in property or the rendition of services, all compensation and
reimbursement of expenses to the extent Allowed by the Bankruptcy Court under
Sections 330 or 503 of the Bankruptcy Code and any fees or charges assessed
against the estates of the Debtors under Section 1930 of Chapter 123 of Title 28
of the United States Code.
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1.2 Allowed means, with reference to any Claim or Equity Interest, (a)
any Claim against or Equity Interest in the Debtors which has been listed by the
Debtors in their Schedules, as such Schedules may be amended by the Debtors from
time to time in accordance with Bankruptcy Rule 1009, as liquidated in amount
and not disputed or contingent and for which no contrary proof of Claim or
Equity Interest has been filed, (b) any Claim or Equity Interest Allowed
hereunder, (c) any Claim or Equity Interest which is not Disputed, or (d) any
Claim or Equity Interest which, if Disputed, (i) as to which, pursuant to the
Plan or a Final Order of the Bankruptcy Court, the liability of the Debtors and
the amount thereof are determined by a Final Order of a court of competent
jurisdiction other than the Bankruptcy Court, or (ii) has been Allowed by Final
Order; provided, however, that any Claim or Equity Interest allowed solely for
the purpose of voting to accept or reject the Plan pursuant to a Final Order of
the Bankruptcy Court shall not be considered an "Allowed Claim" or "Allowed
Equity Interest" hereunder. Unless otherwise specified herein or by Final Order
of the Bankruptcy Court, "Allowed Administrative Expense Claim," "Allowed
Claim," or "Allowed Equity Interest" shall not, for purposes of computation of
distributions under the Plan, include interest on such Administrative Expense
Claim, Claim or Equity Interest from and after the Commencement Date.
1.3 Amended Forcenergy Bylaws means the amended and restated Bylaws of
Reorganized Forcenergy, which shall be in substantially the form contained in
the Plan Supplement.
1.4 Amended Forcenergy Certificate of Incorporation means the amended
and restated Certificate of Incorporation of Reorganized Forcenergy, which shall
be in substantially the form contained in the Plan Supplement.
1.5 Amended Resources Bylaws means the amended and restated Bylaws of
Reorganized Resources, which shall be in substantially the form contained in the
Plan Supplement.
1.6 Amended Resources Certificate of Incorporation means the amended
and restated Certificate of Incorporation of Reorganized Resources, which shall
be in substantially the form contained in the Plan Supplement.
1.7 BLM shall have the meaning set forth in Section 1.68 of the Plan.
1.8 Ballot means the form distributed to each holder of an impaired
Claim or Equity Interest on which is to be indicated acceptance or rejection of
the Plan.
1.9 Bank Group means those certain lenders (or their assignees) under
the Senior Credit Facility, which, as of the Commencement Date, were believed to
have consisted of ING (U.S.) Capital LLC, in its capacity as agent and lender,
Den Norske Bank ASA, Bank of Scotland, MeesPierson Capital Corp., Hibernia
National Bank, Credit Agricole Indosuez, General Electric Capital Corp., Societe
Generale, Southwest Agency, Natexis Banque BFCE, and PNC Bank, National
Association.
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1.10 Bank Group Claim means the Claim asserted by the Bank Group with
respect to the Debtors' indebtedness under the Senior Credit Facility.
1.11 Bankers Trust means Bankers Trust Company, as indenture trustee
under the Senior Subordinated Note Indentures.
1.12 Bankruptcy Code means Title 11 of the United States Code, as
amended from time to time, as applicable to the Chapter 11 Cases.
1.13 Bankruptcy Court means the United States Bankruptcy Court for the
Eastern District of Louisiana having jurisdiction over the Chapter 11 Cases.
1.14 Bankruptcy Rules means the Federal Rules of Bankruptcy Procedure
as promulgated by the United States Supreme Court under Section 2075 of Title 28
of the United States Code, and any Local Rules of the Bankruptcy Court.
1.15 Bonding Entities mean Planet, Underwriters, Developers, and RLI.
1.16 Bonding Entity Claim means the individual Claim of any of the
Bonding Entities.
1.17 Business Day means any day other than a Saturday, Sunday or any
other day on which commercial banks in New York, New York are required or
authorized to close by law or executive order.
1.18 Cash means legal tender of the United States of America and
equivalents thereof.
1.19 Cash Collateral Order means the Order entered by the Bankruptcy
Court on May 17, 1999, as amended or supplemented, authorizing the Debtors use
of Cash Collateral (as defined in Section 363(a) of the Bankruptcy Code).
1.20 Cause of Action means, without limitation, any and all actions,
causes of action, liabilities, obligations, rights, suits, debts, sums of money,
damages, judgments, claims and demands whatsoever, whether known or unknown, in
law, equity or otherwise.
1.21 Chapter 11 Cases means the cases under Chapter 11 of the
Bankruptcy Code commenced by the Debtors, styled In re Forcenergy Inc, Chapter
11 Case No. 99-11391 "A" and In re Forcenergy Resources Inc., Case No. 99-11392
`A", Jointly Administered, currently pending in the Bankruptcy Court.
1.22 Claim has the meaning set forth in Section 101 of the Bankruptcy
Code.
1.23 Claimant means the holder of a Claim against either of the
Debtors.
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1.24 Claims Register shall mean the list of proofs of Claim prepared
and maintained by the Clerk of the Bankruptcy Court.
1.25 Class means a category of holder of Claims or Equity Interests as
set forth in Article III of the Plan.
1.26 Collateral means any property or interest in property of the
estates of the Debtors subject to a Lien or Security Interest to secure the
payment or performance of a Claim, which Lien or Security Interest is not
subject to avoidance under the Bankruptcy Code or otherwise invalid under the
Bankruptcy Code or applicable nonbankruptcy law.
1.27 Commitment Agreement means that certain agreement between and
among Forcenergy and the Standby Purchasers referenced in Section 9.4 of the
Plan, which shall be in substantially the form contained in the Plan Supplement.
1.28 Commencement Date means March 21, 1999, the date on which the
Debtors commenced the Chapter 11 Cases.
1.29 Confirmation Date means the date on which the Clerk of the
Bankruptcy Court enters the Confirmation Order on the docket.
1.30 Confirmation Hearing means the hearing held by the Bankruptcy
Court to consider confirmation of the Plan pursuant to Section 1129 of the
Bankruptcy Code, as such hearing may be adjourned or continued from time to
time.
1.31 Confirmation Order means the Final Order of the Bankruptcy Court
confirming the Plan pursuant to Section 1129 of the Bankruptcy Code.
1.32 Convenience Claim means any Claim in the amount of $10,000 or less
and any Claim that is reduced to $10,000 by the election of the holder thereof
on such holder's Ballot (provided that (i) individual Claims less than $10,000
of a single holder existing as of the Commencement Date will not be treated as
separate Convenience Claims if the aggregate of all Claims due any such single
holder as of the Commencement Date exceeds $10,000, and (ii) any Claim that was
originally in excess of $10,000 may not be subdivided into multiple Claims of
less than $10,000 for purposes of receiving treatment as a Convenience Claim).
1.33 Cramdown Security Agreement means the agreement which secures the
Secured Cramdown Note as set forth in Section 4.3(c) of the Plan, which shall be
in substantially the form contained in the Plan Supplement.
1.34 Creditors' Committee means the statutory committee of unsecured
creditors appointed in the Chapter 11 Cases pursuant to Section 1102 of the
Bankruptcy Code.
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1.35 Debtors means, collectively, Forcenergy Inc and Forcenergy
Resources Inc.
1.36 Debtors in Possession means the Debtors in their capacity as
debtors in possession in the Chapter 11 Cases pursuant to Sections 1101, 1107(a)
and 1108 of the Bankruptcy Code.
1.37 Developers means Developers Insurance Company.
1.38 Disclosure Statement means the disclosure statement relating to
the Plan, including, without limitation, all exhibits and schedules thereto, as
approved by the Bankruptcy Court pursuant to Section 1125 of the Bankruptcy
Code.
1.39 Disputed means the portion (including, when appropriate, the
whole) of any Claim as to which: (a) a proof of Claim has been or been deemed
timely and properly filed under applicable law or Final Order of the Bankruptcy
Court; (b) an objection, motion to estimate, or complaint to determine the
validity, priority or extent of any Lien asserted by the claimant with respect
to the Claim has been timely filed; and (c) such objection, motion or complaint
has not been withdrawn or granted, denied or otherwise determined by Final
Order. Before the time that such an objection, motion or complaint has been
filed, a Claim shall be considered Disputed (w) to the extent, if any, that the
amount of the Claim specified in a proof of Claim exceeds the amount of any
corresponding Claim scheduled by the Debtors in their Schedules; (x) in its
entirety, if any corresponding Claim scheduled by the Debtors has been scheduled
as disputed, contingent or unliquidated in the Schedules; (y) in its entirety,
if any corresponding Claim scheduled by the Debtors in their Schedules places
the Claim in a separate classification from that asserted in a proof of Claim,
or (z) in its entirety, if no corresponding Claim has been scheduled by the
Debtors in their Schedules.
1.40 Disputed Claim Amount means the higher of the amount set forth in
the proof of Claim or listed on the Schedules relating to a Disputed Claim;
provided, however, if a Disputed Claim is estimated for allowance purposes under
Section 502 (c) of the Bankruptcy Code, the amount so estimated pursuant to
Final Order of the Bankruptcy Court shall be the Disputed Claim Amount.
1.41 Disputed Claims Subscription Escrow Account means the escrow
account to be established and maintained by Reorganized Forcenergy as described
in Section 9.6 of the Plan.
1.42 Disputed Claims Subscription Purchase Price shall have the meaning
set forth in Section 9.6 of the Plan.
1.43 Effective Date means the first Business Day on which the
conditions specified in Section 10.1 of the Plan have been satisfied, or waived
in accordance with Section 10.3 of the Plan.
1.44 Eligible Claim Amount shall have the meaning set forth in Section
9.2 of the Plan.
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1.45 Employee Options shall have the meaning set forth in Section 7.13
of the Plan and contained in the Plan Supplement.
1.46 Employment Agreements means the agreements referenced in Section
7.14 of the Plan and the form of which is contained in the Plan Supplement.
1.47 Equity Interest means any share of common stock or other
instrument evidencing an ownership interest in any of the Debtors, whether or
not transferable, and any option, warrant or right, contractual or otherwise, to
acquire any such interest.
1.48 Estates means the Debtors' Chapter 11 bankruptcy estates.
1.49 Exercised Disputed Claim means a Disputed Claim within or
potentially within Class 8, the holder of which has exercised the Subscription
Rights, if any, that such holder was entitled to exercise on account of such
Disputed Claim pursuant to Section 9.6 of the Plan.
1.50 Exercising Claimant shall mean the holder of an Allowed Claim in
Class 8 or a Disputed Claim within or potentially within Class 8 that has
exercised the Subscription Rights, if any, that such holder was entitled to
exercise on account of such Allowed Claim pursuant to Section 9.3 of the Plan.
1.51 Farmout Agreements, Easements, and Surface Rights means with
respect to farmout agreements, any agreement pursuant to which either of the
Debtors assigned its interest in an oil, gas or mineral lease in exchange for
the assignee's commitment to commence drilling operations on such lease, with
respect to easements, any agreement pursuant to which either of the Debtors
obtained incorporeal rights necessary for exploration, development or production
of minerals (such as rights of way or rights of use), and with respect to
surface rights, any agreement pursuant to which either of the Debtors obtained a
lease on the surface of land for commercial purposes.
1.52 Final Order means an order of the Bankruptcy Court or any other
court of competent jurisdiction that has been entered on the docket of the
Bankruptcy Court or such other court for ten (10) or more days and that is not
then stayed or reversed.
1.53 Five Year Warrants means warrants to purchase 240,000 shares of
New Forcenergy Common Stock from Reorganized Forcenergy to be distributed to the
holders of Allowed Forcenergy Equity Interests pursuant to Section 4.10(b) of
the Plan on the terms and subject to the conditions described in Exhibit "1" to
the Plan or as may be amended, supplemented or modified from time to time.
1.54 Forcenergy means Forcenergy Inc, a Delaware corporation.
1.55 Forcenergy Equity Interest means any Equity Interest in Forcenergy
(excluding any Equity Interests held or reserved by Forcenergy or held by any of
its subsidiaries).
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<PAGE> 15
1.56 Forcenergy Operating Agreements means any Joint Operating
Agreement under which Forcenergy is the operator.
1.57 Four Year Warrants means warrants to purchase 240,000 shares of
New Forcenergy Common Stock from Reorganized Forcenergy to be distributed to the
holders of Allowed Forcenergy Equity Interests pursuant to Section 4.10(b) of
the Plan on the terms and subject to the conditions described in Exhibit "1" to
the Plan or as may be amended, supplemented or modified from time to time.
1.58 General Unsecured Claim means any Unsecured Claim other than a
Convenience Claim.
1.59 Governmental Mineral Lessor means the State of Texas, State of
Louisiana, State of Alaska, or any other State or Territory of the United States
of America, or any political subdivision or department thereof, as lessor under
an oil, gas or mineral lease under which either of the Debtors is a lessee.
1.60 Hilcorp means Hilcorp Energy I, L.P.
1.61 Hilcorp Agreement means that certain purchase and sale agreement
between Hilcorp, Sierra and Forcenergy dated on or about August 30, 1999, which
is the subject of the Hilcorp Sale Motion.
1.62 Hilcorp Break-Up Expense Reimbursement means the break-up fee in
the amount of up to $100,000 to be paid to Hilcorp and/or Sierra as an
administrative priority expense in the event that some qualified bidder, other
than Hilcorp and Sierra, is the successful bidder for the properties and leases
made the subject of the Hilcorp Agreement, as approved by the Bankruptcy Court.
1.63 Hilcorp Sale Motion means the Motion for (A) Authorization to Sell
Certain Oil and Gas Properties and to Assign Leases and Related Contracts to
Hilcorp, (B) Authorization to Reject Certain Leases and Related Contracts, (C)
Approval of Notice and Overbid Procedures, Including Break-Up Expense
Reimbursement and (D) Allowance of Cure Amounts and Procedures, pursuant to
Bankruptcy Code Sections 363 and 365.
1.64 Initial Distribution Date means the date that is ninety (90) days
subsequent to the Effective Date, or within ten (10) days thereof.
1.65 Indemnification Agreements means any contracts or other agreements
between Forcenergy and any of its officers and directors pursuant to which
Forcenergy has agreed to indemnify such officers and directors.
1.66 Insured Claim means any Claim arising from an incident or
occurrence to the extent that liability thereunder, if any, is covered by an
insurance policy.
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1.67 Intercompany Claim means any Claim asserted against either of the
Debtors by the other Debtor or any of the Debtors' direct or indirect
subsidiaries.
1.68 Interior means the Department of Interior, through the Minerals
Management Service ("MMS"), the Bureau of Land Management ("BLM"), and the
Bureau of Indian Affairs ("BIA"), for itself and on behalf of various Indian
mineral owners.
1.69 Joint Operating Agreements means an agreement between or among
Forcenergy and any other party or parties for the operation of a tract or
leasehold for oil, gas and other minerals.
1.70 Junior Miscellaneous Secured Claim means a Miscellaneous Secured
Claim not listed on Exhibit "4" of the Plan, as may be amended from time to
time.
1.71 Lien shall have the meaning set forth in Section 101 of the
Bankruptcy Code.
1.72 MMS shall have the meaning set forth in Section 1.68 of the Plan.
1.73 MMS Order shall have the meaning set forth in Section 4.5(b) of
the Plan.
1.74 Master Service Agreements means any agreement between Forcenergy
and any other party covering routine type of work on a lease, such as building
roads, clearing locations, coring, acidization, perforating, drill-stem testing,
and essentially all other operations on the lease except the actual drilling of
wells.
1.75 Mineral Leases means any agreement pursuant to which Forcenergy,
as lessee, has been granted the right to explore for and produce oil, gas or
other minerals.
1.76 Miscellaneous Secured Claims means any Secured Claim other than a
Secured Bank Group Claim or a Secured Tax Claim, regardless of the form of
Collateral or Lien or Security Interest securing payment of such Miscellaneous
Secured Claim.
1.77 New Employee Stock Purchase Plan means the Reorganized Forcenergy
1999 Employee Stock Purchase Plan to be authorized by the Plan and in
substantially the form contained in the Plan Supplement.
1.78 New Forcenergy Common Stock means the common stock of Reorganized
Forcenergy authorized and to be issued pursuant to the Plan. The New Forcenergy
Common Stock shall have a par value of $.01 per share and such rights with
respect to dividends, liquidation, voting and other matters as are provided for
by applicable nonbankruptcy law or in the Amended Forcenergy Certificate of
Incorporation and the Amended Forcenergy Bylaws.
1.79 New Senior Credit Facility means the senior credit facility note
consisting of a revolving credit agreement, term loan agreement and guarantee
agreement, among Reorganized
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Forcenergy, as borrower, each of the guarantors as specified therein,
the Bank Group and/or each of the other lenders from time to time parties
thereto, ING (U.S.) Capital LLC, as agent, to be entered into by the parties
thereto pursuant to Section 8.1 of the Plan, under the terms and subject to the
conditions set forth in Exhibit "2" to the Plan or as may be amended,
supplemented or modified from time to time.
1.80 New Stock Option Plan means the Reorganized Forcenergy 1999 Stock
Plan to be authorized by the Plan and in substantially the form contained in the
Plan Supplement.
1.81 Office Leases means the Debtors' non-residential leases of real
property for office space located in, among other places: (i) Miami, Florida,
(ii) Metairie, Louisiana, (iii) Anchorage, Alaska, and (iv) Lafayette,
Louisiana.
1.82 Oil and Gas Purchase Contracts means any agreement pursuant to
which either of the Debtors has agreed with a third party for the purchase and
sale of oil and/or gas produced from designated leases, fields or areas, and
which sets forth the terms and conditions of purchase and sale.
1.83 Other Priority Claim means any Claim, other than an Administrative
Expense Claim or a Priority Tax Claim, entitled to priority in right of payment
under Section 507(a) of the Bankruptcy Code.
1.84 Plan means this Chapter 11 joint plan of reorganization,
including, without limitation, the Plan Supplement and all exhibits,
supplements, appendices and schedules hereto, either in its present form or as
the same may be altered, amended or modified from time to time.
1.85 Plan Supplement means the forms of documents specified in Section
12.16 of the Plan.
1.86 Planet means Planet Indemnity Company.
1.87 Preferred Stock means the preferred stock of Reorganized
Forcenergy authorized to be issued under the Amended Forcenergy Certificate of
Incorporation.
1.88 Priority Tax Claim means any Claim of a governmental unit of the
kind specified in Sections 502(i) and 507(a)(8) of the Bankruptcy Code.
1.89 Pro Rata Share means a proportionate share, so that the ratio of
the consideration distributed on account of an Allowed Claim or Allowed Equity
Interest in a Class to the amount of such Allowed Claim or Allowed Equity
Interest is the same as the ratio of the amount of the consideration distributed
on account of all Allowed Claims or Allowed Equity Interests in such Class to
the amount of all Allowed Claims or Allowed Equity Interests in such Class.
1.90 Quarter means the period beginning on the Effective Date and
ending on the next of December 31, March 31, June 30 and September 30, and each
three month period thereafter.
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1.91 RLI means RLI Insurance Company.
1.92 Record Date means the day that is five (5) days after the
Confirmation Date, or as otherwise determined by the Bankruptcy Court at the
Confirmation Hearing.
1.93 Registration Rights Agreement means a registration rights
agreement to be entered into pursuant to Section 5.11 of the Plan between
Reorganized Forcenergy and any person or entity entitled to become a party to
such registration rights agreement under Section 5.11 of the Plan, which shall
be in substantially the form contained in the Plan Supplement.
1.94 Reorganized Debtors means Reorganized Forcenergy and Reorganized
Resources.
1.95 Reorganized Forcenergy means Forcenergy, or any successor thereto
by merger, consolidation or otherwise, on and after the Effective Date.
1.96 Reorganized Resources means Resources, or any successor thereto by
merger, consolidation or otherwise, on and after the Effective Date.
1.97 Reserve shall have the meaning set forth in Section 5.3(h) of the
Plan.
1.98 Resources means Forcenergy Resources Inc., a Texas corporation.
1.99 Resources Equity Interest means any Equity Interest in Resources.
1.100 Rights Offering means the issuance to holders of certain Claims
in or potentially within Class 8 of rights to purchase units consisting of
Subscription Preferred Stock and Subscription Warrants pursuant to and in
accordance with the terms of Article IX of the Plan.
1.101 Schedules means the schedules of assets and liabilities, the list
of holders of Equity Interests, and the statements of financial affairs filed by
the Debtors under Section 521 of the Bankruptcy Code and Bankruptcy Rule 1007,
and all amendments and modifications thereto through the Confirmation Date.
1.102 Secured Bank Group Claim means any Claim of the Bank Group under
the Senior Credit Facility to the extent such Claim is a Secured Claim.
1.103 Secured Claim means any Claim, to the extent reflected in the
Schedules or a proof of Claim as being secured by a Lien or Security Interest
(whether consensual or otherwise), to the extent it is secured by a valid,
unavoidable Lien or Security Interest in Collateral, to the extent of the value
of the Estates' interest in such Collateral, as determined in accordance with
Section 506(a) of the Bankruptcy Code and taking into account any other Secured
Claims with respect to such Collateral not inferior in priority to such Secured
Claim, or, in the event that such Claim is subject to setoff under Section 553
of the Bankruptcy Code, to the extent of such setoff.
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1.104 Secured Cramdown Note means the note executed in favor of the
Bank Group in accordance with and pursuant to Section 4.3(c) of the Plan.
1.105 Secured Tax Claim means any Secured Claim which, absent its
secured status, would be entitled to priority in right of payment under Section
507(a)(8) of the Bankruptcy Code.
1.106 Security Interest has the meaning set forth in Section 101 of the
Bankruptcy Code.
1.107 Seismic Contracts means any agreement pursuant to which
Forcenergy has contracted for the acquisition, sale or licensing of seismic
data.
1.108 Senior Credit Facility means that certain Fifth Restatement of
Credit Agreement between and among Forcenergy and the Bank Group effective April
13, 1998, as amended.
1.109 Senior Miscellaneous Secured Claim means those Miscellaneous
Secured Claim listed on Exhibit 4 of the Plan, as may be amended from time to
time.
1.110 Senior Subordinated Note Indentures means (a) that certain
Indenture relating to the 9 1/2% Senior Subordinated Notes ("9 1/2 Indenture"),
dated as of November 6, 1996, by and between Forcenergy and Bankers Trust, as
indenture trustee, and (b) that certain Indenture relating to the 8 1/2% Senior
Subordinated Notes ("8 1/2 Indenture"), dated as of February 14, 1997, by and
between Forcenergy and Bankers Trust, as indenture trustee.
1.111 Senior Subordinated Notes means (a) the 9 1/2% Senior
Subordinated Notes, due 2006 in the original principal amount of $175,000,000,
issued pursuant to and governed by the 9 1/2 Indenture, and (b) the 8 1/2%
Senior Subordinated Notes, due 2007 in the original principal amount of
$200,000,000, issued pursuant to and governed by the 8 1/2 Indenture.
1.112 Sierra means Sierra Mineral Development, L.C.
1.113 Standby Purchasers means Oaktree Capital Management, LLC, The
Anschutz Corporation, Lehman Brothers, Inc. and Moore Capital Management, and/or
certain of their affiliates, each of whom will be parties to the Commitment
Agreement.
1.114 Subscription Preferred Stock means the 14% Series A Cumulative
Preferred Stock of Reorganized Forcenergy to be issued pursuant to the Rights
Offering on the terms and subject to the conditions set forth in Article IX of
the Plan and Exhibit 3 to the Plan.
1.115 Subscription Preferred Stock Designation means the Certificate of
Designation of the Subscription Preferred Stock to be authorized by the Plan
creating, authorizing and providing for the issuance of Subscription Preferred
Stock, which shall be in substantially the form contained in the Plan
Supplement.
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1.116 Subscription Rights means the rights to purchase units consisting
of Subscription Preferred Stock and Subscription Warrants pursuant to and in
accordance with the terms of Section 9.1 of the Plan, Exhibit 3 to the Plan.
1.117 Subscription Rights Election Deadline means the date by which any
Claimant entitled to exercise Subscription Rights must deliver such Claimant's
Subscription Rights Election Form and pay the Subscription Rights Purchase Price
to the Debtors in order to exercise the Subscription Rights, which date shall be
no later than five (5) days prior to the Effective Date.
1.118 Subscription Rights Election Form means the document referenced
in Section 9.3 of the Plan.
1.119 Subscription Rights Purchase Price means the purchase price that
an Exercising Claimant must pay in order to exercise its Subscription Rights and
purchase the Subscription Preferred Stock and the Subscription Warrants in
accordance with Section 9.2 of the Plan, which price shall be equal to the
product of (a) the number of shares of Subscription Preferred Stock being
purchased pursuant to each such Subscription Rights, times (b) $1,000.00.
1.120 Subscription Rights Record Date means the date set forth in the
Subscription Rights Election Form.
1.121 Subscription Warrants means the warrants to purchase 7.5% of New
Forcenergy Common Stock to be issued pursuant to the Rights Offering on the
terms and subject to the conditions set forth in Section 9.1 of the Plan and the
Subscription Warrant Agreement.
1.122 Subscription Warrant Agreement means the warrant agreement
providing for the issuance of the Subscription Warrants, which Subscription
Warrant Agreement shall be in substantially the form contained in the Plan
Supplement.
1.123 Subsequent Distribution Date means the date or dates after the
Initial Distribution Date upon which the Reorganization Debtors make
distributions in accordance with and pursuant to the terms of the Plan.
1.124 Surplus Distributions shall have the meaning set forth in Section
5.3(j) of the Plan.
1.125 Unexercised Subscription Rights means any or all Subscription
Rights that, as of the Subscription Rights Election Deadline, have not been
exercised or have been deemed not to have been exercised due to the failure of
the holders thereof to meet the requirements of Section 9.3 of the Plan.
1.126 Underwriters means Underwriters Indemnity Company.
1.127 Unsecured Claim means any Claim that is not a Secured Claim,
Administrative Expense Claim, Priority Tax Claim or Other Priority Claim.
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1.128 Warrants means the Four Year Warrants and the Five Year Warrants.
1.129 Warrant Agreements means the warrant agreement providing for the
issuance of the Four Year Warrants and the warrant agreement providing for the
issuance of the Five Year Warrants, which Warrant Agreements shall be in
substantially the forms contained in the Plan Supplement.
1.130 Interpretation; Application of Definitions and Rules of
Construction. Wherever from the context it appears appropriate, each term stated
in either the singular or the plural shall include both the singular and the
plural and pronouns stated in the masculine, feminine or neuter gender shall
include the masculine, feminine and neuter. Unless otherwise specified, all
section, article, schedule or exhibit references in the Plan are to the
respective Section in, Article of, Schedule to, or Exhibit to, the Plan. The
words "herein," "hereof," "hereto," "hereunder" and other words of similar
import refer to the Plan as a whole and not to any particular section,
subsection or clause contained in the Plan. The rules of construction contained
in Section 102 of the Bankruptcy Code shall apply to the construction of the
Plan. A term used herein that is not defined herein, but that is used in the
Bankruptcy Code, shall have the meaning ascribed to that term in the Bankruptcy
Code. The headings in the Plan are for convenience of reference only and shall
not limit or otherwise affect the provisions of the Plan.
ARTICLE II
TREATMENT OF ADMINISTRATIVE
EXPENSE CLAIMS AND PRIORITY TAX CLAIMS
--------------------------------------
2.1 Administrative Expense Claims. Except to the extent that any entity
entitled to payment of any Allowed Administrative Expense Claim has been paid by
the Debtors prior to the Effective Date or agrees to a different treatment, each
holder of an Allowed Administrative Expense Claim shall receive Cash in an
amount equal to such Allowed Administrative Expense Claim on the later of the
Effective Date and the date such Administrative Expense Claim becomes an Allowed
Administrative Expense Claim, or within ten (10) days thereof; provided,
however, that Allowed Administrative Expense Claims representing liabilities
incurred in the ordinary course of business by the Debtors in Possession or
liabilities arising under loans or advances to or other obligations incurred by
the Debtors in Possession, to the extent authorized and approved by the
Bankruptcy Court if such authorization and approval was required under the
Bankruptcy Code, shall be paid in full and performed by the Reorganized Debtors
in the ordinary course of business in accordance with the terms and subject to
the conditions of any agreements governing, instruments evidencing or other
documents relating to, such transactions.
2.2 Professional Compensation and Reimbursement Claims. All entities,
including without limitation, Bankers Trust, seeking an award by the Bankruptcy
Court of compensation for services rendered or reimbursement of expenses
incurred through and including the Effective Date under Sections 503(b)(2),
503(b)(3), 503(b)(4) or 503(b)(5) of the Bankruptcy Code or otherwise
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(a) shall file their respective final applications for allowances of
compensation for services rendered and reimbursement of expenses incurred
through the Effective Date by the date that is ninety (90) days after the
Effective Date or such other date as may be fixed by the Bankruptcy Court, and
(b) if granted such an award by the Bankruptcy Court, shall be paid in full, in
Cash such amounts as are Allowed by the Bankruptcy Court on the date such
Administrative Expense Claim becomes an Allowed Administrative Expense Claim, or
within ten (10) days thereof.
2.3 Priority Tax Claims. Except to the extent that a holder of an
Allowed Priority Tax Claim has been paid by the Debtors prior to the Effective
Date or agrees to a different treatment, each holder of an Allowed Priority Tax
Claim shall receive Cash in an amount equal to such Allowed Priority Tax Claim
on the later of the Effective Date and the date such Priority Tax Claim becomes
an Allowed Priority Tax Claim, or within ten (10) days thereof.
2.4 Hilcorp Break-Up Expense Reimbursement and Adjustments. The Hilcorp
Break-Up Expense Reimbursement shall be paid to Hilcorp and/or Sierra in
accordance with the terms of such Final Order as shall be entered by the
Bankruptcy Court without the need for any application therefor. Additionally,
the Hilcorp Agreement, if approved, contemplates certain adjustments at closing
and adjustments after closing through the Final Settlement Date (as defined in
the Hilcorp Agreement). These adjustments will be paid in accordance with the
terms of the Hilcorp Agreement and the Final Order granting the Hilcorp Sale
Motion, if granted, by Forcenergy, or its successors and assigns, including, but
not limited to, the Reorganized Forcenergy and any trustees.
2.5 Statutory Fees Due the United States Trustee. Pursuant to 28 U.S.C.
Section 1930(a)(6), the statutory fees of the United States Trustee shall be
paid in Cash as such fees become due and payable.
ARTICLE III
CLASSIFICATION OF CLAIMS AND EQUITY INTERESTS
Claims, other than Administrative Expense Claims and Priority Tax
Claims, and Equity Interests are classified for all purposes, including voting,
confirmation and distribution pursuant to the Plan, as follows:
<TABLE>
<CAPTION>
Class Status
- ----- ------
<S> <C>
Class 1 -- Other Priority Claims................................... Unimpaired
Class 2 -- Secured Tax Claims...................................... Unimpaired
Class 3 -- Secured Bank Group Claim.................................. Impaired
Class 4A-- Senior Miscellaneous Secured Claims..................... Unimpaired
</TABLE>
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<TABLE>
<S> <C>
Class 4B-- Junior Miscellaneous Secured Claims....................... Impaired
Class 5 -- Interior Claims and Governmental Mineral Lessor Claims.. Unimpaired
Class 6 -- Bonding Entity Claims................................... Unimpaired
Class 7 -- Convenience Claims...................................... Unimpaired
Class 8 -- General Unsecured Claims.................................. Impaired
Class 9 -- Intercompany Claims....................................... Impaired
Class 10 -- Forcenergy Equity Interests.............................. Impaired
Class 11 -- Resources Equity Interests............................. Unimpaired
</TABLE>
ARTICLE IV
TREATMENT OF CLAIMS AND EQUITY INTERESTS
4.1 CLASS 1 -- OTHER PRIORITY CLAIMS.
(a) Impairment and Voting. Class 1 is unimpaired by the Plan. Each
holder of an Allowed Other Priority Claim is deemed to have accepted the Plan
and is not entitled to vote to accept or reject the Plan.
(b) Treatment. Except to the extent that a holder of an Allowed Other
Priority Claim has been paid by the Debtors prior to the Effective Date or
agrees to a different treatment, each holder of an Allowed Other Priority Claim
shall receive Cash in an amount equal to such Allowed Other Priority Claim on
the later of the Effective Date and the date such Other Priority Claim becomes
an Allowed Other Priority Claim, or within ten (10) days thereof.
4.2 CLASS 2 -- SECURED TAX CLAIMS.
(a) Impairment and Voting. Class 2 is unimpaired by the Plan. Each
holder of an Allowed Secured Tax Claim is deemed to have accepted the Plan and
is not entitled to vote to accept or reject the Plan.
(b) Treatment. Except to the extent that a holder of an Allowed Secured
Tax Claim has been paid by the Debtors prior to the Effective Date or agrees to
a different treatment, each holder of an Allowed Secured Tax Claim shall receive
Cash in an amount equal to such Allowed Secured Tax Claim, including any
interest required to be paid pursuant to Section 506(b) of the Bankruptcy Code,
on the later of the Effective Date and the date such Secured Tax Claim becomes
an Allowed Secured Tax Claim, or within ten (10) days thereof.
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(c) Retention of Liens. Each holder of an Allowed Secured Tax Claim
shall retain the Lien (or replacement Lien as may be contemplated under
nonbankruptcy law) securing its Allowed Secured Tax Claim as of the Effective
Date until full and final payment of such Allowed Secured Tax Claim is made as
provided herein, and upon such full and final payment, such Lien shall be deemed
null and void and shall be unenforceable for all purposes.
4.3 CLASS 3 -- SECURED BANK GROUP CLAIM.
(a) Impairment and Voting. Class 3 is impaired by the Plan. Each holder
of an Allowed Secured Bank Group Claim is entitled to vote to accept or reject
the Plan.
(b) Consensual Treatment. If Class 3 accepts the Plan, then the Class 3
Claims shall be treated in accordance with this Section 4.3(b) and the
Reorganized Debtors and their subsidiaries shall enter into the New Senior
Credit Facility on or before the Effective Date to be effective on the Effective
Date, the terms of which are specifically set forth in Exhibit "2" annexed to
the Plan. All members of Class 3 shall participate in the "Term Loan" portion of
the New Senior Credit Facility. The participants in the "Revolver" portion of
the New Senior Credit Facility shall be (i) each member of Class 3 who votes in
favor of the Plan, and (ii) each member of Class 3 who votes to reject the Plan
but who elects to participate in the "Revolver" portion of the New Senior Credit
Facility. On the Effective Date, each participant in the "Revolver" portion of
the New Senior Credit Facility shall receive a Pro Rata Share of $40 million in
partial payment of the indebtedness under the Senior Credit Facility, subject to
the obligation to readvance as revolving credit loans. Each member of Class 3
who votes to reject the Plan and elects not to participate in the "Revolver"
portion of the New Senior Credit Facility shall instead receive a term
promissory note in an amount equal to what otherwise would have been its fully
drawn commitment amount under the "Revolver," the maturity, interest rate,
amortization, interest payments and other terms of which (other than revolving
credit repayments and advances) shall be the same as those of the "Revolver."
All members of Class 3 shall receive a Pro Rata Share of all interest (at the
non-default rate), fees and expenses (pre- and post-Commencement Date)
outstanding under the Senior Credit Facility or any documents executed
therewith, which shall be paid in full, in Cash on the Effective Date. The
obligations of the Reorganized Debtors under the New Senior Credit Facility, if
executed, together with the payments described herein, shall be in replacement
and full substitution of all Bank Group Claims (except that the existing Liens,
Collateral and other Security Interests of the Bank Group shall be maintained
and preserved), and any Causes of Action arising prior to the Effective Date
which the Debtors or the Reorganized Debtors could otherwise assert against any
holder of a Bank Group Claim (or any of such holder's affiliates, officers,
employees, agents or professionals) to the extent such Causes of Action relate
to, arise from or could otherwise be asserted in respect of the Senior Credit
Facility, or any related Liens, Collateral, Security Interests or Loan Documents
(as such term is defined in the Senior Credit Facility) are, by the confirmation
of the Plan, released. On the Effective Date, the Debtors shall be directed and
authorized to execute a release consistent with the above provisions and
acceptable to the holders of Bank Group Claims in favor of the holders of Bank
Group Claims and such holders' affiliates, officers, employees, agents and
professionals; provided, however, that
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failure to execute such a general and complete release shall in no way limit or
affect the release granted hereunder.
(c) Cramdown Treatment. If Class 3 fails to accept the Plan, then the
Bank Group Claim shall be treated as follows: the Bank Group Claim shall receive
a Secured Cramdown Note in the amount outstanding under the existing Senior
Credit Facility (including interest and attorneys' fees), together with interest
at a fixed rate of 8%, payable in full five (5) years after the Confirmation
Date. The Secured Cramdown Note shall be secured pursuant to the Cramdown
Security Agreement, which will provide for the retention by the Bank Group of
all of its Liens and Security Interests and setoff rights as they existed at the
Commencement Date, together with replacement Liens as set forth in the Cash
Collateral Order. (The terms of such Cash Collateral Order are superseded by the
terms of this Plan and the Confirmation Order, but the replacement Liens shall
be determined as if the Cash Collateral Order were still in effect.) The Secured
Cramdown Note shall provide for prepayment of the principal due under the
Secured Cramdown Note to the extent necessary to ensure that the ratio of the
value of the Bank Group's collateral to the amount outstanding under the Secured
Cramdown Note is at least 4:3. This determination will be made by the
Reorganized Debtors at the end of each fiscal Quarter, using an SEC PV-10
valuation, except substituting the average NYMEX price for oil and gas during
the prior Quarter. The interest rate, collateral ratio, and replacement Liens
for the Secured Cramdown Note will be automatically increased to the extent
necessary to match the minimum treatment that the Bankruptcy Court finds fair
and equitable and in compliance with Section 1129 of the Bankruptcy Code.
Interest on the Secured Cramdown Note shall be paid monthly; provided, however,
the Reorganized Debtors reserve the right to file an adversary proceeding to
determine the validity, priority, or avoidability of the Bank Group's Liens or
Security Interests and/or the valuation of the Bank Group's Collateral.
NOTE CONCERNING SUBCLASSIFICATION OF ALLOWED SECURED BANK GROUP CLAIMS:
To the extent necessary to satisfy Section 1122 of the Bankruptcy Code, each
Allowed Secured Bank Group Claim shall be treated in its own individual Class,
but with the treatment specified for holders of Allowed Bank Group Secured
Claims specified in Sections 4.3(b) or 4.3(c) of the Plan.
4.4 CLASS 4 -- MISCELLANEOUS SECURED CLAIMS.
4A SENIOR MISCELLANEOUS SECURED CLAIMS
(a) Impairment and Voting. Class 4A is unimpaired by the Plan. Each
holder of a Senior Miscellaneous Secured Claim is deemed to have accepted the
Plan and is not entitled to vote to accept or reject the Plan.
(b) Treatment. Except to the extent that a holder of an Allowed Senior
Miscellaneous Secured Claim has been paid by the Debtors prior to the Effective
Date or agrees to a different treatment, each holder of an Allowed Senior
Miscellaneous Secured Claim shall receive Cash equal to such Allowed Senior
Miscellaneous Secured Claim on the later of the Effective Date and the date
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such Senior Miscellaneous Secured Claim becomes an Allowed Senior Miscellaneous
Secured Claim, or within ten (10) days thereof.
4B JUNIOR MISCELLANEOUS SECURED CLAIMS
(a) Impairment and Voting. Class 4B is impaired by the Plan. Each
holder of an Allowed Junior Miscellaneous Secured Claim is entitled to vote to
accept or reject the Plan.
(b) Treatment. Except to the extent that a holder of an Allowed Junior
Miscellaneous Secured Claim has been paid by the Debtors prior to the Effective
Date or agrees to a different treatment, each holder of an Allowed Junior
Miscellaneous Secured Claim shall, at the Reorganized Debtors' sole option (i)
be paid in full, in Cash, on the later of the Effective Date and the date such
Junior Miscellaneous Secured Claim becomes an Allowed Junior Miscellaneous
Secured Claim, or within ten (10) days thereof, or (ii) be paid over 3 1/2 years
in equal semi-annual installments of principal with interest at a fixed rate of
8% in an aggregate amount equal to such Allowed Junior Miscellaneous Secured
Claim, or (iii) satisfied in full by the abandonment of all Collateral securing
such Allowed Junior Miscellaneous Secured Claim. Notwithstanding the foregoing,
the Debtors shall not abandon any Collateral consisting of Mineral Leases. Any
Collateral held by a holder of an Allowed Junior Miscellaneous Secured Claim
shall remain Collateral until such Claim is paid in full. Any Collateral
abandoned to the holder of an Allowed Junior Miscellaneous Secured Claim will be
subject to any valid Liens existing as of the Confirmation Date. The amount of
any such Junior Miscellaneous Secured Claim shall be determined as follows: the
Debtors shall file a motion under Section 506 of the Bankruptcy Code as to any
Junior Miscellaneous Secured Claim for which the Debtors seek a determination of
secured status based on the value of the Collateral. Such determination may also
be made by agreed Final Order approved by the Bankruptcy Court after notice and
hearing. Unless specified otherwise, any such determination will be without
prejudice to the Debtors' rights to (i) object to the Claim itself, or (ii)
challenge the Security Interest or Lien given for the Claim as an avoidable
transfer. Any determination under Section 506 of the Bankruptcy Code will set an
upper limit on the Allowed amount of the Junior Miscellaneous Secured Claim. Any
portion of an alleged Junior Miscellaneous Secured Claim in excess of this
amount will be treated as a General Unsecured Claim to the extent such Claim is
Allowed. Junior Miscellaneous Secured Claims may include Claims of lessors,
operators, and vendors to the extent such entities' Claims are Secured Claims.
(c) Optional Treatment for Holders of Junior Miscellaneous Secured
Claims (Non-Louisiana Liens). Notwithstanding anything to the contrary contained
in the Plan, any Claimant that asserts a Miscellaneous Secured Claim allegedly
secured by a Lien and that is listed on Exhibit "5" attached hereto shall have
the option, subject to approval of the Bankruptcy Court as described in this
Section 4B(c), of electing to have such Claimant's Claim (or portion thereof)
allegedly secured by such Lien deemed an Allowed Claim in the amount set forth
in Exhibit "5" and receiving Cash on the
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Effective Date in an amount equal to eighty-five percent (85%) of the amount of
such Allowed Claim in full satisfaction of such Allowed Claim, including any
secured and any unsecured portion of such Allowed Claim; provided, however, that
immediately upon receipt of such Cash, the Claimant holding such Allowed Claim
executes and delivers to the Reorganized Debtors all documents necessary to
effectuate an immediate release of all Liens allegedly securing such Allowed
Claim. To the extent that any Claimant makes the election described in this
Section 4B(c), such election shall be deemed a motion under Bankruptcy Rule 9019
to approve the compromise of all disputes with respect to the Claimant's Claim
allegedly secured by such Lien, including without limitation, all objections to
the Claim and all motions to determine the extent, priority and validity of any
Liens allegedly securing such Claim (including disputes under Section 506 of the
Bankruptcy Code), regardless of whether any such objections or motions have been
filed. Except to the extent otherwise provided therein, the Confirmation Order
shall constitute a Final Order approving the compromise described in this
Section 4B(c) with respect to each such electing Claimant. If the Bankruptcy
Court does not approve the proposed compromise with respect to all or a portion
of the Junior Miscellaneous Secured Claim of any electing Claimant, such
Claimant's Junior Miscellaneous Secured Claim shall remain subject to the
treatment set forth in Section 4B(b) above.
(d) Optional Treatment for Holders of Junior Miscellaneous Secured
Claims (Louisiana Liens). Notwithstanding anything to the contrary contained in
the Plan, any Claimant that asserts a Miscellaneous Secured Claim allegedly
secured by a Lien and that is listed on Exhibit "6" attached hereto shall have
the option, subject to approval of the Bankruptcy Court as described in this
Section 4B(d), of electing to have the Claimant's Claim (or portion thereof)
allegedly secured by such Lien deemed an Allowed Claim in the amount set forth
in Exhibit "6" and receiving Cash on the Effective Date in an amount equal to
eighty percent (80%) of the amount of such Allowed Claim in full satisfaction of
such Allowed Claim, including any secured and any unsecured portion of such
Allowed Claim; provided, however, that immediately upon receipt of such Cash,
the Claimant holding such Allowed Claim executes and delivers to the Reorganized
Debtors all documents necessary to effectuate an immediate release of all Liens
allegedly securing such Allowed Claim. To the extent that any Claimant makes the
election described in this Section 4B(d), such election shall be deemed a motion
under Bankruptcy Rule 9019 to approve the compromise of all disputes with
respect to the Claimant's Claim allegedly secured by such Lien, including
without limitation, all objections to the Claim and all motions to determine the
extent, priority and validity of any Liens allegedly securing such Claim
(including disputes under Section 506 of the Bankruptcy Code), regardless of
whether any such objections or motions have been filed. Except to the extent
otherwise provided therein, the Confirmation Order shall constitute a Final
Order approving the compromise described in this Section 4B(d) with respect to
each such electing Claimant. If the Bankruptcy Court does not approve the
proposed compromise with respect to all or a portion of the Junior Miscellaneous
Secured Claim of any electing Claimant, such Claimant's Junior Miscellaneous
Secured Claim shall remain subject to the treatment set forth in Section 4B(b)
above.
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NOTE CONCERNING SUBCLASSIFICATION OF ALLOWED MISCELLANEOUS SECURED CLAIMS: Each
Allowed Senior or Junior Miscellaneous Secured Claim identified as a Class 4A or
4B Claim shall be treated in its own individual Class, but with the treatment
specified for Class 4A or 4B Claims.
4.5 CLASS 5 -- INTERIOR CLAIMS AND GOVERNMENTAL MINERAL LESSOR CLAIMS.
(a) Impairment and Voting. Class 5 is unimpaired by the Plan. Each
holder of an Allowed Interior Claim or an Allowed Governmental Mineral Lessor
Claim is unimpaired and is not entitled to vote to accept or reject the Plan.
(b) Treatment of Interior Claims. All Claims of the Interior will be
satisfied pursuant to the terms of the Agreed Order Concerning Mineral Leases
(the "MMS Order"), which is subject to Bankruptcy Court approval.
(c) Treatment of Governmental Mineral Lessor Claims. All Claims of
Governmental Mineral Lessors under a mineral lease (a "Lease") shall be
satisfied as follows:
(i) to the extent a Lease is an executory contract or unexpired
lease of nonresidential real property, the Debtors shall assume such Lease
pursuant to Section 365 of the Bankruptcy Code;
(ii) the Debtors shall not abandon any such Lease under Section 554
of the Bankruptcy Code;
(iii) any such Lease shall be deemed in full force and effect,
except to the extent that such Lease has expired, terminated or was
relinquished prior to entry of the Confirmation Order;
(iv) the Debtors' obligations to a Governmental Mineral Lessor
under a Lease and a Governmental Mineral Lessor's obligations to the
Debtors thereunder shall be honored and enforced according to the terms of
such Lease, notwithstanding the Debtors' assumption or rejection of any
Joint Operating Agreement or other contracts concerning or relating to such
Lease;
(v) as adequate assurance of future performance, the Debtors shall
maintain their existing bonding programs (if any) securing the liabilities
associated with the obligation to plug and abandon wells, remove platforms
and pipelines, and to otherwise remediate the properties covered by a Lease
(the "P&A Liabilities") and where any Debtor is an operator, it is in
compliance with applicable non-bankruptcy law and regulations;
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(vi) as adequate assurance of future performance for its Leases
with the State of Alaska, the Debtor will comply with all bonding
requirements of the State of Alaska whether imposed by contract, statute,
regulation or administrative order; and
(vii) the Debtors shall not be required or obligated to establish
any additional bonding programs, collateral or security (other than that
currently in place) or any escrow or sinking fund with respect to the P&A
Liabilities.
(d) The Debtors have heretofore paid all pre-petition royalty and other
monetary obligations, including all penalties and interest, owed to Governmental
Mineral Lessors, and the treatment specified herein shall be in full and final
satisfaction of Governmental Mineral Lessor Claims, but shall be for the benefit
of only the Governmental Mineral Lessors and the Debtors, and no other party;
provided, however, any of the Debtors' monetary obligations to the State of
Louisiana which have not yet been satisfied shall be determined and paid
pursuant to the Debtors' Leases with, and in accordance with the normal
procedures of, the State of Louisiana.
NOTE CONCERNING SUBCLASSIFICATION OF INTERIOR CLAIMS AND GOVERNMENTAL MINERAL
LESSOR CLAIMS: Each Allowed Interior Claim and Allowed Governmental Mineral
Lessor Claim identified as a Class 5 Claim shall be treated in its own
individual Class, but with the treatment specified for holders of Allowed
Interior Claims and Allowed Governmental Mineral Lessor Claims specified in
Section 4.5 of the Plan.
4.6 CLASS 6 - BONDING ENTITY CLAIMS.
(a) Impairment and Voting. Class 6 is unimpaired by the Plan. Each
holder of an Allowed Bonding Entity Claim is not entitled to vote to accept or
reject the Plan.
(b) Consensual Treatment of Bonds Issued Subsequent to the Commencement
Date. If the Bankruptcy Court approves the MMS Order, the new bonds issued in
connection therewith will be entitled to Administrative Expense Claim status as
provided in the MMS Order.
(c) Consensual Treatment of Bonds Issued Prior to the Commencement Date.
Except as to bonds voluntarily canceled by the beneficiary thereof, the rights
of the Bonding Entities (and any reinsurers) will remain in full force and
effect under the Plan. The rights of the Bonding Entities (and any reinsurers)
under the contracts will remain in full force and effect.
4.7 CLASS 7 -- CONVENIENCE CLAIMS.
(a) Impairment and Voting. Class 7 is unimpaired by the Plan. Each
holder of an Allowed Convenience Claim is unimpaired and is not entitled to vote
to accept or reject the Plan.
(b) Treatment. Except to the extent that an Allowed Convenience Claim
has been paid by the Debtors prior to the Effective Date or agrees to a
different treatment, each holder of an
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Allowed Convenience Claim as of the Record Date shall receive Cash in an amount
equal to 100% of such Allowed Convenience Claim on the later of the Effective
Date and the date such Allowed Convenience Claim becomes an Allowed Convenience
Claim, or within ten (10) days thereof.
4.8 CLASS 8 -- GENERAL UNSECURED CLAIMS.
(a) Impairment and Voting. Class 8 is impaired by the Plan. Each holder
of an Allowed General Unsecured Claim is entitled to vote to accept or reject
the Plan.
(b) Treatment. On the Effective Date or within thirty (30) days thereof,
each holder of an Allowed General Unsecured Claim as of the Record Date shall
receive a Pro Rata Share of 23,040,000 shares of New Forcenergy Common Stock,
less the number of shares of New Forcenergy Common Stock held in the Reserve in
respect of Disputed General Unsecured Claims.
4.9 CLASS 9 -- INTERCOMPANY CLAIMS.
(a) Impairment and Voting. Class 9 is impaired by the Plan. Each holder
of an Allowed Intercompany Claim is entitled to vote to accept or reject the
Plan. Notwithstanding the foregoing, any vote cast by a holder of an Allowed
Intercompany Claim shall not be counted for purposes of satisfying the
requirements of Section 1129(a)(10) of the Bankruptcy Code.
(b) Treatment. On the Effective Date or within thirty (30) days thereof,
each holder of an Allowed Intercompany Claim shall receive $1.00.
4.10 CLASS 10 -- FORCENERGY EQUITY INTERESTS.
(a) Impairment and Voting. Class 10 is impaired by the Plan. Each holder
of an Allowed Forcenergy Equity Interest is entitled to vote to accept or reject
the Plan.
(b) Treatment. Each holder of an Allowed Forcenergy Equity Interest as
of the Record Date shall receive a Pro Rata Share of (i) 960,000 shares of New
Forcenergy Common Stock, less the number of shares of New Forcenergy Common
Stock held in the Reserve in respect of Disputed Forcenergy Equity Interests,
(ii) the Four Year Warrants, less the number of Four Year Warrants held in the
Reserve in respect of Disputed Forcenergy Equity Interests, and (iii) the Five
Year Warrants, less the number of Five Year Warrants held in the Reserve in
respect of Disputed Forcenergy Equity Interests, on the later of the Initial
Distribution Date and the date such Forcenergy Equity Interest becomes an
Allowed Forcenergy Equity Interest, or within ten (10) days thereof.
(c) Cancellation of Common Stock and Related Securities. All shares of
common stock, including but not limited to all shares of common stock held or
reserved by Forcenergy or held by any of its subsidiaries, and any other
securities giving rise to or resulting from ownership of Forcenergy Equity
Interests, and any and all rights related to or arising from such common stock
or
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other securities existing prior to the Effective Date, shall be deemed canceled
and rendered null and void on the Effective Date.
4.11 CLASS 11 -- RESOURCES EQUITY INTERESTS.
(a) Impairment and Voting. Class 11 is unimpaired by the Plan. Each
holder of an Allowed Resources Equity Interest is not entitled to vote to accept
or reject the Plan.
(b) Treatment. Each holder of an Allowed Resources Equity Interest shall
retain such interest in Reorganized Resources.
ARTICLE V
PROVISIONS REGARDING VOTING AND DISTRIBUTIONS
UNDER THE PLAN AND TREATMENT OF DISPUTED,
CONTINGENT AND UNLIQUIDATED ADMINISTRATIVE
EXPENSE CLAIMS, CLAIMS AND EQUITY INTERESTS
5.1 Voting of Claims and Equity Interests. Each holder of an Allowed
Claim or an Allowed Equity Interest in an impaired Class of Claims or Equity
Interests shall be entitled to vote separately to accept or reject the Plan as
provided in such Final Order as is entered by the Bankruptcy Court establishing
certain procedures with respect to the solicitation and tabulation of votes to
accept or reject the Plan, or in any other Final Order of the Bankruptcy Court.
5.2 Nonconsensual Confirmation. If any impaired Class of Claims or Class
of Equity Interests entitled to vote shall not accept the Plan by the requisite
statutory majorities provided in Sections 1126(c) or 1126(d) of the Bankruptcy
Code, as applicable, the Debtors reserve the right to amend the Plan in
accordance with Section 12.9 hereof or undertake to have the Bankruptcy Court
confirm the Plan under Section 1129(b) of the Bankruptcy Code or both.
5.3 Method of Distributions Under the Plan.
(a) In General. Subject to Bankruptcy Rule 9010, all distributions under
the Plan shall be made by the Reorganized Debtors to the holder of each Allowed
Claim at the address of such holder as listed on the Schedules as of the Record
Date, and to the holder of each Allowed Forcenergy Equity Interest at the
address of such holder as listed in the transfer ledger for Forcenergy Equity
Interests as of the Record Date, unless the Debtors or Reorganized Debtors have
been notified in writing of a change of address in accordance with Section 12.13
of the Plan by such holder that provides an address for such holder different
from the address reflected on the Schedules (for holders of Allowed Claims) or
on the transfer ledger as of the Record Date (for holders of Allowed Forcenergy
Equity Interests). All distributions under the Plan to holders of Senior
Subordinated Notes with respect to their Allowed Claims shall be made to Bankers
Trust, as disbursing agent for the holders of the Senior Subordinated Notes.
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(b) Distributions of Cash. Any payment of Cash made by the Reorganized
Debtors pursuant to the Plan shall be made, at the sole option of the
Reorganized Debtors, by check drawn on a domestic bank, wire transfer, or any
other method mutually agreeable between the Reorganized Debtors and the payee.
(c) Timing of Distributions. Any payment or distribution required to be
made under the Plan on a day other than a Business Day shall be made on the next
succeeding Business Day.
(d) Hart-Scott-Rodino Compliance. Any shares of New Forcenergy Common
Stock to be distributed under the Plan to any entity required to file a
Premerger Notification and Report Form under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, shall not be distributed until the
notification and waiting periods applicable under such Act to such entity shall
have expired or been terminated.
(e) Minimum Distributions. No payment of Cash less than one-hundred
dollars ($100.00) shall be made by the Reorganized Debtors to any holder of a
Claim unless a request therefor is made in writing to Reorganized Debtors.
(f) Fractional Shares or Warrants. No fractional shares of New
Forcenergy Common Stock or fractional Warrants or Cash in lieu thereof shall be
distributed under the Plan. When any distribution on account of an Allowed Claim
or Allowed Forcenergy Equity Interest pursuant to the Plan would otherwise
result in the issuance of a number of shares of New Forcenergy Common Stock or
Warrants that is not a whole number, the actual distribution of shares of New
Forcenergy Common Stock or Warrants shall be rounded as follows: (i) fractions
of 1/2 or greater shall be rounded to the next higher whole number, and (ii)
fractions of less than 1/2 shall be rounded to the next lower whole number. The
total number of shares of New Forcenergy Common Stock or Warrants to be
distributed to a Class of Claims or Forcenergy Equity Interests, as the case may
be, shall be adjusted as necessary to account for the rounding provided in this
Section 5.3(f).
(g) Distributions to Holders as of the Record Date. As of the close of
business on the Record Date, the claims register (for Claims) and the transfer
ledgers (for Forcenergy Equity Interests) shall be closed, and there shall be no
further changes in the record holders of any Claims or Forcenergy Equity
Interests. The Debtors and Reorganized Debtors shall have no obligation to
recognize any transfer of any Claims or Forcenergy Equity Interests occurring
after the Record Date. The Debtors and Reorganized Debtors shall instead be
entitled to recognize and deal for all purposes under the Plan (except as to
voting to accept or reject the Plan pursuant to Section 5.1 of the Plan) with
only those record holders stated on the claims register (for Claims) and
transfer ledgers (for Forcenergy Equity Interests) as of the close of business
on the Record Date.
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(h) Distributions Withheld for Disputed Claims.
(i) Establishment and Maintenance of Reserve. On the Initial
Distribution Date and each Subsequent Distribution Date, Reorganized
Forcenergy shall reserve from the distributions to be made on such dates
to the holders of Allowed Claims in a particular Class, an amount of
Cash or New Forcenergy Common Stock equal to 100% of the distributions
to which holders of Disputed Claims in such Class would be entitled
under the Plan as of such dates as if such Disputed Claims were Allowed
Claims in their Disputed Claim Amounts (the "Reserve").
(ii) Cash Held in Reserve. Any Cash dividends paid on New Forcenergy
Common Stock held in the Reserve shall be deposited in a segregated bank
account or accounts in the name of Reorganized Forcenergy and designated
as held in trust for the benefit of holders of Disputed Claims to the
extent such Disputed Claim is ultimately Allowed. Cash held in the
Reserve shall not constitute property of the Reorganized Debtors.
Reorganized Forcenergy shall invest the Cash held in the Reserve in a
manner consistent with investment guidelines, which investment
guidelines shall be included in the Plan Supplement. Reorganized
Forcenergy shall pay, or cause to be paid, out of the funds held in the
Reserve, any tax imposed on the Reserve by any governmental unit with
respect to income generated by the property held in the Reserve. The
yield earned on such invested Cash (net of applicable taxes) shall be
held in trust for the benefit of holders of Disputed Claims to the
extent such Disputed Claim is ultimately Allowed. New Forcenergy Common
Stock held in the Reserve shall be held in trust by the Reorganized
Debtors for the benefit of the potential claimants of such securities
and shall not constitute property of the Reorganized Debtors.
(i) Distributions Upon Allowance of Disputed Claims. The holder of a
Disputed Claim that becomes an Allowed Claim subsequent to the Initial
Distribution Date shall receive distributions from the Reserve in accordance
with and pursuant to the terms of the Plan on the next Subsequent Distribution
Date selected by the Reorganized Debtors during the Quarter that follows the
Quarter during which such Disputed Claim becomes an Allowed General Unsecured
Claim pursuant to a Final Order. Such distributions shall be made in accordance
with the Plan based upon the distributions that would have been made to such
holder under the Plan if the Disputed Claim had been an Allowed Claim on or
prior to the Effective Date, without any post-Effective Date interest thereon.
(j) Surplus Distributions to Holders of Allowed General Unsecured
Claims. The following consideration shall constitute surplus distributions (the
"Surplus Distributions") pursuant to the Plan: (i) distributions under the Plan
to holders of Allowed Claims that are unclaimed for a period of one year after
distribution thereof; and (ii) to the extent that a Disputed Claim is not
Allowed or becomes an Allowed Claim in an amount less than the Disputed Claim
Amount, the excess of the amount of New Forcenergy Common Stock in the Reserve
over the amount of New
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Forcenergy Common Stock actually distributed on account of such Disputed Claim.
The Surplus Distributions shall be distributed to the holders of Allowed General
Unsecured Claims pursuant to Section 4.8(b) of the Plan; provided, however, that
the Reorganized Debtors shall not be under any obligation to make any Surplus
Distributions on a Subsequent Distribution Date unless the then fair market
value of the New Forcenergy Common Stock to be distributed on a Subsequent
Distribution Date aggregates $1,000,000 or more, unless the distribution is the
last distribution under the Plan.
5.4 Objections to and Resolution of Administrative Expense Claims,
Claims and Equity Interests. Except as to applications for allowances of
compensation and reimbursement of expenses under Sections 330 and 503 of the
Bankruptcy Code, the Debtors or Reorganized Debtors shall have the exclusive
right to make and file objections to Administrative Expense Claims, Claims and
Equity Interests subsequent to the Confirmation Date. All objections shall be
litigated to Final Order; provided, however, that the Reorganized Debtors shall
have the authority to compromise, settle, otherwise resolve or withdraw any
objections, without approval of the Bankruptcy Court. Unless otherwise ordered
by the Bankruptcy Court, the Debtors or Reorganized Debtors shall file all
objections to Administrative Expense Claims that are the subject of proofs of
Claim or requests for payment filed with the Bankruptcy Court (other than
applications for allowances of compensation and reimbursement of expenses),
Claims and Equity Interests and serve such objections upon the holder of the
Administrative Expense Claim, Claim or Equity Interest as to which the objection
is made as soon as is practicable, but in no event later than ninety (90) days
after the Effective Date or such later date as may be approved by the Bankruptcy
Court.
5.5 Distributions Relating to Allowed Insured Claims. Distributions
under the Plan to each holder of an Allowed Insured Claim shall be in accordance
with the treatment provided under the Plan for the Class in which such Allowed
Insured Claim is classified, but solely to the extent that such Allowed Insured
Claim is not satisfied from proceeds payable to the holder thereof under any
pertinent insurance policies and applicable law. Nothing contained in this
Section 5.5 shall constitute or be deemed a waiver of any Cause of Action that
the Debtors or any entity may hold against any other entity, including, without
limitation, insurers under any policies of insurance.
5.6 Cancellation and Surrender of Existing Securities and Agreements.
(a) On the Effective Date, the promissory notes, share certificates and
other instruments evidencing any Claim or Forcenergy Equity Interest shall be
deemed canceled without further act or action under any applicable agreement,
law, regulation, order or rule and the obligations of the Debtors under the
agreements, indentures and certificates of designations governing such Claims or
Forcenergy Equity Interests, as the case may be, shall be discharged.
(b) Each holder of a promissory note, share certificate or other
instrument evidencing a Claim or Forcenergy Equity Interest shall surrender such
promissory note, share certificate or instrument to the Reorganized Debtors,
unless such requirement is waived by the Reorganized Debtors. No distribution of
property hereunder shall be made to or on behalf of any such holders
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unless and until such promissory note, share certificate or instrument is
received by the Reorganized Debtors or the unavailability of such promissory
note, share certificate or instrument is established to the reasonable
satisfaction of the Reorganized Debtors or such requirement is waived by the
Reorganized Debtors. The Reorganized Debtors may require any holder that is
unable to surrender or cause to be surrendered any such promissory notes, share
certificates or instruments to deliver an affidavit of loss and indemnity and/or
furnish a bond in form and substance (including, without limitation, with
respect to amount) reasonably satisfactory to the Reorganized Debtors. Any
holder that fails within the later of one (1) year after the Confirmation Date
and the date of Allowance of its Claim or Forcenergy Equity Interest (i) if
possible, to surrender or cause to be surrendered such promissory note, share
certificate or instrument, (ii) if requested, to execute and deliver an
affidavit of loss and indemnity reasonably satisfactory to the Reorganized
Debtors, and (iii) if requested, to furnish a bond reasonably satisfactory to
the Reorganized Debtors, shall be deemed to have forfeited all rights, Claims,
Forcenergy Equity Interests and Causes of Action against the Debtors and
Reorganized Debtors and shall not participate in any distribution hereunder.
5.7 Record Date for Distributions to Holders of Senior Subordinated
Notes. At the close of business on the Record Date, the transfer ledgers of
Bankers Trust, agents and servicers of the Senior Subordinated Notes, shall be
closed and there shall be no further changes in the record holders of the Senior
Subordinated Notes. On or before the Effective Date, Bankers Trust shall certify
to the Debtors or the Reorganized Debtors the names and addresses of all holders
of the Senior Subordinated Notes and the face amount of the Senior Subordinates
Notes held by them as of the Record Date. Bankers Trust, agents and servicers of
the Senior Subordinated Notes, and the Debtors and Reorganized Debtors shall
have no obligation to recognize any transfer of Senior Subordinated Notes
occurring after the Record Date.
5.8 Cancellation of Senior Subordinated Note Indentures. On the
Effective Date, the Senior Subordinated Indentures shall be deemed canceled,
terminated and of no further force or effect pursuant to Section 5.6 of the
Plan. Notwithstanding the foregoing, such cancellation of the Senior
Subordinated Note Indentures shall not impair the rights and the duties under
the respective Senior Subordinated Note Indentures as between Bankers Trust and
the beneficiaries of the trust created thereby, or as between Bankers Trust and
the Debtors, as set forth in the respective Senior Subordinated Note Indentures.
The Senior Subordinated Note Indentures shall not be canceled other than
pursuant to Section 5.6 of the Plan and, until such cancellation, such notes
shall be evidence of the entitlement of the holder thereof to receive
distribution of property from the Debtors or Reorganized Debtors pursuant to
the Plan.
5.9 Termination of Bankers Trust's Duties. Subsequent to the performance
by Bankers Trust of the obligations required under the provisions of this Plan,
the Confirmation Order and the respective Senior Subordinated Note Indentures,
Bankers Trust and its successors and assigns shall be relieved of all
obligations under the Senior Subordinated Note Indentures.
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5.10 Fees and Expenses of Bankers Trust. Notwithstanding anything to the
contrary contained in the Plan, any fees and expenses of Bankers Trust incurred
through the Effective Date with regard to any of the Senior Subordinated Notes,
including legal fees and expenses incurred in connection with the Chapter 11
Cases, as determined by the Bankruptcy Court in accordance with the standard for
allowance and payment of such charges under the respective Senior Subordinated
Note Indentures (and not with reference to any "substantial contribution" or
other standard applicable under Bankruptcy Code Section 503(b)(3), (4) or (5) or
otherwise), shall be paid in full, in Cash as part of the Plan. As of the date
hereof, Bankers Trust estimates that its fees and expenses, including legal fees
and expenses, aggregate approximately $260,000.
5.11 Registration of New Forcenergy Common Stock. On the Effective Date
or as soon thereafter as is practicable, each person or entity receiving a
distribution of New Forcenergy Common Stock pursuant to the Plan representing a
minimum percentage of the aggregate New Forcenergy Common Stock issuable
pursuant to the Plan as shall be established in the Registration Rights
Agreement shall be entitled to become a party to the Registration Rights
Agreement.
5.12 Listing of New Forcenergy Common Stock. Reorganized Forcenergy
shall use reasonably commercial efforts to cause the shares of New Forcenergy
Common Stock to be listed on a national securities exchange or the Nasdaq
National Market.
5.13 Issuance of Subscription Preferred Stock and Subscription Warrants.
Reorganized Forcenergy shall issue the Subscription Preferred Stock and
Subscription Warrants in exchange for $40 million Cash (before deducting fees)
pursuant to the Rights Offering.
5.14 Waiver of Subordination. Subject to the provisions of Section 5.8
of the Plan, the distributions to the holders of Senior Subordinated Notes shall
not be subject to levy, garnishment, attachment or other legal process by any
holder of Senior Indebtedness (as such term is defined in each of the Senior
Subordinated Note Indentures) by reason of claimed contractual subordination
rights. On the Effective Date, all creditors shall be deemed to have waived any
and all contractual subordination rights which they may have with respect to
such distributions. The Bankruptcy Court in the Confirmation Order shall
permanently enjoin, effective as of the Confirmation Date, all holders of Senior
Indebtedness from enforcing or attempting to enforce any such rights with
respect to such distributions to the subordinated creditors, including the
holders of the Senior Subordinated Notes.
ARTICLE VI
EXECUTORY CONTRACTS AND UNEXPIRED LEASES
6.1 Assumption or Rejection of Executory Contracts and Unexpired Leases.
(a) Executory Contracts and Unexpired Leases. Pursuant to Sections
365(a) and 1123(b)(2) of the Bankruptcy Code, all executory contracts and
unexpired leases entered into prior
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to the Commencement Date that exist between the Debtors and any person shall be
assumed or rejected (as set forth below) by the Debtors and/or Reorganized
Debtors as of the Effective Date. Notwithstanding anything contained herein to
the contrary, any executory contract or unexpired lease (i) which has been
assumed pursuant to a Final Order of the Bankruptcy Court entered prior to the
Confirmation Date, (ii) which has been rejected pursuant to a Final Order of the
Bankruptcy Court entered prior to the Confirmation Date, or (iii) as to which a
motion for approval of the rejection of such executory contract or unexpired
lease has been filed prior to the Confirmation Date shall be rejected or assumed
in accordance with such motion or Final Order. Subject to the immediately
preceding sentence, the executory contracts and unexpired leases described below
and identified in Exhibits "7" through "11" of the Plan shall be deemed to be,
respectively, assumed or rejected as follows:
(i) Joint Operating Agreements. The Joint Operating Agreements
identified in Exhibit "7" shall be rejected. Subject to satisfactory
agreement, regarding adequate assurance of future performance, all other
Joint Operating Agreements that are not specifically listed in Exhibit "7"
shall be deemed assumed.
(ii) Mineral Leases. With respect to Mineral Leases for which the
Interior or a Governmental Mineral Lessor is the lessor, no determination
will be made as to such leases' status as an executory contract or
unexpired lease. Instead, all obligations of the Debtors to the Interior
and Governmental Mineral Lessors will be honored as set forth in the MMS
Order and the treatment of the Class 5 Claims set forth in Section 4.5 of
the Plan. With respect to Mineral Leases for which neither the Interior
nor a Governmental Mineral Lessor are lessors, the Debtors shall make a
determination of whether such leases are executory contracts or unexpired
leases within the meaning of Section 365 of the Bankruptcy Code and
whether to assume or reject such executory contracts or unexpired leases,
if necessary, prior to the conclusion of the Confirmation Hearing. Any
Mineral Lease that is not expressly rejected in writing by the Debtors
prior to the conclusion of the Confirmation Hearing shall, to the extent
that it is an executory contract or unexpired lease, be assumed under the
terms of the Plan.
(iii) Master Service Agreements. The Master Service Agreements
specifically identified in Exhibit "8" shall be deemed assumed. All other
Master Service Agreements shall be deemed rejected.
(iv) Seismic Contracts. The Seismic Contracts specifically
identified in Exhibit "9" shall be deemed rejected. All other Seismic
Contracts shall be deemed assumed.
(v) Oil and Gas Purchase Contracts. The Oil and Gas Purchase
Contracts specifically identified in Exhibit "10" shall be deemed
rejected. All other Oil and Gas Purchase Contracts shall be deemed
assumed.
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(vi) Forcenergy Operating Agreements. All Forcenergy Operating
Agreements shall be deemed assumed.
(vii) Office Leases. All Office Leases shall be deemed assumed.
(viii) Farmout Agreements, Easements, and Surface Rights. All
Farmout Agreements, Easements, and Surface Rights, to the extent that they
constitute executory contracts, shall be deemed assumed.
(ix) Insurance Policies. Any insurance policy to which either of the
Debtors is a named insured shall be deemed assumed.
(x) Indemnification Agreements. The Indemnification Agreements shall
be deemed assumed.
(xi) Notwithstanding the foregoing, any executory contract or
unexpired lease not specifically assumed or rejected as heretofore
provided (and not otherwise assumed or rejected), except as specifically
identified in Exhibit "11" as being rejected, shall be deemed assumed.
(xii) To the extent that the holder of a Claim arising from the
rejection of any contract, agreement or lease asserts a Secured Claim, the
Debtors may file a motion under Section 506 of the Bankruptcy Code to
limit the amount of such Secured Claim, an adversary proceeding to avoid
the Security Interest taken for such Claim, and/or an objection to the
Claim itself. To the extent that any Claim arising out of an executory
contract or unexpired lease is secured as determined by a Final Order of
the Bankruptcy Court, such Claim shall be treated as a Miscellaneous
Secured Claim under Class 4 of the Plan. To the extent such Claim is
unsecured, such Claim shall be treated as a General Unsecured Claim under
Class 8 of the Plan.
(xiii) The listing of a document on Exhibits "7" through "11" shall
not constitute an admission by the Debtors or Reorganized Debtors that
such document is an executory contract or an unexpired lease or that the
Debtors or Reorganized Debtors have any liability thereunder.
(xiv) Hilcorp Sale Motion. If the Hilcorp Sale Motion (or a motion
to sell such assets to a different purchaser) is granted either prior to
or contemporaneously with confirmation, the treatment of the unexpired
leases and executory contracts identified in the Hilcorp Sale Motion or
other motion will be treated in accordance therewith.
(xv) Notwithstanding anything to the contrary contained herein, the
Debtors payment of outstanding prepetition amounts shall constitute
adequate assurance of future performance of all the executory contracts
and unexpired leases assumed pursuant to this
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Section 6.1(a) (with the exception of those Joint Operating Agreements
assumed pursuant to Section 6.1(a)(i)), unless prior to the deadline for
objection to confirmation of the Plan, the other party to such executory
contract or unexpired lease files an objection to the Plan requesting
additional assurance of future performance; any such determination by the
Bankruptcy Court shall be made at the Confirmation Hearing or subsequent
hearings. With respect to the Joint Operating Agreements assumed pursuant
to Section 6.1(a)(i), the Debtors will file a motion for determination of
what constitutes adequate assurance of future performance prior to the
Confirmation Hearing for any such Joint Operating Agreement that is not
theretofore the subject of a satisfactory agreement regarding adequate
assurance of future performance. Any such determination shall be made by
the Bankruptcy Court at the Confirmation Hearing.
(b) Approval of Assumption or Rejection of Executory Contracts and
Unexpired Leases. Entry of the Confirmation Order shall constitute (i) the
approval, pursuant to Sections 365(a) and 1123(b)(2) of the Bankruptcy Code, of
the assumption of the executory contracts and unexpired leases assumed pursuant
to Section 6.1(a) hereof, (ii) the extension of time, pursuant to Section
365(d)(4) of the Bankruptcy Code, within which the Debtors may assume or reject
the unexpired leases specified in Section 6.1(a) hereof through the date of
entry of a Final Order approving the assumption or rejection of such unexpired
leases, and (iii) the approval, pursuant to Sections 365(a) and 1123(b)(2) of
the Bankruptcy Code, of the rejection of the executory contracts and unexpired
leases rejected pursuant to Section 6.1(a) hereof.
(c) Cure of Defaults. Except as may otherwise be agreed to by the
parties, within ninety (90) days after the Effective Date, the Reorganized
Debtors shall cure any and all undisputed defaults under any executory contract
or unexpired lease assumed pursuant to Section 6.1(a) of the Plan in accordance
with Section 365(b)(1) of the Bankruptcy Code. All disputed defaults that are
required to be cured shall be cured either within thirty (30) days of the entry
of a Final Order determining the amount, if any, of the Debtors' or Reorganized
Debtors' liability with respect thereto, or as may otherwise be agreed to by the
parties. With regard to the leases and related executory contracts identified in
the Hilcorp Sale Motion, the deadline for filing objections to the pre-petition
cure amounts for the leases and related executory contracts identified in the
Hilcorp Sale Motion shall be the deadlines prescribed in the Final Order
approving the Hilcorp Break-Up Expense Reimbursement.
(d) Bar Date for Filing Proofs of Claim Relating to Executory
Contracts and Unexpired Leases Rejected Pursuant to the Plan. Claims arising out
of the rejection of an executory contract or unexpired lease pursuant to Section
6.1(a) of the Plan must be filed with the Bankruptcy Court and served upon the
Debtors or Reorganized Debtors, or as otherwise may be provided in the
Confirmation Order, by no later than thirty (30) days after the later of (i)
notice of entry of an order approving the rejection of such executory contract
or unexpired lease, and (ii) notice of entry of the Confirmation Order. Any
Claims not filed within such time will be forever barred from assertion against
the Debtors, their estates, the Reorganized Debtors and their property.
Notwithstanding anything to the contrary contained in Section 5.4 of the Plan,
the Debtors or the Reorganized Debtors, as
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the case may be, shall have until sixty (60) days after a proof of Claim filed
in accordance with this Section 6.1(d) to file an objection to such Claim.
6.2 Compensation and Benefit Programs. Except as otherwise provided in
Sections 4.10(c) and 7.14 of the Plan, all employment and severance practices
and policies, and all compensation and benefit plans, policies, and programs of
the Debtors applicable to their directors, officers or employees, including,
without limitation, all savings plans, retirement plans, health care plans,
severance benefit plans, indemnity agreements, incentive plans, workers'
compensation programs and life, disability and other insurance plans are treated
as executory contracts under the Plan and are hereby assumed pursuant to
Sections 365(a) and 1123(b)(2) of the Bankruptcy Code.
6.3 Motion to Assume and Assign (Hilcorp Sale Motion). In the event
that the Confirmation Hearing takes place prior to and/or contemporaneously with
the hearing on the Hilcorp Sale Motion, the Plan includes a motion for approval
of the sale of certain properties in Texas and Louisiana to Hilcorp (or another
purchaser) on the terms set forth in the Hilcorp Agreement and a motion to
assume and assign the leases and related executory contracts recited therein.
ARTICLE VII
PROVISIONS REGARDING CORPORATE GOVERNANCE
AND MANAGEMENT OF THE REORGANIZED DEBTORS
7.1 General. On the Effective Date, the management, control and
operation of the Reorganized Debtors shall become the general responsibility of
the respective Boards of Directors of the Reorganized Debtors, who shall,
thereafter, have the responsibility for the management, control and operation of
the Reorganized Debtors.
7.2 Meetings of Stockholders of Reorganized Debtors. In accordance with
the Amended Forcenergy Certificate of Incorporation, the Amended Forcenergy
Bylaws, the Amended Resources Certificate of Incorporation and/or the Amended
Resources Bylaws, as the same may be amended from time to time, the first annual
meeting of the stockholders of the Reorganized Debtors shall be held on a date
in calendar year 2000 selected by the respective Board of Directors of the
Reorganized Debtors, and subsequent meetings of the stockholders of the
Reorganized Debtors shall be held at least once annually each year thereafter.
7.3 Directors and Officers of the Reorganized Debtors.
(a) Boards of Directors.
(i) Reorganized Forcenergy. The initial Board of Directors of
Reorganized Forcenergy shall consist of the following nine individuals:
a. Bruce L. Burnham
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b. B. James Ford
c. Eric Forss
d. Robert Issal
e. Stephen A. Kaplan
f. Gregory P. Pipkin
g. Stig Wennerstrom
h. an individual designated by the Anschutz Corporation
i. an individual designated by the Anschutz Corporation
(ii) Reorganized Resources. The initial Board of Directors of
Reorganized Resources shall consist of Stig Wennerstrom.
(iii) Each of the individuals set forth in sub-paragraphs (i) and
(ii) above shall serve until the first annual meeting of stockholders
of the Reorganized Debtors or their earlier resignation or removal in
accordance with the Amended Forcenergy Certificate of Incorporation,
Amended Forcenergy Bylaws, Amended Resources Certificate of
Incorporation and/or Amended Resources Bylaws, as the same may be
amended from time to time.
(b) Officers. The officers of the respective Debtors immediately prior
to the Effective Date shall serve as the initial officers of the respective
Reorganized Debtors on and after the Effective Date. Such officers shall serve
and be compensated in accordance with the Employment Agreements, which shall
become binding upon confirmation of the Plan, and applicable nonbankruptcy law.
7.4 Amended Bylaws and Amended Certificates of Incorporation. The
Amended Forcenergy Bylaws, Amended Forcenergy Certificate of Incorporation,
Amended Resources Bylaws and Amended Resources Certificate of Incorporation
shall be amended and restated as of the Effective Date to the extent necessary
(a) to prohibit the issuance of nonvoting equity securities as required by
Section 1123(a)(6) of the Bankruptcy Code, subject to further amendment of such
certificates of incorporation and bylaws as permitted by applicable law, and (b)
to effectuate the provisions of the Plan, including the filing of the same with
the Secretary of State of their respective States of incorporation, in each case
without any further action by the stockholders or directors of the Debtors, the
Debtors in Possession or the Reorganized Debtors.
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7.5 Issuance of New Securities. The issuance of the following
securities and notes by Reorganized Forcenergy is hereby authorized without
further act or action under applicable law, regulation, order or rule:
(a) the issuance of the 40,000 shares of Subscription Preferred Stock
in accordance with Article IX of the Plan;
(b) the issuance of 24,000,000 shares of New Forcenergy Common Stock to
the persons entitled to those shares in accordance with Sections
4.8 and 4.10 of the Plan;
(c) the issuance of the Warrants;
(d) the issuance of the Subscription Warrants;
(e) the issuance of the Employee Options under Section 7.13 of the
Plan;
(f) the issuance of the rights to purchase Subscription Preferred Stock
and the Subscription Warrants; and
(g) the issuance of shares of New Forcenergy Common Stock upon the
issuance of the exercise of the Warrants, the Subscription
Warrants, and the Employee Options, which shares are hereby
reserved for issuance pursuant to such agreements and options.
7.6 Adoption of New Stock Option Plan. Effective on the Effective Date,
Reorganized Forcenergy shall adopt the New Stock Option Plan, and a number of
shares of New Forcenergy Common Stock are hereby reserved for issuance
thereunder in accordance with such plan.
7.7 Adoption of New Employee Stock Purchase Plan. Effective on the
Effective Date, Reorganized Forcenergy shall adopt the New Employee Stock
Purchase Plan, and a number of shares of New Forcenergy Common Stock are hereby
reserved for issuance thereunder in accordance with such plan.
7.8 Execution of Subscription Preferred Stock Designation. Effective on
the Effective Date, Reorganized Forcenergy is authorized to, and shall, execute
and file with the Secretary of State of the State of Delaware the Subscription
Preferred Stock Designation.
7.9 Execution of Subscription Warrant Agreement. Effective on the
Effective Date, Reorganized Forcenergy shall execute the Subscription Warrant
Agreement.
7.10 Investment Guidelines. Effective on the Effective Date,
Reorganized Forcenergy shall adopt the investment guidelines for Cash held in
Reserve under the Plan in respect of Disputed Claims.
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7.11 Execution of Warrant Agreements. Effective on the Effective Date,
Reorganized Forcenergy shall execute the Warrant Agreements.
7.12 Execution of Registration Rights Agreement. Effective on the
Effective Date, Reorganized Forcenergy shall execute the Registration Rights
Agreement.
7.13 Employee Options. Reorganized Forcenergy will be authorized to
issue to its directors, employees and consultants options to purchase New
Forcenergy Common Stock (the "Employee Options") from Reorganized Forcenergy
pursuant and subject to the New Stock Option Plan, including without limitation
the issuance on the Effective Date to current employees and directors of options
to purchase an aggregate of 1,328,127 shares of New Forcenergy Common Stock.
7.14 Employment Agreements. As of the Effective Date, the Debtors or
Reorganized Debtors and the officers of Forcenergy will have entered into the
Employment Agreements. All prior employment contracts between the Debtors and
the individuals subject to the Employment Agreements shall be deemed superseded
in their entirety by the Employment Agreements, and subject to Sections 6.2 and
this 7.14 of the Plan, neither the Debtors nor the Reorganized Debtors shall
have any further obligations whatsoever under such superseded contracts or
agreements. As of the Effective Date, the Debtors or Reorganized Debtors will
enter into the Employment Agreements with each of the following identified
officers and which will provide for, among other things, the following initial
base salaries:
<TABLE>
<CAPTION>
OFFICER TITLE INITIAL BASE ANNUAL SALARY
------- ----- --------------------------
<S> <C> <C>
Stig Wennerstrom President and Chief Executive $609,000 (plus a guaranteed
Officer bonus of $150,000)
J. Russell Porter Executive Vice President $350,000
Gary Carlson Vice President - Alaska Division $275,000
Robert G. Gerdes Vice President - Geoscience $200,000
Thomas F. Getten Vice President, General Counsel $300,000
and Secretary
E. Joseph Grady Vice President, Treasurer and $300,000
Chief Financial Officer
Mark Yelverton Vice President - International $200,000
Operations
</TABLE>
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7.15 Retention Bonuses. Pursuant to the terms of a Final Order entered
by the Bankruptcy Court on or about July 27, 1999, Forcenergy adopted a
retention bonus program which will result in payments aggregating up to
approximately $1,350,000 to employees of Forcenergy if such employees remain
employed with Forcenergy and/or Reorganized Forcenergy through certain specified
dates.
7.16 Success Bonuses. Pursuant to the terms of a Final Order entered by
the Bankruptcy Court on or about July 27, 1999 (the "Employment Order"),
Forcenergy adopted a success bonus program which will result in payments
aggregating approximately $812,500 to certain key executives instrumental to the
Debtors' reorganization, provided that the Confirmation Date occurs on or before
December 31, 1999 (the "Initial Target Date"). If the Confirmation Date occurs
after the Initial Target Date, but on or before March 31, 2000 (the "Subsequent
Target Date"), such bonus program will result in payments aggregating
approximately $406,250. The Initial Target Date and the Subsequent Target Date
may be extended in accordance with the terms of the Employment Order. In
addition to the foregoing, and although not addressed by the Employment Order,
Forcenergy shall award its Chief Executive Officer a success bonus on the same
terms and conditions as that provided for the key executives under the
Employment Order.
7.17 Execution of Commitment Agreement. Effective upon the approval of
the Disclosure Statement by Final Order of the Bankruptcy Court, the Standby
Purchasers shall execute the Commitment Agreement.
7.18 Bankruptcy Code Section 1145. The issuance of the securities
pursuant to Section 7.5 of the Plan are hereby authorized in accordance with
Section 1145 of the Bankruptcy Code.
ARTICLE VIII
IMPLEMENTATION AND EFFECT OF CONFIRMATION OF PLAN
8.1 New Senior Credit Facility. Subject to approval by the Bank Group
and the Bankruptcy Court pursuant to Article IV of the Plan, on the Effective
Date, Reorganized Forcenergy and the Bank Group shall enter into the New Senior
Credit Facility, which shall consist of, inter alia, (a) a revolving credit
facility in the amount of Two Hundred and Fifty Million Dollars
($250,000,000),of which Two Hundred and Ten Million Dollars ($210,000,000) shall
be fully advanced to Reorganized Forcenergy on the Effective Date, and (b) a
term loan in the amount of Seventy Million Dollars ($70,000,000). The
obligations of Reorganized Forcenergy under the New Senior Credit Facility shall
be guaranteed by all of the subsidiaries of Reorganized Forcenergy and shall be
secured as set forth in Article IV of the Plan. The terms and conditions of the
New Senior Credit Facility are more specifically described in Exhibit "2" to the
Plan. Alternatively, on the Effective Date, Reorganized Forcenergy shall issue
the New Cramdown Note and New Cramdown Security Agreement as set forth in
Article IV of the Plan.
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8.2 Subscription Preferred Stock and Subscription Warrants. On the
Effective Date, Reorganized Forcenergy shall issue the Subscription Preferred
Stock and Subscription Warrants in consideration of Forty Million Dollars
($40,000,000) pursuant to the Rights Offering.
8.3 Internal Funding. Any additional funds necessary to make the Cash
distributions required under the Plan and to fund the future obligations of the
Reorganized Debtors shall be obtained through the existing Cash assets of the
Reorganized Debtors on the Effective Date and the future business operations of
the Reorganized Debtors.
8.4 Revesting of Assets
(a) The property of each Debtor shall revest in the applicable
Reorganized Debtor on the Effective Date, except as otherwise provided in the
Plan.
(b) From and after the Effective Date, the Reorganized Debtors may
operate their businesses, and may use, acquire and dispose of property free of
any restrictions imposed under the Bankruptcy Code.
(c) As of the Effective Date, all property of the Debtors and
Reorganized Debtors shall be free and clear of all liens, claims and interests
of holders of Claims and Equity Interests, except as provided in the Plan.
8.5 Causes of Action. Except as provided in the Plan, as of the
Effective Date, pursuant to Section 1123(b)(3)(B) of the Bankruptcy Code, any
and all Causes of Action accruing to the Debtors and Debtors in Possession,
including, without limitation, actions under Sections 544, 545, 547, 548, 549,
550, 551, and 553 of the Bankruptcy Code, shall become assets of the Reorganized
Debtors, and the Reorganized Debtors shall have the authority to prosecute such
Causes of Action for the benefit of the estates of the Debtors. The Reorganized
Debtors shall have the authority to compromise and settle, otherwise resolve,
discontinue, abandon or dismiss all such Causes of Action without approval of
the Bankruptcy Court.
8.6 Discharge of Debtors. The rights afforded herein and the treatment
of all Claims and Equity Interests herein shall be in exchange for and in
complete satisfaction, discharge, and release of Claims and Equity Interests of
any nature whatsoever, including any interest accrued on such Claims from and
after the Commencement Date, against the Debtors and the Debtors in Possession,
or any of their assets or properties. Except as otherwise provided herein, on
the Effective Date, all such Claims against and Equity Interests in the Debtors
shall be satisfied, discharged, and released in full, and all persons shall be
precluded from asserting against the Reorganized Debtors, their successors, or
their assets or properties any other or further Claims or Equity Interests based
upon any act or omission, transaction or other activity of any kind or nature
that occurred prior to the Confirmation Date.
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8.7 Injunction. Except as otherwise expressly provided in the Plan or
the Confirmation Order, all entities who have held, hold or may hold Claims
against or Equity Interests in any of the Debtors, are permanently enjoined, on
and after the Effective Date, from (a) commencing or continuing in any manner
any action or other proceeding of any kind with respect to any such Claim or
Equity Interest, (b) the enforcement, attachment, collection or recovery by any
manner or means of any judgment, award, decree or order against the Debtors on
account of any such Claim or Equity Interest, (c) creating, perfecting or
enforcing any encumbrance of any kind against the Debtors or against the
property or interests in property of the Debtors on account of any such Claim or
Equity Interest, and (d) asserting any right of setoff, subrogation or
recoupment of any kind against any obligation due from the Debtors or against
the property or interests in property of the Debtors on account of any such
Claim or Equity Interest. Such injunction shall extend to successors of the
Debtors (including, without limitation, the Reorganized Debtors) and their
respective properties and interests in property.
8.8 Release. Except with respect to any Causes of Action asserted on or
before the Commencement Date, the acceptance of any distribution under the Plan
by any holder of a Claim or Equity Interest shall constitute a waiver and
release of any and all Causes of Action that such holder of a Claim or Equity
Interest could have commenced against any current or former officer or director
of the Debtors based upon, related to or arising from an pre-Commencement Date
actions or omissions of such officers or directors in connection with or related
to their capacities as officers or directors of the Debtors.
ARTICLE IX
THE RIGHTS OFFERING
9.1 Issuance of Subscription Preferred Stock and Subscription Warrants.
On the Effective Date of the Plan, Reorganized Forcenergy shall issue (a) 40,000
shares of Subscription Preferred Stock, and (b) Subscription Warrants for the
purchase of an aggregate 7.5% of New Forcenergy Common Stock in connection with
the Rights Offering. The Subscription Preferred Stock, the Subscription Warrants
and the Rights Offering shall be subject to the terms and conditions set forth
in Exhibit 3 to the Plan.
9.2 Distribution of Subscription Rights. Each holder of an Allowed
Claim or a Disputed Claim within or potentially within Class 8 having an
aggregate value of at least the Eligible Claim Amount (as defined below) on the
Subscription Rights Record Date shall receive Subscription Rights entitling each
such holder to purchase a Pro Rata Share of the Subscription Preferred Stock and
Subscription Warrants. The Eligible Claim Amount is an amount equal to One Forty
Thousandth (.000025) of the sum of Allowed Claims and Disputed Claim Amount
(i.e., 1/40,000 x [Allowed Claims + Disputed Claim Amount]), within or
potentially within Class 8 at the time of calculation. Each increment of the
Eligible Claim Amount entitles the holder to receive one (1) Subscription Right.
A holder's Claim will be rounded up or down to the nearest increment of the
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Eligible Claim Amount held by such holder to determine such holder's actual
entitlement. The Debtors shall distribute to each such holder a Subscription
Rights Election Form with respect to the Subscription Rights together with the
Ballot.
9.3 Exercise of Subscription Rights. In order to exercise the
Subscription Rights, each Claimant that receives Subscription Rights must (i)
return a duly completed Subscription Rights Election Form to the Debtors so that
it is received by the Debtors on or before the Subscription Rights Election
Deadline, and (ii) pay to the Debtors on or before the Subscription Rights
Election Deadline immediately available funds in an equal amount to such
holder's Subscription Rights Purchase Price, such payment to be made either by
wire transfer to the Debtors in accordance with the wire instructions set forth
on the Subscription Rights Election Form or by bank or cashier's check delivered
to the Debtors along with the Subscription Rights Election Form. If, on or prior
to the Subscription Rights Election Deadline, the Debtors for any reason do not
receive from a given Claimant both a duly completed Subscription Rights Election
Form and immediately available funds in an amount equal to such Claimant's
Subscription Purchase Price, such Claimant shall be deemed to have not exercised
its Subscription Rights and to have relinquished and waived its right to
participate in the Rights Offering. After any Claimant has exercised any
Subscription Right, such exercise may not be revoked.
9.4 Backstop by Standby Purchasers. Pursuant to the terms of the
Commitment Agreement, Oaktree Capital Management, LLC, the Anschutz Corporation,
Lehman Brothers, Inc. and Moore Capital Management, and/or certain of their
affiliates (collectively, the "Standby Purchasers") shall be deemed to have
exercised all Subscription Rights that they are entitled to receive pursuant to
the terms of the Plan. In addition, pursuant to the terms of the Commitment
Agreement, the Standby Purchasers shall be entitled to, and shall, exercise all
Unexercised Subscription Rights related thereto at the Subscription Purchase
Price for such Subscription Preferred Stock and Subscription Warrants. Pursuant
to the terms of the Commitment Agreement, the Standby Purchasers shall pay to
the Debtors on or before the Subscription Rights Election Deadline immediately
available funds in an amount equal to the Subscription Purchase Price for all
Subscription Preferred Stock and Subscription Warrants to be purchased by the
Standby Purchasers pursuant to the terms hereof and the Commitment Agreement.
9.5 Distribution of Subscription Preferred Stock and Subscription
Warrants. On the Effective Date or as soon thereafter as practicable, the
Debtors shall distribute the Subscription Preferred Stock and Subscription
Warrants (other than Subscription Preferred Stock and Subscription Warrants held
in escrow in respect of Disputed Claims) purchased by each Exercising Claimant
to such Exercising Claimant.
9.6 Procedures with Respect to Disputed Claims.
(a) EXERCISE OF SUBSCRIPTION RIGHTS: Each holder of a Disputed Claim in
excess of the Eligible Claim Amount potentially in Class 8 on the Subscription
Rights Record Date
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shall be entitled to exercise its Subscription Rights in accordance with Section
9.3 of the Plan. Each such holder must comply with the terms of Section 9.3 of
the Plan or such holder shall be deemed to have not exercised its Subscription
Rights and to have relinquished and waived its rights to participate in the
Rights Offering.
(b) ESCROW OF SUBSCRIPTION PREFERRED STOCK AND SUBSCRIPTION WARRANTS:
The Debtors shall not deliver Subscription Preferred Stock or Subscription
Warrants to the holders of Exercised Disputed Claims, but shall instead deposit
into the Disputed Claims Subscription Escrow Account all Subscription Preferred
Stock and Subscription Warrants subscribed for by the holders of such Exercised
Disputed Claims. All dividends or distributions on account of shares of
Subscription Preferred Stock and Subscription Warrants held in the Disputed
Claims Subscription Escrow Account shall be held in trust in the Disputed Claims
Subscription Escrow Account and shall be distributed only in the manner
described in Section 9.6(c) of the Plan.
(c) RELEASE OF SUBSCRIPTION PREFERRED STOCK AND SUBSCRIPTION WARRANTS
FROM ESCROW: At such time and to the extent that all or any portion of an
Exercised Disputed Claim becomes an Allowed Claim, the Subscription Preferred
Stock and Subscription Warrants subscribed for by the holder of such Exercised
Disputed Claim on account of such Exercised Disputed Claim or portion thereof
(including any dividends received with respect thereto) shall be released from
the Disputed Claims Subscription Escrow Account and distributed by Reorganized
Forcenergy to the holder of such Allowed Claim, net of any taxes or other
applicable charges required to be paid by Reorganized Forcenergy in respect
thereof. At such time and to the extent that an Exercised Disputed Claim is
determined by Final Order not to be an Allowed Claim, (i) the Subscription
Purchase Price paid by the holder of such Exercised Disputed Claim to the
Reorganized Forcenergy (the "Disputed Claim Subscription Purchase Price") shall
be returned by the Reorganized Forcenergy to the holder of such Exercised
Disputed Claim, (ii) the Standby Purchasers shall pay an amount to the
Reorganized Forcenergy equal to the Disputed Claim Subscription Purchase Price,
and (iii) the Subscription Preferred Stock and Subscription Warrants subscribed
for by the holder of such Exercised Disputed Claim on account of such Exercised
Disputed Claim (including any dividends received with respect thereto) shall be
released from the Disputed Claims Subscription Escrow Account and distributed by
Reorganized Forcenergy to the Standby Purchasers.
9.7 No Interest. No interest shall accrue or be payable at any time
with respect to funds delivered in payment of the Subscription Purchase Price.
9.8 Validity of Exercise of Subscription Rights. All questions
concerning the timeliness, validity, form and eligibility of any exercise of
Subscription Rights will be determined by Forcenergy or Reorganized Forcenergy,
in their sole discretion, whose determination shall be final and binding.
Forcenergy and Reorganized Forcenergy reserve the absolute right to reject any
Subscription Rights Election Form not in proper form or if the acceptance
thereof or the issuance of Subscription Preferred Stock or Subscription Warrants
pursuant thereto could be deemed unlawful
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in the opinion of counsel of Forcenergy or Reorganized Forcenergy. Forcenergy or
Reorganized Forcenergy also reserve the right to waive any defect with regard to
any particular Subscription Rights Election Form or to reject any purported
Subscription Rights Election Form by reason of any defect or irregularity in
such exercise. Neither Forcenergy nor Reorganized Forcenergy shall be under any
duty to give notification of any defects or irregularities in any Subscription
Rights Election Form, nor shall either of Forcenergy or Reorganized Forcenergy
incur any liability for failure to give such notification. Neither Forcenergy
nor the Reorganized Forcenergy shall be obligated to recognize any transfer of,
claim against or interest in any Subscription Rights notwithstanding any notice
to the contrary.
ARTICLE X
EFFECTIVENESS OF THE PLAN
10.1 Conditions Precedent to Effectiveness. The Plan shall not become
effective unless and until the following conditions shall have been satisfied or
waived pursuant to Section 10.3 of the Plan:
(a) the Confirmation Order, in form and substance reasonably acceptable
to the Debtors shall have been signed by the judge presiding over the Chapter 11
Cases, and there shall not be a stay or injunction in effect with respect
thereto;
(b) all actions, documents and agreements necessary to implement the
Plan shall have been effected or executed;
(c) the Debtors shall have received all authorizations, consents,
regulatory approvals, rulings, letters, no-action letters, opinions or documents
that are determined by the Debtors to be necessary to implement the Plan; and
(d) each of the following shall have been effected or executed
(including, without limitation, the filing of such documents with any applicable
regulatory agency to cause such documents to become effective):
(1) the Amended Forcenergy Certificate of Incorporation;
(2) the Amended Forcenergy Bylaws;
(3) the Amended Resources Certificate of Incorporation;
(4) the Amended Resources Bylaws;
(5) the New Senior Credit Facility, as necessary;
(6) the Cramdown Note, as necessary;
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(7) the Cramdown Security Agreement, as necessary;
(8) the Subscription Preferred Stock Designation;
(9) the Subscription Warrant Agreement;
(10) the Commitment Agreement;
(11) the issuance of the Subscription Warrants;
(12) the issuance of the Subscription Preferred Stock;
(13) the New Stock Option Plan;
(14) the New Employee Stock Purchase Agreement;
(15) the issuance of the Employee Options under Section 7.13 of the
Plan;
(16) the Employment Agreements;
(17) the investment guidelines for Cash held in Reserve under the
Plan in respect of Disputed Claims;
(18) the issuance of the Warrants;
(19) the Warrant Agreements;
(20) the Registration Rights Agreement; and
(21) the issuance of 24,000,000 shares of New Forcenergy Common
Stock.
10.2 Effect of Failure of Conditions. In the event that one or more of
the conditions specified in Section 10.1 of the Plan have not occurred on or
before two (2) months after the Confirmation Date, and upon notification
submitted by the Debtors to the Bankruptcy Court, (a) the Confirmation Order
shall be vacated, (b) no distributions under the Plan shall be made, (c) the
Debtors and all holders of Claims and Equity Interests shall be restored to the
status quo ante as of the day immediately preceding the Confirmation Date as
though the Confirmation Date never occurred, and (d) the Debtors' obligations
with respect to the Claims and Equity Interests shall remain unchanged and
nothing contained herein shall constitute or be deemed a waiver or release of
any Claims or Equity Interests by or against the Debtors or any other person or
to prejudice in any manner the rights of the Debtors or any person in any
further proceedings involving the Debtors.
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10.3 Waiver of Conditions. The Debtors may waive, by a writing signed
by an authorized representative of the Debtors and subsequently filed with the
Bankruptcy Court, one or more of the conditions precedent to effectiveness of
the Plan set forth in Section 10.1 of the Plan.
ARTICLE XI
RETENTION OF JURISDICTION
The Bankruptcy Court shall have exclusive jurisdiction of all
matters arising out of, and related to, the Chapter 11 Cases and the Plan
pursuant to, and for the purposes of, Sections 105(a) and 1142 of the Bankruptcy
Code and for, among other things, the following purposes:
(a) To determine any and all objections to and proceedings involving
the allowance, estimation, classification, and subordination of Claims or Equity
Interests;
(b) To determine any and all applications for allowances of
compensation and reimbursement of expenses and any other fees and expenses
authorized to be paid or reimbursed under the Bankruptcy Code or the Plan;
(c) To determine the terms for the rejection or assumption of executory
contracts or unexpired leases or for the assumption and assignment, as the case
may be, of executory contracts or unexpired leases to which either Debtor is a
party or with respect to which either Debtor may be liable, and to hear and
determine, and if need be to liquidate, any and all Claims arising therefrom
including the determination of defaults required to be cured;
(d) To determine any and all applications, adversary proceedings and
contested or litigated matters initiated or asserted by either of the Debtors on
or prior to Effective Date and initiated or asserted by either of the Debtors
subsequent to the Effective Date and arising under Chapter 11 of the Bankruptcy
Code or arising in or related to the Debtors' Chapter 11 Cases; including, but
not limited to, (i) Causes of Action to avoid or recover transfers (including
fraudulent or preferential transfers) of the Debtors' property pursuant to
Sections 542 through 553 of the Bankruptcy Code or applicable state law, (ii)
claims and Causes of Action arising from the prepetition activities of the
Debtors, whether arising by statute or common law, whether arising under the
laws of the United States, Texas, or any other state having jurisdiction over
any claim or controversy, and whether maintainable against third parties,
affiliates or insiders of the Debtors, (iii) claims, Causes of Action and other
litigation that may adversely impact or affect the Reorganized Debtors'
property, (iv) contests to Claims, and (v) proceedings involving offsets against
Claims;
(e) To issue orders, determinations, and rulings regarding the
valuation, recovery, disposition, distribution, operation, or use of the
Debtors' property, including claims to recover preferences, fraudulent
conveyances, or damages of any type from any person, and whether initiated prior
to or after the Effective Date;
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(f) To determine any and all applications, claims, Causes of Action,
adversary proceedings, and contested or litigated matters that may be commenced
by the Reorganized Debtors subsequent to the Effective Date;
(g) To consider any modifications of the Plan, remedy any defect or
omission or reconcile any inconsistency in any order of the Bankruptcy Court,
including the Confirmation Order, to the extent authorized by the Bankruptcy
Code;
(h) To determine all controversies, suits, and disputes that may arise
in connection with the interpretation, enforcement, or consummation of the Plan,
the Plan documents and agreements executed in connection therewith or any
person's obligations under the Plan or any documents and agreements executed in
connection therewith;
(i) To consider and act on the compromise and settlement of any Claim
against or Cause of Action by or against the Debtors;
(j) To issue such orders in aid of execution of the Plan to the extent
authorized by Section 1142 of the Bankruptcy Code;
(k) To enter a Final Decree under Bankruptcy Rule 3022 terminating the
Chapter 11 Cases; and
(l) To determine such other matters as may be set forth in the
Confirmation Order or which may arise in connection with the Plan, the
Confirmation Order or the Effective Date.
(m) To enter and implement such orders as may be appropriate in the
event the Confirmation Order is for any reason stayed, revoked, modified or
vacated;
(n) To recover all assets of the Debtors and property of the Debtors'
estates, wherever located;
(o) To hear and determine matters concerning state, local and federal
taxes in accordance with Sections 346, 505 and 1146 of the Bankruptcy Code;
(p) To resolve all disputes, if any, arising under the Hilcorp
Agreement through the Final Settlement Date (as defined in the Hilcorp
Agreement); and
(q) To hear any other matter not inconsistent with the Bankruptcy Code.
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ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1 Effectuating Documents and Further Transactions. Each of the
Debtors or Reorganized Debtors is authorized to execute, deliver, file or record
such contracts, instruments, releases, indentures and other agreements or
documents and take such actions as may be reasonably necessary or appropriate to
effectuate and further evidence the terms and conditions of the Plan and any
notes or securities issued pursuant to the Plan.
12.2 Corporate Action. On the Effective Date, all matters provided for
under the Plan that would otherwise require approval of the stockholders,
directors or members of one or more of the Debtors or Reorganized Debtors or
their successors in interest under the Plan, including, without limitation, the
authorization of 100,000,000 shares of New Forcenergy Common Stock, the issuance
of 24,000,000 shares of New Forcenergy Common Stock, the authorization of
10,000,000 shares of Preferred Stock, the issuance of the Subscription Preferred
Stock, the issuance of the Subscription Warrants, the initial issuance of the
Employee Options, the issuance of the Warrants, the authorization, approval and
effectiveness of the Amended Forcenergy Certificate of Incorporation, the
Amended Forcenergy Bylaws, the Amended Resources Certificate of Incorporation,
the Amended Resources Bylaws, the Subscription Preferred Stock Designation, the
Subscription Warrant Agreement, the New Stock Option Plan, the New Employee
Stock Purchase Plan, the Employment Agreements, the investment guidelines for
Cash held in Reserve under the Plan in respect of Disputed Claims, the Warrant
Agreements, the Registration Rights Agreement, corporate mergers or dissolutions
effectuated pursuant to the Plan, and the election or appointment, as the case
may be, of directors and officers of the Reorganized Debtors pursuant to the
Plan shall be deemed to have occurred and shall be in effect from and after the
Effective Date pursuant to the applicable general corporation law of the states
in which the Debtors or Reorganized Debtors are incorporated, without any
requirement of further action by the stockholders or directors of the Debtors or
Reorganized Debtors. On the Effective Date or as soon thereafter as is
practicable, the Reorganized Debtors shall, if required, file their amended
certificates of incorporation with the Secretary of State of the state in which
each Reorganized Debtor is incorporated, in accordance with the applicable
general corporation law of such states. In addition, the Debtors, the
Reorganized Debtors and their successors and assigns shall have authority and
shall be directed to execute all documents necessary to implement the terms of
the Hilcorp Agreement, if approved, and to take any and all actions necessary to
fulfill the terms thereof.
12.3 Exemption from Transfer Taxes. Pursuant to Section 1146(c) of the
Bankruptcy Code, the issuance, transfer or exchange of notes or equity
securities under the Plan, the creation of any mortgage, deed of trust or other
security interest, the making or assignment of any lease or sublease, or the
making or delivery of any deed or other instrument of transfer under, in
furtherance of, or in connection with the Plan, including, without limitation,
any merger agreements or agreements of consolidation, deeds, bills of sale or
assignments executed in connection with any of
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the transactions contemplated under the Plan shall not be subject to any stamp,
real estate transfer, mortgage recording or other similar tax.
12.4 Injunction Regarding Worthless Stock Deduction. At the
Confirmation Hearing, Forcenergy shall request that the Bankruptcy Court include
in the Confirmation Order a provision enjoining any "50-percent shareholder" of
Forcenergy within the meaning of section 382(g)(4)(D) of the Internal Revenue
Code of 1986, as amended, from claiming a worthless stock deduction with respect
to its Forcenergy Equity Interest for any taxable year of such shareholder
ending prior to the Effective Date.
12.5 Exculpation. Neither the Debtors, the Reorganized Debtors, nor the
Creditors' Committee, nor any of their respective members, officers, directors,
employees, advisors or agents shall have or incur any liability to any holder of
a Claim or Equity Interest for any act or omission in connection with, related
to, or arising out of, the Chapter 11 Cases, the pursuit of confirmation of the
Plan, the consummation of the Plan or the administration of the Plan or the
property to be distributed under the Plan, except for willful misconduct or
gross negligence, and, in all respects, the Debtors, the Reorganized Debtors,
the Creditors' Committee, and each of their respective members, officers,
directors, employees, advisors and agents shall be entitled to rely upon the
advice of counsel with respect to their duties and responsibilities under the
Plan; provided, however, that, subject to Section 8.8 of the Plan, nothing
contained herein shall exculpate, satisfy, discharge or release any Cause of
Action accruing to the Debtors and Debtors in Possession under Sections 547, 548
and 550 of the Bankruptcy Code against present or former officers, directors or
employees of the Debtors in their capacities other than as present or former
officers, directors or employees.
12.6 Termination of Committees. The appointment of the Creditors'
Committee shall terminate on the later of the Effective Date or the date on
which all applications for final allowances of compensation and reimbursement of
expenses have been granted or denied by Final Order.
12.7 Post-Confirmation Date Fees and Expenses. From and after the
Confirmation Date, the Debtors and Reorganized Debtors shall, in the ordinary
course of business and without the necessity for any approval by the Bankruptcy
Court, pay the reasonable fees and expenses of professional persons thereafter
incurred by the Debtors and Reorganized Debtors, including, without limitation,
those fees and expenses incurred in connection with the implementation and
consummation of the Plan.
12.8 Payment of Statutory Fees Due the United States Trustee. All fees
due and payable pursuant to 28 U.S.C. Section 1930(a)(6) shall be paid in
accordance with Section 2.5 of the Plan.
12.9 Amendment or Modification of the Plan. Alterations, amendments or
modifications of the Plan may be proposed in writing by the Debtors at any time
prior to the Confirmation Date, provided that the Plan, as altered, amended or
modified, satisfies the conditions of Sections 1122 and 1123 of the Bankruptcy
Code, and the Debtors shall have complied with Section 1125 of the Bankruptcy
Code. The Plan may be altered, amended or modified at any time after the
Confirmation
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Date and before substantial consummation, provided that the Plan, as altered,
amended or modified, satisfies the requirements of Sections 1122 and 1123 of the
Bankruptcy Code and the Bankruptcy Court, after notice and a hearing, confirms
the Plan, as altered, amended or modified, under Section 1129 of the Bankruptcy
Code and the circumstances warrant such alterations, amendments or
modifications. A holder of a Claim or Equity Interest that has accepted the Plan
shall be deemed to have accepted the Plan, as altered, amended or modified, if
the proposed alteration, amendment or modification does not materially and
adversely change the treatment of the Claim or Equity Interest of such holder.
12.10 Severability. In the event that the Bankruptcy Court determines,
prior to the Confirmation Date, that any provision in the Plan is invalid, void
or unenforceable, such provision shall be invalid, void or unenforceable with
respect to the holder or holders of such Claims or Equity Interests as to which
the provision is determined to be invalid, void or unenforceable. The
invalidity, voidness or unenforceability of any such provision shall in no way
limit or affect the enforceability and operative effect of any other provision
of the Plan.
12.11 Revocation or Withdrawal of the Plan. The Debtors reserve the
right to revoke or withdraw the Plan prior to the Confirmation Date. If the
Debtors revoke or withdraw the Plan prior to the Confirmation Date, then the
Plan shall be deemed null and void. In such event, nothing contained herein
shall constitute or be deemed a waiver or release of any claims by or against
the Debtors or any other person or to prejudice in any manner the rights of the
Debtors or any person in any further proceedings involving the Debtors.
12.12 Binding Effect. The Plan shall be binding upon and inure to the
benefit of the Debtors, the holders of Claims and Equity Interests, and their
respective successors and assigns, including, without limitation, the
Reorganized Debtors.
12.13 Notices. All notices, requests and demands to or upon the Debtors
or the Reorganized Debtors to be effective shall be in writing and, unless
otherwise expressly provided herein, shall be deemed to have been duly given or
made when actually delivered or, in the case of notice by facsimile
transmission, when received and telephonically confirmed, with a copy by mail,
addressed as follows:
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If to the Debtors:
Forcenergy Inc
2730 S.W. 3rd Avenue, Suite 800
Miami, Florida 33129-2356
Attention: Stig Wennerstrom and Thomas F. Getten
Telephone: (305) 856-8500
Facsimile: (305) 856-4300
with a copy to:
Andrews & Kurth L.L.P. Heller, Draper, Hayden & Horn, L.L.C.
600 Travis, Suite 4200 650 Poydras Center, Suite 2500
Houston, Texas 77002 New Orleans, Louisiana 70130-6103
Attention: Hugh Ray and James Donnell Attention: Jan M. Hayden
Telephone: (713) 220-4200 Telephone: (504) 568-1888
Facsimile: (713) 220-4285 Facsimile: (504) 522-0949
If to the Creditors' Committee:
Weil, Gotshal & Manges LLP Lugenbuhl, Wheaton, Peck,
700 Louisiana, Suite 1600 Rankin & Hubbard
Houston, Texas 77002 601 Poydras Street
Attention: Harry A. Perrin Pan-American Life Center, 27th Floor
Telephone: (713) 546-5000 New Orleans, LA 70130-6027
Facsimile: (713) 224-9511 Attention: Stewart F. Peck
Telephone: (504) 568-1990
Facsimile: (504) 529-7418
12.14 Governing Law. Except to the extent the Bankruptcy Code,
Bankruptcy Rules or other federal law is applicable, or to the extent an Exhibit
to the Plan or other document executed in connection with the Plan provides
otherwise, the rights and obligations arising under this Plan shall be governed
by, and construed and enforced in accordance with, the laws of the State of New
York, without giving effect to the principles of conflicts of law of such
jurisdiction.
12.15 Withholding and Reporting Requirements. In connection with the
consummation of the Plan, the Debtors or the Reorganized Debtors, as the case
may be, shall comply with all withholding and reporting requirements imposed by
any federal, state, local or foreign taxing
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authority and all distributions hereunder shall be subject to any such
withholding and reporting requirements.
12.16 Plan Supplement. Forms of the documents comprising or relating to
the following documents shall be consistent with the Plan and Disclosure
Statement and shall be contained in the Plan Supplement and filed with the Clerk
of the Bankruptcy Court prior to the conclusion of the Confirmation Hearing:
(1) the Amended Forcenergy Certificate of Incorporation;
(2) the Amended Forcenergy Bylaws;
(3) the Amended Resources Certificate of Incorporation;
(4) the Amended Resources Bylaws;
(5) the New Senior Credit Facility;
(6) the Cramdown Note;
(7) the Cramdown Security Agreement;
(8) the Subscription Preferred Stock Designation;
(9) the Subscription Warrant Agreement, including the form of
Subscription Warrant;
(10) the Commitment Agreement;
(11) the form of certificate for the Subscription Preferred Stock;
(12) the New Stock Option Plan;
(13) the New Employee Stock Purchase Agreement;
(14) the form of Employee Option;
(15) the form of Employment Agreement;
(16) the investment guidelines for Cash held in Reserve under the Plan
in respect of Disputed Claims;
(17) the Warrant Agreements, including the form of Warrant;
(18) the Registration Rights Agreement; and
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(19) the form of certificate for the New Forcenergy Common Stock.
Upon its filing with the Bankruptcy Court, the Plan Supplement may be inspected
in the office of the Clerk of the Bankruptcy Court during normal Bankruptcy
Court hours. Holders of Claims or Equity Interests may obtain a copy of the Plan
Supplement upon written request to Forcenergy in accordance with Section 12.13
of the Plan.
12.17 Allocation of Plan Distributions Between Principal and Interest.
Except as otherwise expressly provided in the Plan, to the extent that any
Allowed Claim entitled to a distribution under the Plan is comprised of
indebtedness and accrued but unpaid interest thereon, such distribution shall,
for federal income tax purposes, be allocated to the principal amount of the
Claim first and then, to the extent the consideration exceeds the principal
amount of the Claim, to accrued but unpaid interest.
12.18 Headings. Headings are used in the Plan for convenience and
reference only, and shall not constitute a part of the Plan for any other
purpose.
12.19 Exhibits. All Exhibits to the Plan, including the Plan
Supplement, are incorporated into and are a part of the Plan as if set forth in
full herein.
12.20 Filing of Additional Documents. On or before substantial
consummation of the Plan, the Debtors shall file with the Bankruptcy Court such
agreements and other documents as may be necessary or appropriate to effectuate
and further evidence the terms and conditions of the Plan.
Dated: New Orleans, Louisiana
October 26, 1999
FORCENERGY INC, a Delaware corporation
By: /s/ STIG WENNERSTROM
----------------------------
Stig Wennerstrom, President
FORCENERGY RESOURCES INC., a Texas
corporation
By: /s/ STIG WENNERSTROM
----------------------------
Stig Wennerstrom, President
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EXHIBIT "1"
DESCRIPTION OF WARRANTS
SUMMARY OF TERMS OF FOUR YEAR WARRANTS
WARRANTS: Warrants to purchase 240,000 shares of New Forcenergy Common
Stock
EXERCISE PRICE: $16.67
TERM: The Four Year Warrants shall expire on the fourth
anniversary of the Effective Date
OTHER TERMS: Such other terms as described in the Warrant Agreement
providing for the issuance of the Four Year Warrants
SUMMARY OF TERMS OF FIVE YEAR WARRANTS
WARRANTS: Warrants to purchase 240,000 shares of New Forcenergy Common
Stock
EXERCISE PRICE: $20.83
TERM: The Five Year Warrants shall expire on the fifth anniversary
of the Effective Date
OTHER TERMS: Such other terms as described in the Warrant Agreement
providing for the issuance of the Five Year Warrants
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<PAGE> 60
EXHIBIT "2"
DESCRIPTION OF NEW SENIOR CREDIT FACILITY
NEW SENIOR CREDIT FACILITY
<TABLE>
<S> <C> <C>
BORROWER: Reorganized Forcenergy
GUARANTOR: All Subsidiaries of Borrower
AGENT: ING (U.S.) Capital LLC
LENDERS: ING (U.S.) Capital LLC, Den
Norske Bank ASA, Bank of
Scotland, MeesPierson Capital
Corp., Hibernia National Bank,
Credit Agricole Indosuez, General
Electric Capital Corp., Societe
General, Southwest Agency,
Natexis Banque BFCE, and PNC
Bank, National Association
FACILITIES: Revolver Term Loan
$250,000,000 revolving credit $70,000,000 term credit facility
facility ($210,000,000 drawn as of
Effective Date) subject to a
Borrowing Base
MATURITY: Due in full 31/2years from Due in full 31/2years from
Effective Date Effective Date
INTEREST RATES: LIBOR plus 2.0% per annum LIBOR plus 3.5% per annum
This agreement will include
provisions regarding taxes,
breakage cost, yield protection,
capital adequacy and other
customary provisions.
</TABLE>
-1-
<PAGE> 61
<TABLE>
<S> <C> <C>
AMORTIZATION: None Year 1 - none
Year 2 - 10 million
(paid in equal quarterly
installments)
Year 3 - 10 million
(paid in equal quarterly
installments)
Year 3 1/4- 2.5 million
Year 3 1/2- balance due
DEFAULT RATE: Applicable interest rates will Same
increase by 2.0% per annum.
INTEREST PAYMENTS: Monthly Same
BORROWING BASE: Initially $250,000,000. Same
Determined semi-annually in
accordance with the New Senior
Credit Facility, with the first
redetermination to be made
12 months after Effective Date.
Lenders and Borrower will agree
on certain criteria which will be
applied in accordance with the
New Senior Credit Facility in
redetermining the Borrowing Base.
COLLATERAL: All assets of Borrower and each Same
Guarantor; pledge of all stock and
other securities of each Subsidiary
of Borrower.
FACILITY FEE: .25% of the maximum facility .25% of the Term Loan
amount
COMMITMENT FEE: .50% of the unused portion of the N/A
Revolver Facility
</TABLE>
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<PAGE> 62
MANDATORY Commitment or Term Loans will be reduced by 100% of net
PREPAYMENTS/ proceeds of asset sales and 50% of any new debt or equity,
COMMITMENT but without limiting the restrictions on asset sales or
REDUCTIONS: incurrence of debt.
CONDITIONS 1. The Credit Agreement, Promissory Notes, Security
OF LENDING: Documents, and all other documents relating to or
comprising the New Senior Credit Facility (collectively,
the "Loan Documents") must be executed and delivered in
form acceptable to Lenders.
2. Lenders shall have received payment in cash of $40
million of their claims, and all interest (at the
non-default rate), fees and expenses (pre and post
Commencement Date) outstanding under the Senior Credit
Facility or any documents executed therewith.
3. The Effective Date shall have occurred.
4. The Plan shall be satisfactory to Lenders.
5. Lenders must be satisfied with Borrower's financial
condition, operations and properties as presented in the
disclosure statement, and there must be no material
adverse change thereto at closing.
6. Use of proceeds satisfactory to Lenders.
REPRESENTATIONS The Loan Documents shall contain such representations and
AND WARRANTIES: warranties as are customary for facilities of this type.
AFFIRMATIVE The Loan Documents shall contain such affirmative covenants
COVENANTS: as are customary for facilities of this type.
NEGATIVE The Loan Documents shall contain such negative covenants as
COVENANTS: are customary for facilities of this type.
EVENTS OF DEFAULT: The Loan Documents shall contain such events of default as
are customary for facilities of this type.
DOCUMENTATION: The Loan Documents shall contain such other provisions as
are customary for facilities of this type.
-3-
<PAGE> 63
EXHIBIT "3"
DESCRIPTION OF RIGHTS OFFERING
ISSUER: Forcenergy Inc
OFFERING: Offering of rights to purchase units consisting of (i) one
(1) share of Preferred Stock, and (ii) a warrant to purchase
45 shares of the New Forcenergy Common Stock.
ELIGIBLE Claimants holding claims of at least the "Eligible Claim
PURCHASERS: Amount." The "Eligible Claim Amount" equals 1/40,000
(.000025) times the sum of (i) all Allowed Claims in Class
8, and (ii) all 10 Disputed Claims in Class 8. Each
increment of the Eligible Claim Amount entitles the holder
to receive one (1) right. A holder's claims will be rounded
up or down to the nearest increment of the Eligible Claim
Amount held by such holder to determine actual entitlement.
STANDBY Affiliates of Oaktree Capital Management, LLC, The Anschutz
PURCHASERS: Corporation, Lehman Brothers, Inc. and Moore Capital
Management. The Standby Purchasers will agree to purchase
all units not subscribed for by other rights holders.
PURCHASE PRICE
FOR UNITS: $1,000 per unit.
DESCRIPTION OF Perpetual Preferred Stock; liquidation preference $1,000 per
PREFERRED STOCK: share; 40,000 shares to be issued ($40 million aggregate
liquidation preferences).
DIVIDEND: 14% p.a., PIK in Preferred Stock for the first 4 years.
COUPON ACCRUAL/PMT: Quarterly.
OPTIONAL Issuer may redeem any outstanding preferred shares
REDEMPTION: (including PIK shares) at any time at 100% of liquidation
preference plus accrued but unpaid dividends.
OTHER MANDATORY Upon a Change of Control (to be defined), the issuer must
REDEMPTION: redeem all outstanding preferred shares (including PIK
shares) at 101% of liquidation preference plus accrued but
unpaid dividends.
WARRANTS: 7.5% of New Forcenergy Common Stock outstanding as of
closing.
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<PAGE> 64
WARRANT STRIKE $10.00 per share (based on 24 million primary shares
PRICE: outstanding).
OTHER WARRANT Detachable; exercisable for 10 years; anti-dilution
TERMS: protection as would be customary for new issues. Reorganized
Forcenergy must register the underlying New Forcenergy
Common Stock in the event that upon exercise of the Warrants
the New Forcenergy Common Stock would not be freely
tradable.
COMMITMENT FEES: The Standby Purchasers will receive commitment fees in
consideration of their standby purchase commitment equal to
3% of the gross proceeds received by Reorganized Forcenergy
from the sale of the units.
USE OF PROCEEDS: Repay portion of existing Senior Credit Facility pursuant
to Section 4.3(b) of the Plan.
FINANCIAL
COVENANTS: None.
BOARD OF If Reorganized Forcenergy shall fail to declare and pay any
REPRESENTATION: dividend for any two (2) consecutive quarters or any six (6)
quarters in the aggregate, the holders of the Preferred
Stock, voting as a single class, shall be entitled to elect
two (2) members to the Board of Directors.
OTHER: Other events of default, representations and warranties,
closing conditions and affirmative and negative covenants to
be customary for transactions of this type.
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<PAGE> 1
EXHIBIT 2.2
UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF LOUISIANA
IN RE: NO. 99-11391 "A"
FORCENERGY INC CHAPTER 11
Jointly Administered with
FORCENERGY RESOURCES INC. NO. 99-11392 "A"
CHAPTER 11
MOTION FOR AUTHORITY TO FILE
DEBTORS' SECOND IMMATERIAL MODIFICATION
NOW INTO COURT, through undersigned counsel, comes Forcenergy Inc and
Forcenergy Resources Inc. (collectively, the "Debtors") who herein file their
Motion for Authority to File Second Immaterial Modification (the "Motion") to
the Debtors' First Amended Joint Plan of Reorganization Under Chapter 11 of the
Bankruptcy Code dated October 26, 1999 (the "Original Plan") and herein
represent:
1.
On October 27, 1999, the Debtors filed the Original Plan.
2.
On December 13, 1999, the Debtors filed their First Amended Motion for
Authority to File First Immaterial Modification (the "First Motion") to the
Debtors' Original Plan.
<PAGE> 2
3.
The Debtors, through their negotiations with various parties, have
agreed to replace the First Motion with this Motion and to modify certain
provisions of the Original Plan. Those modifications are as indicated below:
A. Exhibit "7" to the Original Plan is hereby amended to eliminate
all references to the following Joint Operating Agreements(1) (as
previously identified therein): JV 300, JV300-A, JV 300-B, JV
300-C, JV 300-D, JV 300-E, JV 300-F, JV 300-G, JV 300-H, JV
300-I, JV 300-J, JV 300-K, JV 300-L, JV 1904, JV 1928, and the
Joint Operating Agreement affecting WC 196.;
B. Section 6.1(a)(i) of the Original Plan is hereby amended to read
as follows:
(i) Joint Operating Agreements (A) The Joint Operating
Agreements identified in Exhibit "7" shall be rejected.
Subject to satisfactory agreement regarding adequate
assurance of future performance, all other Joint
Operating Agreements that are not specifically listed
in Exhibit "7" shall be deemed assumed. With respect to
each Joint Operating Agreement assumed pursuant to this
Section 6.1(a)(i), and except as may otherwise be
required under any order authorizing or concerning the
Debtors assumption of any particular Joint Operating
Agreement, the Debtors are not required to provide any
adequate assurance of future performance of their
obligations under assumed Joint Operating Agreements
other than as expressly set forth in the Plan.
(B) Notwithstanding the foregoing, all Joint Operating
Agreements (each an "Agreement" and collectively, the
"Agreements") between the Debtors (or either of them)
and North Central Oil Corporation ("North Central"),
with respect to South Pass 24 Field, shall be, and
shall be deemed to be, assumed, as amended to provide
that, with respect to each Agreement, beginning on the
Effective Date, the fixed producing well overhead rate
chargeable thereunder shall be $1,700 per well per
month for existing and future producing wells, plus all
- ---------------------
(1) Capitalized terms used herein, if not defined herein, have the defined
meanings set forth in the Plan.
2
<PAGE> 3
adjustments in accordance with the Council for
Petroleum Accountants Societies' Annual Overhead
Adjustment Factors effective on or after January 1,
2000 ("COPAS Adjustments"); provided, however, that in
the event the aggregate number of producing wells
exceeds sixty-one, then, in such event, and for so long
but only for so long, as the number of producing wells
exceeds sixty one, with respect to each producing well
in excess of the sixty first such well, the fixed
producing well overhead rate chargeable thereunder
shall be $1,300 per well per month, plus all COPAS
Adjustments. The foregoing arrangements shall also
govern and include all wells presently co-owned by the
Debtors (or either of them) and North Central within
South Pass 24 Field for which there is no existing
Joint Operating Agreement. In addition to meeting all
obligations under the Agreements following the
Effective Date and all other obligations described in
this Section 6.1(a)(i)(B), each Debtor, as applicable,
shall cause to be paid when due all amounts payable
under each Agreement, as currently in effect, and
all amounts payable in respect of each producing well
for which there is no existing Joint Operating
Agreement, for which such Debtor has heretofore
received an invoice or for which such Debtor hereafter
receives an invoice to the extent each such invoice
relates to periods ending prior to the Effective Date,
and shall not contest the validity or extent of any
prepetition or postpetition recoupment effected by
North Central. Each of the Debtors and North Central
agree to use its best efforts to enter into a single
joint operating agreement with all working interest
owners in the South Pass 24 Field and which will govern
the entire South Pass 24 Field. Each of the Debtors
releases and forever discharges North Central and its
affiliates from all claims, debts, Causes of Action and
other liabilities of any kind or nature whatsoever,
whether known or unknown, that the Debtors (or either
of them) or any of their respective affiliates now has,
has ever had or may hereafter have against North
Central, or any of its affiliates arising
contemporaneously with or prior to the Effective Date
or on account of or arising out of any matter, cause or
event arising contemporaneously with or prior to the
Effective Date, except for claims relating to standard
audit adjustments not directly or indirectly relating
to overhead rates payable in accordance with one or
more of the Agreements; provided, however, that the
Debtors reserve all rights of contribution and
indemnity against North Central with respect to any
action or proceeding initiated by any person other than
the Debtors (or either of them) not brought at the
request or with the participation (direct or indirect)
of the
3
<PAGE> 4
Debtors (or either of them). The Debtors do not reserve
the right to amend, supplement or otherwise alter the
terms of this Section 6.1(a)(i)(B).
C. Section 4.8(c) of the Original Plan is hereby amended to provide
as follows: Any member of this Class may elect to reduce its
Claim to $10,000.00 by electing to do so on such holder's ballot,
or by written notice to the Debtors, through Jan M. Hayden,
received on or before the 10th day following the Confirmation
Date (provided that individual Claims less than $10,000.00 of a
single holder existing as of the Commencement Date will not be
treated as separate Convenience Claims if the aggregate of all
Claims due to any such single holder as of the Commencement Date
exceeds $10,000.00).
D. Exhibits "4", "5" and "6" of the Original Plan are amended and
restated in the Lien Schedule set forth in Exhibit "1" hereto.
For purposes of the optional treatment for holders of Junior
Miscellaneous Secured Claims, the Allowed Lien Amount noted in
Exhibit "1" with respect to the Lien Status "2" and Lien Status
"3" noted therein shall be the Settlement Amount as defined in
either Section 4B(c) or Section 4B(d), as applicable ; provided,
however, that said Settlement Amount may be modified either by
agreement between the Debtors and each such holder or if the
Bankruptcy Court should determine that the amount of the
principal portion of that portion of the holder's Claim secured
by the Lien is different from that set forth in Exhibit "1". In
such event, the Settlement Amount shall be the amount agreed to
by the Debtors and such holder or as determined by the Bankruptcy
Court.
E. Section 4B(b) of the Original Plan is hereby amended to read as
follows:
4
<PAGE> 5
(b) Treatment. Except to the extent that a holder of an Allowed
Junior Miscellaneous Secured Claim has been paid by the Debtors
prior to the Effective Date or agrees to a different treatment,
each holder of an Allowed Junior Miscellaneous Secured Claim
shall, at the Reorganized Debtors' sole option (i) be paid in
full, in Cash, on the later of the Effective Date and the date
such Junior Miscellaneous Secured Claim becomes an Allowed Junior
Miscellaneous Secured Claim, or within ten (10) days thereof, or
(ii) be paid over 3 1/2 years in equal semi-annual installments
of principal with interest at a fixed rate of 8% in an aggregate
amount equal to such Allowed Junior Miscellaneous Secured Claim,
or (iii) satisfied in full by the abandonment of all Collateral
securing such Allowed Junior Miscellaneous Secured Claim.;
provided, however, that if Mar-Con, Inc., Gulf Coast Chemical,
Inc., PMB Operators, Inc., Offshore Process Services, Inc.,
Nettie L. Armstead or JWP Boat Rentals, Inc. are determined by
Final Order to be the holders of a Secured Claim then the
Reorganized Debtors shall pay such Secured Claim in full, in
Cash, plus any interest and attorneys' fees to the extent Allowed
by the Bankruptcy Court, on the later of the Effective Date and
the date that such Secured Claim becomes an Allowed Secured
Claim, or within ten (10) days thereof. Notwithstanding the
foregoing, the Debtors shall not abandon any Collateral
consisting of Mineral Leases. Any Collateral held by a holder of
an Allowed Junior Miscellaneous Secured Claim shall remain
Collateral until such Claim is paid in full. Any Collateral
abandoned to the holder of an Allowed Junior Miscellaneous
Secured Claim will be subject to any valid Liens existing as of
the Confirmation Date. The amount of any such Junior
Miscellaneous Secured Claim shall be determined as follows: the
Debtors shall file a motion under Section 506 of the Bankruptcy
Code as to any Junior Miscellaneous Secured Claim for which the
Debtors seek a determination of secured status based on the value
of the Collateral. Such determination may also be made by agreed
Final Order approved by the Bankruptcy Court after notice and
hearing. Unless specified otherwise, any such determination will
be without prejudice to the Debtors' rights to (i) object to the
Claim itself, or (ii) challenge the Security Interest or Lien
given for the Claim as an avoidable transfer. Any determination
under Section 506 of the Bankruptcy Code will set an upper limit
on the Allowed amount of the Junior Miscellaneous Secured Claim.
Any portion of an alleged Junior Miscellaneous Secured Claim in
excess of this amount will be treated as a General Unsecured
Claim to the extent such Claim is Allowed. Junior Miscellaneous
Secured Claims may include Claims of lessors, operators, and
vendors to the extent such entities' Claims are Secured Claims.
F. Section 4B(c) of the Original Plan is hereby amended to read as
follows:
(c) Optional Treatment for Holders of Junior Miscellaneous
Secured Claims (Non-Louisiana Liens). Notwithstanding anything to
the contrary contained in the Plan, any Claimant that asserts a
Miscellaneous Secured
5
<PAGE> 6
Claim allegedly secured by a Lien that is listed on Exhibit "1"
attached hereto under the heading "Lien Status 2" shall have the
option, subject to approval of the Bankruptcy Court as described
in this Section 4B(c), of electing to have such Claimant's Claim
(or portion thereof) allegedly secured by such Lien deemed an
Allowed Claim in the corresponding Allowed Lien Amount set forth
in Exhibit "1" (the "Settlement Amount") and receiving Cash on
the Effective Date in an amount equal to eighty-five percent
(85%) of the amount of such Allowed Claim in full satisfaction of
such Allowed Claim, including any secured and any unsecured
portion of such Allowed Claim; provided, however, that
immediately upon receipt of such Cash, the Claimant holding such
Allowed Claim executes and delivers to the Reorganized Debtors
all documents necessary to effectuate an immediate release of all
Liens allegedly securing such Allowed Claim. Claimants may
exercise this option by noting same on their ballot or by written
notice to the Debtors, through Jan M. Hayden, received on or
before the 20th day after the Confirmation Date. To the extent
that any Claimant makes the election described in this Section
4B(c), such election shall be deemed a motion under Bankruptcy
Rule 9019 to approve the compromise of all disputes with respect
to the Claimant's Claim allegedly secured by such Lien, including
without limitation, all objections to the Claim and all motions
or adversary proceedings to determine the extent, priority and
validity of any Liens allegedly securing such Claim (including
disputes under Section 506 of the Bankruptcy Code), regardless of
whether any such objections, adversary proceedings or motions
have been filed. Except to the extent otherwise provided therein,
the Confirmation Order shall constitute a Final Order approving
the compromise described in this Section 4B(c) with respect to
each such electing Claimant. If the Bankruptcy Court does not
approve the proposed compromise with respect to all or a portion
of the Junior Miscellaneous Secured Claim of any electing
Claimant, such Claimant's Junior Miscellaneous Secured Claim
shall remain subject to the treatment set forth in Section 4B(b)
above.
G. Section 4B(d) of the Original Plan is hereby amended to read as
follows:
(d) Optional Treatment for Holders of Junior Miscellaneous
Secured Claims (Louisiana Liens). Notwithstanding anything to the
contrary contained in the Plan, any Claimant that asserts a
Miscellaneous Secured Claim allegedly secured by a Lien that is
listed on Exhibit "1" attached hereto under the heading "Lien
Status 3" shall have the option, subject to approval of the
Bankruptcy Court as described in this Section 4B(d), of electing
to have the Claimant's Claim (or portion thereof) allegedly
secured by such Lien deemed an Allowed Claim in the corresponding
Allowed Lien Amount set forth in Exhibit "1" (the "Settlement
Amount"), and receiving Cash on the Effective Date in an amount
equal to eighty percent (80%) of the amount of such Allowed Claim
in full satisfaction of such Allowed Claim, including any secured
and any unsecured portion of such Allowed Claim; provided,
6
<PAGE> 7
however, that immediately upon receipt of such Cash, the Claimant
holding such Allowed Claim executes and delivers to the
Reorganized Debtors all documents necessary to effectuate an
immediate release of all Liens allegedly securing such Allowed
Claim. Claimants may exercise this option by noting same on their
ballot or by written notice to the Debtors, through Jan M.
Hayden, received on or before the 20th day after the Confirmation
Date. To the extent that any Claimant makes the election
described in this Section 4B(d), such election shall be deemed a
motion under Bankruptcy Rule 9019 to approve the compromise of
all disputes with respect to the Claimant's Claim allegedly
secured by such Lien, including without limitation, all
objections to the Claim and all motions or adversary proceedings
to determine the extent, priority and validity of any Liens
allegedly securing such Claim (including disputes under Section
506 of the Bankruptcy Code), regardless of whether any such
objections, motions or adversary proceedings have been filed.
Except to the extent otherwise provided therein, the Confirmation
Order shall constitute a Final Order approving the compromise
described in this Section 4B(d) with respect to each such
electing Claimant. If the Bankruptcy Court does not approve the
proposed compromise with respect to all or a portion of the
Junior Miscellaneous Secured Claim of any electing Claimant, such
Claimant's Junior Miscellaneous Secured Claim shall remain
subject to the treatment set forth in Section 4B(b) above.
H. Section 4.6 of the Original Plan is amended to add subparagraph
(d) which shall read as follows:
(d) The obligations owing to the Bonding Entities (or any
reinsurers thereof) under any agreements between such
Bonding Entities and the Debtors (including any indemnity
agreements) are obligations of the Reorganized Debtors and
the rights of the Bonding Entities (or any reinsurers
thereof) under such agreements will be unimpaired and will
continue in full force and effect after confirmation of the
Plan; provided, however, that nothing contained in this
Section 4.6(d) shall alter or amend in any way the terms and
provisions of the MMS Order.
I. Section 8.6 of the Original Plan is hereby amended to add the
following at the end of the section:
Notwithstanding the foregoing, the discharge herein granted shall
not affect the Reorganized Debtors' obligations under any Final
Order entered in the Chapter 11 Cases concerning the continued
obligations of the Reorganized Debtors recognized as such in such
Final Order with respect to, among
7
<PAGE> 8
others, Joint Operating Agreements, purchase and sale agreements,
or documents of conveyance, transfer and/or assignment.
J. Section 8.7 of the Original Plan is hereby amended to add the
following at the end of the section whose designation shall be
changed to Section 8.7(a): Provided, however, that nothing in
this Section 8.7 shall bar any holder of an Allowed Priority Tax
Claim from asserting any right of setoff prior to the payment in
full of such holder's Allowed Priority Tax Claim. Further,
nothing in the Plan or the Confirmation Order shall be construed
as a bar to the Texas Comptroller from exercising any right to
setoff or recoupment against the Debtors in a matter unrelated to
the Priority Tax Claim filed by the Texas Comptroller. Nothing in
this injunction is intended to apply to the causes, Causes of
Action or claims which may arise from or relate to the currently
pending lawsuit styled Flying Diamond - West Madisonville Limited
Partnership & Sol Levine vs. GW Petroleum, Inc. & Great Western
Onshore, Inc., No.6354, in the 278th Judicial District Court of
Madison County, Texas (the "Levine Lawsuit") or arise out of or
in any way relate to the operative facts therein including that
which may be ascertained through continuing discovery, to the
extent, and only to the extent, such claims are against a
non-debtor entity which entity is acquired by the Reorganized
Debtors through merger or consolidation after the Commencement
Date.
K. Section 8.7 of the Original Plan is hereby further amended to add
the following Section 8.7(b): Further, nothing in this injunction
is intended to affect the enforcement of any encumbrance or lien
by Flying Diamond - West Madisonville Limited Partnership, Flying
Diamond - Levine Limited Partnership, Flying Diamond - Levine No.
2 Limited Partnership, Flying Diamond - Levine No. 3 Limited
Partnership, Flying Diamond - 1975 Drilling Program, the
plaintiffs in the Levine Lawsuit, Sol Levine, John Amoruso and/or
Mardan Energy Corp., and such parties' successors-in-interest
(collectively, the "Plaintiffs"), as claimholders against any
property rights of the Reorganized Debtors (to the extent, and
only to the extent, that such claims or rights were against a
non- debtor entity's property, interest in property or the
proceeds thereof, which non-debtor entity is acquired by the
Reorganized Debtors through merger or consolidation after the
Commencement Date) and/or the assertion by the Plaintiffs of any
right of setoff, subrogation, or recoupment of any kind against
any one or more of the Debtors.
L. Section 8.8 of the Original Plan is hereby amended to read as
follows:
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<PAGE> 9
8.8 Release. Except with respect to any Causes of Action asserted
on or before, or that could have been asserted as of, the
Commencement Date (including, without limitation, any Causes of
Action asserted or which could have been asserted by Escopeta
Production Alaska, Inc., Escopeta Oil & Gas Corporation, Walter
D. Wells, Danny S. Davis and Robert Warthen), the acceptance of
any distribution under the Plan by any holder of a Claim or
Equity Interest shall constitute a waiver and release of any and
all Causes of Action that such holder of a Claim or Equity
Interest could have commenced against any current or former
officer or director of the Debtors based upon, related to or
arising from any actions or omissions of such officers or
directors on or before the Commencement Date in connection with
or related to their capacities as officers or directors of the
Debtors. Provided, however, nothing in this Section 8.8 will
constitute a waiver or release of any claims against any current
or former officer or director of the Debtors that the holder of
an Allowed Priority Tax Claim may have against such persons until
such Allowed Priority Tax Claim is paid in full. However, such
release or waiver shall apply only to any action the holder of
the Allowed Priority Tax Claim could assert against the Debtors
as it relates to the Priority Tax Claim filed. This release does
not extend to any Causes of Action or claims that arise out of or
in any way relate to the Levine Lawsuit (or arise out of or in
any way relate to the operative facts therein) which have been or
may be asserted by the Plaintiffs after the Commencement Date
against Debtors' current and former officers or directors. The
Plaintiffs' (as defined in Section 8.7(b) herein) acceptance of
any distribution under the Plan shall not constitute (and shall
never be deemed to be) a waiver and/or release, by such
Plaintiffs, of any Causes of Action or claims against the
Debtors' current and/or former officers or directors.
M. Section 1.1 of the Original Plan is hereby amended to read as
follows:
1.1 Administrative Expense Claim means any right to payment
constituting a cost or expense of administration of any of
the Chapter 11 Cases under Sections 365(d)(3), 503(b) and
507(a)(1) of the Bankruptcy Code, including, without
limitation, any actual and necessary costs and expenses of
preserving the estates of the Debtors, any actual and
necessary costs and expenses of operating the business of
the Debtors, any indebtedness or obligations incurred or
assumed by the Debtors in Possession in connection with the
conduct of their business, including, without limitation,
for the acquisition or lease of property or an interest in
property or the rendition of services, including any Allowed
Claim arising under Section 365(d)(3), all compensation and
reimbursement of expenses to the extent Allowed by the
Bankruptcy Court under Sections 330 or 503 of the Bankruptcy
Code and any fees or charges assessed against the estates of
the Debtors under Section 1930 of Chapter 123 of Title 28 of
the United States Code.
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<PAGE> 10
N. Section 4.5(c)(vi) of the Original Plan is hereby amended to read
as follows:
(vi) as adequate assurance of future performance for its Mineral
Leases with the State of Alaska, the State of Texas, or any
agencies thereof, the Reorganized Debtors will comply with
all bonding, or other financial assurance requirements, of
the State of Alaska, the State of Texas, or their agencies,
whether imposed by contract, statute or administrative
order; and
O. Section 6.1(a) of the Original Plan is hereby amended to add a
new subsection (xvi) as follows:
(xvi)Notwithstanding any other provisions of this Plan, the
Reorganized Debtors will comply with the requirements
imposed on operators in the State of Texas, whether imposed
by contract, statute, regulation or administrative order,
including but not limited to liabilities for plugging and
abandonment of wells and provision of financial assurance
thereof.
P. Section 6.1(a) of the Original Plan is hereby amended to read as
follows:
(a) Executory Contracts and Unexpired Leases. Pursuant to
Sections 365(a) and 1123(b)(2) of the Bankruptcy Code, all
executory contracts and unexpired leases entered into prior
to the Commencement Date that exist between the Debtors and
any person shall be assumed or rejected (as set forth below)
by the Debtors and/or Reorganized Debtors as of the
Effective Date. Notwithstanding anything contained herein or
in the Confirmation Order to the contrary, any executory
contract or unexpired lease (i) which has been assumed
pursuant to a Final Order of the Bankruptcy Court prior to
the Confirmation Date, (ii) which has been rejected pursuant
to a Final Order of the Bankruptcy Court entered prior to
the Confirmation Date, or (iii) as to which a motion for
approval of the assumption, assumption with amendment or the
rejection of such executory contract or unexpired lease has
been filed prior to or deemed to have been filed on the
Confirmation Date by the Debtors, Apache Corporation,
PennzEnergy Exploration/Devon Energy Corporation, Sola
Communications, Inc., Union Pacific Resources Company, Santa
Fe Synder Corporation, Texaco, Inc., Texaco Exploration and
Production, Inc., Conoco, Inc., Marathon Oil Company,
Amerada Hess Corporation, TransWorld Exploration and
Production, Vastar Resources, Inc., Vastar Offshore, Inc.,
Burlington Resources Oil & Gas Company, Louisiana Land &
Exploration, Phillips Petroleum, BP Amoco, Chevron USA Inc.,
Great Plains Resources, Inc., Mobil Oil Exploration and
Production
10
<PAGE> 11
Southeast, Inc., W&T Offshore, Inc., Vintage Petroleum, Inc.
or Union Oil Company of California shall be assumed or
rejected in accordance with such motion or Final Order.
Nothing contained herein shall impair any lien securing
present or future claims under assumed executory contracts
or unexpired leases or any other rights deemed not to be
impaired under the Plan or under any Final Order
incorporated herein. Subject to the preceding provisions of
this Section 6.1(a), the executory contracts and unexpired
leases described below and identified in Exhibits "7"
through "11" of the Plan shall be deemed to be,
respectively, assumed or rejected as follows:
Q. Section 7.3(a)(i) (h) and (i) of the Original Plan are hereby
amended as follows:
h. Michael F. Bennet
i. Clifford P. Hickey
For purposes of disclosure, Mr. Bennet is a Vice President of
Anschutz Investment Company ("Anschutz"), a privately held
investment company. Prior to joining Anschutz in 1997, Mr. Bennet
served as counsel to the Deputy Attorney General of the United
States. Mr. Bennet also practiced law with the Washington, D.C.
firm of Wilmer, Cutler & Pickering and was personal assistant to
Ohio Governor Richard F. Celeste. Mr. Bennet received his law
degree from Yale Law School, where he was editor-in-chief of The
Yale Law Journal.
For purposes of disclosure, Mr. Hickey is a Vice President of
Anschutz. Prior to joining Anschutz in July 1999, Mr. Hickey was
a Director in Prudential Securities Energy Investment Banking
Group and Vice President and Manager of the Denver office of
Enron Capital & Trade Resources, a subsidiary of Enron Corp. Mr.
Hickey also spent several years with Bankers Trust Company and
Amoco Production Company. Mr. Hickey has a Bachelor of Science
degree in Petroleum Engineering and a Masters degree in Business
Administration, both from the University of Texas at Austin.
R. Paragraph (a) of Article XI of the Original Plan is hereby
amended as follows:
(a) To determine any and all objections to and proceedings
involving the allowance, estimation, classification, and
subordination of Claims or Equity Interests (provided,
however, that nothing contained in this Article XI shall
alter the rights of Escopeta Production Alaska, Inc.,
Escopeta Oil & Gas Corporation, Walter D. Wells, Danny S.
Davis and Robert Warthen (collectively, the "Escopeta
Claimants"), or the Plaintiffs (as defined in Section 8.7(b)
of the Plan) to contest the jurisdiction of the Bankruptcy
Court over the Escopeta Claimants' Claim or the
11
<PAGE> 12
Levine Lawsuit, as defined in Section 8.7(a) of the Plan, or
Plaintiffs' Claim, as applicable.
S. Section 1.64 of the Original Plan is hereby amended to read as
follows:
1.64 Initial Distribution Date means the date occurring as soon
as practicable after the Effective Date, upon which distributions
under the Plan are made by the Debtors to holders of Forcenergy
Equity Interests; provided however, that in no event shall the
Initial Distribution Date occur later than ninety (90) days after
the Effective Date.
T. Section 1.117 of the Original Plan is hereby amended to read as
follows:
1.117 Subscription Rights Election Deadline means the date
specified in the Subscription Rights Election Form by which any
Claimant entitled to exercise Subscription Rights must deliver
such Claimant's Subscription Rights Election Form and pay the
Subscription Rights Purchase Price to the Debtors in order to
exercise the Subscription Rights, which date shall be either (a)
no later than five (5) days prior to the Effective Date, or (b)
with the written consent of the Bank Group under the New Senior
Credit Facility, ninety (90) days after the Effective Date and no
later than five (5) days prior to the closing of the Commitment
Agreement.
U. Section 8.2 of the Original Plan is hereby amended to read as
follows:
8.2 Subscription Preferred Stock and Subscription Warrants. As
soon as practicable after the Confirmation Date and prior to the
Effective Date or, with the written consent of the Bank Group
under the New Senior Credit Facility, on or as soon as
practicable after the Effective Date of the Plan, Reorganized
Forcenergy shall issue the Subscription Rights to the persons
entitled thereto in accordance with Section 9.2 of the Plan. As
soon as practicable, but in no event later than ten (10) days
after the Subscription Rights Election Deadline, Reorganized
Forcenergy shall issue the Subscription Preferred Stock and
Subscription Warrants in consideration of Forty Million Dollars
($40,000,000) pursuant to the Rights Offering.
V. Section 9.1 of the Original Plan is hereby amended to read as
follows:
9.1 Issuance of Subscription Preferred Stock and Subscription
Warrants. As soon as practicable after the Confirmation Date and
on or prior to the Effective Date or, with the written consent
of the Bank Group under the New Senior Credit Facility, as soon
as practicable after the Effective Date, Reorganized Forcenergy
shall enter into the Subscription Warrant Agreement with the
Warrant Agent named therein. As soon as practicable after the
Confirmation Date and prior to the Effective Date or, with the
written consent
12
<PAGE> 13
of the Bank Group under the New Senior Credit
Facility, on or as soon as practicable after the Effective Date,
Reorganized Forcenergy shall issue the Subscription Rights to the
persons entitled thereto in accordance with Section 9.2 of the
Plan. As soon as practicable, but in no event later than ten (10)
days, after the Subscription Rights Election Deadline,
Reorganized Forcenergy shall issue (a) 40,000 shares of
Subscription Preferred Stock, and (b) the Subscription Warrants,
in consideration of Forty Million Dollars ($40,000,000) pursuant
to the Rights Offering. The Subscription Preferred Stock, the
Subscription Warrants and the Rights Offering shall be subject to
the terms and conditions set forth in Exhibit 3 to the Plan,
except as modified in this Article 9 and Section 5.3(h)(iii) of
the Plan.
W. Section 9.2 of the Original Plan is hereby amended to read as
follows:
9.2 Distribution of Subscription Rights. Each holder of an
Allowed Claim or a Disputed Claim within or potentially within
Class 8 having an aggregate value of at least the Eligible Claim
Amount (as defined below) on the Subscription Rights Record Date
shall receive Subscription Rights entitling each such holder to
purchase a pro rata share of the Subscription Preferred Stock and
Subscription Warrants. The Eligible Claim Amount is an amount
equal to One Forty Thousandth (.000025) of the sum of all Allowed
Claims and all Exercised Disputed Claims (i.e., 1/40,000 x
[Allowed Claims + Exercised Disputed Claims]), within or
potentially within Class 8 as of the Subscription Rights Election
Deadline. Each Eligible Claim Amount will entitle the holder to
receive one (1) Subscription Right. A holder's Claim will be
based upon such holder's Allowed Claim and Exercised Disputed
Claim and will be rounded up or down to the nearest number of
Eligible Claim Amounts held by such holder to determine such
holder's actual entitlement. The Debtors shall distribute to each
such holder a Subscription Rights Election Form with respect to
the Subscription Rights. The Subscription Rights Election Form
will contain an Eligible Claim Amount estimated by the Debtors
based on the amount of Allowed Claims as of the Subscription
Rights Record Date. The Eligible Claim Amount will be determined
by the Debtors as of the Subscription Rights Election Deadline
calculated by adding to the amount of Allowed Claims the amount
of Exercised Disputed Claims. For purposes of calculating the
Eligible Claim Amount, the value of Exercised Disputed Claims for
Claimants who do not have a specific Disputed Claim Amount shall
be the lesser of (i) the estimated amount of such Disputed Claim
pursuant to an order of the Bankruptcy Court, or (ii) the amount
set forth in the Subscription Rights Election Form by such
Claimant and returned to the Debtors.
X. Section 9.3 of the Original Plan is hereby amended to read as
follows:
13
<PAGE> 14
9.3 Exercise of Subscription Rights. In order to exercise the
Subscription Rights, each Claimant that receives Subscription
Rights must (i) return a duly completed Subscription Rights
Election Form to the Debtors so that it is received by the
Debtors on or before the Subscription Rights Election Deadline,
and (ii) pay to the Debtors on or before the Subscription Rights
Election Deadline immediately available funds in an amount equal
to (and not less than) such holder's estimated Subscription
Rights Purchase Price, such payment to be made either by wire
transfer to the Debtors in accordance with the wire instructions
set forth on the Subscription Rights Election Form or by bank or
cashier's check delivered to the Debtors along with the
Subscription Rights Election Form. If, on or prior to the
Subscription Rights Election Deadline, the Debtors for any reason
do not receive from a given Claimant both a duly completed
Subscription Rights Election Form and immediately available funds
in an amount equal to (and not less than) such Claimant's
estimated Subscription Purchase Price, such Claimant shall be
deemed to have not exercised its Subscription Rights and to have
relinquished and waived its right to participate in the Rights
Offering. After any Claimant has exercised any Subscription
Right, such exercise may not be revoked. In the event the actual
Eligible Claim Amount exceeds the estimated Eligible Claim Amount
and a Claimant's Subscription Rights are reduced, Reorganized
Forcenergy or its agents shall return, without interest, any
excess funds delivered as the estimated Subscription Rights
Purchase Price promptly following the distribution of
Subscription Preferred Stock and the Subscription Warrants.
Y. Section 9.4 of the Original Plan is hereby amended to read as
follows:
9.4 Backstop by Standby Purchasers. Pursuant to the terms of the
Commitment Agreement, Oaktree Capital Management, LLC, the
Anschutz Corporation, Lehman Brothers, Inc. and Moore Capital
Management, and/or certain of their affiliates (collectively, the
"Standby Purchasers") shall be deemed to have exercised all
Subscription Rights that they are entitled to receive pursuant to
the terms of the Plan. In addition, pursuant to the terms of the
Commitment Agreement, the Standby Purchasers shall be entitled
to, and shall, exercise all Unexercised Subscription Rights
related thereto at the Subscription Purchase Price for such
Subscription Preferred Stock and Subscription Warrants. Pursuant
to the terms of the Commitment Agreement, the Standby Purchasers
shall pay to the Debtors on or before the Subscription Rights
Election Deadline immediately available funds in an amount equal
to the Subscription Purchase Price for all Subscription Preferred
Stock and Subscription Warrants to be purchased by the Standby
Purchasers pursuant to the terms hereof and the Commitment
Agreement. The rights and obligations of the Standby Purchasers
under the Commitment Agreement shall terminate on the date
fifteen (15) months following the Confirmation Date. Pursuant to
the terms of the New Senior Credit Facility,
14
<PAGE> 15
if any Exercised Disputed Claims have not either been disallowed
or become Allowed Claims prior to the first anniversary date of
the Confirmation Date, Reorganized Forcenergy shall commence an
equity offering (either by private placement or registered
offering, at the discretion of Reorganized Forcenergy) in an
amount not less than the Subscription Purchase Price for the
securities then held in the Disputed Claims Subscription Escrow
Account and to complete such offering not later than the date
fifteen (15) months following the Confirmation Date; provided,
however, that Reorganized Forcenergy shall not be required to
commence such an offering if Reorganized Forcenergy has
previously issued and sold equity securities after the Effective
Date of the Plan for an aggregate cash purchase price of at least
the Subscription Purchase Price for the securities held in the
Disputed Claims Subscription Escrow Account as of the first
anniversary of the Confirmation Date.
Z. Section 9.5 of the Original Plan is hereby amended to read as
follows:
9.5 Distribution of Subscription Preferred Stock and Subscription
Warrants. As soon as practicable, but in no event later than ten
(10) days after the Subscription Rights Election Deadline, the
Debtors shall distribute the Subscription Preferred Stock and
Subscription Warrants (other than Subscription Preferred Stock
and Subscription Warrants held in escrow in respect of Disputed
Claims) purchased by each Exercising Claimant to such Exercising
Claimant.
AA. Section 9.6(c) of the Original Plan is hereby amended to read as
follows:
(c) RELEASE OF SUBSCRIPTION PREFERRED STOCK AND SUBSCRIPTION
WARRANTS FROM ESCROW: At such time and to the extent that all or
any portion of an Exercised Disputed Claim becomes an Allowed
Claim, or within ten (10) days thereafter, the Subscription
Preferred Stock and Subscription Warrants subscribed for by the
holder of such Exercised Disputed Claim on account of such
Exercised Disputed Claim or portion thereof (including any
dividends received with respect thereto) shall be released from
the Disputed Claims Subscription Escrow Account and distributed
by Reorganized Forcenergy to the holder of such Allowed Claim,
net of any taxes or other applicable charges required to be paid
by Reorganized Forcenergy in respect thereof. At any time prior
to the date fifteen (15) months after the date of the
Confirmation Order and to the extent that an Exercised Disputed
Claim is determined by Final Order not to be an Allowed Claim,
within ten (10) days of such Final Order (i) the Subscription
Purchase Price paid by the holder of such Exercised Disputed
Claim to Reorganized Forcenergy (the "Disputed Claim Subscription
Purchase Price") shall be returned by Reorganized Forcenergy to
the holder of such Exercised Disputed Claim, (ii) the Standby
Purchasers shall pay an amount to
15
<PAGE> 16
Reorganized Forcenergy equal to the Disputed Claim Subscription
Purchase Price, and (iii) the Subscription Preferred Stock and
Subscription Warrants subscribed for by the holder of such
Exercised Disputed Claim on account of such Exercised Disputed
Claim (including any dividends received with respect thereto)
shall be released from the Disputed Claims Subscription Escrow
Account and distributed by Reorganized Forcenergy to the Standby
Purchasers. At any time on or after the date fifteen (15) months
after the date of the Confirmation Order and to the extent that
an Exercised Disputed Claim is determined not to be an Allowed
Claim, within ten (10) days thereof (i) the Disputed Claim
Subscription Purchase Price shall be returned by Reorganized
Forcenergy to the holder of such Exercised Disputed Claim and
(ii) the Subscription Preferred Stock and Subscription Warrants
subscribed for by the holder of such Exercised Disputed Claim on
account of such Exercised Disputed Claim (including any dividends
received with respect thereto) shall be canceled and extinguished
by Reorganized Forcenergy.
BB. Section 5.3(h) of the Original Plan is hereby amended to add a
new sub-paragraph (iii) as follows:
(iii) Adjustment to Classes 8 and 10 Treatment and Distributions.
Notwithstanding Section 5.3(h)(i) above, in the event the Debtors
determine to make distribution of New Forcenergy Common Stock (a)
without first getting an order estimating Disputed Claims for
purposes of establishing the Reserve, and (b) the Reserve
established by the Debtors is determined after the Initial
Distribution Date to be insufficient to satisfy all Disputed
Claims that are ultimately Allowed, then, and in such event,
Reorganized Forcenergy is hereby authorized and shall issue
shares of New Forcenergy Common Stock to holders of General
Unsecured Claims that are ultimately Allowed in excess of
23,040,000 shares of New Forcenergy Common Stock so that such
holders of Allowed General Unsecured Claims receive their Pro
Rata Share of shares issued to holders of Allowed General
Unsecured Claims; provided, however, that antidilution
adjustments shall be made to holders of New Forcenergy Equity
Interests with the effect that: (1) the number of shares of New
Forcenergy Common Stock distributable to holders of Allowed
Forcenergy Equity Interests as of the Record Date shall be
increased from 960,000 to a number equal to 4.0% of the shares of
New Forcenergy Common Stock issued or issuable to holders of
Allowed General Unsecured Claims and Allowed Forcenergy Equity
Interests pursuant to the Plan; and (2) (a) the number of shares
of New Forcenergy Common Stock issuable upon the exercise or
conversion of the Four Year Warrants, the Five Year Warrants,
Subscription Warrants and the Employee Options shall be increased
by a percentage equal to the number of shares of New Forcenergy
Common Stock issued pursuant to the Plan to holders of Allowed
General Unsecured Claims in excess of 23,040,000 shares plus the
number of shares
16
<PAGE> 17
of New Forcenergy Common Stock issued pursuant to the Plan to
holders of Allowed Forcenergy Equity Interests in excess of
960,000 shares, divided by 24,000,000 shares, and (b) the
then-current conversion or exercise price of each of the Four
Year Warrants, the Five Year Warrants, the Subscription Warrants
and the Employee Options shall be reduced so that the new
exercise or conversion price shall equal: (the then-current
exercise price multiplied by the number of shares into which each
class of such warrants or options may have been exercised or
converted at the time of their original issuance) (i.e., the
aggregate value to be paid), divided by (the total number of
shares of New Forcenergy Common Stock issuable pursuant to such
class of warrants or options, as applicable, after the adjustment
to the number of shares pursuant to clause (2)(a) immediately
above). Distributions of additional shares of New Forcenergy
Common Stock, if any, pursuant to clause 2(a) above will be made
pro rata only to holders of Allowed Forcenergy Equity Interests
as of the Record Date. Distributions of additional warrants or
options, if any, pursuant to clause 2(b) above will be made pro
rata only to (1) with respect to Four Year and Five Year
Warrants, to holders of Allowed Forcenergy Equity Interests as of
the Record Date, (2) with respect to Subscription Warrants, to
the initial purchasers of the Subscription Warrants and (3) with
respect to Employee Options, to holders of the Employee Options
as of the Record Date. All shares issuable pursuant to clause
2(a) above and warrants or options as adjusted pursuant to clause
2(b) above shall be rounded to the nearest whole share of New
Forcenergy Common Stock. All values for conversion or exercise
prices as adjusted above shall be rounded to the nearest
one-hundredth of one percent (.0001). Promptly after any such
adjustments, Reorganized Forcenergy shall announce such
adjustments by a filing under Form 8-K with the Securities and
Exchange Commission. Reorganized Forcenergy shall distribute the
additional Four Year Warrants, Five Year Warrants, Subscription
Warrants and Employee Options as soon as practicable after such
adjustments have been made.
CC. Section 7.5 of the Original Plan is hereby amended in the
following respects:
1) Section 7.5(b) of the Original Plan is hereby amended to add
the following at tAhe end of such clause prior to the semicolon:
"or such additional shares of New Forcenergy Common Stock
that may be issued in accordance with Section 5.3(h)(iii) of
the Plan";
2) Section 7.5(f) of the Original Plan is hereby amended to
delete "and" at the end of such clause;
3) Section 7.5(g) of the Original Plan is hereby amended to
delete the period at the end of such clause and to add "; and";
and
17
<PAGE> 18
4) a new Section 7.5(h) shall be added as follows:
"(h) the issuance of any additional Warrants, Subscription
Warrants and Employee Options pursuant to Section
5.3(h)(iii) of the Plan and the issuance of shares of New
Forcenergy Common Stock upon exercise of such Warrants,
Subscription Warrants and Employee Options, which shares are
hereby reserved for issuance pursuant to such agreements and
options effective at the time of the issuance of such
additional Warrants, Subscription Warrants and Employee
Options."
DD. Section 6.1(a)(xi) of the Original Plan is hereby amended to read
as follows:
Notwithstanding the foregoing, any executory contract or
unexpired lease (including, without limitation, the Agreement
Regarding Production Facility and Transportation of Crude, as
amended, between the Debtors and Bass Enterprises Production
Company) not specifically assumed or rejected as heretofore
provided (and not otherwise assumed or rejected), except as
specifically identified in Exhibit "11" as being rejected, shall
be deemed assumed.
4.
Pursuant to Section 1127 of the Bankruptcy Code, the proponent of a
plan may modify such plan at any time prior to confirmation, but may not modify
such plan so that the plan, as modified, fails to meet the requirements of
Sections 1122 and 1123 of the Bankruptcy Code. The Debtors assert that the
Original Plan, as modified, by this First Immaterial Modification, meets the
requirements of Sections 1122 and 1123.
5.
Further, the Debtors assert that this modification is immaterial in
that it does not adversely affect any party who has accepted the Original Plan
and, thus, there is no need for further disclosure pursuant to Section 1125 of
the Bankruptcy Code.
WHEREFORE, the Debtors pray that this Court enter an order providing
that the proposed modification is immaterial and thus there is no need for
additional notice and hearing and that the Debtors be authorized to file this
Immaterial Modification to their First
18
<PAGE> 19
Amended Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code in
accordance with the provisions of Section 1127 of the Bankruptcy Code. New
Orleans, Louisiana, this 20th day of December, 1999. Respectfully Submitted,
/s/ JAN M. HAYDEN
--------------------------------------
JAN M. HAYDEN (LA BAR #6672)
BERNARD H. BERINS (LA BAR #3002)
HELLER, DRAPER, HAYDEN & HORN, L.L.C.
650 Poydras Street, Suite 2500
New Orleans, Louisiana 70130-6103
Phone: 504/568-1888
Fax: 504/522-0949
Co-Counsel for the Debtors
and
HUGH M. RAY (TX BAR #16611000)
JAMES DONNELL (TX BAR #05981300)
DOUGLAS G. WALTER (NY Bar #DW5817)
ANDREWS & KURTH, LLP
600 Travis, Suite 4200
Houston, Texas 77002
Phone: 713/220-4200
Fax: 713/220-4285
Co-Counsel for the Debtors
19
<PAGE> 1
EXHIBIT 2.3
UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF LOUISIANA
In re: $
$
FORCENERGY INC, $ Case No. 99-11391 "A"
Debtor. $ Chapter 11
$
Jointly Administered with $
$
In re: $
$
FORCENERGY RESOURCES, INC. $ Chapter 99-11392 "A"
Debtor $ Chapter 11
DEBTORS JOINT PLAN SUPPLEMENT
Hugh M. Ray, Tx. Bar No. 16611000 Jan M. Hayden, La. Bar No. 6672
James Donnell, Tx. Bar No. 05981300 Bernard H. Berins, Bar No. 3302
Douglass G. Walter, N.Y. Bar No. Dw5817 Tristan Manthey, La. Bar No. 24539
ANDREWS & KURTH, LLP HELLER, DRAPER, HAYDEN & HORN, L.L.C.
600 Travis, Suite 4200 650 Poydras Street, Suite 2500
Houston, Texas 77002 New Orleans, Louisiana 70130-6103
Telephone: 713-220-4200 Telephone: 504-568-1888
Fax: 713-220-4285 Fax: 504-522-0949
Co-Counsel for Debtors
New Orleans, Louisiana, this 8th day of November 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
EXHIBIT DOCUMENT DESCRIPTION
<S> <C>
1 the Amended Forcenergy Certificate of Incorporation;
2 the Amended Forcenergy Bylaws;
3 the Amended Resources Certificate of Incorporation;
4 the Amended Resources Bylaws;
5 the New Senior Credit Facility;
6 the Cramdown Note, as necessary;
7 the Cramdown Security Agreement, as necessary;
8 the Subscription Preferred Stock Designation;
9 the Subscription Warrant Agreement, including the
form of Subscription Warrant;
10 the Commitment Agreement;
11 the form of certificate for the Subscription Preferred Stock;
12 the New Stock Option Plan;
13 the New Employee Stock Purchase Agreement;
14 the form of Employee Option;
15 the form of Employment Agreement;
16 the investment guidelines for Cash held in Reserve under the
Plan in respect of Disputed Claims;
17 the Warrant Agreements, including the form of Warrant;
18 the Registration Rights Agreement; and
19 the form of certificate for the New Forcenergy Common Stock.
</TABLE>
<PAGE> 3
EXHIBIT 1
DRAFT OF 10/22/99
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
FORCENERGY INC
Forcenergy Inc, a corporation organized and existing under the laws of the
State of Delaware (the "Corporation") hereby certifies that:
1. The United States Bankruptcy Court for the Eastern District of Louisiana
(the "Court"), in Case Nos. 99-11391"A" and 99-11392"A" pursuant to Chapter 11
of Title 11 of the United States Code, has confirmed a plan of reorganization
(the "Plan") for the Corporation, pursuant to Chapter 11 of Title 11 of the
United States Code;
2. In accordance with Section 303(c) of the General Corporation Law of the
State of Delaware, a certified copy of the Plan is being filed with the
Secretary of State of the State of Delaware (the "Secretary") together with this
Certificate;
3. The provision for the making of this Certificate is contained in the
Plan; and
4. Pursuant to the Plan and the filing of a certified copy of the Plan with
the Secretary, the Corporation's Certificate of Incorporation are amended and
restated to read as follows:
ARTICLE I
NAME
The name of the corporation is Forcenergy Inc (the "Corporation").
ARTICLE II
REGISTERED AGENT
The address of the Corporation's registered office in the State of Delaware
and the name of its registered office at such address are:
The Prentice-Hall Corporation System, Inc.
1013 Centre Road,
Wilmington, Delaware 19805
ARTICLE III
CORPORATE PURPOSE
The purpose of the Corporation is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of
Delaware.
<PAGE> 4
ARTICLE IV
CAPITAL STOCK
The total number of shares of stock which the Corporation shall have
authority to issue is One Hundred Ten Million (110,000,000), of which stock One
Hundred Million (100,000,000) shares of the par value of $.01 per share shall be
designated Common Stock ("Common Stock") and Ten Million (10,000,000) shares of
the par value of $.01 per share shall be designated Preferred Stock ("Preferred
Stock"). Each share of Common Stock shall be entitled to one vote.
No stockholder shall have a preemptive right to acquire any shares or
securities of any class, whether now or hereafter authorized, which may at any
time be issued, sold or offered for sale by the Corporation.
The Preferred Stock may be divided into and issued from time to time in one
or more series as may be fixed and determined by the Board of Directors. The
relative rights and preferences of the Preferred Stock of each series shall be
such as shall be stated in any resolution or resolutions adopted by the Board of
Directors setting forth the designation of the series and fixing and determining
the relative rights and preferences thereof, any such resolution or resolutions
being herein called a "Directors' Resolution". The Board of Directors is hereby
authorized to fix and determine such variations in the designations, preferences
and relative, participating, optional or other special rights (including,
without limitation, special voting rights, preferential rights to receive
dividends or assets upon liquidation, rights of conversion into Common Stock or
other securities, redemption provisions or sinking fund provisions) as between
series and as between the Preferred Stock or any series thereof and the Common
Stock, and the qualifications, limitations or restrictions of such rights, all
as shall be stated in a Directors' Resolution, and the shares of Preferred Stock
or any series thereof may have full or limited voting powers, or be without
voting powers, all as shall be stated in a Directors' Resolution.
ARTICLE V
BYLAWS
The Bylaws may be adopted, amended or repealed by a majority of the
Board of Directors of the Corporation, but the Bylaws adopted by the Board of
Directors of the Corporation may be amended or repealed by the affirmative vote
of the holders of a majority of the total voting power of all shares of stock of
the Corporation entitled to vote in the election of directors, considered for
the purposes of this Article V as a single class.
-2-
<PAGE> 5
ARTICLE VI
DIRECTORS
Section 1. Powers. Except as otherwise expressly provided in this
Certificate of Incorporation or the Bylaws, all of the powers of the
Corporation, insofar as the same may be lawfully vested by this Certificate of
Incorporation in the Board of Directors, shall be exercised exclusively by or at
the direction of the Board of Directors of the Corporation.
Section 2. Number and Terms of Directors. The number of directors of the
Board of Directors of the Corporation shall be as specified in the Bylaws. Each
director will serve for a term ending on the next annual stockholders' meeting
following the annual meeting at which the director was elected. Each director
will serve until his successor shall have been duly elected and qualified, or
until his earlier resignation or removal.
Newly created directorships resulting from any increase in the number of
directors between annual meetings of the stockholders and any vacancies on the
Board of Directors resulting from death, resignation, disqualification, removal
or other cause shall be filled solely by the Board of Directors by the
affirmative vote of a majority of the remaining directors then in office, even
though constituting less than a quorum of the Board of Directors. The foregoing
shall not apply to new directors elected by holders of any preferred stock
pursuant to a Certificate of Designations established by the Board of Directors
or in order to comply with the requirements of any national securities exchange
on which the stock of the Corporation is then listed, in which case such
directors shall serve terms as set forth in a separate Certificate of
Designations established by the Board of Directors to govern the terms, rights,
preferences and limitations of such preferred stock. No decrease in the number
of directors constituting the Board of Directors shall shorten the term of any
incumbent director.
ARTICLE VII
ANNUAL AND SPECIAL MEETINGS OF STOCKHOLDERS
Section 1. Annual Meetings. Annual meetings of the stockholders of the
Corporation for the election of directors shall be held on a date and at a time
and place designated by or in the manner provided in the Bylaws. At an annual
meeting of the stockholders, only such business shall be conducted as shall have
been properly brought before the meeting. To be properly brought before an
annual meeting of stockholders, business must be (i) specified in the notice of
meeting (or any supplement thereto) given by or at the direction of the Board of
Directors, (ii) otherwise properly brought before the meeting by or at the
direction of the Board of Directors, or (iii) otherwise properly brought before
the meeting by a registered stockholder. For business to be properly brought
before an annual meeting by a stockholder, the stockholder must have given
timely notice thereof in writing to the Secretary of the Corporation. To be
timely, a stockholder's notice must be delivered to or mailed and received at
the principal executive offices of the Corporation not less than 60 days nor
more than 90 days prior to the meeting; provided, however, that in the event
that less than 70 days' notice or prior public disclosure of the date of the
meeting is given or made to
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stockholders, notice by the stockholder to be timely must be so received not
later than the close of business on the tenth day following the day on which
such notice of the date of the annual meeting was mailed or such public
disclosure was made. A stockholder's notice to the Secretary shall set forth as
to each matter the stockholder proposes to bring before the annual meeting:
(a) a brief description of the business desired to be brought before
the annual meeting and the reasons for conducting such business at the annual
meeting;
(b) the name and address, as they appear on the Corporation's books, of
the stockholder proposing such business;
(c) the class and number of shares of the Corporation's stock which are
beneficially owned by the stockholder; and
(d) any material interest of the stockholder in such business.
Notwithstanding anything in the Bylaws to the contrary, no business shall be
conducted at any annual meeting of stockholders except in accordance with the
procedures set forth in this Article VII, Section 1. The Chairman of the annual
meeting, or such other person as may be designated by a majority of the Board of
Directors, shall, if the facts warrant, determine that business was not properly
brought before the meeting in accordance with the provisions of this Article
VII, Section 1, and if he should so determine, he shall so declare to the
meeting and any such business not properly brought before the meeting shall not
be transacted.
Section 2. Special Meetings. Special meetings of the stockholders may be
called by the President and shall be called by the Secretary (1) at the request
of a majority of the Board of Directors or (2) at the written request of
stockholders holding together at least a majority of the shares of the
Corporation entitled to vote at the meeting. Special meetings of the
stockholders may not be called by any other person. Notice of special meetings
shall be given by the President, or the Secretary at the direction of the
President, a majority of the Board of Directors or stockholders holding together
at least a majority of the shares of the Corporation entitled to vote at the
meeting; provided that the direction for such notice shall comply with
applicable securities and other law; and provided further, in connection with a
notice pursuant to a request by stockholders, the Board of Directors shall be
entitled to include such other information or disclosure accompanying the notice
as the Board of Directors shall deem desirable. Only business that has been
stated in the notice of a special meeting of stockholders may be transacted at
the special meeting.
Section 3. Written Consents of Stockholders. Any action required or
permitted to be taken by the stockholders of the Corporation must be effected at
an annual or special meeting of stockholders of the Corporation and may not be
effected by any consent in writing by such stockholders.
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ARTICLE VIII
RIGHTS
The Board of Directors is hereby authorized to create and issue, whether or
not in connection with the issuance and sale of any of its stock or other
securities, rights (the "Rights") entitling the holders thereof to purchase from
shares of capital stock or other securities of the Corporation. The times at
which and the terms upon which the Rights are to be issued will be determined by
the Board of Directors and set forth in the contracts or instruments that
evidence the Rights. The authority of the Board of Directors with respect to the
Rights shall include, but not be limited to, determination of the following:
(a) The initial purchase price per share of the capital stock or other
securities of the Corporation to be purchased upon exercise of the
Rights.
(b) Provisions relating to the times at which and the circumstances
under which the Rights may be exercised or sold or otherwise
transferred, either together with or separately from, any other
securities of the Corporation.
(c) Provisions that adjust the number or exercise price of the Rights
or amount or nature of the securities or other property receivable upon
exercise of the Rights in the event of a combination, split or
recapitalization of any capital stock of the Corporation, a change in
ownership of the Corporation's securities or a reorganization, merger,
consolidation, sale of assets or other occurrence relating to the
Corporation or any capital stock of the Corporation, and provisions
restricting the ability of the Corporation to enter into any such
transaction absent an assumption by the other party or parties thereto
of the obligations of the Corporation under such Rights.
(d) Provisions that deny the holder of a specified percentage of the
outstanding securities of the Corporation the right to exercise the
Rights and/or cause the Rights held by such holder to become void.
(e) Provisions that permit the Corporation to redeem the Rights.
(f) The appointment of one or more agents to take specified actions on
behalf of the Corporation with respect to the Rights.
ARTICLE IX
REMOVAL OF DIRECTORS
A director of the Corporation may be removed with or without cause by the
affirmative vote of the holders of a majority of the stock entitled to vote upon
his election.
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ARTICLE X
RIGHT TO AMEND OR REPEAL CERTIFICATE
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred on stockholders herein
are granted subject to this reservation.
ARTICLE XI
INDEMNIFICATION OF DIRECTORS, OFFICERS
AND OTHER AUTHORIZED REPRESENTATIVES
Section 1. Directors. The Corporation shall indemnify its present and
former directors against liabilities, damages, settlements, and expenses
(including attorneys' fees) incurred in connection with the Corporation's
affairs and by reason of the fact that he is or was a director or is serving at
the request of the Corporation as a director of other corporations,
partnerships, joint ventures, trusts or other enterprises, to the fullest extent
permitted by the law, and as more particularly set forth in the Corporation's
Bylaws. Such indemnification provisions of the Corporation's Bylaws may be
enacted and modified from time to time by resolution of the Corporation's Board
of Directors.
Section 2. Officers, Employees and Agents. The Corporation shall indemnify
its present or former officers, and may indemnify its present or former
employees and agents, and persons presently or formerly serving at the request
of the Corporation as officers, employees or agents of other corporations,
partnerships, joint ventures, trusts or other enterprises, to the fullest extent
permitted by law and as more particularly set forth in the Corporation's Bylaws.
Such indemnification provisions of the Corporation's Bylaws may be enacted and
modified from time to time by resolution of the Corporation's Board of
Directors.
Section 3. Liability Insurance. The Corporation shall have the power to
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against any liability asserted against him and incurred by him in any such
capacity or arising out of his status as such, whether or not the Corporation
would have the power to indemnify him against liability under the provisions of
this Article XI.
Section 4. Indemnification Agreements. The Corporation shall have the power
to enter into indemnification agreements with any director, officer, employee or
agent of the Corporation, or with any person who serves at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise. Such agreements may
contain, in addition to any other lawful terms, any provisions intended to
protect such person in the event of any actual or threatened change of control
of the Corporation, including, but not limited to,
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provisions requiring the Corporation to deposit into an irrevocable trust funds
sufficient to cover actual or potential future obligations of the Corporation to
indemnify or advance expenses (including attorneys' fees) to such person.
Section 5. No Rights of Subrogation. Indemnification hereunder and under
the Bylaws shall be a personal right and the Corporation shall have no liability
under this Article XI to any insurer or any person, corporation, partnership,
association, trust or other entity (other than the heirs, executors or
administrators of such person) by reason of subrogation, assignment, or
succession by any other means to the claim of any person to indemnification
hereunder or under the Corporation's Bylaws.
Section 6. Effect of Modification. Any repeal or modification of any
provision of this Article XI by the stockholders of the Corporation shall not
adversely affect any right to protection of a director, officer, employee or
agent of the Corporation existing immediately prior to the time of such repeal
or modification.
ARTICLE XII
LIMITATION OF DIRECTOR LIABILITY
A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived any improper
personal benefit. If the Delaware General Corporation Law is hereafter amended
to authorize corporate action further eliminating or limiting the personal
liability of directors, then the liability of a director of the Corporation
shall be eliminated or limited to the fullest extent permitted by the Delaware
General Corporation Law, as so amended.
ARTICLE XIII
Pursuant to Section 203(b)(3), and in accordance with Sections 203(b)(3)
and 303, of the Delaware General Corporation Law, the Corporation hereby elects
not to be governed by Section 203 of the Delaware General Corporation Law.
ARTICLE XIV
No voting equity securities of the Corporation may be issued; provided,
this provision, included in this Certificate of Incorporation in compliance with
Section 1123 of the United States Bankruptcy Code, 11 U.S.C. Section 1123, shall
have no force and effect except to the extent required by said Section 1123 so
long as said Section 1123 is in effect and applicable to the Corporation.
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The undersigned has made and executed this Amended and Restated Certificate
of Incorporation of the Corporation under the seal of the Corporation this ___th
date of ______ 1999, and affirms under the penalties of perjury that it is true
and it is the act and deed of the Corporation.
FORCENERGY INC
By:
---------------------------
Stig Wennerstrom
President
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EXHIBIT 2
AMENDED AND RESTATED
BYLAWS
OF
FORCENERGY INC
A DELAWARE CORPORATION
DATED: , 1999
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INDEX
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PAGE
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ARTICLE I
OFFICES AND FISCAL YEAR
Section 1.01 Registered Office........................................................................1
Section 1.02 Other Offices............................................................................1
Section 1.03 Fiscal Year..............................................................................1
ARTICLE II
MEETING OF STOCKHOLDERS
Section 2.01 Place of Meeting.........................................................................1
Section 2.02 Annual Meeting...........................................................................1
Section 2.03 Special Meetings.........................................................................1
Section 2.04 Notice of Meetings.......................................................................1
Section 2.05 Quorum, Manner of Acting and Adjournment.................................................1
Section 2.06 Organization.............................................................................2
Section 2.07 Voting and Proxies.......................................................................2
Section 2.08 Consent of Stockholders in Lieu of Meeting...............................................3
Section 2.09 Voting Lists.............................................................................3
Section 2.10 Judges of Election.......................................................................3
ARTICLE III
BOARD OF DIRECTORS
Section 3.01 Powers...................................................................................4
Section 3.02 Number and Term of Office................................................................4
Section 3.03 Newly Created Directorships and Vacancies................................................4
Section 3.04 Resignations.............................................................................5
Section 3.05 Organization.............................................................................5
Section 3.06 Place of Meeting.........................................................................5
Section 3.07 Organization Meeting.....................................................................5
Section 3.08 Regular Meetings.........................................................................5
Section 3.09 Special Meetings.........................................................................5
Section 3.10 Quorum, Manner of Acting and Adjournment.................................................6
Section 3.11 Action by Written Consent Without Meeting................................................6
Section 3.12 Executive, Stock Option and Other Committees.............................................6
</TABLE>
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<TABLE>
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Section 3.13 Compensation of Directors................................................................7
Section 3.14 Notification of Nominations..............................................................7
ARTICLE IV
NOTICE-WAIVERS-MEETINGS
Section 4.01 Notice, What Constitutes.................................................................7
Section 4.02 Waivers of Notice........................................................................7
Section 4.03 Conference Telephone Meetings............................................................8
ARTICLE V
OFFICERS
Section 5.01 Number, Qualifications and Designation...................................................8
Section 5.02 Election and Term of Office..............................................................8
Section 5.03 Subordinate Officers, Committees and Agents..............................................8
Section 5.04 The Chairman and Vice Chairman of the Board..............................................8
Section 5.05 The Chief Executive Officer..............................................................9
Section 5.06 The President............................................................................9
Section 5.07 The Vice Presidents......................................................................9
Section 5.08 The Secretary............................................................................9
Section 5.09 The Treasurer............................................................................9
Section 5.10 Officers' Bonds.........................................................................10
Section 5.11 Salaries and Compensation...............................................................10
ARTICLE VI
CERTIFICATES OF STOCK, TRANSFER, ETC.
Section 6.01 Issuance................................................................................10
Section 6.02 Transfer................................................................................10
Section 6.03 Stock Certificates......................................................................10
Section 6.04 Lost, Stolen, Destroyed or Mutilated Certificates.......................................10
Section 6.05 Record Holder of Shares.................................................................11
Section 6.06 Determination of Stockholders of Record.................................................11
ARTICLE VII
INDEMNIFICATION OF DIRECTORS, OFFICERS AND
OTHER AUTHORIZED REPRESENTATIVES
Section 7.01 Indemnification of Authorized Representatives in
Third Party Proceedings.................................................................12
</TABLE>
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<TABLE>
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Section 7.02 Indemnification of Authorized Representatives in
Corporate Proceedings...................................................................12
Section 7.03 Mandatory Indemnification of Authorized Representatives.................................13
Section 7.04 Determination of Entitlement to Indemnification.........................................13
Section 7.05 Advancing Expenses......................................................................13
Section 7.06 Certain Terms Defined...................................................................14
Section 7.07 Scope of Article........................................................................14
Section 7.08 Scope of Indemnification Rights; Insurance..............................................14
Section 7.09 Reliance on Provisions..................................................................15
Section 7.10 Indemnification for Past Authorized Representatives.....................................15
ARTICLE VIII
GENERAL PROVISIONS
Section 8.01 Dividends...............................................................................16
Section 8.02 Annual Statements.......................................................................16
Section 8.03 Contracts...............................................................................16
Section 8.04 Checks..................................................................................16
Section 8.05 Corporate Seal..........................................................................16
Section 8.06 Deposits................................................................................16
Section 8.07 Amendment of Bylaws.....................................................................17
Section 8.08 Conflicts Between Bylaws and Certificate of Incorporation...............................17
</TABLE>
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ARTICLE I
OFFICES AND FISCAL YEAR
Section 1.01 Registered Office. The registered office of the
Corporation shall be at the office of its registered agent in the State of
Delaware until otherwise changed by the Board of Directors, and a statement of
such change is filed in the manner provided by statute.
Section 1.02 Other Offices. The Corporation may also have offices at
such other places within or without the State of Delaware as the Board of
Directors may from time to time determine or the business of the Corporation
requires.
Section 1.03 Fiscal Year. The fiscal year of the Corporation shall end
on the 31st of December in each year.
ARTICLE II
MEETING OF STOCKHOLDERS
Section 2.01 Place of Meeting. All meetings of the Corporation shall be
held at the registered office of the Corporation, or at such other place within
or without the State of Delaware as shall be designated by the Board of
Directors in the notice of such meeting.
Section 2.02 Annual Meeting. The Board of Directors may fix the date
and time of the annual meeting of the stockholders, but if no such date and time
is fixed by the board, the meeting for any calendar year shall be held on the
15th day of June in such year, if not a legal holiday, and if a legal holiday
then on the next succeeding business day at 10:00 o'clock A.M., and at said
meeting the stockholders then entitled to vote shall elect directors and shall
transact such other business as may properly be brought before the meeting.
Section 2.03 Special Meetings. Special meetings of the stockholders of
the Corporation may be called only by the persons empowered to do so in the
Corporation's Certificate of Incorporation.
Section 2.04 Notice of Meetings. Written notice of the place, date and
hour of every meeting of the stockholders, whether annual or special, shall be
given to each stockholder of record entitled to vote at the meeting not less
than ten nor more than sixty days before the date of the meeting. Every notice
of a special meeting shall state the purpose or purposes thereof.
Section 2.05 Quorum, Manner of Acting and Adjournment. The holders of a
majority of the stock issued and outstanding (not including treasury stock) and
entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute, by the Corporation's
Certificate
<PAGE> 16
of Incorporation or by these Bylaws. If, however, such quorum shall not be
present or represented at any meeting of the stockholders, the stockholders
entitled to vote thereat, present in person or represented by proxy, shall have
power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or represented. At
any such adjourned meeting at which a quorum shall be present or represented,
any business may be transacted which might have been transacted at the meeting
as originally notified. If the adjournment is for more than thirty days, or if
after the adjournment a new record date is fixed for the adjourned meeting, a
notice of the adjourned meeting shall be given to each stockholder of record
entitled to vote at the meeting. When a quorum is present at any meeting, the
vote of the holders of the majority of the stock having voting power, present in
person or represented by proxy, shall decide any question brought before such
meeting, unless the question is one upon which, by express provision of an
applicable statute, the Corporation's Certificate of Incorporation, or these
Bylaws, a different vote is required, in which case such express provision shall
govern and control the decision of such question. Except upon those questions
governed by the aforesaid express provisions, the stockholders present in person
or by proxy at a duly organized meeting can continue to do business until
adjournment, notwithstanding withdrawal of enough stockholders to leave less
than a quorum.
Section 2.06 Organization. At every meeting of the stockholders, the
Chairman of the Board, if there be one, or in the case of a vacancy in the
office or absence of the Chairman of the Board, one of the following officers
present in the order stated: the Vice Chairman of the Board, if there be one;
the president; the vice presidents in their order of rank and then seniority; a
chairman designated by the Board of Directors, or a chairman chosen by the
stockholders entitled to cast a majority of the votes which all stockholders
present in person or by proxy are entitled to cast, shall act as chairman; and
the secretary, or, in his absence, an assistant secretary, or, in the absence of
both the secretary and assistant secretaries, a person appointed by the
chairman, shall act as secretary.
Section 2.07 Voting and Proxies. Except as otherwise provided in the
Corporation's Certificate of Incorporation, each stockholder shall at every
meeting of the stockholders be entitled to one vote in person or by proxy for
each share of capital stock (held of record on the record date with respect to
such meeting) having voting power with respect to the matter being voted upon.
No proxy shall be voted on after three years from its date, unless the proxy
provides for a longer period. Every proxy shall be executed in writing by the
stockholder or by his duly authorized attorney-in-fact and filed with the
secretary of the Corporation. A proxy, unless coupled with an interest, shall be
revocable at will, notwithstanding any other agreement or any provision in the
proxy to the contrary, but the revocation of a proxy shall not be effective
until notice thereof has been given to the secretary of the Corporation. A duly
executed proxy shall be irrevocable if it states that it is irrevocable and if,
and only as long as, it is coupled with an interest sufficient in law to support
an irrevocable proxy. A proxy may be made irrevocable regardless of whether the
interest with which it is coupled is an interest in the stock itself or an
interest in the Corporation generally. A proxy shall not be revoked by the death
or incapacity of the maker unless, before the vote is counted or the
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authority is exercised, written notice of such death or incapacity is given to
the secretary of the Corporation.
Section 2.08 Consent of Stockholders in Lieu of Meeting. Unless
otherwise provided in the Corporation's Certificate of Incorporation, any action
required to be taken at any annual or special meeting of stockholders of the
Corporation, or any action which may be taken at any annual or special meeting
of such stockholders, may be taken without a meeting, without prior notice and
without a vote, if a consent or consents in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Every written consent shall bear the date of signature of each
stockholder who signs the consent and no written consent shall be effective to
take the corporate action referred to therein unless, within sixty days of the
earliest date consent is delivered in the manner required above to the
Corporation, written consents signed by a sufficient number of holders to take
action are delivered to the Corporation by delivery to its registered office in
Delaware, its principal place of business, or an officer or agent of the
Corporation having custody of the books in which proceedings of meetings of
stockholders are recorded. Delivery made to the Corporation's registered office
shall be by hand or by certified or registered mail, return receipt requested.
Prompt notice of the taking of the corporate action without a meeting by less
than unanimous written consent shall be given to those stockholders who have not
consented in writing.
Section 2.09 Voting Lists. The officer who has charge of the stock
ledger of the Corporation shall prepare and make, at least ten days before every
meeting of stockholders, a complete list of the stockholders entitled to vote at
the meeting. The list shall be arranged in alphabetical order showing the
address of each stockholder and the number of shares registered in the name of
each stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten days prior to the meeting either at a place within the
city where the meeting is to be held, which place shall be specified in the
notice of the meeting, or, if not so specified, at the place where the meeting
is to be held. The list shall also be produced and kept at the time and place of
the meeting during the whole time thereof, and may be inspected by any
stockholder who is present.
Section 2.10 Judges of Election. All elections of directors shall be by
written ballot, unless otherwise provided in the Corporation's Certificate of
Incorporation; the vote upon any other matter need not be by ballot. In advance
of any meeting of stockholders, the Board of Directors may appoint judges of
election, who need not be stockholders, to act at such meeting or any
adjournment thereof. If judges of election are not so appointed, the chairman of
any such meeting may, and, upon the demand of any stockholder or his proxy at
the meeting and before voting begins, shall, appoint judges of election. The
number of judges shall be either one or three, as determined, in the case of
judges appointed upon demand of a stockholder, by stockholders present entitled
to cast a majority of the votes which all stockholders present are entitled to
cast thereon. No person who is a candidate
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for office shall act as a judge. In case any person appointed as judge fails to
appear or fails or refuses to act, the vacancy may be filled by appointment made
by the Board of Directors in advance of the convening of the meeting, or at the
meeting by the chairman of the meeting.
If judges of election are appointed as aforesaid, they shall determine
the number of shares outstanding and the voting power of each, the shares
represented at the meeting, the existence of a quorum, the authenticity,
validity and effect of proxies, receive votes or ballots, hear and determine all
challenges and questions in any way arising in connection with the right to
vote, count and tabulate all votes, determine the result, and do such acts as
may be proper to conduct the election or vote with fairness to all stockholders.
If there be three judges of election, the decision, act or certificate of a
majority shall be effective in all respects as the decision, act or certificate
of all.
On request of the chairman of the meeting or of any stockholder or his
proxy, the judges shall make a report in writing of any challenge or question or
matter determined by them, and execute a certificate of any fact found by them.
ARTICLE III
BOARD OF DIRECTORS
Section 3.01 Powers. The Board of Directors shall have full power to
manage the business and affairs of the Corporation, and all powers of the
Corporation, except those specifically reserved or granted to the stockholders
by statute, the Corporation's Certificate of Incorporation or these Bylaws, are
hereby granted to and vested in the Board of Directors.
Section 3.02 Number and Term of Office. The initial Board of Directors
shall consist of nine (9) directors. Thereafter, the number of directors may be
increased or decreased from time to time by resolution of the Board of
Directors. All directors of the Corporation shall be natural persons, but need
not be residents of Delaware or stockholders of the Corporation. Except as
otherwise set forth in the Certificate of Incorporation, each director will
serve for a term ending on the annual stockholders' meeting following the annual
meeting at which the director was elected. Unless otherwise specified in the
Corporation's Certificate of Incorporation, each director shall serve until his
successor shall have been elected and qualified, except in the event of his
death, resignation, or removal.
Section 3.03 Newly Created Directorships and Vacancies. Newly created
directorships resulting from any increase in the number of directors between
annual meetings of the stockholders, and any vacancies on the Board of Directors
resulting from death, resignation, disqualification, removal or other cause
shall be filled by the affirmative vote of a majority of the directors then in
office even though constituting less than a quorum of the entire Board of
Directors or at a special meeting of the stockholders by the holders of shares
entitled to vote for the election of directors.
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Section 3.04 Resignations and Removal. Any director of the Corporation
may resign at any time by giving written notice to the president or the
secretary of the Corporation. Such resignation shall take effect at the date of
the receipt of such notice or at any later time specified therein and, unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective. A director of the Corporation may be removed
with or without cause by the affirmative vote of the holders of a majority of
the stock entitled to vote upon his election.
Section 3.05 Organization. At every meeting of the Board of Directors,
the Chairman of the Board, if there be one, or in the case of a vacancy in the
office or absence of the Chairman of the Board, one of the following officers
present in the order stated: the Vice Chairman of the Board, if there be one;
the president; the vice presidents in their order of rank and then seniority; or
a chairman chosen by a majority of the directors present, shall preside, and the
secretary, or, in his absence, an assistant secretary, or in the absence of the
secretary and the assistant secretaries, any person appointed by the chairman of
the meeting shall act as secretary.
Section 3.06 Place of Meeting. The Board of Directors may hold its
meetings, both regular and special, at such place or places within or without
the State of Delaware as the Board of Directors may from time to time designate,
or as may be designated in the notice calling the meeting.
Section 3.07 Organization Meeting. The first meeting of each
newly-elected Board of Directors shall be held at such time and place as shall
be fixed for the annual meeting of stockholders of the Corporation, and no
notice of such meeting to the newly-elected directors shall be necessary in
order to legally convene the meeting, provided a quorum shall be present. In the
event such meeting is not held at the time and place so fixed, the meeting may
be held at such time and place as shall be specified in a notice given as
hereinafter provided for special meetings of the Board of Directors, or as shall
be specified in a written waiver signed by all of the directors.
Section 3.08 Regular Meetings. Regular meetings of the Board of
Directors may be held without notice at such time and place as shall be
designated from time to time by resolution of the Board of Directors. If the
date fixed for any such regular meeting be a legal holiday under the laws of the
State where such meeting is to be held, then the same shall be held on the next
succeeding business day, not a Saturday, or at such other time as may be
determined by resolution of the Board of Directors. At such meetings, the
directors shall transact such business as may properly be brought before the
meeting.
Section 3.09 Special Meetings. Special meetings of the Board of
Directors shall be held whenever called by the president or by two or more of
the directors. Notice of each such meeting shall be given to each director by
telephone or in writing at least 24 hours (in the case of notice by telephone,
e-mail, telegram or telecopy), two days (in the case of notice by nationally
recognized overnight courier) or five days (in the case of notice by mail)
before the time at which the meeting is to be held. Each such notice shall state
the time and place of the meeting to be so held.
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Section 3.10 Quorum, Manner of Acting and Adjournment. At all meetings
of the Board of Directors a majority of the directors shall constitute a quorum
for the transaction of business and the act of a majority of the directors
present at any meeting at which there is a quorum shall be the act of the Board
of Directors, except as may be otherwise specifically provided by statute or by
the Corporation's Certificate of Incorporation. If a quorum shall not be present
at any meeting of the Board of Directors, the directors present thereat may
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present.
Section 3.11 Action by Written Consent Without Meeting. Unless
otherwise restricted by the Corporation's Certificate of Incorporation or these
Bylaws, any action required or permitted to be taken at any meeting of the Board
of Directors or of any committee thereof may be taken without a meeting, if all
members of the Board consent thereto in writing, and the writing or writings are
filed with the minutes of proceedings of the Board.
Section 3.12 Executive, Stock Option and Other Committees. The Board of
Directors may, by resolution adopted by a majority of the whole Board, designate
an executive committee, a stock option committee, and one or more other
committees, each committee to consist of one or more directors who shall serve
at the pleasure of the Board. The Board may designate one or more directors as
alternate members of any committee, who may replace any absent or disqualified
members of any meeting of the committee. In the absence or disqualification of a
member, and the alternate or alternates, if any, designated for such member, of
any committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another director to act at the meeting in the place of any
such absent or disqualified member.
Any such committee, to the extent provided in the resolution
establishing such committee, shall have and may exercise all the power and
authority of the Board of Directors in the management of the business and
affairs of the Corporation, including the power or authority to declare a
dividend or to authorize the issuance of stock, and may authorize the seal of
the Corporation to be affixed to all papers which may require it; but no such
committee shall have the power or authority in reference to amending the
Corporation's Certificate of Incorporation (except that a committee may, to the
extent authorized in the resolution or resolutions providing for the issuance of
shares of stock adopted by the Board of Directors as provided in Section 151(a)
of the Delaware General Corporation law ("DGCL"), fix any of the preferences or
rights of such shares relating to dividends, redemption, dissolution, any
distribution of assets of the Corporation or the conversion into, or the
exchange of such shares for, shares of any other class or classes or any other
series of the same or any other class or classes of stock of the Corporation),
adopting an agreement of merger or consolidation under Section 251 or 252 of the
DGCL, recommending to the stockholders the sale, lease or exchange of all or
substantially all of the Corporation's property and assets, recommending to the
stockholders a dissolution of the Corporation or a revocation of a dissolution,
or amending the Bylaws of the Corporation; and, unless the resolution expressly
so provides, no such committee shall
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have the power of authority to declare a dividend, to authorize the issuance of
stock or to adopt a certificate of ownership and merger pursuant to Section 253
of the DGCL. Such committee or committees shall have such name or names as may
be determined from time to time by resolution adopted by the Board of Directors.
Each committee so formed shall keep regular minutes of its meetings and report
the same to the Board of Directors when required.
Section 3.13 Compensation of Directors. Unless otherwise restricted by
the Corporation's Certificate of Incorporation, the Board of Directors shall
have the authority to fix the compensation of directors. The directors may be
paid their expenses, if any, of attendance at each meeting of the Board of
Directors and may be paid a fixed sum for attendance at each meeting of the
Board of Directors or a stated salary as director. No such payment shall
preclude any director from serving the Corporation in any other capacity and
receiving compensation therefor. Members of special standing committees may be
allowed like compensation for attending committee meetings.
Section 3.14 Notification of Nominations. Nominations for the election
of directors may be made by the Board of Directors or by any stockholder in the
manner provided in the Corporation's Certificate of Incorporation or as provided
by law.
ARTICLE IV
NOTICE-WAIVERS-MEETINGS
Section 4.01 Notice, What Constitutes. Whenever, under the provisions
of the statutes of Delaware or the Corporation's Certificate of Incorporation or
these Bylaws, notice is required to be given to any director or stockholder, it
shall not be construed to mean personal notice, but such notice may be given in
writing, by mail, addressed to such director or stockholder, at his address as
it appears on the records of the Corporation, with postage thereon prepaid, and
such notice shall be deemed to be given at the time when the same shall be
deposited in the United States mail. Notice to directors may also be given in
accordance with Section 3.09 of Article III thereof.
Section 4.02 Waivers of Notice. Whenever any written notice is required
to be given under the provisions of the Corporation's Certificate of
Incorporation, these Bylaws, or by statute, a waiver thereof in writing, signed
by the person or persons entitled to such notice, whether before or after the
time stated therein, shall be deemed equivalent to the giving of such notice.
Except in the case of a special meeting of stockholders, neither the business to
be transacted at, nor the purpose of, any regular or special meeting of
stockholders, directors, or members of a committee of directors need be
specified in any written waiver of notice of such meeting.
Attendance of a person, either in person or by proxy, at any meeting,
shall constitute a waiver of notice of such meeting, except where a person
attends a meeting for the express purpose of objecting to the transaction of any
business because the meeting was not lawfully called or convened.
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Section 4.03 Conference Telephone Meetings. One or more directors may
participate in a meeting of the Board, or of a committee of the Board, by means
of conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other. Participation in a
meeting pursuant to this section shall constitute presence in person at such
meeting.
ARTICLE V
OFFICERS
Section 5.01 Number, Qualifications and Designation. The officers of
the Corporation shall be chosen by the Board of Directors and shall fill such
offices as may be determined by the Board of Directors from time to time. One
person may hold more than one office. Officers may be, but need not be,
directors or stockholders of the Corporation. The Board of Directors may elect
from among the members of the Board a Chairman of the Board and a Vice Chairman
of the Board who may be, but need not be, officers or stockholders of the
Corporation.
Section 5.02 Election and Term of Office. The officers of the
Corporation, except those elected by delegated authority pursuant to Section
5.03 of this Article, shall be elected annually by the Board of Directors, and
each such officer shall hold his office until his successor shall have been
elected and qualified, or until his earlier resignation or removal. The Board of
Directors may remove any officer by its resolution to that effect. Any officer
may resign at any time upon written notice to the Corporation. Any such
resignation shall be effective upon its receipt by the Corporation, unless a
later effective date is specified therein, and unless otherwise specified
therein, the acceptance of resignation shall not be necessary to make it
effective.
Section 5.03 Subordinate Officers, Committees and Agents. The Board of
Directors may from time to time elect such other officers and appoint such
committees, employees or other agents as its deems necessary, who shall hold
their offices for such terms and shall exercise such powers and perform such
duties as are provided in these Bylaws, or as the Board of Directors may from
time to time determine. The Board of Directors may delegate to any officer or
committee the power to elect subordinate officers and to retain or appoint
employees or other agents, or committees thereof, and to prescribe the authority
and duties of such subordinate officers, committees, employees or other agents.
Section 5.04 The Chairman and Vice Chairman of the Board. The Chairman
of the Board or in his absence, the Vice Chairman of the Board, shall preside at
all meetings of the stockholders and of the Board of Directors, and shall
perform such other duties as may from time to time be assigned to them by the
Board of Directors. The Chairman of the Board and any Vice Chairman shall be
elected annually by the Board of Directors, and shall remain in such position
until his successor shall have been elected and qualified or until his earlier
resignation or removal.
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Section 5.05 The Chief Executive Officer. The Chief Executive Officer
shall have overall management responsibility for the Corporation, shall set and
carry out corporate policies and see to the execution of the Corporation's
long-term objectives. The Chief Executive Officer shall have authority to sign
for and bind the Corporation to any contract, mortgage, and other agreements
unless the Board directs another officer to sign such document; and, in general,
shall have such authority and responsibilities as are incident to the office of
Chief Executive Officer or are delegated to him by the Board of Directors.
Section 5.06 The President. The president shall have general
supervision over the business and operations of the Corporation, in the ordinary
course of business, subject, however, to the policy decisions of the Chief
Executive Officer and the overall control of the Board of Directors. He shall
sign, execute, and acknowledge, in the name of the Corporation, deeds,
mortgages, bonds, contracts or other instruments, authorized by the Board of
Directors, except in cases where the signing and execution thereof shall be
expressly delegated by the Board of Directors, or by these Bylaws, to some other
officer or agent of the Corporation; and, in general, shall perform all duties
incident to the office of the president, and such other duties as from time to
time may be assigned to him by the Board of Directors or the Chief Executive
Officer.
Section 5.07 The Vice Presidents. The vice presidents shall perform the
duties of the president in his absence and such other duties as may from time to
time be assigned to them by the Board of Directors, the Chief Executive Officer
or the president.
Section 5.08 The Secretary. The secretary, or one or more assistant
secretaries, shall attend all meetings of the stockholders and of the Board of
Directors and shall record the proceedings of the stockholders and of the
directors and of committees of the Board in a book or books to be kept for that
purpose; see that notices are given and records and reports properly kept and
filed by the Corporation as required by law; be the custodian of the seal of the
Corporation and see that it is affixed to all documents to be executed on behalf
of the Corporation under its seal; and, in general, perform all duties incident
to the office of secretary, and such other duties as may from time to time be
assigned to him by the Board of Directors, the Chief Executive Officer or the
president.
Section 5.09 The Treasurer. The treasurer or an assistant treasurer
shall have or provide for the custody of the funds or other property of the
Corporation and shall keep a separate book account of the same to his credit as
treasurer; collect and receive or provide for the collection and receipt of
moneys earned by or in any manner due to or received by the Corporation; deposit
all funds in his custody as treasurer in such banks or other places of deposit
as the Board of Directors may from time to time designate; whenever so required
by the Board of Directors, render an account showing his transactions as
treasurer and the financial condition of the Corporation; and, in general,
discharge such other duties as may from time to time be assigned to him by the
Board of Directors, the Chief Executive Officer or the president.
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Section 5.10 Officers' Bonds. No officer of the Corporation need
provide a bond to guarantee the faithful discharge of his duties.
Section 5.11 Salaries and Compensation. The salaries and compensation
of the Chief Executive Officer of the Corporation shall be determined by the
Board of Directors from time to time. Subject to the guidelines or limitations
set by the Board or a compensation committee of the Board, if any, the
compensation of the other officers, employees and agents of the Corporation
shall be determined by the Corporation's Chief Executive Officer.
ARTICLE VI
CERTIFICATES OF STOCK, TRANSFER, ETC.
Section 6.01 Issuance. Each stockholder shall be entitled to a
certificate or certificates of shares of stock of the Corporation owned by him
upon his request therefor. The stock certificates of the Corporation shall be
numbered and registered in the stock ledger and transfer books of the
Corporation as they are issued. They shall be signed by the president or vice
president and by the secretary or an assistant secretary or the treasurer or
assistant treasurer, and shall bear the corporate seal, which may be a
facsimile, engraved or printed. Any of or all the signatures upon such
certificate may be facsimile, engraved or printed. In case any officer, transfer
agent or registrar who has signed, or whose facsimile signature has been placed
upon, any share certificate shall have ceased to be such officer, transfer agent
or registrar before the certificate is issued, it may be issued with the same
effect as if he were such officer, transfer agent or registrar at the date of
its issue.
Section 6.02 Transfer. Upon surrender to the Corporation or the
transfer agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignation or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its book.
Section 6.03 Stock Certificates. Stock certificates of the Corporation
shall be in such form as provided by statute and approved by the Board of
Directors. The stock record books and the blank stock certificates books shall
be kept by the secretary or by any agency designated by the Board of Directors
for that purpose.
Section 6.04 Lost, Stolen, Destroyed or Mutilated Certificates. The
Board of Directors may direct a new certificate or certificates to be issued in
place of any certificate or certificates theretofore issued by the Corporation
alleged to have been lost, stolen or destroyed, upon the making of an affidavit
of that fact by the person claiming the certificate of stock to be lost, stolen
or destroyed. When authorizing such issue of a new certificate or certificates,
the Board of Directors may, in its discretion and as a condition precedent to
the issuance thereof, require the owner of such lost, stolen or destroyed
certificate or certificates, or his legal representative, to advertise the same
in such
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manner as it shall require and/or to give the Corporation a bond in such sum as
it may direct as indemnity against any claim that may be made against the
Corporation with respect to the certificate alleged to have been lost, stolen or
destroyed.
Section 6.05 Record Holder of Shares. The Corporation shall be entitled
to recognize the exclusive right of a person registered on its books as the
owner of shares to receive dividends, and to vote as such owner, and to hold
liable for calls and assessments a person registered on its books as the owner
of shares, and shall not be bound to recognize any equitable or other claim to
or interest in such share or shares on the part of any other person, whether or
not it shall have express or other notice thereof, except as otherwise provided
by the laws of Delaware.
Section 6.06 Determination of Stockholders of Record. In order that the
Corporation may determine the stockholders entitled to notice of or to vote at
any meeting of stockholders or any adjournment thereof, or entitled to receive
payment of any dividend or other distribution or allotment of any rights, or
entitled to exercise any right in respect of any change, conversion or exchange
of stock or for the purpose of any other lawful action, the Board of Directors
may fix, in advance, a record date, which shall not be more than sixty nor less
than ten days before the date of such meeting, nor more than sixty days prior to
any other action.
If no record date is fixed:
(1) The record date for determining stockholders entitled
to notice of or to vote at a meeting of stockholders
shall be at the close of business on the day next
preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day
next preceding the day on which the meeting is held;
(2) The record date for determining stockholders for any
other purpose shall be at the close of business on
the day on which the Board of Directors adopts the
resolution relating thereto.
A determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.
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ARTICLE VII
INDEMNIFICATION OF DIRECTORS, OFFICERS AND
OTHER AUTHORIZED REPRESENTATIVES
Section 7.01 Indemnification of Authorized Representatives in Third
Party Proceedings. The Corporation shall indemnify any person who was or is an
"authorized representative" of the Corporation (which shall mean for the
purposes of this Article a director or officer of the Corporation, or a person
serving at the request of the Corporation as a director, officer, or trustee of
another corporation, partnership, joint venture, trust or other enterprise) and
who was or is a "party" (which shall include for purposes of this Article the
giving of testimony or similar involvement) or is threatened to be made a party
to any "third party proceeding" (which shall mean for purposes of this Article
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative, or investigative, other than an action by or in the
right of the Corporation) by reason of the fact that such person was or is an
authorized representative of the Corporation, against expenses (which shall
include for purposes of this Article attorneys' fees), judgments, penalties,
fines and amounts paid in settlement actually and reasonably incurred by such
person in connection with such third party proceeding if such person acted in
good faith and in a manner such person reasonably believed to be in, or not
opposed to, the best interests of the Corporation and, with respect to any
criminal third party proceeding (including any action or investigation which
could or does lead to a criminal third party proceeding) had no reasonable cause
to believe such conduct was unlawful. The termination of any third party
proceeding by judgment, order, settlement, indictment, conviction or upon a plea
of nolo contendere or its equivalent, shall not of itself create a presumption
that the authorized representative did not act in good faith and in a manner
which such person reasonably believed to be in, or not opposed to, the best
interests of the Corporation, and, with respect to any criminal third party
proceeding, had reasonable cause to believe that such conduct was unlawful.
Section 7.02 Indemnification of Authorized Representatives in Corporate
Proceedings. The Corporation shall indemnify any person who was or is an
authorized representative of the Corporation and who was or is a party or is
threatened to be made a party to any "corporate proceeding" (which shall mean
for purposes of this Article any threatened, pending or completed action or suit
by or in the right of the Corporation to procure a judgment in its favor or
investigative proceeding by the Corporation) by reason of the fact that such
person was or is an authorized representative of the Corporation, against
expenses actually and reasonably incurred by such person in connection with the
defense or settlement of such corporate proceeding if such person acted in good
faith and in a manner reasonably believed to be in, or not opposed to, the best
interests of the Corporation, except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable unless and only to the extent that the Court of Chancery
or the court in which such corporate proceeding was pending shall determine,
upon application, that, despite the adjudication of liability but in view of all
the circumstances of the
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case, such authorized representative is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
Section 7.03 Mandatory Indemnification of Authorized Representatives.
To the extent that an authorized representative of the Corporation has been
successful on the merits or otherwise in defense of any third party or corporate
proceeding or in defense of any claim, issue or matter therein, such person
shall be indemnified against expenses actually and reasonably incurred by such
person in connection therewith.
Section 7.04 Determination of Entitlement to Indemnification. Any
indemnification under Section 7.01, 7.02 or 7.03 of this Article (unless ordered
by a court) shall be made by the Corporation only upon a determination that
indemnification of the authorized representative is proper in the circumstances
because such person has either met the applicable standard of conduct set forth
in Section 7.01 or 7.02 or has been successful on the merits or otherwise as set
forth in Section 7.03 and that the amount requested has been actually and
reasonably incurred. Such determination shall be made:
(a) By the Board of Directors by a majority of a quorum
consisting of directors who were not parties to such third party or
corporate proceeding, or
(b) If such a quorum is not obtainable, or, even if
obtainable, a majority vote of such a quorum so directs, by independent
legal counsel in a written opinion, or
(c) By the stockholders.
Section 7.05 Advancing Expenses.
(a) Expenses actually and reasonably incurred in defending a
third party or corporate proceeding shall be paid on behalf of a director or
officer by the Corporation in advance of the final disposition of such third
party or corporate proceeding upon receipt of an undertaking by or on behalf of
the director or officer to repay such amount if it shall ultimately be
determined that such person is not entitled to be indemnified by the Corporation
as authorized in this Article.
(b) Expenses actually and reasonably incurred in defending a
third party or corporate proceeding shall be paid on behalf of an authorized
representative other than a director or officer by the Corporation in advance of
the final disposition of such third party or corporate proceeding as authorized
by the Board of Directors upon receipt of an undertaking by or on behalf of such
authorized representative to repay if it shall ultimately be determined that
such person is not entitled to be indemnified by the Corporation as authorized
by this Article.
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(c) The financial ability of any authorized representative to
make a repayment contemplated by this Section shall not be a prerequisite to the
making of an advance.
Section 7.06 Certain Terms Defined. For purposes of this Article,
references to "other enterprises" shall include employee benefit plans;
references to "fines" shall include any excise taxes assessed on a person with
respect to an employee benefit plan; and references to "serving at the request
of the Corporation" shall include any service as a director, officer, employee,
or agent of the Corporation which imposes duties on, or involves services by,
such director, officer, employee, or agent with respect to an employee benefit
plan, its participants, or beneficiaries; and a person who acted in good faith
and in a manner he reasonably believed to be in the interest of the participants
and beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the Corporation" as referred to in
this Article.
Section 7.07 Scope of Article. The indemnification of authorized
representatives and advancement of expenses, as authorized by the preceding
provisions of this Article, shall not be deemed exclusive of any other rights to
which those seeking indemnification or advancement of expenses may be entitled
under any statute, agreement, vote of stockholders or disinterested directors,
or otherwise, both as to action in an official capacity and as to action in
another capacity.
Section 7.08 Scope of Indemnification Rights; Insurance.
(a) Notwithstanding any contrary provisions of this Article;
it shall be the obligation of the Corporation to indemnify and advance expenses
to authorized representatives to the full extent permitted by law, including any
changes, amendments or supplements thereto. The Corporation hereby adopts any
changes, amendments and supplements under Delaware law that expand its rights to
indemnify and/or advance expenses to authorized representatives, and shall be
authorized to effect the same whether or not these Bylaws have been further
amended to reflect such change, amendment or supplement.
(b) The rights of authorized representatives to indemnity and
advancement of expenses shall:
(i) apply to amounts paid or payable to the
Corporation in satisfaction of a judgment or settlement of a
claim against an authorized representative;
(ii) apply to authorized representatives serving as
such at the time whether prior or subsequent to the adoption
of these Bylaws or any amendment or restatement thereof; and
(iii) inure to the benefit of (and be enforceable
against the Corporation by) any executor, personal
representative or heir of an authorized representative.
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(c) Each authorized representative requesting indemnity or
advance of expenses from the Corporation shall be presumed to have satisfied the
required standard of conduct and any and all other conditions precedent to such
indemnity and/or advancement, unless and until the contrary is established.
(d) If the Corporation refuses a request for indemnity or
advancement of expenses as requested by an authorized representative (or
declines to respond to a request within 15 days after it is made), and such
authorized representative engages counsel to prosecute any suit, action or
proceeding against the Corporation seeking to enforce his rights to indemnity or
advancement of expenses, such authorized representative shall be entitled to
receive (in addition to such indemnity and/or advancement of expenses to which
he may be entitled) an award of the reasonable attorneys' fees and disbursements
incurred (whether before or at trial or on one or more appeals) by such
authorized representative in connection with such suit, action or proceeding.
(e) The rights of authorized representatives to
indemnification and advancement of expenses by the Corporation shall be deemed
to be a contract right. The Corporation shall be authorized to enter into and
perform indemnification agreements in favor of any one or more authorized
representatives in furtherance of this provision; however, the rights of
authorized representative(s) under any such agreement shall be cumulative (and
not alternative) to the rights granted under this Article VII or otherwise
available under law.
(f) The Corporation shall be authorized to procure and
maintain at its sole expense insurance for the benefit of authorized
representatives, providing coverage against any and all claims, demands, losses,
fines, settlements, damages or expenses (including attorneys' fees and
disbursements) asserted against or incurred by an authorized representative in
his capacity as such, or arising out of his status as such, and such insurance
policies may provide coverage whether or not the Corporation is authorized to
provide indemnification or advancement of expenses in the circumstances under
which a claim' is made under the policy. The rights of authorized
representatives under such policy shall be cumulative, and not alternative, to
their rights under this Article or otherwise available by contract or applicable
law, and the maintenance of such insurance coverage shall not satisfy or affect
the Corporation's obligations to indemnify authorized representatives except to
the extent of payments actually received by an authorized representative under
the policy.
Section 7.09 Reliance on Provisions. Each person who shall act as an
authorized representative of the Corporation shall be deemed to be doing so in
reliance upon rights of indemnification and advance of expenses provided by this
Article.
Section 7.10 Indemnification for Past Authorized Representatives. The
indemnification and advancement of expenses provided by, or granted pursuant to,
this Article shall, unless otherwise provided when authorized or ratified,
continue as to a person who has ceased to be a director or
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authorized representative and shall inure to the benefit of heirs, executors and
administrators of such a person.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.01 Dividends. Dividends upon the capital stock of the
Corporation, subject to the provisions of the Corporation's Certificate of
Incorporation, if any, may be declared by the Board of Directors at any regular
or special meeting, pursuant to law. Dividends may be paid in cash, in property,
or in shares of the capital stock of the Corporation, subject to the provisions
of the Corporation's Certificate of Incorporation. Before payment of any
dividend, there may be set aside out of any funds of the Corporation available
for dividends such sum or sums as the Directors from time to time, in their
absolute discretion, think proper as a reserve or reserves to meet
contingencies, or for equalizing dividends, or for repairing or maintaining any
property of the Corporation, or such other purposes as the directors shall think
appropriate to the interest of the Corporation, and the directors may modify or
abolish any such reserve in the manner in which it was created.
Section 8.02 Annual Statements. The Board of Directors shall cause to
be presented at each annual meeting a statement of the business and condition of
the Corporation.
Section 8.03 Contracts. Except as otherwise provided in these Bylaws,
the Board of Directors may authorize any officer or officers, or the Chairman
and Vice Chairman of the board of Directors, or any agent or agents, to enter
into any contract or to execute or deliver any instrument on behalf of the
Corporation and such authority may be general or confined to specific instances.
Section 8.04 Checks. All checks, notes, bills of exchange or other
orders in writing shall be signed by such person or persons as the Board of
Directors may from time to time designate.
Section 8.05 Corporate Seal. The corporate seal shall have inscribed
thereon the name of the Corporation, the year of its organization and words
"Corporate Seal, Delaware". The seal may be used by causing it or a facsimile
thereof to be impressed or affixed or in any other manner reproduced.
Section 8.06 Deposits. All funds of the Corporation shall be deposited
from time to time to the credit of the Corporation in such banks, trust
companies, or other depositories as the Board of Directors may approve or
designate, and all such funds shall be withdrawn only upon checks signed by such
one or more officers or employees as the Board of Directors shall from time to
time determine.
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Section 8.07 Amendment of Bylaws. These Bylaws may be altered or
repealed or new bylaws may be adopted only in the manner set forth in the
Corporation's Certificate of Incorporation.
Section 8.08 Conflicts Between Bylaws and Certificate of Incorporation.
If any provision of these Bylaws shall conflict or be inconsistent with the
provisions of the Corporation's Certificate of Incorporation, the provisions of
the Certificate of Incorporation shall supersede, govern and control over such
conflicting or inconsistent provisions of these Bylaws. If these Bylaws are
amended to delete herefrom any provisions hereof which provision is also then
included in the Corporation's Certificate Incorporation, such provision shall
continue to remain in effect by virtue of and pursuant to the Certificate of
Incorporation notwithstanding its removal from the Bylaws.
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CERTIFICATION
The undersigned duly elected Secretary of the corporation does hereby
certify the foregoing Bylaws were adopted by the filing with the Secretary of
State of the State of Delaware on ___________________, 1999, pursuant to Section
303(c) of the General Corporation Law of the State of Delaware of a certified
copy of the Plan of Reorganization for the corporation, as confirmed by the
United States Bankruptcy Court for the Eastern District of Louisiana in Case
Nos. 99-11391"A" and 99-11392"A" pursuant to Chapter 11 of Title 11 of the
United States Code, which Plan provides for the adoption of these Bylaws.
, Secretary
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EXHIBIT 3
RESTATED ARTICLES OF INCORPORATION
OF
FORCENERGY RESOURCES INC.
Forcenergy Resources Inc., a corporation organized and existing under
the laws of the State of Texas (the "Corporation") hereby certifies that:
1. The name of the corporation is Forcenergy Resources Inc.
2. The United States Bankruptcy Court for the Eastern District of
Louisiana (the "Court"), in Case Nos. 99-11391"A" and 99-11392"A" pursuant to
Chapter 11 of Title 11 of the United States Code, has confirmed a plan of
reorganization (the "Plan") for the Corporation, pursuant to Chapter 11 of Title
11 of the United States Code. Pursuant to the Plan, the Corporation's Articles
of Incorporation are restated to read as follows:
"ARTICLE ONE
The name of the corporation (the "Corporation") is Forcenergy Resources
Inc.
ARTICLE TWO
The period of the corporation's duration is perpetual.
ARTICLE THREE
The purpose for which the corporation is organized is to engage in any
lawful business for which corporations may be organized under the laws of the
State of Texas.
ARTICLE FOUR
The corporation shall have authority to issue One Thousand (1,000)
shares of capital stock consisting of One Thousand (1,000) shares of Common
Stock, $.01 par value per share.
ARTICLE FIVE
The corporation will not commence business until it has received for
the issuance of its shares consideration of the value of One Thousand Dollars
($1,000.00), consisting of money, labor done or property actually received.
<PAGE> 34
ARTICLE SIX
No shareholder shall be entitled as a matter of right to any preemptive
or preferential right to subscribe for, purchase, or receive additional unissued
or treasury shares of any class of the corporation, whether now or later
authorized, or any notes, bonds, debentures, warrants, options or other
securities convertible into or entitling the holder to purchase shares. Such
additional shares, notes, bonds, debentures, warrants, options or other
securities convertible into or entitling the holder to purchase shares may be
issued or disposed of as the Board of Directors in its absolute discretion deems
advisable.
ARTICLE SEVEN
At each election for directors of the corporation, each shareholder
entitled to vote at such election shall have the right to vote, in person or by
proxy, only the number of shares owned by him for as many persons as there are
directors to be elected, and no shareholder shall ever have the right or be
permitted to cumulate his votes on any basis, any and all rights of cumulative
voting being hereby expressly denied.
ARTICLE EIGHT
The address of the registered office of the corporation is 800 Brazos,
Austin, Texas 78701 and the name of its registered agent at such address is
Corporation Service Company.
ARTICLE NINE
The number of directors constituting the Board of Directors is one (1),
and the name and address of the person who is to serve as a director until the
next annual meeting of the shareholders or until his successor is elected and
qualified are:
NAME ADDRESS
Stig Wennerstrom 2730 SW 3rd Avenue
Miami, Florida 33129-2237
The number of directors of the corporation set forth above shall
constitute the authorized number of directors until changed by amendment to the
bylaws of the corporation or by resolution of the Board of Directors.
ARTICLE TEN
A director of the corporation shall not be personally liable to the
corporation or its shareholders for monetary damages for any act or omission in
his capacity as a director, except to the extent otherwise expressly provided by
a statute of the State of Texas. Any repeal or modification of this Article
shall be prospective only, and shall not adversely affect any limitation of the
personal liability of a director of the corporation existing at the time of the
repeal or modification.
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ARTICLE ELEVEN
Any action required by the Texas Business Corporation Act to be taken
at any annual or special meeting of shareholders, or any action which may be
taken at any annual or special meeting of shareholders, may be taken without a
meeting, without prior notice, and without a vote, if a consent or consents in
writing, setting forth the action so taken shall be signed by the holder or
holders of shares having not less than the minimum number of votes that would be
necessary to take such action at a meeting at which the holders of all shares
entitled to vote on the action were present and voted."
3. The Court approved the foregoing Restated Articles of Incorporation
of the Corporation pursuant to the Plan on ______________, 1999.
4. The Court had jurisdiction of the case under Chapter 11 of Title 11
of the United States Code.
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<PAGE> 36
The undersigned has made and executed these Restated Articles of
Incorporation of the Corporation under the seal of the Corporation this ___th
day of ______________ 1999, and affirms under the penalties of perjury that it
is true and it is the act and deed of the Corporation.
FORCENERGY RESOURCES INC.
By:
--------------------------------
Stig Wennerstrom
President
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EXHIBIT 4
Draft of 9/15/99
AMENDED AND RESTATED
BYLAWS
OF
FORCENERGY RESOURCES INC.
A TEXAS CORPORATION
DATED: ______________, 1999
<PAGE> 38
I N D E X
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ARTICLE I OFFICES
Section 1.1 Principal Office...................................................1
Section 1.2 Registered Office..................................................1
Section 1.3 Other Offices......................................................1
ARTICLE II MEETINGS OF SHAREHOLDERS
Section 2.1 Place of Meetings..................................................1
Section 2.2 Annual Meeting.....................................................2
Section 2.3 Special Meetings...................................................2
Section 2.4 Notice of Meetings.................................................2
Section 2.5 Voting Lists.......................................................3
Section 2.6 Quorum.............................................................3
Section 2.7 Organization.......................................................4
Section 2.8 Proxies............................................................4
Section 2.9 Voting of Shares...................................................5
Section 2.10 Voting of Shares by Certain Holders................................6
Section 2.11 Election of Directors..............................................6
Section 2.12 Telephone Meetings.................................................7
Section 2.13 Action Without Meeting.............................................7
ARTICLE III DIRECTORS
Section 3.1 Number and Qualification...........................................8
Section 3.2 Election and Term of Office........................................8
Section 3.3 Resignation........................................................8
Section 3.4 Removal............................................................8
Section 3.5 Vacancies..........................................................9
Section 3.6 General Powers.....................................................9
Section 3.7 Compensation.......................................................9
ARTICLE IV MEETINGS OF THE BOARD
Section 4.1 Place of Meetings..................................................10
Section 4.2 Annual Meeting.....................................................10
Section 4.3 Regular Meetings...................................................10
Section 4.4 Special Meetings...................................................10
Section 4.5 Quorum and Action..................................................11
Section 4.6 Presumption of Assent to Action....................................11
Section 4.7 Telephone Meetings.................................................11
Section 4.8 Action Without Meeting.............................................11
</TABLE>
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<TABLE>
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ARTICLE V COMMITTEES OF THE BOARD
Section 5.1 Membership and Authorities.........................................12
Section 5.2 Minutes and Rules of Procedure.....................................12
Section 5.3 Vacancies..........................................................12
Section 5.4 Telephone Meetings.................................................12
Section 5.5 Action Without Meeting.............................................12
ARTICLE VI OFFICERS
Section 6.1 Number.............................................................13
Section 6.2 Election, Term of Office and Qualification.........................13
Section 6.3 Subordinate Officers...............................................13
Section 6.4 Resignation........................................................13
Section 6.5 Removal............................................................14
Section 6.6 Vacancies..........................................................14
Section 6.7 The Chairman of the Board..........................................14
Section 6.8 The President......................................................14
Section 6.9 The Vice Presidents................................................15
Section 6.10 The Secretary......................................................15
Section 6.11 Assistant Secretaries..............................................16
Section 6.12 The Treasurer......................................................16
Section 6.13 Assistant Treasurers...............................................16
Section 6.14 Treasurer's Bond...................................................16
Section 6.15 Salaries...........................................................17
ARTICLE VII CORPORATE SHARES
Section 7.1 Share Certificates.................................................17
Section 7.2 Lost Certificates, etc.............................................18
Section 7.3 Transfer of Shares.................................................18
Section 7.4 Share Transfer Records; Ownership of Shares........................19
Section 7.5 Closing of Share Transfer Records and Record Dates.................19
Section 7.6 Distributions......................................................21
Section 7.7 Restrictions on Transfer...........................................21
ARTICLE VIII INDEMNIFICATION
Section 8.1 Definitions........................................................23
Section 8.2 Indemnification....................................................23
Section 8.3 Successful Defense.................................................25
Section 8.4 Determinations.....................................................25
Section 8.5 Advancement of Expenses............................................26
Section 8.6 Employee Benefit Plans.............................................26
Section 8.7 Other Indemnification and Insurance................................26
</TABLE>
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<TABLE>
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<S> <C> <C>
Section 8.8 Notice............................................................27
Section 8.9 Construction......................................................27
Section 8.10 Continuing Offer, Reliance, etc...................................27
Section 8.11 Effect of Amendment...............................................28
ARTICLE IX GENERAL PROVISIONS
Section 9.1 Waiver of Notice..................................................28
Section 9.2 Seal..............................................................28
Section 9.3 Fiscal Year.......................................................28
Section 9.4 Checks, Notes, etc................................................29
Section 9.5 Examination of Books and Records..................................29
Section 9.6 Voting Upon Shares Held by the Corporation........................29
ARTICLE X AMENDMENTS
Section 10.1 Amendment by Board................................................30
ARTICLE XI SUBJECT TO ARTICLES OF INCORPORATION AND ALL LAWS
Section 11.1 Subject to All Laws...............................................30
</TABLE>
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FORCENERGY RESOURCES INC.
B Y L A W S
ARTICLE I
OFFICES
SECTION 1.1 PRINCIPAL OFFICE. The principal office of the Corporation
shall be in the City of Miami, Florida.
SECTION 1.2 REGISTERED OFFICE. The registered office of the
Corporation required by the Texas Business Corporation Act, as amended from time
to time (the "TBCA"), to be maintained in the State of Texas, may be, but need
not be, identical with the principal office, and the address of the registered
office may be changed from time to time by the Board of Directors of the
Corporation (the "Board").
SECTION 1.3 OTHER OFFICES. The Corporation may also have offices at
such other places, both within and without the State of Texas, as the Board may
from time to time determine or the business of the Corporation may require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
SECTION 2.1 PLACE OF MEETINGS. The Board may designate any place,
either within or without the State of Texas, as the place of meeting for any
annual or special meeting of the shareholders called by the Board. A waiver of
notice signed by all shareholders entitled to vote at a meeting may designate
any place, either within or without the State of Texas, as the place for the
holding of such meeting. If no designation is made, meetings shall be held at
the principal office of the Corporation.
<PAGE> 42
SECTION 2.2 ANNUAL MEETING. The annual meeting of shareholders shall
be held at such time, on such day and at such place as may be designated by the
Board, at which time the shareholders shall elect a Board and transact such
other business as may properly be brought before the meeting.
SECTION 2.3 SPECIAL MEETINGS. Special meetings of the shareholders
for any purpose or purposes, unless otherwise prescribed by law or by the
Articles of Incorporation of the Corporation, as amended from time to time (the
"Articles"), may be called by (a) the Chairman of the Board, if one shall be
elected, (b) the President, (c) the Board or (d) the holders of at least ten
percent (10%) of all of the shares entitled to vote at the meetings. Business
transacted at all special meetings shall be confined to the purpose or purposes
stated in the call.
SECTION 2.4 NOTICE OF MEETINGS. (a) Written or printed notice of all
meetings of shareholders stating the place, day and hour thereof, and in the
case of a special meeting the purpose or purposes for which the meeting is
called, shall be personally delivered or mailed, not less than ten (10) days nor
more than sixty (60) days prior to the date of the meeting, to each shareholder
entitled to vote at such meeting. If mailed, the notice shall be deemed
delivered when deposited in the United States mail addressed to the shareholder
at his address as it appears on the share transfer records of the Corporation,
with postage thereon prepaid. Delivery of any such notice to any officer of a
corporation or association, or to any member of a partnership, shall constitute
delivery of such notice to such corporation, association or partnership.
(b) Any notice required to be given to any shareholder, under any
provision of the TBCA or the Articles or Bylaws of the Corporation, need not be
given to the shareholder if (i) notice of two consecutive annual meetings and
all notices of meetings held during the period between those annual meetings, if
any, or (ii) all (but in no event less than two) payments (if sent by first
class mail) of distributions of interest on securities during a 12-month period
have been mailed to that person, addressed at his address as shown on the share
transfer records of the Corporation, and have been returned undeliverable. Any
action or meeting taken or held without notice to such a person shall have the
same force and effect as if the notice had been
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duly given and, if the action taken by the Corporation is reflected in any
articles or document filed with the Secretary of State of the State of Texas,
those articles or that document may state that notice was duly given to all
persons to whom notice was required to be given. If such person delivers to the
Corporation a written notice setting forth his then current address, the
requirement that notice be given to that person shall be reinstated.
SECTION 2.5 VOTING LISTS. The officer or agent having charge of the
share transfer records of the Corporation shall make, at least ten (10) days
before each meeting of the shareholders, a complete list of shareholders
entitled to vote at such meeting or any adjournment thereof, arranged in
alphabetical order, with the address of each and the number of shares held by
each, which list, for a period of ten (10) days prior to such meeting, shall be
kept on file at the registered office or principal place of business of the
Corporation and shall be subject to inspection by any shareholder at any time
during usual business hours. Such list shall also be produced and kept open at
the time and place of the meeting and shall be subject to the inspection of any
shareholder for the duration of the meeting. The original share transfer records
shall be prima facie evidence as to who are the shareholders entitled to examine
such list or share transfer records or to vote at any meeting of shareholders.
Failure to comply with this Section 2.5 with respect to any meeting of
shareholders shall not affect the validity of any action taken at such meeting.
SECTION 2.6 QUORUM. A quorum shall be present at a meeting of
shareholders if the holders of a majority of the shares entitled to vote are
represented at the meeting in person or by proxy, unless otherwise provided by
the Articles. Unless otherwise provided in the Articles or these Bylaws, once a
quorum is present at a meeting of shareholders, the shareholders represented in
person or by proxy at the meeting may conduct such business as may be properly
brought before the meeting until it is adjourned, and the subsequent withdrawal
from the meeting of any shareholder or the refusal of any shareholder
represented in person or by proxy to vote shall not affect the presence of a
quorum at the meeting. Unless otherwise provided in the Articles or these
Bylaws, the shareholders represented in person or by proxy at a meeting of
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shareholders at which a quorum is not present may adjourn the meeting until such
time and to such place as may be determined by a vote of the holders of a
majority of the shares represented in person or by proxy at that meeting.
SECTION 2.7 ORGANIZATION. (a) The Chairman of the Board, if one shall
be elected, shall preside at all meetings of the shareholders. In the absence of
the Chairman of the Board or should one not be elected, the President or, in his
absence, a Vice President shall preside. In the absence of all of these
officers, any shareholder or the duly appointed proxy of any shareholder may
call the meeting to order and a chairman shall be elected from among the
shareholders present.
(b) The Secretary of the Corporation shall act as secretary at all
meetings of the shareholders. In his absence an Assistant Secretary shall so act
and in the absence of all of these officers the presiding officer may appoint
any person to act as secretary of the meeting.
SECTION 2.8 PROXIES. (a) At any meeting of the shareholders every
shareholder entitled to vote at such meeting shall be entitled to vote in person
or by proxy executed in writing by such shareholder or by his duly authorized
attorney-in-fact. A telegram, telex, cablegram or similar transmission by the
shareholder, or a photographic, photostatic, facsimile or similar reproduction
of a writing executed by the shareholder, shall be treated as an execution in
writing for purposes of this Section. Proxies shall be filed with the Secretary
immediately after the meeting has been called to order.
(b) No proxy shall be valid after eleven (11) months from the date
of its execution unless such proxy otherwise provides.
(c) Each proxy shall be revocable before it has been voted unless the
proxy form conspicuously states that the proxy is irrevocable and the proxy is
coupled with an interest, including the appointment as proxy of (i) a pledgee,
(ii) a person who purchased or agreed to purchase, or owns or holds an option to
purchase, the shares, (iii) a creditor of the Corporation who extended it credit
under terms requiring the appointment, (iv) an employee of the Corporation whose
employment contract requires the appointment or
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(v) a party to a voting agreement created under the TBCA. An irrevocable proxy,
if noted conspicuously on the certificate representing the shares that are
subject to the irrevocable proxy, shall be recognized as against the holder of
the shares or any successor or transferee of the shares. A revocable proxy shall
be deemed to have been revoked if the Secretary of the Corporation shall have
received at or before the meeting instructions of revocation or a proxy bearing
a later date, which instructions or proxy shall have been duly executed and
dated in writing by the shareholder.
(d) In the event that any instrument in writing shall designate two
(2) or more persons to act as proxies, a majority of such persons present at the
meeting or, if only one shall be present, then that one, shall have and may
exercise all of the powers conferred by such written instrument upon all the
persons so designated unless the instrument shall otherwise provide.
SECTION 2.9 VOTING OF SHARES. Except as otherwise provided by the
TBCA, the Articles and subject to Section 7.5 of these Bylaws, each shareholder
shall be entitled at each meeting of shareholders to one (1) vote on each matter
submitted to a vote at such meeting for each share having voting rights
registered in his name on the share transfer records of the Corporation. When a
quorum is present at any meeting of shareholders (and notwithstanding the
subsequent withdrawal of enough shareholders to leave less than a quorum
present) and except as otherwise provided in the TBCA or the Articles, (a) with
respect to any matter other than the election of directors or a matter for which
the affirmative vote of the holders of a specified portion of the shares
entitled to vote is required by the TBCA, the act of shareholders shall be the
affirmative vote of a majority of the shares entitled to vote on, and voted for
or against, that matter at a meeting of shareholders at which a quorum is
present and (b) with respect to any matter for which the affirmative vote of the
holders of a specified portion of the shares entitled to vote is required by the
TBCA, the act of the shareholders on that matter shall be the affirmative vote
of the holders of a majority of the shares entitled to vote on that matter
rather than the affirmative vote of a specified portion of shares as otherwise
required by the TBCA.
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SECTION 2.10 VOTING OF SHARES BY CERTAIN HOLDERS. (a) Shares standing
in the name of another corporation may be voted by such officer, agent or proxy
as the bylaws of such corporation may authorize or, in the absence of such
authorization, as the board of directors of such corporation may determine.
(b) Shares held by an administrator, executor, guardian or
conservator may be voted by him so long as such shares forming a part of an
estate are in the possession and form a part of the estate being served by him,
either in person or by proxy, without a transfer of such shares into his name.
Shares standing in the name of a trustee may be voted by him, either in person
or by proxy, but no trustee shall be entitled to vote shares held by him without
a transfer of such shares into his name as trustee.
(c) Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may be voted by
such receiver without the transfer thereof into his name if authority to do so
be contained in an appropriate order of the court by which such receiver was
appointed.
(d) A shareholder whose shares are pledged shall be entitled to
vote such shares until the shares have been transferred into the name of the
pledgee, and thereafter the pledgee shall be entitled to vote the shares so
transferred.
(e) Shares of the Corporation's stock (i) owned by the Corporation
itself, (ii) owned by another corporation, the majority of the voting stock of
which is owned or controlled by the Corporation, or (iii) held by the
Corporation in a fiduciary capacity shall not be voted, directly or indirectly,
at any meeting, and shall not be counted in determining the total number of
outstanding shares at any given time.
SECTION 2.11 ELECTION OF DIRECTORS. At each election for Directors,
each shareholder entitled to vote at such election shall, unless otherwise
provided by the Articles or by the TBCA, have the right to vote the number of
shares owned by him for as many persons as there are to be elected and for whose
election he has a right to vote. Unless otherwise provided by the Articles, no
shareholder shall have the right or be permitted to cumulate his votes on any
basis.
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SECTION 2.12 TELEPHONE MEETINGS. Shareholders may participate in and
hold a meeting of the shareholders by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other and participation in a meeting pursuant to this
Section shall constitute presence in person at such meeting, except where a
person participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
SECTION 2.13 ACTION WITHOUT MEETING. (a) Any action required by the
TBCA or the Articles to be taken at any annual or special meeting of the
shareholders, or any action which may be taken at any annual or special meeting
of the shareholders, may be taken without a meeting, without prior notice, and
without a vote, if a consent or consents in writing, setting forth the action so
taken, shall be signed by the holder or holders of all the shares entitled to
vote with respect to the action that is the subject of the consent unless
otherwise provided in the Articles.
(b) Every written consent shall bear the date of signature of each
shareholder who signs the consent. No written consent shall be effective to take
the action that is the subject of the consent unless, within sixty (60) days
after the date of the earliest dated consent delivered to the Corporation in the
manner required by this Section, a consent or consents signed by the holder or
holders of shares having not less than the minimum number of votes that would be
necessary to take the action that is the subject of the consent are delivered to
the Corporation by delivery to its registered office, its principal place of
business, or an officer or agent of the Corporation having custody of the books
in which proceedings of meetings of shareholders are recorded. Delivery shall be
by hand or certified or registered mail, return receipt requested. Delivery to
the Corporation's principal place of business shall be addressed to the
President or principal executive officer of the Corporation.
(c) A telegram, telex, cablegram or similar transmission by a
shareholder, or a photographic, photostatic, facsimile or similar reproduction
of a writing signed by a shareholder, shall be regarded as signed by the
shareholder for purposes of this Section.
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(d) Prompt notice of the taking of any action by shareholders
without a meeting by less than unanimous written consent shall be given to those
shareholders who did not consent in writing to the action.
ARTICLE III
DIRECTORS
SECTION 3.1 NUMBER AND QUALIFICATION. The Board shall be composed of
not less than one (1) nor more than nine (9) members who shall be elected
annually by the shareholders. Subject to any limitations specified by the TBCA
or in the Articles, the number of Directors may be increased or decreased by
resolution adopted by a majority of the Board. No decrease in the number of
Directors shall have the effect of shortening the term of any incumbent
Director. Directors need not be residents of the State of Texas or shareholders
of the Corporation.
SECTION 3.2 ELECTION AND TERM OF OFFICE. The Directors shall be
elected at the annual meeting of the shareholders (except as provided in
Sections 3.3 and 3.4) by the holders of shares entitled to vote in the election
of Directors. Unless otherwise provided in the Articles, each Director elected
shall hold office until his successor shall have been elected and qualified, or
until his death, resignation or removal in the manner hereinafter provided.
SECTION 3.3 RESIGNATION. Any Director may resign at any time by
giving written notice to the President or Secretary. Such resignation shall take
effect at the time specified therein, and unless otherwise specified therein,
the acceptance of such resignation shall not be necessary to make it effective.
SECTION 3.4 REMOVAL. At any special meeting of the shareholders
called expressly for that purpose, any Director or Directors, including the
entire Board, may be removed, either with or without cause, and another person
or persons may be elected to serve for the remainder of his or their term by a
vote of the holders of a majority of all shares outstanding and entitled to vote
at an election of Directors. In case any
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vacancy so created shall not be filled by the shareholders at such meeting, such
vacancy may be filled by the Directors as provided in Section 3.5.
SECTION 3.5 VACANCIES. (a) Any vacancy occurring in the Board (except
by reason of an increase in the number of Directors) may be filled in accordance
with subsection (c) of this Section 3.5 or may be filled by the affirmative vote
of a majority of the remaining Directors though less than a quorum of the Board.
A Director elected to fill a vacancy shall be elected for the unexpired term of
his predecessor in office.
(b) A directorship to be filled by reason of an increase in the
number of Directors may be filled in accordance with subsection (c) of this
Section 3.5 or may be filled by the Board for a term of office continuing only
until the next election of one (1) or more Directors by the shareholders;
provided, however, that subsequent to the first annual meeting of shareholders
the Board may not fill more than two (2) such directorships during the period
between any two (2) successive annual meetings of shareholders.
(c) Any vacancy occurring in the Board or any directorship to be
filled by reason of an increase in the number of Directors may be filled by
election at an annual or special meeting of shareholders called for that
purpose.
SECTION 3.6 GENERAL POWERS. The powers of the Corporation shall be
exercised by or under the authority of, and the property, business and affairs
of the Corporation shall be managed under the direction of, the Board. In
addition to the powers and authorities expressly conferred upon them by these
Bylaws, the Board may exercise all such powers of the Corporation and do all
such lawful acts and things as are not by law or by the Articles or by these
Bylaws directed or required to be exercised or done by the shareholders.
SECTION 3.7 COMPENSATION. Directors as such shall not receive any
stated salary for their services, but by resolution of the Board, a fixed sum
for expenses of attendance, if any, may be allowed for attendance at any regular
or special meeting of the Board, provided that nothing herein contained shall be
construed to preclude any Director from serving the Corporation in any other
capacity and receiving compensation
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therefor. Members of special or standing committees may be allowed like
compensation for attending committee meetings.
ARTICLE IV
MEETINGS OF THE BOARD
SECTION 4.1 PLACE OF MEETINGS. The Directors of the Corporation may
hold their meetings, both regular and special, either within or without the
State of Texas.
SECTION 4.2 ANNUAL MEETING. The first meeting of each newly elected
Board shall be held immediately following the adjournment of the annual meeting
of the shareholders and no notice of such meeting shall be necessary to the
newly elected Directors in order legally to constitute the meeting, provided a
quorum shall be present, or they may meet at such time and place as shall be
fixed by the consent in writing of all of the Directors.
SECTION 4.3 REGULAR MEETINGS. Regular meetings of the Board, in
addition to the annual meetings referred to in Section 4.2, may be held without
notice at such time and place as shall from time to time be determined by the
Board.
SECTION 4.4 SPECIAL MEETINGS. Special meetings of the Board may be
called by the Chairman of the Board, if one shall be elected, or by the
President, if a Chairman of the Board is not elected, on one (1) day's notice
(oral or written) to each Director. Special meetings shall be called by the
President or the Secretary on like notice on the written request of the number
of Directors constituting 33 1/3% or more of the total number of Directors.
Neither the purpose of, nor the business to be transacted at, any special
meeting of the Board need be specified in the notice or waiver of notice of such
meeting. Attendance of a Director at a meeting shall constitute a waiver of
notice of such meeting except where a Director attends a meeting for the express
purpose of objecting to the transaction of any business on the grounds that the
meeting is not lawfully called or convened.
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SECTION 4.5 QUORUM AND ACTION. At all meetings of the Board, the
presence of a majority of the number of Directors fixed in accordance with
Section 3.1 shall be necessary and sufficient to constitute a quorum for the
transaction of business and the act of a majority of the Directors at any
meeting at which a quorum is present shall be the act of the Board unless the
act of a greater number is required by law, the Articles or these Bylaws. If a
quorum shall not be present at any meeting of Directors, the Directors present
may adjourn the meeting from time to time without notice other than announcement
at the meeting until a quorum shall be present.
SECTION 4.6 PRESUMPTION OF ASSENT TO ACTION. A Director who is
present at a meeting of the Board at which action on any corporate matter is
taken shall be presumed to have assented to the action taken unless his dissent
shall be entered in the minutes of the meeting or unless he shall file his
written dissent to such action with the secretary of the meeting before the
adjournment thereof or shall forward such dissent by registered mail to the
Secretary of the Corporation immediately after the adjournment of the meeting.
Such right to dissent shall not apply to a Director who voted in favor of such
action.
SECTION 4.7 TELEPHONE MEETINGS. Directors may participate in and hold
a meeting of the Board by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other and participation in a meeting pursuant to this
Section shall constitute presence in person at such meeting, except where a
person participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
SECTION 4.8 ACTION WITHOUT MEETING. Any action required or permitted
to be taken at a meeting of the Board, or any committee thereof, may be taken
without a meeting if a consent in writing, setting forth the action so taken, is
signed by all the members of the Board, or committee, as the case may be, and
such consent shall have the same force and effect as a unanimous vote at a
meeting.
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ARTICLE V
COMMITTEES OF THE BOARD
SECTION 5.1 MEMBERSHIP AND AUTHORITIES. The Board, by resolution
adopted by a majority of the full Board, may designate from among its members
(a) one (1) or more committees, each of which shall have and may exercise all of
the authority of the Board in the business and affairs of the Corporation,
except in those cases where the authority of the Board is specifically denied to
such committee or committees by the TBCA, the Articles or these Bylaws and (b)
one (1) or more Directors as alternate members of any such committee, who may,
subject to any limitations imposed by the Board, replace absent or disqualified
members at any meeting of that committee. The designation of any committee and
the delegation thereto of authority shall not operate to relieve the Board, or
any member thereof, of any responsibility imposed upon it or him by law. The
members of each such committee shall serve at the pleasure of the Board.
SECTION 5.2 MINUTES AND RULES OF PROCEDURE. Each committee designated
by the Board shall keep regular minutes of its proceedings and report the same
to the Board when required. Subject to the provisions of these Bylaws, the
members of any committee may fix such committee's own rules of procedure.
SECTION 5.3 VACANCIES. The Board shall have the power at any time to
fill vacancies in, to change the membership of, or to dissolve, any committee.
SECTION 5.4 TELEPHONE MEETINGS. Members of any committee designated by
the Board may participate in or hold a meeting by use of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other. Participation in a meeting pursuant to this
Section shall constitute presence in person at such meeting, except where a
person participates in the meeting for the express purpose of objecting to the
transaction of any business on the grounds that the meeting is not lawfully
called or convened.
SECTION 5.5 ACTION WITHOUT MEETING. Any action required or permitted
to be taken at a meeting of any committee designated by the Board may be taken
without a meeting if a consent in writing,
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setting forth the action so taken, is signed by all the members of the
committee, and such consent shall have the same force and effect as a unanimous
vote at a meeting.
ARTICLE VI
OFFICERS
SECTION 6.1 NUMBER. The officers of the Corporation shall be a
President and a Secretary. The Board may also elect a Chairman of the Board, one
(1) or more Vice Presidents, a Treasurer, one (1) or more Assistant Secretaries
and one (1) or more Assistant Treasurers. One (1) person may hold any two (2) or
more of these offices.
SECTION 6.2 ELECTION, TERM OF OFFICE AND QUALIFICATION. The Board
shall elect officers, none of whom need be a member of the Board, except for the
Chairman of the Board, if one shall be elected, at its first meeting after each
annual meeting of shareholders. Each officer so elected shall hold office until
his successor shall have been duly elected and qualified or until his death,
resignation or removal in the manner hereinafter provided.
SECTION 6.3 SUBORDINATE OFFICERS. The Board may appoint such other
officers and agents as it shall deem necessary who shall hold their offices for
such terms, have such authority and perform such duties as the Board may from
time to time determine. The Board may delegate to any committee or officer the
power to appoint any such subordinate officer or agent. No subordinate officer
appointed by any committee or superior officer as aforesaid shall be considered
as an officer of the Corporation, the officers of the Corporation being limited
to the officers elected or appointed as such by the Board as a whole.
SECTION 6.4 RESIGNATION. Any officer may resign at any time by giving
written notice thereof to the Board or to the President or Secretary of the
Corporation. Any such resignation shall take effect at the time specified
therein and, unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
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SECTION 6.5 REMOVAL. Any officer elected or appointed by the Board
may be removed at any time with or without cause by the affirmative vote of a
majority of the full Board. Any other officer may be removed at any time with or
without cause by the Board or by any committee or superior officer in whom such
power of removal may be conferred by the Board. The removal of any officer shall
be without prejudice to the contract rights, if any, of the person so removed.
Election or appointment of an officer or agent shall not of itself create any
contract rights.
SECTION 6.6 VACANCIES. A vacancy in any office shall be filled for
the unexpired portion of the term by the Board, but in case of a vacancy
occurring in an office filled by a committee or superior officer in accordance
with the provisions of Section 6.3, such vacancy may be filled by such committee
or superior officer.
SECTION 6.7 THE CHAIRMAN OF THE BOARD. The Chairman of the Board, if
one shall be elected, shall be the chief executive officer of the Corporation,
shall preside at all meetings of the shareholders and Directors, shall be ex
officio a member of all standing committees, shall have general and active
management of the business of the Corporation, shall have the general
supervision and direction of all other officers of the Corporation with full
power to see that their duties are properly performed and shall see that all
orders and resolutions of the Board are carried into effect. He may sign, with
any other proper officer, certificates for shares of the Corporation and any
deeds, bonds, mortgages, contracts and other documents which the Board has
authorized to be executed, except where required by law to be otherwise signed
and executed and except where the signing and execution thereof shall be
expressly delegated by the Board or these Bylaws to some other officer or agent
of the Corporation. In addition, the Chairman of the Board shall perform
whatever duties and shall exercise all powers that are given to him by the
Board.
SECTION 6.8 THE PRESIDENT. If no Chairman of the Board shall be
elected, the President shall be the chief executive officer of the Corporation
and shall have the powers and duties of the Chairman of the Board as set forth
in Section 6.7. In the absence of the Chairman of the Board, if one shall be
elected, the
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President shall preside at all meetings of the shareholders and Directors. He
may sign, with any other proper officer, certificates for shares of the
Corporation and any deeds, bonds, mortgages, contracts and other documents which
the Board has authorized to be executed, except where required by law to be
otherwise signed and executed and except where the signing and execution thereof
shall be expressly delegated by the Board or these Bylaws to some other officer
or agent of the Corporation. In addition, the President shall perform whatever
duties and shall exercise all the powers that are given to him by the Board or
by the Chairman of the Board, if one shall be elected.
SECTION 6.9 THE VICE PRESIDENTS. The Vice Presidents shall perform
the duties as are given to them by these Bylaws and as may from time to time be
assigned to them by the Board, by the Chairman of the Board, if one shall be
elected, or by the President and may sign, with any other proper officer,
certificates for shares of the Corporation. At the request of the President or
in his absence or disability, the Vice President designated by the President (or
in the absence of such designation, the senior Vice President) shall perform the
duties and exercise the powers of the President.
SECTION 6.10 THE SECRETARY. The Secretary, when available, shall
attend all meetings of the Board and all meetings of the shareholders and record
all votes and the minutes of all proceedings in a book to be kept for that
purpose and shall perform like duties for any standing committees when required.
He shall give, or cause to be given, notice of all meetings of the shareholders
and special meetings of the Board as required by law or these Bylaws, be
custodian of the corporate records and have general charge of the share transfer
records of the Corporation and shall perform such other duties as may be
prescribed by the Board, by the Chairman of the Board, if one shall be elected,
or by the President under whose supervision he shall be. He may sign, with any
other proper officer, certificates for shares of the Corporation and shall keep
in safe custody the seal of the Corporation, and, when authorized by the Board,
affix the same to any instrument requiring it and, when so affixed, it shall be
attested by his signature or by the signature of the Treasurer or an Assistant
Secretary.
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SECTION 6.11 ASSISTANT SECRETARIES. The Assistant Secretaries shall
perform the duties as are given to them by these Bylaws or as may from time to
time be assigned to them by the Board or by the Secretary. At the request of the
Secretary, or in his absence or disability, the Assistant Secretary designated
by the Secretary (or in the absence of such designation the senior Assistant
Secretary), shall perform the duties and exercise the powers of the Secretary.
SECTION 6.12 THE TREASURER. The Treasurer shall have the custody and
be responsible for all corporate funds and securities and shall keep full and
accurate accounts of receipts and disbursements in books and records of account
belonging to the Corporation and shall deposit all monies and other valuable
effects in the name and to the credit of the Corporation in such depositories as
may be designated by the Board. He shall disburse the funds of the Corporation
as may be ordered by the Board, taking proper vouchers for such disbursements,
and shall render to the Chairman of the Board, if one shall be elected, the
President and the Directors, at the regular meetings of the Board, or whenever
they may require it, an account of all his transactions as Treasurer and of the
financial condition of the Corporation. He may sign, with any other proper
officer, certificates for shares of the Corporation.
SECTION 6.13 ASSISTANT TREASURERS. The Assistant Treasurers shall
perform the duties as are given to them by these Bylaws or as may from time to
time be assigned to them by the Board or by the Treasurer. At the request of the
Treasurer, or in his absence or disability, the Assistant Treasurer designated
by the Treasurer (or in the absence of such designation, the senior Assistant
Treasurer), shall perform the duties and exercise the powers of the Treasurer.
SECTION 6.14 TREASURER'S BOND. If required by the Board, the Treasurer
and any Assistant Treasurer shall give the Corporation a bond in such sum and
with such surety or sureties as shall be satisfactory to the Board for the
faithful performance of the duties of his office and for the restoration to the
Corporation, in case of his death, resignation, retirement or removal from
office, of all books and records
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of account, papers, vouchers, money and other property of whatever kind in his
possession or under his control belonging to the Corporation.
SECTION 6.15 SALARIES. The salary or other compensation of officers
shall be fixed from time to time by the Board. The Board may delegate to any
committee or officer the power to fix from time to time the salary or other
compensation of subordinate officers and agents appointed in accordance with the
provisions of Section 6.3.
ARTICLE VII
CORPORATE SHARES
SECTION 7.1 SHARE CERTIFICATES. (a) The certificates representing
shares of the Corporation shall be in such form, not inconsistent with the
provisions of the TBCA and the Articles, as shall be approved by the Board. The
certificates shall be signed by the Chairman of the Board, if one shall be
elected, the President or a Vice President and a Secretary or Assistant
Secretary, or such other or additional officers as may be prescribed from time
to time by the Board, and may be sealed with the corporate seal or a facsimile
thereof. The signatures of such officer or officers upon a certificate may be
facsimiles if the certificate is countersigned by a transfer agent, or
registered by a registrar, either of which is other than the Corporation itself
or an employee of the Corporation. In case any officer who has signed or whose
facsimile signature has been placed upon a certificate shall have ceased to be
such officer before such certificate is issued, it may be issued with the same
effect as if he were such officer at the date of its issuance.
(b) If the Corporation is authorized to issue shares of more than
one (1) class or more than one (1) series of any class, there shall be set forth
on the face or back of the certificate or certificates, which the Corporation
shall issue to represent shares of such class or series of stock, such legends
or statements as may be required by applicable law or the Articles or as may be
approved by the Board.
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(c) In the event the Corporation has, by its Articles, limited or
denied the preemptive right of shareholders of any class or series of stock,
there shall be set forth on the face or back of the certificate or certificates,
which the Corporation shall issue to represent shares of such class or series of
stock, such legends or statements regarding such denial as shall be required by
the TBCA or the Articles.
(d) All certificates for each class or series of stock shall be
consecutively numbered and the name of the person owning the shares represented
thereby, with the number of such shares and the date of issue, shall be entered
on the Corporation's share transfer records.
(e) All certificates surrendered to the Corporation shall be
cancelled, and, except as provided in Section 7.2 with respect to lost,
destroyed or mutilated certificates, no new certificate shall be issued until
the former certificate for the same number of shares has been surrendered and
cancelled.
SECTION 7.2 LOST CERTIFICATES, ETC. The Board may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation alleged to have been lost or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost or destroyed. In authorizing such issue of a
new certificate or certificates, the Board may, in its discretion and as a
condition precedent to the issue thereof, require the owner of such lost or
destroyed certificate or certificates, or his legal representative, to advertise
the same in such manner as it shall require and/or indemnify the Corporation as
the Board may prescribe.
SECTION 7.3 TRANSFER OF SHARES. Subject to any restrictions upon
transfer, upon surrender to the Corporation or the transfer agent of the
Corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer and satisfaction of
the Corporation that the requested transfer complies with the provisions of
applicable state and federal laws and regulations and any agreements to which
the Corporation is a party, the Corporation shall issue a new certificate to the
person entitled thereto, cancel the old certificate and record the transaction
upon its share transfer records.
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SECTION 7.4 SHARE TRANSFER RECORDS; OWNERSHIP OF SHARES. (a) The
Corporation shall keep at its registered office or principal place of business,
or at the office of its transfer agent or registrar, a record of the original
issuance of shares issued by the Corporation and a record of each transfer of
those shares that have been presented to the Corporation for registration of
transfer. Such records shall contain the names and addresses of all past and
current shareholders of the Corporation and the number and class of shares
issued by the Corporation held by each of them. Any share transfer records may
be in written form or in any other form capable of being converted into written
form within a reasonable time. The principal place of business of the
Corporation, or the office of its transfer agent or registrar, may be located
outside the State of Texas.
(b) The Corporation shall be entitled to treat and recognize the
person in whose name shares issued by the Corporation are registered in the
share transfer records of the Corporation at any particular time (including,
without limitation, as of a record date fixed pursuant to Section 7.5) as the
owner of those shares at that time for the purposes of voting those shares,
receiving distributions thereon or notices in respect thereof, transferring
those shares, giving proxies with respect to those shares or otherwise
exercising rights, entering into agreements or taking action in respect of those
shares and, accordingly, shall not be bound to recognize any equitable or other
claim to or interest in such share or shares on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise provided by the laws of the State of Texas.
SECTION 7.5 CLOSING OF SHARE TRANSFER RECORDS AND RECORD DATES. (a)
For the purpose of determining shareholders entitled to notice of or to vote at
any meeting of shareholders or any adjournment thereof, or entitled to receive a
distribution by the Corporation (other than a distribution involving a purchase
or redemption by the Corporation of its own shares) or a share dividend, or in
order to make a determination of shareholders for any other proper purpose
(other than determining shareholders entitled to consent to action by
shareholders proposed to be taken without a meeting of shareholders), the Board
may provide that the share transfer records shall be closed for a stated period
but not to exceed, in any case, sixty (60) days.
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If the share transfer records shall be closed for the purpose of determining
shareholders entitled to notice of or to vote at a meeting of shareholders, such
records shall be closed for at least ten (10) days immediately preceding such
meeting. In lieu of closing the share transfer records, the Board may fix in
advance a date as the record date for any such determination of shareholders,
such date in any case to be not more than sixty (60) days and, in case of a
meeting of shareholders, not less than ten (10) days prior to the date on which
the particular action requiring such determination of shareholders is to be
taken, and the determination of shareholders on such record date shall apply
with respect to the particular action requiring the same notwithstanding any
transfer of shares on the records of the Corporation after such record date. If
the share transfer records are not closed and no record date is fixed for the
determination of shareholders entitled to notice of or to vote at a meeting of
shareholders, or shareholders entitled to receive a distribution (other than a
distribution involving a purchase or redemption by the Corporation of its own
shares) or a share dividend, the date on which notice of the meeting is mailed
or the date on which the resolution of the Board declaring such distribution or
share dividend is adopted, as the case may be, shall be the record date for such
determination of shareholders. When a determination of shareholders entitled to
vote at any meeting of shareholders has been made as provided in this Section,
such determination shall apply to any adjournment thereof except where the
determination has been made through the closing of the share transfer records
and the stated period of closing has expired.
(b) Unless a record date shall have previously been fixed or
determined pursuant to this Section, whenever action by shareholders is proposed
to be taken by consent in writing without a meeting of shareholders, the Board
may fix a record date for the purpose of determining shareholders entitled to
consent to that action, which record date shall not precede, and shall not be
more than ten (10) days after, the date upon which the resolution fixing the
record date is adopted by the Board. If no record date has been fixed by the
Board and the prior action of the Board is not required by the TBCA, the record
date for determining shareholders entitled to consent to action in writing
without a meeting shall be the first date on which a
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signed written consent setting forth the action taken or proposed to be taken is
delivered to the Corporation by delivery to its registered office, its principal
place of business, or an officer or agent of the Corporation having custody of
the books in which proceedings of meetings of shareholders are recorded.
Delivery shall be by hand or by certified or registered mail return receipt
requested. Delivery to the Corporation's principal place of business shall be
addressed to the President or the principal executive officer of the
Corporation. If no record date shall have been fixed by the Board and prior
action of the Board is required by the TBCA, the record date for determining
shareholders entitled to consent to action in writing without a meeting shall be
at the close of business on the date on which the Board adopts a resolution
taking such prior action.
(c) Distributions made by the Corporation, including those that
were payable but not paid to a holder of shares, or to his heirs, successors or
assigns, and have been held in suspense by the Corporation or were paid and
delivered by it unto an escrow account or to a trustee or custodian, shall be
payable by the Corporation, escrow agent, trustee or custodian to the holder of
the shares as of the record date determined for that distribution as provided in
subsection (a) of this Section, or to his heirs, successors and assigns.
SECTION 7.6 DISTRIBUTIONS. The Board may, from time to time, declare,
and the Corporation may make, distributions on its outstanding shares in the
manner and upon the terms and conditions provided by the Articles and by the
TBCA.
SECTION 7.7 RESTRICTIONS ON TRANSFER. Shares of the Corporation shall
not be offered for sale, sold, assigned, transferred, pledged or otherwise
disposed of by the holder thereof (1) unless such offer, sale, assignment,
pledge or other disposition is in accordance with the Shareholder's Agreement
between the holder of the certificate, the Corporation and the other
shareholders and (2) unless they have been duly registered under the applicable
securities laws or the Corporation has received advice of counsel for the
Corporation to the effect that the proposed disposition would not be in
violation of said laws. A restrictive legend substantially as follows shall be
placed conspicuously on the certificates for such shares, to wit:
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[BACK OF CERTIFICATE]
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF (I) UNLESS SUCH SALE, TRANSFER OR OTHER
DISPOSITION SHALL HAVE BEEN APPROVED BY THE BOARD OF DIRECTORS OF THE
CORPORATION AND (II) UNLESS REGISTERED UNDER APPLICABLE SECURITIES LAWS
OR UNTIL THE CORPORATION HAS RECEIVED ADVICE OF COUNSEL (WHICH MAY BE
COUNSEL FOR THE CORPORATION) REASONABLY SATISFACTORY TO THE CORPORATION
THAT THE SHARES MAY BE TRANSFERRED WITHOUT SUCH REGISTRATION.
ARTICLE SEVEN OF THE ARTICLES OF INCORPORATION, WHICH IS ON FILE IN THE
OFFICE OF THE SECRETARY OF STATE, PROVIDES THAT NO SHAREHOLDER OF THE
CORPORATION SHALL HAVE THE RIGHT OF CUMULATIVE VOTING AT ANY ELECTION
OF DIRECTORS.
ARTICLE SIX OF THE ARTICLES OF INCORPORATION PROVIDES OWNERSHIP OF
SHARES OF ANY CLASS OF THE CAPITAL STOCK OF THE CORPORATION SHALL NOT
ENTITLE THE HOLDERS THEREOF TO ANY PREEMPTIVE RIGHT TO SUBSCRIBE OR
PURCHASE OR HAVE OFFERED TO THEM FOR SUBSCRIPTION OR PURCHASE ANY
ADDITIONAL SHARES OF CAPITAL STOCK OF ANY CLASS OF THE CORPORATION OR
ANY SECURITIES CONVERTIBLE INTO ANY CLASS OF CAPITAL STOCK OF THE
CORPORATION.
THE CORPORATION WILL FURNISH A COPY OF THE ARTICLES OF INCORPORATION TO
THE RECORD HOLDER OF THIS CERTIFICATE WITHOUT CHARGE ON WRITTEN REQUEST
TO THE CORPORATION AT ITS PRINCIPAL PLACE OF BUSINESS OR REGISTERED
OFFICE.
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ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 DEFINITIONS. In this Article:
(a) "Indemnitee" means (i) any present or former Director, advisory
director or officer of the Corporation, (ii) any person who while serving in any
of the capacities referred to in clause (i) hereof served at the Corporation's
request as a director, officer, partner, venturer, proprietor, trustee,
employee, agent or similar functionary of another foreign or domestic
corporation, partnership, joint venture, sole proprietorship, trust, employee
benefit plan or other enterprise, and (iii) any person nominated or designated
by (or pursuant to authority granted by) the Board or any committee thereof to
serve in any of the capacities referred to in clauses (i) or (ii) hereof.
(b) "Official Capacity" means (i) when used with respect to a
Director, the office of Director of the Corporation, and (ii) when used with
respect to a person other than a Director, the elective or appointive office of
the Corporation held by such person or the employment or agency relationship
undertaken by such person on behalf of the Corporation, but in each case does
not include service for any other foreign or domestic corporation or any
partnership, joint venture, sole proprietorship, trust, employee benefit plan or
other enterprise.
(c) "Proceeding" means any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative, arbitrative or
investigative, any appeal in such an action, suit or proceeding, and any inquiry
or investigation that could lead to such an action, suit or proceeding.
SECTION 8.2 INDEMNIFICATION. The Corporation shall indemnify every
Indemnitee against all judgments, penalties (including excise and similar
taxes), fines, amounts paid in settlement and reasonable expenses actually
incurred by the Indemnitee in connection with any Proceeding in which he was, is
or is threatened to be named defendant or respondent, or in which he was or is a
witness without being named a defendant or respondent, by reason, in whole or in
part, of his serving or having served, or having been
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nominated or designated to serve, in any of the capacities referred to in
Section 8.1, if it is determined in accordance with Section 8.4 that the
Indemnitee (a) conducted himself in good faith, (b) reasonably believed, in the
case of conduct in his Official Capacity, that his conduct was in the
Corporation's best interests and, in all other cases, that his conduct was at
least not opposed to the Corporation's best interests, and (c) in the case of
any criminal proceeding, had no reasonable cause to believe that his conduct was
unlawful; provided, however, that in the event that an Indemnitee is found
liable to the Corporation or is found liable on the basis that personal benefit
was improperly received by the Indemnitee the indemnification (i) is limited to
reasonable expenses actually incurred by the Indemnitee in connection with the
Proceeding and (ii) shall not be made in respect of any Proceeding in which the
Indemnitee shall have been found liable for willful or intentional misconduct in
the performance of his duty to the Corporation. Except as provided in the
immediately preceding proviso to the first sentence of this Section 8.2, no
indemnification shall be made under this Section 8.2 in respect of any
Proceeding in which such Indemnitee shall have been (x) found liable on the
basis that personal benefit was improperly received by him, whether or not the
benefit resulted from an action taken in the Indemnitee's Official Capacity, or
(y) found liable to the Corporation. The termination of any Proceeding by
judgment, order, settlement or conviction, or on a plea of nolo contendere or
its equivalent, is not of itself determinative that the Indemnitee did not meet
the requirements set forth in clauses (a), (b) or (c) in the first sentence of
this Section 8.2. An Indemnitee shall be deemed to have been found liable in
respect of any claim, issue or matter only after the Indemnitee shall have been
so adjudged by a court of competent jurisdiction after exhaustion of all appeals
therefrom. Reasonable expenses shall include, without limitation, all court
costs and all fees and disbursements of attorneys for the Indemnitee. The
indemnification provided herein shall be applicable whether or not negligence or
gross negligence of the Indemnitee is alleged or proven.
SECTION 8.3 SUCCESSFUL DEFENSE. Without limitation of Section 8.2 and
in addition to the indemnification provided for in Section 8.2, the Corporation
shall indemnify every Indemnitee against
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reasonable expenses incurred by such person in connection with any Proceeding in
which he is a witness or a named defendant or respondent because he served in
any of the capacities referred to in Section 8.1, if such person has been wholly
successful, on the merits or otherwise, in defense of the Proceeding.
SECTION 8.4 DETERMINATIONS. Any indemnification under Section 8.2
(unless ordered by a court of competent jurisdiction) shall be made by the
Corporation only upon a determination that indemnification of the Indemnitee is
proper in the circumstances because he has met the applicable standard of
conduct. Such determination shall be made (a) by the Board by a majority vote of
a quorum consisting of Directors who, at the time of such vote, are not named
defendants or respondents in the Proceeding; (b) if such a quorum cannot be
obtained, then by a majority vote of a committee of the Board, duly designated
to act in the matter by a majority vote of all Directors (in which designation
Directors who are named defendants or respondents in the Proceeding may
participate), such committee to consist solely of two (2) or more Directors who,
at the time of the committee vote, are not named defendants or respondents in
the Proceeding; (c) by special legal counsel selected by the Board or a
committee thereof by vote as set forth in clauses (a) or (b) of this Section 8.4
or, if the requisite quorum of all of the Directors cannot be obtained therefor
and such committee cannot be established, by a majority vote of all of the
Directors (in which Directors who are named defendants or respondents in the
Proceeding may participate); or (d) by the shareholders in a vote that excludes
the shares held by Directors that are named defendants or respondents in the
Proceeding. Determination as to reasonableness of expenses shall be made in the
same manner as the determination that indemnification is permissible, except
that if the determination that indemnification is permissible is made by special
legal counsel, determination as to reasonableness of expenses must be made in
the manner specified in clause (c) of the preceding sentence for the selection
of special legal counsel. In the event a determination is made under this
Section 8.4 that the Indemnitee has met the applicable standard of conduct as to
some matters but not as to others, amounts to be indemnified may be reasonably
prorated.
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SECTION 8.5 ADVANCEMENT OF EXPENSES. Reasonable expenses (including
court costs and attorneys' fees) incurred by an Indemnitee who was or is a
witness or was, is or is threatened to be made a named defendant or respondent
in a Proceeding shall be paid by the Corporation at reasonable intervals in
advance of the final disposition of such Proceeding, and without making the
determination specified in Section 8.4, after receipt by the Corporation of (a)
a written affirmation by such Indemnitee of his good faith belief that he has
met the standard of conduct necessary for indemnification by the Corporation
under this Article and (b) a written undertaking by or on behalf of such
Indemnitee to repay the amount paid or reimbursed by the Corporation if it shall
ultimately be determined that he is not entitled to be indemnified by the
Corporation as authorized in this Article. Such written undertaking shall be an
unlimited obligation of the Indemnitee but need not be secured and it may be
accepted without reference to financial ability to make repayment.
Notwithstanding any other provision of this Article, the Corporation may pay or
reimburse expenses incurred by an Indemnitee in connection with his appearance
as a witness or other participation in a Proceeding at a time when he is not
named a defendant or respondent in the Proceeding.
SECTION 8.6 EMPLOYEE BENEFIT PLANS. For purposes of this Article, the
Corporation shall be deemed to have requested an Indemnitee to serve an employee
benefit plan whenever the performance by him of his duties to the Corporation
also imposes duties on or otherwise involves services by him to the plan or
participants or beneficiaries of the plan. Excise taxes assessed on an
Indemnitee with respect to an employee benefit plan pursuant to applicable law
shall be deemed fines. Action taken or omitted by an Indemnitee with respect to
an employee benefit plan in the performance of his duties for a purpose
reasonably believed by him to be in the interest of the participants and
beneficiaries of the plan shall be deemed to be for a purpose which is not
opposed to the best interests of the Corporation.
SECTION 8.7 OTHER INDEMNIFICATION AND INSURANCE. The indemnification
provided by this Article shall (a) not be deemed exclusive of, or to preclude,
any other rights to which those seeking indemnification may at any time be
entitled under the Corporation's Articles, any law, agreement or vote of
shareholders or
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disinterested Directors, or otherwise, or under any policy or policies of
insurance purchased and maintained by the Corporation on behalf of any
Indemnitee, both as to action in his Official Capacity and as to action in any
other capacity, (b) continue as to a person who has ceased to be in the capacity
by reason of which he was an Indemnitee with respect to matters arising during
the period he was in such capacity, and (c) inure to the benefit of the heirs,
executors and administrators of such a person.
SECTION 8.8 NOTICE. Any indemnification of or advance of expenses to
an Indemnitee in accordance with this Article shall be reported in writing to
the shareholders of the Corporation with or before the notice or waiver of
notice of the next shareholders' meeting or with or before the next submission
to shareholders of a consent to action without a meeting and, in any case,
within the twelve-month period immediately following the date of the
indemnification or advance.
SECTION 8.9 CONSTRUCTION. The indemnification provided by this
Article shall be subject to all valid and applicable laws, including, without
limitation, Article 2.02-1 of the TBCA, and, in the event this Article or any of
the provisions hereof or the indemnification contemplated hereby are found to be
inconsistent with or contrary to any such valid laws, the latter shall be deemed
to control and this Article shall be regarded as modified accordingly, and, as
so modified, to continue in full force and effect.
SECTION 8.10 CONTINUING OFFER, RELIANCE, ETC. The provisions of this
Article (a) are for the benefit of, and may be enforced by, each Indemnitee of
the Corporation, the same as if set forth in their entirety in a written
instrument duly executed and delivered by the Corporation and such Indemnitee
and (b) constitute a continuing offer to all present and future Indemnitees. The
Corporation, by its adoption of these Bylaws, (x) acknowledges and agrees that
each Indemnitee of the Corporation has relied upon and will continue to rely
upon the provisions of this Article in becoming, and serving in any of the
capacities referred to in Section 8.1(a) of this Article, (y) waives reliance
upon, and all notices of acceptance of, such provisions by such Indemnitees and
(z) acknowledges and agrees that no present or future Indemnitee shall be
prejudiced
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in his right to enforce the provisions of this Article in accordance with their
terms by any act or failure to act on the part of the Corporation.
SECTION 8.11 EFFECT OF AMENDMENT. No amendment, modification or repeal
of this Article or any provision hereof shall in any manner terminate, reduce or
impair the right of any past, present or future Indemnitees to be indemnified by
the Corporation, nor the obligation of the Corporation to indemnify any such
Indemnitees, under and in accordance with the provisions of the Article as in
effect immediately prior to such amendment, modification or repeal with respect
to claims arising from or relating to matters occurring, in whole or in part,
prior to such amendment, modification or repeal, regardless of when such claims
may arise or be asserted.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1 WAIVER OF NOTICE. (a) Whenever, under the provisions of
applicable law or of the Articles or of these Bylaws, any notice is required to
be given to any shareholder or Director, a waiver thereof in writing signed by
the person or persons entitled to such notice, whether before or after the time
stated therein, shall be equivalent to the giving of such notice.
(b) Attendance of a Director at a meeting shall constitute a waiver
of notice of such meeting except where a Director attends a meeting for the
express purpose of objecting to the transaction of any business on the grounds
that the meeting is not lawfully called or convened.
SECTION 9.2 SEAL. If one be adopted, the corporate seal shall have
inscribed thereon the name of the Corporation and shall be in such form as may
be approved by the Board. Said seal may be used by causing it or a facsimile of
it to be impressed or affixed or in any manner reproduced.
SECTION 9.3 FISCAL YEAR. The fiscal year of the Corporation shall be
fixed by resolution of the Board.
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SECTION 9.4 CHECKS, NOTES, ETC. All checks or demands for money and
notes of the Corporation shall be signed by such officer or officers or such
other person or persons as the Board may from time to time designate. The Board
may authorize any officer or officers or such other person or persons to enter
into any contract or execute and deliver any instrument in the name of and on
behalf of the Corporation, and such authority may be general or confined to
specific instances.
SECTION 9.5 EXAMINATION OF BOOKS AND RECORDS. Any person who shall
have been a shareholder for at least six (6) months immediately preceding his
demand, or shall be the holder of at least five percent (5%) of all of the
outstanding shares of the Corporation, upon written demand stating the purpose
thereof, shall have the right to examine, in person or by agent, accountant or
attorney, at any reasonable time or times, for any proper purpose, its relevant
books and records of account, minutes and share transfer records, and to make
extracts therefrom. Subject to the preceding sentence, the Board shall determine
from time to time whether, and if allowed, when and under what conditions and
regulations the books and records of account, the minutes and share transfer
records of the Corporation or any of them shall be open to inspection by the
shareholders, and the shareholders rights in this respect are and shall be
restricted and limited accordingly.
SECTION 9.6 VOTING UPON SHARES HELD BY THE CORPORATION. Unless
otherwise ordered by the Board, the Chairman of the Board, if one shall be
elected, or the President, if a Chairman of the Board shall not be elected,
acting on behalf of the Corporation, shall have full power and authority to
attend and to act and to vote at any meeting of shareholders of any corporation
in which the Corporation may hold shares and at any such meeting, shall possess
and may exercise any and all of the rights and powers incident to the ownership
of such shares which, as the owner thereof, the Corporation might have possessed
and exercised, if present. The Board by resolution from time to time may confer
like powers upon any other person or persons.
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ARTICLE X
AMENDMENTS
SECTION 10.1 AMENDMENT BY BOARD. The Board shall have the power to
alter, amend or repeal these Bylaws or adopt new Bylaws, subject to amendment,
repeal or adoption of new Bylaws by action of the shareholders and unless the
shareholders in amending, repealing or adopting a new Bylaw expressly provide
that the Board may not amend or repeal that Bylaw. The Board may exercise this
power at any regular or special meeting at which a quorum is present by the
affirmative vote of a majority of the Directors present at the meeting and
without any notice of the action taken with respect to the Bylaws having been
contained in the notice or waiver of notice of such meeting. Unless the
Corporation's Articles or a Bylaw adopted by the shareholders provide otherwise
as to all or some portion of the Bylaws, the Corporation's shareholders may
amend, repeal or adopt new Bylaws even though the Bylaws may also be amended by
the Board.
ARTICLE XI
SUBJECT TO ARTICLES OF INCORPORATION AND ALL LAWS
SECTION 11.1 SUBJECT TO ALL LAWS. The provisions of these Bylaws shall
be subject to the Articles of Incorporation and all valid and applicable laws,
including, without limitation, the TBCA as now or hereafter amended, and in the
event that any of the provisions of these Bylaws are found to be inconsistent
with or contrary to the Articles of Incorporation or any such valid laws, the
latter shall be deemed to control and these Bylaws shall be deemed modified
accordingly, and, as so modified, to continue in full force and effect.
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CERTIFICATION
The undersigned duly elected Secretary of the corporation does hereby
certify the foregoing Bylaws were adopted by the Plan of Reorganization for the
corporation, as confirmed by the United States Bankruptcy Court for the Eastern
District of Louisiana in Case Nos. 99-11391 "A" and 99-11392 "A" pursuant to
Chapter 11 of Title 11 of the United States Code, which Plan provides for the
adoption of these Bylaws.
__________________, Secretary
<PAGE> 72
EXHIBIT 5
================================================================================
CREDIT AGREEMENT
-------------------------------------------------------
FORCENERGY INC,
as Borrower
and
ING (U.S.) CAPITAL LLC,
as Agent
and CERTAIN FINANCIAL INSTITUTIONS
as Lenders
-------------------------------------------------------
$[250,000,000] Revolving Credit Loans
$70,000,000 Series A Term Loans
$[_______] Series B Term Loans
[December ___, 1999]
================================================================================
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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CREDIT AGREEMENT..........................................................................................1
ARTICLE I - Definitions and References....................................................................1
Section 1.1. Defined Terms..................................................................1
Section 1.2. Exhibits and Schedules; Additional Definitions................................18
Section 1.3. Amendment of Defined Instruments..............................................18
Section 1.4. References and Titles.........................................................18
Section 1.5. Calculations and Determinations...............................................19
ARTICLE II - The Loans...................................................................................19
Section 2.1. Revolving Credit Loans........................................................19
Section 2.2. Term Loans....................................................................19
Section 2.3. Requests for Revolving Credit Loans...........................................21
Section 2.4. Continuations and Conversions of Existing Loans...............................22
Section 2.5. Use of Proceeds...............................................................23
Section 2.6. Interest Rates and Fees.......................................................23
Section 2.7. Optional Prepayments and Commitment Reductions................................24
Section 2.8. Mandatory Prepayments.........................................................25
Section 2.9. Initial Borrowing Base........................................................26
Section 2.10. Subsequent Determinations of Borrowing Base and Conforming
Borrowing Base................................................................26
Section 2.11. Borrowing Base Reductions.....................................................29
Section 2.12. Letters of Credit.............................................................29
Section 2.13. Requesting Letters of Credit..................................................30
Section 2.14. Reimbursement and Participations..............................................30
Section 2.15. Letter of Credit Fees.........................................................32
Section 2.16. No Duty to Inquire............................................................32
Section 2.17. LC Collateral.................................................................33
ARTICLE III - Payments to Lenders........................................................................34
Section 3.1. General Procedures............................................................34
Section 3.2. Capital Reimbursement.........................................................35
Section 3.3. Increased Cost of Eurodollar Loans or Letters of Credit.......................35
Section 3.4. Availability..................................................................36
Section 3.5. Funding Losses................................................................36
Section 3.6. Reimbursable Taxes............................................................37
Section 3.7. Change of Applicable Lending Office...........................................38
Section 3.8. Replacement of Lenders........................................................38
ARTICLE IV - Conditions Precedent to Lending.............................................................39
Section 4.1. Documents to be Delivered.....................................................39
</TABLE>
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<TABLE>
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Section 4.2. Approval and Closing of Reorganization and Additional Conditions
Precedent to Effectiveness.....................................................40
Section 4.3. Additional Conditions Precedent................................................41
ARTICLE V - Representations and Warranties................................................................42
Section 5.1. No Default.....................................................................42
Section 5.2. Organization and Good Standing.................................................42
Section 5.3. Authorization..................................................................42
Section 5.4. No Conflicts or Consents.......................................................42
Section 5.5. Enforceable Obligations........................................................42
Section 5.6. Initial Financial Statements...................................................43
Section 5.7. Other Obligations and Restrictions.............................................43
Section 5.8. Full Disclosure................................................................43
Section 5.9. Litigation.....................................................................43
Section 5.10. Labor Disputes and Acts of God.................................................44
Section 5.11. ERISA Plans and Liabilities....................................................44
Section 5.12. Environmental and Other Laws...................................................44
Section 5.13. Names and Places of Business...................................................46
Section 5.14. Borrower's Subsidiaries........................................................46
Section 5.15. Title to Properties, Licenses..................................................47
Section 5.16. Government Regulation..........................................................47
Section 5.17. Insider........................................................................47
Section 5.18. Solvency.......................................................................48
Section 5.19. Officers, Directors and Shareholders...........................................48
ARTICLE VI - Affirmative Covenants of Borrower............................................................48
Section 6.1. Payment and Performance........................................................48
Section 6.2. Books, Financial Statements and Reports........................................48
Section 6.3. Other Information and Inspections..............................................51
Section 6.4. Notice of Material Events and Change of Address................................51
Section 6.5. Maintenance of Properties......................................................52
Section 6.6. Maintenance of Existence and Qualifications....................................52
Section 6.7. Payment of Trade Liabilities, Taxes, etc.......................................52
Section 6.8. Insurance......................................................................53
Section 6.9. Performance on Borrower's Behalf...............................................53
Section 6.10. Interest.......................................................................53
Section 6.11. Compliance with Agreements and Law.............................................54
Section 6.12. Environmental Matters; Environmental Reviews...................................54
Section 6.13. Evidence of Compliance.........................................................54
Section 6.14. Agreement to Deliver Security Documents........................................54
Section 6.15. Perfection and Protection of Security Interests and Liens......................55
Section 6.16. Bank Accounts; Offset..........................................................55
Section 6.17. Guaranties of Borrower's Subsidiaries..........................................56
Section 6.18. Production Proceeds............................................................56
</TABLE>
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<TABLE>
<S> <C>
ARTICLE VII - Negative Covenants of Borrower..............................................................56
Section 7.1. Indebtedness...................................................................56
Section 7.2. Limitation on Liens............................................................57
Section 7.3. Hedging Contracts..............................................................57
Section 7.4. Limitation on Mergers, Issuances of Securities.................................58
Section 7.5. Limitation on Sales of Property................................................58
Section 7.6. Limitation on Dividends and Redemptions and Debt...............................59
Section 7.7. Limitation on Investments and New Businesses...................................59
Section 7.8. Limitation on Credit Extensions................................................59
Section 7.9. Transactions with Affiliates...................................................60
Section 7.10. Prohibited Contracts;..........................................................60
Section 7.11. Current Ratio..................................................................60
Section 7.12. Fixed Charge Coverage Ratio....................................................60
Section 7.13. Interest Coverage..............................................................60
Section 7.14. Tangible Net Worth.............................................................60
Section 7.15. Capital Expenditures...........................................................61
ARTICLE VIII - Events of Default and Remedies.............................................................61
Section 8.1. Events of Default..............................................................61
Section 8.2. Remedies.......................................................................64
ARTICLE IX - Agent........................................................................................65
Section 9.1. Appointment and Authority......................................................65
Section 9.2. Exculpation, Agent's Reliance, Etc.............................................65
Section 9.3. Credit Decisions...............................................................65
Section 9.4. Indemnification................................................................65
Section 9.5. Rights as Lender...............................................................66
Section 9.6. Sharing of Set-Offs and Other Payments.........................................66
Section 9.7. Investments....................................................................67
Section 9.8. Benefit of Article IX..........................................................67
Section 9.9. Resignation....................................................................67
ARTICLE X - Miscellaneous.................................................................................68
Section 10.1. Waivers and Amendments; Acknowledgments........................................68
Section 10.2. Survival of Agreements; Cumulative Nature......................................69
Section 10.3. Notices........................................................................70
Section 10.4. Payment of Expenses; Indemnity.................................................70
Section 10.5. Joint and Several Liability; Parties in Interest; Assignments..................72
Section 10.6. Confidentiality................................................................74
Section 10.7. Governing Law; Submission to Process...........................................74
Section 10.8. Limitation on Interest.........................................................75
Section 10.9. Termination; Limited Survival..................................................75
Section 10.10. Severability...................................................................75
Section 10.11. Counterparts; Fax..............................................................75
</TABLE>
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<TABLE>
<S> <C>
Section 10.12. Waiver of Jury Trial, Punitive Damages, etc....................................76
</TABLE>
Schedules and Exhibits:
Schedule 1 - Disclosure Schedule
Schedule 2 - Security Schedule
Schedule 3 - Insurance Schedule
Schedule 4 - Reorganization Documents
Schedule 5 - Series B Term Lender Schedule
Exhibit A-1 - Revolving Credit Promissory Note
Exhibit A-2 - Series A Term Note
Exhibit A-3 - Series B Term Note
Exhibit B - Borrowing Notice
Exhibit C - Continuation/Conversion Notice
Exhibit D - Certificate Accompanying Financial Statements
Exhibit E - Opinion of Counsel for Restricted Persons
Exhibit F - Assignment and Assumption Agreement
Exhibit G - Environmental Compliance Certificate
Exhibit H - Letter of Credit Application and Agreement
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT is made as of December, 1999, by and among
Forcenergy Inc, a Delaware corporation (herein called "Borrower"), ING (U.S.)
Capital LLC, individually and as agent (herein called "Agent"), and the Lenders
referred to below. In consideration of the mutual covenants and agreements
contained herein the parties hereto agree as follows:
[Recitals to be provided]
ARTICLE I - Definitions and References
Section 1.1. Defined Terms. As used in this Agreement, each of the
following terms has the meaning given to such term in this Section 1.1 or in the
sections and subsections referred to below:
"Adjusted Base Rate" means the sum of the Base Rate plus the Applicable
Base Rate Margin, provided that the Adjusted Base Rate charged by any Person
shall never exceed the Highest Lawful Rate
"Adjusted Eurodollar Rate" means, for any Eurodollar Loan for any
Interest Period therefor, the per annum rate equal to the sum of (a) the
Applicable Eurodollar Margin plus (b) the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) determined by Agent to be equal to the
quotient obtained by dividing (i) the Eurodollar Rate for such Eurodollar Loan
for such Interest Period by (ii) 1 minus the Reserve Requirement for such
Eurodollar Loan for such Interest Period. The Adjusted Eurodollar Rate for any
Eurodollar Loan shall change whenever the Applicable Eurodollar Margin or the
Reserve Requirement changes. No Adjusted Eurodollar Rate charged by any Person
shall ever exceed the Highest Lawful Rate.
"Affiliate" means, as to any Person, each other Person that directly or
indirectly (through one or more intermediaries or otherwise) controls, is
controlled by, or is under common control with, such Person. A Person shall be
deemed to be "controlled by" any other Person if such other Person possesses,
directly or indirectly, power
(a) to vote 20% or more of the securities (on a fully diluted basis)
having ordinary voting power for the election of directors or managing general
partners; or
(b) to direct or cause the direction of the management and policies of
such Person whether by contract or otherwise.
"Agent" means ING (U.S.) Capital LLC, as Agent hereunder, and its
successors in such capacity.
"Agreement" means this Credit Agreement.
<PAGE> 78
"Applicable Base Rate Margin" means, on each day, (i) one percent
(1.0%) per annum in respect of Revolving Credit Loans and Series B Term Loans
and (ii) two and one-half percent (2.5%) per annum in respect of Series A Term
Loans.
"Applicable Eurodollar Margin" means, on each day, (i) two percent
(2.0%) per annum in respect of Revolving Credit Loans and Series B Term Loans
and (ii) three and one-half percent (3.5%) per annum in respect of Series A Term
Loans.
"Applicable Lending Office" means, with respect to each Lender, such
Lender's Domestic Lending Office in the case of Base Rate Loans and such
Lender's Eurodollar Lending Office in the case of Eurodollar Loans.
"Approved Debt" means the Indebtedness listed on Schedule ___.
[Schedule of Approved Debt showing payee, time of payment and amount of payment]
"Base Rate" means the higher of (a) the Reference Rate and (b) the
Federal Funds Rate plus one-half percent (0.5%) per annum. For purposes of this
definition, "Reference Rate" means the arithmetic average of the rates of
interest publicly announced by The Chase Manhattan Bank, Citibank, N.A. and
Morgan Guaranty Trust Company of New York (or their respective successors) as
their respective prime commercial lending rates (or, as to any such bank that
does not announce such a rate, such bank's 'base' or other rate determined by
Agent to be the equivalent rate announced by such bank), except that, if any
such bank shall, for any period, cease to announce publicly its prime commercial
lending (or equivalent) rate, Agent shall, during such period, determine the
"Reference Rate" based upon the prime commercial lending (or equivalent) rates
announced publicly by the other such banks.
"Base Rate Loan" means a Loan which does not bear interest at the
Eurodollar Rate.
"Borrower" means Forcenergy Inc, a Delaware corporation.
"Borrowing" means a borrowing of new Revolving Credit Loans of a single
Type pursuant to Section 2.3 or a Continuation or Conversion of existing Loans
into a single Type (and, in the case of Eurodollar Loans, with the same Interest
Period) pursuant to Section 2.4.
"Borrowing Base" means, at the particular time in question, either the
amount as provided for in Section 2.9 or the amount determined by Lenders in
accordance with the provisions of Section 2.10 as reduced from time to time
pursuant to the other provisions of this Agreement.
"Borrowing Base Deficiency" has the meaning given to such term in
Section 2.11.
"Borrowing Notice" means a written notice, or telephonic request, or a
written confirmation made by Borrower which meets the requirements of Section
2.3.
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<PAGE> 79
"Business Day" means a day, other than a Saturday or Sunday, on which
commercial banks are open for business with the public in New York, New York.
Any Business Day in any way relating to Eurodollar Loans (such as the day on
which an Interest Period begins or ends) must also be a day on which, in the
judgment of Agent, significant transactions in dollars are carried out in the
interbank eurocurrency market.
"Cash Equivalents" means Investments in:
(a) marketable obligations, maturing within twelve months after
acquisition thereof, issued or unconditionally guaranteed by the United States
of America or an instrumentality or agency thereof and entitled to the full
faith and credit of the United States of America;
(b) demand deposits, and time deposits (including certificates of
deposit) maturing within twelve months from the date of deposit thereof, with
any office of any Lender *[or with a domestic office of any national or state
bank or trust company which is organized under the Laws of the United States of
America or any state therein, which has capital, surplus and undivided profits
of at least $500,000,000, and whose long term certificates of deposit are rated
at least Aa2 by Moody's or AA by S&P;
(c) open market commercial paper, maturing within 270 days after
acquisition thereof, which are rated at least P-1 by Moody's or A-1 by S&P; and
(d) money market or other mutual funds substantially all of whose
assets comprise securities of the types described in subsections (a) through (c)
above.
"Change of Control" means the occurrence of any of the following
events: (a) any Person or two or more Persons acting as a group (other than
Anshutz Investment Company, Oaktree Capital Management, LLC, Lehman Brothers or
Moore Capital or any partnership or other fund entity for which any of them has
exclusive authority over investment decisions whether as manager, general
partner or otherwise (the "Initial Major Shareholders")) shall acquire
beneficial ownership (within the meaning of Rule 13d-3 of the Securities and
Exchange Commission under the Securities Act of 1934, as amended, and including
holding proxies to vote for the election of directors other than proxies held by
Borrower's management or their designees to be voted in favor of Persons
nominated by Borrower's Board of Directors) of 35% or more of the outstanding
voting securities of Borrower, measured by voting power (including both common
stock and any preferred stock or other equity securities entitling the holders
thereof to vote with the holders of common stock in elections for directors of
Borrower) (b) one-third or more of the directors of Borrower shall consist of
Persons not nominated by Borrower's Board of Directors (not including as Board
nominees any directors which the Board is obligated to nominate pursuant to
shareholders agreements, voting trust arrangements or similar arrangements), or
(c) a majority of the directors of Borrower shall consist of Persons not
nominated by one or more of the Initial Major Shareholders.
3
<PAGE> 80
"Collateral" means all property of any kind which is subject to a Lien
in favor of Lenders (or in favor of Agent for the benefit of Lenders) or which,
under the terms of any Security Document, is purported to be subject to such a
Lien.
"Conforming Borrowing Base" has the meaning given to such term in
Section 2.10.
"Consolidated" refers to the consolidation of any Person, in accordance
with GAAP, with its properly consolidated subsidiaries. References herein to a
Person's Consolidated financial statements, financial position, financial
condition, liabilities, etc. refer to the consolidated financial statements,
financial position, financial condition, net income, liabilities, etc. of such
Person and its properly consolidated subsidiaries.
"Consolidated Cash Flow" means for any Fiscal Quarter, the sum of
Consolidated Net Income of Borrower for such Fiscal Quarter calculated in
accordance with GAAP plus depreciation, depletion, amortization and interest
expense deducted in determining such Consolidated Net Income.
"Consolidated Fixed Charges" means for any Fiscal Quarter the sum of
(i) lease payments pursuant to leases which are capitalized in accordance with
GAAP, (ii) the aggregate principal payments made with respect to Funded Debt of
Borrower and its Subsidiaries (other than voluntary prepayments) or due and
payable during such Fiscal Quarter plus (ii) Interest Expense of Borrower and
its Subsidiaries during such Fiscal Quarter.
"Consolidated Net Income" means net profit (or loss) after taxes of the
Borrower and its Subsidiaries, on a consolidated basis, determined in accordance
with GAAP.
"Consolidated Tangible Net Worth" means, as of any date of
determination, the remainder of (i) all Consolidated assets of Borrower, other
than intangible assets (including, without limitation, as intangible assets such
assets as patents, copyrights, licenses, franchises, goodwill, trade names,
trade secrets, and leases other than oil, gas or mineral leases or leases
required to be capitalized under GAAP), minus (ii) all Indebtedness of Borrower
and its Subsidiaries outstanding on such date, after eliminating all offsetting
debits and credits between Borrower and its Subsidiaries and all other items
required to be eliminated in the course of preparation of Consolidated financial
statements of Borrower in accordance with GAAP.
"Continuation" shall refer to the continuation pursuant to Section 2.4
hereof of a Eurodollar Loan as a Eurodollar Loan from one Interest Period to the
next Interest Period.
"Continuation/Conversion Notice" means a written request made by
Borrower which meets the requirements of Section 2.4, substantially in the form
attached hereto as Exhibit C.
"Conversion" shall refer to a conversion pursuant to Section 2.4 or
Article III of one Type of Loan into another Type of Loan.
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"Current Assets" means the sum of (i) current assets of Borrower and
its Subsidiaries on a Consolidated basis determined in accordance with GAAP plus
(ii) the excess, if any, of the Borrowing Base over the Facility Usage plus the
aggregate principal amount of Series B Term Loans.
"Current Liabilities" means the current liabilities of Borrower and its
Subsidiaries on a Consolidated basis determined in accordance with GAAP.
"Default" means any Event of Default and any default, event or
condition which would, with the giving of any requisite notices and the passage
of any requisite periods of time, constitute an Event of Default.
"Default Rate" means, at the time in question (a) with respect to any
Base Rate Loan, the rate two percent (2%) above the Adjusted Base Rate then in
effect and (b) with respect to any Eurodollar Loan, the rate two percent (2%)
above the Adjusted Eurodollar Rate then in effect for such Loan. No Default Rate
charged by any Person shall ever exceed the Highest Lawful Rate.
"Determination Date" has the meaning given to such term in Section
2.10.
"Disclosure Report" means a notice given by Borrower under Section 6.4.
"Disclosure Schedule" means Schedule 1 hereto.
"Domestic Lending Office" means, with respect to any Lender, the office
of such Lender specified as its "Domestic Lending Office" below its name on its
signature page hereto, or such other office as such Lender may from time to time
specify to Borrower and Agent; with respect to LC Issuer, the office, branch, or
agency through which it issues Letters of Credit; and, with respect to Agent,
the office, branch, or agency through which it administers this Agreement.
"Eligible Transferee" means a Person which either (a) is a Lender or an
Affiliate of a Lender, or (b) is consented to as an Eligible Transferee by Agent
and, so long as no Default or Event of Default is continuing, by Borrower, which
consents in each case will not be unreasonably withheld.
"Effective Date" means the "effective date" under the Reorganization
Plan.
"Engineering Report" means the Initial Engineering Report and each
engineering report delivered pursuant to Section 6.2.
"Environmental Laws" means any and all Laws relating to the environment
or to emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or wastes
into the environment including ambient air, surface water, ground water, or
land, or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or wastes.
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"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, together with all rules and regulations promulgated
with respect thereto.
"ERISA Affiliate" means Borrower and all members of a controlled group
of corporations and all trades or businesses (whether or not incorporated) under
common control that, together with Borrower, are treated as a single employer
under Section 414 of the Internal Revenue Code.
"ERISA Plan" means any employee benefit plan as defined in Section 3(3)
of ERISA with respect to which any Restricted Person or ERISA Affiliate is, or
within the immediately preceding six years was, an "employer" as defined in
Section 3(5) of ERISA.
"Eurodollar Lending Office" means, with respect to any Lender, the
office of such Lender specified as its "Eurodollar Lending Office" below its
name on the signature page hereto (or, if no such office is specified, its
Domestic Lending Office), or such other office of such Lender as such Lender may
from time to time specify to Borrower and Agent.
"Eurodollar Loan" means a Loan that bears interest at the Adjusted
Eurodollar Rate.
"Eurodollar Rate" means, with respect to each particular Eurodollar
Loan and the related Interest Period, the rate per annum (rounded upwards, if
necessary, to the nearest 1/16 of 1%) reported, on the date two Business Days
prior to the first day of such Interest Period, on Telerate Access Service Page
3750 (British Bankers Association Settlement Rate) as the London Interbank
Offered Rate for dollar deposits having a term comparable to such Interest
Period and in an amount of $1,000,000 or more (or, if such Page shall cease to
be publicly available or if the information contained on such Page, in Agent's
sole judgment, shall cease to accurately reflect such London Interbank Offered
Rate, as reported by any publicly available source of similar market data
selected by Agent that, in Agent's sole judgment, accurately reflects such
London Interbank Offered Rate).
"Evaluation Date" means each of the following which shall be limited to
three (3) dates in any 12-month period:
(a) March 1 and September 1 of each year, beginning March 1, 2001; and
(b) Each other date which Majority Lenders or Agent at the instruction
of Majority Lenders specify, by notice to Borrower as a date on which the
information is to be delivered to Lenders for purposes of redetermining the
Borrowing Base; provided that each such date must be the first or last date of a
calendar month not sooner than 60 days after such notice and that no such
Evaluation Date under this clause (b) may be prior to March 1, 2001.
"Event of Default" has the meaning given to such term in Section 8.1,
provided that the requirement, if any, for the giving of notice, the lapse of
time, or both, has been satisfied.
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"Existing Agreement" means that certain Fifth Restatement of Credit
Agreement dated as of April 13, 1998 among Borrower, Agent and Lenders, together
with the promissory notes made by Borrower thereunder.
"Existing Obligations" means the obligations of Borrower under the
Existing Agreement.
[ "FAB Transaction" means a sale of the equity interests of
Forcenergy FAB (a wholly owned Subsidiary of Borrower) and the related
repurchase by Borrower of the common stock of Borrower which is owned by
Forcenergy FAB as of the date of this Agreement, the terms and conditions of
which have been approved by Majority Lenders.]
"Facility Usage" means, at the time in question, the aggregate amount
of outstanding Revolving Credit Loans and existing LC Obligations at such time.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100th of one percent) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day, provided that (a) if the day for which such rate is to
be determined is not a Business Day, the Federal Funds Rate for such day shall
be such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day, and (b) if such rate is not so
published for any day, the Federal Funds Rate for such day shall be the average
rate quoted to Agent on such day on such transactions as determined by Agent.
["Final Disclosure Statement" has the meaning given in the recitals
hereto.]
"Fiscal Quarter" means a three-month period ending on March 31, June
30, September 30 or December 31 of any year.
"Fiscal Year" means a twelve-month period ending on December 31 of any
year.
"Funded Debt" means, as to any Person, at any date, without
duplication, (a) all Liabilities of such Person for borrowed money, (b) all
Liabilities of such Person evidenced by bonds, debentures, notes or similar
investments, (c) all Liabilities of such Person to pay the deferred purchase
price of property or services, except trade accounts payable arising in the
ordinary course of business and payable on ordinary trade terms (d) all
Liabilities of such Person under leases capitalized in accordance with GAAP, and
(e) Liabilities owing under direct or indirect guaranties of Liabilities of any
other Person of the type listed in any of the foregoing clauses (a) through (d).
"GAAP" means those generally accepted accounting principles and
practices which are recognized as such by the Financial Accounting Standards
Board (or any generally recognized successor) and which, in the case of Borrower
and its Consolidated Subsidiaries, are applied for all periods after the date
hereof in a manner consistent with the manner in which such principles
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<PAGE> 84
and practices were applied to the audited Initial Financial Statements. If any
change in any accounting principle or practice is required by the Financial
Accounting Standards Board (or any such successor) in order for such principle
or practice to continue as a generally accepted accounting principle or
practice, all reports and financial statements required hereunder with respect
to Borrower or with respect to Borrower and its Consolidated Subsidiaries may be
prepared in accordance with such change. All calculations and determinations to
be made hereunder which are affected in any material respect by such change may
be made in accordance with such change only after notice of such change is given
to each Lender and Majority Lenders agree to such change insofar as it affects
such calculations and determinations.
"Guarantor" means each Subsidiary of Borrower which now or hereafter
executes and delivers a guaranty to Agent pursuant to Section 6.17.
"Hazardous Materials" means any substances regulated under any
Environmental Law, whether as pollutants, contaminants, or chemicals, or as
industrial, toxic or hazardous substances or wastes, or otherwise.
"Hedging Contract" means (a) any agreement providing for options,
swaps, floors, caps, collars, forward sales or forward purchases involving
interest rates, commodities or commodity prices, equities, currencies, bonds, or
indexes based on any of the foregoing, (b) any option, futures or forward
contract traded on an exchange, and (c) any other derivative agreement or other
similar agreement or arrangement.
"Highest Lawful Rate" means, with respect to each Lender Party to whom
Obligations are owed, the maximum nonusurious rate of interest that such Lender
Party is permitted under applicable Law to contract for, take, charge, or
receive with respect to such Obligations. All determinations herein of the
Highest Lawful Rate, or of any interest rate determined by reference to the
Highest Lawful Rate, shall be made separately for each Lender Party as
appropriate to assure that the Loan Documents are not construed to obligate any
Person to pay interest to any Lender Party at a rate in excess of the Highest
Lawful Rate applicable to such Lender Party.
"Indebtedness" of any Person means Liabilities in any of the following
categories:
(a) Liabilities for borrowed money,
(b) Liabilities constituting an obligation to pay the deferred purchase
price of property or services,
(c) Liabilities evidenced by a bond (other than bonds securing
contingent plugging and abandonment obligations), debenture, note or similar
instrument,
(d) Liabilities which (i) would under GAAP be shown on such Person's
balance sheet as a liability, and (ii) are payable more than one year from the
date of creation thereof (other than reserves for taxes and reserves for
contingent obligations),
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(e) Liabilities arising under Hedging Contracts,
(f) Liabilities constituting principal under leases capitalized in
accordance with GAAP,
(g) Liabilities arising under conditional sales or other title
retention agreements,
(h) Liabilities owing under direct or indirect guaranties of
Liabilities of any other Person or otherwise constituting obligations to
purchase or acquire or to otherwise protect or insure a creditor against loss in
respect of Liabilities of any other Person (such as obligations under working
capital maintenance agreements, agreements to keep-well, or agreements to
purchase Liabilities, assets, goods, securities or services), but excluding
endorsements in the ordinary course of business of negotiable instruments in the
course of collection,
(i) Liabilities (for example, repurchase agreements, mandatorily
redeemable preferred stock and sale/leaseback agreements) consisting of an
obligation to purchase or redeem securities or other property, if such
Liabilities arises out of or in connection with the sale or issuance of the same
or similar securities or property,
(j) Liabilities with respect to letters of credit or applications or
reimbursement agreements therefor,
(k) Liabilities with respect to payments received in consideration of
oil, gas, or other minerals yet to be acquired or produced at the time of
payment (including obligations under "take-or-pay" contracts to deliver gas in
return for payments already received and the undischarged balance of any
production payment created by such Person or for the creation of which such
Person directly or indirectly received payment), or
(l) Liabilities with respect to other obligations to deliver goods or
services in consideration of advance payments therefor;
provided, however, that the "Indebtedness" of any Person shall not include
Liabilities that were incurred by such Person on ordinary trade terms to
vendors, suppliers, or other Persons providing goods and services for use by
such Person in the ordinary course of its business, unless and until such
Liabilities are outstanding more than 120 days after the incurrence thereof.
"Independent Petroleum Engineers" means Netherland, Sewell &
Associates, Inc. and Collarini Incorporated, or other independent petroleum
engineers chosen by Borrower and acceptable to Majority Lenders.
"Initial Engineering Report" means the engineering reports concerning
oil and gas properties of Restricted Persons dated September 1, 1999, prepared
by the Borrower and audited by the Independent Petroleum Engineers as of
September 1, 1999.
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"Initial Financial Statements" means the Consolidated financial
statements of Borrower as of the Effective Date reflecting the effect of the
Reorganization and the effect of [fresh start accounting rules] as such
financial statements were presented and approved by Lenders prior to the date
hereof, with such adjustments made after the Effective Date to reflect actual
condition and results of operation on such date to the extent such adjustments
are not material.
"Insurance Schedule" means Schedule 3 attached hereto.
"Interest Expense" means for any Fiscal Quarter the sum of (i) interest
payable on the Obligations for such Fiscal Quarter, (ii) plus interest payable
(excluding any accrued but unpaid interest) on any other Funded Debt for such
Fiscal Quarter, (iii) plus amounts payable for such Fiscal Quarter or minus
amounts receivable for such Fiscal Quarter, in either case as a periodic payment
under Hedging Contracts relating to interest rates.
"Interest Payment Date" means (a) with respect to each Base Rate Loan,
the last Business Day of each calendar month and (b) with respect to each
Eurodollar Loan the last Business Day of each calendar month and the last day of
the Interest Period that is applicable thereto.
"Interest Period" means, with respect to each particular Eurodollar
Loan in a Borrowing, the period specified in the Borrowing Notice or
Continuation/Conversion Notice applicable thereto, beginning on and including
the date specified in such Borrowing Notice or Continuation/Conversion Notice
(which must be a Business Day), and ending one, two or three months thereafter,
as Borrower may elect in such notice; provided that: (a) any Interest Period
which would otherwise end on a day which is not a Business Day shall be extended
to the next succeeding Business Day unless such Business Day falls in another
calendar month, in which case such Interest Period shall end on the next
preceding Business Day; and (b) any Interest Period which begins on the last
Business Day in a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall end on the last Business Day in a calendar month; and (c) notwithstanding
the foregoing, any Interest Period which would otherwise end after the Maturity
Date shall end on the last day of the Commitment Period (or, if the Maturity
Date is not a Business Day, on the next preceding Business Day).
"Internal Revenue Code" means the United States Internal Revenue Code
of 1986, as amended from time to time and any successor statute or statutes.
"Investment" means any investment made directly or indirectly, in any
Person, whether by acquisition of shares of capital stock, indebtedness or other
obligations or securities or by loan, advance, capital contribution or otherwise
and whether made in cash, by the transfer of property, or by any other means.
"Law" means any statute, law, regulation, ordinance, rule, treaty,
judgment, order, decree, permit, concession, franchise, license, agreement or
other governmental restriction of the United States or any state or political
subdivision thereof or of any foreign country or any department, province or
other political subdivision thereof.
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"LC Application" means any application for a Letter of Credit hereafter
made by Borrower to LC Issuer.
"LC Collateral" has the meaning given to such term in Section 2.17(a).
"LC Issuer" means ING (U.S.) Capital LLC in its capacity as the issuer
of Letters of Credit hereunder, and its successors in such capacity. Agent may,
with the consent of Borrower and the Lender in question, appoint any Lender
hereunder as an LC Issuer in place of or in addition to ING (U.S.) Capital LLC.
"LC Obligations" means, at the time in question, the sum of all Matured
LC Obligations plus the maximum amounts which LC Issuer might then or thereafter
be called upon to advance under all Letters of Credit then outstanding.
"Lender Parties" means Agent, LC Issuer, and all Lenders.
"Lenders" means each signatory hereto (other than Borrower and any
Restricted Person that is a party hereto), including LC Issuer, ING (U.S.)
Capital LLC in its capacity as a Lender hereunder rather than as Agent or LC
Issuer, and the successors of each such party as holder of a Note.
"Lenders' Independent Engineer" means a firm of independent petroleum
engineers chosen by Majority Lenders.
"Letter of Credit" means any letter of credit issued by LC Issuer
hereunder at the application of Borrower.
"Liabilities" means, as to any Person, all indebtedness, liabilities
and obligations of such Person, whether matured or unmatured, liquidated or
unliquidated, primary or secondary, direct or indirect, absolute, fixed or
contingent, and whether or not required to be considered pursuant to GAAP.
"Lien" means, with respect to any property or assets, any right or
interest therein of a creditor to secure Liabilities owed to it or any other
arrangement with such creditor which provides for the payment of such
Liabilities out of such property or assets or which allows such creditor to have
such Liabilities satisfied out of such property or assets prior to the general
creditors of any owner thereof, including any lien, mortgage, security interest,
pledge, deposit, production payment, rights of a vendor under any title
retention or conditional sale agreement or lease substantially equivalent
thereto, tax lien, mechanic's or materialman's lien, or any other charge or
encumbrance for security purposes, whether arising by Law or agreement or
otherwise, but excluding any right of offset which arises without agreement in
the ordinary course of business. "Lien" also means any filed financing statement
(other than protective filings for operating leases), any registration of a
pledge (such as with an issuer of uncertificated securities), or any other
arrangement or action which would serve to perfect a Lien described in
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the preceding sentence, regardless of whether such financing statement is filed,
such registration is made, or such arrangement or action is undertaken before or
after such Lien exists.
"Loan Documents" means this Agreement, the Notes, the Security
Documents, the Letters of Credit, the LC Applications, and all other agreements,
certificates, documents, instruments and writings at any time delivered in
connection herewith or therewith (exclusive of term sheets and commitment
letters).
"Loans" means the Revolving Credit Loans and the Term Loans,
collectively.
"Majority Lenders" means Lenders whose aggregate Percentage Shares
equal or exceed sixty-six and two-thirds percent (66 2/3%).
"Material Adverse Change" means a material and adverse change, from the
state of affairs presented in the Initial Financial Statements or as represented
or warranted in any Loan Document, to (a) Borrower's Consolidated financial
condition, (b) Borrower's Consolidated operations, properties or prospects,
considered as a whole, (c) Borrower's ability to timely pay the Obligations, or
(d) the enforceability of the material terms of any Loan Documents.
"Matured LC Obligations" means all amounts paid by LC Issuer on drafts
or demands for payment drawn or made under or purported to be under any Letter
of Credit and all other amounts due and owing to LC Issuer under any LC
Application for any Letter of Credit, to the extent the same have not been
repaid to LC Issuer (with the proceeds of Loans or otherwise).
"Maturity Date" means [Three and one-half years after the Effective
Date].
"Maximum Credit Amount" means the amount of $320,000,000.
"Maximum Drawing Amount" means at the time in question the sum of the
maximum amounts which LC Issuer might then or thereafter be called upon to
advance under all Letters of Credit which are then outstanding.
"Maximum Series A Term Loan Amount" means $70,000,000. Each Series A
Term Lender's Maximum Series A Term Loan Amount shall be the amount as set forth
opposite such Series A Term Lender's name on its signature page.
"Maximum Series B Term Loan Amount" means $_________. Each Series B
Term Lender's Maximum Series B Term Loan Amount shall be the amount as set forth
opposite such Series B Term Lender's name on the Series B Term Lender Schedule.
"Moody's" means Moody's Investor Service, Inc., or its successor.
"Notes" means the Revolving Credit Notes and the Term Notes,
collectively.
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"Obligations" means all Liabilities from time to time owing by any
Restricted Person to any Lender Party under or pursuant to any of the Loan
Documents, including all LC Obligations.
"Obligation" means any part of the Obligations.
"Percentage Share" means, with respect to any Lender, the percentage
obtained by dividing (i) the sum of the unpaid principal balance of such
Lender's Term Loans at the time in question plus such Lender's Revolving Credit
Commitment, by (ii) the sum of the aggregate unpaid principal balance of all
Term Loans at such time plus the total Revolving Credit Commitment.
"Permitted Investments" means (a) Cash Equivalents, (b) Investments
existing on the date of this Agreement by a Restricted Person in a wholly owned
Subsidiary of such Restricted Person as reflected on the Disclosure Schedule,
(c) Investments in the form of loans made by Borrower or any Restricted Person
to Borrower or to any of its direct or indirect wholly owned domestic
Subsidiaries which is a Guarantor, (d) any Investment in the form of loans made
by a Restricted Person to any direct or indirect wholly owned Subsidiary of
Borrower that is not a domestic Subsidiary not to exceed $10,000,000 in the
aggregate during any Fiscal Year and (e) Hedging Contracts permitted under
Section 7.3.
"Permitted Liens" means
(a) statutory Liens for taxes, assessments or other
governmental charges or levies which are not yet delinquent or which
are being contested in good faith in compliance with Section 6.7;
(b) landlords', operators', carriers', warehousemen's,
repairmen's, mechanics', materialmen's, or other like Liens which do
not secure Indebtedness, in each case only to the extent arising in the
ordinary course of business and only to the extent securing obligations
which are not delinquent or which are being contested in good faith in
compliance with Section 6.7;
(c) zoning restrictions, easements, rights-of-way,
restrictions on use, minor defects and irregularities in title to any
property, so long as matters neither secure Indebtedness nor materially
impair the value of such property or the use of such property for the
purposes for which such property is held;
(d) deposits of cash or securities to secure the performance
of bids, trade contracts, leases, statutory obligations and other
obligations of a like nature (excluding appeal bonds and deposits for
borrowed money) incurred in the ordinary course of business;
(e) Liens created pursuant to the Existing Agreement;
(f) Liens set forth in the Disclosure Schedule;
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(g) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security
legislation and deposits securing liability to insurance carriers under
insurance or self-insurance arrangements;
(h) Liens which arise pursuant to the specific terms of any
license, joint operating agreement, unitization agreement or other
similar agreement evidencing the interest of the relevant Person in any
oil and gas producing property, provided that such Lien is not securing
any Indebtedness other than Indebtedness incurred in connection with
the specific terms of any such license, joint operating agreement,
unitization agreement or other similar agreement; and
(i) Liens which arise pursuant to leases of equipment entered
into in the ordinary course of business, provided that such Lien is not
securing any Indebtedness other than Indebtedness incurred in
connection with the specific terms of such equipment lease.
"Permitted Stock Acquisitions" means the acquisition by Borrower of
equity of a Person, provided that: (i) such acquisition constitutes 100% of the
outstanding equity of such Person (including the purchase or the termination of
any outstanding warrants or similar rights with respect to the equity of such
Person), (ii) such Person's business, operation and type of assets are the same
as that of the Borrower, (iii) immediately prior to such acquisition, each
Restricted Person is, and immediately after giving effect to such acquisition,
each Restricted Person, including such Person being acquired, will be, in
compliance with each of the covenants under the Loan Documents, and each of the
representations and warranties are and will be true as if made immediately prior
to and immediately following consummation of such acquisition, (iv) the
acquisition shall have been approved by a resolution of the Board of Directors
with the finding that the acquisition is on fair market terms to the Borrower
and will not result in a Material Adverse Effect on Borrower nor interfere with
Borrower's proposed business plan as theretofore submitted to the Lenders, (v)
contemporaneously with the consummation of such acquisition, such Person shall
have the power to comply with, and shall have provided a guarantee and Security
Documents on its properties in the manner contemplated by, the provisions of
Section 6.14, 6.15 and 6.17 hereof, (vi) no Default or Event of Default shall
exist immediately prior to and after giving effect to such acquisition and (vii)
the Borrower shall have submitted a certificate of its president and chief
financial officer to the effect that each of the foregoing conditions has been
satisfied contemporaneously with the consummation of such acquisition.
"Permitted Subordinated Indebtedness" means Indebtedness of Borrower,
provided that: (i) such Indebtedness is subordinated to the Obligations on terms
reasonably satisfactory to Agent, (ii) such Indebtedness matures no sooner than
one year following the Maturity Date as in effect at the time of incurrence of
such subordinated Indebtedness, (iii) such Indebtedness is not secured by a Lien
on any revenues, assets or property of Borrower or any other Restricted Person,
(iv) such Indebtedness, in the aggregate with all other such subordinated
Indebtedness incurred from and after the date of this Agreement, does not exceed
$150,000,000, (v) at the time of incurrence of such Indebtedness, no Default or
Event of Default shall have occurred nor
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<PAGE> 91
would result after giving effect the incurrence of such subordinated
Indebtedness, (vi) the incurrence of such Indebtedness has been approved by
resolutions of the Board of Directors of Borrower, provided that such
resolutions shall have a finding that the interest rate and terms are no less
than favorable than the rates and terms generally available in the market for
placement of high yield subordinated notes with institutional investors, (vii)
after giving effect to the incurrence of such Indebtedness, for each of the four
Fiscal Quarters which has most recently ended prior to the date on which such
subordinated Indebtedness is incurred, the ratio of Borrower's Consolidated Cash
Flow to Borrower's Consolidated Fixed Charges would not have been less than 1.5
to 1, and the ratio of Borrower's Consolidated Cash Flow to Borrower's
Consolidated Interest Expense would not have been less than 2.5 to 1, in each
case computed on a pro forma basis by adjusting "Consolidated Interest Expense"
to reflect the interest expense which would have been incurred if, on the first
day of the first of such four Fiscal Quarters, such subordinated Indebtedness
had been incurred and 100% of the net proceeds thereof had been applied on such
date to reduce the Loans in the manner provided in this Agreement; provided,
however, to the extent up to (but not more than) 50% of such proceeds are to be
applied to make an acquisition contemporaneously with the incurrence of such
subordinated Indebtedness, such pro forma adjustments shall instead properly
reflect on a pro forma basis, such acquisition to the extent funded with such
proceeds as if acquired and paid for on the first day of the first of such four
Fiscal Quarters , (viii) the covenants benefitting such subordinated
Indebtedness shall at no time require the maintaining of any balance sheet or
income statement ratios other than ratios used solely for the purpose of
limiting the incurrence of additional Indebtedness or additional Liens; provided
any such limitation on the incurrence of additional Indebtedness and Liens shall
provide for the incurrence of the Obligations and the granting of Liens to
secure the Obligations on terms satisfactory to Agent, (ix) any guaranty of
subsidiaries for such subordinated Indebtedness shall contain terms, and be
subordinate to the Obligations on terms reasonably satisfactory to Agent, (x)
contemporaneously with the incurrence of such Indebtedness, Borrower shall make
the prepayments of 50% net cash proceeds as required under Section 2.8(a), (xi)
no Default or Event of Default shall exist immediately prior to and after giving
effect to the incurrence of such Indebtedness, and (xii) one Business Day prior
to the incurrence of such Indebtedness, Borrower shall have submitted a
certificate of its president and chief financial officer to the effect that each
of the foregoing conditions has been or will be satisfied contemporaneously with
the incurrence of such subordinated Indebtedness.
"Person" means an individual, corporation, partnership, limited
liability company, association, joint stock company, trust or trustee thereof,
estate or executor thereof, unincorporated organization or joint venture,
Tribunal, or any other legally recognizable entity.
"Preferred Stock" means capital stock other than common stock of
Borrower.
"Rating Agency" means either S & P or Moody's, or their respective
successors.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect.
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"Reorganization" means the consummation of all of the transactions
contemplated by the Reorganization Documents, including but not limited to the
transactions listed on Schedule 4A.
"Reorganization Documents" means the Reorganization Plan, the
confirmation order, and those documents listed on Schedule 4B and all documents
and agreements entered into between the parties to such documents in connection
with such documents.
"Reorganization Plan" means the Joint Plan of Reorganization of
Forcenergy Inc and Forcenergy Resources Inc. as confirmed in the [confirmation
order].
"Reserve Requirement" means, at any time, the maximum rate at which
reserves (including any marginal, special, supplemental, or emergency reserves)
are required to be maintained under regulations issued from time to time by the
Board of Governors of the Federal Reserve System (or any successor) by member
banks of the Federal Reserve System against "Eurocurrency liabilities" (as such
term is used in Regulation D). Without limiting the effect of the foregoing, the
Reserve Requirement shall reflect any other reserves required to be maintained
by such member banks with respect to (a) any category of liabilities which
includes deposits by reference to which the Adjusted Eurodollar Rate is to be
determined, or (b) any category of extensions of credit or other assets which
include Eurodollar Loans.
"Restricted Person" means any of Borrower and each Subsidiary of
Borrower.
"Revolving Credit Commitment" means initially $____________,
[$250,000,000 minus the Maximum Series B Term Loan Amount] as such amount is
reduced from time to time in accordance with the provisions of this Agreement.
Each Revolving Credit Lender's Revolving Credit Commitment shall be the amount
obtained by multiplying (i) the total Revolving Credit Commitment by (ii) the
such Revolving Credit Lender's Revolving Credit Percentage Share.
"Revolving Credit Commitment Period" means the period from and
including the Effective Date until and including Maturity Date, unless extended
by Agent pursuant to Section 2.12 (or, if earlier, the day on which the
Revolving Credit Notes first become due and payable in full).
"Revolving Credit Lender" means each holder of a Revolving Credit Note.
"Revolving Credit Loan" and "Revolving Credit Note" have the meanings
given in Section 2.1.
"Revolving Credit Percentage Share" means, with respect to any
Revolving Credit Lender, the Revolving Credit Percentage Share set forth below
such Revolving Credit Lender's name on its signature page hereto as modified
from time to time as a result of assignments pursuant to Section 10.5.
"S & P" means Standard & Poor's Ratings Services (a division of McGraw
Hill Companies, Inc.), or its successor.
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"Security Documents" means the instruments listed in the Security
Schedule and all other security agreements, deeds of trust, mortgages, chattel
mortgages, pledges, guaranties, financing statements, continuation statements,
extension agreements and other agreements or instruments now, heretofore, or
hereafter delivered by any Restricted Person to Agent in connection with this
Agreement or any transaction contemplated hereby to secure or guarantee the
payment of any part of the Obligations or the performance of any Restricted
Person's other duties and obligations under the Loan Documents.
"Security Schedule" means Schedule 2 hereto.
"Series A Term Lender" means a holder of a Series A Term Note.
"Series B Term Lender" means a holder of a Series B Term Note.
"Series B Term Lender Schedule" means Schedule 5 hereto.
"Series A Term Loan" has the meaning given in Section 2.2(a).
"Series B Term Loan" has the meaning given in Section 2.2(b).
"Series A Term Note" has the meaning given in Section 2.2(a).
"Series B Term Note" has the meaning given in Section 2.2(b).
"Subsidiary" means, with respect to any Person, any corporation,
association, partnership, limited liability company, joint venture, or other
business or corporate entity, enterprise or organization which is directly or
indirectly (through one or more intermediaries) controlled by or owned fifty
percent or more by such Person, provided that associations, joint ventures or
other relationships (a) which are established pursuant to a standard form
operating agreement or similar agreement or which are partnerships for purposes
of federal income taxation only, (b) which are not corporations or partnerships
(or subject to the Uniform Partnership Act) under applicable state Law, and (c)
whose businesses are limited to the exploration, development and operation of
oil, gas or mineral properties and interests owned directly by the parties in
such associations, joint ventures or relationships, shall not be deemed to be
"Subsidiaries" of such Person.
"Termination Event" means (a) the occurrence with respect to any ERISA
Plan of (i) a reportable event described in Sections 4043(b)(5) or (6) of ERISA
or (ii) any other reportable event described in Section 4043(b) of ERISA other
than a reportable event not subject to the provision for 30-day notice to the
Pension Benefit Guaranty Corporation pursuant to a waiver by such corporation
under Section 4043(a) of ERISA, or (b) the withdrawal of any ERISA Affiliate
from an ERISA Plan during a plan year in which it was a "substantial employer"
as defined in Section 4001(a)(2) of ERISA, or (c) the filing of a notice of
intent to terminate any ERISA Plan or the treatment of any ERISA Plan amendment
as a termination under Section 4041 of ERISA, or (d) the institution of
proceedings to terminate any ERISA Plan by the Pension Benefit
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Guaranty Corporation under Section 4042 of ERISA, or (e) any other event or
condition which might constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any ERISA Plan.
"Term Lenders" means the holders of Series A Term Note and Series B
Term Notes, collectively.
"Term Loans" means the Series A Term Loans and the Series B Term Loans,
collectively.
"Term Notes" means the Series A Term Notes and the Series B Term Notes,
collectively.
"Tribunal" means any government, any arbitration panel, any court or
any governmental department, commission, board, bureau, agency or
instrumentality of the United States of America or any state, province,
commonwealth, nation, territory, possession, county, parish, town, township,
village or municipality, whether now or hereafter constituted or existing.
"Type" means, with respect to any Loans, the characterization of such
Loans as either Base Rate Loans or Eurodollar Loans.
Section 1.2. Exhibits and Schedules; Additional Definitions. All
Exhibits and Schedules attached to this Agreement are a part hereof for all
purposes. Reference is hereby made to the Security Schedule for the meaning of
certain terms defined therein and used but not defined herein, which definitions
are incorporated herein by reference.
Section 1.3. Amendment of Defined Instruments. Unless the context
otherwise requires or unless otherwise provided herein the terms defined in this
Agreement which refer to a particular agreement, instrument or document also
refer to and include all renewals, extensions, modifications, amendments and
restatements of such agreement, instrument or document, provided that nothing
contained in this section shall be construed to authorize any such renewal,
extension, modification, amendment or restatement.
Section 1.4. References and Titles. All references in this Agreement to
Exhibits, Schedules, articles, sections, subsections and other subdivisions
refer to the Exhibits, Schedules, articles, sections, subsections and other
subdivisions of this Agreement unless expressly provided otherwise. Titles
appearing at the beginning of any subdivisions are for convenience only and do
not constitute any part of such subdivisions and shall be disregarded in
construing the language contained in such subdivisions. The words "this
Agreement", "this instrument", "herein", "hereof", "hereby", "hereunder" and
words of similar import refer to this Agreement as a whole and not to any
particular subdivision unless expressly so limited. The phrases "this section"
and "this subsection" and similar phrases refer only to the sections or
subsections hereof in which such phrases occur. The word "or" is not exclusive,
and the word "including" (in its various forms) means "including without
limitation". Pronouns in masculine, feminine and neuter genders shall be
construed to include any other gender, and words in the singular form shall be
construed to include the plural and vice versa, unless the context otherwise
requires.
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Section 1.5. Calculations and Determinations. All calculations under
the Loan Documents shall be made on the basis of actual days elapsed (including
the first day but excluding the last) and a year of 360 days. Each determination
by a Lender Party of amounts to be paid under Article III or any other matters
which are to be determined hereunder by a Lender Party (such as any Eurodollar
Rate, Adjusted Eurodollar Rate, Business Day, Interest Period, or Reserve
Requirement) shall, in the absence of manifest error, be conclusive and binding.
Unless otherwise expressly provided herein or unless Majority Lenders otherwise
consent all financial statements and reports furnished to any Lender Party
hereunder shall be prepared and all financial computations and determinations
pursuant hereto shall be made in accordance with GAAP.
ARTICLE II - The Loans and Letters of Credit
Section 2.1. Revolving Credit Loans. Subject to the terms and
conditions hereof, each Revolving Credit Lender agrees to make loans to Borrower
(herein called such Revolving Credit Lender's "Revolving Credit Loans") upon
Borrower's request from time to time during the Revolving Credit Commitment
Period, provided that (a) subject to Sections 3.3, 3.4 and 3.6, all Revolving
Credit Lenders are requested to make Revolving Credit Loans of the same Type in
accordance with their respective Revolving Credit Percentage Shares and as part
of the same Borrowing, and (b) after giving effect to such Revolving Credit
Loans, (i) the Facility Usage does not exceed the Revolving Credit Commitment
determined as of the date on which the requested Revolving Credit Loans are to
be made, (ii) the sum of the Revolving Credit Loans of each Revolving Credit
Lender plus the existing LC Obligations of such Revolving Credit Lender does not
exceed such Revolving Credit Lender's Revolving Credit Commitment and (iii) the
sum of the Facility Usage plus the outstanding principal amount of the Series B
Term Loans does not exceed the Borrowing Base. The aggregate amount of all Loans
in any Borrowing must be greater than or equal to $1,000,000 or higher integral
multiple of $100,000 or must equal the remaining availability under the
Revolving Credit Commitment. Portions of each Revolving Credit Lender's
Revolving Credit Loans may be from time to time designated as Base Rate Loans or
Eurodollar Loans as provided herein. Borrower may have no more than five
Borrowings of Eurodollar Loans outstanding at any time. The obligation of
Borrower to repay to each Revolving Credit Lender the aggregate amount of all
Revolving Credit Loans made by such Revolving Credit Lender, together with
interest accruing in connection therewith, shall be evidenced by a single
promissory note (herein called such Revolving Credit Lender's "Revolving Credit
Note") made by Borrower payable to the order of such Revolving Credit Lender in
the form of Exhibit A-1 with appropriate insertions. The amount of principal
owing on any Revolving Credit Lender's Revolving Credit Note at any given time
shall be the aggregate amount of all Revolving Credit Loans theretofore made by
such Revolving Credit Lender minus all payments of principal theretofore
received by such Revolving Credit Lender on such Revolving Credit Note. Interest
on each Revolving Credit Note shall accrue and be due and payable as provided
herein and therein. Each Revolving Credit Note shall be due and payable as
provided herein and therein, and shall be due and payable in full on the
Maturity Date. Subject to the terms and conditions hereof, Borrower may borrow,
repay, and reborrow hereunder.
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Section 2.2. Term Loans.
(a) Series A Term Loans. Subject to the terms and conditions hereof,
each Series A Term Lender agrees to make a single loan to Borrower on the date
hereof, provided that (a) such Series A Term Lender's Series A Term Loan (herein
called such Series A Term Lender's "Series A Term Loan") shall equal such Series
A Term Lender's Maximum Series A Term Loan Amount and (b) the aggregate amount
of all Series A Term Loans does not exceed the total Maximum Series A Term Loan
Amount. Portions of each Series A Term Lender's Series A Term Loan may from time
to time be designated as a Base Rate Loan or Eurodollar Loan as provided herein.
Borrower's obligation to repay to each Series A Term Lender the amount of such
Series A Term Loan made by such Series A Term Lender, together with interest
accruing in connection therewith, shall be evidenced by a single promissory note
(herein called such Series A Term Lender's "Series A Term Note") made by
Borrower payable to the order of such Series A Term Lender in the form of
Exhibit A-2 with appropriate insertions. The amount of principal owing on any
Series A Term Lender's Series A Term Note shall be the amount of such Series A
Term Lender's Series A Term Loan minus all payments of principal theretofore
received by such Series A Term Lender on such Series A Term Note. Interest on
each Series A Term Note shall accrue and be due and payable as provided herein
and therein. Each Series A Term Note shall be due and payable as provided herein
and therein, and shall be due and payable in full on the Maturity Date. No
portion of any Series A Term Loan which has been repaid may be reborrowed.
Borrower will, in addition to paying any interest then due on the
Series A Term Loans make principal payments, with each such payment applied
ratably to each Series A Term Note, in accordance with the following schedule:
<TABLE>
<CAPTION>
Payment Date Amount of Payment
------------ -----------------
<S> <C>
[March 31, 2001] $2,500,000
[June 30, 2001] $2,500,000
[September 30, 2001] $2,500,000
[December 31, 2001] $2,500,000
[March 31, 2002] $2,500,000
[June 30, 2002] $2,500,000
[September 30, 2002] $2,500,000
[December 31, 2002] $2,500,000
[March 31, 2003] $2,500,000
[June 30, 2003] $47,500,000
</TABLE>
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<PAGE> 97
(b) Series B Term Loans. Subject to the terms and conditions hereof,
each Series B Term Lender shall be deemed to have made a single Loan to Borrower
(herein called such Series B Term Lender's "Series B Term Loan") equal to such
Series B Term Lender's Maximum Series B Term Loan Amount, which amount is the
principal amount of its loans under the Existing Agreement less the amount of
such Series B Term Lender's Series A Term Loans. Portions of each Series B Term
Lender's Series B Term Loan may from time to time be designated as a Base Rate
Loan or Eurodollar Loan as provided herein. Borrower's obligation to repay to
each Series B Term Lender the amount of such Series B Term Loan, together with
interest accruing in connection therewith, shall be evidenced by a single
promissory note (herein called such Series B Term Lender's "Series B Term Note")
made by Borrower payable to the order of such Series B Term Lender in the form
of Exhibit A-3 with appropriate insertions. The amount of principal owing on any
Series B Term Lender's Series B Term Note shall be the amount of such Series B
Term Lender's Series B Term Loan minus all payments of principal theretofore
received by such Series B Term Lender on such Series B Term Note. Interest on
each Series B Term Note shall accrue and be due and payable as provided herein
and therein. Each Series B Term Note shall be due and payable as provided herein
and therein, and shall be due and payable in full on the Maturity Date. No
portion of any Series B Term Loan which has been repaid may be reborrowed.
Section 2.3. Requests for Revolving Credit Loans. Borrower must give to
Agent a written notice (or telephonic notice promptly confirmed in writing) of
any requested Borrowing of new Revolving Credit Loans to be advanced by
Revolving Credit Lenders. Each such notice must:
(a) specify (i) the aggregate amount of the Revolving Credit Loans and
the date on which the Revolving Credit Loans are to be advanced and (ii) the
applicable Interest Period for any Revolving Credit Loans which are Eurodollar
Loans; and
(b) be received by Agent not later than (i) 10:00 a.m., New York, New
York time, on the day on which the Revolving Credit Loans which are Base Rate
Loans are to be made, or (ii) 1:00 p.m., New York, New York time on the third
Business Day preceding the day on which any Revolving Credit Loans which are
Eurodollar Loans are to be made.
Each such Borrowing Notice must be made in the form and substance form attached
hereto as Exhibit B, duly completed. Each such telephonic request shall be
deemed a representation, warranty, acknowledgment and agreement by Borrower as
to the matters which are required to be set out in such written confirmation.
Upon receipt of any such Borrowing Notice, Agent shall give each Revolving
Credit Lender prompt notice of the terms thereof. If all conditions precedent to
such new Revolving Credit Loans have been met, each Revolving Credit Lender will
on the date requested promptly remit to Agent at Agent's office in New York, New
York the amount of such Revolving Credit Lender's new Revolving Credit Loan in
immediately available funds, and upon receipt of such funds, unless to its
actual knowledge any conditions precedent to such Revolving Credit Loans have
been neither met nor waived as provided herein, Agent shall promptly make such
Revolving Credit Loans available to Borrower. Unless Agent shall have received
prompt notice from a Revolving Credit Lender that such Revolving Credit Lender
will
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<PAGE> 98
not make available to Agent such Revolving Credit Lender's new Revolving Credit
Loan, Agent may in its discretion assume that such Revolving Credit Lender has
made such Revolving Credit Loan available to Agent in accordance with this
section and Agent may if it chooses, in reliance upon such assumption, make such
Revolving Credit Loan available to Borrower. If and to the extent such Revolving
Credit Lender shall not so make its new Revolving Credit Loan available to
Agent, such Revolving Credit Lender and Borrower severally agree to pay or repay
to Agent within three days after demand the amount of such Revolving Credit Loan
together with interest thereon, for each day from the date such amount was made
available to Borrower until the date such amount is paid or repaid to Agent,
with interest at (i) the Federal Funds Rate, if such Revolving Credit Lender is
making such payment and (ii) the interest rate applicable at the time to the
other new Revolving Credit Loans made on such date, if Borrower is making such
repayment. If neither such Revolving Credit Lender nor Borrower pays or repays
to Agent such amount within such three-day period, Agent shall in addition to
such amount be entitled to recover from such Revolving Credit Lender and from
Borrower, on demand, interest thereon at the Default Rate, calculated from the
date such amount was made available to Borrower. The failure of any Revolving
Credit Lender to make any new Revolving Credit Loan to be made by it hereunder
shall not relieve any other Revolving Credit Lender of its obligation hereunder,
if any, to make its new Revolving Credit Loan, but no Revolving Credit Lender
shall be responsible for the failure of any other Revolving Credit Lender to
make any new Revolving Credit Loan to be made by such other Revolving Credit
Lender.
Section 2.4. Continuations and Conversions of Existing Loans. Borrower
may make the following elections with respect to Revolving Credit Loans or Term
Loans already outstanding: to convert Base Rate Loans to Eurodollar Loans, to
convert Eurodollar Loans to Base Rate Loans on the last day of the Interest
Period applicable thereto, and to continue Eurodollar Loans beyond the
expiration of such Interest Period by designating a new Interest Period to take
effect at the time of such expiration. In making such elections, Borrower may
combine existing Loans made pursuant to separate Borrowings into one new
Borrowing or divide existing Loans made pursuant to one Borrowing into separate
new Borrowings, provided that (i) Borrower may have no more than five Borrowings
of Eurodollar Loans outstanding at any time and (ii) no combinations may be made
between Borrowings constituting Revolving Credit Loans on the one hand and
Borrowings constituting Term Loans on the other hand. To make any such election,
Borrower must give to Agent a Continuation/Conversion Notice with respect to any
such Conversion or Continuation of existing Loans, with a separate
Continuation/Conversion Notice given for each new Borrowing. Each such
Conversion Notice must:
(a) specify the existing Loans which are to be Continued or Converted;
(b) specify (i) the aggregate amount of any Borrowing of Base Rate
Loans into which such existing Loans are to be continued or converted and the
date on which such Continuation or Conversion is to occur, or (ii) the aggregate
amount of any Borrowing of Eurodollar Loans into which such existing Loans are
to be continued or converted, the date on which such Continuation or Conversion
is to occur (which shall be the first day of the Interest Period which is to
apply to such Eurodollar Loans), and the length of the applicable Interest
Period; and
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(c) be received by Agent not later than (i) 10:00 a.m., New York, New
York time, on the day on which any such Continuation or Conversion to Base Rate
Loans is to occur, or (ii) 1:00 p.m., New York, New York time on the third
Business Day preceding the day on which any such Continuation or Conversion to
Eurodollar Loans is to occur.
Each such Continuation/Conversion Notice must be made in the form and substance
of the form attached hereto as Exhibit C, duly completed. Upon receipt of any
such Continuation/Conversion Notice, Agent shall give each Lender prompt notice
of the terms thereof. Each Continuation/Conversion Notice shall be irrevocable
and binding on Borrower. During the continuance of any Default, Borrower may not
make any election to convert existing Loans into Eurodollar Loans or continue
existing Loans as Eurodollar Loans. If (due to the existence of a Default or for
any other reason) Borrower fails to timely and properly give any
Continuation/Conversion Notice with respect to a Borrowing of existing
Eurodollar Loans at least three days prior to the end of the Interest Period
applicable thereto, such Eurodollar Loans shall automatically be converted into
Base Rate Loans at the end of such Interest Period. No new funds shall be repaid
by Borrower or advanced by any Lender in connection with any Continuation or
Conversion of existing Loans pursuant to this section, and no such Continuation
or Conversion shall be deemed to be a new advance of funds for any purpose; such
Continuations and Conversions merely constitute a change in the interest rate
applicable to already outstanding Loans.
Section 2.5. Use of Proceeds. Borrower shall use the initial Loans to
refinance Existing Obligations. Borrower shall use Loans (other than the initial
Loans) to refinance Matured LC Obligations and fund oil and gas property (and
related assets) acquisitions, exploration, development and production activities
of Borrower and to provide working capital for its operations. Borrower shall
use all Letters of Credit for the purpose of securing bonding obligations,
workmen's compensation obligations, plugging and abandonment liabilities and for
other general business purposes. In no event shall the funds from any Loan or
any Letter of Credit be used directly or indirectly by any Person for personal,
family, household or agricultural purposes or for the purpose, whether
immediate, incidental or ultimate, of purchasing, acquiring or carrying any
"margin stock" (as such term is defined in Regulation U promulgated by the Board
of Governors of the Federal Reserve System) or to extend credit to others
directly or indirectly for the purpose of purchasing or carrying any such margin
stock. Borrower represents and warrants that Borrower is not engaged
principally, or as one of Borrower's important activities, in the business of
extending credit to others for the purpose of purchasing or carrying such margin
stock.
Section 2.6. Interest Rates and Fees.
(a) Interest Rates. Each Base Rate Loan shall bear interest on each day
outstanding at the Adjusted Base Rate in effect on such day. Each Eurodollar
Loan shall bear interest on each day during the related Interest Period at the
related Adjusted Eurodollar Rate in effect on such day. Anything to the contrary
herein notwithstanding, if an Event of Default has occurred and is continuing,
all Loans shall bear interest on each day outstanding at the applicable Default
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Rate. Past due payments of principal and interest shall bear interest at the
rates and in the manner set forth in the Notes.
(b) Commitment Fees. In consideration of each Revolving Credit Lender's
commitment to make Revolving Credit Loans, Borrower will pay to Agent for the
account of each Revolving Credit Lender a commitment fee determined on a daily
basis by applying a rate of one-half percent (0.5%) per annum to such Revolving
Credit Lender's Percentage Share of the unused portion of the Borrowing Base on
each day during the Revolving Credit Commitment Period, determined for each such
day by deducting from the amount of the Borrowing Base at the end of such day
the Facility Usage. In addition, Borrower will pay to Agent for the account of
each Revolving Credit Lender an excess commitment fee determined on a daily
basis by applying a rate of three-eighths of one percent (0.375%) per annum to
such Revolving Credit Lender's Percentage Share of the excess, if any, of the
Revolving Credit Commitment over the Borrowing Base on each day during the
Revolving Credit Commitment Period determined for each such day by deducting
from the Revolving Credit Commitment the Borrowing Base in effect at the end of
such day. Such commitment fee and excess commitment fee shall be due and payable
in arrears on the last day of each Fiscal Quarter and at the end of the
Revolving Credit Commitment Period.
(c) Facility Fees. In consideration of each Revolving Credit Lender's
commitment to make Revolving Credit Loans, each Series A Term Lender's
commitment to make Series A Term Loans, and each Series B Term Lender's
commitment to make Series B Term Loans, Borrower will pay to Agent for the
account of each Revolving Credit Lender, Series A Term Lender and Series B Term
Lender in the amount of one-quarter of one percent (.25%) of such Revolving
Credit Lender's Revolving Credit Commitment, one-quarter of one percent (.25%)
of such Series A Term Lender's Maximum Series A Term Loan Amount and one-quarter
of one percent (.25%) of such Series B Term Lender's Maximum Series B Term Loan
Amount, respectively, due and payable on the date hereof.
(d) Agent's Fees. In addition to all other amounts due to Agent under
the Loan Documents, Borrower will pay fees to Agent as described in a letter
agreement of even date herewith between Agent and Borrower.
(e) Excess Borrowing Base Fees. On each day in which the Facility Usage
plus the Series B Term Loans exceeds the Conforming Borrowing Base, a fee shall
accrue calculated at two percent (2.0%) per annum multiplied by such excess,
which fee shall be due and payable by Borrower on the next Interest Payment Date
and shall be paid to Agent to be paid ratably to each Revolving Credit Lender
and Series B Term Lender based upon a fraction the numerator of which is such
Lender's weighted average outstanding Revolving Credit Loans and LC Obligations
or Series B Term Loans, as applicable, and the denominator of which is the
weighted average total Facility Usage and Series B Term Loans for such period.
Section 2.7. Optional Prepayments and Commitment Reductions.
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(a) Borrower may, upon two Business Days' notice to Agent (and Agent
will promptly give notice to the other Lenders) from time to time and without
premium or penalty prepay the Revolving Credit Loans, in whole or in part, so
long as the aggregate amounts of all partial prepayments of principal on the
Revolving Credit Loans equals $500,000 or any higher integral multiple of
$100,000, and so long as Borrower does not make any prepayments which would
reduce the unpaid principal balance of the Revolving Credit Loans to less than
$100,000 without first either (i) terminating this Agreement or (ii) providing
assurance satisfactory to Agent in its discretion that Revolving Credit Lenders'
legal rights under the Loan Documents are in no way affected by such reduction.
Upon receipt of any such notice, Agent shall give each Revolving Credit Lender
prompt notice of the terms thereof.
(b) Borrower may, upon two Business Days' notice to each Term Lender
from time to time and without premium or penalty prepay the Term Loans, in whole
or in part, so long as the aggregate of amounts of all partial prepayments of
principal on the Term Loans equals $500,000 or any higher integral multiple of
$100,000.
(c) Each prepayment of principal under this Section shall be
accompanied by all interest then accrued and unpaid on the principal so prepaid.
Any principal or interest prepaid pursuant to this Section shall be in addition
to, and not in lieu of, all payments otherwise required to be paid under the
Loan Documents at the time of such prepayment.
(d) Borrower may, upon two Business Days notice to Agent (and Agent
will promptly give notice to the other Lenders) from time to time decrease the
Revolving Credit Commitment in whole or in part so long as the aggregate amount
of such reduction equals $500,000 or any higher integral multiple of $100,000.
(e) Each prepayment of a Term Loan pursuant to this Section shall be
made pro-rata with respect to all Term Loans, shall be accompanied by a pro-rata
reduction in the Revolving Credit Commitment, and if the Revolving Credit
Commitment after such reduction is less than the Facility Usage, Borrower shall
immediately prepay the Revolving Credit Loans in the amount of such excess.
Section 2.8. Mandatory Prepayments.
(a) Upon the incurrence or creation of any Indebtedness for borrowed
money (to the extent permitted in this Agreement), an amount equal to 50% of the
net cash proceeds received by Borrower in connection with such issuance shall be
applied as follows (and the other 50% may be retained by the Borrower) (i) first
as a mandatory prepayment of the outstanding principal balance of the Series A
Term Loans until the Series A Term Loans have been paid in full, and (ii) then
as a mandatory prepayment of the Series B Term Loans and a permanent reduction
in the Revolving Credit Commitments in the amount of such prepayment (and a
mandatory prepayment of the outstanding Revolving Credit Loans in the amount, if
any, that the Facility Usage exceeds the Revolving Credit Commitment after such
reduction).
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(b) Upon the issuance of any common stock, preferred stock or other
equity of the Borrower or Restricted Person (to the extent permitted in this
Agreement), an amount equal to 50% of the net cash proceeds received by Borrower
in connection with such issuance shall be applied as follows (and the other 50%
may be retained by the Borrower) (i) first as a mandatory prepayment of the
outstanding principal balance of the Series A Term Loans until the Series A Term
Loans have been paid in full, and (ii) then as a mandatory prepayment of the
Series B Term Loans and a permanent reduction in the Revolving Credit
Commitments in the amount of such prepayment (and a mandatory prepayment of the
outstanding Revolving Credit Loans in the amount, if any, that the Facility
Usage exceeds the Revolving Credit Commitment after such reduction).
(c) Upon the sale, transfer, conveyance or assignments of any assets
(to the extent permitted in this Agreement) of Borrower or Restricted Person
(excluding however, the sale of properties to Hilcorp Energy I, L.P., covering
the same properties as were presented in the motion to the Bankruptcy Court
dated on or about September 13, 1999 or the sale of such properties to another
buyer approved by the Bankruptcy Court), an amount equal to 100% of the net cash
proceeds received by Borrower in connection with such sale, transfer, conveyance
or assignments shall be applied as follows: (i) one-third as a mandatory
prepayment of the outstanding principal balance of the Series A Term Loans and
(ii) two-thirds as a mandatory prepayment of the Revolving Credit Loans (and a
permanent reduction in the Revolving Credit Commitments and a reduction in the
Borrowing Base and Conforming Borrowing Base in the amount of such prepayment)
and the Series B Term Loans; provided, however, if the Series A Term Loans have
been paid in full (A) provided no Default shall have occurred which is
continuing, no mandatory prepayment of the Revolving Credit Loans and Series B
Term Loans shall be required in respect of any proceeds of a sale pursuant to
Section 7.5(d) and (B) in the case of any other proceeds, such proceeds shall be
applied to the Revolving Credit Loans, Revolving Credit Commitments, Borrowing
Base, Conforming Borrowing Base and Series B Term Loans (as provided above in
this subsection (c)) in an amount which shall be the greater of (i) two-thirds
(2/3) of the net cash proceeds so received by Borrower or (ii) the amount which
was attributable to such sold properties in connection with the most recent
Borrowing Base.
(d) Each prepayment of principal under this section shall be
accompanied by all interest then accrued and unpaid on the principal so prepaid.
Any principal or interest prepaid pursuant to this section shall be in addition
to, and not in lieu of, all payments otherwise required to be paid under the
Loan Documents at the time of such prepayment. Each prepayment of the Series A
Term Loans shall be applied to the principal installments thereof in inverse
order of maturity. Each permanent reduction of the Revolving Credit Commitments
and the prepayment of Series B Term Loans shall be applied ratably to such
Revolving Credit Commitments and Series B Term Loans of each Lender based upon
the fraction, the numerator of which is the Revolving Credit Commitment or
Series B Term Loan of such Lender and the denominator of which is the sum of the
total Revolving Credit Commitments and Series B Term Loans.
Section 2.9. Initial Borrowing Base. During the period from the date
hereof to the first Determination Date, the Borrowing Base and Conforming
Borrowing Base shall be $250,000,000.
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Section 2.10. Subsequent Determinations of Borrowing Base and
Conforming Borrowing Base. On or before each Evaluation Date, Borrower shall
furnish to each Lender all information, reports and data which Agent has then
requested concerning Restricted Persons' businesses and properties (including
their oil and gas properties and interests and the reserves and production
relating thereto), together with the Engineering Report described in Section
6.2(h) or (i), as applicable. Within 60 days after receiving such information,
reports and data, or as promptly after receiving such information, reports and
data as practicable, Majority Lenders shall determine an amount for the
Borrowing Base and Conforming Borrowing Base and Agent shall by notice to
Borrower designate such amount as the new Borrowing Base and Conforming
Borrowing Base available to Borrower hereunder, which designation shall take
effect immediately on the date such notice is sent (herein called a
"Determination Date") and shall remain in effect until but not including the
next date as of which the Borrowing Base and Conforming Borrowing Base are
redetermined. If Borrower does not furnish all such information, reports and
data by the date specified in the first sentence of this section, Agent may
nonetheless designate the Borrowing Base and Conforming Borrowing Base at any
amount which Majority Lenders determine and may redesignate the Borrowing Base
and Conforming Borrowing Base from time to time thereafter until each Lender
receives all such information, reports and data, whereupon Majority Lenders
shall designate a new Borrowing Base and new Conforming Borrowing Base as
described above. Majority Lenders shall determine the amount of the Borrowing
Base and Conforming Borrowing Base as follows:
(a) Projected future production volumes, lease operating
expenses and capital costs for Borrower's interest in oil and gas
properties located in or offshore the United States which have
attributable to them proved oil or gas reserves ("Borrower's Oil and
Gas Properties") shall be based upon the amounts reflected in the
Engineering Report prepared for the most recent Evaluation Date (or
most recently delivered in the event such report is not timely
delivered by such Evaluation Date, adjusted to reflect production since
the date of such report); provided, that production volumes and lease
operating expenses shall be adjusted by (i) multiplying such production
volumes by the Applicable Volume Risk Percentage (as defined herein)
and (ii) multiplying such lease operating expenses by the Applicable
LOE Risk Percentage (as defined herein). Capital costs shall be
included at 100% of such capital costs reflected in such Engineering
Report. For purposes of this Section 2.10, the term "Applicable Volume
Risk Percentage" shall mean that percentage determined by the Lenders'
Independent Engineer in the exercise of its good faith discretion for
the Borrower's Oil and Gas Properties (which may be different
percentages for properties of the same developed, developed
non-producing or undeveloped category); provided that such percentage
determined by the Lenders' Independent Engineer shall be:
(A) not less than 90% nor greater than 100% of the
production volumes, in the case of reserves which are proved
developed producing reserves on the Evaluation Date,
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(B) not less than 70% nor greater than 90% of the
production volumes, in the case of reserves which are proved
developed non-producing reserves on the Evaluation Date, and
(C) not less than 50% nor greater than 65% of the
production volumes, in the case of reserves which are proved
undeveloped reserves on the Evaluation Date.
For purposes of this Section 2.10, the term "Applicable LOE Risk
Percentage" shall mean that percentage determined by the Lenders'
Independent Engineer in its discretion; provided that such percentage
determined shall be not less than 100% nor greater than 110% of the
Applicable Volume Risk Percentage for the corresponding production
volumes.
(b) Projected production volumes and cash flow for the first
three months following the date specified in the Engineering Report
(the "as of" date used for evaluation) shall be excluded in determining
the Borrowing Base or the Conforming Borrowing Base.
(c) The assumptions regarding future prices of production
shall be (i) the price assumptions as published in the most recent
Madison Energy Advisors survey of price assumptions of major energy
lenders adjusted by the differential for each of Borrower's major
geographic operating regions between (A) the New York Mercantile
Exchange weighted average spot price for oil and natural gas over the
four Fiscal Quarters then most recently ended and (B) the weighted
average market price for oil and natural gas received by Borrower in
each of Borrower's major geographic operating regions for the same
period or (ii) if such survey is no longer published by Madison Energy
Advisors or a corporate successor, the amount determined by the
Lenders' Independent Engineer or the Agent as the arithmetic average of
the price assumptions and price escalation assumptions generally used
by each of the Lenders in their oil and gas reserve based loans,
adjusted for the location and quality of the production and, in the
case of clause (i) or (ii), adjusted for Borrower's oil and gas price
hedging contracts in a manner acceptable to Majority Lenders. Future
lease operating expenses and capital costs shall be escalated by the
same factors as are utilized in future price escalations.
(d) The net present value of the projected future net revenues
attributable to production from Borrower's Oil and Gas Properties
("NPV") shall be determined after deducting all projected future
royalties and other burdens on production, taxes (other than income
taxes), lease operating expenses (including without limitation field
level general and administrative expenses customarily included in lease
operating expenses) and capital costs and utilizing a 10% discount
factor to determine present value.
(e) The Borrowing Base and Conforming Borrowing Base shall
exclude the NPV of Borrower's Oil and Gas Properties which are not
subject to a perfected first priority Lien securing the Obligations
(unless such Oil and Gas Properties are available
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for such a perfected first priority Lien (and remain unencumbered) and
Majority Lenders have elected not to take such a Lien) or for which
Borrower does not have a record title or for which title is subject to
defects or limitations which are not acceptable to Majority Lenders.
(f) The "Borrowing Base" shall equal 60% of such NPV;
provided, however, that the percentage of the Borrowing Base that is
derived from proved developed non-producing reserves and proved
undeveloped reserves shall not exceed (i) 45% in respect to a Borrowing
Base in respect of an Evaluation Date on or prior to September 1, 2001
or (ii) 40% in respect to a Borrowing Base thereafter. The "Conforming
Borrowing Base" shall equal 60% of such NPV; provided, however, that
the percentage of the Conforming Borrowing Base that is derived from
proved developed non-producing reserves and proved undeveloped reserves
shall not exceed (i) 40% in respect to a Conforming Borrowing Base in
respect of an Evaluation Date on or prior to September 1, 2001 or (ii)
35% in respect to a Conforming Borrowing Base thereafter.
(g) On or within __ days after each Evaluation Date, on a date
set by Agent and Borrower, Borrower shall cause its internal engineers
and representatives of the Independent Petroleum Engineers to meet with
representatives of Lenders' Independent Engineer and other petroleum
engineers for any Lender and provide information and review the
Engineering Report and data supporting the Engineering Report for such
Evaluation Date.
(h) The audit by the Independent Petroleum Engineer must
include an evaluation of not less than 80% of reserves (by value) using
the same procedures and criteria that the Independent Petroleum
Engineer would apply had it independently prepared the report and an
examination of the remaining 20% of reserves (by value) for accuracy.
As used above, proved reserves, proved developed producing reserves, proved
developed non-producing reserves and proved undeveloped reserves shall be
determined in accordance with the standards established by the Society of
Petroleum Engineers.
Section 2.11. Borrowing Base Reductions. If the sum of the Facility
Usage plus the outstanding principal amount of the Series B Term Loans exceeds
the Borrowing Base (such excess being called a "Borrowing Base Deficiency") the
Borrower shall, within 60 days after notice of the Borrowing Base Deficiency has
been given to Borrower, prepay the Revolving Credit Loans or reduce the LC
Obligations in the amount of the Borrowing Base Deficiency. Each prepayment of
principal under this Section shall be accompanied by all interest then accrued
and unpaid on the principal so prepaid. Any principal or interest prepaid
pursuant to this Section shall be in addition to, and not in lieu of, all
payments otherwise required to be paid under the Loan Documents at the time of
such prepayment.
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Section 2.12. Letters of Credit. Subject to the terms and conditions
hereof, Borrower may during the Revolving Credit Commitment Period request LC
Issuer to issue one or more Letters of Credit, provided that, after taking such
Letter of Credit into account:
(a) the Facility Usage does not exceed the Revolving Credit
Commitment at such time; and
(b) the amount of each Letter of Credit shall not exceed
$5,000,000 (unless consented to be Majority Lenders) and the aggregate
amount of all LC Obligations at any time does not exceed $20,000,000;
and
(c) the expiration date of such Letter of Credit is prior to
the Maturity Date;
and further provided that:
(d) such Letter of Credit is to be used for the purposes set
forth in Section 2.5;
(e) such Letter of Credit is not directly or indirectly used
to assure payment of or otherwise support any Funded Debt of any
Person;
(f) the issuance of such Letter of Credit will be in
compliance with all applicable governmental restrictions, policies, and
guidelines and will not subject LC Issuer to any cost which is not
reimbursable under Article III;
(g) the form and terms of such Letter of Credit are acceptable
to LC Issuer in its sole and absolute discretion; and
(h) all other conditions in this Agreement to the issuance of
such Letter of Credit have been satisfied.
LC Issuer will honor any such request if the foregoing conditions (a) through
(h) (in the following Section 2.13 called the "LC Conditions") have been met as
of the date of issuance of such Letter of Credit.
Section 2.13. Requesting Letters of Credit. Borrower must make written
application for any Letter of Credit not later than 10:00 a.m. New York, New
York time at least two Business Days before the date on which Borrower desires
for LC Issuer to issue such Letter of Credit. By making any such written
application Borrower shall be deemed to have represented and warranted that the
LC Conditions described in Section 2.12 will be met as of the date of issuance
of such Letter of Credit. Each such written application for a Letter of Credit
must be made in writing in the form and substance of Exhibit H, the terms and
provisions of which are hereby incorporated herein by reference (or in such
other form as may mutually be agreed upon by LC Issuer and Borrower). Two
Business Days after the LC Conditions for a Letter of Credit have been met as
described in Section 2.12, LC Issuer will issue such Letter of Credit at LC
Issuer's
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office in New York, New York. If any provisions of any LC Application conflict
with any provisions of this Agreement, the provisions of this Agreement shall
govern and control.
Section 2.14. Reimbursement and Participations.
(a) Reimbursement by Borrower. Borrower promises to pay to LC Issuer,
the full amount of each Matured LC Obligation on the date that LC Issuer honors
any draft or other demand for payment under or purported to be under any Letter
of Credit. Interest shall accrue on each Matured LC Obligation at the Default
Rate from and after the date each Matured LC Obligation becomes due and payable
until such Matured LC Obligation is paid in full.
(b) Letter of Credit Advances. If the beneficiary of any Letter of
Credit makes a draft or other demand for payment thereunder then Borrower may,
during the interval between the making thereof and the honoring thereof by LC
Issuer, request Lenders to make Loans to Borrower in the amount of such draft or
demand, which Loans shall be made concurrently with LC Issuer's payment of such
draft or demand and shall be immediately used by LC Issuer to repay the amount
of the resulting Matured LC Obligation. Such a request by Borrower shall be made
in compliance with all of the provisions hereof, provided that for the purposes
of the first sentence of Section 2.1, the amount of such Loans shall be
considered, but the amount of the Matured LC Obligation to be concurrently paid
by such Loans shall not be considered.
(c) Participation by Lenders. LC Issuer irrevocably agrees to grant and
hereby grants to each Lender, and -- to induce LC Issuer to issue Letters of
Credit hereunder -- each Lender irrevocably agrees to accept and purchase and
hereby accepts and purchases from LC Issuer, on the terms and conditions
hereinafter stated and for such Lender's own account and risk, an undivided
interest equal to such Lender's Revolving Credit Percentage Share of LC Issuer's
obligations and rights under each Letter of Credit issued hereunder and the
amount of each Matured LC Obligation paid by LC Issuer thereunder. Each Lender
unconditionally and irrevocably agrees with LC Issuer that, if a Matured LC
Obligation is paid under any Letter of Credit for which LC Issuer is not
reimbursed in full by Borrower in accordance with the terms of this Agreement
and the related LC Application (including any reimbursement by means of
concurrent Loans or by the application of LC Collateral), such Lender shall (in
all circumstances and without set-off or counterclaim) pay to LC Issuer on
demand, in immediately available funds at LC Issuer's address for notices
hereunder, such Lender's Revolving Credit Percentage Share of such Matured LC
Obligation (or any portion thereof which has not been reimbursed by Borrower).
Each Lender's obligation to pay LC Issuer pursuant to the terms of this
subsection is irrevocable and unconditional. If any amount required to be paid
by any Lender to LC Issuer pursuant to this subsection is paid by such Lender to
LC Issuer within three Business Days after the date such payment is due, LC
Issuer shall in addition to such amount be entitled to recover from such Lender,
on demand, interest thereon calculated from such due date at the Federal Funds
Rate. If any amount required to be paid by any Lender to LC Issuer pursuant to
this subsection is not paid by such Lender to LC Issuer within three Business
Days after the date such payment is due, LC Issuer shall in addition to such
amount be entitled to recover from such Lender, on demand, interest thereon
calculated from such due date at the Default Rate.
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(d) Distributions to Participants. Whenever LC Issuer has in accordance
with this section received from any Lender payment of such Lender's Revolving
Credit Percentage Share of any Matured LC Obligation, if LC Issuer thereafter
receives any payment of such Matured LC Obligation or any payment of interest
thereon (whether directly from Borrower or by application of LC Collateral or
otherwise, and excluding only interest for any period prior to LC Issuer's
demand that such Lender make such payment of its Revolving Credit Percentage
Share), LC Issuer will distribute to such Lender its Revolving Credit Percentage
Share of the amounts so received by LC Issuer; provided, however, that if any
such payment received by LC Issuer must thereafter be returned by LC Issuer,
such Lender shall return to LC Issuer the portion thereof which LC Issuer has
previously distributed to it.
(e) Calculations. A written advice setting forth in reasonable detail
the amounts owing under this section, submitted by LC Issuer to Borrower or any
Lender from time to time, shall be conclusive, absent manifest error, as to the
amounts thereof.
Section 2.15. Letter of Credit Fees. In consideration of LC Issuer's
issuance of any Letter of Credit, Borrower agrees to pay (a) to Agent, for the
account of all Lenders in accordance with their respective Revolving Credit
Percentage Shares, a letter of credit issuance fee at a rate equal to two
percent (2.0%) per annum, and (b) to such LC Issuer for its own account, a
letter of credit fronting fee at a rate equal to one-quarter of one percent
(.25%) per annum. Each such fee will be calculated based on the face amount of
all Letters of Credit outstanding on each day at the above applicable rate and
will be payable quarterly in arrears. In addition, Borrower will pay to LC
Issuer administrative, issuance, amendment or extension fees for each Letter of
Credit and an administrative drawing fee upon any drawing under a Letter of
Credit in accordance with such LC Issuer's standard schedule of fees in effect
from time to time.
Section 2.16. No Duty to Inquire.
(a) Drafts and Demands. LC Issuer is authorized and instructed to
accept and pay drafts and demands for payment under any Letter of Credit without
requiring, and without responsibility for, any determination as to the existence
of any event giving rise to said draft, either at the time of acceptance or
payment or thereafter. LC Issuer is under no duty to determine the proper
identity of anyone presenting such a draft or making such a demand (whether by
tested telex or otherwise) as the officer, representative or agent of any
beneficiary under any Letter of Credit, and payment by LC Issuer to any such
beneficiary when requested by any such purported officer, representative or
agent is hereby authorized and approved. BORROWER RELEASES EACH LENDER PARTY
FROM, AND AGREES TO HOLD EACH LENDER PARTY HARMLESS AND INDEMNIFIED AGAINST, ANY
LIABILITY OR CLAIM IN CONNECTION WITH OR ARISING OUT OF THE SUBJECT MATTER OF
THIS SECTION, WHICH INDEMNITY SHALL APPLY WHETHER OR NOT ANY SUCH LIABILITY OR
CLAIM IS IN ANY WAY OR TO ANY EXTENT CAUSED, IN WHOLE OR IN PART, BY ANY
NEGLIGENT ACT OR OMISSION OF ANY KIND BY ANY LENDER PARTY, provided only that no
Lender Party shall be entitled to indemnification for that portion, if any, of
any liability or claim which is proximately caused by its own individual gross
negligence or willful misconduct, as determined in a final judgment.
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(b) Extension of Maturity. If the maturity of any Letter of Credit is
extended by its terms or by Law or governmental action, if any extension of the
maturity or time for presentation of drafts or any other modification of the
terms of any Letter of Credit is made at the request of any Restricted Person,
or if the amount of any Letter of Credit is increased at the request of any
Restricted Person, this Agreement shall be binding upon all Restricted Persons
with respect to such Letter of Credit as so extended, increased or otherwise
modified, with respect to drafts and property covered thereby, and with respect
to any action taken by LC Issuer, LC Issuer's correspondents, or any Lender
Party in accordance with such extension, increase or other modification.
(c) Transferees of Letters of Credit. If any Letter of Credit provides
that it is transferable, LC Issuer shall have no duty to determine the proper
identity of anyone appearing as transferee of such Letter of Credit, nor shall
LC Issuer be charged with responsibility of any nature or character for the
validity or correctness of any transfer or successive transfers, and payment by
LC Issuer to any purported transferee or transferees as determined by LC Issuer
is hereby authorized and approved, and BORROWER RELEASES EACH LENDER PARTY FROM,
AND AGREES TO HOLD EACH LENDER PARTY HARMLESS AND INDEMNIFIED AGAINST, ANY
LIABILITY OR CLAIM IN CONNECTION WITH OR ARISING OUT OF THE FOREGOING, WHICH
INDEMNITY SHALL APPLY WHETHER OR NOT ANY SUCH LIABILITY OR CLAIM IS IN ANY WAY
OR TO ANY EXTENT CAUSED, IN WHOLE OR IN PART, BY ANY NEGLIGENT ACT OR OMISSION
OF ANY KIND BY ANY LENDER PARTY, provided only that no Lender Party shall be
entitled to indemnification for that portion, if any, of any liability or claim
which is proximately caused by its own individual gross negligence or willful
misconduct, as determined in a final judgment.
Section 2.17. LC Collateral.
(a) LC Obligations in Excess of Borrowing Base. If, after the making of
all mandatory prepayments required under Section 2.8 or 2.11, the outstanding LC
Obligations will exceed the Borrowing Base, then in addition to prepayment of
the entire principal balance of the Loans Borrower will immediately pay to LC
Issuer an amount equal to such excess. LC Issuer will hold such amount as
security for the remaining LC Obligations (all such amounts held as security for
LC Obligations being herein collectively called "LC Collateral") and the other
Obligations, and such collateral may be applied from time to time to any Matured
LC Obligations or other Obligations which are due and payable. Neither this
subsection nor the following subsection shall, however, limit or impair any
rights which LC Issuer may have under any other document or agreement relating
to any Letter of Credit, LC Collateral or LC Obligation, including any LC
Application, or any rights which any Lender Party may have to otherwise apply
any payments by Borrower and any LC Collateral under Section 3.1.
(b) Acceleration of LC Obligations. If the Obligations or any part
thereof become immediately due and payable pursuant to Section 8.1 then, unless
Majority Lenders otherwise specifically elect to the contrary (which election
may thereafter be retracted by Majority Lenders at any time), all LC Obligations
shall become immediately due and payable without regard to whether or not actual
drawings or payments on the Letters of Credit have occurred, and
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Borrower shall be obligated to pay to LC Issuer immediately an amount equal to
the aggregate LC Obligations which are then outstanding.
(c) Investment of LC Collateral. Pending application thereof, all LC
Collateral shall be invested by LC Issuer in such Cash Equivalents as LC Issuer
may choose in its sole discretion. All interest on (and other proceeds of) such
Investments shall be reinvested or applied to Matured LC Obligations or other
Obligations which are due and payable. When all Obligations have been satisfied
in full, including all LC Obligations, all Letters of Credit have expired or
been terminated, and all of Borrower's reimbursement obligations in connection
therewith have been satisfied in full, LC Issuer shall release any remaining LC
Collateral. Borrower hereby assigns and grants to LC Issuer a continuing
security interest in all LC Collateral paid by it to LC Issuer, all Investments
purchased with such LC Collateral, and all proceeds thereof to secure its
Matured LC Obligations and its Obligations under this Agreement, each Note, and
the other Loan Documents, and Borrower agrees that such LC Collateral,
Investments and proceeds shall be subject to all of the terms and conditions of
the Security Documents. Borrower further agrees that LC Issuer shall have all of
the rights and remedies of a secured party under the Uniform Commercial Code as
adopted in the State of New York with respect to such security interest and that
an Event of Default under this Agreement shall constitute a default for purposes
of such security interest.
(d) Payment of LC Collateral. When Borrower is required to provide LC
Collateral for any reason and fails to do so on the day when required, LC Issuer
may without notice to Borrower or any other Restricted Person provide such LC
Collateral (whether by application of proceeds of other Collateral, by transfers
from other accounts maintained with LC Issuer, or otherwise) using any available
funds of Borrower or any other Person also liable to make such payments. Any
such amounts which are required to be provided as LC Collateral and which are
not provided on the date required shall, for purposes of each Security Document,
be considered past due Obligations owing hereunder, and LC Issuer is hereby
authorized to exercise its respective rights under each Security Document to
obtain such amounts.
ARTICLE III - Payments to Lenders
Section 3.1. General Procedures. Borrower will make each payment which
it owes under the Loan Documents to Agent for the account of the Lender Party to
whom such payment is owed, in lawful money of the United States of America,
without set-off, deduction or counterclaim, and in immediately available funds.
Each such payment must be received by Agent not later than 12:00 noon, New York,
New York time, on the date such payment becomes due and payable. Any payment
received by Agent after such time will be deemed to have been made on the next
following Business Day. Should any such payment become due and payable on a day
other than a Business Day, the maturity of such payment shall be extended to the
next succeeding Business Day, and, in the case of a payment of principal or past
due interest, interest shall accrue and be payable thereon for the period of
such extension as provided in the Loan Document under which such payment is due.
Each payment under a Loan Document shall be due and payable at the place
provided therein and, if no specific place of payment is provided,
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shall be due and payable at the place of payment of Agent's Note. When Agent
collects or receives money on account of the Obligations, Agent shall distribute
all money so collected or received, and each Lender Party shall apply all such
money so distributed, as follows:
(a) first, for the payment of all Obligations which are then due (and
if such money is insufficient to pay all such Obligations, first to any
reimbursements due Agent under Section 6.9 or 10.4 and then to the partial
payment of all other Obligations then due in proportion to the amounts thereof,
or as Lender Parties shall otherwise agree);
(b) then for the prepayment of amounts owing under the Loan Documents
(other than principal on the Notes) if so specified by Borrower;
(c) then for the prepayment of principal on the Notes, together with
accrued and unpaid interest on the principal so prepaid; and
(d) last, for the payment or prepayment of any other Obligations.
All payments applied to principal and interest on any Note shall be applied
first to fees and expenses then due and payable, then to any interest then due
and payable, then to principal then due and payable, and last to any prepayment
of principal and interest in compliance with Sections 2.7 and 2.8. All
distributions of amounts described in any of subsections (b), (c) or (d) above
shall be made by Agent pro rata to each Lender Party then owed Obligations
described in such subsection in proportion to all amounts owed to all Lender
Parties which are described in such subsection; provided that if any Lender then
owes payments to LC Issuer for the purchase of a participation under Section
2.14(c) or to Agent under Section 9.9, any amounts otherwise distributable under
this section to such Lender shall be deemed to belong to LC Issuer, or Agent,
respectively, to the extent of such unpaid payments, and Agent shall apply such
amounts to make such unpaid payments rather than distribute such amounts to such
Lender.
Section 3.2. Capital Reimbursement. If either (a) the introduction or
implementation of or the compliance with or any change in or in the
interpretation of any Law, or (b) the introduction or implementation of or the
compliance with any request, directive or guideline from any central bank or
other governmental authority (whether or not having the force of Law) affects or
would affect the amount of capital required or expected to be maintained by any
Lender Party or any corporation controlling any Lender Party, then, upon demand
by such Lender Party, Borrower will pay to Agent for the benefit of such Lender
Party, from time to time as specified by such Lender Party, such additional
amount or amounts which such Lender Party shall determine to be appropriate to
compensate such Lender Party or any corporation controlling such Lender Party in
light of such circumstances, to the extent that such Lender Party reasonably
determines that the amount of any such capital would be increased or the rate of
return on any such capital would be reduced by or in whole or in part based on
the existence of the face amount of such Lender Party's Loans, Letters of
Credit, participations in Letters of Credit or commitments under this Agreement.
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Section 3.3. Increased Cost of Eurodollar Loans or Letters of Credit.
If any applicable Law (whether now in effect or hereinafter enacted or
promulgated, including Regulation D) or any interpretation or administration
thereof by any governmental authority charged with the interpretation or
administration thereof (whether or not having the force of Law):
(a) shall change the basis of taxation of payments to any Lender Party
of any principal, interest, or other amounts attributable to any Eurodollar Loan
or Letter of Credit or otherwise due under this Agreement in respect of any
Eurodollar Loan or Letter of Credit (other than taxes imposed on the overall net
income of such Lender Party or any Applicable Lending Office of such Lender
Party by any jurisdiction in which such Lender Party or any such Applicable
Lending Office is located); or
(b) shall change, impose, modify, apply or deem applicable any reserve,
special deposit or similar requirements in respect of any Eurodollar Loan or any
Letter of Credit (excluding those for which such Lender Party is fully
compensated pursuant to adjustments made in the definition of Eurodollar Rate)
or against assets of, deposits with or for the account of, or credit extended
by, such Lender Party; or
(c) shall impose on any Lender Party or the interbank eurocurrency
deposit market any other condition affecting any Eurodollar Loan or Letter of
Credit, the result of which is to increase the cost to any Lender Party of
funding or maintaining any Eurodollar Loan or of issuing any Letter of Credit or
to reduce the amount of any sum receivable by any Lender Party in respect of any
Eurodollar Loan or Letter of Credit by an amount deemed by such Lender Party to
be material,
then such Lender Party shall promptly notify Agent and Borrower in writing of
the happening of such event and of the amount required to compensate such Lender
Party for such event (on an after-tax basis, taking into account any taxes on
such compensation), whereupon (i) Borrower shall pay such amount to Agent for
the account of such Lender Party and (ii) Borrower may elect, by giving to Agent
and such Lender Party not less than three Business Days' notice, to convert all
(but not less than all) of any such Eurodollar Loans into Base Rate Loans.
Section 3.4. Availability. If (a) any change in applicable Laws, or in
the interpretation or administration thereof of or in any jurisdiction
whatsoever, domestic or foreign, shall make it unlawful or impracticable for any
Lender Party to fund or maintain Eurodollar Loans or to issue or participate in
Letters of Credit, or shall materially restrict the authority of any Lender
Party to purchase or take offshore deposits of dollars (i.e., "eurodollars"), or
(b) any Lender Party determines that matching deposits appropriate to fund or
maintain any Eurodollar Loan are not available to it, or (c) any Lender Party
determines that the formula for calculating the Eurodollar Rate does not fairly
reflect the cost to such Lender Party of making or maintaining loans based on
such rate, then, upon notice by such Lender Party to Borrower and Agent,
Borrower's right to elect Eurodollar Loans from such Lender Party (or, if
applicable, to obtain Letters of Credit) shall be suspended to the extent and
for the duration of such illegality, impracticability or restriction and all
Eurodollar Loans of such Lender Party which are then outstanding or are then the
subject of any Borrowing Notice and which cannot lawfully or practicably be
maintained or
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funded shall immediately become or remain, or shall be funded as,
Base Rate Loans of such Lender Party. Borrower agrees to indemnify each Lender
Party and hold it harmless against all costs, expenses, claims, penalties,
liabilities and damages which may result from any such change in Law,
interpretation or administration.
Section 3.5. Funding Losses. In addition to its other obligations
hereunder, Borrower will indemnify each Lender Party against, and reimburse each
Lender Party on demand for, any loss or expense incurred or sustained by such
Lender Party (including any loss or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by a Lender
Party to fund or maintain Eurodollar Loans), as a result of (a) any payment or
prepayment (whether authorized or required hereunder or otherwise) of all or a
portion of a Eurodollar Loan on a day other than the day on which the applicable
Interest Period ends, (b) any payment or prepayment, whether required hereunder
or otherwise, of a Loan made after the delivery, but before the effective date,
of a Continuation/Conversion Notice, if such payment or prepayment prevents such
Continuation/Conversion Notice from becoming fully effective, (c) the failure of
any Loan to be made or of any Continuation/Conversion Notice to become effective
due to any condition precedent not being satisfied or due to any other action or
inaction of any Restricted Person, or (d) any Conversion (whether authorized or
required hereunder or otherwise) of all or any portion of any Eurodollar Loan
into a Base Rate Loan or into a different Eurodollar Loan on a day other than
the day on which the applicable Interest Period ends including, but not limited
to Conversion pursuant to Section 2.4.
Section 3.6. Reimbursable Taxes. Borrower covenants and agrees that:
(a) Borrower will indemnify each Lender Party against and reimburse
each Lender Party for all present and future income, stamp and other taxes,
levies, costs and charges whatsoever imposed, assessed, levied or collected on
or in respect of this Agreement or any Eurodollar Loans or Letters of Credit
(whether or not legally or correctly imposed, assessed, levied or collected),
excluding, however, any taxes imposed on or measured by the overall net income
of Agent or such Lender Party or any Applicable Lending Office of such Lender
Party by any jurisdiction in which such Lender Party or any such Applicable
Lending Office is located (all such non-excluded taxes, levies, costs and
charges being collectively called "Reimbursable Taxes" in this section). Such
indemnification shall be on an after-tax basis, taking into account any
additional such Reimbursable Taxes imposed on the amounts paid as indemnity.
(b) All payments on account of the principal of, and interest on, each
Lender Party's Loans and Note, and all other amounts payable by Borrower to any
Lender Party hereunder, shall be made in full without set-off or counterclaim
and shall be made free and clear of and without deductions or withholdings of
any nature by reason of any Reimbursable Taxes, all of which will be for the
account of Borrower. In the event of Borrower being compelled by Law to make any
such deduction or withholding from any payment to any Lender Party, Borrower
shall pay on the due date of such payment, by way of additional interest, such
additional amounts as are needed to cause the amount receivable by such Lender
Party after such deduction or withholding to equal the amount which would have
been receivable in the absence of such deduction or withholding. If Borrower
should make any deduction or withholding as aforesaid,
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Borrower shall within 60 days thereafter forward to such Lender Party an
official receipt or other official document evidencing payment of such deduction
or withholding.
(c) If Borrower is ever required to pay any Reimbursable Tax with
respect to any Eurodollar Loan, Borrower may elect, by giving to Agent and such
Lender Party not less than three Business Days' notice, to convert all (but not
less than all) of any such Eurodollar Loan into a Base Rate Loan, but such
election shall not diminish Borrower's obligation to pay all Reimbursable Taxes.
(d) Notwithstanding the foregoing provisions of this section, Borrower
shall be entitled, to the extent it is required to do so by Law, to deduct or
withhold (and not to make any indemnification or reimbursement for) income or
other similar taxes imposed by the United States of America (other than any
portion thereof attributable to a change in federal income tax Laws effected
after the date hereof) from interest, fees or other amounts payable hereunder
for the account of any Lender Party, other than a Lender Party (i) who is a U.S.
person for Federal income tax purposes or (ii) who has the Prescribed Forms on
file with Agent (with copies provided to Borrower) for the applicable year to
the extent deduction or withholding of such taxes is not required as a result of
the filing of such Prescribed Forms, provided that if Borrower shall so deduct
or withhold any such taxes, it shall provide a statement to Agent and such
Lender Party, setting forth the amount of such taxes so deducted or withheld,
the applicable rate and any other information or documentation which such Lender
Party may reasonably request for assisting such Lender Party to obtain any
allowable credits or deductions for the taxes so deducted or withheld in the
jurisdiction or jurisdictions in which such Lender Party is subject to tax. As
used in this section, "Prescribed Forms" means such duly executed forms or
statements, and in such number of copies, which may, from time to time, be
prescribed by Law and which, pursuant to applicable provisions of (x) an income
tax treaty between the United States and the country of residence of the Lender
Party providing the forms or statements, (y) the Internal Revenue Code, or (z)
any applicable rules or regulations thereunder, permit Borrower to make payments
hereunder for the account of such Lender Party free of such deduction or
withholding of income or similar taxes.
Section 3.7. Change of Applicable Lending Office. Each Lender Party
agrees that, upon the occurrence of any event giving rise to the operation of
Sections 3.2 through 3.6 with respect to such Lender Party, it will, if
requested by Borrower, use reasonable efforts (subject to overall policy
considerations of such Lender Party) to designate another Applicable Lending
Office, provided that such designation is made on such terms that such Lender
Party and its Applicable Lending Office suffer no economic, legal or regulatory
disadvantage, with the object of avoiding the consequence of the event giving
rise to the operation of any such section. Nothing in this section shall affect
or postpone any of the obligations of Borrower or the rights of any Lender Party
provided in Sections 3.2 through 3.6.
Section 3.8. Replacement of Lenders. If any Lender Party seeks
reimbursement for increased costs under Sections 3.2 through 3.6, then within
ninety days thereafter -- provided no Event of Default then exists -- Borrower
shall have the right (unless such Lender Party withdraws its request for
additional compensation) to replace such Lender Party by requiring
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such Lender Party to assign its Loans and Notes and its commitments hereunder to
an Eligible Transferee reasonably acceptable to Agent and to Borrower, provided
that: (a) all Obligations of Borrower owing to such Lender Party being replaced
(including such increased costs, but excluding principal and accrued interest on
the Notes being assigned) shall be paid in full to such Lender Party
concurrently with such assignment, and (b) the replacement Eligible Transferee
shall purchase the Note being assigned by paying to such Lender Party at a price
equal to the principal amount thereof plus accrued and unpaid interest thereon.
In connection with any such assignment Borrower, Agent, such Lender Party and
the replacement Eligible Transferee shall otherwise comply with Section 10.5.
Notwithstanding the foregoing rights of Borrower under this section, however,
Borrower may not replace any Lender Party which seeks reimbursement for
increased costs under Section 3.2 through 3.6 unless Borrower is at the same
time replacing all Lender Parties which are then seeking such compensation.
ARTICLE IV - Conditions Precedent to Lending
Section 4.1. Documents to be Delivered. No Lender has any obligation to
make its first Loan, and LC Issuer has no obligation to issue the first Letter
of Credit, unless Agent shall have received all of the following, at Agent's
office in New York, New York, duly executed and delivered and in form, substance
and date satisfactory to Agent:
(a) This Agreement and any other documents that Lenders are to execute
in connection herewith.
(b) Each Note.
(c) Each Security Document listed in the Security Schedule or required
by Agent pursuant to 6.14.
(d) Certain certificates of Borrower including:
(i) An "Omnibus Certificate" of the Secretary and of the
Chairman of the Board or President of Borrower, which shall contain the
names and signatures of the officers of Borrower authorized to execute
Loan Documents and which shall certify to the truth, correctness and
completeness of the following exhibits attached thereto: (1) a copy of
resolutions duly adopted by the Board of Directors of Borrower and in
full force and effect at the time this Agreement is entered into,
authorizing the execution of this Agreement and the other Loan
Documents delivered or to be delivered in connection herewith and the
consummation of the transactions contemplated herein and therein, (2) a
copy of the charter documents of Borrower and all amendments thereto,
certified by the appropriate official of Borrower's state of
organization, and (3) a copy of any bylaws of Borrower; and
(ii) A "Compliance Certificate" of the Chairman of the Board
or President and of the chief financial officer of Borrower, of even
date with such Loan or such Letter of
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Credit, in which such officers certify to the satisfaction of the
conditions set out in Subsections (a), (b), (c) and (d) of Section 4.3.
(e) certificate (or certificates) of the due formation, valid existence
and good standing of Borrower in its state of organization, issued by the
appropriate authorities of such jurisdiction, and certificates of Borrower's
good standing and due qualification to do business, issued by appropriate
officials in any states in which Borrower owns property subject to Security
Documents.
(f) Documents similar to those specified in subsections (d)(i) and (e)
of this section with respect to each Guarantor and the execution by it of its
guaranty of Borrower's Obligations.
(g) A favorable opinion of Messrs. Andrews & Kurth, L.L.P., counsel for
Restricted Persons, substantially in the form set forth in Exhibit E [opinions
of local counsel to be determined].
(h) The Initial Financial Statements.
(i) Certificates or binders evidencing Restricted Persons' insurance in
effect on the date hereof.
(j) Initial Engineering Reports.
(k) Evidence of the commitment, facility, agency and other fees
required to be paid to any Lender pursuant to any Loan Documents or any
commitment agreement heretofore entered into.
(l) Revolving Credit Lenders shall have received their pro-rata share
of a cash payment in the aggregate amount of $40,000,000 in partial payment of
the Existing Obligations.
(m) The Lenders shall have received (a) interest (at the non-default
rate) and fees which are due and owing to them, including, without limitation,
interest and fees which have accrued since the date of filing of the bankruptcy
petition by the Borrower and (b) payment of all costs, expenses, or
disbursements incurred by each Lender since such date in connection with the
outstanding Existing Obligations, the bankruptcy of Borrower, and the
Reorganization Plan, including, without limitation, reasonable fees of
attorneys, accountants, experts and advisors.
(n) Evidence showing that the use of the proceeds is as described under
Section 2.5, which evidence shall be, in form and substance satisfactory to the
Lenders.
Section 4.2. Approval and Closing of Reorganization and Additional
Conditions Precedent to Effectiveness. This Agreement shall not become effective
until Borrower shall have consummated each transaction contemplated as a
condition to effectiveness of the Reorganization Plan, in form and substance
satisfactory to Agent and each Reorganization Document has been approved by
Agent. Borrower, for itself and on behalf of any other
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Restricted Person, hereby acknowledges and agrees that (i) the consummation of
the transactions contemplated under this Agreement and the Reorganization
Documents are intended to be simultaneous for all intents and purposes, and (ii)
each Restricted Person shall be deemed to have executed and delivered each Loan
Document as set forth in Section 4.1 above, including without limitation each
Security Document, immediately prior to or simultaneously with the making of the
Loans hereunder.
Section 4.3. Additional Conditions Precedent. No Lender has any
obligation to make any Loan (including its first), and LC Issuer has no
obligation to issue any Letter of Credit (including its first), unless the
following conditions precedent have been satisfied unless waived by each
Revolving Credit Lender ( or all Lenders in the case of the first Loan):
(a) All representations and warranties made by any Restricted Person in
any Loan Document shall be true on and as of the date of such Loan or the date
of issuance of such Letter of Credit (except to the extent that the facts upon
which such representations are based have been changed by the extension of
credit hereunder) as if such representations and warranties had been made as of
the date of such Loan or the date of issuance of such Letter of Credit.
(b) No Default shall exist at the date of such Loan or the date of
issuance of such Letter of Credit.
(c) No Material Adverse Change shall have occurred since the date of
the Initial Financial Statements.
(d) Each Restricted Person shall have performed and complied with all
agreements and conditions required in the Loan Documents to be performed or
complied with by it on or prior to the date of such Loan or the date of issuance
of such Letter of Credit.
(e) The making of such Loan or the issuance of such Letter of Credit
shall not be prohibited by any Law and shall not subject any Lender or any LC
Issuer to any penalty or other onerous condition under or pursuant to any such
Law.
(f) Agent shall have received all documents and instruments which Agent
has then reasonably requested, in addition to those described in Section 4.1
(including opinions of legal counsel for Restricted Persons and Agent; corporate
documents and records; documents evidencing governmental authorizations,
consents, approvals, licenses and exemptions; and certificates of public
officials and of officers and representatives of Borrower and other Persons), as
to (i) the accuracy and validity of or compliance with all representations,
warranties and covenants made by any Restricted Person in this Agreement and the
other Loan Documents, (ii) the satisfaction of all conditions contained herein
or therein, and (iii) all other matters pertaining hereto and thereto. All such
additional documents and instruments shall be reasonably satisfactory to Agent
in form, substance and date.
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(g) In the case of any Loan advanced in connection with any acquisition
involving an amount in excess of $10,000,000, Borrower shall have complied with
the provisions of Section 6.14 with respect to such acquisition
contemporaneously with the funding of such Loan.
ARTICLE V - Representations and Warranties
To confirm each Lender's understanding concerning Restricted Persons
and Restricted Persons' businesses, properties and obligations and to induce
each Lender to enter into this Agreement and to extend credit hereunder,
Borrower represents and warrants to each Lender that:
Section 5.1. No Default. No event has occurred and is continuing which
constitutes a Default.
Section 5.2. Organization and Good Standing. Each Restricted Person is
duly organized, validly existing and in good standing under the Laws of its
jurisdiction of organization, having all powers required to carry on its
business and enter into and carry out the transactions contemplated hereby. Each
Restricted Person is duly qualified, in good standing, and authorized to do
business in all other jurisdictions within the United States wherein the
character of the properties owned or held by it or the nature of the business
transacted by it makes such qualification necessary, except where the failure to
do so could not cause a Material Adverse Change. Each Restricted Person has
taken all actions and procedures customarily taken in order to enter, for the
purpose of conducting business or owning property, each jurisdiction outside the
United States wherein the character of the properties owned or held by it or the
nature of the business transacted by it makes such actions and procedures
desirable, except where the failure to do so could not cause a Material Adverse
Change.
Section 5.3. Authorization. Each Restricted Person has duly taken all
action necessary to authorize the execution and delivery by it of the Loan
Documents to which it is a party and to authorize the consummation of the
transactions contemplated thereby and the performance of its obligations
thereunder. Borrower is duly authorized to borrow funds hereunder.
Section 5.4. No Conflicts or Consents. The execution and delivery by
the various Restricted Persons of the Loan Documents to which each is a party,
the performance by each of its obligations under such Loan Documents, and the
consummation of the transactions contemplated by the various Loan Documents, do
not and will not (a) conflict with any provision of (i) any Law, (ii) the
organizational documents of any Restricted Person, or (iii) any agreement,
judgment, license, order or permit applicable to or binding upon any Restricted
Person, (b) result in the acceleration of any Indebtedness owed by any
Restricted Person, or (c) result in or require the creation of any Lien upon any
assets or properties of any Restricted Person except as expressly contemplated
or permitted in the Loan Documents. Except as expressly contemplated in the Loan
Documents no consent, approval, authorization or order of, and no notice to or
filing with, any Tribunal or third party is required in connection with the
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execution, delivery or performance by any Restricted Person of any Loan Document
or to consummate any transactions contemplated by the Loan Documents.
Section 5.5. Enforceable Obligations. This Agreement is, and the other
Loan Documents when duly executed and delivered will be, legal, valid and
binding obligations of each Restricted Person which is a party hereto or
thereto, enforceable in accordance with their terms except as such enforcement
may be limited by bankruptcy, insolvency or similar Laws of general application
relating to the enforcement of creditors' rights.
Section 5.6. Initial Financial Statements. Borrower has heretofore
delivered to Agent for distribution to each Lender true, correct and complete
copies of the Initial Financial Statements. The Initial Financial Statements
fairly present Borrower's Consolidated financial position at the respective
dates thereof and the Consolidated results of Borrower's operations and
Borrower's Consolidated cash flows for the respective periods thereof after
giving effect to the Reorganization and the other adjustments which are fully
reflected in the footnotes to the Initial Financial Statements. Since the date
of the annual Initial Financial Statements no Material Adverse Change has
occurred, except as reflected in the Disclosure Schedule. All Initial Financial
Statements were prepared in accordance with GAAP (except to the extent that such
matters not properly contained in footnotes to the Initial Financial Statements
are adequately disclosed in the Disclosure Schedule or otherwise disclosed in
writing to Lenders).
Section 5.7. Other Obligations and Restrictions. No Restricted Person
has any outstanding Liabilities of any kind (including contingent obligations,
tax assessments, and unusual forward or long-term commitments) which are, in the
aggregate, material to Borrower or material with respect to Borrower's
Consolidated financial condition and not shown in the Initial Financial
Statements or disclosed in the Disclosure Schedule or a Disclosure Report.
Except as shown in the Initial Financial Statements or disclosed in the
Disclosure Schedule or a Disclosure Report, no Restricted Person is subject to
or restricted by any franchise, contract, deed, charter restriction, or other
instrument or restriction which could cause a Material Adverse Change.
Section 5.8. Full Disclosure. No certificate, statement or other
information delivered herewith or heretofore by any Restricted Person to any
Lender in connection with the negotiation of this Agreement or in connection
with any transaction contemplated hereby contains any untrue statement of a
material fact or omits to state any material fact known to any Restricted Person
(other than industry-wide risks normally associated with the types of businesses
conducted by Restricted Persons) necessary to make the statements contained
herein or therein not misleading as of the date made or deemed made. There is no
material fact known to any Restricted Person (other than industry-wide risks
normally associated with the types of businesses conducted by Restricted
Persons) that has not been disclosed in the [Final Disclosure Statement] which
could cause a Material Adverse Change. There are no statements or conclusions in
any Engineering Report which are based upon or include misleading materially
information or fail to take into account material information regarding the
matters reported therein, it being understood that each Engineering Report is
necessarily based upon professional opinions, estimates and projections and that
Borrower does not warrant that such opinions, estimates and projections will
ultimately prove to have been accurate. Borrower has heretofore
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delivered to Agent for distribution to each Lender true, correct and complete
copies of the Initial Engineering Report.
Section 5.9. Litigation. Except as disclosed in the Initial Financial
Statements or in the Disclosure Schedule or a Disclosure Report: (a) there are
no actions, suits or legal, equitable, arbitrative or administrative proceedings
pending, or to the knowledge of any Restricted Person threatened, against any
Restricted Person before any Tribunal which could cause a Material Adverse
Change, and (b) there are no outstanding judgments, injunctions, writs, rulings
or orders by any such Tribunal against any Restricted Person or any Restricted
Person's stockholders, partners, directors or officers which could cause a
Material Adverse Change.
Section 5.10. Labor Disputes and Acts of God. Except as disclosed in
the Disclosure Schedule or a Disclosure Report, neither the business nor the
properties of any Restricted Person has been affected by any fire, explosion,
accident, strike, lockout or other labor dispute, drought, storm, hail,
earthquake, embargo, act of God or of the public enemy or other casualty
(whether or not covered by insurance), which could cause a Material Adverse
Change.
Section 5.11. ERISA Plans and Liabilities. All currently existing ERISA
Plans are listed in the Disclosure Schedule or a Disclosure Report. Except as
disclosed in the Initial Financial Statements or in the Disclosure Schedule or a
Disclosure Report, no Termination Event has occurred with respect to any ERISA
Plan and all ERISA Affiliates are in compliance with ERISA in all material
respects. No ERISA Affiliate is required to contribute to, or has any other
absolute or contingent liability in respect of, any "multiemployer plan" as
defined in Section 4001 of ERISA. Except as set forth in the Disclosure Schedule
or a Disclosure Report: (a) no "accumulated funding deficiency" (as defined in
Section 412(a) of the Internal Revenue Code) exists with respect to any ERISA
Plan, whether or not waived by the Secretary of the Treasury or his delegate,
and (b) the current value of each ERISA Plan's benefits does not exceed the
current value of such ERISA Plan's assets available for the payment of such
benefits by more than $500,000.
Section 5.12. Environmental and Other Laws. As used in this section:
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, "CERCLIS" means the Comprehensive
Environmental Response, Compensation and Liability Information System List of
the Environmental Protection Agency, and "Release" has the meaning given such
term in 42 U.S.C. Section 9601(22). Except as set forth in the Disclosure
Schedule or a Disclosure Report:
(a) Restricted Persons are conducting their businesses in compliance
with all applicable Laws, including Environmental Laws, and have all permits,
licenses and authorizations required in connection with the conduct of their
businesses, except to the extent failure to have any such permit, license or
authorization could not cause a Material Adverse Change. Each Restricted Person
is in compliance in all material respects with the terms and conditions of all
such permits, licenses and authorizations, and is also in compliance in all
material respects with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in any applicable Environmental
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Law or in any regulation, code, plan, order, decree, judgment, injunction,
notice or demand letter issued, entered, promulgated or approved thereunder,
except to the extent failure to comply could not cause a Material Adverse
Change.
(b) No notice, notification, demand, request for information, citation,
summons or order has been issued, no complaint has been filed, no penalty has
been assessed, and to the best of Borrower's knowledge no investigation or
review is pending or threatened by any Tribunal or any other Person with respect
to (i) any alleged material generation, treatment, storage, recycling,
transportation, disposal, or Release of any Hazardous Materials, either by any
Restricted Person or on any property owned by any Restricted Person, (ii) any
material remedial action which might be needed to respond to any such alleged
generation, treatment, storage, recycling, transportation, disposal, or Release,
or (iii) any alleged material failure by any Restricted Person to have any
permit, license or authorization required in connection with the conduct of its
business or with respect to any such generation, treatment, storage, recycling,
transportation, disposal, or Release.
(c) No Restricted Person otherwise has any known material contingent
liability in connection with any alleged generation, treatment, storage,
recycling, transportation, disposal, or Release of any Hazardous Materials.
(d) To the best of Restricted Persons' knowledge after reasonably
prudent inquiry, no Restricted Person has handled any Hazardous Materials, other
than as a generator, on any properties now or previously owned or leased by any
Restricted Person to an extent that such handling has caused, or could cause, a
Material Adverse Change; and to the best of Restricted Persons' knowledge after
reasonably prudent inquiry:
(i) no PCBs are or have been present at any properties now or
previously owned or leased by any Restricted Person to an extent that
such presence has caused, or could cause, a Material Adverse Change;
(ii) no asbestos is or has been present at any properties now
or previously owned or leased by any Restricted Person to an extent
that such presence has caused, or could cause, a Material Adverse
Change;
(iii) there are no underground storage tanks for Hazardous
Materials, active or abandoned, at any properties now or previously
owned or leased by any Restricted Person;
(iv) no Hazardous Materials have been Released, in a
reportable quantity, where such a quantity has been established by
statute, ordinance, rule, regulation or order, at, on or under any
properties now or previously owned or leased by any Restricted Person
to an extent that such presence has caused, or could cause, a Material
Adverse Change;
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(v) no Hazardous Materials have been otherwise Released at, on
or under any properties now or previously owned or leased by any
Restricted Person to an extent that such release has caused, or could
cause, a Material Adverse Change.
(e) No Restricted Person has transported or arranged for the
transportation of any Hazardous Material to any location which is listed on the
National Priorities List under CERCLA, listed for possible inclusion on the
National Priorities List by the Environmental Protection Agency in CERCLIS, or
listed on any similar state list or which is the subject of federal, state or
local enforcement actions or other investigations which may lead to claims
against any Restricted Person for clean-up costs, remedial work, damages to
natural resources or for personal injury claims, including, but not limited to,
claims under CERCLA to an extent that such transportation or arrangement has
caused, or could cause, a Material Adverse Change.
(f) No Hazardous Material generated by any Restricted Person has been
recycled, treated, stored, disposed of or released by any Restricted Person at
any location other than those listed in Disclosure Schedule to an extent that
such recycling treatment, storage, disposal or release has caused, or could
cause, a Material Adverse Change.
(g) No oral or written notification of a Release of a Hazardous
Material has been filed by or on behalf of any Restricted Person (and to the
best knowledge of Borrower, no such notification has been filed with respect to
any Restricted Person by any other Person), and no property now or previously
owned or leased by any Restricted Person is listed or proposed for listing on
the National Priority list promulgated pursuant to CERCLA, in CERCLIS, or on any
similar state list of sites requiring investigation or clean-up to an extent
that such filing or listing has caused, or could cause, a Material Adverse
Change.
(h) There are no Liens arising under or pursuant to any Environmental
Laws on any of the real properties or properties owned or leased by any
Restricted Person, and no government actions have been taken or are in process
which could subject any of such properties to such Liens; nor would any
Restricted Person be required to place any notice or restriction relating to the
presence of Hazardous Materials at any properties owned by it in any deed to
such properties to an extent that such Liens, actions, notices, or restrictions
have caused, or could cause, a Material Adverse Change.
(i) There have been no environmental investigations, studies, audits,
tests, reviews or other analyses conducted by or which are in the possession of
any Restricted Person in relation to any properties or facility now or
previously owned or leased by any Restricted Person which have not been made
available to Agent to an extent that such investigations, studies, audits,
tests, reviews or other analyses have caused, or could cause, a Material Adverse
Change.
Section 5.13. Names and Places of Business. No Restricted Person has,
during the preceding five years, had, been known by, or used any other trade or
fictitious name, except as disclosed in the Disclosure Schedule. Except as
otherwise indicated in the Disclosure Schedule or a Disclosure Report, the chief
executive office and principal place of business of each Restricted Person are
(and for the preceding five years have been) located at the address of
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Borrower set out on the signature pages hereto. Except as indicated in the
Disclosure Schedule or a Disclosure Report, no Restricted Person has any other
office or place of business.
Section 5.14. Borrower's Subsidiaries. Borrower does not presently have
any Subsidiary or own any stock in any other corporation or association except
those listed in the Disclosure Schedule or a Disclosure Report. Neither Borrower
nor any Restricted Person is a member of any general or limited partnership,
joint venture or association of any type whatsoever except those listed in the
Disclosure Schedule or a Disclosure Report and associations, joint ventures or
other relationships (a) which are established pursuant to a standard form
operating agreement or similar agreement or which are partnerships for purposes
of federal income taxation only, (b) which are not corporations or partnerships
(or subject to the Uniform Partnership Act) under applicable state Law, and (c)
whose businesses are limited to the exploration, development and operation of
oil, gas or mineral properties and interests owned directly by the parties in
such associations, joint ventures or relationships. Except as otherwise revealed
in a Disclosure Report, Borrower owns, directly or indirectly, the equity
interest in each of its Subsidiaries which is indicated in the Disclosure
Schedule.
Section 5.15. Title to Properties, Licenses. Each Restricted Person has
good and defensible title to all of its material properties and assets, free and
clear of all Liens other than Permitted Liens and of all impediments to the use
of such properties and assets in such Restricted Person's business, except that
no representation or warranty is made with respect to any oil, gas or mineral
property or interest to which no proved oil or gas reserves are properly
attributed. Other than Permitted Liens, each Restricted Person will respectively
own in the aggregate, in all material respects, the net interests in production
attributable to the wells and units evaluated in the Initial Reserve Reports.
The ownership of such Properties shall not in the aggregate in any material
respect obligate such Restricted Person to bear the costs and expenses relating
to the maintenance, development and operations of such Properties in an amount
materially in excess of the working interest of such Properties set forth in the
Initial Engineering Reports. Each Restricted Person has paid all royalties
payable under the oil and gas leases to which it is operator, except those
contested in accordance with the terms of the applicable joint operating
agreement or otherwise contested in good faith by appropriate proceedings. Upon
delivery of each Engineering Report furnished to Lenders pursuant to Section
6.2(h), the statements made in the preceding sentences of this section shall be
true with respect to such Engineering Reports. All information contained in the
Initial Engineering Reports is true and correct in all material respects as of
the date thereof and as of the date of the first Loan hereunder. Each Restricted
Person possesses all licenses, permits, franchises, patents, copyrights,
trademarks and trade names, and other intellectual property (or otherwise
possesses the right to use such intellectual property without violation of the
rights of any other Person) which are necessary to carry out its business as
presently conducted and as presently proposed to be conducted hereafter, and no
Restricted Person is in violation in any material respect of the terms under
which it possesses such intellectual property or the right to use such
intellectual property, except where the failure to do so would not cause a
Material Adverse Change.
Section 5.16. Government Regulation. Neither Borrower nor any other
Restricted Person owing Obligations is subject to regulation under the Public
Utility Holding Company Act
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of 1935, the Federal Power Act, the Investment Company Act of 1940 (as any of
the preceding acts have been amended) or any other Law which regulates the
incurring by such Person of Indebtedness, including Laws relating to common
contract carriers or the sale of electricity, gas, steam, water or other public
utility services.
Section 5.17. Insider. No Restricted Person, nor, to its knowledge, any
Person having "control" (as that term is defined in 12 U.S.C. Section 375b(9) or
in regulations promulgated pursuant thereto) of any Restricted Person, is a
"director" or an "executive officer" or "principal shareholder" (as those terms
are defined in 12 U.S.C. Section 375b(8) or (9) or in regulations promulgated
pursuant thereto) of any Lender, of a bank holding company of which any Lender
is a Subsidiary or of any Subsidiary of a bank holding company of which any
Lender is a Subsidiary.
Section 5.18. Solvency. Upon giving effect to the issuance of the
Notes, the execution of the Loan Documents by Borrower and the consummation of
the transactions contemplated hereby, and the Reorganization Plan becoming
effective, Borrower will be solvent (as such term is used in applicable
bankruptcy, liquidation, receivership, insolvency or similar Laws).
Section 5.19. Officers, Directors and Shareholders. The officers and
directors of Borrower are those persons disclosed in the [Final Disclosure
Statement].
ARTICLE VI - Affirmative Covenants of Borrower
To conform with the terms and conditions under which each Lender is
willing to have credit outstanding to Borrower, and to induce each Lender to
enter into this Agreement and extend credit hereunder, Borrower warrants,
covenants and agrees that until the full and final payment of the Obligations
and the termination of this Agreement, unless Majority Lenders have previously
agreed otherwise:
Section 6.1. Payment and Performance. Borrower will pay all amounts due
under the Loan Documents in accordance with the terms thereof and will observe,
perform and comply with every covenant, term and condition expressed or implied
in the Loan Documents. Borrower will cause each other Restricted Person to
observe, perform and comply with every such term, covenant and condition in any
Loan Document.
Section 6.2. Books, Financial Statements and Reports. Each Restricted
Person will at all times maintain full and accurate books of account and
records. Borrower will maintain and will cause its Subsidiaries to maintain a
standard system of accounting, will maintain its Fiscal Year, and will furnish
the following statements and reports to each Lender Party at Borrower's expense:
(a) As soon as available, and in any event within ninety (90) days
after the end of each Fiscal Year, complete Consolidated and consolidating
financial statements of Borrower together with all notes thereto, prepared in
reasonable detail in accordance with GAAP, together
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with an unqualified opinion, based on an audit using generally accepted auditing
standards, by independent certified public accountants selected by Borrower and
reasonably acceptable to Majority Lenders, stating that such Consolidated
financial statements have been so prepared. These financial statements shall
contain a Consolidated and consolidating balance sheet as of the end of such
Fiscal Year and Consolidated and consolidating statements of earnings, of cash
flows, and of changes in owners' equity for such Fiscal Year, each setting forth
in comparative form the corresponding figures for the preceding Fiscal Year. In
addition, within ninety (90) days after the end of each Fiscal Year Borrower
will furnish a report signed by such accountants (i) stating that they have read
this Agreement, (ii) containing calculations showing compliance (or
non-compliance) at the end of such Fiscal Year with the requirements of Sections
7.11 through 7.14, and (iii) further stating that in making their examination
and reporting on the Consolidated financial statements described above they did
not conclude that any Default existed at the end of such Fiscal Year or at the
time of their report, or, if they did conclude that a Default existed,
specifying its nature and period of existence.
(b) As soon as available, and in any event within forty-five (45) days
after the end of each of the first three Fiscal Quarters of each Fiscal Year,
Borrower's Consolidated and consolidating balance sheet as of the end of such
Fiscal Quarter and Consolidated and consolidating statements of Borrower's
earnings and cash flows for the period from the beginning of the then current
Fiscal Year to the end of such Fiscal Quarter, all in reasonable detail and
prepared in accordance with GAAP, subject to changes resulting from normal
year-end adjustments. In addition Borrower will, together with each such set of
financial statements and each set of financial statements furnished under
subsection (a) of this section, furnish a certificate in the form of Exhibit D
signed by the chief financial officer of Borrower stating that such financial
statements are accurate and complete (subject to normal year-end adjustments),
stating that he has reviewed the Loan Documents, containing calculations showing
compliance (or non-compliance) at the end of such Fiscal Quarter with the
requirements of Sections 7.11 through 7.14 and stating that no Default exists at
the end of such Fiscal Quarter or at the time of such certificate or specifying
the nature and period of existence of any such Default.
(c) As soon as available, and in any event within forty-five (45) days
after the end of each calendar month, Borrower's Consolidated and consolidating
balance sheet as of the end of such calendar month and Consolidated and
consolidating statements of Borrower's earnings and cash flows for the period
from the beginning of the then current Fiscal Year to the end of such calendar
month, all in reasonable detail and prepared in accordance with GAAP, subject to
changes resulting from normal year-end adjustments with management discussion
and analysis. Borrower will furnish a monthly reconciliation of actual drilling
costs and results compared against projected drilling costs and results and a
year-to-date reconciliation of actual drilling costs and results compared
against projected drilling costs and results with the financial statements
furnished under this section. Borrower will also furnish a monthly
reconciliation of the information contained in the financial statements
furnished under this section compared against the monthly projections and
budgets furnished pursuant to Section 6.2(e) and a year-to-date reconciliation
of information contained in the financial statements furnished under this
section compared against year-to-date projections and budgets furnished pursuant
to Section
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6.2(e). In addition, Borrower will, together with each such set of financial
statements and each set of financial statements furnished under subsection (a)
of this section, furnish a certificate in the form of Exhibit D signed by the
chief financial officer of Borrower stating that such financial statements are
accurate and complete (subject to normal quarter-end and year-end adjustments),
stating that he has reviewed the Loan Documents, containing calculations showing
compliance (or non-compliance) at the end of such calendar month with the
requirements of Sections 7.11 through 7.14 and stating that no Default exists at
the end of such calendar month or at the time of such certificate or specifying
the nature and period of existence of any such Default. All of the foregoing
information shall be in form and scope reasonably satisfactory to Majority
Lenders.
(d) Promptly upon their becoming available, copies of all financial
statements, reports, notices and proxy statements sent by any Restricted Person
to its stockholders and all registration statements, periodic reports and other
statements and schedules filed by any Restricted Person with any securities
exchange, the Securities and Exchange Commission or any similar governmental
authority.
(e) As soon as available, and in any event within sixty (60) days after
the end of each Fiscal Year, a business and financial plan for Borrower (in form
reasonably satisfactory to Agent), prepared by a senior financial officer
thereof, setting forth for the next fiscal year, monthly financial projections
and budgets for Borrower, and thereafter annual financial projections and
budgets during the Revolving Credit Commitment Period. In addition Borrower
will, together with such business and financial plan furnish a drilling program
plan setting forth for the next Fiscal Year monthly drilling projections, in
form, scope and detail satisfactory to Agent.
(f) As soon as available, and in any event within thirty (30) days
after the end of each Fiscal Year, Borrower shall deliver to Agent an
environmental compliance certificate signed by the president or chief executive
officer of Borrower in the form attached hereto as Exhibit G. Further, if
requested by Agent, Borrower shall permit and cooperate with an environmental
and safety review made in connection with the operations of Borrower's oil and
gas properties one time during each Fiscal Year beginning with the Fiscal Year
1999, by Pilko & Associates, Inc. or other consultants selected by Agent which
review shall, if requested by Agent, be arranged and supervised by advisors to
Agent, all at Borrower's cost and expense. The consultant shall render a verbal
or written report, as specified by Agent, based upon such review at Borrower's
cost and expense with such report rendered by September 30, 2000.
(g) Concurrently with the annual renewal of Borrower's insurance
policies, Borrower shall, if requested by Agent in writing, cause a certificate
or report to be issued by Agent's professional insurance consultants or other
insurance consultants satisfactory to Agent certifying that Borrower's insurance
for the next succeeding year after such renewal (or for such longer period for
which such insurance is in effect) complies with the provisions of this
Agreement and the Security Documents.
(h) By each Evaluation Date (other than the regular September 1
Evaluation Date) an Engineering Report prepared by petroleum engineers who are
employees of Borrower and
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audited by the Independent Petroleum Engineers, concerning all oil and gas
properties and interests owned by any Restricted Person which are located in or
offshore of the United States and which have attributable to them proved oil or
gas reserves. This report shall reflect reserve information as of a date no
earlier than 60 days prior to the date of such report. This report shall be
satisfactory to Agent, shall contain sufficient information to enable Borrower
to meet the reporting requirements concerning oil and gas reserves contained in
Regulations S-K and S-X promulgated by the Securities and Exchange Commission,
shall take into account any "over-produced" status under gas balancing
arrangements, and shall contain information and analysis comparable in scope to
that contained in the Initial Engineering Report. This report shall distinguish
(or shall be delivered together with a certificate from an appropriate officer
of Borrower which distinguishes) those properties treated in the report which
are Collateral from those properties treated in the report which are not
Collateral.
(i) By the September 1 Evaluation Date, an Engineering Report prepared
as of the preceding July 1 by petroleum engineers who are employees of Borrower
together with an accompanying report on property sales, property purchases and
changes in categories, both in the same form and scope as the reports in (h)
above.
(j) By January [15] and July [15] of each year, all production data,
well logs, core samples and other data that the Lenders' Independent Engineer
may request regarding any oil and gas property which will be evaluated in the
Engineering Report for the next Evaluation Date but which was not evaluated in
the Engineering Report for the immediately preceding Evaluation Date.
(k) As soon as available, and in any event within thirty (30) days
after the end of each month, a report describing by region the gross volume of
production and sales attributable to production during such month from the
properties described in subsections (h) and (i) above and describing the related
severance taxes, other taxes, and leasehold operating expenses and capital costs
attributable thereto and incurred during such month.
(l) As soon as available, and in any event within forty-five days after
the end of each June and December, a list, by name and address, of those Persons
who have purchased production during such 6-month period from the Mortgaged
Properties, giving each such purchaser's owner number for Borrower and each
other grantor of a Lien on Mortgaged Properties and each such purchaser's
property number for each such Mortgaged Property.
Section 6.3. Other Information and Inspections. Each Restricted Person
will furnish to each Lender any information which Agent may from time to time
reasonably request in writing concerning any covenant, provision or condition of
the Loan Documents or any matter in connection with Restricted Persons'
businesses and operations. Each Restricted Person will permit representatives
appointed by Agent (including independent accountants, auditors, agents,
attorneys, appraisers and any other Persons) to visit and inspect during normal
business hours any of such Restricted Person's property, including its books of
account, other books and records, and any facilities or other business assets,
and to make extra copies therefrom and photocopies and photographs thereof, and
to write down and record any information such
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representatives obtain, and each Restricted Person shall permit Agent or its
representatives to investigate and verify the accuracy of the information
furnished to Agent or any Lender in connection with the Loan Documents and to
discuss all such matters with its officers, employees and representatives.
Section 6.4. Notice of Material Events and Change of Address. Borrower
will promptly notify each Lender in writing, stating that such notice is being
given pursuant to this Agreement, of:
(a) occurrence of any Material Adverse Change,
(b) the occurrence of any Default of which Borrower has knowledge,
(c) the acceleration of the maturity of any Indebtedness owed by any
Restricted Person or of any default by any Restricted Person under any
indenture, mortgage, agreement, contract or other instrument to which any of
them is a party or by which any of them or any of their properties is bound, if
such acceleration or default could cause a Material Adverse Change,
(d) the occurrence of any Termination Event,
(e) any claim of $1,000,000 or more (in the aggregate with other claims
pending), any notice of potential liability under any Environmental Laws which
might exceed such amount, or any other claim of $1,000,000 or more (in the
aggregate with other such liabilities and claims pending) asserted against any
Restricted Person or with respect to any Restricted Person's properties, and
(f) the filing of any suit or proceeding against any Restricted Person
in which an adverse decision could cause a Material Adverse Change.
Upon the occurrence of any of the foregoing Restricted Persons will take all
necessary or appropriate steps to remedy promptly any such Material Adverse
Change, Default, acceleration, default or Termination Event, to protect against
any such adverse claim, to defend any such suit or proceeding, and to resolve
all controversies on account of any of the foregoing. Borrower will also notify
Agent and Agent's counsel in writing at least twenty Business Days prior to the
date that any Restricted Person changes its name or the location of its chief
executive office or principal place of business or the place where it keeps its
books and records concerning the Collateral, furnishing with such notice any
necessary financing statement amendments or requesting Agent and its counsel to
prepare the same.
Section 6.5. Maintenance of Properties. Each Restricted Person will
maintain, preserve, protect, and keep all Collateral and all other property used
or useful in the conduct of its business in good condition and in compliance in
all material respects with all applicable Laws, and will from time to time make
all repairs, renewals and replacements needed to enable the business and
operations carried on in connection therewith to be promptly and advantageously
conducted at all times.
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Section 6.6. Maintenance of Existence and Qualifications. Each
Restricted Person will maintain and preserve its existence and its rights and
franchises in full force and effect and will qualify to do business in all
states or jurisdictions where required by applicable Law, except where the
failure so to qualify will not cause a Material Adverse Change.
Section 6.7. Payment of Trade Liabilities, Taxes, etc. Each Restricted
Person will (a) timely file all required tax returns; (b) timely pay all taxes,
assessments, and other governmental charges or levies imposed upon it or upon
its income, profits or property; (c) within one hundred twenty (120) days after
the incurrence thereof same becomes due pay all Liabilities owed by it on
ordinary trade terms to vendors, suppliers and other Persons providing goods and
services used by it in the ordinary course of its business; (d) pay and
discharge when due all other Liabilities now or hereafter owed by it; and (e)
maintain appropriate accruals and reserves for all of the foregoing in
accordance with GAAP. Each Restricted Person may, however, delay paying or
discharging any of the foregoing so long as it is in good faith contesting the
validity thereof by appropriate proceedings, provided that such contest does not
induce any danger of sale, forfeiture, or loss, and has set aside on its books
adequate reserves in accordance with GAAP.
Section 6.8. Insurance. Each Restricted Person shall at all times
maintain insurance for its property in accordance with the Insurance Schedule,
which insurance shall be by financially sound and reputable insurers. Borrower
will maintain the additional insurance coverage as described in the respective
Security Documents. Upon demand by Agent any insurance policies covering
Collateral shall be endorsed (a) to provide for payment of losses to Agent as
its interests may appear, (b) to provide that such policies may not be canceled
or reduced or affected in any material manner for any reason without 30 days
prior notice to Agent, (c) to provide for any other matters specified in any
applicable Security Document or which Agent may reasonably require; and (d) to
provide for insurance against fire, casualty and any other hazards normally
insured against, in the amount of the full value (less a reasonable deductible
not to exceed amounts customary in the industry for similarly situated
businesses and properties) of the property insured. Each Restricted Person shall
at all times maintain insurance against its liability for injury to persons or
property in accordance with the Insurance Schedule, which insurance shall be by
financially sound and reputable insurers. Without limiting the foregoing, each
Restricted Person shall at all time maintain liability insurance in accordance
with Insurance Schedule.
Section 6.9. Performance on Borrower's Behalf. If any Restricted Person
fails to pay any taxes, insurance premiums, expenses, attorneys' fees or other
amounts it is required to pay under any Loan Document, Agent may upon five (5)
days prior written notice to Borrower pay the same; provided, however, that if
Borrower is contesting any such amount in accordance with the terms of the Loan
Documents and gives Agent written notice thereof at least one (1) day prior to
the date contained in Agent's notice to Borrower on which Agent intends to pay
such amount, Agent will refrain from making such payment for so long as Borrower
is contesting such amount in accordance with the terms of the Loan Documents. If
any Restricted Person fails to pay any insurance premiums it is required to pay
under any Loan Document, Agent may pay the same. Notwithstanding the foregoing,
Agent may pay any taxes, expenses, attorneys' fees,
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premiums or other amounts required to be paid by any Restricted Person under any
Loan Document to prevent the attachment of any lien on any of such Restricted
Person's assets. Borrower shall immediately reimburse Agent for any such
payments and each amount paid by Agent shall constitute an Obligation owed
hereunder which is due and payable on the date such amount is paid by Agent.
Section 6.10. Interest. Borrower hereby promises to each Lender Party
to pay interest at the Default Rate on all Obligations (including Obligations to
pay fees or to reimburse or indemnify any Lender) which Borrower has in this
Agreement promised to pay to such Lender Party and which are not paid when due
or within the applicable period of grace, if any. Such interest shall accrue
from the date such Obligations become due until they are paid.
Section 6.11. Compliance with Agreements and Law. Each Restricted
Person will perform all material obligations it is required to perform under the
terms of each indenture, mortgage, deed of trust, security agreement, lease,
franchise, agreement, contract or other instrument or obligation to which it is
a party or by which it or any of its properties is bound. Each Restricted Person
will conduct its business and affairs in compliance in all material respects
with all Laws applicable thereto.
Section 6.12. Environmental Matters; Environmental Reviews.
(a) Each Restricted Person will comply in all material respects with
all Environmental Laws now or hereafter applicable to such Restricted Person, as
well as all contractual obligations and agreements with respect to environmental
remediation or other environmental matters, and shall obtain, at or prior to the
time required by applicable Environmental Laws, all environmental, health and
safety permits, licenses and other authorizations necessary for its operations
and will maintain such authorizations in full force and effect except to an
extent that the failure to do so would not cause a Material Adverse Change.
(b) will promptly furnish to Agent all written notices of violation,
orders, claims, citations, complaints, penalty assessments, suits or other
proceedings received by Borrower, or of which it has notice which involve or
could reasonably be expected to involve asserted damages in excess of $1,000,000
(in the aggregate with other such notices regarding matters pending), pending or
threatened against Borrower, by any governmental authority with respect to any
alleged violation of or non-compliance with any Environmental Laws or any
permits, licenses or authorizations in connection with its ownership or use of
its properties or the operation of its business.
(c) Borrower will promptly furnish to Agent all requests for
information, notices of claim, demand letters, and other notifications, received
by Borrower in connection with its ownership or use of its properties or the
conduct of its business, relating to potential responsibility with respect to
any investigation or clean-up of Hazardous Material at any location.
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(d) Borrower will comply with any recommendations made to Borrower
pursuant to the report rendered pursuant to Section 6.2(f) in a manner
consistent with a reasonable and prudent operator.
Section 6.13. Evidence of Compliance. Each Restricted Person will
furnish to each Lender at such Restricted Person's or Borrower's expense all
evidence which Agent from time to time reasonably requests in writing as to the
accuracy and validity of or compliance with all representations, warranties and
covenants made by any Restricted Person in the Loan Documents, the satisfaction
of all conditions contained therein, and all other matters pertaining thereto.
Section 6.14. Agreement to Deliver Security Documents. Borrower agrees
to deliver and to cause each other Restricted Person to deliver, to further
secure the Obligations whenever requested by Agent in its sole and absolute
discretion, deeds of trust, mortgages, chattel mortgages, security agreements,
financing statements and other Security Documents in form and substance
satisfactory to Agent for the purpose of granting, confirming, and perfecting
first and prior liens or security interests in any real or personal property now
owned or hereafter acquired by any Restricted Person. Without limiting the
foregoing, each Restricted Person shall deliver such Security Documents (i)
immediately upon consummation of an acquisition of assets involving an amount in
excess of $10,000,000 by such Restricted Person, covering such assets, (ii)
within 30 days after consummation of any other acquisition of assets by such
Restricted Person, covering such assets and (iii) within 30 days after the end
of any Fiscal Quarter in which such Restricted Person has completed any wells,
covering the properties related thereto (to the extent not theretofore covered
by Security Documents). Borrower also agrees to deliver, upon the request by
Agent, whenever Agent reasonably determines that a question exists with respect
to the ownership of or title to such properties or interests favorable title
opinions from legal counsel acceptable to Agent with respect to any Restricted
Person's properties and interests designated by Agent, based upon abstract or
record examinations to dates acceptable to Agent and (a) stating that such
Restricted Person has good and defensible title to such properties and
interests, free and clear of all Liens other than Permitted Liens, (b)
confirming that such properties and interests are subject to Security Documents
securing the Obligations that constitute and create legal, valid and duly
perfected first deed of trust or mortgage liens in such properties and interests
and first priority assignments of and security interests in the oil and gas
attributable to such properties and interests and the proceeds thereof, and (c)
covering such other matters as Agent may request. Agent is hereby authorized to
release any and all Liens pursuant to the Security Documents upon an asset which
is sold by Borrower as permitted under Section 7.5 or otherwise consented to by
Majority Lenders; provided, that Borrower shall have made any required payments
pursuant to Section 2.8 of this Agreement.
Section 6.15. Perfection and Protection of Security Interests and
Liens. Within 30 days of a written request by Agent, Borrower will from time to
time deliver, and will cause each other Restricted Person from time to time to
deliver, to Agent any financing statements, continuation statements, extension
agreements and other documents, properly completed and executed (and
acknowledged when required) by Restricted Persons in form and substance
satisfactory to Agent,
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which Agent requests for the purpose of perfecting, confirming, or protecting
any Liens or other rights in Collateral securing any Obligations.
Section 6.16. Bank Accounts; Offset. To secure the repayment of the
Obligations Borrower hereby grants to each Lender a security interest, a lien,
and a right of offset, each of which shall be in addition to all other
interests, liens, and rights of any Lender at common Law, under the Loan
Documents, or otherwise, and each of which shall be upon and against (a) any and
all moneys, securities or other property (and the proceeds therefrom) of
Borrower now or hereafter held or received by or in transit to any Lender from
or for the account of Borrower, whether for safekeeping, custody, pledge,
transmission, collection or otherwise, (b) any and all deposits (general or
special, time or demand, provisional or final) of Borrower whether or not with
any Lender, and (c) any other credits and claims of Borrower at any time
existing against any Lender, including claims under certificates of deposit. At
any time and from time to time after the occurrence of any Default, each Lender
is hereby authorized to foreclose upon, or to offset against the Obligations
then due and payable (in either case without notice to Borrower), any and all
items hereinabove referred to. The remedies of foreclosure and offset are
separate and cumulative, and either may be exercised independently of the other
without regard to procedures or restrictions applicable to the other.
Section 6.17. Guaranties of Borrower's Subsidiaries. Each Subsidiary of
Borrower now existing or created, acquired or coming into existence after the
date hereof shall, promptly upon request by Agent, execute and deliver to Agent
an absolute and unconditional guaranty of the timely repayment of the
Obligations and the due and punctual performance of the obligations of Borrower
hereunder, which guaranty shall be satisfactory to Agent in form and substance.
Each Subsidiary of Borrower existing on the date hereof shall duly execute and
deliver such a guaranty prior to the making of any Loan hereunder. Borrower will
cause each of such Subsidiaries to deliver to Agent, simultaneously with its
delivery of such a guaranty, written evidence satisfactory to Agent and its
counsel that such Subsidiary has taken all corporate or partnership action
necessary to duly approve and authorize its execution, delivery and performance
of such guaranty and any other documents which it is required to execute.
Section 6.18. Production Proceeds. Notwithstanding that, by the terms
of the various Security Documents, Restricted Persons are and will be assigning
to Agent and Lenders all of the "Production Proceeds" (as defined therein)
accruing to the property covered thereby, so long as no Event of Default has
occurred Restricted Persons may continue to receive from the purchasers of
production all such Production Proceeds, subject, however, to the Liens created
under the Security Documents, which Liens are hereby affirmed and ratified. Upon
the occurrence of an Event of Default, Agent and Lenders may exercise all rights
and remedies granted under the Security Documents, including the right to obtain
possession of all Production Proceeds then held by Restricted Persons or to
receive directly from the purchasers of production all other Production
Proceeds. In no case shall any failure, whether purposed or inadvertent, by
Agent or Lenders to collect directly any such Production Proceeds constitute in
any way a waiver, remission or release of any of their rights under the Security
Documents, nor shall any release of any Production Proceeds by Agent or Lenders
to Restricted Persons constitute a waiver,
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remission, or release of any other Production Proceeds or of any rights of Agent
or Lenders to collect other Production Proceeds thereafter.
ARTICLE VII - Negative Covenants of Borrower
To conform with the terms and conditions under which each Lender is
willing to have credit outstanding to Borrower, and to induce each Lender to
enter into this Agreement and make the Loans, Borrower warrants, covenants and
agrees that until the full and final payment of the Obligations and the
termination of this Agreement, unless Majority Lenders have previously agreed
otherwise:
Section 7.1. Indebtedness. No Restricted Person will in any manner owe
or be liable for Indebtedness except:
(a) the Obligations;
(b) any guaranty by a Restricted Person of Indebtedness of Borrower or
Indebtedness on which Borrower is the primary obligor;
(c) obligations under operating leases entered into in the ordinary
course of such Restricted Person's business in arm's length transactions at
competitive market rates under competitive terms and conditions in all respects;
(d) unsecured Indebtedness among Borrower and the Guarantors arising in
the ordinary course of business;
(e) Indebtedness arising under Hedging Contracts permitted under 7.3;
(f) Approved Debt (excluding any renewals or extensions thereof); and
(g) Permitted Subordinated Indebtedness.
Section 7.2. Limitation on Liens. Except for Permitted Liens, no
Restricted Person will create, assume or permit to exist any Lien upon any of
the properties or assets which it now owns or hereafter acquires.
Section 7.3. Hedging Contracts. No Restricted Person will be a party to
or in any manner be liable on any Hedging Contract, except:
(a) contracts entered into with the purpose and effect of fixing prices
on oil or gas expected to be produced by Restricted Persons, provided that at
all times: (i) no such contract fixes a price for a term of more than
twenty-four (24) months; (ii) the aggregate monthly production covered by all
such contracts (determined, in the case of contracts that are not settled on a
monthly basis, by a monthly proration acceptable to Agent) for any single month
does not in
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the aggregate exceed seventy-five percent (75%) of Restricted Persons' aggregate
Projected Oil and Gas Production anticipated to be sold in the ordinary course
of Restricted Persons' businesses for such month, (iii) no such contract
requires any Restricted Person to put up money, assets, letters of credit or
other security against the event of its nonperformance prior to actual default
by such Restricted Person in performing its obligations thereunder other than
deposits made by Borrower to satisfy minimum margin requirements in an aggregate
amount not to exceed $10,000,000 outstanding at any time, and (iv) each such
contract is with a counterparty or has a guarantor of the obligation of the
counterparty who (unless such counterparty is a Lender or one of its Affiliates)
at the time the contract is made has long-term obligations rated AA or Aa2 or
better, respectively, by either Rating Agency, and (v) promptly after entering
into such contract, if requested by Agent, but in any event on a monthly basis,
Borrower gives notice of such fact to Agent and all Lenders. As used in this
subsection, the term "Projected Oil and Gas Production" means the projected
production of oil or gas (measured by volume unit or BTU equivalent, not sales
price) for the term of the contracts or a particular month, as applicable, from
properties and interests owned by any Restricted Person which are located in or
offshore of the United States and which have attributable to them proved oil or
gas reserves, as such production is projected in the most recent report
delivered pursuant to Section 6.2(h) or (i), after deducting projected
production from any properties or interests sold or under contract for sale that
had been included in such report and after adding projected production from any
properties or interests that had not been reflected in such report but that are
reflected in a separate or supplemental reports meeting the requirements of such
Section 6.2(h) or (i) above and otherwise are satisfactory to Agent.
Notwithstanding the foregoing, in the event that the aggregate monthly
production covered by all contracts entered into with the purpose and effect of
fixing prices on oil and/or gas expected to be produced by Restricted Persons
(determined, in the case of contracts that are not settled on a monthly basis,
by a monthly proration acceptable to Agent) for a period of six consecutive
months equals, in the aggregate for such six month period, seventy-five percent
(75%) of the Restricted Persons' aggregate Projected Oil and Gas Production
anticipated to be sold in the ordinary course of Restricted Persons' businesses
during such six month period, Borrower will notify agent and each Lender in
writing of such fact at least fifteen (15) days prior to the beginning of such
six month period; and
(b) upon prior written notice to Agent and Lenders, contracts entered
into by a Restricted Person with the purpose and effect of fixing interest rates
on a principal amount of Indebtedness of such Restricted Person that is accruing
interest at a variable rate, provided that (i) the aggregate notional amount of
such contracts never exceeds seventy-five percent (75%) of the anticipated
outstanding principal balance of the Indebtedness to be hedged by such contracts
or an average of such principal balances calculated using a generally accepted
method of matching interest swap contracts to declining principal balances, (ii)
the floating rate index of each such contract generally matches the index used
to determine the floating rates of interest on the corresponding Indebtedness to
be hedged by such contract and (iii) each such contract is with a counterparty
or has a guarantor of the obligation of the counterparty who (unless such
counterparty is a Lender or one of its Affiliates) at the time the contract is
made has long-term obligations rated AA or Aa2 or better, respectively, by
either Rating Agency.
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Section 7.4. Limitation on Mergers, Issuances of Securities. No
Restricted Person will merge or consolidate with or into any other Person except
that any Subsidiary of Borrower may be merged into or consolidated with (a)
another Subsidiary of Borrower, so long as a Guarantor is the surviving business
entity, or (b) Borrower, so long as Borrower is the surviving business entity.
No Restricted Person will issue any additional shares of its capital stock or
other securities or any options, warrants or other rights to acquire such
additional shares or other securities other than common stock of Borrower or
Preferred Stock. Such Preferred Stock will pay no dividends in cash or property
and not be subject to redemption under any event or circumstance, in either
event for a period extending 6 months following the Maturity Date. No Subsidiary
of Borrower which is a partnership will allow any diminution of Borrower's
interest (direct or indirect) therein.
Section 7.5. Limitation on Sales of Property. No Restricted Person will
sell, transfer, lease, exchange, alienate or dispose of any of its material
assets or properties or any material interest therein, or discount, sell, pledge
or assign any notes payable to it, accounts receivable or future income, except:
(a) equipment which is worthless or obsolete or which is replaced by
equipment of equal suitability and value;
(b) inventory (including oil and gas sold as produced and seismic data)
which is sold in the ordinary course of business on ordinary trade terms;
(c) capital stock of any of Borrower's Subsidiaries which is
transferred to Borrower;
(d) oil and gas properties which are sold for cash for fair
consideration during the term of this Agreement not in excess of $3,000,000 in
the case of any individual sale nor in excess of $15,000,000 in the aggregate
with respect to all such sales after Effective Date;
(e) as contemplated by the FAB Transaction.
Section 7.6. Limitation on Dividends and Redemptions and Debt. No
Restricted Person will declare or pay any dividends on, or make any other
distribution in respect of, any class of its capital stock or any partnership or
other interest in it, nor will any Restricted Person directly or indirectly make
any capital contribution to or purchase, redeem, acquire or retire any shares of
the capital stock of or partnership interests in any Restricted Person (whether
such interests are now or hereafter issued, outstanding or created), or cause or
permit any reduction or retirement of the capital stock of any Restricted
Person, except that (i) as contemplated by the FAB Transaction or (ii)
Restricted Person may make dividends in the form of Preferred Stock. In no event
shall a Restricted Person make a cash dividend payment in respect of the
Preferred Stock. Such dividends, distributions, contributions, purchases,
redemptions, acquisitions, retirements or reductions may be made by Borrower and
Guarantors (a) without limitation to Borrower; and (b) to Guarantors which are
Subsidiaries of Borrower, to the extent permitted under the investment
restrictions of Section 7.7. No Restricted Person shall make a prepayment of any
Indebtedness except for prepayments of Approved Debt.
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Section 7.7. Limitation on Investments and New Businesses. No
Restricted Person will (a) make any expenditure or commitment or incur any
obligation or enter into or engage in any transaction except in the ordinary
course of business, (b) engage directly or indirectly in any business or conduct
any operations except in connection with or incidental to its present businesses
and operations, (c) make any acquisitions of or capital contributions to or
other Investments in any Person, other than Permitted Investments or Permitted
Stock Acquisitions, or (d) make any significant acquisitions or Investments in
any properties other than oil and gas properties.
Section 7.8. Limitation on Credit Extensions. Except for Permitted
Investments, no Restricted Person will extend credit, make advances or make
loans other than (a) normal and prudent extensions of credit to customers buying
goods and services in the ordinary course of business, which extensions shall
not be for longer periods than those extended by similar businesses operated in
a normal and prudent manner, and (b) loans to Borrower or to any Guarantor.
Section 7.9. Transactions with Affiliates. Neither Borrower nor any of
its Subsidiaries nor any Guarantor will engage in any material transaction with
any of its Affiliates on terms which are less favorable to it than those which
would have been obtainable at the time in arm's length dealings with Persons
other than such Affiliates except for material transactions among Restricted
Persons.
Section 7.10. Prohibited Contracts;. Except as expressly provided for
in the Loan Documents, no Restricted Person will, directly or indirectly, enter
into, create, or otherwise allow to exist any contract or other consensual
restriction on the ability of any Subsidiary of Borrower to: (a) pay dividends
or make other distributions to Borrower, (b) to redeem equity interests held in
it by Borrower, (c) to repay loans and other indebtedness owing by it to
Borrower, or (d) to transfer any of its assets to Borrower. No Restricted Person
will enter into any "take-or-pay" contract or other contract or arrangement for
the purchase of goods or services which obligates it to pay for such goods or
service regardless of whether they are delivered or furnished to it. No
Restricted Person will amend or permit any amendment to any contract or lease
which releases, qualifies, limits, makes contingent or otherwise detrimentally
affects the rights and benefits of Agent or any Lender under or acquired
pursuant to any Security Documents. No ERISA Affiliate will incur any obligation
to contribute to any "multiemployer plan" as defined in Section 4001 of ERISA.
No Restricted Person will create or allow to exist any ERISA Plan other than
those existing on the date hereof.
Section 7.11. Current Ratio. The ratio of Borrower's Consolidated
Current Assets to Borrower's Consolidated Current Liabilities will never be less
than 1.0 to 1.0.
Section 7.12. Fixed Charge Coverage Ratio. The ratio of Borrower's
Consolidated Cash Flow for any Fiscal Quarter to Borrower's Consolidated Fixed
Charges for such Fiscal Quarter will never be less than 1.5 to 1.0.
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Section 7.13. Interest Coverage. The ratio of Borrower's Consolidated
Cash Flow for any Fiscal Quarter to Borrower's Consolidated Interest Expense for
such Fiscal Quarter will never be less than 2.5 to 1.0.
Section 7.14. Tangible Net Worth. The sum of (a) Borrower's
Consolidated Tangible Net Worth plus (b) all non-cash charges attributable to
any full cost accounting writedown of assets from and after the date of the
Initial Financial Statements will never be less than the sum of (i) 90% of
Consolidated Tangible Net Worth as reflected in the Initial Financial Statements
plus (ii) 50% of Consolidated Net Income (if positive) for each Fiscal Quarter
since the date of the Initial Financial Statements plus (iii) an amount equal to
50% of the net worth of any Person that becomes a Subsidiary of the Borrower or
is merged into or consolidated with the Borrower or any Subsidiary of Borrower
or substantially all of the assets of which are acquired by the Borrower or any
Subsidiary of the Borrower to the extent the purchase price paid therefor is
paid in equity securities of the Borrower or any Subsidiary of the Borrower plus
(iv) 50% of the net cash proceeds (but without duplication) of any offerings of
capital stock or other equity interests of the Borrower or any of its
Subsidiaries or pursuant to the conversion or exchange of any redeemable
Preferred Stock into capital stock or other equity interests of the Borrower or
any of its Subsidiaries since the date of the Initial Financial Statements.
Section 7.15. Capital Expenditures. Borrower shall not, and shall not
permit any Restricted Person to incur any Capital Expenditures in any of the six
month periods beginning with March 1 or September 1 of each year (an "Incurrence
Period") in excess of the Capital Expenditure Limit for the Applicable
Measurement Period. The "Applicable Measurement Period" means the six month
period beginning January 1 or July 1 immediately prior to the Incurrence Period.
"Capital Expenditure Limit" means the sum of (but without duplication), with
respect to a period, (i) eighty percent (80%) of Projected Excess Cash Flow for
the Applicable Measurement Period, plus (ii) the amount by which Current Assets
exceed Current Liabilities (or minus the amount by which Current Liabilities
exceed Current Assets) on the first day of the Applicable Measurement Period,
plus (iii) the 50% of the net cash proceeds received from the incurrence of
Indebtedness or issuance of equity after the first day of such Applicable
Measurement Period which is not required to be applied to the Loans pursuant to
Section 2.8(a) or (b), plus (iv) the net cash proceeds from the sale, transfer,
conveyance or assignment of properties that, pursuant to Section 7.5(d) and
Section 2.8(c), are not required to be applied to the Loans minus (v) any
uninvoiced Capital Expenditures incurred prior to the first day of the
Applicable Measurement Period (to the extent not reflected in Current
Liabilities). "Projected Excess Cash Flow" means for the Applicable Measurement
Period, projected Consolidated Cash Flow minus projected Fixed Charges for such
period, with such projections for revenue, taxes, lease operating expenses ad
other burdens to be based on the amounts reflected in the Engineering Report
delivered for the preceding January 1 or July 1 Evaluation Date in respect of
properties which are shown as proved developed producing properties in such
report. Notwithstanding the foregoing, the Capital Expenditure Limit for the
first Incurrence Period after the Effective Date will be established in a manner
reasonably acceptable to Agent and Borrower, including, without limitation (i)
using a different starting date for the Applicable Measurement Period to fall
after the Effective Date, if appropriate, (ii) taking into account the sources
and uses of cash and the payments of claims in connection with the
Reorganization, and
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(iii) not treating payments of claims which arose prior to the Effective Date
(whether arising as operating expenses or as capital expenditures) as capital
expenditures, whether paid on the Effective Date or from time to time
thereafter; provided, however if such claims are to be paid from time to time
after the Effective Date, such payments shall be treated as projected Fixed
Charges in the period payable.
ARTICLE VIII - Events of Default and Remedies
Section 8.1. Events of Default. Each of the following events
constitutes an Event of Default under this Agreement:
(a) Any Restricted Person fails to pay any principal component of any
Obligation when due and payable, whether at a date for the payment of a fixed
installment or as a contingent or other payment becomes due and payable or as a
result of acceleration or otherwise;
(b) Any Restricted Person fails to pay any Obligation (other than the
Obligations in subsection (a) above) when due and payable, whether at a date for
the payment of a fixed installment or as a contingent or other payment becomes
due and payable or as a result of acceleration or otherwise, within three
Business Days after the same becomes due;
(c) Any "default" or "event of default" occurs under any Loan Document
which defines either such term, and the same is not remedied within the
applicable period of grace (if any) provided in such Loan Document;
(d) Any Restricted Person fails to duly observe, perform or comply with
any covenant, agreement or provision of Article VI, and such failure is neither
remedied by such Restricted Person nor waived by Majority Lenders within 15 days
after its occurrence or within such longer period which Majority Lenders may in
their sole and absolute discretion provide to such Restricted Person;
(e) Any Restricted Person fails (other than as referred to in
subsections (a), (b), (c) or (d) above) to duly observe, perform or comply with
any covenant, agreement, condition or provision of any Loan Document and such
failure is not remedied within the applicable grace period, if any;
(f) Any representation or warranty previously, presently or hereafter
made in writing by or on behalf of any Restricted Person in connection with any
Loan Document shall prove to have been false or incorrect in any material
respect on any date on or as of which made, or any Loan Document at any time
ceases to be valid, binding and enforceable as warranted in Section 5.5 for any
reason other than its release or subordination by Agent;
(g) Any Restricted Person fails to duly observe, perform or comply with
any agreement with any Person or any term or condition of any instrument, if
such agreement or instrument is materially significant to Borrower or to
Borrower and its Subsidiaries on a
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Consolidated basis or materially significant to any Guarantor, and such failure
is not remedied within the applicable period of grace (if any) provided in such
agreement or instrument;
(h) Any Restricted Person (i) fails to pay any portion, when such
portion is due, of any of its Indebtedness in excess of $500,000, or (ii)
breaches or defaults in the performance of any agreement or instrument by which
any such Indebtedness is issued, evidenced, governed, or secured, and any such
failure, breach or default continues beyond any applicable period of grace
provided therefor;
(i) Either (i) any "accumulated funding deficiency" (as defined in
Section 412(a) of the Internal Revenue Code) in excess of $100,000 exists with
respect to any ERISA Plan, whether or not waived by the Secretary of the
Treasury or his delegate, or (ii) any Termination Event occurs with respect to
any ERISA Plan and the then current value of such ERISA Plan's benefit
liabilities exceeds the then current value of such ERISA Plan's assets available
for the payment of such benefit liabilities by more than $100,000 (or in the
case of a Termination Event involving the withdrawal of a substantial employer,
the withdrawing employer's proportionate share of such excess exceeds such
amount);
(j) Any Restricted Person:
(i) suffers the entry against it of a judgment, decree or
order for relief by a Tribunal of competent jurisdiction in an
involuntary proceeding commenced under any applicable bankruptcy,
insolvency or other similar Law of any jurisdiction now or hereafter in
effect, including the federal Bankruptcy Code, as from time to time
amended, or has any such proceeding commenced against it which remains
undismissed for a period of sixty days; or
(ii) commences a voluntary case under any applicable
bankruptcy, insolvency or similar Law now or hereafter in effect,
including the federal Bankruptcy Code, as from time to time amended; or
applies for or consents to the entry of an order for relief in an
involuntary case under any such Law; or makes a general assignment for
the benefit of creditors; or fails generally to pay (or admits in
writing its inability to pay) its debts as such debts become due; or
takes corporate or other action to authorize any of the foregoing; or
(iii) suffers the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official of all or a substantial part of its assets or of any
part of the Collateral in a proceeding brought against or initiated by
it, and such appointment or taking possession is neither made
ineffective nor discharged within thirty days after the making thereof,
or such appointment or taking possession is at any time consented to,
requested by, or acquiesced to by it; or
(iv) suffers the entry against it of a final judgment for the
payment of money in excess of $500,000 (not covered by insurance
satisfactory to Agent in its discretion), unless the same is discharged
within thirty days after the date of entry thereof or an
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appeal or appropriate proceeding for review thereof is taken within
such period and a stay of execution pending such appeal is obtained; or
(v) suffers a writ or warrant of attachment or any similar
process to be issued by any Tribunal against all or any substantial
part of its assets or any part of the Collateral, and such writ or
warrant of attachment or any similar process is not stayed or released
within sixty days after the entry or levy thereof or after any stay is
vacated or set aside;
(k) Any Change of Control occurs; and
(l) Any Material Adverse Change occurs.
Upon the occurrence of an Event of Default described in subsection (j)(i),
(j)(ii) or (j)(iii) of this section with respect to Borrower, all of the
Obligations shall thereupon be immediately due and payable, without demand,
presentment, notice of demand or of dishonor and nonpayment, protest, notice of
protest, notice of intention to accelerate, declaration or notice of
acceleration, or any other notice or declaration of any kind, all of which are
hereby expressly waived by Borrower and each Restricted Person who at any time
ratifies or approves this Agreement. Upon any such acceleration, any obligation
of any Lender and any obligation of LC Issuer to issue Letters of Credit
hereunder to make any further Loans shall be permanently terminated. During the
continuance of any other Event of Default, Agent at any time and from time to
time may (and upon written instructions from Majority Lenders, Agent shall),
without notice to Borrower or any other Restricted Person, do either or both of
the following: (1) terminate any obligation of Lenders to make Loans hereunder,
and any obligation of LC Issuer to issue Letters of Credit hereunder, and (2)
declare any or all of the Obligations immediately due and payable, and all such
Obligations shall thereupon be immediately due and payable, without demand,
presentment, notice of demand or of dishonor and nonpayment, protest, notice of
protest, notice of intention to accelerate, declaration or notice of
acceleration, or any other notice or declaration of any kind, all of which are
hereby expressly waived by Borrower and each Restricted Person who at any time
ratifies or approves this Agreement.
Section 8.2. Remedies. If any Default shall occur and be continuing,
each Lender Party may protect and enforce its rights under the Loan Documents by
any appropriate proceedings, including proceedings for specific performance of
any covenant or agreement contained in any Loan Document, and each Lender Party
may enforce the payment of any Obligations due it or enforce any other legal or
equitable right which it may have. All rights, remedies and powers conferred
upon Lender Parties under the Loan Documents shall be deemed cumulative and not
exclusive of any other rights, remedies or powers available under the Loan
Documents or at Law or in equity.
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ARTICLE IX - Agent
Section 9.1. Appointment and Authority. Each Lender Party hereby
irrevocably authorizes Agent, and Agent hereby undertakes, to receive payments
of principal, interest and other amounts due hereunder as specified herein and
to take all other actions and to exercise such powers under the Loan Documents
as are specifically delegated to Agent by the terms hereof or thereof, together
with all other powers reasonably incidental thereto. The relationship of Agent
to the other Lender Parties is only that of one commercial lender acting as
administrative agent for others, and nothing in the Loan Documents shall be
construed to constitute Agent a trustee or other fiduciary for any Lender Party
or any holder of any participation in a Note nor to impose on Agent duties and
obligations other than those expressly provided for in the Loan Documents. With
respect to any matters not expressly provided for in the Loan Documents and any
matters which the Loan Documents place within the discretion of Agent, Agent
shall not be required to exercise any discretion or take any action, and it may
request instructions from Lenders with respect to any such matter, in which case
it shall be required to act or to refrain from acting (and shall be fully
protected and free from liability to all Lender Parties in so acting or
refraining from acting) upon the instructions of Majority Lenders (including
itself), provided, however, that Agent shall not be required to take any action
which exposes it to a risk of personal liability that it considers unreasonable
or which is contrary to the Loan Documents or to applicable Law. Upon receipt by
Agent from Borrower of any communication calling for action on the part of
Lenders or upon notice from any other Lender to Agent of any Default or Event of
Default, Agent shall promptly notify each other Lender thereof.
Section 9.2. Exculpation, Agent's Reliance, Etc. Neither Agent nor any
of its directors, officers, agents, attorneys, or employees shall be liable for
any action taken or omitted to be taken by any of them under or in connection
with the Loan Documents, INCLUDING THEIR NEGLIGENCE OF ANY KIND, except that
each shall be liable for its own gross negligence or willful misconduct. Without
limiting the generality of the foregoing, Agent (a) may treat the payee of any
Note as the holder thereof until Agent receives written notice of the assignment
or transfer thereof in accordance with this Agreement, signed by such payee and
in form satisfactory to Agent; (b) may consult with legal counsel (including
counsel for Borrower), independent public accountants and other experts selected
by it and shall not be liable for any action taken or omitted to be taken in
good faith by it in accordance with the advice of such counsel, accountants or
experts; (c) makes no warranty or representation to any other Lender and shall
not be responsible to any other Lender Party for any statements, warranties or
representations made in or in connection with the Loan Documents; (d) shall not
have any duty to ascertain or to inquire as to the performance or observance of
any of the terms, covenants or conditions of the Loan Documents on the part of
any Restricted Person or to inspect the property (including the books and
records) of any Restricted Person; (e) shall not be responsible to any other
Lender for the due execution, legality, validity, enforceability, genuineness,
sufficiency or value of any Loan Document or any instrument or document
furnished in connection therewith; (f) may rely upon the representations and
warranties of each Restricted Person or Lender Party in exercising its powers
hereunder; and (g) shall incur no liability under or in respect of the Loan
Documents by acting upon any notice, consent, certificate or other instrument or
writing (including any facsimile, telegram, cable or telex) believed by it to be
genuine and signed or sent by the proper Person or Persons.
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Section 9.3. Credit Decisions. Each Lender Party acknowledges that it
has, independently and without reliance upon any other Lender Party, made its
own analysis of Borrower and the transactions contemplated hereby and its own
independent decision to enter into this Agreement and the other Loan Documents.
Each Lender Party also acknowledges that it will, independently and without
reliance upon any other Lender Party and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under the Loan Documents.
SECTION 9.4. INDEMNIFICATION. EACH LENDER AGREES TO INDEMNIFY AGENT (TO
THE EXTENT NOT REIMBURSED BY BORROWER WITHIN TEN (10) DAYS AFTER DEMAND) FROM
AND AGAINST SUCH LENDER'S PERCENTAGE SHARE OF ANY AND ALL LIABILITIES,
OBLIGATIONS, CLAIMS, LOSSES, DAMAGES, PENALTIES, FINES, ACTIONS, JUDGMENTS,
SUITS, SETTLEMENTS, COSTS, EXPENSES OR DISBURSEMENTS (INCLUDING REASONABLE FEES
OF ATTORNEYS, ACCOUNTANTS, EXPERTS AND ADVISORS) OF ANY KIND OR NATURE
WHATSOEVER (IN THIS SECTION COLLECTIVELY CALLED "LIABILITIES AND COSTS") WHICH
TO ANY EXTENT (IN WHOLE OR IN PART) MAY BE IMPOSED ON, INCURRED BY, OR ASSERTED
AGAINST AGENT GROWING OUT OF, RESULTING FROM OR IN ANY OTHER WAY ASSOCIATED WITH
ANY OF THE COLLATERAL, THE LOAN DOCUMENTS AND THE TRANSACTIONS AND EVENTS
(INCLUDING THE ENFORCEMENT THEREOF) AT ANY TIME ASSOCIATED THEREWITH OR
CONTEMPLATED THEREIN (WHETHER ARISING IN CONTRACT OR IN TORT AND OTHERWISE AND
INCLUDING ANY VIOLATION OR NONCOMPLIANCE WITH ANY ENVIRONMENTAL LAWS BY ANY
PERSON OR ANY LIABILITIES OR DUTIES OF ANY PERSON WITH RESPECT TO HAZARDOUS
MATERIALS FOUND IN OR RELEASED INTO THE ENVIRONMENT).
THE FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH LIABILITIES AND
COSTS ARE IN ANY WAY OR TO ANY EXTENT OWED, IN WHOLE OR IN PART, UNDER ANY CLAIM
OR THEORY OF STRICT LIABILITY, OR ARE CAUSED, IN WHOLE OR IN PART, BY ANY
NEGLIGENT ACT OR OMISSION OF ANY KIND BY AGENT,
provided only that no Lender shall be obligated under this section to indemnify
Agent for that portion, if any, of any liabilities and costs which is
proximately caused by Agent's own individual gross negligence or willful
misconduct, as determined in a final judgment. Cumulative of the foregoing, each
Lender agrees to reimburse Agent promptly upon demand for such Lender's
Percentage Share of any costs and expenses to be paid to Agent by Borrower under
Section 10.4(a) to the extent that Agent is not timely reimbursed for such
expenses by Borrower as provided in such section. As used in this section the
term "Agent" shall refer not only to the Person designated as such in Section
1.1 but also to each director, officer, agent, attorney, employee,
representative and Affiliate of such Person.
Section 9.5. Rights as Lender. In its capacity as a Lender, Agent shall
have the same rights and obligations as any Lender and may exercise such rights
as though it were not Agent. Agent may accept deposits from, lend money to, act
as trustee under indentures of, and generally engage in any kind of business
with any Restricted Person or their Affiliates, all as if it were not Agent
hereunder and without any duty to account therefor to any other Lender.
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Section 9.6. Sharing of Set-Offs and Other Payments. Each Lender Party
agrees that if it shall, whether through the exercise of rights under Security
Documents or rights of banker's lien, set off, or counterclaim against Borrower
or otherwise, obtain payment of a portion of the aggregate Obligations owed to
it which, taking into account all distributions made by Agent under Section 3.1,
causes such Lender Party to have received more than it would have received had
such payment been received by Agent and distributed pursuant to Section 3.1,
then (a) it shall be deemed to have simultaneously purchased and shall be
obligated to purchase interests in the Obligations as necessary to cause all
Lender Parties to share all payments as provided for in Section 3.1, and (b)
such other adjustments shall be made from time to time as shall be equitable to
ensure that Agent and all Lender Parties share all payments of Obligations as
provided in Section 3.1; provided, however, that nothing herein contained shall
in any way affect the right of any Lender Party to obtain payment (whether by
exercise of rights of banker's lien, set-off or counterclaim or otherwise) of
indebtedness other than the Obligations. Borrower expressly consents to the
foregoing arrangements and agrees that any holder of any such interest or other
participation in the Obligations, whether or not acquired pursuant to the
foregoing arrangements, may to the fullest extent permitted by Law exercise any
and all rights of banker's lien, set-off, or counterclaim as fully as if such
holder were a holder of the Obligations in the amount of such interest or other
participation. If all or any part of any funds transferred pursuant to this
section is thereafter recovered from the seller under this section which
received the same, the purchase provided for in this section shall be deemed to
have been rescinded to the extent of such recovery, together with interest, if
any, if interest is required pursuant to the order of a Tribunal order to be
paid on account of the possession of such funds prior to such recovery.
Section 9.7. Investments. Whenever Agent in good faith determines that
it is uncertain about how to distribute to Lender Parties any funds which it has
received, or whenever Agent in good faith determines that there is any dispute
among Lender Parties about how such funds should be distributed, Agent may
choose to defer distribution of the funds which are the subject of such
uncertainty or dispute. If Agent in good faith believes that the uncertainty or
dispute will not be promptly resolved, or if Agent is otherwise required to
invest funds pending distribution to Lender Parties, Agent shall invest such
funds pending distribution; all interest on any such Investment shall be
distributed upon the distribution of such Investment and in the same proportion
and to the same Persons as such Investment. All moneys received by Agent for
distribution to Lender Parties (other than to the Person who is Agent in its
separate capacity as a Lender Party) shall be held by Agent pending such
distribution solely as Agent for such Lender Parties, and Agent shall have no
equitable title to any portion thereof.
Section 9.8. Benefit of Article IX. The provisions of this Article
(other than the following Section 9.9) are intended solely for the benefit of
Lender Parties, and no Restricted Person shall be entitled to rely on any such
provision or assert any such provision in a claim or defense against any Lender.
Lender Parties may waive or amend such provisions as they desire without any
notice to or consent of Borrower or any Restricted Person.
Section 9.9. Resignation. Agent may resign at any time by giving 30
days prior written notice thereof to Lenders and Borrower. Each such notice
shall set forth the date of such resignation. Upon any such resignation,
Majority Lenders shall have the right to appoint a
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successor Agent subject, so long as no Default shall have occurred and be
continuing, to the approval of Borrower, which approval shall not be
unreasonably withheld or delayed. A successor must be appointed for any retiring
Agent, and such Agent's resignation shall only become effective when such
successor accepts such appointment. If, within thirty days after the date of the
retiring Agent's resignation, no successor Agent has been appointed and has
accepted such appointment, then the retiring Agent may appoint a successor
Agent, which shall be a financial institution organized or licensed to conduct a
lending or trust business under the Laws of the United States of America or of
any state thereof. Upon the acceptance of any appointment as Agent hereunder by
a successor Agent, the retiring Agent shall be discharged from its duties and
obligations under this Agreement and the other Loan Documents. After any
retiring Agent's resignation hereunder the provisions of this Article IX shall
continue to inure to its benefit as to any actions taken or omitted to be taken
by it while it was Agent under the Loan Documents.
ARTICLE X - Miscellaneous
Section 10.1. Waivers and Amendments; Acknowledgments.
(a) Waivers and Amendments. No failure or delay (whether by course of
conduct or otherwise) by any Lender in exercising any right, power or remedy
which such Lender Party may have under any of the Loan Documents shall operate
as a waiver thereof or of any other right, power or remedy, nor shall any single
or partial exercise by any Lender Party of any such right, power or remedy
preclude any other or further exercise thereof or of any other right, power or
remedy. No waiver of any provision of any Loan Document and no consent to any
departure therefrom shall ever be effective unless it is in writing and signed
as provided below in this section, and then such waiver or consent shall be
effective only in the specific instances and for the purposes for which given
and to the extent specified in such writing. No notice to or demand on any
Restricted Person shall in any case of itself entitle any Restricted Person to
any other or further notice or demand in similar or other circumstances. This
Agreement and the other Loan Documents set forth the entire understanding
between the parties hereto with respect to the transactions contemplated herein
and therein and supersede all prior discussions and understandings with respect
to the subject matter hereof and thereof, and no waiver, consent, release,
modification or amendment of or supplement to this Agreement or the other Loan
Documents shall be valid or effective against any party hereto unless the same
is in writing and signed by (i) if such party is Borrower, by Borrower, (ii) if
such party is Agent or LC Issuer, by such party, and (iii) if such party is a
Lender, by such Lender or by Agent on behalf of Lenders with the written consent
of Majority Lenders (which consent has already been given as to the termination
of the Loan Documents as provided in Section 10.9). Notwithstanding the
foregoing or anything to the contrary herein, Agent shall not, without the prior
consent of each individual Lender, execute and deliver on behalf of such Lender
any waiver or amendment which would: (1) waive any of the conditions specified
in Article IV (provided that Agent may in its discretion withdraw any request it
has made under Section 4.3(f)) in connection with initial Loans, (2) increase
the maximum amount which such Lender is committed hereunder to lend, (3) reduce
any fees payable to such Lender hereunder, or the principal of, or interest on,
such Lender's Note, (4) postpone any date fixed for any payment of any such
fees, principal or interest
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(including mandatory prepayments pursuant to Section 2.8), (5) amend the
definition herein of "Majority Lenders" or otherwise change the aggregate amount
of Percentage Shares which is required for Agent, Lenders or any of them to take
any particular action under the Loan Documents, (6) release Borrower from its
obligation to pay such Lender's Note or any Guarantor from its guaranty of such
payment, (7) release all or substantially all of the Collateral or (8) amend
this Section 10.1(a). Notwithstanding the foregoing, Agent, in such capacity,
may execute and deliver (i) any waiver or amendment waiving any of the
conditions specified in Article IV subsequent to the initial Loans having been
made only upon the prior consent of each Revolving Credit Lender and (ii) a
release of Liens upon the sale of assets as provided in Section 6.14 without the
consent of any of the Lenders.
(b) Acknowledgments and Admissions. Borrower hereby represents,
warrants, acknowledges and admits that (i) it has been advised by counsel in the
negotiation, execution and delivery of the Loan Documents to which it is a
party, (ii) it has made an independent decision to enter into this Agreement and
the other Loan Documents to which it is a party, without reliance on any
representation, warranty, covenant or undertaking by Agent or any Lender,
whether written, oral or implicit, other than as expressly set out in this
Agreement or in another Loan Document delivered on or after the date hereof,
(iii) there are no representations, warranties, covenants, undertakings or
agreements by any Lender as to the Loan Documents except as expressly set out in
this Agreement or in another Loan Document delivered on or after the date
hereof, (iv) no Lender has any fiduciary obligation toward Borrower with respect
to any Loan Document or the transactions contemplated thereby, (v) the
relationship pursuant to the Loan Documents between Borrower and the other
Restricted Persons, on one hand, and each Lender, on the other hand, is and
shall be solely that of debtor and creditor, respectively, (vi) no partnership
or joint venture exists with respect to the Loan Documents between any
Restricted Person and any Lender, (vii) Agent is not Borrower's Agent, but Agent
for Lenders, (viii) should an Event of Default or Default occur or exist, each
Lender will determine in its sole discretion and for its own reasons what
remedies and actions it will or will not exercise or take at that time, (ix)
without limiting any of the foregoing, Borrower is not relying upon any
representation or covenant by any Lender, or any representative thereof, and no
such representation or covenant has been made, that any Lender will, at the time
of an Event of Default or Default, or at any other time, waive, negotiate,
discuss, or take or refrain from taking any action permitted under the Loan
Documents with respect to any such Event of Default or Default or any other
provision of the Loan Documents, all Lender Parties have relied upon the
truthfulness of the acknowledgments in this section in deciding to execute and
deliver this Agreement and to become obligated hereunder.
(c) Joint Acknowledgment. THIS WRITTEN AGREEMENT AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
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Section 10.2. Survival of Agreements; Cumulative Nature. All of
Restricted Persons' various representations, warranties, covenants and
agreements in the Loan Documents shall survive the execution and delivery of
this Agreement and the other Loan Documents and the performance hereof and
thereof, including the making or granting of the Loans and the delivery of the
Notes and the other Loan Documents, and shall further survive until all of the
Obligations are paid in full to each Lender Party and all of Lender Parties'
obligations to Borrower are terminated. All statements and agreements contained
in any certificate or other instrument delivered by any Restricted Person to any
Lender Party under any Loan Document shall be deemed representations and
warranties by Borrower or agreements and covenants of Borrower under this
Agreement. The representations, warranties, indemnities, and covenants made by
Restricted Persons in the Loan Documents, and the rights, powers, and privileges
granted to Lender Parties in the Loan Documents, are cumulative, and, except for
expressly specified waivers and consents, no Loan Document shall be construed in
the context of another to diminish, nullify, or otherwise reduce the benefit to
any Lender Party of any such representation, warranty, indemnity, covenant,
right, power or privilege. In particular and without limitation, no exception
set out in this Agreement to any representation, warranty, indemnity, or
covenant herein contained shall apply to any similar representation, warranty,
indemnity, or covenant contained in any other Loan Document, and each such
similar representation, warranty, indemnity, or covenant shall be subject only
to those exceptions which are expressly made applicable to it by the terms of
the various Loan Documents.
Section 10.3. Notices. All notices, requests, consents, demands and
other communications required or permitted under any Loan Document shall be in
writing, unless otherwise specifically provided in such Loan Document (provided
that Agent may give telephonic notices to the other Lender Parties), and shall
be deemed sufficiently given or furnished if delivered by personal delivery, by
facsimile or other electronic transmission, by delivery service with proof of
delivery, or by registered or certified United States mail, postage prepaid, to
Borrower and Restricted Persons at the address of Borrower specified on the
signature pages hereto and to each Lender Party at its address specified on the
signature pages hereto (unless changed by similar notice in writing given by the
particular Person whose address is to be changed). Any such notice or
communication shall be deemed to have been given (a) in the case of personal
delivery or delivery service, as of the date of first attempted delivery during
normal business hours at the address provided herein, (b) in the case of
facsimile or other electronic transmission, upon receipt, or (c) in the case of
registered or certified United States mail, three days after deposit in the
mail; provided, however, that no Borrowing Notice shall become effective until
actually received by Agent.
Section 10.4. Payment of Expenses; Indemnity.
(a) Payment of Expenses. Whether or not the transactions contemplated
by this Agreement are consummated, Borrower will promptly (and in any event,
within 30 days after any invoice or other statement or notice) pay: (i) all
transfer, stamp, mortgage, documentary or other similar taxes, assessments or
charges levied by any governmental or revenue authority in respect of this
Agreement or any of the other Loan Documents or any other document referred to
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herein or therein, (ii) all reasonable costs and expenses incurred by or on
behalf of any Lender Party (including without limitation reasonable attorneys'
fees, consultants' fees, engineering fees, accounting fees, travel costs and
miscellaneous expenses) in connection with (1) the negotiation, preparation,
execution and delivery of the Loan Documents or (2) the defense or enforcement
of any of the Loan Documents (including this Section) or the defense of such
Lender Party's exercise of its rights thereunder and (iii) all reasonable costs
and expenses incurred by or on behalf of Agent, in such capacity, (including
without limitation reasonable attorneys' fees, consultants' fees, engineering
fees, accounting fees, travel costs and miscellaneous expenses) in connection
with (1) the negotiation, preparation, execution and delivery of any and all
consents, waivers or other documents or instruments relating to the Loan
Documents, (2) the filing, recording, refiling and re-recording of any Loan
Documents and any other documents or instruments or further assurances required
to be filed or recorded or refiled or re-recorded by the terms of any Loan
Document, (3) the borrowings hereunder and other action reasonably required in
the course of administration hereof, (4) the monitoring or confirming (or
preparation or negotiation of any document related to) Borrower's compliance
with any covenants or conditions contained in this Agreement or in any Loan
Document or (5) the defense of the amount, extent, validity or priority of the
Liens benefiting or securing the Existing Agreement and the obligations
thereunder or of the Liens securing the Obligations. In addition to the
foregoing, until all Obligations have been paid in full, Borrower will also pay
or reimburse Agent for all reasonable out-of-pocket costs and expenses of Agent
or its agents or employees in connection with the continuing administration of
the Loans and the related due diligence of Agent, including travel and
miscellaneous expenses and fees and expenses of Agent's outside counsel, reserve
engineers and consultants engaged in connection with the Loan Documents.
(b) INDEMNITY. BORROWER AGREES TO INDEMNIFY EACH LENDER PARTY, UPON
DEMAND, FROM AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, CLAIMS, LOSSES,
DAMAGES, PENALTIES, FINES, ACTIONS, JUDGMENTS, SUITS, SETTLEMENTS, COSTS,
EXPENSES OR DISBURSEMENTS (INCLUDING REASONABLE FEES OF ATTORNEYS, ACCOUNTANTS,
EXPERTS AND ADVISORS) OF ANY KIND OR NATURE WHATSOEVER (IN THIS SECTION
COLLECTIVELY CALLED "LIABILITIES AND COSTS") WHICH TO ANY EXTENT (IN WHOLE OR IN
PART) MAY BE IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST SUCH LENDER PARTY
GROWING OUT OF, RESULTING FROM OR IN ANY OTHER WAY ASSOCIATED WITH ANY OF THE
COLLATERAL, THE LOAN DOCUMENTS AND THE TRANSACTIONS AND EVENTS (INCLUDING THE
ENFORCEMENT OR DEFENSE THEREOF) AT ANY TIME ASSOCIATED THEREWITH OR CONTEMPLATED
THEREIN (WHETHER ARISING IN CONTRACT OR IN TORT OR OTHERWISE AND INCLUDING ANY
VIOLATION OR NONCOMPLIANCE WITH ANY ENVIRONMENTAL LAWS BY ANY LENDER PARTY OR
ANY OTHER PERSON OR ANY LIABILITIES OR DUTIES OF ANY LENDER PARTY OR ANY OTHER
PERSON WITH RESPECT TO HAZARDOUS MATERIALS FOUND IN OR RELEASED INTO THE
ENVIRONMENT).
THE FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH LIABILITIES AND
COSTS ARE IN ANY WAY OR TO ANY EXTENT OWED, IN WHOLE OR IN PART, UNDER ANY CLAIM
OR THEORY OF STRICT LIABILITY OR CAUSED, IN WHOLE OR IN PART BY ANY NEGLIGENT
ACT OR OMISSION OF ANY KIND BY ANY LENDER PARTY,
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provided only that no Lender Party shall be entitled under this section to
receive indemnification for that portion, if any, of any liabilities and costs
which is proximately caused by its own individual gross negligence or willful
misconduct, as determined in a final judgment. If any Person (including Borrower
or any of its Affiliates) ever alleges such gross negligence or willful
misconduct by any Lender Party, the indemnification provided for in this section
shall nonetheless be paid upon demand, subject to later adjustment or
reimbursement, until such time as a court of competent jurisdiction enters a
final judgment as to the extent and effect of the alleged gross negligence or
willful misconduct. As used in this section the term "Lender Party" shall refer
not only to each Person designated as such in Section 1.1 but also to each
director, officer, agent, attorney, employee, representative and Affiliate of
such Person.
Section 10.5. Joint and Several Liability; Parties in Interest;
Assignments.
(a) All Obligations which are incurred by two or more Restricted
Persons shall be their joint and several obligations and liabilities. All
grants, covenants and agreements contained in the Loan Documents shall bind and
inure to the benefit of the parties thereto and their respective successors and
assigns; provided, however, that no Restricted Person may assign or transfer any
of its rights or delegate any of its duties or obligations under any Loan
Document without the prior consent of Majority Lenders. Neither Borrower nor any
Affiliates of Borrower shall directly or indirectly purchase or otherwise retire
any Obligations owed to any Lender nor will any Lender accept any offer to do
so, unless each Lender shall have received substantially the same offer with
respect to the same Percentage Share of the Obligations owed to it. If Borrower
or any Affiliate of Borrower at any time purchases some but less than all of the
Obligations owed to Lender Parties, such purchaser shall not be entitled to any
rights of any Lender under the Loan Documents unless and until Borrower or its
Affiliates have purchased all of the Obligations.
(b) No Lender shall sell any participation interest in its commitment
hereunder or any of its rights under its Loans or under the Loan Documents to
any Person unless the agreement between such Lender and such participant at all
times provides: (i) that such participation exists only as a result of the
agreement between such participant and such Lender and that such transfer does
not give such participant any right to vote as a Lender or any other direct
claims or rights against any Person other than such Lender, (ii) that such
participant is not entitled to payment from any Restricted Person under Sections
3.2 through 3.6 of amounts in excess of those payable to such Lender under such
sections (determined without regard to the sale of such participation), and
(iii) unless such participant is an Affiliate of such Lender, that such
participant shall not be entitled to require such Lender to take any action
under any Loan Document or to obtain the consent of such participant prior to
taking any action under any Loan Document, except for actions which would
require the consent of all Lenders under subsection (a) of Section 10.1(a). No
Lender selling such a participation shall, as between the other parties hereto
and such Lender, be relieved of any of its obligations hereunder as a result of
the sale of such participation. Each Lender which sells any such participation
to any Person (other than an Affiliate of such Lender) shall give prompt notice
thereof to Agent and Borrower.
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(c) Except for sales of participations under the immediately preceding
subsection, no Lender shall make any assignment or transfer of any kind of its
commitments or any of its rights under its Loans or under the Loan Documents,
except for assignments to a Person that is a Lender or an Affiliate of a Lender
or that has consented to by Agent, which consent will not be unreasonably
withheld, and then only if such assignment is made in accordance with the
following requirements:
(i) Each such assignment shall apply to all Obligations owing
to the assignor Lender hereunder and to the unused portion of the
assignor Lender's commitments, so that after such assignment is made
the assignor Lender shall have a fixed (and not a varying) Percentage
Share in its Loans and Note and be committed to make that Percentage
Share of all future Loans, the assignee shall have a fixed Percentage
Share in such Loans and Note and be committed to make that Percentage
Share of all future Loans, and the Percentage Share of the Maximum
Credit Amount of both the assignor and assignee shall equal or exceed
$5,000,000.
(ii) The parties to each such assignment shall execute and
deliver to Agent, for its acceptance and recording in the "Register"
(as defined below in this section), an Assignment and Acceptance
Agreement in the form of Exhibit F, appropriately completed, together
with the Note subject to such assignment and a processing fee payable
to Agent of $5,000. Upon such execution, delivery, and payment and upon
the satisfaction of the conditions set out in such Assignment and
Acceptance, then (1) Borrower shall issue new Notes to such assignor
and assignee upon return of the old Notes to Borrower, and (2) as of
the "Settlement Date" specified in such Assignment and Acceptance the
assignee thereunder shall be a party hereto and a Lender hereunder and
Agent shall thereupon deliver to Borrower and each Lender a schedule
showing the revised Percentage Shares of such assignor Lender and such
assignee Lender and the Percentage Shares of all other Lenders.
(iii) Each assignee Lender which is not a United States person
(as such term is defined in Section 7701(a)(30) of the Internal Revenue
Code) for Federal income tax purposes, shall (to the extent it has not
already done so) provide Agent and Borrower with the "Prescribed Forms"
referred to in Section 3.6(d).
(iv) Any Lender who determines to sell any Loan must sell such
Lender's Revolving Credit Loan or Series B Term Loan and such Lender's
Series A Term Loan in equal proportions.
(v) No such assignee shall be an oil and gas industry
competitor or a Person buying directly for the account of an oil and
gas industry competitor [other limitations to be discussed].
(d) Nothing contained in this section shall prevent or prohibit any
Lender from assigning or pledging all or any portion of its Loans and Note to
any Federal Reserve Bank as
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collateral security pursuant to Regulation A of the Board of Governors of the
Federal Reserve System and any Operating Circular issued by such Federal Reserve
Bank; provided that no such assignment or pledge shall relieve such Lender from
its obligations hereunder.
(e) By executing and delivering an Assignment and Acceptance, each
assignee Lender thereunder will be confirming to and agreeing with Borrower,
Agent and each other Lender Party that such assignee understands and agrees to
the terms hereof, including Article IX hereof.
(f) Agent shall maintain a copy of each Assignment and Acceptance and a
register for the recordation of the names and addresses of Lenders and the
Percentage Shares of, and principal amount of the Loans owing to, each Lender
from time to time (in this section called the "Register"). The entries in the
Register shall be conclusive, in the absence of manifest error, and Borrower and
each Lender Party may treat each Person whose name is recorded in the Register
as a Lender hereunder for all purposes. The Register shall be available for
inspection by Borrower or any Lender Party at any reasonable time and from time
to time upon reasonable prior notice.
Section 10.6. Confidentiality. Each Lender Party agrees that it will
take all reasonable steps to keep confidential any proprietary information given
to it by any Restricted Person, provided, however, that this restriction shall
not apply to information which (a) has at the time in question entered the
public domain, (b) is required to be disclosed by Law (whether valid or invalid)
of any Tribunal, (c) is disclosed to any Lender Party's Affiliates, auditors,
attorneys, or agents, (d) is furnished to any other Lender Party or to any
purchaser or prospective purchaser of participations or other interests in any
Loan or Loan Document (provided each such purchaser or prospective purchaser
first agrees to hold such information in confidence on the terms provided in
this section), or (e) is disclosed in the course of enforcing its rights and
remedies during the existence of an Event of Default.
Section 10.7. Governing Law; Submission to Process. EXCEPT TO THE
EXTENT THAT THE LAW OF ANOTHER JURISDICTION IS EXPRESSLY ELECTED IN A LOAN
DOCUMENT, THE LOAN DOCUMENTS SHALL BE DEEMED CONTRACTS AND INSTRUMENTS MADE
UNDER THE LAWS OF THE STATE OF NEW YORK AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK AND THE LAWS
OF THE UNITED STATES OF AMERICA, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAW. BORROWER HEREBY AGREES THAT ANY LEGAL ACTION OR PROCEEDING AGAINST BORROWER
WITH RESPECT TO THIS AGREEMENT, THE NOTES OR ANY OF THE LOAN DOCUMENTS MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES OF
AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK AS LENDER PARTIES MAY ELECT, AND,
BY EXECUTION AND DELIVERY HEREOF, BORROWER ACCEPTS AND CONSENTS FOR ITSELF AND
IN RESPECT TO ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF
THE AFORESAID COURTS, AND FURTHER AGREES TO A TRANSFER OF ANY SUCH PROCEEDING TO
A FEDERAL COURT SITTING IN THE STATE OF NEW YORK TO THE EXTENT THAT IT HAS
SUBJECT MATTER JURISDICTION, AND OTHERWISE TO A STATE COURT IN NEW YORK, NEW
YORK, AND AGREES THAT SUCH JURISDICTION SHALL BE EXCLUSIVE, UNLESS WAIVED BY
MAJORITY LENDERS IN WRITING, WITH RESPECT TO ANY ACTION OR PROCEEDING BROUGHT BY
IT AGAINST LENDER PARTIES AND ANY QUESTIONS RELATING TO USURY. BORROWER AGREES
THAT SECTIONS 5-1401
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AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK SHALL APPLY
TO THE LOAN DOCUMENTS AND WAIVES ANY RIGHT TO STAY OR TO DISMISS ANY ACTION OR
PROCEEDING BROUGHT BEFORE SAID COURTS ON THE BASIS OF FORUM NON CONVENIENS. IN
FURTHERANCE OF THE FOREGOING, BORROWER HEREBY IRREVOCABLY DESIGNATES AND
APPOINTS CT CORPORATION SYSTEM, 1633 BROADWAY, NEW YORK, NEW YORK, 10014 AS
AGENT OF BORROWER TO RECEIVE SERVICE OF ALL PROCESS BROUGHT AGAINST BORROWER
WITH RESPECT TO ANY SUCH PROCEEDING IN ANY SUCH COURT IN NEW YORK, SUCH SERVICE
BEING HEREBY ACKNOWLEDGED BY BORROWER TO BE EFFECTIVE AND BINDING SERVICE IN
EVERY RESPECT. COPIES OF ANY SUCH PROCESS SO SERVED SHALL ALSO, IF PERMITTED BY
LAW, BE SENT BY REGISTERED MAIL TO BORROWER AT ITS ADDRESS SET FORTH BELOW, BUT
THE FAILURE OF BORROWER TO RECEIVE SUCH COPIES SHALL NOT AFFECT IN ANY WAY THE
SERVICE OF SUCH PROCESS AS AFORESAID. BORROWER SHALL FURNISH TO LENDER PARTIES A
CONSENT OF CT CORPORATION SYSTEM AGREEING TO ACT HEREUNDER PRIOR TO THE
EFFECTIVE DATE OF THIS AGREEMENT. NOTHING HEREIN SHALL AFFECT THE RIGHT OF
LENDER PARTIES TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL
LIMIT THE RIGHT OF LENDER PARTIES TO BRING PROCEEDINGS AGAINST BORROWER IN THE
COURTS OF ANY OTHER JURISDICTION. IF FOR ANY REASON CT CORPORATION SYSTEM SHALL
RESIGN OR OTHERWISE CEASE TO ACT AS BORROWER'S AGENT, BORROWER HEREBY
IRREVOCABLY AGREES TO (A) IMMEDIATELY DESIGNATE AND APPOINT A NEW AGENT
ACCEPTABLE TO AGENT TO SERVE IN SUCH CAPACITY AND, IN SUCH EVENT, SUCH NEW AGENT
SHALL BE DEEMED TO BE SUBSTITUTED FOR CT CORPORATION SYSTEM FOR ALL PURPOSES
HEREOF AND (B) PROMPTLY DELIVER TO AGENT THE WRITTEN CONSENT (IN FORM AND
SUBSTANCE SATISFACTORY TO AGENT) OF SUCH NEW AGENT AGREEING TO SERVE IN SUCH
CAPACITY.
Section 10.8. Limitation on Interest. Lender Parties, Restricted
Persons and the other parties to the Loan Documents intend to contract in strict
compliance with applicable usury Law from time to time in effect. In furtherance
thereof such persons stipulate and agree that none of the terms and provisions
contained in the Loan Documents shall ever be construed to provide for interest
in excess of the maximum amount of interest permitted to be charged by
applicable Law from time to time in effect. Neither any Restricted Person nor
any present or future guarantors, endorsers, or other Persons hereafter becoming
liable for payment of any Obligation shall ever be liable for unearned interest
thereon or shall ever be required to pay interest thereon in excess of the
maximum amount that may be lawfully charged under applicable Law from time to
time in effect, and the provisions of this section shall control over all other
provisions of the Loan Documents which may be in conflict or apparent conflict
herewith.
Section 10.9. Termination; Limited Survival. In its sole and absolute
discretion Borrower may at any time that no Obligations are owing elect in a
written notice delivered to Agent to terminate this Agreement. Upon receipt by
Agent of such a notice, if no Obligations are then owing this Agreement and all
other Loan Documents shall thereupon be terminated and the parties thereto
released from all prospective obligations thereunder. Notwithstanding the
foregoing or anything herein to the contrary, any waivers or admissions made by
any Restricted Person in any Loan Document, any Obligations under Sections 3.2
through 3.6, and any obligations which any Person may have to indemnify or
compensate any Lender Party shall survive any termination of this Agreement or
any other Loan Document. At the request and expense of Borrower, Agent shall
prepare and execute all necessary instruments to reflect and
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effect such termination of the Loan Documents. Agent is hereby authorized to
execute all such instruments on behalf of all Lenders, without the joinder of or
further action by any Lender.
Section 10.10. Severability. If any term or provision of any Loan
Document shall be determined to be illegal or unenforceable all other terms and
provisions of the Loan Documents shall nevertheless remain effective and shall
be enforced to the fullest extent permitted by applicable Law.
Section 10.11. Counterparts; Fax. This Agreement may be separately
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to
constitute one and the same Agreement. This Agreement and the Loan Documents may
be validly executed and delivered by facsimile or other electronic transmission.
Section 10.12. Waiver of Jury Trial, Punitive Damages, etc. TO THE
EXTENT PERMITTED BY LAW, LENDER PARTIES AND BORROWER HEREBY KNOWINGLY,
VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON, OR DIRECTLY OR INDIRECTLY ARISING OUT
OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR
ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN)
OR ACTIONS OF SUCH PERSONS OR BORROWER. THIS PROVISION IS A MATERIAL INDUCEMENT
FOR LENDER PARTIES' ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
BORROWER AND EACH LENDER PARTY HEREBY FURTHER (A) IRREVOCABLY WAIVES, TO THE
MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER
IN ANY SUCH LITIGATION ANY "SPECIAL DAMAGES", AS DEFINED BELOW, (B) CERTIFIES
THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR AGENT OR COUNSEL FOR ANY PARTY
HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND (C)
ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT, THE OTHER
LOAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION.
AS USED IN THIS SECTION, "SPECIAL DAMAGES" INCLUDES ALL SPECIAL, CONSEQUENTIAL,
EXEMPLARY, OR PUNITIVE DAMAGES (REGARDLESS OF HOW NAMED), BUT DOES NOT INCLUDE
ANY PAYMENTS OR FUNDS WHICH ANY PARTY HERETO HAS EXPRESSLY PROMISED TO PAY OR
DELIVER TO ANY OTHER PARTY HERETO.
IN WITNESS WHEREOF, this Agreement is executed as of the date first
written above.
FORCENERGY INC, as Borrower
By:
-----------------------------------
Name:
Title:
Address:
2730 S.W. 3rd Avenue, Suite 800
Miami, Florida 33192
Attention:
Telephone: (305) 856-8500
Fax: (305) 856-4300
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ING (U.S.) CAPITAL LLC,
Agent, [LC Issuer] and Lender
By:
-----------------------------------
Name:
Title:
Address:
55 E. 52nd Street
New York, New York 10055
Attention:
----------------------------
Telephone: (212)
---------------------
Fax: (212) 832-3616
Maximum Series A Term Loan Amount:
--------------------------------------
Revolving Credit Percentage Share:
--------------------------------------
Domestic Lending Office:
--------------------------------------
Eurodollar Lending Office:
--------------------------------------
DEN NORSKE BANK ASA
By:
-----------------------------------
Name:
Title:
By:
-----------------------------------
Name:
Title:
Maximum Series A Term Loan Amount:
--------------------------------------
Revolving Credit Percentage Share:
--------------------------------------
Domestic Lending Office:
--------------------------------------
Eurodollar Lending Office:
--------------------------------------
<PAGE> 154
MEESPIERSON CAPITAL CORP.
By:
-----------------------------------
Name:
Title:
By:
-----------------------------------
Name:
Title:
Maximum Series A Term Loan Amount:
--------------------------------------
Revolving Credit Percentage Share:
--------------------------------------
Domestic Lending Office:
--------------------------------------
Eurodollar Lending Office:
--------------------------------------
BANK OF SCOTLAND
By:
-----------------------------------
Name:
Title:
Maximum Series A Term Loan Amount:
--------------------------------------
Revolving Credit Percentage Share:
--------------------------------------
Domestic Lending Office:
--------------------------------------
Eurodollar Lending Office:
--------------------------------------
<PAGE> 155
CREDIT AGRICOLE INDOSUEZ
By:
-----------------------------------
Name:
Title:
Maximum Series A Term Loan Amount:
--------------------------------------
Revolving Credit Percentage Share:
--------------------------------------
Domestic Lending Office:
--------------------------------------
Eurodollar Lending Office:
--------------------------------------
NATEXIS BANQUE BFCE
By:
-----------------------------------
Name:
Title:
Maximum Series A Term Loan Amount:
--------------------------------------
Revolving Credit Percentage Share:
--------------------------------------
Domestic Lending Office:
--------------------------------------
Eurodollar Lending Office:
--------------------------------------
SOCIETE GENERALE, SOUTHWEST AGENCY
By:
-----------------------------------
Name:
Title:
Maximum Series A Term Loan Amount:
--------------------------------------
Revolving Credit Percentage Share:
--------------------------------------
Domestic Lending Office:
--------------------------------------
Eurodollar Lending Office:
--------------------------------------
<PAGE> 156
GENERAL ELECTRIC CAPITAL CORP.
By:
-----------------------------------
Name:
Title:
Maximum Series A Term Loan Amount:
--------------------------------------
Revolving Credit Percentage Share:
--------------------------------------
Domestic Lending Office:
--------------------------------------
Eurodollar Lending Office:
--------------------------------------
BANK OF AMERICA
By:
-----------------------------------
Name:
Title:
Maximum Series A Term Loan Amount:
--------------------------------------
Revolving Credit Percentage Share:
--------------------------------------
Domestic Lending Office:
--------------------------------------
Eurodollar Lending Office:
--------------------------------------
AVENUE MANAGEMENT LLC
By:
-----------------------------------
Name:
Title:
Maximum Series A Term Loan Amount:
--------------------------------------
Revolving Credit Percentage Share:
--------------------------------------
Domestic Lending Office:
--------------------------------------
Eurodollar Lending Office:
--------------------------------------
<PAGE> 157
SCHEDULE 1
DISCLOSURE SCHEDULE
To supplement the following sections of the Agreement of which this
Schedule is a part, Borrower hereby makes the following disclosures:
1. Initial Financial Statements:
2. Other Obligations:
3. Litigation:
4. ERISA Liabilities:
5. Names and Places of Business:
6. Borrower's Subsidiaries and Stockholdings:
7. Initial Engineering Reports
<PAGE> 158
SCHEDULE 2
SECURITY SCHEDULE
[The following direct and indirect Subsidiaries of Borrower -
Forcenergy Resources, Inc., Forcenergy Onshore Inc., Forcenergy Ltd., Forcenergy
Drilling Inc., Forcenergy GOM Inc., Forcenergy International Inc., Forcenergy
Phenix Marin Corp., Forcenergy Gryphon B.V., Forcenergy Australia Pty Ltd.,
Edisto Energy Inc., Edisto Energy Canada, Inc., Forcenergy Invest AM, FAB
Holding Co. LLC, Forcenergy AB, and Mint Holding Co. - shall unconditionally and
absolutely guaranty payment of Borrower's obligations hereunder and Borrower and
such Subsidiaries shall grant Lenders security interests and liens, with
priority over all existing and future security interests, liens, claims, and
encumbrances, in and on all real and personal property, whether now existing or
hereafter acquired, and all proceeds, products, rents, revenues, and profits of
the same, of such Persons.]
[Borrower will assign deposit accounts and agree not to move bank
accounts.]
<PAGE> 159
EXHIBIT A-1
PROMISSORY NOTE
[Revolving Credit Note]
$_________________ New York, New York ________, 1999
FOR VALUE RECEIVED, the undersigned, Forcenergy Inc, a Delaware
corporation (herein called "Borrower"), hereby promises to pay to the order of
ING (U.S.) Capital LLC, (herein called "Lender"), the principal sum of
_______________________________________ Dollars ($ __________), or, if greater
or less, the aggregate unpaid principal amount of the Loan made under this Note
by Lender to Borrower pursuant to the terms of the Credit Agreement (as
hereinafter defined), together with interest on the unpaid principal balance
thereof as hereinafter set forth, both principal and interest payable as herein
provided in lawful money of the United States of America at the offices of Agent
under the Credit Agreement, ____________________ or at such other place within
____________ County, ____________, as from time to time may be designated by the
holder of this Note.
This Note (a) is issued and delivered under that certain Credit
Agreement of even date herewith among Borrower, ING (U.S.) Capital LLC, as
Agent, and the lenders (including Lender) referred to therein (herein, as from
time to time supplemented, amended or restated, called the "Credit Agreement"),
and is a "Note" as defined therein, (b) is subject to the terms and provisions
of the Credit Agreement, which contains provisions for payments and prepayments
hereunder and acceleration of the maturity hereof upon the happening of certain
stated events, and (c) is secured by and entitled to the benefits of certain
Security Documents (as identified and defined in the Credit Agreement). Payments
on this Note shall be made and applied as provided herein and in the Credit
Agreement. Reference is hereby made to the Credit Agreement for a description of
certain rights, limitations of rights, obligations and duties of the parties
hereto and for the meanings assigned to terms used and not defined herein and to
the Security Documents for a description of the nature and extent of the
security thereby provided and the rights of the parties thereto.
The principal amount of this Note, together with all interest accrued
hereon, shall be due and payable in full on ____________, 19__.
So long as no Event of Default has occurred and is continuing, all Base
Rate Loans (exclusive of any past due principal or interest) from time to time
outstanding shall bear interest on each day outstanding at the Base Rate in
effect on such day. If an Event of Default has occurred and is continuing, all
Base Rate Loans (exclusive of any past due principal or interest) from time to
time outstanding shall bear interest on each day outstanding at the Default Rate
in effect on such day. On each Interest Payment Date Borrower shall pay to the
holder hereof all unpaid interest which has accrued on the Base Rate Loans to
but not including such Interest Payment Date. So long as no Event of Default has
occurred and is continuing, each Eurodollar Loan (exclusive of any past due
principal or interest) shall bear interest on each day during the related
Interest Period at the related Adjusted Eurodollar Rate in effect on such day.
If an Event
<PAGE> 160
of Default has occurred and is continuing, all Eurodollar Loans (exclusive of
any past due principal or interest) from time to time outstanding shall bear
interest on each day outstanding at the Default Rate in effect on such day. On
each Interest Payment Date relating to such Eurodollar Loan, Borrower shall pay
to the holder hereof all unpaid interest which has accrued on such Eurodollar
Loan to but not including such Interest Payment Date. All past due principal of
and past due interest on the Loans shall bear interest on each day outstanding
at the Default Rate in effect on such day, and such interest shall be due and
payable daily as it accrues.
Notwithstanding the foregoing paragraph and all other provisions of
this Note, in no event shall the interest payable hereon, whether before or
after maturity, exceed the maximum interest which, under applicable Law, may be
charged on this Note, and this Note is expressly made subject to the provisions
of the Credit Agreement which more fully set out the limitations on how interest
accrues hereon.
If this Note is placed in the hands of an attorney for collection after
default, or if all or any part of the indebtedness represented hereby is proved,
established or collected in any court or in any bankruptcy, receivership, debtor
relief, probate or other court proceedings, Borrower and all endorsers, sureties
and guarantors of this Note jointly and severally agree to pay reasonable
attorneys' fees and collection costs to the holder hereof in addition to the
principal and interest payable hereunder.
Borrower and all endorsers, sureties and guarantors of this Note hereby
severally waive demand, presentment, notice of demand and of dishonor and
nonpayment of this Note, protest, notice of protest, notice of intention to
accelerate the maturity of this Note, declaration or notice of acceleration of
the maturity of this Note, diligence in collecting, the bringing of any suit
against any party and any notice of or defense on account of any extensions,
renewals, partial payments or changes in any manner of or in this Note or in any
of its terms, provisions and covenants, or any releases or substitutions of any
security, or any delay, indulgence or other act of any trustee or any holder
hereof, whether before or after maturity.
THIS NOTE AND THE RIGHTS AND DUTIES OF THE PARTIES HERETO SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW), EXCEPT TO THE EXTENT THE SAME ARE GOVERNED BY APPLICABLE
FEDERAL LAW.
FORCENERGY INC
By:
-----------------------------------
Name:
Title:
2
<PAGE> 161
EXHIBIT A-2
PROMISSORY NOTE
[Series A Term Note]
$_________________ New York, New York ________, 1999
FOR VALUE RECEIVED, the undersigned, Forcenergy Inc, a Delaware
corporation (herein called "Borrower"), hereby promises to pay to the order of
ING (U.S.) Capital LLC, (herein called "Lender"), the principal sum of
_______________________________________ Dollars ($ __________), or, if greater
or less, the aggregate unpaid principal amount of the Loan made under this Note
by Lender to Borrower pursuant to the terms of the Credit Agreement (as
hereinafter defined), together with interest on the unpaid principal balance
thereof as hereinafter set forth, both principal and interest payable as herein
provided in lawful money of the United States of America at the offices of Agent
under the Credit Agreement, ____________________ or at such other place within
____________ County, ____________, as from time to time may be designated by the
holder of this Note.
This Note (b) is issued and delivered under that certain Credit
Agreement of even date herewith among Borrower, ING (U.S.) Capital LLC, as
Agent, and the lenders (including Lender) referred to therein (herein, as from
time to time supplemented, amended or restated, called the "Credit Agreement"),
and is a "Note" as defined therein, (b) is subject to the terms and provisions
of the Credit Agreement, which contains provisions for payments and prepayments
hereunder and acceleration of the maturity hereof upon the happening of certain
stated events, and (c) is secured by and entitled to the benefits of certain
Security Documents (as identified and defined in the Credit Agreement). Payments
on this Note shall be made and applied as provided herein and in the Credit
Agreement. Reference is hereby made to the Credit Agreement for a description of
certain rights, limitations of rights, obligations and duties of the parties
hereto and for the meanings assigned to terms used and not defined herein and to
the Security Documents for a description of the nature and extent of the
security thereby provided and the rights of the parties thereto.
The principal amount of this Note, together with all interest accrued
hereon, shall be due and payable in full on ____________, 19__.
So long as no Event of Default has occurred and is continuing, all Base
Rate Loans (exclusive of any past due principal or interest) from time to time
outstanding shall bear interest on each day outstanding at the Base Rate in
effect on such day. If an Event of Default has occurred and is continuing, all
Base Rate Loans (exclusive of any past due principal or interest) from time to
time outstanding shall bear interest on each day outstanding at the Default Rate
in effect on such day. On each Interest Payment Date Borrower shall pay to the
holder hereof all unpaid interest which has accrued on the Base Rate Loans to
but not including such Interest Payment Date. So long as no Event of Default has
occurred and is continuing, each Eurodollar Loan (exclusive of any past due
principal or interest) shall bear interest on each day during the
related Interest Period at the related Adjusted Eurodollar Rate in effect on
such day. If an Event of Default has occurred and is continuing, all Eurodollar
Loans (exclusive of any past due principal or interest) from time to time
outstanding shall bear interest on each day outstanding at
<PAGE> 162
the Default Rate in effect on such day. On each Interest Payment Date relating
to such Eurodollar Loan, Borrower shall pay to the holder hereof all unpaid
interest which has accrued on such Eurodollar Loan to but not including such
Interest Payment Date. All past due principal of and past due interest on the
Loans shall bear interest on each day outstanding at the Default Rate in effect
on such day, and such interest shall be due and payable daily as it accrues.
Notwithstanding the foregoing paragraph and all other provisions of
this Note, in no event shall the interest payable hereon, whether before or
after maturity, exceed the maximum interest which, under applicable Law, may be
charged on this Note, and this Note is expressly made subject to the provisions
of the Credit Agreement which more fully set out the limitations on how interest
accrues hereon.
If this Note is placed in the hands of an attorney for collection after
default, or if all or any part of the indebtedness represented hereby is proved,
established or collected in any court or in any bankruptcy, receivership, debtor
relief, probate or other court proceedings, Borrower and all endorsers, sureties
and guarantors of this Note jointly and severally agree to pay reasonable
attorneys' fees and collection costs to the holder hereof in addition to the
principal and interest payable hereunder.
Borrower and all endorsers, sureties and guarantors of this Note hereby
severally waive demand, presentment, notice of demand and of dishonor and
nonpayment of this Note, protest, notice of protest, notice of intention to
accelerate the maturity of this Note, declaration or notice of acceleration of
the maturity of this Note, diligence in collecting, the bringing of any suit
against any party and any notice of or defense on account of any extensions,
renewals, partial payments or changes in any manner of or in this Note or in any
of its terms, provisions and covenants, or any releases or substitutions of any
security, or any delay, indulgence or other act of any trustee or any holder
hereof, whether before or after maturity.
THIS NOTE AND THE RIGHTS AND DUTIES OF THE PARTIES HERETO SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW), EXCEPT TO THE EXTENT THE SAME ARE GOVERNED BY APPLICABLE
FEDERAL LAW.
FORCENERGY INC
By:
-----------------------------------
Name:
Title:
2
<PAGE> 163
EXHIBIT A-3
PROMISSORY NOTE
[Series B Term Note]
$_________________ New York, New York ________, 1999
FOR VALUE RECEIVED, the undersigned, Forcenergy Inc, a Delaware
corporation (herein called "Borrower"), hereby promises to pay to the order of
ING (U.S.) Capital LLC, (herein called "Lender"), the principal sum of
_______________________________________ Dollars ($ __________), or, if greater
or less, the aggregate unpaid principal amount of the Loan made under this Note
by Lender to Borrower pursuant to the terms of the Credit Agreement (as
hereinafter defined), together with interest on the unpaid principal balance
thereof as hereinafter set forth, both principal and interest payable as herein
provided in lawful money of the United States of America at the offices of Agent
under the Credit Agreement, ____________________ or at such other place within
____________ County, ____________, as from time to time may be designated by the
holder of this Note.
This Note (c) is issued and delivered under that certain Credit
Agreement of even date herewith among Borrower, ING (U.S.) Capital LLC, as
Agent, and the lenders (including Lender) referred to therein (herein, as from
time to time supplemented, amended or restated, called the "Credit Agreement"),
and is a "Note" as defined therein, (b) is subject to the terms and provisions
of the Credit Agreement, which contains provisions for payments and prepayments
hereunder and acceleration of the maturity hereof upon the happening of certain
stated events, and (c) is secured by and entitled to the benefits of certain
Security Documents (as identified and defined in the Credit Agreement). Payments
on this Note shall be made and applied as provided herein and in the Credit
Agreement. Reference is hereby made to the Credit Agreement for a description of
certain rights, limitations of rights, obligations and duties of the parties
hereto and for the meanings assigned to terms used and not defined herein and to
the Security Documents for a description of the nature and extent of the
security thereby provided and the rights of the parties thereto.
The principal amount of this Note, together with all interest accrued
hereon, shall be due and payable in full on ____________, 19__.
So long as no Event of Default has occurred and is continuing, all Base
Rate Loans (exclusive of any past due principal or interest) from time to time
outstanding shall bear interest on each day outstanding at the Base Rate in
effect on such day. If an Event of Default has occurred and is continuing, all
Base Rate Loans (exclusive of any past due principal or interest) from time to
time outstanding shall bear interest on each day outstanding at the Default Rate
in effect on such day. On each Interest Payment Date Borrower shall pay to the
holder hereof all unpaid interest which has accrued on the Base Rate Loans to
but not including such Interest Payment Date. So long as no Event of Default has
occurred and is continuing, each Eurodollar Loan (exclusive of any past due
principal or interest) shall bear interest on each day during the
related Interest Period at the related Adjusted Eurodollar Rate in effect on
such day. If an Event
<PAGE> 164
of Default has occurred and is continuing, all Eurodollar Loans (exclusive of
any past due principal or interest) from time to time outstanding shall bear
interest on each day outstanding at the Default Rate in effect on such day. On
each Interest Payment Date relating to such Eurodollar Loan, Borrower shall pay
to the holder hereof all unpaid interest which has accrued on such Eurodollar
Loan to but not including such Interest Payment Date. All past due principal of
and past due interest on the Loans shall bear interest on each day outstanding
at the Default Rate in effect on such day, and such interest shall be due and
payable daily as it accrues.
Notwithstanding the foregoing paragraph and all other provisions of
this Note, in no event shall the interest payable hereon, whether before or
after maturity, exceed the maximum interest which, under applicable Law, may be
charged on this Note, and this Note is expressly made subject to the provisions
of the Credit Agreement which more fully set out the limitations on how interest
accrues hereon.
If this Note is placed in the hands of an attorney for collection after
default, or if all or any part of the indebtedness represented hereby is proved,
established or collected in any court or in any bankruptcy, receivership, debtor
relief, probate or other court proceedings, Borrower and all endorsers, sureties
and guarantors of this Note jointly and severally agree to pay reasonable
attorneys' fees and collection costs to the holder hereof in addition to the
principal and interest payable hereunder.
Borrower and all endorsers, sureties and guarantors of this Note hereby
severally waive demand, presentment, notice of demand and of dishonor and
nonpayment of this Note, protest, notice of protest, notice of intention to
accelerate the maturity of this Note, declaration or notice of acceleration of
the maturity of this Note, diligence in collecting, the bringing of any suit
against any party and any notice of or defense on account of any extensions,
renewals, partial payments or changes in any manner of or in this Note or in any
of its terms, provisions and covenants, or any releases or substitutions of any
security, or any delay, indulgence or other act of any trustee or any holder
hereof, whether before or after maturity.
THIS NOTE AND THE RIGHTS AND DUTIES OF THE PARTIES HERETO SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW), EXCEPT TO THE EXTENT THE SAME ARE GOVERNED BY APPLICABLE
FEDERAL LAW.
FORCENERGY INC
By:
-----------------------------------
Name:
Title:
2
<PAGE> 165
EXHIBIT B
BORROWING NOTICE
Reference is made to that certain Credit Agreement dated as of ______,
1999 (as from time to time amended, the "Agreement"), by and among Forcenergy
Inc ("Borrower"), ING (U.S.) Capital LLC, as Agent, and certain financial
institutions ("Lenders"). Terms which are defined in the Agreement are used
herein with the meanings given them in the Agreement. Pursuant to the terms of
the Agreement Borrower hereby requests a Borrowing of new Loans to be advanced
pursuant to Section 2.3(a) of the Agreement as follows:
Aggregate amount of Borrowing: $__________________
Type of Loans in Borrowing: __________________
Date on which Loans are to
be advanced: __________________
Length of Interest Period for
Eurodollar Loans (1, 2 or 3 months): ___________ months
If combined with existing Loans
see attached Continuation/Conversion Notice.
To induce Lenders to make such Loans, Borrower hereby represents,
warrants, acknowledges, and agrees to and with Agent and each Lender that:
(a) The officer of Borrower signing this instrument is the duly
elected, qualified and acting officer of Borrower as indicated below such
officer's signature hereto having all necessary authority to act for Borrower in
making the request herein contained.
(b) The representations and warranties of Borrower set forth in the
Agreement and the other Loan Documents are true and correct on and as of the
date hereof (except to the extent that the facts on which such representations
and warranties are based have been changed by the extension of credit under the
Agreement), with the same effect as though such representations and warranties
had been made on and as of the date hereof.
(c) There does not exist on the date hereof any condition or event
which constitutes a Default which has not been waived in writing as provided in
Section 10.1(a) of the Agreement; nor will any such Default exist upon
Borrower's receipt and application of the Advances requested hereby. Borrower
will use the Advances hereby requested in compliance with Section 2.5 of the
Agreement.
<PAGE> 166
(d) Except to the extent waived in writing as provided in Section
10.1(a) of the Agreement, Borrower has performed and complied with all
agreements and conditions in the Agreement required to be performed or complied
with by Borrower on or prior to the date hereof, and each of the conditions
precedent to Advances contained in the Agreement remains satisfied.
(e) The Facility Usage, after the making of the Advances requested
hereby, will not be in excess of the Revolving Credit Commitment on the date
requested for the making of such Advances.
(f) The Loan Documents have not been modified, amended or supplemented
by any unwritten representations or promises, by any course of dealing, or by
any other means not provided for in Section 10.1(a) of the Agreement. The
Agreement and the other Loan Documents are hereby ratified, approved, and
confirmed in all respects.
The officer of Borrower signing this instrument hereby certifies that,
to the best of his knowledge after due inquiry, the above representations,
warranties, acknowledgments, and agreements of Borrower are true, correct and
complete.
IN WITNESS WHEREOF, this instrument is executed as of ____________,
19__.
FORCENERGY INC
By:
-----------------------------------
Name:
Title:
2
<PAGE> 167
EXHIBIT C
CONTINUATION/CONVERSION NOTICE
Reference is made to that certain Credit Agreement dated as of _______,
1999 (as from time to time amended, the "Agreement"), by and among Forcenergy
Inc ("Borrower"), ING (U.S.) Capital LLC, as Agent, and the lenders referred to
therein ("Lenders"). Terms which are defined in the Agreement are used herein
with the meanings given them in the Agreement.
Borrower hereby requests a Conversion or Continuation of existing Loans
into a new Borrowing pursuant to Section 2.4 of the Agreement as follows:
Existing Borrowing(s) to be continued or converted:
$____________ of Eurodollar Loans with Interest Period ending _________
$____________ of Base Rate Loans
If being combined with new Loans, $____________ of new Loans to be
advanced on __________
Aggregate amount of new Borrowing: $__________________
Type of Loans in new Borrowing: __________________
Date of Continuation or Conversion: __________________
Length of Interest Period for Eurodollar Loans
(1, 2 or 3 months): ___________ months
To meet the conditions set out in the Agreement for such
conversion/continuation, Borrower hereby represents, warrants, acknowledges, and
agrees to and with Agent and each Lender that:
(a) The officer of Borrower signing this instrument is the duly
elected, qualified and acting officer of Borrower as indicated below such
officer's signature hereto having all necessary authority to act for Borrower in
making the request herein contained.
(b) here does not exist on the date hereof any condition or event which
constitutes a Default which has not been waived in writing as provided in
Section 10.1(a) of the Agreement.
(c) he Loan Documents have not been modified, amended or supplemented
by any unwritten representations or promises, by any course of dealing, or by
any other means not provided for in Section 10.1(a) of the Agreement. The
Agreement and the other Loan Documents are hereby ratified, approved, and
confirmed in all respects.
<PAGE> 168
The officer of Borrower signing this instrument hereby certifies that,
to the best of his knowledge after due inquiry, the above representations,
warranties, acknowledgments, and agreements of Borrower are true, correct and
complete.
IN WITNESS WHEREOF this instrument is executed as of _________________.
FORCENERGY INC
By:
------------------------------
Name:
Title:
2
<PAGE> 169
EXHIBIT D
CERTIFICATE ACCOMPANYING
FINANCIAL STATEMENTS
Reference is made to that certain Credit Agreement dated as of
________, 1999 (as from time to time amended, the "Agreement"), by and among
Forcenergy Inc ("Borrower"), ING (U.S.) Capital LLC, as Agent, and certain
financial institutions ("Lenders"), which Agreement is in full force and effect
on the date hereof. Terms which are defined in the Agreement are used herein
with the meanings given them in the Agreement.
This Certificate is furnished pursuant to Section 6.1(b) of the
Agreement. Together herewith Borrower is furnishing to Agent and each Lender
Borrower's *[audited/unaudited] financial statements (the "Financial
Statements") as at ____________ (the "Reporting Date"). Borrower hereby
represents, warrants, and acknowledges to Agent and each Lender that:
(a) the officer of Borrower signing this instrument is the duly
elected, qualified and acting ____________ of Borrower and as such is Borrower's
chief financial officer;
(b) the Financial Statements are accurate and complete and satisfy the
requirements of the Agreement;
(c) attached hereto is a schedule of calculations showing Borrower's
compliance as of the Reporting Date with the requirements of Sections 7.12
through 7.15 of the Agreement and Borrower's non-compliance as of such date with
the requirements of Section(s) ____________ of the Agreement;
(d) on the Reporting Date Borrower was, and on the date hereof Borrower
is, in full compliance with the disclosure requirements of Section [6.4] 5.1(d)
of the Agreement, and no Default otherwise existed on the Reporting Date or
otherwise exists on the date of this instrument *[except for Default(s) under
Section(s) ____________ of the Agreement, which *[is/are] more fully described
on a schedule attached hereto].
(e) *[Unless otherwise disclosed on a schedule attached hereto,] The
representations and warranties of Borrower set forth in the Agreement and the
other Loan Documents are true and correct on and as of the date hereof (except
to the extent that the facts on which such representations and warranties are
based have been changed by the extension of credit under the Agreement), with
the same effect as though such representations and warranties had been made on
and as of the date hereof.
The officer of Borrower signing this instrument hereby certifies that
he has reviewed the Loan Documents and the Financial Statements and has
otherwise undertaken such inquiry as is in his opinion necessary to enable him
to express an informed opinion with respect to the above representations,
warranties and acknowledgments of Borrower and, to the best of his knowledge,
such representations, warranties, and acknowledgments are true, correct and
complete.
<PAGE> 170
IN WITNESS WHEREOF, this instrument is executed as of __________, 19__.
FORCENERGY INC
By:
-------------------------------
Name:
Title:
2
<PAGE> 171
EXHIBIT G
ENVIRONMENTAL COMPLIANCE CERTIFICATE
Reference is made to that certain Credit Agreement dated as of _______,
1999 (as from time to time amended, the "Agreement"), by and among Forcenergy
Inc ("Borrower"), ING (U.S.) Capital LLC, as Agent, and certain financial
institutions. Terms which are defined in the Agreement are used herein with the
meanings given them in the Agreement. The undersigned, being the
*[President/Chief Executive Officer] of Borrower, hereby certifies to Agent and
Lenders as follows:
1. For the Fiscal Year ending immediately prior to the date hereof,
Borrower has complied and is complying with Section [____] of the Credit
Agreement *[except as set forth in Schedule I attached hereto];
2. To the best knowledge of the undersigned after due inquiry, Borrower
is on the date hereof in compliance with all applicable Environmental Laws,
noncompliance with which could cause a Material Adverse Change;
3. Borrower has taken (and continues to take) steps to minimize the
generation of potentially harmful effluents;
4. Borrower has established an ongoing program of conducting an
internal audit of each operating facility of Borrower to identify actual or
potential environmental liabilities which could cause a Material Adverse Change;
and
5. Borrower has established an ongoing program of training its
employees in issues of environmental, health and safety compliance, and Borrower
presently has one or more individuals in charge of implementing such training
program.
The officer of Borrower signing this instrument hereby certifies that,
to the best of his knowledge after due inquiry and consultation with the
operating officers of Borrower, the above representations, warranties,
acknowledgments, and agreements of Borrower are true, correct and complete.
IN WITNESS WHEREOF, this instrument is executed as of __________, 19__.
FORCENERGY INC
By:
---------------------------------
Name:
Title:
<PAGE> 172
EXHIBIT F
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement dated as of ______, 1999 (the
"Credit Agreement") among Forcenergy Inc, a Delaware corporation (the
"Borrower"), the Lenders (as defined in the Credit Agreement) and ING (U.S.)
Capital LLC, as agent for the Lenders (the "Agent"). Terms defined in the Credit
Agreement are used herein with the same meaning.
The "Assignor" and the "Assignee" referred to on Schedule 1 agree as
follows:
1. The Assignor hereby sells and assigns to the Assignee, without
recourse and without representation or warranty except as expressly set forth
herein, and the Assignee hereby purchases and assumes from the Assignor, an
interest in and to the Assignor's rights and obligations under the Credit
Agreement and the other Loan Documents as of the date hereof equal to the
percentage interest specified on Schedule 1 of all outstanding rights and
obligations under the Credit Agreement and the other Loan Documents. After
giving effect to such sale and assignment, the Assignee's Commitment and the
amount of the Loans owing to the Assignee will be as set forth on Schedule 1.
2. The Assignor (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (ii) makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Loan Documents
or the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Loan Documents or any other instrument or document furnished
pursuant thereto; (iii) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of any Restricted Person
or the performance or observance by any Restricted Person of any of its
obligations under the Loan Documents or any other instrument or document
furnished pursuant thereto; and (iv) attaches the Note held by the Assignor and
requests that Agent exchange such Note for new Notes payable to the order of the
Assignee in an amount equal to the Commitment assumed by the Assignee pursuant
hereto and to the Assignor in an amount equal to the Commitment retained by the
Assignor, if any, as specified on Schedule 1.
3. The Assignee (i) confirms that it has received a copy of the Credit
Agreement, together with copies of the financial statements referred to in
Section [____] thereof and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Acceptance; (ii) agrees that it will, independently and without
reliance upon Agent, the Assignor or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Credit
Agreement; (iii) confirms that it is an Eligible Assignee; (iv) appoints and
authorizes Agent to take such action as agent on its behalf and to exercise such
powers and discretion under the Credit Agreement as are delegated to Agent by
the terms thereof, together with such powers and discretion as are reasonably
incidental thereto; (v) agrees that it will perform in accordance with their
terms all of the
<PAGE> 173
obligations that by the terms of the Credit Agreement are required to be
performed by it as a Lender; and (vi) attaches any U.S. Internal Revenue Service
or other forms required under Section [____].
4. Following the execution of this Assignment and Acceptance, it will
be delivered to Agent for acceptance and recording by Agent. The effective date
for this Assignment and Acceptance (the "Effective Date") shall be the date of
acceptance hereof by Agent, unless otherwise specified on Schedule 1.
5. Upon such acceptance and recording by Agent, as of the Effective
Date, (vii) the Assignee shall be a party to the Credit Agreement and, to the
extent provided in this Assignment and Acceptance, have the rights and
obligations of a Lender thereunder and (viii) the Assignor shall, to the extent
provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Credit Agreement.
6. Upon such acceptance and recording by Agent, from and after the
Effective Date, Agent shall make all payments under the Credit Agreement and the
Notes in respect of the interest assigned hereby (including, without limitation,
all payments of principal, interest and commitment fees with respect thereto) to
the Assignee. The Assignor and Assignee shall make all appropriate adjustments
in payments under the Credit Agreement and the Notes for periods prior to the
Effective Date directly between themselves.
7. This Assignment and Acceptance shall be governed by, and construed
in accordance with, the Laws of the State of New York.
8. This Assignment and Acceptance may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Delivery of an executed
counterpart of Schedule 1 to this Assignment and Acceptance by telecopier shall
be effective as delivery of a manually executed counterpart of this Assignment
and Acceptance.
IN WITNESS WHEREOF, the Assignor and the Assignee have caused Schedule
1 to this Assignment and Acceptance to be executed by their officers thereunto
duly authorized as of the date specified thereon.
2
<PAGE> 174
SCHEDULE 1
to
ASSIGNMENT AND ACCEPTANCE
Percentage interest assigned: ________%
Assignee's Commitment: $_______
Aggregate outstanding principal amount of Loans assigned: $_______
Principal amount of Note payable to Assignee: $_______
Principal amount of Note payable to Assignor: $_______
Effective Date (if other than date of acceptance by Agent): *____, 19__
[NAME OF ASSIGNOR], as Assignor
By:
--------------------------------------
Title:
Dated:________________, 19__
[NAME OF ASSIGNEE], as Assignee
By:
--------------------------------------
Title:
Domestic Lending Office:
Eurodollar Lending Office:
* This date should be no earlier than five Business Days after the
delivery of this Assignment and Acceptance to Agent.
<PAGE> 175
Accepted [and Approved] **
this ___ day of ___________, 19 _
*[NAME OF AGENT]
By:
----------------------------
Title:
[Approved this ____ day
of ____________, 19__
[NAME OF BORROWER]
By: ______________________________]**
Title:
** Required if the Assignee is an Eligible Assignee solely by reason of
subsection (iii) of the definition of "Eligible Assignee".
2
<PAGE> 176
EXHIBIT 6
SECURED CRAMDOWN
PROMISSORY NOTE
$ New York, New York September __, 1999
---------------------
FOR VALUE RECEIVED, the undersigned, Forcenergy Inc, a Delaware
corporation (formerly known as Forcenergy Gas Exploration, Inc. and herein
called "Borrower"), hereby promises to pay to the order of ______, a ______ and
(herein called "Lender"), the principal sum of ______ and No/100 Dollars
($______), together with interest on the unpaid principal balance thereof at the
rate of eight percent (8%) per annum, both principal and interest payable as
herein provided in lawful money of the United States of America at the offices
of the Lender, ______, or at such other place as from time to time may be
designated by the holder of this Note.
This Note (a) is issued and delivered under the Debtors' Joint Plan of
Reorganization Under Chapter 11 of the Bankruptcy Code in In re: Forcenergy, Inc
and In re: Forcenergy Resources Inc., Jointly Administered Cases Nos. 99-11391
and 99-11392 filed in the United States Bankruptcy Court for the Eastern
District of Louisiana (the "Bankruptcy Proceeding"), which Plan was confirmed on
______, 1999 (the "Plan of Reorganization"), and (b) is secured by and entitled
to the benefits of that certain (i) Renewal Deed of Trust, Mortgage, Assignment,
Security Agreement, Fixture Filing and Financing Statement from Borrower to
______, Trustee and ING (U.S.) Capital LLC, as Collateral Agent for the Lender
and others (the "Agent"), (ii) Stock Pledge Agreement from Borrower in favor of
Agent and (iii) Guarantor Stock Pledge Agreement from Forcenergy Resources, Inc.
in favor of Agent (the "Security Documents"). Reference is hereby made to the
Security Documents for a description of the nature and extent of the security
thereby provided (the "Collateral") and the rights of the parties thereto.
This Note is given in replacement of and substitution for, but does not
extinguish the debt evidenced by, the Note(s) issued to Lender (as identified
and defined in that certain Fifth Restatement of Credit Agreement dated April
13, 1998, among Borrower, ING (U.S.) Capital Corporation as Agent, and the
Lenders referred to therein).
The amounts owing under this Note shall be due and payable as follows:
(i) On the first day of the first calendar month following the Effective Date
(hereafter defined), and on the first day of each succeeding calendar month
thereafter, accrued interest shall be due and payable; and (ii) all accrued, but
unpaid interest, and all unpaid principal owing under this Note, shall be due
and payable on the fifth anniversary of the Effective Date. All payments
received shall be applied first to the costs of collection, second to accrued,
but unpaid interest and finally to principal.
Borrower may prepay this Note or any portion hereof at any time and
from time to time prior to maturity without penalty. All such prepayments
received shall be applied first to accrued, but unpaid interest, and secondly to
principal.
<PAGE> 177
In the event the ratio of (i) the value of the Collateral securing all
notes issued under the Plan of Reorganization to (ii) the principal amount
outstanding under all notes issued to Class 3 claimants under the Plan or
Reorganization, is at any fiscal quarter less than 4:3, Borrower shall be
required to prepay this Note in the amount necessary to achieve a 4:3 ratio. The
Collateral shall be valued on a quarterly basis by the Borrower using an SEC
PV-10 valuation, except substituting the average NYMEX price for oil and gas
during the prior quarter. Borrower shall provide the valuation to the Lender
within forty-five (45) days after the end of each fiscal quarter. To the extent
a prepayment is required, such payment shall be due within (30) days following
delivery of the valuation to the Lender.
Borrower and all endorsers, sureties and guarantors of this Note hereby
severally waive demand, presentment, notice of demand and of dishonor and
nonpayment of this Note, protest, notice of protest, notice of intention to
accelerate the maturity of this Note, declaration or notice of acceleration of
the maturity of this Note, diligence in collecting, the bringing of any suit
against any party and any notice of or defense on account of any extensions,
renewals, partial payments or changes in any manner of or in this Note or in any
of its terms, provisions and covenants, or any releases or substitutions of any
security, or any delay, indulgence or other act of any trustee or any holder
hereof, whether before or after maturity.
It is agreed that: (a) if default shall be made in the timely payment
of principal on this Note which default has not been cured by Borrower within
five (5) days; (b) if default shall be made in the timely payment of interest on
this Note, which default has not been cured by Borrower within thirty (30) days;
(c) if default is made in the observance of any covenant of the Borrower under
the Security Documents, which default has not been cured by the Borrower within
sixty (60) days after the date of receipt by Borrower of written notice of such
default from Lender; or (d) should Borrower or any endorser, surety or guarantor
hereof make an assignment for the benefit of creditors, file a petition under
any bankruptcy law or any insolvency law or any other law for the relief or aid
of debtors, including, without limitation, the Federal Bankruptcy Code of 1986
or any amendment thereto (any such law or code being herein referred to as a
"Bankruptcy Law") or file a petition or answer seeking for itself, or consenting
to or acquiescing in any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any Bankruptcy Law or failure
of any such petition filed against it to be dismissed within sixty (60) days
from the date when filed or should a receiver, custodian, liquidator, fiscal
agent or trustee of any of them or of the whole or any substantial part of their
properties or assets be appointed or should a court enter an order, judgment or
decree approving a petition filed against any one of them seeking
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any Bankruptcy Law or should an order of relief be
entered pursuant to any such Bankruptcy Law with respect to any one of them,
then such event shall be deemed to be, and is hereinafter referred to as a
"Default".
It is agreed that in the event of a Default hereunder, the Lender or
any other holder hereof, at its option, may declare the entirety of this Note,
together with all accrued but unpaid interest thereon and hereon, immediately
due and payable without notice, demand or presentment to the
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<PAGE> 178
Borrower or any other person or party, all of which are hereby waived, and
failure to exercise said option shall not constitute a waiver on the part of
Lender or any other holder hereof of the right to exercise said option at any
other time.
If this Note is not paid at maturity, howsoever said maturity may be
brought about, and the same is placed in the hands of an attorney for collection
or if collection by suit or by any other legal proceedings is sought, the
undersigned agrees to pay Lender all costs and expenses incurred by Lender in
connection therewith, including, but not limited to, reasonable attorneys' fees,
all of which shall become a part of the principal hereof.
Borrower and all other parties hereafter assuming or otherwise becoming
liable for the payment of any sum of money payable under this Note jointly and
severally waive notice of acceleration and notice of intent to accelerate,
grace, presentment and demand for payment, notice of protest, and/or dishonor.
The invalidity, or unenforceability in particular circumstances, of any
provision of this Note shall not extend beyond such provision or such
circumstances and no other provision of this instrument shall be affected
thereby.
It is the intention of Borrower and Lender to conform strictly to the
interest laws applicable to this loan transaction. Accordingly, it is agreed
that notwithstanding any provisions to the contrary in this Note, or in any of
the documents securing payment hereof or otherwise relating hereto, the
aggregate of all interest and any other charges or consideration constituting
interest under applicable interest law that is taken, reserved, contracted for,
charged or received under this Note or under any of the other aforesaid
agreements or otherwise in connection with this loan transaction shall under no
circumstances exceed the maximum legal rate of interest allowed by the
applicable law. If any excess of interest in such respect is provided for, or
shall be adjudicated to be so provided for, in this Note, then in such event (a)
neither the Borrower hereof nor Borrower's heirs, legal representatives,
successors or assigns or any other party liable for the payment hereof shall be
obligated to pay the amount of such interest to the extent that it is in excess
of the maximum amount of interest allowed by the interest laws applicable to
this loan transaction, and (b) any excess shall be deemed a mistake and canceled
automatically and, if therefore paid, shall be credited on this Note by the
holder hereof (or if this Note shall have been paid in full, refunded to
Borrower), and (c) the effective rate of interest shall be automatically subject
to reduction to the maximum legal rate of interest allowed under such interest
laws as now or hereafter construed by courts of appropriate jurisdiction. All
sums paid or agreed to be paid the holder or holders hereof for the use,
forbearance or detention of the indebtedness evidenced hereby shall, to the
extent permitted by the interest laws applicable to this loan transaction, be
amortized, prorated, allocated and spread throughout the full term of this Note.
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<PAGE> 179
THIS NOTE AND THE RIGHTS AND DUTIES OF THE PARTIES HERETO SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW), EXCEPT TO THE EXTENT THE SAME ARE GOVERNED BY APPLICABLE
FEDERAL LAW.
EXECUTED to be effective on the _________ day of _________________,
1999 (the "Effective Date").
FORCENERGY INC, formerly known as
Forcenergy Gas Exploration, Inc.
By:
-------------------------------------
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<PAGE> 180
EXHIBIT 7
RENEWAL DEED OF TRUST, MORTGAGE, ASSIGNMENT, SECURITY AGREEMENT,
FIXTURE FILING AND FINANCING STATEMENT
FROM
FORCENERGY INC
(Taxpayer I.D. No. 65-0429338)
TO
FRANK FERRARA, TRUSTEE,
AND
ING (U.S.) CAPITAL LLC, AGENT
(Taxpayer I.D. No. 13-4038440)
Dated September ___, 1999
(The "Effective Date")
A CARBON, PHOTOGRAPHIC, FACSIMILE, OR OTHER REPRODUCTION OF THIS INSTRUMENT IS
SUFFICIENT AS A FINANCING STATEMENT.
THIS INSTRUMENT CONTAINS AFTER ACQUIRED PROPERTY PROVISIONS, SECURES PAYMENT OF
FUTURE ADVANCES, AND COVERS PROCEEDS ON COLLATERAL.
THIS INSTRUMENT COVERS MINERALS AND OTHER SUBSTANCES OF VALUE WHICH MAY BE
EXTRACTED FROM THE EARTH (INCLUDING WITHOUT LIMITATION OIL AND GAS), AND THE
ACCOUNTS RELATED THERETO, WHICH WILL BE FINANCED AT THE WELLHEADS OR MINEHEADS
OF THE WELLS OR MINES LOCATED ON THE PROPERTIES DESCRIBED IN SECTION 1.1 OF THIS
INSTRUMENT. THIS INSTRUMENT COVERS GOODS WHICH ARE OR ARE TO BECOME FIXTURES ON
THE REAL PROPERTY DESCRIBED HEREIN. THIS INSTRUMENT IS TO BE FILED FOR RECORD,
AMONG OTHER PLACES, IN THE REAL ESTATE OR COMPARABLE RECORDS OF THE COUNTIES
AND/OR PARISHES REFERENCED IN EXHIBIT A HERETO AND SUCH FILING SHALL SERVE,
AMONG OTHER PURPOSES, AS A FIXTURE FILING. THE GRANTOR HAS AN INTEREST OF RECORD
IN THE REAL ESTATE AND IMMOVABLE PROPERTY CONCERNED, WHICH INTEREST IS DESCRIBED
IN SECTION 1.1 OF THIS INSTRUMENT.
MISSISSIPPI INDEXING INSTRUCTION: THE PROPERTY SUBJECT TO THIS MORTGAGE IS
LOCATED OFFSHORE. THIS INSTRUMENT SHOULD BE INDEXED IN THE GENERAL INDEX AND THE
RECORDS OF OFFSHORE MATTERS.
A POWER OF SALE HAS BEEN GRANTED IN THIS MORTGAGE. A POWER OF SALE MAY ALLOW
AGENT (AS HEREINAFTER DEFINED) OR THE TRUSTEE (AS HEREINAFTER DEFINED) TO TAKE
THE MORTGAGED PROPERTIES AND SELL THEM WITHOUT GOING TO COURT IN A FORECLOSURE
ACTION UPON DEFAULT BY THE GRANTOR (AS HEREINAFTER DEFINED) UNDER THIS MORTGAGE.
<PAGE> 181
THIS INSTRUMENT SECURES AN OBLIGATION THAT MAY INCREASE OR DECREASE FROM TIME TO
TIME.
WHEN RECORDED OR FILED RETURN TO: THIS DOCUMENT PREPARED BY:
Thompson & Knight, P.C. James Donnell
1700 Pacific Avenue Andrews & Kurth L.L.P.
Suite 3300 600 Travis, Suite 4200
Dallas, Texas 75201 Houston, Texas 77002
Attention: Nancy Heberling
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<PAGE> 182
RENEWAL DEED OF TRUST, MORTGAGE, ASSIGNMENT, SECURITY AGREEMENT,
FIXTURE FILING AND FINANCING STATEMENT
(this "Mortgage")
ARTICLE I.
Granting Clauses; Secured Indebtedness
Section 1.1. Grant and Mortgage. FORCENERGY INC, 2730 S.W. 3rd Avenue,
Suite 800, Miami, Dade County, Florida 33129-2237 (herein called "Grantor"), for
and in consideration of the sum of Ten Dollars ($10.00) and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, to Grantor in hand paid, and in order to secure the payment of the
secured indebtedness hereinafter referred to and the performance of the
obligations, covenants, agreements, warranties and undertakings of Grantor
hereinafter described, does hereby (a) GRANT, BARGAIN, SELL, CONVEY, TRANSFER,
ASSIGN and SET OVER to Frank Ferrara, Trustee (herein called "Trustee"), and
grant to Trustee a POWER OF SALE (pursuant to this Mortgage and applicable law)
with respect to, those of the following described properties; rights and
interests which are located in (or cover properties located in) the States of
Texas, Alaska or Mississippi, or which are located within (or cover properties
located within) the offshore area over which the United States of America
asserts jurisdiction and to which the laws of any such state are applicable with
respect to this Mortgage and/or the liens or security interests created hereby
(the "Deed of Trust Mortgaged Properties"), and (b) MORTGAGE, ASSIGN, WARRANT,
PLEDGE and HYPOTHECATE to Agent (as hereinafter defined), and grant to Agent a
POWER OF SALE (pursuant to this Mortgage and applicable law) with respect to,
all of the following described rights, interests and properties which were not
granted to Trustee in clause (a) above (the "Other Mortgaged Properties"):
A. The oil, gas and/or other mineral properties, mineral
servitudes, and/or mineral rights which are described in Part One of
Exhibit A attached hereto and made a part hereof;
B. The interest in the oil, gas and/or other mineral leases
(and other properties, if any) described in Part Two of Exhibit A
hereto that was conveyed to Forcenergy Partners, L.P. or Forcenergy
Offshore, Inc. in those certain conveyances (the "Apache/et al
Conveyances") described in Exhibit "C" hereto;
C. All of the Grantor's interest in the oil, gas and/or other
mineral leases, and other properties, which are described in Part Three
of Exhibit A hereto;
D. Without limitation of the foregoing, all other right, title
and interest of Grantor of whatever kind or character (including,
without limitation, interests in oil, gas and/or mineral leases, fee
mineral and/or royalty interests, and other interests) in and to
<PAGE> 183
the lands which are described or referred to in Exhibit A hereto as a
part of the descriptions (contained in such Exhibit A) of oil, gas
and/or mineral leases (and/or other properties) and/or mineral
servitudes and/or mineral rights, or which are otherwise described in
any of the leases or other instruments described in Exhibit A hereto,
even though the Grantor's interest therein may be incorrectly described
in, or omitted from, Exhibit A hereto;
E. All of Grantor's interest (whether now owned or hereafter
acquired by operation of law or otherwise) in and to all presently
existing and hereafter created oil, gas and/or mineral unitization,
pooling and/or communitization agreements, declarations and/or orders,
and in and to the properties, rights and interests covered and the
units created thereby (including, without limitation, units formed
under orders, rules, regulations or other official acts of any federal,
state or other authority having jurisdiction), which cover, affect or
otherwise relate to the properties, rights and interests described in
clause A, B, C or D above;
F. All of Grantor's interest in and rights under (whether now
owned or hereafter acquired by operation of law or otherwise) all
presently existing and hereafter created operating agreements,
equipment leases, production sales, purchase, exchange and/or
processing agreements, gas balancing agreements, transportation
agreements, farmout and/or farm-in agreements, salt water disposal
agreements, area of mutual interest agreements, and other contracts
and/or agreements which cover, affect, or otherwise relate to the
properties, rights and interests described in clause A, B or C above or
to the operation of such properties, rights and interests or to the
treating, handling, storing, processing, transporting or marketing of
oil, gas, other hydrocarbons, or other minerals produced from (or
allocated to) such properties, rights and interests (including but not
limited to, those contracts listed in Exhibit A hereto), as same may be
amended or supplemented from time to time;
G. All of Grantor's interest (whether now owned or hereafter
acquired by operation of law or otherwise) in and to all improvements,
fixtures, movable or immovable property and other property (including,
without limitation, all wells, pumping units, wellhead equipment,
tanks, pipelines, flow lines, gathering lines, compressors, dehydration
units, separators, meters, buildings, injection facilities, salt water
disposal facilities, and power, telephone and telegraph lines), and all
easements, servitudes, rights- of-way, surface leases, licenses,
permits and other surface rights, which are now or hereafter used, or
held for use, in connection with the properties, rights and interests
described in clause A, B or C above, or in connection with the
operation of such properties, rights and interests, or in connection
with the treating, handling, storing, processing, transporting or
marketing of oil, gas, other hydrocarbons, or other minerals produced
from (or allocated to) such properties, rights and interests; and
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<PAGE> 184
H. All rights, estates, powers and privileges appurtenant to
the foregoing rights, interests and properties.
TO HAVE AND TO HOLD (a) the Deed of Trust Mortgaged Properties unto the
Trustee, and its or their successors or substitutes in this trust, and to its or
their successors and assigns, in trust, however, upon the terms, provisions and
conditions herein set forth, and (b) the Other Mortgaged Properties unto Agent,
and Agent's successors and assigns, upon the terms, provisions and conditions
herein set forth (the Deed of Trust Mortgaged Properties and the Other Mortgaged
Properties being herein sometimes collectively called the "Mortgaged
Properties").
Section 1.2 Grant of Security Interest. In order to further secure the
payment of the secured indebtedness hereinafter referred to and the performance
of the obligations, covenants, agreements, warranties, and undertakings of
Grantor hereinafter described, Grantor hereby grants to Agent a security
interest in the entire interest of Grantor (whether now owned or hereafter
acquired by operation of law or otherwise) in and to:
(a) all oil, gas, other hydrocarbons, and other minerals
produced from or allocated to the Mortgaged Properties, and any
products processed or obtained therefrom (herein collectively called
the "Production"), together with all proceeds of Production (regardless
of whether Production to which such proceeds relate occurred on or
before or after the date hereof), and together with all liens and
security interests securing payment of the proceeds of the Production,
including, but not limited to, those liens and security interests
provided for under (i) statutes enacted in the jurisdictions in which
the Mortgaged Properties are located, or (ii) statutes made applicable
to the Mortgaged Properties under federal law (or some combination of
federal and state law);
(b) without limitation of any other provisions of this Section
1.2, all payments received in lieu of production from the Mortgaged
Properties (regardless of whether such payments accrued, and/or the
events which gave rise to such payments occurred, on or before or after
the date hereof), including, without limitation, "take or pay" payments
and similar payments, payments received in settlement of or pursuant to
a judgment rendered with respect to take or pay or similar obligations
or other obligations under a production sales contract, payments
received in buyout or buydown or other settlement of a production sales
contract, and payments received under a gas balancing or similar
agreement as a result of (or received otherwise in settlement of or
pursuant to judgment rendered with respect to) rights held by Grantor
as a result of Grantor (and/or its predecessors in title) taking or
having taken less gas from lands covered by a Mortgaged Property (or
lands pooled or unitized therewith) than their ownership of such
Mortgaged Property would entitle them to receive (the payments
described in this subsection (b) being herein called "Payments in Lieu
of Production");
(c) all equipment, inventory, improvements, fixtures,
accessions, goods and other personal property or movable property of
whatever nature or hereafter located on or
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<PAGE> 185
used or held for use in connection with the Mortgaged Properties (or in
connection with the operation thereof or the treating, handling,
storing, processing, transporting, or marketing of Production, or other
oil, gas, other hydrocarbons or other minerals), and all licenses and
permits of whatever nature now or hereafter used or held for use in
connection with the Mortgaged Properties (of in connection with the
operation thereof or the treating, handling, storing, processing,
transporting, or marketing of Production, or other oil, gas, other
hydrocarbons or other minerals), and all renewals or replacements of
the foregoing or substitutions for the foregoing;
(d) all contract rights, choses in action (i.e., rights to
enforce contracts or to bring claims thereunder) and other general
intangibles (regardless of whether the same arose, and/or the events
which gave rise to the same occurred, on or before or after the date
hereof) related to the Mortgaged Properties, the operation thereof
(whether Grantor is operator or non-operator), or the treating,
handling, storing, processing, transporting, or marketing of Production
or other oil, gas, other hydrocarbons or other minerals (including,
without limitation, any of the same relating to payment of proceeds of
Production or to payment of amounts which could constitute Payments in
Lieu of Production);
(e) Without limitation of the generality of the foregoing, any
rights and interests of Grantor under any present or future hedge or
swap agreements, cap, floor, collar, exchange, forward or other hedge
or protection agreements or transactions relating to crude oil, natural
gas or other hydrocarbons, or any option with respect to any such
agreement or transaction now existing or hereafter entered into by or
on behalf of Grantor;
(f) all geological, geophysical, engineering, accounting,
title, legal, and other technical or business data concerning the
Mortgaged Properties, the Production or any other item of Property (as
hereinafter defined) which are now or hereafter in the possession of
Grantor or in which Grantor can otherwise grant a security interest,
and all books, files, records, magnetic media, and other forms of
recording or obtaining access to such data;
(g) all money, documents, instruments, chattel paper,
securities, accounts or general intangibles arising from or by virtue
of any transaction (regardless of whether such transaction occurred on
or before or after the date hereof) related to the Mortgaged
Properties, the Production or any other item of Property (all of the
properties, rights and interests described in subsections (a), (b),
(c), (d), (e) and (f) above and this subsection (g) being herein
sometimes collectively called the "Collateral"); and
(h) all proceeds of the Collateral, whether such proceeds or
payments are goods, money, documents, instruments, chattel paper,
securities, accounts, general intangibles, fixtures, real/immovable
property, personal/ movable property or other assets (the Mortgaged
Properties, the Collateral and the proceeds of the Collateral being
herein sometimes collectively called the "Property").
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<PAGE> 186
Section 1.3. Note, Loan Documents, Other Obligations. This Mortgage is
made to secure and enforce the payment and performance of the following
promissory notes, obligations, indebtedness and liabilities:
(a) One certain promissory note dated as of the Effective
Date, in the principal amount of ________________________ Dollars
($____________) made by Grantor and payable to the order of INCC, on or
before the fifth anniversary of the Effective Date, bearing interest as
therein provided, and containing a provision for the payment of a
reasonable additional amount as attorneys' fees, as the same may from
time to time be supplemented, amended or modified, and all other notes
given in substitution therefor or in modification, renewal or extension
thereof, in whole or in part;
(b) One certain promissory note dated as of the Effective
Date, in the principal amount of ________________________ Dollars
($____________) made by Grantor and payable to the order of Bank of
Scotland, on or before the fifth anniversary of the Effective Date,
bearing interest as therein provided, and containing a provision for
the payment of a reasonable additional amount as attorneys' fees, as
the same may from time to time be supplemented, amended or modified,
and all other notes given in substitution therefor or in modification,
renewal or extension thereof, in whole or in part;
(c) One certain promissory note dated as of the Effective
Date, in the principal amount of ________________________ Dollars
($____________) made by Grantor and payable to the order of MeesPierson
Capital Corp., on or before the fifth anniversary of the Effective
Date, bearing interest as therein provided, and containing a provision
for the payment of a reasonable additional amount as attorneys' fees,
as the same may from time to time be supplemented, amended or modified,
and all other notes given in substitution therefor or in modification,
renewal or extension thereof, in whole or in part;
(d) One certain promissory note dated as of the Effective
Date, in the principal amount of ________________________ Dollars
($____________) made by Grantor and payable to the order of Den Norske
Bank ASA, on or before the fifth anniversary of the Effective Date,
bearing interest as therein provided, and containing a provision for
the payment of a reasonable additional amount as attorneys' fees, as
the same may from time to time be supplemented, amended or modified,
and all other notes given in substitution therefor or in modification,
renewal or extension thereof, in whole or in part;
(e) One certain promissory note dated as of the Effective
Date, in the principal amount of ________________________ Dollars
($____________) made by Grantor and payable to the order of PNC Bank,
N.A., on or before the fifth anniversary of the Effective Date, bearing
interest as therein provided, and containing a provision for the
payment of a reasonable additional amount as attorneys' fees, as the
same may from time to time be supplemented, amended or modified, and
all other notes given in substitution therefor or in modification,
renewal or extension thereof, in whole or in part;
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(f) One certain promissory note dated as of the Effective
Date, in the principal amount of ________________________ Dollars
($____________) made by Grantor and payable to the order of Hibernia
National Bank, on or before the fifth anniversary of the Effective
Date, bearing interest as therein provided, and containing a provision
for the payment of a reasonable additional amount as attorneys' fees,
as the same may from time to time be supplemented, amended or modified,
and all other notes given in substitution therefor or in modification,
renewal or extension thereof, in whole or in part;
(g) One certain promissory note dated as of the Effective
Date, in the principal amount of ________________________ Dollars
($____________) made by Grantor and payable to the order of General
Electric Capital Corporation, on or before the fifth anniversary of the
Effective Date, bearing interest as therein provided, and containing a
provision for the payment of a reasonable additional amount as
attorneys' fees, as the same may from time to time be supplemented,
amended or modified, and all other notes given in substitution therefor
or in modification, renewal or extension thereof, in whole or in part;
(h) One certain promissory note dated as of the Effective
Date, in the principal amount of ________________________ Dollars
($____________) made by Grantor and payable to the order of Credit
Agricole Indosuez, on or before the fifth anniversary of the Effective
Date, bearing interest as therein provided, and containing a provision
for the payment of a reasonable additional amount as attorneys' fees,
as the same may from time to time be supplemented, amended or modified,
and all other notes given in substitution therefor or in modification,
renewal or extension thereof, in whole or in part;
(i) One certain promissory note dated as of the Effective
Date, in the principal amount of ________________________ Dollars
($____________) made by Grantor and payable to the order of Societe
Generale, Southwest Agency, on or before the fifth anniversary of the
Effective Date, bearing interest as therein provided, and containing a
provision for the payment of a reasonable additional amount as
attorneys' fees, as the same may from time to time be supplemented,
amended or modified, and all other notes given in substitution therefor
or in modification, renewal or extension thereof, in whole or in part;
(j) One certain promissory note dated as of the Effective
Date, in the principal amount of ________________________ Dollars
($____________) made by Grantor and payable to the order of Natexis
Banque BFCE, on br before the fifth anniversary of the Effective Date,
bearing interest as therein provided, and containing a provision for
the payment of a reasonable additional amount as attorneys' fees, as
the same may from time to time be supplemented, amended or modified,
and all other notes given in substitution therefor or in modification,
renewal or extension thereof, in whole or in part;
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(k) All indebtedness and other obligations owed to any one or
more Lenders or Agent or Trustee now or hereafter incurred or arising
pursuant to or permitted by the provisions of one or more of the Notes
(as hereinafter defined), this Mortgage or any other instrument now or
hereafter evidencing, governing, guaranteeing or securing the "secured
indebtedness" (as hereinafter defined) or any part thereof or otherwise
executed in connection with any advance or loan evidenced or governed
by the Notes (the Notes, this Mortgage and such other instruments being
herein sometimes collectively called the "Loan Documents"); and
(l) Without limiting the generality of the foregoing, all
post-petition interest, expenses, and other duties and liabilities with
respect to indebtedness or other obligations described above in this
Section 1.3, which would be owed but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization, or, similar proceeding.
Section 1.4. Secured Indebtedness. The notes described in Sections
1.3(b) through 1.3(i), as from time to time supplemented, amended or modified,
and all other notes given in substitution therefor, or in modification, renewal
or extension thereof, in whole or in part, are herein sometimes collectively
called the "Notes" and are issued pursuant to the "Plan of Reorganization"
referenced therein (the "Plan") filed in the "Bankruptcy Proceeding" referenced
therein. The indebtedness referred to in Section 1.3, and all renewals,
extensions and modifications thereof, and all substitutions therefor, in whole
or in part, are herein sometimes referred to as the "secured indebtedness" or
the "indebtedness secured hereby". It is contemplated and acknowledged that the
secured indebtedness may include revolving credit loans and advances from time
to time, and that this Mortgage shall have effect, as of the date hereof, to
secure all secured indebtedness, regardless of whether any amounts are advanced
on the date hereof or on a later date or, whether having been advanced, are
later repaid in part or in whole and further advances made at a later date.
SECTION 1.5. MAXIMUM SECURED AMOUNT. NOTWITHSTANDING ANY PROVISION
HEREOF TO THE CONTRARY, THE INDEBTEDNESS SECURED HEREBY SHALL NOT, AT ANY TIME
OR FROM TIME TO TIME, EXCEED AN AGGREGATE MAXIMUM AMOUNT OF $____________.
Section 1.6. Maturity of Indebtedness. The maturity of the indebtedness
secured hereby, subject to rights of acceleration, is ____________.
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ARTICLE II.
Representations, Warranties and Covenants
Section 2.1. Grantor represents, warrants, and covenants as follows:
(a) Title and Permitted Encumbrance. Grantor has, and Grantor
covenants to maintain, good and defensible title to the Mortgaged
Properties, free and clear of all liens, security interests, and
encumbrances except for those which (i) existed as of the Petition Date
or (ii) were permitted under the Existing Lien Documents or (iii) are
permitted under the Plan.
(b) Leases and Contracts; Performance of Obligations. The oil,
gas and/or mineral leases, contracts, and other agreements forming a
part of the Property, to the extent the same cover or otherwise relate
to the Property, are in full force and effect, and Grantor agrees to so
maintain them in full force and effect except to the extent provided
for in the Plan or in other orders entered in the Bankruptcy
Proceeding.
(c) Sale of Production. No Mortgaged Property is or will
become subject to any contractual or other arrangement (i) whereby
payment for production is or can be deferred for a substantial period
after the month in which such production is delivered (i.e., in the
case of oil, not in excess of 60 days, and in the case of gas, not in
excess of 90 days) or (ii) whereby payments are made to Grantor other
than by checks, drafts, wire transfer advises or, other similar
writings, instruments or communications for the immediate payment of
money except to the extent provided for in the Plan or in other orders
entered in the Bankruptcy Proceeding.
(d) Condition of Personal Property. The equipment, inventory,
improvements, fixtures, goods and other tangible personal/moveable
property forming a part of the Collateral are, and will (subject to
repair and/or replacement in the ordinary course of business and events
of casualty and force majeure) remain, in good repair and condition and
are and will be adequate for the normal operation of the Collateral in
accordance with prudent industry standards; all of such Collateral is,
and will remain, located on the Mortgaged Properties, except for that
portion thereof which is or shall be located elsewhere (including that
usually located on the Mortgaged Properties but temporarily located
elsewhere) in the course of the normal operation of the Collateral.
Upon request of Agent, Grantor will deliver to Agent an inventory
and/or financing statements describing and showing the make, model,
serial number and location of all equipment, inventory, fixtures, goods
and other tangible personal property forming a part of the Property.
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<PAGE> 190
(e) Operation of Mortgaged Properties. The Mortgaged
Properties (and properties unitized therewith) are being (and, to the
extent the same could adversely affect the ownership or operation of
the Mortgaged Properties after the date hereof, have in the past been),
and hereafter will be, maintained, operated and developed in a good and
workmanlike manner, in accordance with prudent industry standards and
in conformity in all material respects with all applicable laws and all
rules, regulations and orders of all duly constituted authorities
having jurisdiction and in conformity in all material respects with all
oil, gas and/or other mineral leases (including, without limitation, in
conformity with. all provisions where the failure to be in conformity
could affect the validity and/or continuance in force of a lease) and
other contracts and agreements forming a part of the Property and in
conformity with the permitted Encumbrances.
(f) Sale or Disposal. Grantor will not, without the prior
written consent of Agent, sell, exchange, lease, transfer, or otherwise
dispose of any part of, or interest in, the Property other than those
allowed in the Existing Lien Documents. Grantor shall account fully and
faithfully for and, if Agent so elects, shall promptly pay or turn over
to Agent the proceeds in whatever form received from disposition in any
manner of any of the Property. Grantor shall at all times keep the
Property and its proceeds separate and distinct from other property of
Grantor and shall keep accurate and complete records of the Property
and its proceeds.
(g) Ad Valorem and Severance Taxes. Grantor has paid and
discharged, and will continue to pay and discharge, all ad valorem
taxes assessed against the Property or any part thereof and all
production, severance and other taxes assessed against, or measured by,
the Production or the value, or proceeds, of the Production except to
the extent same are being contested in good faith and Grantor has
established adequate reserves therefor.
(h) Environmental. Except as provided for in the Plan, Grantor
will not cause or permit the Property or Grantor to be in violation of
applicable Environmental Laws. Grantor shall obtain or cause
third-party operators to represent that they have obtained, at or prior
to the time required by applicable Environmental Laws, all
environmental, health and safety permits, licenses and other
authorizations necessary for its operations and will maintain such
authorizations in full force and effect.
(i) Not Abandon Wells: Participate in Operations. Except as
provided for in the Plan, Grantor will not, without prior written
consent of Agent, abandon, or consent to the abandonment of, any well
producing from the Mortgaged Properties (or properties unitized
therewith) so long as such well is capable (or is subject to being made
capable through drilling, reworking, or other operations which it would
be commercially feasible to conduct) of producing oil, gas, or other
hydrocarbons or other minerals in commercial quantities (as determined
without considering the effect of this Mortgage). Except as provided
for in the Plan, Grantor will not, without prior written consent of
Agent (which consent, After giving due regard to Grantor's business and
technical reasons for electing not to participate, will not be
unreasonably withheld), elect not to participate in a proposed
operation on the Mortgaged Properties where the effect of such election
would be the forfeiture either temporarily (i.e. until a certain sum of
money is received out of the forfeited interest) or permanently of any
interest in the Mortgaged Properties.
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Section 2.2. Compliance by Operator. As to any part of the Mortgaged
Properties which is not a working interest, Grantor agrees to use its reasonable
efforts to cause the owner or owners of the working interest in such properties
to comply with the covenants and agreements contained herein; and as to any part
of the Mortgaged Properties which is a working interest but which is operated by
a party other than Grantor, Grantor agrees to use its reasonable efforts
(including, but not limited to, exercising all rights under any operating
agreement) to cause the party who is the operator of such property to comply
with the covenants and agreements contained herein.
ARTICLE III.
Assignment of Production, Accounts, and Proceeds
Section 3.1. Assignment of Production. Grantor does hereby absolutely
and unconditionally assign, transfer and set over to Agent all Production which
accrues to Grantor's interest in the Mortgaged Properties, all proceeds of such
Production and all Payments in Lieu of Production (herein referred to as "O&G
Proceeds"), and all rights with respect to proceeds or profits to which Grantor
is entitled by virtue of ownership of the Mortgaged Properties described in
Section 1.1.H (herein referred to as "Plant Proceeds") (the O&G Proceeds and
Plant Proceeds being herein collectively referred to as the "Production
Proceeds").
Section 3.2. Effectuating Payment of Production Proceeds to Agent. Upon
a Default, Grantor agrees to execute and deliver any and all transfer orders,
division orders and other instruments that may be reasonably requested by Agent
or that may be required by any party for the purpose of effectuating payment of
the Production proceeds to Agent. If under any existing sales agreements, other
than division orders or transfer orders, any Production Proceeds are required to
be paid to Grantor so that under such existing agreements payment cannot be made
of such Production Proceeds to Agent, Grantor's interest in all Production
Proceeds under such sales agreements and in all other Production Proceeds which
for any reason may be paid to Grantor shall, when received by Grantor,
constitute trust funds in Grantor's hands and shall be immediately paid over to
Agent. Without limitation upon any of the foregoing, Grantor hereby constitutes
and appoints Agent, effective upon a Default as Grantor's special
attorney-in-fact (with full power of substitution, either generally or for such
periods or purposes as Agent may from time to time prescribe) in the name, place
and stead of Grantor to do any and every act and exercise any and every power
that Grantor might or could do or exercise personally with respect to all
Production and Production Proceeds (the same having been assigned by Grantor to
Agent pursuant to Section 3.1 hereof), expressly inclusive, but not limited to,
the right, power and authority to:
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(a) Execute and deliver in the name of Grantor any and all
transfer orders, division orders, letters in lieu of transfer orders,
indemnifications, certificates and other instruments of every nature
that may be requested or required by any party for the purposes of
effectuating payment of the Production Proceeds to Agent or which Agent
may otherwise deem necessary or appropriate to effect the intent and
purposes of the assignment contained in Section 3.1; and
(b) If under any product sales agreements other than division
orders or transfer orders, any Production Proceeds are required to be
paid to Grantor so that under such existing agreements payment cannot
be made of such Production Proceeds to Agent, to make, execute and
enter into such sales agreements or other agreements as are necessary
to direct Production Proceeds to be payable to Agent;
giving and granting unto said attorney-in-fact full power and authority to do
and perform any and every act and thing whatsoever necessary and requisite to be
done as fully and to all intents and purposes, as Grantor might or could do if
personally present; and Grantor shall be bound thereby as fully and effectively
as if Grantor had personally executed, acknowledged and delivered any of the
foregoing certificates or documents. The powers and authorities herein conferred
upon Agent may be exercised by Agent through any person who, at the time of the
execution of the particular instrument, is an officer of Agent. The power of
attorney herein conferred is granted for valuable consideration and hence is
coupled with an interest and is irrevocable so long as the secured indebtedness,
or any part thereof, shall remain unpaid. All persons dealing with Agent or any
substitute shall be fully protected in treating the powers and authorities
conferred by this paragraph as continuing in full force and effect until advised
by Agent that all the secured indebtedness is fully and finally paid. Agent may,
but shall not be obligated to, take such action as it deems appropriate in an
effort to collect the Production Proceeds and any reasonable expenses (including
reasonable attorney's fees) so incurred by Agent shall be a demand obligation of
Grantor and shall be part of the secured indebtedness, and shall bear interest
each day, from the date of such expenditure or payment until paid, at the rate
described in Section 2.3 hereof.
Section 3.3. Rights Under Wyoming Statutes. Grantor hereby appoints
Agent as its attorney-in-fact to pursue any and all lien rights of the Grantor
to liens and security interests in the Mortgaged Properties securing payment of
Production Proceeds attributable to the Mortgaged Properties, including, but not
limited to, those liens and security interests provided for by Section
34.1-9-319, Wyoming Statutes Annotated, 1988 Republished Edition (June 1991).
Grantor further hereby assigns to Agent any and all such liens, security
interests, financing statements, or similar interests of Grantor attributable to
its interests in the Mortgaged Properties and Production Proceeds therefrom
arising under or created by said statutory provision, judicial decision, or
otherwise.
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ARTICLE IV.
Remedies Upon Default
Section 4. 1. Default. The term "default" as used in this Mortgage
shall mean the occurrence of a "Default" as defined in the Notes.
Section 4.2. Acceleration of Secured Indebtedness. Upon the occurrence
of a default described in subsection (e) or (f) of section 4.1 above, all of the
secured indebtedness shall thereupon be immediately due and payable, without
presentment, demand, protest, notice of protest, declaration or notice of
acceleration or intention to accelerate, putting the Grantor in default,
dishonor, notice of dishonor or any other notice or declaration of any kind, all
of which are hereby expressly waived by Grantor, and the liens evidenced hereby
shall be subject to foreclosure in any manner provided for herein or provided
for by law as Agent may elect. During the continuance of any other default,
Agent at any time and from time to time may without notice to Grantor or any
other person declare any or all of the secured indebtedness immediately due and
payable and all such secured indebtedness shall thereupon be immediately due and
payable, without presentment, demand, protest, notice of protest, notice of
acceleration or of intention to accelerate, putting the Grantor in default,
dishonor, notice of dishonor or any other notice or declaration of any kind, all
of which are hereby expressly waived by Grantor, and the liens evidenced hereby
shall be subject to foreclosure in any manner provided for herein or provided
for by law as Agent may elect.
Section 4.3. Pre-Foreclosure Remedies. Upon the occurrence of a
default, Agent is authorized, prior or subsequent to the institution of any
foreclosure proceedings, to enter upon the Property, or any part thereof, and to
take possession of the Property and all books and records relating thereto, and
to exercise without interference from Grantor any and all rights which Grantor
has with respect to the management, possession, operation, protection or
preservation of the Property. If necessary to obtain the possession provided for
above, Agent may invoke any and all remedies to dispossess Grantor; without
limitation of the foregoing, as to those Properties located in the State of
Pennsylvania, any attorney or any court of record of Pennsylvania or elsewhere,
is hereby authorized and empowered to appear for the Grantor, and all persons
claiming under or through the Grantor and as attorney for the Grantor and ill
persons claiming under or through the Grantor, to sign an agreement for entering
an amicable action of ejectment for possession of the Property or any part
thereof and to confess judgment therein against the Grantor, in favor of Agent,
whereupon a writ of possession may immediately issue for the possession of the
Property, without any prior complaint, writ or proceeding whatsoever, and for so
doing, this Mortgage, or a copy hereof verified by affidavit, shall be a
sufficient warrant (this power may be exercised as often as Agent shall require
and shall not be exhausted by one or more or any imperfect exercise thereof).
All reasonable costs, expenses and liabilities of every character incurred by
Agent in managing, operating, maintaining, protecting or preserving the Property
shall constitute a demand obligation (which obligation Grantor hereby expressly
promises to pay) owing by Grantor to Agent and shall bear interest from date of
expenditure until paid at the rate described in Section 2.3 hereof, all of which
shall constitute a portion of the secured indebtedness and shall be secured by
this Mortgage and by any other instrument securing
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the secured indebtedness. In connection with any action taken by Agent pursuant
to this Section 4.3, NEITHER AGENT NOR ANY LENDER SHALL BE LIABLE FOR ANY LOSS
SUSTAINED BY GRANTOR RESULTING FROM ANY ACT OR OMISSION OF AGENT (INCLUDING
AGENT'S OWN NEGLIGENCE) IN MANAGING THE PROPERTY UNLESS SUCH LOSS IS CAUSED BY
THE GROSS NEGLIGENCE, WILLFUL MISCONDUCT OR BAD FAITH OF AGENT, nor shall Agent
be obligated to perform or discharge any obligation, duty or liability of
Grantor arising under any agreement forming a part of the Property or arising
under any Permitted Encumbrance or otherwise arising. Grantor hereby assents to,
ratifies and confirms any and all actions of Agent with respect to the Property
taken under this Section 4.3.
Section 4.4. Foreclosure.
(a) Upon the occurrence of a default, Trustee, or his
successor or substitute, is authorized and empowered and it shall be
his special duty at the request of Agent to sell the Deed of Trust
Mortgaged Properties, or any part thereof, as an entirety or in parcels
as Agent may elect, at such place or places and otherwise in the manner
and upon such notice as may be required by law or, in the absence of
any such requirement, as Trustee may deem appropriate. If Trustee or
his successor or substitute shall have given notice of sale hereunder,
any successor or substitute Trustee thereafter appointed may complete
the sale and the conveyance of the property pursuant thereto as if such
notice had been given by the successor or substitute Trustee conducting
the sale. Cumulative of the foregoing and the other provisions of this
Section 4.4:
(i) As to any portion of the Deed of Trust Mortgaged
Properties located in the State of Texas (or within the
offshore area over which the United States of America asserts
jurisdiction and to which the laws of such state are
applicable with respect to this Mortgage and/or the liens or
security interests created hereby), such sales of all or any
part of such Deed of Trust Mortgaged Properties shall be
conducted at the courthouse of any county (whether or not the
counties in which such Deed of Trust Mortgaged Properties are
located are contiguous) in the State of Texas in which any
part of such Deed of Trust Mortgaged Properties is situated or
which lies shoreward of any Deed of Trust Mortgaged Property
(i.e., to the extent a particular Deed of Trust Mortgaged
Property lies offshore within the reasonable projected seaward
extension of the relevant county boundary), at public vendue
to the highest bidder for cash between the hours of ten
o'clock a.m. and four o'clock p.m. on the first Tuesday in any
month or at such other place, time and date as provided by the
statutes of the State of Texas then in force governing sales
of real estate under powers conferred by deed of trust, after
having given notice of such sale in accordance with such
statutes.
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<PAGE> 195
(ii) Trustee shall, at the request of Agent, sell the
Deed of Trust Mortgaged Properties located in Mississippi (or
within the offshore area over which the United States of
America asserts jurisdiction and to which the laws of such
state are applicable with respect to this Mortgage and/or the
liens or security interests created hereby), or a sufficiency
thereof, to satisfy the indebtedness secured hereby, at public
outcry to the highest bidder for cash. "Cash" may include
cashiers' checks, certified checks, bank checks, wired funds
or other methods of payment reasonably acceptable to Trustee.
The sale shall be advertised in the manner provided by law.
Any details of sale not specified herein may be determined by
Trustee in its discretion. Grantor waives the provisions of
Section 89-1-55 of the Mississippi Code and Section 111 of the
Mississippi Constitution, if any, as far as they restrict the
right of Trustee to offer at sale more than 160 acres at a
time, and Trustee may offer the property to be sold as a
whole, regardless of how it is described. If such Deed of
Trust Mortgaged Properties are situated in or offshore of two
or more counties, or in or offshore of two or more judicial
districts of the same county, Trustee shall have full power to
select in which county or judicial district the sale of
property shall be made, newspaper advertisement published and
notice of sale posted, and Trustee's selection shall be
binding. The indebtedness secured hereby shall be codified
with the net proceeds of the sale, and the Grantor shall
remain liable for the remaining balance of the indebtedness
secured hereby.
A POWER OF SALE HAS BEEN GRANTED IN THIS MORTGAGE. A POWER OF
SALE MAY ALLOW TRUSTEE TO TAKE THE MORTGAGED PROPERTIES AND SELL THEM
WITHOUT GOING TO COURT IN A FORECLOSURE ACTION UPON DEFAULT BY GRANTOR
UNDER THIS MORTGAGE.
(b) Upon the occurrence of a default, this Mortgage may be
foreclosed as to the Other Mortgaged Properties, or any part thereof,
in any manner permitted by applicable law. Cumulative of the foregoing
and the other provisions of this Section 4.4, as to Other Mortgaged
Properties located in the State of Louisiana (or within the offshore
area over which the United States of America asserts jurisdiction and
to which the laws of such state are applicable with respect to this
Mortgage and/or the liens or security interests created hereby), Agent
may foreclose this Mortgage by executory process subject to, and on the
terms and conditions required or permitted by, applicable law, and
shall have the right to appoint a keeper of such Other Mortgaged
Properties.
A POWER OF SALE HAS BEEN GRANTED IN THIS MORTGAGE. A POWER OF
SALE MAY ALLOW AGENT TO TAKE THE MORTGAGED PROPERTIES AND SELL THEM
WITHOUT GOING TO COURT IN A FORECLOSURE ACTION UPON DEFAULT BY GRANTOR
UNDER THIS MORTGAGE.
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<PAGE> 196
(c) Upon the occurrence of a default, Agent may exercise its
rights of enforcement with respect to the Collateral under the Texas
Business and Commerce Code, as amended, the Louisiana Commercial Laws,
as amended, or under the Uniform Commercial Code or similar statute in
force in any other state to the extent the same is applicable law.
Cumulative of the foregoing and the other provisions of this Section
4.4, to the extent permitted by applicable law:
(i) Agent may enter upon Grantor's premises to take
possession of, assemble and collect the Collateral or to
render it unusable; and
(ii) Agent may require Grantor to assemble the
Collateral and make it available at a place Agent designates
which is mutually convenient to allow Agent to take possession
or dispose of the Collateral; and
(iii) written notice mailed to Grantor as provided
herein at least ten (10) days prior to the date of public sale
of the Collateral or prior to the date after which private
sale of the Collateral will be made shall constitute
reasonable notice; and
(iv) in the event of a foreclosure of the liens
and/or security interests evidenced hereby, the Collateral, or
any part thereof, and the Mortgaged Properties, or any part
thereof, may, at the option of Agent, be sold, as a whole or
in parts, together or separately (including, without
limitation, where a portion of the Mortgaged Properties is
sold, the Collateral related thereto may be sold in connection
therewith); and
(v) the expenses of sale provided for in clause FIRST
of Section 4.7 shall include the reasonable expenses of
retaking the Collateral, or any part thereof, holding the same
and preparing the same for sale or other disposition; and
(vi) should, under this subsection, the Collateral be
disposed of other than by sale, any proceeds of such
disposition shall be treated under Section 4.7 as if the same
were sales proceeds; and
(vii) as to the Collateral located in or otherwise
subject to the laws of the State of Louisiana, Agent may
foreclose this Mortgage as a security agreement affecting the
Collateral by executory process subject to, and on the terms
and conditions required or permitted by applicable law, and
shall have the right to appoint a keeper of such Collateral.
(d) To the extent permitted by applicable law, the sale
hereunder of less than the whole of the Property shall not exhaust the
powers of sale herein granted or the right to judicial foreclosure, and
successive sale or sales may be made until the whole of the
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Property shall be sold, and, if the proceeds of such sale of less than
the whole of the Property shall be less than the aggregate of the
indebtedness secured hereby and the expense of conducting such sale,
this Mortgage and the liens and security interests hereof shall remain
in full force and effect as to the unsold portion of the Property just
as though no sale had been made; provided, however, that Grantor shall
never have any right to require the sale of less than the whole of the
Property. In the event any sale hereunder is not completed or is
defective in the opinion of Agent, such sale shall not exhaust the
powers of sale hereunder or the right to judicial foreclosure, and
Agent shall have the right to cause a subsequent sale or sales to be
made. Any sale may be adjourned by announcement at the time and place
appointed for such sale without further notice except as may be
required by law. The Trustee or his successor or substitute, and the
Agent acting under power of sale, may appoint or delegate any one or
more persons as agent to perform any act or acts necessary or incident
to any sale held by it (including, without limitation, the posting of
notices and the conduct of sale), and such appointment need not be in
writing or recorded. Any and all statements of fact or other recitals
made in any deed or deeds, or other instruments of transfer, given in
connection with a sale as to nonpayment of the secured indebtedness or
as to the occurrence of any default, or as to all of the secured
indebtedness having been declared to be due and payable, or as to the
request to sell, or as to notice of time, place and terms of sale and
the properties to be sold having been duly given, or (with respect to
any sale by the Trustee, or any successor or substitute trustee) as to
the refusal, failure or inability to act of Trustee or any substitute
or successor trustee or the appointment of any substitute or successor
trustee, or as to any other act or thing having been duly done, shall
be taken as prima facie evidence of the truth of the facts so stated
and recited. Notwithstanding any reference herein to the Notes or any
other Loan Document, all persons dealing with the Mortgaged Properties
shall be entitled to rely on any document, or certificate, of the Agent
as to the occurrence of an event, such an Event of Default, and shall
not be charged with or forced to review any provision of any other
document to determine the accuracy thereof. With respect to any sale
held in foreclosure of the liens and/or security interests covered
hereby, it shall not be necessary for the Trustee, Agent, any public
officer acting under execution or order of the court or any other party
to have physically present or constructively in his possession, either
at the time of or prior to such sale, the Property or any part thereof.
(e) As to Property now or hereafter located in, or otherwise
subject to the laws of, the State of Louisiana, Grantor acknowledges
the secured indebtedness, whether now existing or to arise hereafter,
and for Grantor, Grantor's heirs, devisees, personal representatives,
successors and assigns, hereby confesses judgment for the full amount
of the secured indebtedness in favor of the Lender. Grantor further
agrees that the Agent may cause all or any part of the Property to be
seized and sold after due process of law, the Grantor waiving the
benefit of all laws or parts of laws relative to the appraisement of
property seized and sold under executory process or other legal
process, and consenting that all or any part of the Property may be
sold without appraisement, either in its entirety or in lots or
parcels, as the Agent may determine, to the highest bidder for cash or
on such
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terms as the plaintiff in such proceedings may direct. Grantor hereby
waives (i) the benefit of appraisement provided for in articles 2332,
2336, 2723, and 2724 of the Louisiana Code of Civil Procedure and all
other laws conferring the same; (ii) the demand and three (3) days
notice of demand as provided in articles 2639 and 2721 of the Louisiana
Code of Civil Procedure; (iii) the notice of seizure provided for in
articles 2293 and 2721 of the Louisiana Code of Civil Procedure; (iv)
the three (3) days delay provided for in articles 2331 and 2722 of the
Louisiana Code of Civil Procedure; and (v) all other laws providing
rights of notice, demand, appraisement, or delay. Grantor expressly
authorizes and agrees that Agent shall have the right to appoint a
keeper of such Property pursuant to the terms and provisions of La.
R.S. 9:5131 et seq. and La. R S. 9:5136. et seq., which keeper may be
the Agent, any agent or employee thereof, or any other person, firm, or
corporation. Compensation for the services of the keeper is hereby
fixed at five percent (5%) of the amount due or sued for or claimed or
sought to be protected, preserved, or enforced in the proceeding for
the recognition or enforcement of this Mortgage and shall be secured by
the liens and security interests of this Mortgage.
Section 4.5. Effective as Mortgage. As to the Deed of Trust Mortgaged
Properties, this instrument shall be effective as a mortgage as well as a deed
of trust and upon the occurrence of a default may be foreclosed as to the Deed
of Trust Mortgaged Properties, or any portion thereof, in any manner permitted
by applicable law, and any foreclosure suit may be brought by Trustee or by
Agent. To the extent, if any, required to cause this instrument to be so
effective as a mortgage as well as a deed of trust, Grantor hereby mortgages the
Deed of Trust Mortgaged Properties to Agent. In the event a foreclosure
hereunder as to the Deed of Trust Mortgaged Properties, or any part thereof,
shall be commenced by Trustee, or his substitute or successor, Agent may at any
time before the sale of such properties direct Trustee to abandon the sale, and
may then institute suit for the foreclosure of this Mortgage as to such
properties. It is agreed that if Agent should institute a suit for the
foreclosure of this Mortgage, Agent may at any time before the entry of a final
judgment in said suit dismiss the same, and require Trustee, his substitute or
successor, to sell the Deed of Trust Mortgaged Properties, or any part thereof,
in accordance with the provisions of this Mortgage.
Section 4.6. Receiver. In addition to all other remedies herein
provided for, Grantor agrees that, upon the occurrence of a default, Agent shall
as a matter of right be entitled to the appointment of a receiver or receivers
for all or any part of the Property, whether such receivership be incident to a
proposed sale (or sales) of such property or otherwise, and without regard to
the value of the Property or the solvency of any person or persons liable for
the payment of the indebtedness secured hereby, and Grantor does hereby consent
to the appointment of such receiver or receivers, waives any and all defenses to
such appointment, and agrees not to oppose any application therefor by Agent,
and agrees that such appointment shall in no manner impair, prejudice or
otherwise affect the rights of Agent under Article III hereof. Nothing herein is
to be construed to deprive Agent or any Lender of any other right, remedy or
privilege it may now or hereafter have under the law to have a receiver
appointed. Any money advanced by Agent in connection with any such receivership
shall be a demand obligation (which obligation Grantor hereby expressly promises
to pay) owing by Grantor to Agent and shall bear interest, from the date of
making such advancement by Agent until paid, at the rate described in Section
2.3 hereof.
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Section 4.7. Proceeds of Foreclosure. Unless applicable law requires
otherwise, the proceeds of any sale held in foreclosure of the liens and/or
security interests evidenced hereby shall be applied:
FIRST, to the payment of all necessary costs and expenses
incident to such foreclosure sale, including but not limited to all
court costs and charges of every character in the event foreclosed by
suit and including but not limited to a reasonable fee to the Trustee
if such sale was made by the Trustee acting under the provisions of
Section 4.4(a) and including but not limited to the compensation of the
keeper, if any;
SECOND, to the payment of the secured indebtedness (including
specifically without limitation the principal, interest and reasonable
attorneys' fees due and unpaid on the Notes and the amounts due and
unpaid and owed under this Mortgage) in such manner and order as Agent
may elect; and
THIRD, the remainder, if any there shall be, shall be paid to
Grantor, or to Grantor's heirs, devisees, representatives, successors
or assigns, or such other persons as may be entitled thereto by law.
Section 4.8. Lender as Purchaser. Any Lender shall have the right to
become the purchaser at any sale held in foreclosure of the liens and/or
security interests evidenced hereby, and any Lender purchasing at any such sale
shall have the right to credit upon the amount of the bid made therefor, to the
extent necessary to satisfy such bid, the secured indebtedness owing to such
Lender, or if such Lender holds less than all of such indebtedness, the pro rata
part thereof owing to such Lender, accounting to all other Lenders not joining
in such bid in cash for the portion of such bid or bids apportionable to such
non-bidding Lender or Lenders.
Section 4.9. Foreclosure as to Matured Debt. Upon the occurrence of a
default, Agent shall have the right to proceed with foreclosure of the liens
and/or security interests evidenced hereby without declaring the entire secured
indebtedness due, and in such event, any such foreclosure sale may be made
subject to the unmatured part of the secured indebtedness and shall not in any
manner affect the unmatured part of the secured indebtedness, but as to such
unmatured part, this Mortgage shall remain in full force and effect just as
though no sale had been made. The proceeds of such sale shall be applied as
provided in Section 4.7 except that the amount paid under clause SECOND thereof
shall be only the matured portion of the secured indebtedness and any proceeds
of such sale in excess of those provided for in clauses FIRST and SECOND
(modified as provided above) shall be applied as provided in clause SECOND and
THIRD of Section 3.3 hereof. Several sales may be made hereunder without
exhausting the right of sale for any unmatured part of the secured indebtedness.
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Section 4.10. Remedies Cumulative. All remedies herein provided for are
cumulative of each other and of all other remedies existing at law or in equity
and are cumulative of any and all other remedies provided for in any other Loan
Document, and, in addition to the remedies herein provided, all such other
remedies as may now or hereafter exist at law or in equity for the collection of
the secured indebtedness and the enforcement of the covenants herein and the
foreclosure of the liens and/or security interests evidenced hereby may be
utilized, and the resort to any remedy provided for hereunder or under any such
other Loan Document or provided for by law shall not prevent the concurrent or
subsequent employment of any other appropriate remedy or remedies.
Section 4.11. Discretion as to Security. Unless applicable law requires
otherwise, Agent or Lender may resort to any security given by this Mortgage or
to any other security now existing or hereafter given to secure the payment of
the secured indebtedness, in whole or in part, and in such portions and in such
order as may seem best to Agent or Lender in its sole and uncontrolled
discretion, and any such action shall not in any way be considered as a waiver
of any of the rights, benefits, liens or security interests evidenced by this
Mortgage.
Section 4.12. Grantor's Waiver of Certain Rights. To the full extent
Grantor may do so, Grantor agrees that Grantor will not at any time insist upon,
plead, claim or take the benefit or advantage of any law now or hereafter in
force providing for any appraisement, valuation, stay, extension or redemption,
and Grantor, for Grantor, Grantor's heirs, devisees, representatives, successors
and assigns, and for any and all persons ever claiming any interest in the
Property, to the extent permitted by applicable law, hereby waives and releases
all rights of appraisement, valuation, stay of execution, redemption, notice of
intention to mature or declare due the whole of the secured indebtedness, notice
of election to mature or declare due the whole of the secured indebtedness and
all rights to a marshaling of assets of Grantor, including the Property, or to a
sale in inverse order of alienation in the event of foreclosure of the liens
and/or security interests hereby created. Grantor shall not have or assert any
right under any statute or rule of law pertaining to the marshaling of assets,
sale in inverse order of alienation, the exemption of homestead, the
administration of estates of decedents, or other matters whatever to defeat,
reduce or affect the right under the terms of this Mortgage to a sale of the
Property for the collection of the secured indebtedness without any prior or
different resort for collection, or the right under the terms of this Mortgage
to the payment of the secured indebtedness out of the proceeds of sale of the
Property in preference to every other claimant whatever. If any law referred to
in this section and now in force, of which Grantor or Grantor's heirs, devisees,
representatives, successors or assigns or any other persons claiming any
interest in the Mortgaged Properties or the Collateral might take advantage
despite this section, shall hereafter be repealed or cease to be in force, such
law shall not thereafter be deemed to preclude the application of this section.
Section 4.13. Grantor as Tenant Post-Foreclosure. Unless applicable law
provides otherwise, in the event there is a foreclosure sale hereunder and at
the time of such sale Grantor or Grantor's heirs, devisees, representatives,
successors or assigns or any other persons claiming any interest in the Property
by, through or under Grantor are occupying or using the Property, or
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any part thereof, each and all shall immediately become the tenant of the
purchaser at such sale, which tenancy shall be a tenancy from day to day,
terminable at the will of either landlord or tenant, at a reasonable rental per
day based upon the value of the property occupied, such rental to be due daily
to the purchaser. To the extent permitted by applicable law, the purchaser at
such sale shall, notwithstanding any language herein apparently to the contrary,
have the sole option to demand immediate possession following the sale or to
permit the occupants to remain as tenants at will. In the event the tenant fails
to surrender possession of said property upon demand, the purchaser shall be
entitled to institute and maintain a summary action for possession of the
property (such as an action for forcible entry and detainer) in any court having
jurisdiction.
ARTICLE V.
Miscellaneous
Section 5.1. Scope of Mortgage. This Mortgage is a deed of trust and
mortgage of both real/immovable and personal/movable property, a security
agreement, a financing statement and an assignment, and also covers proceeds and
fixtures.
Section 5.2. Effective as a Financing Statement. This Mortgage covers
goods which are or are to become fixtures on the real property described herein,
and this Mortgage shall be effective as a financing statement filed as a fixture
filing with respect to all fixtures included within the Property. This Mortgage
shall also be effective as a financing statement, filed as a fixture filing,
covering minerals and other substances of value which may be extracted from the
earth (including without limitation oil and gas), and accounts related thereto,
which will be financed at the wellhead or minehead of the wells or mines located
on the Mortgaged Properties. This Mortgage is to be filed or filed for record in
the real estate/immovable property records of each county or parish where any
part of the Mortgaged Properties is situated or which lies shoreward of any
Mortgaged Property (i.e., to the extent a Mortgaged Property lies offshore
within the projected seaward extension of the relevant county or parish
boundaries), and may also be filed in the offices of the Bureau of Land
Management, the Minerals Management Service or state agencies (or any successor
agencies). This Mortgage shall also be effective as a financing statement
covering any other Property and may be filed in any other appropriate filing or
recording office. The mailing address of Grantor is the address of Grantor set
forth at the end of this Mortgage and the address of Agent from which
information concerning the security interests hereunder may be obtained is the
address of Agent set forth at the end of this Mortgage.
Section 5.3. Reproduction of Mortgage as Financing Statement. A carbon,
photographic, facsimile or other reproduction of this Mortgage or of any
financing statement relating to this Mortgage shall be sufficient as a financing
statement for any of the purposes referred to in Section 5.2.
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Section 5.4. Notice to Account Debtors. In addition to, but without
limitation of, the rights granted in Article III hereof, Agent may notify the
account debtors or obligors of any accounts, chattel paper, negotiable
instruments or other evidences of indebtedness included in the Collateral to pay
Agent directly.
Section 5.5. Waivers. Agent may at any time and from time to time in
writing waive compliance by Grantor with any covenant herein made by Grantor to
the extent and in the manner specified in such writing, or consent to Grantor's
doing any act which hereunder Grantor is prohibited from doing, or to Grantor's
failing to do any act which hereunder Grantor is required to do, to the extent
and in the manner specified in such writing, or release any part of the Property
or any interest therein or any Production Proceeds from the lien and security
interest of this Mortgage, without the joinder of Trustee. Any party liable,
either directly or indirectly, for the secured indebtedness or for any covenant
herein or in any other Loan Document may be released from all or any part of
such obligations without impairing or releasing the liability of any other
party. No such act shall in any way impair any rights or powers hereunder except
to the extent specifically agreed to in such writing.
Section 5.6. No Impairment of Security. The lien security interest and
other security rights hereunder shall not be impaired by any indulgence,
moratorium or release which may be granted, including, but not limited to, any
renewal, extension or modification which may be granted with respect to any
secured indebtedness, or any surrender, compromise, release, renewal, extension,
exchange or substitution which may be granted in respect of the Property
(including without limitation Production Proceeds), or any part thereof of any
interest therein, or any release or indulgence granted to any endorser,
guarantor or surety of any secured indebtedness.
Section 5.7. Acts Not Constituting Waiver. Any default may be waived
without waiving any other prior or subsequent default. Any default may be
remedied without waiving the default remedied. Neither failure to exercise, nor
delay in exercising, any right, power or remedy upon any default shall be
construed as a waiver of such default or as a waiver of the right to exercise
any such right, power or remedy at a later date. No single or partial exercise
of any right, power or remedy hereunder shall exhaust the same or shall preclude
any other or further exercise thereof, and every such right, power or remedy
hereunder may be exercised at any time and from time to time. No modification or
waiver of any provision hereof nor consent to any departure by Grantor therefrom
shall in any event be effective unless the same shall be in writing and signed
by Agent and then such waiver or consent shall be effective only in the specific
instances, for the purpose for which given and to the extent therein specified.
No notice to nor demand on Grantor in any case shall of itself entitle Grantor
to any other or further notice or demand in similar or other circumstances.
Acceptance of any payment in an amount less than the amount then due on any
secured indebtedness shall be deemed an acceptance on account only and shall not
in any way excuse the existence of a default hereunder.
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Section 5.8. Grantor's Successors. In the event the ownership of the
Property or any part thereof becomes vested in a person other than Grantor,
then, without notice to Grantor, such successor or successors in interest may be
dealt with, with reference to this Mortgage and to the indebtedness secured
hereby, in the same manner as with Grantor, without in any way vitiating or
discharging Grantor's liability hereunder or for the payment of the indebtedness
or performance of the obligations secured hereby. No transfer of the Property,
no forbearance, and no extension of the time for the payment of the indebtedness
secured hereby shall operate to release, discharge, modify, change or affect, in
whole or in part, the liability of Grantor hereunder or for the payment of the
indebtedness or performance of the obligations secured hereby or the liability
of any other person hereunder or for the payment of the indebtedness secured
hereby.
Section 5.9. Place of Payment. All secured indebtedness which may be
owing hereunder at any time by Grantor shall be payable at the place designated
in the Notes, or at such other place as the applicable Lender may designate in
writing.
Section 5.10. Subrogation to Existing Liens. To the extent that
proceeds of the Notes are used to pay indebtedness secured by any outstanding
lien, security interest, charge or prior encumbrance against the Property, such
proceeds have been advanced at Grantor's request, and the party or parties
advancing the same shall be subrogated to any and all rights, security interests
and liens owned by any owner or holder of such outstanding liens, security
interests, charges or encumbrances, irrespective of whether said liens, security
interests, charges or encumbrances are released, and it is expressly understood
that, in consideration of the payment of such indebtedness, Grantor hereby
waives and releases all demands and causes of action for offsets and payments
to, upon and in connection with the said indebtedness.
Section 5.11. Application of Payments to Certain Indebtedness. If any
part of the secured indebtedness cannot be lawfully secured by this Mortgage or
if any part of the Property cannot be lawfully subject to the lien and security
interest hereof to the full extent of such indebtedness, then all payments made
shall be applied on said indebtedness first in discharge of that portion thereof
which is not secured by this Mortgage.
Section 5.12. Compliance with Usury Laws. It is the intent of Grantor,
Agent, Lenders and all other parties to the Loan Documents to contract in strict
compliance with applicable usury law from time to time in effect. In furtherance
thereof, it is stipulated and agreed that none of the terms and provisions
contained herein shall ever be construed to create a contract to pay, for the
use, forbearance or detention of money, interest in excess of the maximum amount
of interest permitted to be charged by applicable law from time to time in
effect.
Section 5.13. Substitute Trustee. The Trustee may resign by an
instrument in writing addressed to Agent, or Trustee may be removed at any time
with or without cause by an instrument in writing executed by Agent. In case of
the death, resignation, removal, or disqualification of Trustee, or if for any
reason Agent shall deem it desirable to appoint a
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substitute or successor trustee to act instead of the herein named trustee or
any substitute or successor trustee, then Agent shall have the right and is
hereby authorized and empowered to appoint a successor trustee, or a substitute
trustee, without other formality than appointment and designation in writing
executed by Agent and the authority hereby conferred shall extend to the
appointment of other successor and substitute trustees successively until the
indebtedness secured hereby has been paid in full, or until the Property is sold
hereunder. In the event the secured indebtedness is owned by more than one
person or entity, the holder or holders of not less than a majority in the
amount of the secured indebtedness shall also have the right and authority to
make the appointment of a successor or substitute trustee as provided for in the
preceding sentence or to remove Trustee as provided in the first sentence of
this section. Such appointment and designation by Agent, or by the holder or
holders of not less than a majority of the indebtedness secured hereby, shall be
full evidence of the right and authority to make the same and of all facts
therein recited. If Agent, or any Lender, is a corporation or association and
such appointment is executed in its behalf by an officer of such corporation or
association, such appointment shall be conclusively presumed to be executed with
authority and shall be valid and sufficient without proof of any action by the
board of directors of any superior officer of the corporation or association.
Agent may act through an agent or attorney-in-fact in substituting trustees.
Upon the making of any such appointment and designation, all of the estate and
title of Trustee in the Deed of Trust Mortgaged Properties shall vest in the
named successor or substitute Trustee and he shall thereupon succeed to, and
shall hold, possess and execute, all the rights, powers, privileges, immunities
and duties herein conferred upon Trustee; but nevertheless, upon the written
request of Agent or of the successor or substitute Trustee, the Trustee ceasing
to act shall execute and deliver an instrument transferring to such successor or
substitute Trustee all of the estate and title in the Deed of Trust Mortgaged
Properties of the Trustee so ceasing to act, together with all the rights,
powers, privileges, immunities and duties herein conferred upon the Trustee, and
shall duly assign, transfer and deliver any of the properties and moneys held by
said Trustee hereunder to said successor or substitute Trustee. Notwithstanding
the foregoing, should the law of any state in which the Deed of Trust Mortgaged
Properties are located require actions to be taken in the appointment of a
successor or substitute trustee which are in addition to those set forth above,
such actions shall be taken in connection with the appointment of any successor
or substitute trustee with respect to Deed of Trust Mortgaged Properties located
in such state. All references herein to Trustee shall be deemed to refer to
Trustee (including any successor or substitute appointed and designated as
herein provided) from time to time acting hereunder.
Section 5.14. No Liability for Trustee. THE TRUSTEE SHALL NOT BE LIABLE
FOR ANY ERROR OF JUDGMENT OR ACT DONE BY TRUSTEE IN GOOD FAITH, OR BE OTHERWISE
RESPONSIBLE OR ACCOUNTABLE UNDER ANY CIRCUMSTANCES WHATSOEVER (INCLUDING,
WITHOUT LIMITATION, THE TRUSTEE'S NEGLIGENCE), EXCEPT FOR TRUSTEE'S GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT. The Trustee shall have the right to rely on
any instrument, document or signature authorizing or supporting any action taken
or proposed to be taken by him hereunder, believed by him in good faith to be
genuine. All moneys received by Trustee shall, until used or applied as herein
provided, be held in trust for the purposes for which they were
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received, but need not be segregated in any manner from any other moneys (except
to the extent required by law), and Trustee shall be under no liability for
interest on any moneys received by him hereunder. Grantor hereby ratifies and
confirms any and all acts which the herein named Trustee or his successor or
successors, substitute or substitutes, shall do lawfully by virtue hereof.
Grantor will reimburse Trustee for, and indemnify and save him harmless against,
any and all liability and expenses (including attorneys' fees) which may be
incurred by him in the performance of his duties except to the extent such
liability arises out of his gross negligence or willful misconduct. The
foregoing indemnities shall not terminate upon the Release Date or upon the
release, foreclosure or other termination of this Mortgage but will survive the
Release Date, foreclosure of this Mortgage or conveyance in lieu of foreclosure,
and the repayment of the secured indebtedness and the discharge and release of
this Mortgage and the other documents evidencing and/or securing the secured
indebtedness. Any amount to be paid hereunder by Grantor to Trustee shall be a
demand obligation owing by Grantor to Trustee and shall be subject to and
covered by the provisions of Section 2.3 hereof.
Section 5.15. Release of Mortgage. If all of the secured indebtedness
be paid as the same becomes due and payable, the Grantor may request the Agent
to terminate this Mortgage. Upon such termination the Grantor may further
request the Agent to provide a written act of release of this Mortgage (except
to the extent expressly provided herein with respect to indemnification and
other rights which are to continue following the release hereof). Agent agrees
to deliver such an act of release (subject to the foregoing limitation), all at
the cost and expense of the Grantor, within thirty (30) days (or such lesser
number of days as may be mandated by applicable law) of receiving such request
unless Agent in good faith, has cause to believe that Grantor is not entitled to
a termination of this Mortgage. Notwithstanding the foregoing, it is understood
and agreed that certain indemnifications, and other rights, which are provided
herein to continue following the release hereof, shall continue in effect
notwithstanding such release.
Section 5.16. Notices. All notices, requests, demands and other
communications required or permitted hereunder shall be in writing and shall be
deemed sufficiently given or furnished if delivered by personal delivery, or by
delivery service with proof of delivery, by telecopy or telex, or by registered
or certified United States mail, postage prepaid, at the addresses specified at
the end of this Mortgage (unless changed by similar notice in writing given by
the particular party whose address is to be changed). Any such notice or
communication shall be deemed to have been given (a) in the case of personal
delivery or delivery service, as of the date of first attempted delivery at the
address provided herein, (b) in the case of telecopy or telex, upon receipt, and
(c) in the case of registered or certified United States mail, three days after
deposit in the mail. Notwithstanding the foregoing, or anything else in the Loan
Documents which may appear to the contrary, any notice given in connection with
a foreclosure of the liens and/or security interests created hereunder, or
otherwise in connection with the exercise by Agent, any Lender or Trustee of
their respective rights hereunder or under any other Loan Document, which is
given in a manner permitted by applicable law shall constitute proper notice;
without limitation of the foregoing, notice given in a form required or
permitted by statute shall (as to the portion of the Property to which such
statute is applicable) constitute proper notice.
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Section 5.17. Invalidity of Certain Provisions. A determination that
any provision of this Mortgage is unenforceable or invalid shall not affect the
enforceability or validity of any other provision and the determination that the
application of any provision of this Mortgage to any person or circumstance is
illegal or unenforceable shall not affect the enforceability or validity of such
provision as it may apply to other persons or circumstances.
Section 5.18. Gender; Titles. Within this Mortgage, words of any gender
shall be held and construed to include any other gender, and words in the
singular number shall be held and construed to include the plural, unless the
context otherwise requires. Titles appearing at the beginning of any
subdivisions hereof are for convenience only, do not constitute any part of such
subdivisions, and shall be disregarded in construing the language contained in
such subdivisions.
Section 5.19. Recording. Grantor will cause this Mortgage and all
amendments and supplements thereto and substitutions therefor and all financing
statements and continuation statements relating thereto to be recorded, filed,
re-recorded and refiled in such manner and in such places as Trustee or Agent
shall reasonably request and will pay all such recording, filing, re-recording
and refiling taxes, fees and other charges.
Section 5.20. Reporting Compliance. Grantor agrees to comply with any
and all reporting requirements applicable to the transaction evidenced by the
Notes and secured by this Mortgage which are set forth in any law, statute,
ordinance, rule, regulation, order or determination of any governmental
authority, and further agrees upon request of Agent to furnish Agent with
evidence of such compliance.
Section 5.21. Certain Obligations of Grantor. Without limiting
Grantor's obligations hereunder, Grantor's liability hereunder shall extend to
and include all post petition interest, expenses, and other duties and
liabilities with respect to Grantor's obligations hereunder which would be owed
but for the fact that the same, may be unenforceable due to the existence of a
bankruptcy, reorganization or similar proceeding.
Section 5.22. Authority of Agent. The Lenders may, by agreement among
them, provide for and regulate the exercise of rights and remedies hereunder,
but, unless and until modified to the contrary in writing signed by all Lenders
and recorded in the same counties and parishes as this Mortgage is recorded, (i)
all persons other than Grantor and its affiliates shall be entitled to rely on
the releases, waivers, consents, approvals, notifications and other acts
(including, without limitation, appointment of substitute or successor trustee,
or trustees, hereunder and the bidding in of all or any part of the secured
indebtedness held by any one or more Lenders at any foreclosure sale, whether
the same be conducted under the provisions hereof or otherwise) of Agent,
without inquiry into any such agreements or the existence of required consent or
approval of any Lender and without the joinder of any party other than Agent in
such releases, waivers, consents, approvals, notifications or other acts and
(ii) all notices, requests, consents, demands and other communications required
or permitted to be given hereunder (including without limitation, payment of
proceeds of runs under Article III hereof) may be given to Agent.
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Section 5.23. Renewal and Extension. The Notes renew and extend, but do
not extinguish nor release, the balance of following (collectively, the
"Original Notes")
(a) One certain promissory note dated August 26, 1998, in the
principal amount of Forty-Five Million Dollars ($45,000,000) made by
Grantor and payable to the order of INCC, on or before March 31, 2002.
(b) One certain promissory note dated August 26, 1998, in the
principal amount of Forty Five Million Dollars ($45,000,000) made by
Grantor and payable to the order of bank of Scotland on or before March
31, 2002.
(c) One certain promissory note dated June 22, 1998, in the
principal amount of Forty-Seven Million Five Hundred Thousand Dollars
($47,500,000) made by Grantor and payable to the order of MeesPierson
Capital Corp., on or before march 31, 2002.
(d) One certain promissory note dated April 13, 1998 in the
principal amount of Forty-Five Million Dollars ($45,000,000) made by
Grantor and payable to the order of Den Norske Bank ASA, on or before
March 31, 2002.
(e) One certain promissory note dated June 22, 1998, in the
principal amount of Thirty-Two Million Five Hundred Thousand Dollars
($32,500,000) made by Grantor and payable to the order of PNC Bank,
N.A., on or before March 31, 2002.
(f) One certain promissory note dated April 13, 1998, in the
principal amount of Thirty Million Dollars ($30,000,000) made by
Grantor and payable to the order of Hibernia National Bank, on or
before March 31, 2002.
(g) One certain promissory note dated June 22, 1998, in the
principal amount of Twenty-Five Million Dollars ($25,000,000) made by
Grantor and payable to the order of General Electric Capital
Corporation, on or before March 31, 2002.
(h) One certain promissory note dated April 13, 1998, in the
principal amount of Twenty Million Dollars ($20,000,000) made by
Grantor and payable to the order of Credit Agricole Indosuez, on or
before March 31, 2002.
(i) One certain promissory note dated August 26, 1998, in the
principal amount of Twenty Million Dollars ($20,000,000) made by
Grantor and payable to the order of Societe Generale, Southwest Agency,
on or before March 31, 2002.
(j) One certain promissory note dated August 28, 1998, in the
principal amount of Ten Million Dollars ($10,000,000) made by Grantor
and payable to the order of Natexis Banque BFCE, on or before March 31,
2002.
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which Original Notes were secured by (i) that certain Deed of Trust, Mortgage,
Line of Credit Mortgage, Assignment Security Agreement, Fixture Filing and
Financing Statement dated April 26, 1996 executed by Borrower to Roland
Boekhout, Trustee and First American Title Company of Utah, Trustee and
Internationale Nederlander (U.S.) Capital Corporation, Agent (ii) that certain
Deed of Trust, Mortgage, Line of Credit Mortgage, Assignment, Security Agreement
Fixture Filing and Financing Statement dated October 21, 1996 executed by
Borrower to Roland Boekhout, Trustee and international Nederlander (U.S.)
Capital Corporation Agent and (iii) that certain Deed of Trust, Mortgage,
Assignment Security Agreement, Fixture Filing and Financing Statement from
Borrower to Frank Ferrara, Trustee and ING (U.S.) Capital LLC, Agent ("Existing
Lien Documents"). Mortgagor hereby acknowledges and agrees that such Existing
Lien Documents are modified, renewed, extended and continued n full force and
effect against the Property until the Notes and all renewals, rearrangements,
modifications and extensions thereof have been fully and finally paid. All
capitalized terms used herein without definition shall have the meanings given
such terms in the Existing Lien Documents.
Section 5.24. Counterparts. This Mortgage may be executed in several
counterparts, all of which are identical, except that to facilitate recordation,
(a) certain counterparts hereof may include only those portions of Exhibits A
and B which contain descriptions of the properties located in (or otherwise
subject to the recording or filing requirements and/or protections of the
recording or filing acts or regulations of) the recording jurisdiction in which
the particular counterpart is to be recorded (Exhibit B contains only
descriptions of properties located in Uinta County, Wyoming, and may be omitted
from counterparts filed in other counties or parishes) and (b) Exhibit C applies
only to Wyoming and may be omitted from counterparts hereof filed in other
jurisdictions. All of such counterparts together shall constitute one and the
same instrument. Complete copies of this Mortgage containing the entire Exhibit
A, Exhibit B, Exhibit C, Schedule 1 and Annex I have been retained by Grantor
and Agent and one such copy has been recorded in Vermilion Parish, Louisiana.
Section 5.25. Successors and Assigns. The terms, provisions, covenants,
representations, indemnifications and conditions hereof shall be binding upon
Grantor, and the successors and assigns of Grantor, and shall inure to the
benefit of Trustee, Agent and each Lender and their respective successors and
assigns, and shall constitute covenants running with the Mortgaged Properties.
Should the agency under which Agent serves be terminated, or otherwise cease to
exist, Lenders (including the successors and assigns of the Lenders named
herein) shall be deemed to be the successors to Agent. All references in this
Mortgage to Grantor, Trustee, Lenders or Agent shall be deemed to include all
such successors and assigns.
Section 5.26. FINAL AGREEMENT OF THE PARTIES. THE WRITTEN LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
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<PAGE> 209
Section 5.27. CHOICE OF LAW. WITHOUT REGARD TO PRINCIPLES OF CONFLICTS
OF LAW, THIS MORTGAGE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND
TO BE PERFORMED ENTIRELY WITHIN SUCH STATE AND THE LAWS OF THE UNITED STATES OF
AMERICA, EXCEPT THAT TO THE EXTENT THAT THE LAW OF A STATE IN WHICH A PORTION OF
THE PROPERTY IS LOCATED (OR WHICH IS OTHERWISE APPLICABLE TO A PORTION OF THE
PROPERTY) NECESSARILY OR, IN THE SOLE DISCRETION OF LENDER, APPROPRIATELY
GOVERNS WITH RESPECT TO PROCEDURAL AND SUBSTANTIVE MATTERS RELATING TO THE
CREATION, PERFECTION AND ENFORCEMENT OF THE LIENS, SECURITY INTERESTS AND OTHER
RIGHTS AND REMEDIES GRANTED HEREIN, THE LAW OF SUCH STATE SHALL APPLY AS TO THAT
PORTION OF THE PROPERTY LOCATED IN (OR OTHERWISE SUBJECT TO THE LAWS OF) SUCH
STATE.
Section 5.28. Appearance; Resolutions. For purposes of Louisiana law,
including but not limited to the availability of executory process, Grantor and
Agent have appeared on this date before the undersigned Notaries Public and
witnesses in order to execute this Mortgage. There may be attached to
counterparts hereof being recorded in Louisiana certified resolutions of
Grantor's Board of Directors authorizing the execution and delivery of this
Mortgage.
Section 5.29. Paraph. Grantor acknowledges that no promissory note or
other instrument has been presented to the undersigned Notary Public(s) to be
paraphed for identification herewith.
THE REST OF THIS PAGE LEFT INTENTIONALLY BLANK
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<PAGE> 210
THUS DONE AND PASSED this ___ day of January, 1999, in my presence and
in the presence of the undersigned competent witnesses who hereunto sign their
names with Grantor and me, Notary, after reading of the whole.
WITNESSES: FORCENERGY INC
- --------------------
By:
--------------------------------
Stig Wennerstrom
President
---------------------
NOTARY PUBLIC
[SEAL]
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<PAGE> 211
THUS DONE AND PASSED this ____ day of January, 1999, in my presence and
in the presence of the undersigned competent witnesses who hereunto sign their
names with Agent and me, Notary, after reading of the whole.
WITNESSES: ING (U.S.) CAPITAL LLC, AGENT
- ---------------------------
By:
--------------------------------
Name: W. King Grant
Title:Senior Vice President
---------------------
NOTARY PUBLIC
[SEAL]
The address and Taxpayer The address of Trustee is:
ID No. of Grantor is:
Forcenergy Inc 55 East 52nd Street, 33rd Floor
2730 S.W. 3rd Avenue, Suite 300 New York, New York 10055
Miami, Florida 33129-2237
(Miami - Dade County)
Taxpayer ID No. 65-0429338
The address and Taxpayer This instrument prepared by:
I.D. No. of Agent is:
ING (U.S.) Capital LLC Samuel D. Haas
55 East 52nd Street, 33rd Floor Thompson & Knight, P.C.
New York, New York 10055 1700 Pacific Avenue, Suite 3300
Taxpayer ID No. 13-4038440 Dallas, Texas 75201
214-969-1325
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<PAGE> 212
STATE OF FLORIDA )
)
COUNTY OF MIAMI - DADE )
BE IT REMEMBERED THAT I, the undersigned authority, a notary public
duly qualified, commissioned, sworn and acting in and for the State of Florida,
being authorized in such state to take acknowledgments, hereby certify that, on
this ____ day of January, 1999, there personally appeared before me Stig
Wennerstrom, President of FORCENERGY INC, a Delaware corporation, known to me to
be such officer, such corporation, being a party to the foregoing instrument.
LOUISIANA On this date before me, the undersigned authority, personally
came and appeared Stig Wennerstrom, to me personally known and
known by me to be the person whose genuine signature is
affixed to the foregoing document as the President of
Forcenergy Inc, a Delaware corporation, who signed said
document before me in the presence of the two witnesses, whose
names are thereto subscribed. As such, being competent
witnesses, and who acknowledged, in my presence and in the
presence of said witnesses, that he signed the above and
foregoing document as his own free act and deed on behalf of
such corporation by authority of its board of directors and as
the free act and deed of such corporation and for the uses and
purposes therein set forth and apparent.
MISSISSIPPI Personally appeared before me, the undersigned authority in
and for the said state, on this day, within my jurisdiction,
Stig Wennerstrom, being the President of Forcenergy Inc, a
Delaware corporation, and acknowledged that, for and on behalf
of the said corporation, and as its act and deed, he executed
the above and foregoing instrument, after first having been
duly authorized by said corporation so to do.
ALASKA, TEXAS The foregoing instrument was acknowledged before me this date
and by Stig Wennerstrom, as President of Forcenergy Inc, a
WYOMING Delaware corporation, on behalf of such corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal in
Miami Dade County, Florida, on the day and year first above written.
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<PAGE> 213
NOTARY PUBLIC, State of Florida
My commission expires:
- --------------------
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<PAGE> 214
STATE OF NEW YORK )
)
COUNTY OF NEW YORK )
BE IT REMEMBERED THAT I, the undersigned authority, a notary public
duly qualified, commissioned, sworn and acting in and for the State of New York,
and being authorized in such state to take acknowledgments, hereby certify that,
on this ____ day of January, 1999, there personally appeared before me W. King
Grant, Senior Vice President of ING (U.S.) CAPITAL LLC, a Delaware limited
liability company, acting as Agent, known to me to be such officer, such limited
liability company, acting as Agent, being a party to the foregoing instrument.
LOUISIANA On this date before me, the undersigned authority, personally
came and appeared W. King Grant, to me personally known and
known by me to be the person whose genuine signature is
affixed to the foregoing document as the Senior Vice President
of ING (U.S.) Capital LLC, a Delaware limited liability
company, which limited liability company is acting as Agent,
who signed said document before me in the presence of the two
witnesses, whose names are thereto subscribed as such, being
competent witnesses, and who acknowledged, in my presence and
in the presence of said witnesses, that he signed the above
and foregoing document as his own free act and deed on behalf
of such limited liability company by authority of its board of
directors and as the free act and deed of such limited
liability company, acting as Agent, and for the uses and
purposes therein set forth and apparent.
MISSISSIPPI Personally appeared before me, the undersigned authority in
and for the said state, on this day, within my jurisdiction,
W. King Grant, being the Senior Vice President of ING (U.S.)
Capital LLC a Delaware limited liability company, and
acknowledged that, for and on behalf of the said limited
liability company, acting as Agent, and as its act and deed,
acting as Agent, he executed the above and foregoing
instrument, after first having been duly authorized by said
limited liability company so to do.
ALASKA,TEXAS The foregoing instrument was acknowledged before me this date
and WYOMING by W. King Grant, as Senior Vice President of ING (U.S.)
Capital LLC, a Delaware limited liability company, acting as
Agent, on behalf of said limited liability company acting as
Agent.
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<PAGE> 215
IN WITNESS WHEREOF, I have hereunto set my hand and official seal in
New York County, New York, on the day and year first above written.
---------------------------------------------------
NOTARY PUBLIC, State of New York
[SEAL] Printed Name:
-------------------------------------
My Commission Expires:
----------------------------
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<PAGE> 216
CERTIFICATE OF CORPORATE RESOLUTIONS
I, the undersigned hereby certify that I am the Secretary of Forcenergy
Inc, a Delaware corporation (the "Corporation") with offices at 2730 S.W. 3rd
Avenue, Suite 800, Miami, Florida 33129.
I further certify that the attached resolutions were duly adopted and
are now in full force and effect.
I further certify that these resolutions are within the power of the
Board of Directors of the Corporation to pass as provided in the charter and
by-laws of said Corporation.
IN WITNESS WHEREOF, I hereunto subscribe my name and affix the seal of
the Corporation on this ____ day of January, 1999.
FORCENERGY INC
[SEAL]
By:
----------------------------------------
Name:
----------------------------------
Secretary
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EXHIBIT 8
A&K DRAFT
10/26/99
FORCENERGY INC
CERTIFICATE OF DESIGNATION OF THE POWERS,
PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL AND OTHER SPECIAL RIGHTS OF
14% SERIES A CUMULATIVE PREFERRED STOCK
(Par Value $0.01 Per Share)
AND QUALIFICATIONS, LIMITATIONS
AND RESTRICTIONS THEREOF
------------------------------------------------
Pursuant to Section 303 of the
General Corporation Law of the State of Delaware
------------------------------------------------
The undersigned President and Secretary of FORCENERGY INC, a Delaware
corporation (the "Corporation"), certify that:
1. The United States Bankruptcy Court for the Eastern District of
Louisiana (the "Court"), in Case Nos. 99-11391"A" and 99-11392"A" pursuant to
Chapter 11 of Title 11 of the United States Code, has confirmed a plan of
reorganization (the "Plan") for the Corporation, pursuant to Chapter 11 of Title
11 of the United States Code;
2. In accordance with Section 303(c) of the General Corporation Law of
the State of Delaware, a certified copy of the Plan is being filed with the
Secretary of State of the State of Delaware (the "Secretary") together with this
Certificate of Designation;
3. The provision for the making of this Certificate of Designation is
contained in the Plan; and
4. Pursuant to the Plan and the filing of a certified copy of the Plan
with the Secretary in accordance with the provisions of Section 303(c) of the
General Corporation Law of the State of Delaware, the Court has authorized and
the Corporation hereby creates and provides for the
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<PAGE> 218
issue of a series of Preferred Stock, herein designated as the 14% Series A
Cumulative Preferred Stock (the "Preferred Stock"), which shall consist
initially of 40,000 shares of Preferred Stock (subject to increase or decrease
by the Board as described herein in accordance with Section 151 of the General
Corporation Law of the State of Delaware), and the powers, designations,
preferences and relative, participating, optional or other special rights of the
shares of such series, and the qualifications, limitations or restrictions
thereof (in addition to the powers, designations, preferences and relative,
participating, optional or other special rights, and the qualifications,
limitations or restrictions thereof, set forth in the Certificate of
Incorporation that are applicable to the Preferred Stock of all series) are
hereby fixed as follows (certain terms used herein being defined in Section 9):
1. Designation and Amount; General.
(a) The series of Preferred Stock authorized by this
resolution shall be designated the 14% Series A Cumulative Preferred
Stock and shall have a par value of $.01 and a stated value of $1,000
per share (the "Stated Value").
(b) Each share of Preferred Stock shall be identical in all
respects with the other shares of Preferred Stock except as to the
dates from and after which dividends thereon shall be cumulative and
subject to the provisions of Sections 3(b) and 7(f).
(c) The number of shares of Preferred Stock shall initially be
40,000, which number may from time to time be increased (but not above
the total number of authorized shares of Preferred Stock and subject to
Section 8(b)(1)) or decreased (but not below the number of shares of
Preferred Stock then outstanding) by resolution of the Board.
(d) No fractional shares of Preferred Stock shall be issued.
(e) In any case where any Dividend Payment Date or redemption
date shall not be a Business Day, then (notwithstanding any other
provision of this Certificate of Designation) payment of dividends or
redemption price need not be made on such date, but may be made on the
next succeeding Business Day with the same force and effect as if made
on the Dividend Payment Date or redemption date; provided that no
interest shall accrue on such amount of dividends or redemption price
for the period from and after such dividend payment date or redemption
date, as the case may be.
2. Rank. In the payment of dividends and in the distribution of assets
upon the liquidation (complete or partial), dissolution or winding up of the
affairs of the Corporation, the shares of Preferred Stock shall rank senior and
prior to all classes of Junior Stock of the Corporation and to each other class
of capital stock of the Corporation established hereafter by the Board.
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A&K DRAFT
10/26/99
3. Dividends.
(a) Holders of the outstanding shares of Preferred Stock will
be entitled to receive, when, as and if declared by the Board, out of
funds legally available therefor, dividends on each share of the
Preferred Stock at a rate per annum equal to 14% of the Stated Value of
such share (the "Dividend Payment"), payable quarterly on the last
Business Day of each March, June, September and December, respectively,
in each year, commencing [_____________] (the "Dividend Payment Date"),
with respect to the quarterly dividend period (or portion thereof)
ending on the day preceding such respective Dividend Payment Date.
(b) Any dividend payments made with respect to the Preferred
Stock may be made in an amount of fully paid and nonassessable shares
of Preferred Stock equivalent to the Dividend Payment (the "PIK
Shares"); provided, however, that beginning on the fourth anniversary
of the date hereof the dividend payments shall be made in cash and not
by the issuance of PIK Shares.
For purposes of dividends payable in PIK Shares, the
Corporation shall execute, issue and deliver on such Dividend Payment
Date to each holder of record on the related record date, a stock
certificate dated such Dividend Payment Date representing a number of
PIK Shares equal to the dividend payable to such holder, which number
shall equal the quotient of the dollar amount of the dividend declared
divided by the Stated Value, and the due issuance of such PIK Shares
shall constitute full payment thereof; provided, however, that, in lieu
of the issuance of any fractional PIK Shares, the Corporation shall, in
its sole discretion, either (x) pay, on such dividend date, to each
holder of a fractional PIK Share an additional PIK Share amount to
round up such fractional share to a full PIK Share, (y) pay, on such
Dividend Payment Date, to each holder of a fractional PIK Share
(rounded up or down to the nearest 1/100th of a share) an amount in
cash equal to the product of such fraction and the Stated Value, or (z)
on behalf of and for the accounts of all holders of shares of Preferred
Stock who would otherwise be entitled to a fractional PIK Share as a
dividend on the aggregate number of shares of Preferred Stock held by
such holder on the related record date, the Corporation shall aggregate
all such fractional PIK Shares (each such fractional share rounded up
or down to the nearest 1/100th of a share) and, on or before the tenth
Business Day following such Dividend Payment Date, sell such aggregated
fractional PIK Shares in compliance with any applicable securities laws
and, within six Business Days of such sale, pay each such holder his
proportionate share of the net proceeds of such sale.
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(c) Dividends on the Preferred Stock shall be cumulative, but
not compounded, as follows:
(1) if such shares are issued prior to the record
date for the first dividend on shares of Preferred Stock, from
the date of first issue of any shares of Preferred Stock;
(2) if such shares are issued during any period
commencing on (and including) the day after a record date for
a dividend on shares of Preferred Stock and ending on (and
including) the payment date for such dividend, from such
Dividend Payment Date; and
(3) otherwise from the last Business Day of each
March, June, September and December, next preceding the date
of issue of such shares.
Dividends on the Preferred Stock shall be computed for any
period less than or greater than a full quarter on the basis of a year
of 360 days of equal 30-day months.
Dividends shall be payable to the holders of record of the
Preferred Stock appearing on the stock books of the Corporation on such
record dates, not more than 60 days nor less than 10 days preceding the
Dividend Payment Dates thereof, as may be fixed by the Board. Dividends
in arrears for any past dividend periods may be declared and paid at
any time, without reference to any regular Dividend Payment Date, to
holders of record on a date not more than 60 days nor less than 10 days
preceding the payment date thereof, as may be fixed by the Board.
(d) All dividends paid with respect to shares of Preferred
Stock shall be paid pro rata, both as to amount and (subject to the
proviso to the first sentence of Section 3(b)) as to the portion
thereof, if any, paid in PIK Shares.
(e) So long as any shares of Preferred Stock are outstanding,
the Corporation shall not, directly or indirectly, declare or pay or
set apart for payment any dividends or make any other distribution on
the Junior Stock or on any Junior Rights (as defined below) and shall
not (and shall not permit any subsidiary of the Corporation to),
directly or indirectly, redeem, purchase or otherwise acquire for
value, or set apart money for any sinking or other similar fund for the
redemption or purchase of, any Junior Stock or any Junior Rights (other
than the acquisition of (x) Junior Stock as a result of a
reclassification, exchange or conversion of Junior Stock solely into
Junior Stock, (y) Junior Rights upon the exercise, conversion or
exchange thereof solely for Junior Stock or (z) Junior Rights in a Call
Repurchase) unless: (1) the full dividends on all outstanding shares of
the Preferred Stock and on any outstanding shares of capital stock of
the Corporation which rank on a parity with
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<PAGE> 221
the Preferred Stock in the payment of dividends for all past
quarter-yearly (or, in the case of such other capital stock, any other
applicable) dividend periods with respect thereto ending on or prior to
the date of such dividend or distribution, acquisition for value or
setting apart shall have been paid; and (2) the full dividends on all
outstanding shares of Preferred Stock and on any outstanding shares of
capital stock of the Corporation which rank on a parity with Preferred
Stock in the payment of dividends for the then current quarter-yearly
(or, in the case of such other capital stock, any other applicable)
dividend period with respect thereto ending next after such date either
(A) shall have been paid in cash or a cash reserve or (B) shall have
been declared and a sum in cash sufficient for the payment thereof
shall have been deposited by the Corporation in an irrevocable trust
with a bank or trust company organized and in good standing under the
laws of the United States of America or any State thereof, doing
business in the Borough of Manhattan, The City of New York and having
capital and surplus of not less than $50,000,000 according to its last
published statement of condition (a "Trust") for the pro rata benefit
of the holders thereof.
In addition, the Corporation shall not declare or pay or set
apart for payment any cash dividend or make any other distribution in
cash on, and shall not (and shall not permit any subsidiary of the
Corporation to) redeem, purchase or otherwise acquire for cash, or set
apart cash for any sinking or other analogous fund for the redemption
or purchase of, any shares of Junior Stock or any Junior Rights (other
than any acquisition of any Junior Rights constituting a Call
Repurchase) if all or any portion of the dividends paid to holders of
shares of Preferred Stock in respect of the dividend period ending next
before the date of such dividend or distribution, acquisition or
setting apart was paid in PIK Shares pursuant to Section 3(b).
(f) No full dividends shall be declared by the Corporation or
paid or set apart for payment by the Corporation on any shares of
capital stock of the Corporation which rank on a parity with the
Preferred Stock in the payment of dividends for any period unless the
full dividends on all outstanding shares of the Preferred Stock for all
quarter-yearly dividend periods ending on or prior to the date of
payment of such full dividends on such parity stock have been or
contemporaneously are declared and paid or declared and an amount
(whether in cash or PIK Shares) sufficient for the payment thereof
shall have been set aside by the Corporation, separate and apart from
its other assets, in trust for the pro rata benefit of the holders of
such shares, so as to be and continue to be available therefor. If any
dividends are not paid in full, as aforesaid, upon the shares of the
Preferred Stock and any other such parity stock, all dividends declared
and paid upon shares of the Preferred Stock and any other such parity
stock shall be declared and paid pro rata (as nearly as may be) so that
the amount of dividends declared and paid per share of the Preferred
Stock and such parity stock shall in
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<PAGE> 222
all cases bear to each other the same ratio that accrued dividends per
share on the Preferred Stock and such parity stock bear to each other.
(g) No interest, or sum of money in lieu of interest, shall be
payable in respect of any dividend payment on the Preferred Stock which
may be in arrears.
4. Liquidation.
(a) In the event of any liquidation (complete or partial),
dissolution or winding up of the affairs of the Corporation, whether
voluntary or involuntary, after payment or provision for payment of the
debts and other liabilities of the Corporation, but before any
distribution is made to holders of shares of Junior Stock upon any such
liquidation (complete or partial), dissolution or winding up of the
affairs of the Corporation, the holders of the Preferred Stock shall be
entitled to be paid out of the assets of the Corporation available for
distribution to its stockholders, an amount in cash equal to the Stated
Value (the "Liquidation Preference"), plus all accrued and unpaid
dividends (whether or not declared) on each such share to the date
fixed for distribution or payment, provided that the per share cash
amount payable for accrued but unpaid dividend payments in the form of
fully paid and nonassessable shares of Preferred Stock shall be equal
to the Stated Value (the "Liquidation Payment"). If, upon any
liquidation (complete or partial), dissolution or winding up of the
affairs of the Corporation, whether voluntary or involuntary, the
assets of the Corporation, or proceeds thereof, distributable among the
holders of the then outstanding shares of Preferred Stock and the
holders of any shares of capital stock ranking on a parity with the
Preferred Stock with respect to any distribution of assets upon
liquidation (complete or partial), dissolution or winding up of the
affairs of the Corporation, whether voluntary or involuntary, are
insufficient to pay in full all such preferential amounts payable to
such holders, then all such assets and proceeds of the Corporation thus
distributable shall be distributed among the holders of Preferred Stock
and the holders of such capital stock so ranking on a parity with the
Preferred Stock ratably in proportion to the respective aggregate
amounts otherwise payable with respect thereto.
(b) Notice of any liquidation (complete or partial),
dissolution or winding up of the affairs of the Corporation, whether
voluntary or involuntary, shall be given by mail, postage prepaid, not
less than 30 days prior to the distribution or payment date stated
therein, to each holder of record of Preferred Stock appearing on the
stock books of the Corporation as of the date of such notice at the
address of said holder shown therein. Such notice shall state a
distribution or payment date, the amount of the Liquidation Payment and
the place where the Liquidation Payment shall be distributable or
payable.
(c) After the payment in cash to the holders of shares of the
Preferred Stock of the full amount of the Liquidation Payment with
respect to outstanding shares of Preferred
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<PAGE> 223
Stock, the holders of outstanding shares of Preferred Stock shall have
no right or claim, based on their ownership of shares of Preferred
Stock, to any of the remaining assets of the Corporation.
5. Conversion. The shares of Preferred Stock shall not be convertible
into shares of Common Stock.
6. Redemption.
(a) At any time the Corporation may, at its option, redeem the
Preferred Stock, in whole or in part (an "Optional Redemption"), in
cash, for a price payable for each share of Preferred Stock (including
PIK Shares) equal to the sum of the Stated Value plus all accrued and
unpaid dividends (whether or not declared) with respect thereto to the
redemption date; provided that the per share cash amount payable for
accrued but unpaid dividend payments in the form of fully paid and
nonassessable shares of Preferred Stock shall be equal to the Stated
Value (the "Redemption Payment").
(b) Upon the occurrence of a Change of Control, each holder of
Preferred Stock will have the right to require the Company to
repurchase such holder's shares of Preferred Stock pursuant to the
offer described below (the "Change of Control Offer") at a price
payable for each share of Preferred Stock (including PIK Shares) equal
to 101% of the Stated Value plus all accrued and unpaid dividends
(whether or not declared) on each such share to the date fixed for
payment; provided that the per share cash amount payable for accrued
but unpaid dividend payments in the form of fully paid and
nonassessable shares of Preferred Stock shall be equal to the Stated
Value (the "Change of Control Payment").
(c) Notwithstanding anything to the contrary contained herein,
the Corporation will not be required to make a Change of Control Offer
upon a Change of Control if a third party makes the Change of Control
Offer in the manner, at the times and otherwise in compliance with the
requirements set forth herein applicable to a Change of Control Offer
made by the Corporation and purchases all shares of Preferred Stock
validly tendered and not withdrawn under such Change of Control Offer.
7. Terms of Redemption. Any Optional Redemption or a Change of Control
Offer shall be effected in the manner and with the effect set forth in this
Section 7.
(a) Any Redemption Payment or Change of Control Payment, as
the case may be, shall be paid in cash out of funds legally available
therefor.
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(b) The Corporation shall give notice of any Optional
Redemption by mail, postage prepaid, not less than 20 days nor more
than 60 days prior to the date fixed for such redemption, to each
holder of record of the shares of Preferred Stock to be redeemed
appearing on the stock books of the Corporation as of the date of such
notice at the address of said holder shown therein. Such notice to any
holder shall state the redemption date, the redemption price, the place
where the shares to be redeemed, upon presentation and surrender of the
certificates representing such shares, shall be redeemed and the
redemption price therefor shall be paid; and that dividends on such
shares shall cease to accrue on the redemption date. Any notice which
is mailed in the manner herein provided shall be conclusively presumed
to have been duly given, whether or not the stockholder receives such
notice, and failure duly to give such notice by mail, or any defect in
such notice, to any holder of shares of the Preferred Stock to be
redeemed shall not affect the validity of the proceedings for the
redemption of any other shares of the Preferred Stock.
(c) The Corporation shall give notice of any Change of Control
by mail, postage prepaid, not more than 60 days after such event to
each holder of record of the shares of Preferred Stock appearing on the
stock books of the Corporation as of the date of such notice at the
address of said holder shown therein. Any such notice shall describe
the transaction or transactions that constitute the Change of Control
and offer to repurchase the Preferred Stock on the date specified in
such notice, which date shall be no earlier than 30 days and no later
than 60 days from the date such notice is mailed, pursuant to the
procedures required by this Section 7 and described in such notice.
(d) If a notice of redemption of shares of Preferred Stock
shall have been duly given (whether pursuant to an Optional Redemption
or a Change of Control Offer), and if the Corporation deposits in cash
the aggregate redemption price of such shares in a Trust for the pro
rata benefit of the holders of such shares prior to such redemption
date, then from and after the time of such deposit, or, if no such
deposit is made, then upon such redemption date (if on or before such
redemption date all funds in cash necessary for redemption of such
shares shall have been set aside by the Corporation, separate and apart
from its other funds, in trust for the pro rata benefit of the holders
of such shares, so as to be and continue to be available therefor), and
notwithstanding that any certificate representing any such shares shall
not have been surrendered for cancellation, (i) dividends on such
shares shall cease to accrue on such redemption date, (ii) the holders
of such shares shall cease to be stockholders with respect to such
shares, (iii) such shares shall no longer be deemed to be outstanding
and shall no longer be transferable on the books of the Corporation and
(iv) such holders shall have no interest in or claim against the
Corporation with respect to such shares except only the right to
receive from the Corporation the amount payable on redemption thereof,
without interest (or, in the case of such deposit, from such bank or
trust company the funds so deposited, without interest), upon surrender
of the certificates representing such shares on
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or after the redemption date (or, in the case of such deposit, at any
time after such deposit). Any funds so deposited in a Trust and
unclaimed at the end of two years from the date fixed for redemption
shall, to the extent permitted by law, be repaid to the Corporation
upon its request, after which the holders of such shares shall look
only to the Corporation for payment thereof.
(e) Upon any redemption of shares of Preferred Stock (whether
pursuant to an Optional Redemption or a Change of Control Offer), the
shares of Preferred Stock so redeemed shall be cancelled and shall
revert to authorized but unissued Preferred Stock, undesignated as to
series, and the number of shares of Preferred Stock which the
Corporation shall have authority to issue shall not be decreased by
such redemption.
8. Voting; Other.
(a) The holders of shares of Preferred Stock shall have only
those voting rights expressly provided herein or as otherwise required
by Delaware law. As to matters upon which holders of shares of
Preferred Stock are entitled to vote, the holders of Preferred Stock
shall be entitled to one vote per share. Except as otherwise provided
herein, holders of Preferred Stock and holders of Junior Stock shall
vote together as a single class.
(b) So long as any shares of the Preferred Stock remain
outstanding, in addition to any other vote or consent of stockholders
required by law or the Certificate of Incorporation, the Corporation
shall not, directly or indirectly, without the affirmative vote at a
meeting or the written consent with or without a meeting of the holders
of at least a majority of the number of shares of Preferred Stock then
outstanding, or a majority of the members of the Board elected by the
holders of the Preferred Stock,
(i) authorize or approve the issuance of any shares
of, or of any security convertible into, or exercisable or
exchangeable for, shares of any other capital stock of the
Corporation, which shares rank prior to or pari passu with the
shares of Preferred Stock in the payment of dividends or in
the distribution of assets upon liquidation (complete or
partial), dissolution or winding up of the affairs of the
Corporation (other than the issuance of any PIK Shares
pursuant to Section 3(b) or the issuance of Preferred Stock
pursuant to the Plan);
(ii) voluntarily redeem or repurchase any outstanding
stock of the Corporation unless such redemption or repurchase
is to be effected in accordance with an employee benefit plan
approved by the Board;
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(iii) declare or pay any dividends on any outstanding
stock (except Preferred Stock) of the Corporation, except as
expressly provided herein; or
(iv) engage in any business other than the business
currently engaged in by the Corporation and any business
substantially similar or related thereto.
(c) An "Event of Noncompliance" shall have occurred if (i) the
Corporation has failed to declare and pay any dividend on the Preferred
Stock for any two (2) consecutive quarters or (ii) the Corporation has
failed to declare and pay any dividend on the Preferred Stock for any
six (6) quarters in the aggregate, whether or not such payments are
legally permissible or are prohibited by any agreements to which the
Corporation is subject. The Corporation shall promptly deliver notice
of the occurrence of an Event of Noncompliance to the holders of the
Preferred Stock upon discovery thereof.
If any Event of Noncompliance has occurred and is continuing,
the number of directors constituting the Corporation's Board of
Directors shall, at the request of the holders of a majority of the
Preferred Stock then outstanding, be increased by two members, and the
holders of Preferred Stock shall have the special right, voting
separately as a single class (with each Share being entitled to one
vote) and to the exclusion of all other classes of the Corporation's
stock, to elect two individuals to fill such newly created
directorships, to fill any vacancy of such directorships and to remove
any individuals elected to such directorships. The newly created
directorship shall constitute a separate class of directors, and the
director elected by the holders of the Preferred Stock shall be
entitled to cast a number of votes on each matter considered by the
Board of Directors (including for purposes of determining the existence
of a quorum) equal to the sum of the number of votes entitled to be
cast by all of the other directors plus two. The special right of the
holders of Preferred Stock to elect members of the Board of Directors
may be exercised at the special meeting called pursuant to this Section
8(c), at any annual or other special meeting of stockholders and, to
the extent and in the manner permitted by applicable law, pursuant to a
written consent in lieu of a stockholders meeting. Such special right
shall continue until such time as there is no longer any Event of
Noncompliance in existence, at which time such special right shall
terminate subject to revesting upon the occurrence and continuation of
any Event of Noncompliance which gives rise to such special right
hereunder.
At any time when such special right has vested in the holders
of Preferred Stock a proper officer of the Corporation shall, upon the
written request of the holder of at least 10% of the Preferred Stock
then outstanding, addressed to the secretary of the Corporation, call a
special meeting of the holders of Preferred Stock for the purpose of
electing a director pursuant to this Section 8(c). Such meeting shall
be held at the earliest legally permissible date at the principal
office of the Corporation, or at such other place designated by the
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holders of at least 10% of the Preferred Stock then outstanding. If
such meeting has not been called by a proper officer of the Corporation
within 10 days after personal service of such written request upon the
secretary of the Corporation or within 20 days after mailing the same
to the secretary of the Corporation at its principal office, then the
holders of at least 10% of the Preferred Stock then outstanding may
designate in writing one of their number to call such meeting at the
expense of the Corporation, and such meeting may be called by such
Person so designated upon the notice required for annual meetings of
stockholders and shall be held at the Corporation's principal office,
or at such other place designated by the holders of at least 10% of the
Preferred Stock then outstanding. Any holder of Preferred Stock so
designated shall be given access to the stock record books of the
Corporation for the purpose of causing a meeting of stockholders to be
called pursuant to this Section 8(c).
At any meeting or at any adjournment thereof at which the
holders of Preferred Stock have the special right to elect directors,
the presence, in person or by proxy, of the holders of a majority of
the Preferred Stock then outstanding shall be required to constitute a
quorum for the election or removal of any director by the holders of
the Preferred Stock exercising such special right. The vote of a
majority of such quorum shall be required to elect or remove any such
director.
Any director so elected by the holders of Preferred Stock
shall continue to serve as a director until the expiration of the later
of (a) the date on which there is no longer any Event of Noncompliance
in existence or (b) the remaining period of the full term for which
such director has been elected. After the expiration of such period or
when the full term for which such director has been elected ceases
(provided that the special right to elect directors has terminated), as
the case may be, the number of directors constituting the board of
directors of the Corporation shall decrease to such number as
constituted the whole board of directors of the Corporation immediately
prior to the occurrence of the Event or Events of Noncompliance giving
rise to the special right to elect directors.
If any Event of Noncompliance exists, each holder of Preferred
Stock shall also have any other rights which such holder is entitled to
under any contract or agreement at any time and any other rights which
such holder may have pursuant to applicable law.
9. Certain Definitions. As used herein with respect to the Preferred
Stock, the following terms shall have the following meanings:
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(a) "accrued dividends", with respect to any share of any
class or series, means an amount computed at the annual dividend rate
for the class or series of which the particular share is a part, from
and including the date on which dividends on such share became
cumulative to and including the date to which such dividends are to be
accrued, less the aggregate amount of all dividends theretofore paid
thereon.
(b) "Adjustment Event" shall have the meaning set forth in
Section 5(d)(1).
(c) "Affiliate" shall mean any Person or entity directly or
indirectly controlling or controlled by or under direct or indirect
common control with the Corporation.
(d) "Board" shall mean the Board of Directors of the
Corporation.
(e) "Business Day" shall mean each Monday, Tuesday, Wednesday,
Thursday and Friday which is not a day on which banking institutions in
the Borough of Manhattan, The City of New York are authorized or
obligated by law or executive order to close.
(f) "Call Repurchase" shall mean a repurchase for cash by the
Corporation of any of its Warrants to purchase Common Stock initially
issued to purchasers of the Preferred Stock pursuant to a Warrant
Agreement, dated as of __________, 1999 between the Corporation and
_____________, as Warrant Agent pursuant to which such Warrants are to
be issued (i) which repurchase has been approved by the Board and (ii)
the amount of which repurchase, together with the amounts of any other
previous Call Repurchases, does not exceed $4,000,000 in the aggregate.
(g) "Capital Stock" means (i) in the case of a corporation,
corporate stock, (ii) in the case of an association or business entity,
any and all shares, interests, participations, rights or other
equivalents (however designated) of corporate stock, (iii) in the case
of a partnership or limited liability company, partnership or
membership interests (whether general or limited) and (iv) any other
interest or participation that confers on a Person the right to receive
a share of the profits and losses of, or distributions of assets of,
the issuing Person.
(h) "Change of Control" shall be deemed to occur at such time
as (i) any Person (including a "group" within the meaning of Section
13(d) of the Exchange Act) other than a member of the Control Group
becomes the "beneficial owner" as defined in Rule 13d-3 under the
Exchange Act) of more than 35% of the Common Stock, (ii) the
Corporation merges or consolidates with or into another Person and all
of the voting securities of the Corporation that are outstanding
immediately prior to such transaction are changed into or exchanged
for, in addition to any other consideration, securities of the
surviving corporation or a parent corporation that owns all of the
outstanding capital stock of the surviving
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corporation, which securities represent immediately after such
transaction at least a majority of the aggregate voting power of the
voting stock of the surviving corporation or parent corporation, as the
case may be, or (iii) the sale of all or substantially all of the
assets other than the Corporation other than a Permitted Transfer.
(i) "Certificate of Incorporation" shall mean the Amended and
Certificate of Incorporation of the Corporation approved pursuant to
the Plan and as amended from time to time.
(j) "Common Stock" shall mean the common stock of the Company,
par value $0.01, which stock has no preference in respect of dividends
or of amounts payable in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Company.
(k) "Control Group" shall mean any Person and their Affiliates
who beneficially own in excess of 5% of either the Common Stock or the
Preferred Stock as of the Effective Date of the Plan.
(l) "Corporation" shall mean Forcenergy Inc, a Delaware
corporation.
(m) "Court" shall mean The United States Bankruptcy Court for
the Eastern District of Louisiana
(n) "Debtors" shall have the meaning set forth in the Plan.
(o) "Effective Date" shall mean the date on which the Plan is
declared or becomes effective.
(p) "Exchange Act" refers to the Securities Exchange Act of
1934 as it may be amended and any successor act thereto.
(q) "holder" of shares of Preferred Stock shall mean the
stockholder in whose name such Preferred Stock is registered in the
stock books of the Corporation.
(r) "Issue Date" shall mean the date on which the Preferred
Stock is initially issued.
(s) "Junior Right" shall mean any option, right or warrant
convertible into, or exercisable or exchangeable for, any Junior Stock.
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(t) "Junior Stock" shall mean the Common Stock and any other
class or series of shares of the Corporation hereafter authorized over
which the Preferred Stock has preference or priority in the payment of
dividends and in the distribution of assets on any liquidation
(complete or partial), dissolution or winding up of the affairs of the
Corporation.
(u) "Liquidation Payment" shall have the meaning set forth in
Section 4(a).
(v) "Liquidation Preference" shall have the meaning set forth
in Section 4(a).
(w) "Optional Redemption" shall have the meaning set forth in
paragraph 6(a).
(x) "Permitted Transfer" shall mean (i) any merger,
consolidation or combination of a Wholly Owned Subsidiary of the
Corporation with or into another Wholly Owned Subsidiary of the
Corporation or with or into the Corporation, or (ii) the sale of all or
substantially all of the assets of the Debtors in which the holders of
Preferred Stock receive the Stated Value per share plus all accrued and
unpaid dividends (whether or not declared) from the proceeds thereof.
(y) "Person" shall mean any individual, corporation,
partnership, joint venture, limited liability company, association,
joint-stock company, trust, unincorporated organization, government or
any agency or political subdivision thereof or any other entity.
(z) "PIK Shares" shall have the meaning set forth in Section
3(b).
(aa) "Plan" shall mean the Joint Plan of Reorganization under
Chapter 11 of the Bankruptcy Code for the Corporation and its
Affiliated Debtors (as therein described), as confirmed by the Court.
(bb) "Preferred Stock" shall mean the Corporation's 14% Series
A Cumulative Preferred Stock, par value $0.01 per share.
(cc) "Stated Value" shall have the meaning set forth in
Section 1(a).
(dd) "Subsidiary" means, with respect to any Person, (i) any
corporation, association or other business entity of which more than
50% of the total voting power of shares of Capital Stock entitled
(without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by such Person or one or
more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership or limited liability company (a) the
sole general partner or the managing general partner or managing member
of which is such
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Person or a Subsidiary of such Person or (b) the only general partners
or managing members of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
(ee) "Wholly Owned Subsidiary" of any Person means a
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares)
shall at the time be owned by such Person or by one or more Wholly
Owned Subsidiaries of such Person.
10. Entire Designation. The shares of Preferred Stock shall not have
any powers, designations, preferences or relative, participating, optional, or
other special rights, nor shall there be any qualifications, limitations or
restrictions or any powers, designations, preferences or rights of such shares,
other than as set forth herein or in the Certificate of Incorporation or as may
be provided by law.
11. Amendment. The provisions hereof and the Certificate of
Incorporation shall not be amended in any manner which would materially and
adversely affect the rights, privileges or powers of the Preferred Stock
without, in addition to any other vote of stockholders required by law, the
affirmative vote of the holders of two-thirds or more of the outstanding shares
of Preferred Stock, voting together as a single class.
12. Record Holders. The Corporation and any duly appointed transfer
agent and registrar for the Preferred Stock shall deem and treat the record
holder of any Preferred Stock as the true and lawful owner thereof for all
purposes, and neither the Corporation not said transfer agent shall be affected
by any notice to the contrary.
13. Events of Noncompliance.
(a) Definition. An Event of Noncompliance shall have occurred if:
(i) the Corporation fails to pay within five days of any
Dividend Payment Date the full amount of dividends then accrued on the
Preferred Stock, whether or not such payments are legally permissible
or are prohibited by any agreement to which the Corporation is subject;
(ii) the Corporation fails to make any redemption payment with
respect to the Preferred Stock which it is required to make hereunder
within 15 days of the applicable redemption date of any Optional
Redemption or Change of Control Offer, whether or not
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such payment is legally permissible or is prohibited by any agreement
to which the Corporation is subject; or
(iii) the Corporation breaches in any material respect or
otherwise fails to perform or observe in any material respect any other
covenant or agreement set forth herein in any material respect for a
period of 90 days.
The Corporation shall promptly deliver notice of the occurrence of an
Event of Noncompliance to the holders of Preferred Stock upon discovery thereof.
(b) Consequences of Events of Noncompliance. If any Event of
Noncompliance has occurred and is continuing, the number of directors
constituting the Corporation's Board of Directors shall, at the request of the
holders of a majority of the Preferred Stock then outstanding, be increased by
two members, and the holders of Preferred Stock shall have the special right,
voting separately as a single class (with each share of Preferred Stock being
entitled to one vote) and to the exclusion of all other classes of the
Corporation's stock, to elect two individuals to fill such newly created
directorship, to fill any vacancy of such directorships and to remove any
individual elected to such directorships. The newly created directorships shall
constitute a separate class of directors, and the directors elected by the
holders of the Preferred Stock shall be entitled to cast a number of votes on
each matter considered by the Board of Directors (including for purposes of
determining the existence of a quorum) equal to the sum of the number of votes
entitled to be cast by all of the other directors plus two. The special right of
the holders of Preferred Stock to elect members of the Board of Directors may be
exercised at the special meeting called pursuant to this Section 13(b), at any
annual or other special meeting of stockholders and, to the extent and in the
manner permitted by applicable law, pursuant to a written consent in lieu of a
stockholders meeting. Such special right shall continue until such time as there
is no longer any Event of Noncompliance in existence, at which time such special
right shall terminate subject to revesting upon the occurrence and continuation
of any Event of Noncompliance which gives rise to such special right hereunder.
At any time when such special right has vested in the holders of
Preferred Stock, a proper officer of the Corporation shall, upon the written
request of the holder of at least 10% of the Preferred Stock then outstanding,
addressed to the secretary of the Corporation, call a special meeting of the
holders of Preferred Stock for the purpose of electing a director pursuant to
this Section 13(b). Such meeting shall be held at the earliest legally
permissible date at the principal office of the Corporation, or at such other
place designated by the holders of at least 10% of the Preferred Stock then
outstanding. If such meeting has not been called by a proper officer of the
Corporation within 10 days after personal service of such written request upon
the secretary of the Corporation or within 20 days after mailing the same to the
secretary of the Corporation at its principal office, then the holders of at
least 10% of the Preferred Stock then outstanding may designate in writing one
of their number to call such meeting at the expense of the Corporation, and such
meeting may be called by such Person so designated upon the notice required for
annual
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meetings of stockholders and shall be held at the Corporation's principal
office, or at such other place designated by the holders of at least 10% of the
Preferred Stock then outstanding. Any holder of Preferred Stock so designated
shall be given access to the stock record books of the Corporation for the
purpose of causing a meeting of stockholders to be called pursuant to this
Section 13(b).
At any meeting or at any adjournment thereof at which the holders of
Preferred Stock have the special right to elect directors, the presence, in
person or by proxy, of the holders of a majority of the Preferred Stock then
outstanding shall be required to constitute a quorum for the election or removal
of any director by the holders of the Preferred Stock exercising such special
right. The vote of a majority of such quorum shall be required to elect or
remove any such director.
Any director so elected by the holders of Preferred Stock shall
continue to serve as a director until the expiration of the later of (a) the
date on which there is no longer any Event of Noncompliance in existence or (b)
the remaining period of the full term for which such director has been elected.
After the expiration of such period or when the full term for which such
director has been elected ceases (provided that the special right to elect
directors has terminated), as the case may be, the number of directors
constituting the board of directors of the Corporation shall decrease to such
number as constituted the whole board of directors of the Corporation
immediately prior to the occurrence of the Event or Events of Noncompliance
giving rise to the special right to elect directors.
If any Event of Noncompliance exists, each holder of Preferred Stock
shall also have any other rights which such holder is entitled to under any
contract or agreement at any time and any other rights which such holder may
have pursuant to applicable law.
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IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designation to be signed by Stig Wennerstrom, its President, and attested by
Thomas F. Getten, its Secretary, whereby said President affirms, under penalties
of perjury, that this Certificate is the act and deed of the Corporation and
that the facts stated herein are true, this _____ day of ____________, 1999.
FORCENERGY INC
By: ___________________________
Stig Wennerstrom, President
Attest:
_____________________________
Thomas F. Getten, Secretary
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EXHIBIT 9
This Agreement is included in the Motion to Substitute Revised Warrant
Agreements to be Filed as Part of Debtor's Amended Plan Supplement included in
this Form 8-K and is omitted from this Form 8-K.
<PAGE> 236
EXHIBIT 10
COMMITMENT AGREEMENT
THIS COMMITMENT AGREEMENT, dated as of ____________, 1999, is among
Forcenergy Inc (the "Company"), a Delaware corporation and a debtor and
debtor-in-possession in that certain voluntary proceeding under Chapter 11 of
the Bankruptcy Code referred to below, and [the undersigned affiliates of Lehman
Brothers, Inc., Moore Capital Management, Inc., Oaktree Capital Management, LLC
and The Anschutz Corporation] (the "Initial Purchasers"). 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 March 21, 1999, the Company and Forcenergy Resources, Inc.
filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in
the United States Bankruptcy Court for the Eastern District of Louisiana which
are being jointly administered by such Bankruptcy Court under Case No. 99-11391
"A" (the "Chapter 11 Cases");
WHEREAS, since the commencement of the Chapter 11 Cases, 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, on October 26, 1999, the Company filed the Plan, which Plan
contemplates, inter alia, (i) the issue to the Company's unsecured creditors, on
account of their Allowed Claims, of rights to purchase (the "Rights Offering")
units consisting of (a) shares of the Company's preferred stock ("Preferred
Stock") and (b) 10-year warrants for the purchase of the Company's common stock
("Warrants", and together with Preferred Stock, the "Securities"), (ii) the
exercise by the Initial Purchasers of their rights to purchase the Securities
pursuant to the Rights Offering on account of their Allowed Claims, (iii) the
purchase by the Initial Purchasers of the Securities not otherwise purchased
pursuant to the Rights Offering and (iv) the payment by the Company of the
Commitment Fee to the Initial Purchasers;
WHEREAS, the Company desires that the Initial Purchasers enter into
this Commitment Agreement in order to evidence their respective commitments and
obligations; and
WHEREAS, the Company and the Initial Purchasers 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:
<PAGE> 237
ARTICLE I
SECTION 1.1 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.
"Actions" shall have the meaning assigned to it in 3.8(c).
"Backstop Shares" shall have the meaning assigned to it in Section 2.1.
"Business Day" shall mean any day other than a Saturday, Sunday or any
other day on which banking institutions in the City of New York are authorized
by law, regulation or executive order to remain closed.
"Bylaws" shall mean the bylaws of the Company as amended pursuant to
the Plan.
"Certificate of Incorporation" shall mean the certificate of
incorporation of the Company as amended pursuant to the Plan.
"Closing" shall mean the closing of the transactions contemplated by
this Commitment Agreement.
"Commitment Fee" shall have the meaning assigned to it in Section 10.2.
"Company" shall have the meanings assigned to it in the Recitals.
"Company SEC Documents" shall mean the Annual Report of the Company on
Form 10-K for the fiscal year ended December 31, 1998 and any Quarterly Reports
of the Company on Form 10-Q and Current Reports on Form 8-K filed thereafter
under the Exchange Act.
"Confirmation Order" shall have the meaning set forth in the Plan.
"Disclosure Statement" shall have the meaning assigned to it in Section
3.5.
"Disputed Claims Payment Date" shall mean, with respect to Securities
(a) subscribed for by Exercised Disputed Claims that have been determined by
Final Order not to be an Allowed Claim and (b) not been previously purchased by
the Initial Purchasers pursuant to Section 2.1(b); the date two Business Days
after receipt of written notice from the Company (i) that the aggregate purchase
price of such Securities is in excess of $250,000, or (ii) that no further
Exercised Disputed Claims exist.
"Effective Date" shall have the meaning set forth in the Plan.
"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,
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distribution, use, treatment, storage, disposal, transport or handling of
Materials of Environmental Concern.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Historical Financial Statements" shall mean the audited consolidated
balance sheets of the Company and Subsidiaries as of September 30, 1998, and the
related consolidated statements of operations, stockholders' equity (deficit)
and cash flows for the fiscal year in the period ended December 31, 1998.
"HSR Act" shall have the meaning assigned to it in Section 3.4.
"Initial Purchasers" shall have the meaning assigned to it in the
Recitals.
"Mailing Date" shall mean the initial date of mailing of the Disclosure
Statement, as approved by the Bankruptcy Court to the creditors and shareholders
of the Company.
"Material Adverse Effect" shall mean, in connection with the Company 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 the Company 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. Sections 9601, et seq.. and hazardous wastes as defined
under the Resource Conservation and Recovery Act, 42 U.S.C. Sections 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.
"Plan" shall mean the Debtors' First Amended Joint Plan of
Reorganization Under Chapter 11 of the United States Bankruptcy Code, dated as
of October 26, 1999, attached hereto as Exhibit A, as may be amended in
accordance with applicable law.
"Preferred Stock" shall have the meaning assigned to it in the
Recitals.
"Rights Offering" shall have the meaning assigned to it in the
Recitals.
"Securities" shall have the meaning assigned to it in the Recitals.
"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 the Company.
"Subscription Purchase Price" shall have the meaning assigned to it in
the Plan.
"Warrants" shall have the meaning assigned to it in the Recitals.
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ARTICLE II
SECTION 2.1 Obligations Of The Initial Purchasers
In reliance upon the representations, warranties, covenants and
agreements of the Company and upon the terms and subject to the conditions of
this Commitment Agreement:
(a) Each Initial Purchaser agrees to subscribe for and at the
Closing, purchase from the Company, in the amount determined pursuant to the
Plan (i) its full pro rata share of the Securities granted to the Initial
Purchasers pursuant to the Plan on account of any and all Claims and (ii) all of
the remaining Securities 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 the Company agrees to
issue and sell to the Initial Purchasers such Securities. The Securities shall
be paid for in the amount of its related Subscription Purchase Price in the
manner provided for in the Plan.
(b) Each Initial Purchaser hereby subscribes for and agrees to
purchase, on any Disputed Claims Payment Date, its full pro rata share of the
Securities subscribed for by holders of Exercised Disputed Claims to the extent
that all or a portion of any such Exercised Disputed Claim is determined by
Final Order not to be an Allowed Claim. The Initial Purchaser will pay to the
Company for such Securities on the Disputed Claims Payment Date an amount of
cash equal to the Disputed Subscription Purchase Price (or such lesser amount
with respect to such 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 the Company shall designate in writing.
SECTION 2.2 Closing
(a) The Closing shall take place at the offices of Andrews &
Kurth L.L.P., 600 Travis, Suite 4200, Houston, Texas 77002, or at such other
location as the parties may agree, on the Effective Date.
(b) At the Closing:
(i) The Company shall deliver to each Initial Purchaser
certificates for each of the Securities representing such Initial
Purchaser's pro rata share of the Securities 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 such Initial
Purchaser at least two Business Days prior to the Closing;
(ii) The Company shall deliver to each Initial Purchaser
against payment therefor, certificates of the Securities, in definitive
form and registered in the name(s) specified in writing by such Initial
Purchaser at least two Business Days prior to the Closing, representing
such Initial Purchaser's pro rata share of the Securities subscribed
for and purchased pursuant to Section 2.1(a)(i) hereof and the Backstop
Shares subscribed for and purchased pursuant to Section 2.1(a)(ii)
hereof;
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(iii) The Company shall issue the Securities representing the
Disputed Claims to be held in escrow in a Disputed Claims Reserve
Account; and
(iv) 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.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants, as of the execution and
delivery hereof, to the Initial Purchasers as follows:
SECTION 3.1 Organization and Qualification
The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, and has full power and
authority to own, operate and lease its properties and to carry on its business
as now being conducted.
SECTION 3.2 Authority, Authorization and Validity
Subject to approval of this Commitment Agreement by the Bankruptcy
Court and the issuance of the Confirmation Order, the Company 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 the Company, and the consummation by
the Company of the transactions contemplated hereby to be performed by the
Company, have been duly authorized by all requisite action of its Board of
Directors and, if required, shareholders of the Company, and this Commitment
Agreement constitutes the valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject, where
applicable, to entry of the Confirmation Order and to general principles of
equity, whether considered in a proceeding at law or in equity.
SECTION 3.3 Capitalization
The Securities to be issued by the Company pursuant to this Commitment
Agreement and/or the Plan, when so issued as provided in the Plan and/or this
Commitment Agreement, 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 the Securities in accordance with
the Certificate of Incorporation, the Bylaws and the laws of the State of
Delaware.
SECTION 3.4 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
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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 the Company in connection with
the execution and delivery by the Company of this Commitment Agreement or the
consummation by the Company of the transactions contemplated hereby to be
performed by the Company.
SECTION 3.5 Disclosure Statement
On October 26, 1999, the Company 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 the Company in the solicitation of acceptances or rejections of the
Plan, together with any further amendments as of the Mailing Date, 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 3.6 Full Disclosure
The Company has disclosed to the Initial Purchasers all material facts
concerning the Company's and its Subsidiaries' assets, business, operations and
financial condition. No representation or warranty by the Company in this
Commitment Agreement and no statement made by the Company contained in the Plan,
the Disclosure Statement (other than statements made by the Initial Purchasers
therein) or any document delivered or to be delivered by or on behalf of the
Company to the Initial Purchasers 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 the light of the
circumstances under which they were made, not misleading.
SECTION 3.7 Absence of Certain Changes
Since the date of the Historical Financial Statements and except as
disclosed in the Company SEC Documents, the Plan, the Disclosure Statement and
filings with the Bankruptcy Court, the business of the Company has been
conducted in the ordinary course 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;
(ii) any declaration, setting aside or payment of any dividend
or other distribution with respect to any shares of capital stock of
the Company, or any repurchase, redemption or other acquisition by the
Company or any Subsidiary of any outstanding shares of capital stock or
other securities of, or other ownership interests in, the Company or
any Subsidiary (excluding any transactions relating to Forcenergy AB);
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(iii) any amendment of any material term of any outstanding
security of the Company or any Subsidiary;
(iv) any incurrence, assumption or guarantee by the Company or
any Subsidiary of any indebtedness for borrowed money;
(v) any creation or assumption by the Company 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 other than a Subsidiary of the Company;
(vii) any damage, destruction or other casualty loss (whether
or not covered by insurance) affecting the business or assets of the
Company 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 the Company or any Subsidiary relating to
its assets or business (including the acquisition or disposition of any
assets) or any relinquishment by the Company or any Subsidiary of any
contract or other right, in either case, material to the Company and
its Subsidiaries, taken as a whole, other than transactions and
commitments in the ordinary course of business consistent with past
practices;
(ix) any (A) employment, deferred compensation, severance,
retirement or other similar agreement entered into with any director,
officer or employee of the Company 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 the Company or
any Subsidiary, or (C) change in compensation or other benefits payable
to any director, officer or employee of the Company 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 the Company 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 the
Company or any Subsidiary; or
(xi) any agreement to do any of the forgoing.
SECTION 3.8 Environmental Matters
(a) The Company 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
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of which to obtain or make, individually or in the aggregate, would not have a
Material Adverse Effect.
(b) Except as disclosed in the Disclosure Statement or
otherwise affected by the Chapter 11 Cases, the Company 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) Except as described in the Disclosure Statement 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 threatened against the Company or any of its
Subsidiaries 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 the Company or such Subsidiaries, would not reasonably
be expected to have a Material Adverse Effect.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE INITIAL PURCHASERS
SECTION 4.1 Representations and Warranties of the Initial Purchasers
Each of the Initial Purchasers hereby severally, and not jointly,
represents and warrants to, and covenants and agrees with, the Company as
follows.
SECTION 4.2 Organization
The Initial Purchaser is a corporation or limited liability company
duly organized, validly existing and in good standing under the laws of its
state of incorporation or organization, and has full power and authority to own,
operate and lease its properties and to carry on its business as now being
conducted.
SECTION 4.3 Authority, Authorization and Validity
The Initial Purchaser 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 the Initial Purchaser, and the consummation by the Initial
Purchaser of the transactions contemplated hereby to be performed by the Initial
Purchaser, have been duly authorized by all requisite action of its Board of
Directors or managers and, if required, its shareholders or members. This
Commitment Agreement has been duly authorized by such Initial Purchaser and has
been duly executed and delivered on its behalf and constitutes the valid and
binding obligation of such Initial Purchaser,
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enforceable against such Initial Purchaser 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.
SECTION 4.4 Available Funds
The Initial Purchaser 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 the Company and has and will have sufficient funds available to
fulfill these obligations.
SECTION 4.5 No Conflicts
The execution and delivery by such Initial Purchaser of this Commitment
Agreement, and the consummation by such Initial Purchaser of the transactions
contemplated 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 on, or the acceleration of any
obligation or the loss of a benefit under, (I) the certificate of incorporation
or bylaws or limited liability company agreement of such Initial Purchaser, (II)
any note, indenture, deed of trust, material lease, or other material
instrument, contract or agreement to which such Initial Purchaser may then be a
party, 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 4.6 Approvals and Consents
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 such Initial Purchaser 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.
SECTION 4.7 Disclosure
The information provided by such Initial Purchaser 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 the light of the circumstances under which
they were made, not misleading.
SECTION 4.8 Accredited Investor
The Initial Purchaser is an "accredited investor," as such term is
defined in Regulation D promulgated under the Securities Act.
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SECTION 4.9 Investigation
The Company has made available and the Initial Purchaser has reviewed
such information which such Initial Purchaser considers necessary or appropriate
to evaluate the risks and merits of an investment in the Securities.
SECTION 4.10 Financial Experience
The Initial Purchaser has such knowledge and experience in financial,
tax and business matters, including substantial experience in evaluating and
investing in common stock and other securities (including the common stock and
other securities of new and speculative companies), in order to evaluate the
merits and risks of an investment in the Securities and to make an informed
investment decision with respect thereto.
ARTICLE V
COVENANTS OF THE COMPANY
The Company covenants and agrees with the Initial Purchasers 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 5.1 Conduct of Business
(a) The Company 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) The Company will not (i) take or agree or commit to take
any action that would make any representation and warranty of the Company
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 5.2 Actions in the Chapter 11 Case
(a) Subject to its fiduciary obligations as
debtor-in-possession in the Chapter 11 Case, the Company shall use its
reasonable best efforts to cause the Plan to be confirmed by the Bankruptcy
Court.
(b) Promptly after the execution and delivery hereof, the
Company shall make such filings (which shall be in form and substance
satisfactory to the Initial Purchasers ) 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 Plan, including, without limitation, the provisions of Section
10.2 hereof. The Company shall use its reasonable best efforts to obtain such
approval as part of the hearing on confirmation of the Plan.
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(c) The Company shall use its reasonable best efforts to file
with the Bankruptcy Court and to prosecute objections to all Claims that the
Company 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.
SECTION 5.3 Delivery of Certain Documents
(a) The Company shall promptly furnish to the Initial
Purchasers from the date hereof until the Effective Date a copy of each such
report, including financial statements and schedules, hereafter filed by the
Company pursuant to the Exchange Act, and all material documents served upon or
served by the Company 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.
(b) The Company shall give the Initial Purchasers 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 the Company (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 the Initial Purchasers 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 the Initial Purchasers pursuant to this Commitment Agreement shall
be deemed to impact the Initial Purchasers' ability to rely on any
representations or warranties by the Company or the conditions to the
obligations of the parties to consummate the transactions contemplated by this
Commitment Agreement.
SECTION 5.4 Notification
The Company shall promptly notify the Initial Purchasers of (i) 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, (ii)
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, (iii) 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
(iv) 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.
SECTION 5.5 Government Filings
The Company 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,
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promptly pay, as and when due, 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 5.6 Further Assurances
The Company shall (i) execute and deliver such instruments and take
such other actions as the Initial Purchasers may reasonably require in order to
carry out the intent and purpose of this Commitment Agreement and the Plan, (ii)
use its best efforts, diligently and in good faith, to obtain any consents
required herein to be obtained, (iii) 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, (iv) 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 (v) use its best efforts, diligently and in good faith, to
cause the conditions precedent set forth in Article IX hereof to be satisfied.
SECTION 5.7 Management Reports
Subject to its fiduciary duties as debtor-in-possession, the Company
shall prepare, consistently with its current practice, and deliver to the
Initial Purchasers copies of its internal financial package substantially
comparable to the report included in the monthly filing with the Bankruptcy
Court simultaneously with the circulation thereof within the Company.
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ARTICLE VI
COVENANTS OF THE INITIAL PURCHASERS
Each of the Initial Purchasers, jointly and severally, covenants and
agrees, subject to the terms and conditions hereof, that they will (i) execute
and deliver such instruments and take such other actions as the Company may
reasonably require in order to carry out the intent and purpose of this
Commitment Agreement and the Plan, (ii) use their best efforts, diligently and
in good faith, to obtain any consents required herein to be obtained by them,
(iii) 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, (iv) vote the Claims held by them in favor of the confirmation of
the Plan, (v) 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 (vi) use their best efforts,
diligently and in good faith, to cause the conditions precedent set forth in
Article IX hereof to be satisfied.
ARTICLE VII
COVENANTS OF THE COMPANY AND THE INITIAL PURCHASERS
The Company and the Initial Purchasers agree that:
SECTION 7.1 Best Efforts
Subject to the terms and conditions of this Commitment Agreement, the
Company and the Initial Purchasers will use their reasonable 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. The
Company and the Initial Purchasers 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 7.2 Certain Filings
The Company and the Initial Purchasers 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.
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ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY
SECTION 8.1 Conditions Precedent to the Company's Obligations
The obligations of the Company to consummate the transactions
contemplated by this Commitment Agreement, including, without limitation, to
issue the Securities 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 the
Company, 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 the Initial
Purchasers 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 each Initial Purchasers, respectively, on and as of such
date.
(d) At the Effective Date, each of the Initial Purchasers
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, provided, however, that if any Initial Purchaser shall default in its
obligation to subscribe and purchase from the Company the Securities at the time
and in the amounts required pursuant to Section 2.1 hereof, any one or more of
the non-defaulting Initial Purchasers may, but shall not be required to, perform
such obligations and subscribe for and purchase such Securities in which case
this condition shall be satisfied.
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS
OF THE INITIAL PURCHASERS
SECTION 9.1 Conditions to Respective Obligations of the Initial
Purchasers
The joint and several obligations of the Initial Purchasers 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 the Initial Purchasers (except as expressly provided in this Section 9.1), of
each of the following conditions:
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(a) Prior to the Effective Date, there shall have been
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
the Initial Purchasers of the Securities and the Securities issuable to the
Initial Purchasers 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 the
Company or the Initial Purchasers, arising out of or with respect to the
transactions contemplated by this Commitment Agreement.
(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 the Initial Purchasers and shall be in form and substance
satisfactory to each of the Initial Purchasers.
(c) Prior to the Effective Date, the Bankruptcy Court shall
have entered an order (which order shall become a Final Order) approving this
Commitment Agreement.
(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
Disclosure Statement, against the Company the adverse determination of which
would have a Material Adverse Effect.
(e) All consents and approvals of any governmental agency,
authority, commission or other party required to consummate the transactions
contemplated by this Commitment Agreement 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.
(f) The representations and warranties of the Company
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 the Company on and as of such date, and the Initial Purchasers shall have
received a certificate of an executive officer of the Company to such effect.
(g) At the Effective Date, the Company shall have complied or
shall concurrently comply in all material respects with each covenant and
agreement required herein to be complied with by it on or prior to the Effective
Date, and the Initial Purchasers have received a certificate of an executive
officer of the Company to such effect.
(h) At the Effective Date, the Certificate of Incorporation
shall have been duly adopted and filed with the Secretary of State for the State
of Delaware and the Bylaws shall have been duly adopted and each shall contain
provisions acceptable to the Initial Purchasers.
(i) The Registration Rights Agreement shall have been executed
and delivered by the parties thereto and such agreements shall contain
substantially the terms described in the
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Disclosure Statement, and all Exhibits and Schedules to the Plan and Disclosure
Statement shall be in form and substance reasonably satisfactory to each of the
Initial Purchasers.
(j) From the date hereof through and including the Effective
Date, there shall have been no material adverse change in the business,
properties, financial condition, prospects, or results of operations of the
Company and its Subsidiaries taken as a whole.
(k) The Initial Purchasers shall have received an opinion,
dated the Effective Date, of Andrews & Kurth L.L.P., counsel to the Company,
which opinion shall be, in form and substance, reasonably satisfactory to the
Initial Purchasers and customary for the transactions contemplated by this
Agreement arising in a bankruptcy context, excluding, without limitation,
matters approved by the Bankruptcy Court pursuant to the Plan, but including,
without limitation, any applicable matters on which Andrews & Kurth L.L.P., as
counsel to the Company, renders an opinion to the Bank Group in connection with
the New Senior Credit Facility.
(l) The majority of holders of claims against the Company that
have been classified as Class 3 shall have approved the Plan.
SECTION 9.2 Waivers
On the date (which shall not be prior to 15 days after entry of an
order confirming the Plan) on which the Company notifies the Initial Purchasers
that the remaining conditions to the obligations of the Initial Purchasers set
forth in Section 9.1 hereof have been satisfied or waived and the Company
delivers all such instruments, certificates and opinions in appropriate form as
required under this Commitment Agreement, the Initial Purchasers shall determine
whether the conditions set forth in Sections 9.1(d) and 9.1(g) have been
satisfied, or if such conditions have not been satisfied shall determine whether
or not to waive the same, and shall notify the Company 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.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Compliance With Plan
Without limiting the obligations of the Company under this Commitment
Agreement, the Company hereby covenants and agrees with the Initial Purchasers
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 10.2 Commitment Fee
As partial consideration for the commitment by the Initial Purchasers
to purchase the Securities, including the Backstop Shares, the Company shall pay
to the Initial Purchasers an
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aggregate fee equal to $1,200,000 (the "Commitment Fee") on the Effective Date
of the Plan. Each Initial Purchaser will receive by wire transfer in immediately
available funds that portion of the Commitment Fee equivalent to such Initial
Purchaser's pro rata share of the Securities granted to such Initial Purchaser
pursuant to the Plan. The Company agrees that, once paid, the Commitment Fee
shall not be refundable under any circumstances.
SECTION 10.3 Waivers
Any failure of the Company or the Initial Purchasers 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 10.4 Brokers and Finders; Expenses
Except for Petrie Parkman & Co., which will be compensated as described
in the Disclosure Statement, each of the Company and the Initial Purchasers
represent and warrant 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.
SECTION 10.5 Notices
Any notice, demand, claim or other communications under this Commitment
Agreement shall be in writing and shall be deemed to have been given (i) upon
personal delivery thereof, (ii) upon receipt thereof if sent by registered mail,
return receipt requested, postage prepaid, or (iii) 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 the Company, to:
Forcenergy Inc
2730 S.W. 3rd Avenue, Suite 800
Miami, Florida 33129-2356
Attention: Thomas F. Getten
copy to its counsel:
Andrews & Kurth L.L.P.
600 Travis, Suite 4200
Houston, Texas 77002
Attention: David C. Buck
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<PAGE> 253
If to the Initial Purchasers:
Lehman Brothers
600 Travis, Suite 7330l
Houston, Texas 77002
Attention: J. Robert Chambers
- and -
The Anschutz Corporation
555 17th Street, Suite 2400
Denver, Colorado 80202
Attention: Craig Slater
- and -
Oaktree Capital Management, LLC
333 South Grand Avenue, 28th Floor
Los Angeles, California 90071
Attention: Steve Kaplan
- and -
Moore Capital Management
1251 Avenue of the Americas
New York, New York 10020
Attention: Chris Kane
copy to their counsel:
McGlinchey Stafford
643 Magazine Street
P.O. Box 60643 (70160-0643)
New Orleans, Louisiana 70130-3477
Attention: Rudy J. Cerone
and with a copy to counsel for the
Official Unsecured Creditors Committee:
Weil, Gotshal & Manges LLP
700 Louisiana, Suite 1600
Houston, Texas 77002
Attention: Harry A. Perrin
and
Lugenbuhl, Burke, Wheaton, Peck, Rankin & Hubbard
601 Poydras Street
Pan American Life Center, 27th Floor
New Orleans, Louisiana 70130-6027
Attention: Stewart F. Peck
18
<PAGE> 254
SECTION 10.6 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 limitation, any trustee of the Company and the
Company) 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 each of the other parties.
SECTION 10.7 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 10.8 Entire Agreement
This Commitment Agreement, the Subscription Rights Agreement and the
Plan (including the Exhibits and Schedules 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 10.9 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 10.10 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 10.11 Survival
The representations and warranties of the parties hereto shall survive
only until the Effective Date but not thereafter.
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<PAGE> 255
SECTION 10.12 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 Section 10.2 hereof shall be
effective upon the execution and delivery hereof.
SECTION 10.13 Termination of this Agreement
(a) At any time prior to date of confirmation of the Plan, the
Company, for any reason in its sole discretion, may terminate this Commitment
Agreement by written notice to the Initial Purchasers. Nothing in this
Commitment Agreement shall in any way limit or restrict the ability of the
Company to amend the Plan, or to terminate this Commitment Agreement in
connection with any amendment to the Plan or any plan of reorganization other
than the Plan.
(b) In the event the Company amends the Plan, any one of the
Initial Purchasers shall have the right to terminate this Commitment Agreement
by written notice to the Company within 10 calendar days of the filing date of
the amendment to the Plan. If the Company does not receive written notice from
any Initial Purchaser within 10 calendar days of the filing date of an amendment
to the Plan, the amendments shall be deemed accepted by the Initial Purchasers
and the Initial Purchasers shall remain bound by the terms of this Commitment
Agreement.
(c) In the event the Initial Purchasers terminate this
Commitment Agreement due to an amendment to the Plan, or the Company terminates
this Commitment Agreement by written notice to the Initial Purchasers, the
Company and the Initial Purchasers shall have no further obligations to the
other parties under this Commitment Agreement.
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<PAGE> 256
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.
FORCENERGY INC
By:
----------------------------------------
Name:
Title:
[AFFILIATE OF THE ANSCHUTZ CORPORATION]
By:
----------------------------------------
Name:
Title:
[AFFILIATE OF OAKTREE CAPITAL MANAGEMENT,
LLC]
By:
----------------------------------------
Name:
Title:
[AFFILIATE OF LEHMAN BROTHERS, INC.]
By:
----------------------------------------
Name:
Title:
MOORE CAPITAL MANAGEMENT, INC
By:
----------------------------------------
Name:
Title:
21
<PAGE> 257
EXHIBIT 11
14% SERIES A CUMULATIVE 14% SERIES A CUMULATIVE
PREFERRED STOCK PREFERRED STOCK
NUMBER INCORPORATED UNDER THE LAWS SHARES
PrA- OF THE STATE OF DELAWARE
SEE REVERSE FOR
CERTAIN DEFINITIONS
CUSIP
FORCENERGY INC
THIS IS TO CERTIFY THAT
IS THE OWNER OF
FULLY PAID AND NON-ASSESSABLE SHARES OF THE 14% Series A Cumulative
Preferred Stock $.01 par value of
Forcenergy Inc transferable on the books of the Corporation by the
holder hereof in person or by duly authorized attorney upon surrender
of this certificate properly endorsed. This certificate and the
shares represented hereby are issued and shall be held subject to all
of the provisions of the Certificate of Incorporation of the
Corporation and Amendments thereof to all of which the holder by the
acceptance hereby assents. This Certificate is not valid unless
countersigned and registered by the Transfer Agent and Registrar.
Witness the facsimile seal of the Corporation and the
facsimile signatures of its duly authorized officers.
Dated
-------------------- -----------------------
SECRETARY PRESIDENT
AUTHORIZED SIGNATURE
COUNTERSIGNED AND REGISTERED:
BY AMERICAN STOCK TRANSFER & TRUST COMPANY
(New York, N.Y.) TRANSFER AGENT
AND REGISTRAR
<PAGE> 258
EXHIBIT 12
FORCENERGY INC
1999 STOCK PLAN
SECTION 1. Purpose of the Plan.
The Forcenergy Inc 1999 Stock Plan (the "Plan") is intended to promote
the interests of Forcenergy Inc, a Delaware corporation (the "Company"), by
encouraging officers, employees, directors and consultants of the Company and
its Affiliates to acquire or increase their equity interest in the Company and
to provide a means whereby they may develop a sense of proprietorship and
personal involvement in the development and financial success of the Company,
and to encourage them to remain with and devote their best efforts to the
business of the Company thereby advancing the interests of the Company and its
stockholders. The Plan is also contemplated to enhance the ability of the
Company and its Affiliates to attract and retain the services of individuals who
are essential for the growth and profitability of the Company.
SECTION 2. Definitions.
As used in the Plan, the following terms shall have the meanings set
forth below:
"Affiliate" shall mean (i) any entity that, directly or through one or
more intermediaries, is controlled by the Company, (ii) any entity in which the
Company has a significant equity interest, as determined by the Committee, and
(iii) any "parent corporation" of the Company (as defined in Section 424(e) of
the Code) and any "subsidiary corporation" of any such parent (as defined in
Section 424(f) of the Code) thereof.
"Award" shall mean any Option, Restricted Stock, Performance Award,
Phantom Shares, Bonus Shares, Other Stock-Based Award or Cash Award.
"Award Agreement" shall mean any written agreement, contract, or other
instrument or document evidencing any Award, which may, but need not, be
executed or acknowledged by a Participant.
"Board" shall mean the Board of Directors of the Company.
"Bonus Shares" shall mean an award of Shares granted pursuant to
Section 6(d) of the Plan.
"Cash Award" shall mean an award payable in cash granted pursuant to
Section 6(f) of the Plan.
<PAGE> 259
"Change in Control" shall mean the occurrence of any one of the
following:
(a) the consummation of any transaction (including without limitation,
any merger, consolidation, tender offer, or exchange offer) the result
of which is that any individual or "person" (as such term is used in
Sections 13(d)(3) and 14(d)(2), of the Securities Exchange Act of 1934
- the "Exchange Act") is or becomes the "beneficial owner" (as such
term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act),
directly or indirectly, of securities of the Company representing 33%
or more of the combined voting power of the Company's then outstanding
securities,
(b) the individuals who, as of the effective date of the Plan,
constitute the Board (the "Incumbent Board"), cease for any reason to
constitute at least a majority of the Board; provided, however, that
any individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company's stockholders, was
approved by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for
this purpose, any such individual whose initial assumption of office
occurs as a result of either (i) an actual or threatened election
contest (as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act), or an actual or threatened
solicitation of proxies or consents by or on behalf of a Person other
than the Board or (ii) a plan or agreement to replace a majority of the
members of the Board then comprising the Incumbent Board,
(c) the sale, lease, transfer, conveyance or other disposition
(including by merger or consolidation) in one or a series of related
transactions, of all or substantially all of the assets of the Company
and its subsidiaries, taken as a whole,
(d) the adoption of a plan relating to the liquidation or dissolution
of the Company, or
(e) the date the Company files a report or proxy statement with the SEC
stating that a change in control has or may occur pursuant to any then
existing contract or termination.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the rules and regulations thereunder.
"Committee" shall mean the committee appointed by the Board to
administer the Plan or, if none, the Board.
"Consultant" shall mean any individual, other than a Director or an
Employee, who renders consulting services to the Company or an Affiliate for a
fee.
"Director" shall mean a "non-employee director" of the Company, as
defined in Rule 16b-3.
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"Employee" shall mean any employee of the Company or an Affiliate.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Fair Market Value" shall mean, with respect to Shares, the closing
sales price of a Share on the applicable date (or if there is no trading in the
Shares on such date, on the next preceding date on which there was trading) as
reported in The Wall Street Journal (or other reporting service approved by the
Committee). In the event the Shares are not publicly traded at the time a
determination of its fair market value is required to be made hereunder, the
determination of fair market value shall be made in good faith by the Committee.
"Option" shall mean an option granted under Section 6(a) of the Plan.
Options granted under the Plan may constitute "incentive stock options" for
purposes of Section 422 of the Code or nonqualified stock options.
"Other Stock-Based Award" shall mean an award granted pursuant to
Section 6(g) of the Plan that is not otherwise specifically provided for, the
value of which is based in whole or in part upon the value of a Share.
"Participant" shall mean any Director, Employee or Consultant granted
an Award under the Plan.
"Performance Award" shall mean any right granted under Section 6(c) of
the Plan.
"Performance Objectives" means the objectives, if any, established by
the Committee that are to be achieved with respect to an Award granted under
this Plan, which may be described in terms of Company-wide objectives, in terms
of objectives that are related to performance of a division, subsidiary,
department or function within the Company or a subsidiary in which the
Participant receiving the Award is employed or in individual or other terms, and
which will relate to the period of time determined by the Committee. The
Performance Objectives intended to qualify under Section 162(m) of the Code
shall be with respect to one or more of the following (i) net earnings; (ii)
operating income; (iii) earnings before interest and taxes ("EBIT"); (iv)
earnings before interest, taxes, depreciation, and amortization expenses
("EBITDA"); (v) earnings before taxes and unusual or nonrecurring items; (vi)
revenue; (vii) return on investment; (viii) return on equity; (ix) return on
total capital; (x) return on assets; (xi) total stockholder return; (xii) return
on capital employed in the business; (xiii) stock price performance; (xiv)
earnings per share growth; and (xv) cash flows. Which objectives to use with
respect to an Award, the weighting of the objectives if more than one is used,
and whether the objective is to be measured against a Company-established budget
or target, an index or a peer group of companies, shall be determined by the
Committee in its discretion at the time of grant of the Award. A Performance
Objective need not be based on an increase or a positive result and may include,
for example, maintaining the status quo or limiting economic losses.
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<PAGE> 261
"Person" shall mean individual, corporation, partnership, association,
joint-stock company, trust, unincorporated organization, government or political
subdivision thereof or other entity.
"Phantom Shares" shall mean an Award of the right to receive Shares
issued at the end of a Restricted Period which is granted pursuant to Section
6(e) of the Plan.
"Restricted Period" shall mean the period established by the Committee
with respect to an Award during which the Award either remains subject to
forfeiture or is not exercisable by the Participant.
"Restricted Stock" shall mean any Share, prior to the lapse of
restrictions thereon, granted under Sections 6(b) of the Plan.
"Rule 16b-3" shall mean Rule 16b-3 promulgated by the SEC under the
Exchange Act, or any successor rule or regulation thereto as in effect from time
to time.
"SEC" shall mean the Securities and Exchange Commission, or any
successor thereto.
"Shares" or "Common Shares" or "Common Stock" shall mean the common
stock of the Company, $0.01 par value, and such other securities or property as
may become the subject of Awards under the Plan.
SECTION 3. Administration.
The Plan shall be administered by the Committee. A majority of the
Committee shall constitute a quorum, and the acts of the members of the
Committee who are present at any meeting thereof at which a quorum is present,
or acts unanimously approved by the members of the Committee in writing, shall
be the acts of the Committee. Subject to the following, the Committee, in its
sole discretion, may delegate any or all of its powers and duties under the
Plan, including the power to grant Awards under the Plan, to the Chief Executive
Officer of the Company, subject to such limitations on such delegated powers and
duties as the Committee may impose. Upon any such delegation all references in
the Plan to the "Committee", other than in Section 7, shall be deemed to include
the Chief Executive Officer; provided, however, that such delegation shall not
limit the Chief Executive Officer's right to receive Awards under the Plan.
Notwithstanding the foregoing, the Chief Executive Officer may not grant Awards
to, or take any action with respect to any Award previously granted to, a person
who is an officer or a member of the Board. Subject to the terms of the Plan and
applicable law, and in addition to other express powers and authorizations
conferred on the Committee by the Plan, the Committee shall have full power and
authority to: (i) designate Participants; (ii) determine the type or types of
Awards to be granted to a Participant; (iii) determine the number of Shares to
be covered by, or with respect to which payments, rights, or other matters are
to be calculated in connection with, Awards; (iv) determine the terms and
conditions of any Award; (v) determine whether, to what extent, and under what
circumstances Awards may be settled or exercised in cash, Shares, other
securities, other Awards or other property, or canceled, forfeited,
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<PAGE> 262
or suspended and the method or methods by which Awards may be settled,
exercised, canceled, forfeited, or suspended; (vi) determine whether, to what
extent, and under what circumstances cash, Shares, other securities, other
Awards, other property, and other amounts payable with respect to an Award shall
be deferred either automatically or at the election of the holder thereof or of
the Committee; (vii) interpret and administer the Plan and any instrument or
agreement relating to an Award made under the Plan; (viii) establish, amend,
suspend, or waive such rules and regulations and appoint such agents as it shall
deem appropriate for the proper administration of the Plan; and (ix) make any
other determination and take any other action that the Committee deems necessary
or desirable for the administration of the Plan. Unless otherwise expressly
provided in the Plan, all designations, determinations, interpretations, and
other decisions under or with respect to the Plan or any Award shall be within
the sole discretion of the Committee, may be made at any time and shall be
final, conclusive, and binding upon all Persons, including the Company, any
Affiliate, any Participant, any holder or beneficiary of any Award, any
stockholder and any Employee.
SECTION 4. Shares Available for Awards.
(a) Shares Available. Subject to adjustment as provided in Section
4(c), the number of Shares with respect to which Awards may be granted under the
Plan initially shall be 3,000,000, provided the number of Shares with respect to
which Awards may be granted under this Plan shall be increased from time to time
to a number not to exceed 15% of the total number of Shares outstanding and
issuable upon the exercise of options, warrants and other securities
convertible, exchangeable or exercisable into Shares at the time of such grant.
If any Award is exercised, paid, forfeited, terminated or canceled without the
delivery of Shares, then the Shares covered by such Award, to the extent of such
payment, exercise, forfeiture, termination or cancellation, shall again be
Shares with respect to which Awards may be granted.
(b) Sources of Shares Deliverable Under Awards. Any Shares delivered
pursuant to an Award may consist, in whole or in part, of authorized and
unissued Shares or of treasury Shares.
(c) Adjustments. In the event that the Committee determines that any
dividend or other distribution (whether in the form of cash, Shares, other
securities, or other property), recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, or exchange of Shares or other securities of the Company, issuance
of warrants or other rights to purchase Shares or other securities of the
Company, or other similar corporate transaction or event affects the Shares such
that an adjustment is determined by the Committee to be appropriate in order to
prevent dilution or enlargement of the benefits or potential benefits intended
to be made available under the Plan, then the Committee shall, in such manner as
it may deem equitable, adjust any or all of (i) the number and type of Shares
(or other securities or property) with respect to which Awards may be granted,
(ii) the number and type of Shares (or other securities or property) subject to
outstanding Awards, and (iii) the grant or exercise price with respect to any
Award or, if deemed appropriate, make provision for a cash payment to the holder
of an outstanding Award.
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<PAGE> 263
SECTION 5. Eligibility.
Any Employee, Director or Consultant shall be eligible to be designated
a Participant and receive an Award under the Plan.
SECTION 6. Awards.
(a) Options. Subject to the provisions of the Plan, the Committee shall
have the authority to determine the Participants to whom Options shall be
granted, the number of Shares to be covered by each Option, the purchase price
therefor and the conditions and limitations applicable to the exercise of the
Option, including the following terms and conditions and such additional terms
and conditions, as the Committee shall determine, that are not inconsistent with
the provisions of the Plan.
(i) Exercise Price. The purchase price per Share purchasable
under an Option shall be determined by the Committee at the time the
Option is granted, but shall not be less than the Fair Market Value per
Share on such grant date.
(ii) Time and Method of Exercise. The Committee shall
determine the time or times at which an Option may be exercised in
whole or in part (which may include the achievement of one or more
Performance Objectives), and the method or methods by which, and the
form or forms (which may include, without limitation, cash, check
acceptable to the Company, Shares already-owned for more than six
months, outstanding Awards, Shares that would otherwise be acquired
upon exercise of the Option, a "cashless-broker" exercise (through
procedures approved by the Company), other securities or other
property, loans, notes approved by the Committee, or any combination
thereof, having a Fair Market Value on the exercise date equal to the
relevant exercise price) in which payment of the exercise price with
respect thereto may be made or deemed to have been made.
(iii) Incentive Stock Options. The terms of any Option granted
under the Plan intended to be an incentive stock option shall comply in
all respects with the provisions of Section 422 of the Code, or any
successor provision, and any regulations promulgated thereunder.
Incentive stock options may be granted only to employees of the Company
and its parent corporation and subsidiary corporations, within the
meaning of Section 424 of the Code. To the extent the aggregate Fair
Market Value of the Shares (determined as of the date of grant) of an
Option to the extent exercisable for the first time during any calendar
year (under all plans of the Company and its parent and subsidiary
corporations) exceeds $100,000, such Option Shares in excess of
$100,000 shall be nonqualified stock options.
(iv) Limits. The maximum number of Options that may be granted
to any Participant during any calendar year shall not exceed 1,000,000
Shares.
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<PAGE> 264
(b) Restricted Stock. Subject to the provisions of the Plan, the
Committee shall have the authority to determine the Participants to whom
Restricted Stock shall be granted, the number of Shares of Restricted Stock to
be granted to each such Participant, the duration of the Restricted Period
during which, and the conditions, including Performance Objectives, if any,
under which if not achieved, the Restricted Stock may be forfeited to the
Company, and the other terms and conditions of such Awards. Unless subject to
the achievement of Performance Objectives or a special determination is made by
the Committee as to a shorter Restricted Period, the Restricted Period shall not
be less than three years.
(i) Dividends. Dividends paid on Restricted Stock may be paid
directly to the Participant, may be subject to risk of forfeiture
and/or transfer restrictions during any period established by the
Committee or sequestered and held in a bookkeeping cash account (with
or without interest) or reinvested on an immediate or deferred basis in
additional shares of Common Stock, which credit or shares may be
subject to the same restrictions as the underlying Award or such other
restrictions, all as determined by the Committee in its discretion.
(ii) Registration. Any Restricted Stock may be evidenced in
such manner as the Committee shall deem appropriate, including, without
limitation, book-entry registration or issuance of a stock certificate
or certificates. In the event any stock certificate is issued in
respect of Restricted Stock granted under the Plan, such certificate
shall be registered in the name of the Participant and shall bear an
appropriate legend referring to the terms, conditions, and restrictions
applicable to such Restricted Stock.
(iii) Forfeiture and Restrictions Lapse. Except as otherwise
determined by the Committee or the terms of the Award that granted the
Restricted Stock, upon termination of a Participant's employment (as
determined under criteria established by the Committee) for any reason
during the applicable Restricted Period, all Restricted Stock shall be
forfeited by the Participant and reacquired by the Company.
Unrestricted Shares, evidenced in such manner as the Committee shall
deem appropriate, shall be issued to the holder of Restricted Stock
promptly after the applicable restrictions have lapsed or otherwise
been satisfied.
(iv) Transfer Restrictions. During the Restricted Period,
Restricted Stock will be subject to the limitations on transfer as
provided in Section 6(h)(iii).
(v) Limits. The maximum number of Shares of Restricted Stock
that may be granted to any Participant during any calendar year shall
not exceed 1,000,000 Shares.
(c) Performance Awards. The Committee shall have the authority to
determine the Participants who shall receive a Performance Award, which shall be
denominated as a cash amount (e.g., $100 per award unit) at the time of grant
and confer on the Participant the right to receive payment of such Award, in
whole or in part, upon the achievement of such Performance Objectives during
such performance periods as the Committee shall establish with respect to the
Award.
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<PAGE> 265
(i) Terms and Conditions. Subject to the terms of the Plan and
any applicable Award Agreement, the Committee shall determine the
Performance Objectives to be achieved during any performance period,
the length of any performance period, the amount of any Performance
Award and the amount of any payment or transfer to be made pursuant to
any Performance Award.
(ii) Payment of Performance Awards. Performance Awards, to the
extent earned, shall be paid (in cash and/or in Shares, in the sole
discretion of the Committee) in a lump sum following the close of the
performance period.
(iii) Limits. The maximum value of Performance Awards that may
be granted to any Participant during any calendar year shall not exceed
$2,000,000.
(d) Bonus Shares. The Committee shall have the authority, in its
discretion, to grant Bonus Shares to Participants. Each Bonus Share shall
constitute a transfer of an unrestricted Share to the Participant, without other
payment therefor, as additional compensation for the Participant's services to
the Company. Bonus Shares shall be in lieu of a cash bonus that otherwise would
be granted.
(e) Phantom Shares. The Committee shall have the authority to grant
Awards of Phantom Shares to Participants upon such terms and conditions as the
Committee may determine.
(i) Terms and Conditions. Each Phantom Share Award shall
constitute an agreement by the Company to issue or transfer a specified
number of Shares or pay an amount of cash equal to a specified number
of Shares, or a combination thereof to the Participant in the future,
subject to the fulfillment during the Restricted Period of such
conditions, including Performance Objectives, if any, as the Committee
may specify at the date of grant. During the Restricted Period, the
Participant shall not have any right to transfer any rights under the
subject Award, shall not have any rights of ownership in the Phantom
Shares and shall not have any right to vote such shares.
(ii) Dividends. Any Phantom Share award may provide that
amount equal to any or all dividends or other distributions paid on
Shares during the Restricted Period be credited in a cash bookkeeping
account (without interest) or that equivalent additional Phantom Shares
be awarded, which account or shares may be subject to the same
restrictions as the underlying Award or such other restrictions as the
Committee may determine.
(iii) Limits. The maximum number of Phantom Shares that may be
granted to any Participant during any calendar year shall not exceed
1,000,000.
(f) Cash Awards. The Committee shall have the authority to determine
the Participants to whom Cash Awards shall be granted, the amount, and the terms
or conditions, if any, as additional compensation for the Participant's services
to the Company or its Affiliates. A Cash Award may
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be granted (simultaneously or subsequently) separately or in tandem with another
Award and may entitle a Participant to receive a specified amount of cash from
the Company upon such other Award becoming taxable to the Participant, which
cash amount may be based on a formula relating to the anticipated taxable income
associated with such other Award and the payment of the Cash Award.
(g) Other Stock-Based Awards. The Committee may also grant to
Participants an Other Stock-Based Award, which shall consist of a right which is
an Award denominated or payable in, valued in whole or in part by reference to,
or otherwise based on or related to, Shares as is deemed by the Committee to be
consistent with the purposes of the Plan. Subject to the terms of the Plan,
including the Performance Objectives, if any, applicable to such Award, the
Committee shall determine the terms and conditions of any such Other Stock-Based
Award. The maximum number of Shares or value for which Other Stock-Based Awards
may be granted to any Participant during any calendar year shall not exceed
1,000,000 Shares, if the Award is in Shares, or $2,000,000, if the Award is in
dollars.
(h) General.
(i) Awards May Be Granted Separately or Together. Awards may,
in the discretion of the Committee, be granted either alone or in
addition to, in tandem with, or in substitution for any other Award
granted under the Plan or any award granted under any other plan of the
Company or any Affiliate. Awards granted in addition to or in tandem
with other Awards or awards granted under any other plan of the Company
or any Affiliate may be granted either at the same time as or at a
different time from the grant of such other Awards or awards.
(ii) Forms of Payment by Company Under Awards. Subject to the
terms of the Plan and of any applicable Award Agreement, payments or
transfers to be made by the Company or an Affiliate upon the grant,
exercise or payment of an Award may be made in such form or forms as
the Committee shall determine, including, without limitation, cash,
Shares, other securities, other Awards or other property, or any
combination thereof, and may be made in a single payment or transfer,
in installments, or on a deferred basis, in each case in accordance
with rules and procedures established by the Committee. Such rules and
procedures may include, without limitation, provisions for the payment
or crediting of reasonable interest on installment or deferred
payments.
(iii) Limits on Transfer of Awards.
(A) Except as provided in (C) below, each Award, and
each right under any Award, shall be exercisable only by the
Participant during the Participant's lifetime, or by the
person to whom the Participant's rights shall pass by will or
the laws of descent and distribution.
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(B) Except as provided in (C) below, no Award and no
right under any such Award may be assigned, alienated,
pledged, attached, sold or otherwise transferred or encumbered
by a Participant otherwise than by will or by the laws of
descent and distribution (or, in the case of Restricted Stock,
to the Company) and any such purported assignment, alienation,
pledge, attachment, sale, transfer or encumbrance shall be
void and unenforceable against the Company or any Affiliate.
(C) Notwithstanding anything in the Plan to the
contrary, to the extent specifically provided by the Committee
with respect to a grant, a nonqualified stock option may be
transferred to immediate family members or related family
trusts, or similar entities on such terms and conditions as
the Committee may establish.
(iv) Term of Awards. The term of each Award shall be for such
period as may be determined by the Committee; provided, that in no
event shall the term of any Award exceed a period of 10 years from the
date of its grant.
(v) Share Certificates. All certificates for Shares or other
securities of the Company or any Affiliate delivered under the Plan
pursuant to any Award or the exercise thereof shall be subject to such
stop transfer orders and other restrictions as the Committee may deem
advisable under the Plan or the rules, regulations, and other
requirements of the SEC, any stock exchange upon which such Shares or
other securities are then listed, and any applicable federal or state
laws, and the Committee may cause a legend or legends to be put on any
such certificates to make appropriate reference to such restrictions.
(vi) Consideration for Grants. Awards may be granted for no
cash consideration or for such consideration as the Committee
determines including, without limitation, such minimal cash
consideration as may be required by applicable law.
(vii) Delivery of Shares or other Securities and Payment by
Participant of Consideration. No Shares or other securities shall be
delivered pursuant to any Award until payment in full of any amount
required to be paid pursuant to the Plan or the applicable Award
Agreement (including, without limitation, any exercise price, tax
payment or tax withholding) is received by the Company. Such payment
may be made by such method or methods and in such form or forms as the
Committee shall determine, including, without limitation, cash, Shares,
other securities, other Awards or other property, withholding of
Shares, cashless exercise with simultaneous sale, or any combination
thereof; provided that the combined value, as determined by the
Committee, of all cash and cash equivalents and the Fair Market Value
of any such Shares or other property so tendered to the Company, as of
the date of such tender, is at least equal to the full amount required
to be paid pursuant to the Plan or the applicable Award Agreement to
the Company.
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SECTION 7. Amendment and Termination.
Except to the extent prohibited by applicable law and unless otherwise
expressly provided in an Award Agreement or in the Plan:
(a) Amendments to the Plan. Except as required by applicable
law or the rules of the principal securities market on which the shares
are traded and subject to Section 7(b) below, the Board or the
Committee may amend, alter, suspend, discontinue, or terminate the Plan
without the consent of any stockholder, Participant, other holder or
beneficiary of an Award, or other Person; provided, however, no such
amendment may be made without stockholder approval, if such amendment
would (i) materially increase the benefits accruing to Participants,
(ii) materially increase the number of Shares authorized under the
Plan, or (iii) materially increase the Persons eligible for Awards
under the Plan.
(b) Amendments to Awards. Subject to (d) below, the Committee
may waive any conditions or rights under, amend any terms of, or alter
any Award theretofore granted, provided no change, other than pursuant
to Section 7(c), in any Award shall reduce the benefit to Participant
without the consent of such Participant.
(c) Adjustment of Awards Upon the Occurrence of Certain
Unusual or Nonrecurring Events. Subject to (d) below, the Committee is
hereby authorized to make adjustments in the terms and conditions of,
and the criteria included in, Awards in recognition of unusual or
nonrecurring events (including, without limitation, the events
described in Section 4(c) of the Plan) affecting the Company, any
Affiliate, or the financial statements of the Company or any Affiliate,
or of changes in applicable laws, regulations, or accounting
principles, whenever the Committee determines that such adjustments are
appropriate in order to prevent dilution or enlargement of the benefits
or potential benefits intended to be made available under the Plan.
(d) Section 162(m). The Committee, in its sole discretion and
without the consent of the Participant, may amend (i) any stock-based
Award to reflect (1) a change in corporate capitalization, such as a
stock split or dividend, (2) a corporate transaction, such as a
corporate merger, a corporate consolidation, any corporate separation
(including a spinoff or other distribution of stock or property by a
corporation), any corporate reorganization (whether or not such
reorganization comes within the definition of such term in Section 368
of the Code), (3) any partial or complete corporate liquidation, or (4)
a change in accounting rules required by the Financial Accounting
Standards Board and (ii) any Award that is not intended to meet the
requirements of Section 162(m) of the Code, to reflect significant
event that the Committee, in its sole discretion, believes to be
appropriate to reflect the original intent in the grant of the Award.
With respect to an Award that is subject to Section 162(m) of the Code,
the Committee (i) shall not take any action that would disqualify such
Award and (ii) must first certify that the Performance Objectives, if
applicable, have been achieved before the Award may be paid.
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SECTION 8. Change in Control.
Notwithstanding any other provision of this Plan to the contrary, in
the event of a Change in Control of the Company all outstanding Awards
automatically shall become fully vested immediately prior to such Change in
Control (or such earlier time as set by the Committee), all restrictions, if
any, with respect to such Awards shall lapse, all performance criteria, if any,
with respect to such Awards shall be deemed to have been met in full (at the
highest level), and unless the Company survives as an independent publicly
traded company, all Options outstanding at the time of the event or transaction
shall terminate, except to the extent provision is made in writing in connection
with such event or transaction for the continuation of the Plan and/or the
assumption of the Options theretofore granted, or for the substitution for such
Options of new options covering the stock of a successor entity, or the parent
or subsidiary thereof, with appropriate adjustments as to the number and kinds
of shares and exercise prices, in which event the Plan and Options theretofore
granted shall continue in the manner and under the terms so provided.
SECTION 9. General Provisions.
(a) No Rights to Awards. No Director, Employee, Consultant or other
Person shall have any claim to be granted any Award, and there is no obligation
for uniformity of treatment of Employees, Consultants, or holders or
beneficiaries of Awards. The terms and conditions of Awards need not be the same
with respect to each recipient.
(b) Withholding. The Company or any Affiliate is authorized to withhold
from any Award, from any payment due or transfer made under any Award or under
the Plan or from any compensation or other amount owing to a Participant the
amount (in cash, Shares, other securities, Shares that would otherwise be issued
pursuant to such Award, other Awards or other property) of any applicable taxes
payable in respect of an Award, its exercise, the lapse of restrictions thereon,
or any payment or transfer under an Award or under the Plan and to take such
other action as may be necessary in the opinion of the Company to satisfy all
obligations for the payment of such taxes. In addition, the Committee may
provide, in an Award Agreement, that the Participant shall have the right to
direct the Company to satisfy the Company's tax withholding obligation through
the "constructive" tender of already-owned Shares or the withholding of Shares
otherwise to be acquired upon the exercise or payment of such Award.
(c) No Right to Employment. The grant of an Award shall not be construed
as giving a Participant the right to be retained in the employ of the Company or
any Affiliate. Further, the Company or an Affiliate may at any time dismiss a
Participant from employment, free from any liability or any claim under the
Plan, unless otherwise expressly provided in the Plan or in any Award Agreement.
(d) Governing Law. The validity, construction, and effect of the Plan
and any rules and regulations relating to the Plan shall be determined in
accordance with the laws of the State of Delaware and applicable federal law.
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(e) Severability. If any provision of the Plan or any Award is or
becomes or is deemed to be invalid, illegal, or unenforceable in any
jurisdiction or as to any Person or Award, or would disqualify the Plan or any
Award under any law deemed applicable by the Committee, such provision shall be
construed or deemed amended to conform to the applicable laws, or if it cannot
be construed or deemed amended without, in the determination of the Committee,
materially altering the intent of the Plan or the Award, such provision shall be
stricken as to such jurisdiction, Person or Award and the remainder of the Plan
and any such Award shall remain in full force and effect.
(f) Other Laws. The Committee may refuse to issue or transfer any Shares
or other consideration under an Award if, acting in its sole discretion, it
determines that the issuance of transfer or such Shares or such other
consideration might violate any applicable law or regulation or entitle the
Company to recover the same under Section 16(b) of the Exchange Act, and any
payment tendered to the Company by a Participant, other holder or beneficiary in
connection with the exercise of such Award shall be promptly refunded to the
relevant Participant, holder or beneficiary.
(g) No Trust or Fund Created. Neither the Plan nor the Award shall
create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company or any Affiliate and a Participant or
any other Person. To the extent that any Person acquires a right to receive
payments from the Company or any Affiliate pursuant to an Award, such right
shall be no greater than the right of any general unsecured creditor of the
Company or any Affiliate.
(h) No Fractional Shares. No fractional Shares shall be issued or
delivered pursuant to the Plan or any Award, and the Committee shall determine
whether cash, other securities, or other property shall be paid or transferred
in lieu of any fractional Shares or whether such fractional Shares or any rights
thereto shall be canceled, terminated, or otherwise eliminated.
(i) Headings. Headings are given to the Sections and subsections of the
Plan solely as a convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction or interpretation of
the Plan or any provision thereof.
SECTION 10. Effective Date of the Plan.
The Plan is contingent on approval by the Bankruptcy Court for the
Eastern District of Louisiana (the "Bankruptcy Court") as part of the
confirmation of a plan of reorganization of the Company and, if approved, will
be effective as of the effective date of such plan of confirmation. Options
shall not constitute incentive stock options unless stockholder approval of this
Plan is obtained within 12 months of the date the Plan is approved by the Board.
SECTION 11. Term of the Plan.
No Award shall be granted under the Plan after the 10th anniversary of
the effective date of the plan of reorganization of which this Plan is a part
that has been confirmed by the Bankruptcy
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Court. However, unless otherwise expressly provided in the Plan or in an
applicable Award Agreement, any Award granted prior to such termination, and the
authority of the Board or the Committee to amend, alter, adjust, suspend,
discontinue, or terminate any such Award or to waive any conditions or rights
under such Award, shall extend beyond such termination date.
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EXHIBIT 13
9/02/99 DRAFT
FORCENERGY INC
1999 EMPLOYEE STOCK PURCHASE PLAN
Forcenergy Inc hereby establishes the Forcenergy Inc 1999
Employee Stock Purchase Plan (the "Plan"), the terms of which are as set forth
below.
1. Definitions.
As used in the Plan the following terms shall have the meanings set
forth below:
(a) "Account" means a ledger account established by the Company for a
Participant.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
(d) "Committee" means the Compensation Committee of the Board.
(e) "Common Stock" means the common stock, $0.01 par value, of
Forcenergy Inc.
(f) "Company" means Forcenergy Inc, a Delaware corporation, or any
successor.
(g) "Continuous Employment" means the absence of any interruption or
termination of service as an Eligible Employee with the Participating Companies.
Continuous Employment shall not be considered interrupted in the case of an
authorized leave of absence, provided that such leave is for a period of not
more than 90 days or reemployment upon the expiration of such leave is
guaranteed by contract or statute.
(h) "Eligible Compensation" means, with respect to each Participant,
the regular cash base compensation (wages, salary or commissions) paid to the
Participant by the Participating Companies each pay period during the Option
Period, including any elective salary deferral contributions made therefrom
pursuant to Code Sections 125, 129 or 401(k), but excluding bonuses and all
other items of compensation.
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(i) "Eligible Employee" means an employee of the Participating
Companies who is customarily employed for at least 20 hours per week and more
than five months in a calendar year.
(j) "Enrollment Date" means the first day of each Option Period.
(k) "Exercise Date" means the last day of each Option Period.
(l) "Exercise Price" means the price per share of the shares of Common
Stock offered in a given Option Period determined as provided in Section 10
below.
(m) "Fair Market Value" means, with respect to a share of Common Stock
as of any Enrollment Date or Exercise Date, closing sales price per share of the
Common Stock for such date (or, in the event that the Common Stock is not traded
on such date, on the immediately preceding trading date), as reported in The
Wall Street Journal for the Nasdaq National Market or, in the event the Common
Stock is listed on a stock exchange, the fair market value per share shall be
the closing sales price on such exchange on such date (or, in the event that the
Common Stock is not traded on such date, on the immediately preceding trading
date), as reported in The Wall Street Journal.
(n) "Option Period" means each six-month period commencing on January
1 and terminating on the following June 30 or commencing on July 1 and
terminating on the following December 31; provided, however, notwithstanding the
foregoing the initial Option Period shall commence on the effective date of the
S-8 Registration Statement covering the shares of Common Stock issuable under
the Plan, and shall end on June 30, 2000.
(o) "Participant" means an Eligible Employee who has elected to
participate in the Plan by filing an enrollment agreement with the Company as
provided in Section 7 below.
(p) "Participating Companies" means the Company and each present and
future Subsidiary that the Committee, in its sole discretion, from time to time
designates to be a Participating Company.
(q) "Subsidiary" means any corporation, domestic or foreign, of which
the Company owns, directly or indirectly, not less than 50% of the total
combined voting power of all classes of stock or other equity interests and that
otherwise qualifies as a "subsidiary corporation" within the meaning of Section
424(f) of the Code or any successor thereto.
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2. Purpose of the Plan.
The purpose of the Plan is to provide an incentive for present and
future employees of the Participating Companies to acquire a proprietary
interest (or increase an existing proprietary interest) in the Company through
the purchase of Common Stock. It is the intention of the Company that the Plan
qualify as an "employee stock purchase plan" under Section 423 of the Code.
Accordingly, the provisions of the Plan shall be administered, interpreted and
construed in a manner consistent with the requirements of that section of the
Code.
3. Shares Reserved for the Plan.
There shall be reserved for issuance and purchase by Participants
under the Plan an aggregate of 480,000 shares of Common Stock, subject to
adjustment as provided in Section 15 below. Shares of Common Stock subject to
the Plan may be newly issued shares or treasury shares. If and to the extent
that any option to purchase shares of Common Stock shall not be exercised for
any reason or if such right to purchase shares shall terminate as provided
herein, the shares that have not been so purchased hereunder shall again become
available for the purposes of the Plan unless the Plan shall have been
terminated.
4. Administration of the Plan.
(a) The Plan shall be administered by a Committee appointed by, and
which shall serve at the pleasure of, the Board. The Committee shall have
authority to interpret the Plan, to prescribe, amend and rescind rules and
regulations relating to the Plan, to correct any defect or rectify any omission
in this Plan or to reconcile any inconsistency in this Plan or any option, and
to make all other determinations necessary or advisable for the administration
of the Plan, all of which actions and determinations shall be final, conclusive
and binding on all persons. The act or determination of a majority of the
members of the Committee shall be deemed to be the act or determination of the
Committee.
(b) The Committee may request advice or assistance or employ such
other persons as it in its discretion deems necessary or appropriate for the
proper administration of the Plan, including, but not limited to employing a
brokerage firm, bank or other financial institution to assist in the purchase of
shares, delivery of reports or other administrative aspects of the Plan.
(c) All Eligible Employees granted options under the Plan shall have
the same rights and privileges; however, the Plan will not fail to satisfy this
requirement merely because the amount of Common Stock which may be purchased by
any Eligible Employee is determined on the basis of a uniform relationship to
the Eligible Compensation of Eligible Employees, or because the Plan provides
that no Eligible Employee may purchase more than a maximum amount of Common
Stock as set forth under the Plan.
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5. Eligibility to Participate in the Plan.
Subject to the further provisions of the Plan, each Eligible Employee
who is employed by a Participating Company on an Enrollment Date shall be
eligible to participate in the Plan for the Option Period beginning on that
Enrollment Date.
6. Option Periods.
The Plan shall consist of consecutive Option Periods until the Plan is
terminated.
7. Election to Participate in the Plan.
(a) Each Eligible Employee may elect to participate in the Plan by
completing an enrollment agreement in the form provided by the Company and
filing such enrollment agreement with the Company prior to the applicable
Enrollment Date, unless another time for filing the enrollment form is set by
the Committee for all Eligible Employees with respect to a given Option Period.
(b) Payroll deductions for a Participant shall commence on the first
payroll date following the Enrollment Date and shall end on the last payroll
date in the Option Period to which such authorization is applicable, unless
sooner terminated by the Participant as provided in Section 12.
(c) Unless a Participant elects otherwise prior to the Enrollment Date
of the immediately succeeding Option Period, an Eligible Employee who is
participating in an Option Period as of the Exercise Date of such Option Period
shall be deemed (i) to have elected to participate in the immediately succeeding
Option Period and (ii) to have authorized the same payroll deduction for such
immediately succeeding Option Period as was in effect for such Participant
immediately prior to the succeeding Option Period.
8. Payroll Deductions.
(a) All Participant contributions to the Plan shall be made only by
payroll deductions. At the time a Participant files the enrollment agreement
with respect to an Option Period, the Participant shall authorize payroll
deductions to be made on each payroll date during the Option Period in an amount
of from 1% to 10% of the Eligible Compensation which the Participant receives on
each payroll date during such Option Period. The amount of such payroll
deductions shall be a whole percentage (i.e., 1%, 2%, 3%, etc.) of the
Participant's Eligible Compensation.
(b) All payroll deductions made for a Participant may be deposited in
the Company's general corporate account and shall be credited to the
Participant's Account under the
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Plan. No interest shall accrue or be credited with respect to the payroll
deductions of a Participant under the Plan. A Participant may not make any
additional payments into such Account. All payroll deductions received or held
by the Company under the Plan may be used by the Company for any corporate
purpose, and the Company shall not be obligated to segregate such payroll
deductions.
(c) Except as provided in Section 12, a Participant may not change his
contribution election during an Option Period.
(d) Notwithstanding the foregoing, no Participant may make payroll
deductions during any year in excess of $21,250.
9. Grant of Options.
(a) On the Enrollment Date of each Option Period, subject to the
limitations set forth in Sections 3 and 9(b) hereof, each Eligible Employee
shall be granted an option to purchase on the Exercise Date for such Option
Period (at the Exercise Price determined as provided in Section 10 below) up to
a number of shares of the Company's Common Stock determined by dividing such
Eligible Employee's payroll deductions accumulated during the Option Period
ending on such Exercise Date by 85% of the fair market value of a share of the
Common Stock on the Enrollment Date or on the Exercise Date, whichever is lower.
(b) Notwithstanding any provision of the Plan to the contrary, no
Eligible Employee shall be granted an option under the Plan (i) if, immediately
after the grant, such Eligible Employee (or any other person whose stock would
be attributed to such Employee pursuant to Section 424(d) of the Code) would own
stock and/or hold outstanding options to purchase stock possessing 5% or more of
the total combined voting power or value of all classes of stock of the Company
or of any Subsidiary of the Company, or (ii) which permits such Eligible
Employee's rights to purchase stock under all employee stock purchase plans of
the Company and its Subsidiaries to accrue at a rate which exceeds $25,000 of
fair market value of such stock (determined at the time such option is granted)
for each calendar year in which such option is outstanding at any time.
10. Exercise Price.
The Exercise Price of each of the shares offered in a given Option
Period shall be the lower of: (i) 85% of the Fair Market Value of a share of the
Common Stock on the applicable Enrollment Date, or (ii) 85% of the Fair Market
Value of a share of the Common Stock on the applicable Exercise Date.
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11. Exercise of Options.
Unless a Participant withdraws from the Plan as provided in Section
12, the Participant's option for the purchase of shares will be exercised
automatically on each Exercise Date, and the maximum number of shares subject to
the option will be purchased for the Participant at the applicable Exercise
Price with the accumulated payroll deductions in the Participant's Account.
12. Withdrawal; Termination of Employment.
(a) A Participant may withdraw all but not less than all of the
payroll deductions credited to the Participant's Account under the Plan at any
time by giving written notice to the Company. All of the Participant's payroll
deductions credited to the Participant's Account will be paid to him promptly
after receipt of the Participant's notice of withdrawal, the Participant's
participation in the Plan will be automatically terminated, and no further
payroll deductions for the purchase of shares will be made. Payroll deductions
will not resume on behalf of a Participant who has withdrawn from the Plan
unless written notice is delivered to the Company within the enrollment period
preceding the commencement of a new Option Period directing the Company to
resume payroll deductions.
(b) Upon termination of the Participant's Continuous Employment prior
to the Exercise Date of the Option Period for any reason, including retirement
or death, the payroll deductions credited to the Participant's Account will be
returned to the Participant or, in the case of death, to the Participant's
estate, and the Participant's options to purchase shares under the Plan will be
automatically terminated.
(c) In the event a Participant ceases to be an Eligible Employee
during an Option Period, the Participant will be deemed to have elected to
withdraw from the Plan, the payroll deductions credited to the Participant's
Account will be returned to the Participant, and the Participant's options to
purchase shares under the Plan will be terminated.
(d) A Participant's withdrawal from an Option Period will not affect
the Participant's eligibility to participate in a succeeding Option Period.
13. Transferability.
Options to purchase Common Stock granted under the Plan are not
transferable by a Participant and are exercisable only by the Participant.
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14. Reports.
Individual Accounts will be maintained for each Participant in the
Plan. Statements of Accounts will be given to participating Employees
semi-annually promptly following each Exercise Date, which statements will set
forth the amounts of payroll deductions, the per share purchase price, the
number of shares purchased and the remaining cash balance, if any.
15. Adjustments Upon Changes in Capitalization.
(a) If the outstanding shares of Common Stock are increased or
decreased, or are changed into or are exchanged for a different number or kind
of shares, as a result of one or more reorganizations, restructurings,
recapitalizations, reclassifications, stock splits, reverse stock splits, stock
dividends or the like, upon authorization of the Committee, appropriate
adjustments may be made in the number and/or kind of shares, and the per share
option price thereof, which may be issued in the aggregate and to any
Participant upon exercise of options granted under the Plan.
(b) In the event of the proposed dissolution or liquidation of the
Company, each Option Period will terminate immediately prior to the consummation
of such proposed action, unless otherwise provided by the Committee. In the
event of a proposed sale of all or substantially all of the assets of the
Company, or the merger of the Company with or into another corporation, each
option under the Plan shall be assumed or an equivalent option shall be
substituted by such successor corporation or a parent or subsidiary of such
successor corporation, unless the Committee determines, in the exercise of its
sole discretion and in lieu of such assumption or substitution, that the
Participant shall have the right to exercise the option as to all of the
optioned stock, including shares as to which the option would not otherwise be
exercisable. If the Committee makes an option fully exercisable in lieu of
assumption or substitution in the event of a merger or sale of assets, the
Committee shall notify the Participant that the option shall be fully
exercisable for a stated period, which shall not be less than 10 days from the
date of such notice, and the option will terminate upon the expiration of such
period.
(c) In all cases, the Committee shall have full discretion to exercise
any of the powers and authority provided under this Section 15, and the
Committee's actions hereunder shall be final and binding on all Participants. No
fractional shares of stock shall be issued under the Plan pursuant to any
adjustment authorized under the provisions of this Section 15.
16. Amendment of the Plan.
The Board may at any time, or from time to time, amend the Plan in any
respect; provided, however, that the Plan may not be amended in any way that
will cause rights issued under the Plan to fail to meet the requirements for
employee stock purchase plans as defined in Section 423 of the Code or any
successor thereto, including, without limitation, shareholder approval if
required.
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17. Termination of the Plan.
The Plan and all rights of Eligible Employees hereunder shall
terminate:
(a) on the Exercise Date that Participants become entitled to purchase
a number of shares greater than the number of reserved shares remaining
available for purchase under the Plan; or
(b) at any time, at the discretion of the Board.
In the event that the Plan terminates under circumstances described in
Section 17(a) above, reserved shares remaining as of the termination date shall
be sold to Participants on a pro rata basis.
18. Notices.
All notices or other communications by a Participant to the Company
under or in connection with the Plan shall be deemed to have been duly given
when received in the form specified by the Company at the location, or by the
person, designated by the Company for the receipt thereof.
19. Shareholder Approval.
The Plan shall be subject to approval by the shareholders of the
Company within twelve months after the date the Plan is adopted by the Board of
Directors. If such shareholder approval is not obtained prior to the first
Exercise Date, the Plan shall be null and void and all Participants shall be
deemed to have withdrawn on such Exercise Date pursuant to Section 12.
20. Conditions Upon Issuance of Shares.
(a) The Plan, the grant and exercise of options to purchase shares of
Common Stock under the Plan, and the Company's obligation to sell and deliver
shares upon the exercise of options to purchase shares shall be subject to all
applicable federal, state and foreign laws, rules and regulations, and to such
approvals by any regulatory or governmental agency as may, in the opinion of
counsel for the Company, be required. In the event the Company is required to
obtain from any commission or agency authority to issue any stock certificate,
the inability of the Company to obtain from any such commission or agency
authority that counsel for the Company deems necessary for the lawful issuance
of any such certificate will relieve the Company from liability to any
Participant, except to return to him the amount of the balance in his account.
-8-
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(b) The Company may make such provisions as it deems appropriate for
withholding of amounts that the Company determines it is required to withhold
pursuant to applicable tax laws in connection with the purchase or sale by a
Participant of any Common Stock acquired pursuant to the Plan. The Company may
require a Participant to satisfy any relevant tax requirements before
authorizing any issuance of Common Stock to such Participant.
-9-
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FORCENERGY INC
OPTION GRANT MEMO
To:
From: President
Date:
Grant: OPTION TYPE : INCENTIVE
OPTION DATE :
NUMBER OF OPTIONS SHARES :
OPTION PRICE :
VESTING DATE(S) :
EXPIRATION DATE :
- --------------------------------------------------------------------------------
We are pleased to inform you that the Compensation Committee of the Board of
Directors has granted you the Option to purchase the above number of shares of
the common stock of the Company at the option price once the option grant has
vested. This grant is a "freebie"; it is not an obligation. No cash expenditures
on your part is required unless and until you desire to buy any of the stock
subject to the Option at the option price anytime after vesting. The option
price and the vesting dates are as shown above and this Option shall vest in
equal portions on each of the above vesting dates. You may exercise all or any
portion of those options that have vested at any time prior to the above stated
expiration date.
This grant is separate from and in addition to other option grants you may
receive as well as your right to purchase shares of the Company's common stock
pursuant to the 1999 Employee Stock Purchase Plan or any other plan in effect.
This letter formalizes your grant and gives you a short outline of the terms
thereof; however, the terms and conditions of your grant are also governed by
the attached Incentive Stock Option Agreement (the "Option Agreement") and the
Forcenergy Inc 1999 Stock Option Plan. To the extent there is a conflict between
the terms of this memo and the attached Option Agreement, the terms of the
Option Agreement shall control. No action is required on your part to
acknowledge receipt of your grant; however, retain this memo for your files as
no other copies will be circulated. Please do not hesitate to contact our chief
financial officer or the Human Resources Department if you have any questions.
<PAGE> 282
INCENTIVE STOCK OPTION AGREEMENT
AGREEMENT made this ________________ between FORCENERGY INC, a Delaware
corporation (the "Company"), and _______________________ ("Employee").
To carry out the purposes of the FORCENERGY INC 1999 STOCK OPTION PLAN
(the "Plan"), by affording Employee the opportunity to purchase shares of the
common stock of the Company ("Stock"), and in consideration of the mutual
agreements and other matters set forth herein and in the Plan. the Company and
Employee hereby agree as follows:
1. GRANT OF OPTION. The Company hereby grants to Employee the right and
option ("Option") to purchase all or any part of an aggregate of shares of
Stock, on the terms and conditions set forth herein and in the Plan, which Plan
is incorporated herein by reference as a part of this Agreement. This Option is
intended to constitute an 'Incentive stock option, within the meaning of section
422(b) of the Internal Revenue Code of 1986, as amended (the "Code"). As an
incentive stock option, the exercise of this option and the purchase of shares
does not result in the recognition of ordinary taxable income to the employee,
unless the shares are sold prior to the later of two years from the date of
grant of the option or one year from the date of exercise. If shares are sold
after those dates, the employees will recognize a long-term capital gain or loss
for the difference between the sales price and option price.
2. PURCHASE PRICE. The purchase price of Stock purchased pursuant to
the exercise of this Option shall be $ per share, which has been determined
to be not less than the fair market value of the Stock at the date of grant of
this Option. For all purposes of this Agreement, fair market value of Stock
shall be determined in accordance with the provisions of the Plan.
3. EXERCISE OF OPTION. Subject to the earlier expiration of this Option
as herein provided, this Option may be exercised, by written notice to the
Company at its principal executive office addressed to the attention of its
Chief Executive Officer, at any time and from time to time after the date of
grant hereof, but, except as otherwise provided below, this Option shall not be
exercisable for more than a percentage of the aggregate number of shares offered
by this Option determined by the number of full years from the date of grant
hereof to the date of such exercise, in accordance with the following schedule:
Percentage of Shares
Number of Full Years That May Be Purchased
-------------------- ---------------------
Per option memo
This Option may be exercised only while Employee remains an employee of
the Company and will terminate and cease to be exercisable upon Employee's
termination of employment with the Company, except that:
(a) If Employee's employment with the Company terminates by reason of
disability (within the meaning of section 22(e)(3) of the Code), this Option may
be exercised in full by Employee (or Employee's estate or the person who
acquires this Option by will or the laws of descent and distribution or
otherwise by reason of the death of Employee) at any time during the period of
one year following such termination. However, Employee (or the Employee's estate
or the person who acquires this Option by will or by the laws of descent and
distribution or otherwise by reason of the death of Employee) shall only have
the right to purchase the number of shares that Employee was entitled to
purchase hereunder as of the date of such Employee's termination of employment.
<PAGE> 283
(b) If Employee dies while in the employ of the Company, Employee's
estate, or the person who acquires this Option by will or the laws of descent
and distribution or otherwise by reason of the death of Employee may exercise
this Option in full at any time during the period of one year following the date
of Employee's death. However, Employee's estate, or the person who acquires this
Option by will or the laws of descent and distribution or otherwise by reason of
the death of Employee, shall only be able to purchase the number of shares that
Employee was entitled to purchase hereunder as of the date of Employee's death.
(c) If Employee's employment with the Company terminates for any reason
other than as described in (a) or (b) above, unless Employee voluntarily
terminates such employment or such employment is terminated for cause, this
Option may be exercised by Employee at any time during the period of three
months following such termination, or by Employee's estate (or the person who
acquires this Option by will or the laws of descent and distribution or
otherwise by reason of the death of Employee) during a period of one year
following Employee's death if Employee dies during such three month period. but
in each case only as to the number of shares Employee was entitled to purchase
hereunder upon exercise of this Option as of the date Employee's employment so
terminates. The Committee appointed by the Board of Directors of the Company to
administer the Plan (the "Committee") may in its sole discretion advise Employee
in writing, prior to a voluntary termination of Employee's employment, that such
termination will be treated for purposes of this paragraph as an involuntary
termination for a reason other than cause. As used in this paragraph, the term
"cause" shall mean Employee's gross negligence or willful misconduct in
performance of the duties of his employment, or Employee's final conviction of a
felony or of a misdemeanor involving moral turpitude.
This Option shall not be exercisable in any event after the expiration
of ten years from the date of grant hereof. The purchase price of shares as to
which this Option is exercised shall be paid in full at the time of exercise (a)
in cash (including check, bank draft or money order payable to the order of the
Company), or (b) by delivering to the Company shares of Stock having a fair
market value equal to the purchase price, or (c) a combination of cash and
Stock. No fraction of a share of Stock shall be issued by the Company upon
exercise of an Option or accepted by the Company in payment of the exercise
price thereof, rather, Employee shall provide a cash payment for such amount as
is necessary to effect the issuance and acceptance of only whole shares of
Stock. Unless and until a certificate or certificates representing such shares
shall have been issued by the Company to Employee, Employee (or the person
permitted to exercise this Option in the event of Employee's death) shall not be
or have any of the rights or privileges of a shareholder of the Company with
respect to shares acquirable upon an exercise of this Option.
To the extent that Employee and the Company are subject to a written
employment agreement which contains terms and conditions that are inconsistent
with this Option, the terms and provisions of such employment agreement shall
control.
4. WITHHOLDING OF TAX. To the extent that the exercise of this Option
or the disposition of shares of Stock acquired by exercise of this Option
results in compensation income to Employee for federal or state income tax
purposes, Employee shall deliver to the Company at the time of such exercise or
disposition such amount of money or shares of Stock as the Company may require
to meet its obligation under applicable tax laws or regulations, and, if
Employee fails to do so, the Company is authorized to withhold from any cash or
Stock remuneration then or thereafter payable to Employee any tax required to be
withheld by reason of such resulting compensation income. Upon an exercise of
this Option, the Company is further authorized in its discretion to satisfy any
such withholding requirement out of any cash or shares of Stock distributable to
Employee upon such exercise.
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5. STATUS OF STOCK. The Company has registered, for issuance under the
Securities Act of 1933, as amended (the "Act") the shares of Stock acquirable
upon exercise of this Option, and agrees to keep such registration effective
throughout the period this Option is exercisable. In the absence of such
effective registration or an available exemption from registration under the
Act, issuance of shares of Stock acquirable upon exercise of this Option will be
delayed until registration of such shares is effective or an exemption from
registration under the Act is available. The Company intends to use its best
efforts to ensure that no such delay will occur. In the event exemption from
registration under the Act is available upon an exercise of this Option,
Employee (or the person permitted to exercise this Option in the event of
Employee's death or incapacity), if requested by the Company to do so, will
execute and deliver to the Company in writing an agreement containing such
provisions as the Company may require to assure compliance with applicable
securities laws.
Employee agrees that the shares of Stock which Employee may acquire by
exercising this Option will not be sold or otherwise disposed of in any manner
which would constitute a violation of any applicable securities laws. whether
federal or state. Employee also agrees (i) that the certificates representing
the shares of Stock purchased under this Option may bear such legend or legends
as the Committee deems appropriate in order to assure compliance with applicable
securities laws, (ii) that the Company may refuse to register the transfer of
the shares of Stock purchased under this Option on the stock transfer records of
the Company if such proposed transfer would in the opinion of counsel
satisfactory to the Company constitute a violation of any applicable securities
laws and (iii) that the Company may give related instructions to its transfer
agent, if any, to stop registration of the transfer of the shares of Stock
purchased under this Option.
6. EMPLOYMENT RELATIONSHIP. For purposes of this Agreement, Employee
shall be considered to be in the employment of the Company as long as Employee
remains an employee of either the Company, a parent or subsidiary corporation
(as defined in section 424 of the Code) of the Company, or a corporation or a
parent or subsidiary of such corporation assuming or substituting a new option
for this Option. Any question as to whether and when there has been a
termination of such employment, and the cause of such termination, shall be
determined by the Committee and its determination shall be final.
7. BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of any successors to the Company and all persons lawfully claiming
under Employee.
8. GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Florida.
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EXHIBIT 15
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") made as of the Effective
Date by and between [ Name ] (the "Executive") and Forcenergy Inc, a Delaware
corporation (the "Company" or "Employer").
PRELIMINARY STATEMENT
The Executive and the Company have heretofore executed that certain
Employment Agreement dated as of _____[Date]_____, as amended (the "Original
Agreement").
The Company filed on March 21, 1999 (the "Filing Date") for protection
under Chapter 11 of the U.S. Bankruptcy Code in the proceeding In re Forcenergy
Inc, Case No. 99-11391-"A" (the "Proceeding") in the U.S. Bankruptcy Court of
the Eastern District of Louisiana (the "Court").
The Company is engaged in the oil and gas business, which includes, but
is not limited to, the purchase, sale, development, improvement, drilling and
exploration of oil and gas properties (the "Business").
The Executive has particular expertise in the Business. This Agreement
shall amend and restate the Original Agreement effective on the effective date
of the confirmation of the plan of reorganization (the "Plan") in the Proceeding
(the "Effective Date") and shall govern the employment of the Executive.
NOW, THEREFORE, in consideration of the mutual promises herein
contained, and for other good and valuable consideration, the receipt and
adequacy of which are conclusively acknowledged, the parties hereto, intending
to be legally bound, hereby amend and restate the Original Agreement as follows:
1. Term. The initial term of the Executive's employment under this
Agreement shall be for a period commencing on the Effective Date and, subject to
the terms hereof, shall terminate on the earlier of (i) two years from the
Effective Date or (ii) termination pursuant to Section 8 hereof. The term of the
Executive's employment hereunder (the "Employment Term") may be renewed from
year to year for additional one-year periods, if the Company gives notice to the
Executive of renewal at least 120 days prior to the scheduled termination of the
Employment Term.
2. Duties. The Executive shall serve as the Company's ____[Title]_____,
with such duties as are generally incident to such position and such other
duties as may be hereafter assigned to Executive by the Board of Directors or
the Chief Executive Officer of the Company. The Executive agrees that he will
devote his full time and attention to the affairs of the Company and use his
best efforts to promote the Business and interests of the Company.
3. Compensation. The Company shall pay Executive a base salary ("Base
Salary") fixed at $[Amount] per annum for the period commencing on the Effective
Date and ending on the termination date of the Employment Term, payable in
monthly installments equal to 1/12 of the Base Salary, subject to the
withholding of such amounts relating to the taxes and other
<PAGE> 286
governmental assessments as the Company may reasonably determine it should
withhold pursuant to any applicable law, rule or regulation. Base Salary shall
be subject to review and may be increased (but not decreased) by the Board of
Directors of the Company during the Employment Term.
4. Benefits. The Executive shall be entitled to four (4) weeks vacation
time per calendar year, which vacation time shall be scheduled at the mutual
convenience of the Executive and the Company. The Executive shall be entitled to
participate in, and receive benefits under, any and all pension, insurance,
hospitalization, medical or disability programs or policies of the Company which
may be in effect at any time during the course of his employment by the Company
and generally available to employees of the Company, subject to the terms of
such plans, programs or policies. Notwithstanding the foregoing, the Company
may, in its discretion, at any time and from time to time, change or revoke any
of its employee benefits plans, programs or policies, and the Executive shall
not be deemed, by virtue of this Agreement, to have any vested interest in any
such plans, programs or policies. All stock options granted to the Executive in
connection with the Plan shall vest 25% each year of employment, 1, 2, 3 and 4
years after the Effective Date. All stock options granted to the Executive after
the Effective Date shall vest 25% each year of employment, 2, 3, 4 and 5 years
after the grant date.
5. Bonus. The Company may also pay the Executive an annual bonus,
either on a "ad hoc" basis or pursuant to bonus plan or arrangement as may be
established at the Company's discretion to senior executives of the Company. The
amount of any bonus may vary depending on actual performance of the Company and
the Executive as determined in the discretion of the Board of Directors and/or
its Compensation Committee. Nothing contained herein shall imply the Company has
any obligation to grant to the Executive any bonus compensation or any increases
in Base Salary. Bonus compensation shall be subject to withholding for taxes and
other deductions as the Company may determine.
6. Expenses. The Executive shall be entitled to reimbursement by the
Company, in accordance with the Company's policies then applicable to employees
at the Executive's level, against appropriate vouchers or other receipts for
authorized travel, entertainment and other business expenses reasonably incurred
by him in the performance of his duties hereunder.
7. Death; Permanent Disability. Upon the death of the Executive during
the term of this Agreement, the Employment Term shall terminate. If during the
Employment Term the Executive fails, because of illness or other incapacity, to
perform the services required to be performed by him hereunder for any period of
more than 90 days during any calendar year (any such illness or incapacity being
hereinafter referred to as "Permanent Disability"), then the Company, in its
discretion, may at any time thereafter terminate the Employment Term upon not
less than 30 days' written notice thereof to the Executive, and the Employment
Term shall terminate and come to an end upon the date set forth in said notice
as if said date were the termination date of the Employment Term; provided,
however, that no such termination shall be effective if prior to the date when
such notice is given, the Executive's illness or incapacity shall have
terminated and he shall be physically and mentally able to perform the services
required hereunder and shall have taken up and be performing such duties.
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If the Executive's employment shall be terminated by reason of his
death or Permanent Disability, the Executive or his estate, as the case may be,
shall be entitled to receive (i) any earned and unpaid salary accrued through
the date of termination; (ii) an aggregate amount equal to 12 months' Base
Salary at the rate in effect immediately prior to such termination of
employment, payable in a lump sum on the effective date of termination for
Permanent Disability or within 60 days after the Executive's death (payment in
such case being payable to the Executive's estate); and (iii) subject to the
terms thereof, any benefits that may be due to the Executive on the date of
termination under the provisions of any employee benefit plan, program or
policy.
8. Termination. (a) The Company may terminate the employment of the
Executive at any time, for cause by written notice, the cause to be specified in
the notice. For purposes of this Agreement, "cause" shall mean: (i) any material
misconduct of the Executive in connection with the performance of any of his
material duties hereunder, including, without limitation, misappropriation of
funds or property of the Company, securing or attempting to secure personally
any profit in connection with any transaction entered into on behalf of the
Company, regardless of whether such act results in material financial loss to
the Company or to any of its Affiliates, or any act having the effect of
materially injuring the reputation, business or business relationships of the
Company; (ii) failure, neglect or refusal in any material respect to comply with
and abide by the decisions or directions of the Company; (iii) material breach
of any covenants contained in this Agreement; (iv) conviction of a felony; (v)
drug or alcohol abuse materially affecting the Executive's performance of his
duties under this Agreement, where the Executive has refused medical or
professional help; or (vi) sexual misconduct within the workplace. Termination
for cause shall be effective upon the giving of such notice and, upon the giving
of such notice, the Executive shall be entitled to receive: (i) within thirty
(30) days of the effective date of such termination, any earned and unpaid
salary accrued through the date of termination; and (ii) subject to the terms
thereof, any benefits which may be due to the Executive on such termination date
under the provisions of any employee benefit plan, program or policy. After the
termination of the Executive's employment under this Section 8(a), the
obligations of the Company under this Agreement to make any further payments, or
to provide any benefits other than those specified herein, to the Executive
shall thereupon cease and terminate.
(b) The Company may also terminate the Employment Term at any time
without cause. In the event (i) the Company terminates the Employment Term
without cause, (ii) the Company fails to renew this Agreement at the end of the
initial term or any renewal term, or (iii) the Executive terminates the
Employment Term pursuant to a "Termination by Executive for Good Reason" (as
both such terms are defined in subparagraph (c) below), the Company shall pay to
the Executive, in addition to all sums then accrued, due and payable under this
Agreement, an aggregate amount equal to 2.0 times the Executive's annual Base
Salary at the rate in effect immediately prior to such termination of employment
(the "Severance Payment"), payable in a lump sum on the effective date of the
termination of the employment. Further, effective with the effective date of the
termination of the employment as provided in this subparagraph (b), 50% of all
stock options, warrants and other rights to acquire the securities of the
Company and any of its Affiliates, and all rights to compensation based upon or
measured by the stock price or other indicia of value of the Company, previously
issued to the Executive (vested and unvested) shall immediately vest and become
exercisable (to the extent such 50% has not previously vested) and remain
exercisable for a period ending one year after the effective
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date of termination of employment; provided, however, if the Executive
terminates the Employment Term pursuant to a Termination by Executive for Good
Reason within 12 months after a Change in Control, 100% of all such options,
warrants or other rights shall immediately vest and become exercisable and
remain exercisable for a period ending one year after the effect date of
termination of employment.
(c) For purposes of this Agreement, the following capitalized terms
shall have the meanings set forth herein:
(i) "Affiliate" shall mean any "person" (as such term is utilized
in Section 13(d) and Section 14(d)(2) of the Securities Exchange Act of 1934, as
amended and in effect on the date of this Agreement (the "Exchange Act")), who
or which, directly and/or indirectly, controls, is controlled by or is under
common control with another person. For purposes of this definition, "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of management and policies, whether through ownership of voting
securities, by contract, or otherwise.
(ii) "Change in Control": a Change in Control shall be deemed to
occur if:
(A) any "person" (as such term is utilized in Section 13(d)
and Section 14(d)(2) of the Exchange Act), including without limitation any
"group" (as such term is utilized in Section 13(d)(3) of the Exchange Act), who
is not, on the date of this Agreement, an Affiliate of the Company, shall become
the "beneficial owner" (as such term is defined in Rule 13d-3 under the Exchange
Act) of securities of the Company representing more than 50% of the votes that
may be cast for the election of directors of the Company; or
(B) as the result of, or in connection with, any cash or other
tender offer, or exchange offer, merger, consolidation or other business
combination, sale of assets, liquidation or dissolution, or any combination of
any one or more of the foregoing transactions, the persons who were directors of
the Company immediately prior to the consummation of any such transaction or
combination of transactions shall cease to constitute a majority of the
directors of the Company, or any successor thereto; provided however, a Change
in Control shall not be deemed to occur in connection with the consummation of
the transactions contemplated by the confirmation of the Plan in the Proceeding.
(iii) "Maximum Amount" shall mean the amount equal to three times
the Executive's annualized includible compensation for the base period, as such
may be defined in Section 280G of the Internal Revenue Code of 1986, as amended
(or regulations thereunder).
(iv) "Termination by Executive for Good Reason" shall mean a
termination of the Executive's employment by the Executive upon the occurrence
of any one or more of the following:
(A) Change in Control where the Executive does not receive
stock options and other benefits in amounts and on such terms at least as
favorable to the Executive as they existed prior to the Change in Control;
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(B) the reassignment of the Executive by Employer, without the
Executive's express written consent, to a position with Employer other than that
set forth in Section 2 hereof, or a materially adverse change in the nature or
scope of the Executive's title, authorities, powers, functions, duties or
responsibilities in those positions;
(C) the reduction in the Executive's Base Salary without the
Executive's consent;
(D) (i) the relocation of the Executive's place of employment,
other than to another currently existing office of the Company within the
contiguous 48 states of the U.S., without the Executive's consent, or (ii) the
relocation of the Executive's place of employment with or without his consent
where the Company refuses to reimburse the Executive for his reasonably incurred
relocation expenses (moving and closing costs in connection with the sale of his
residence); or
(E) the Company's failure to perform its obligations under
this Agreement in any material respect that remains uncured 10 days after the
Company receives notice of its default, including, without limitation, the
failure of the Company to pay compensation in accordance with this Agreement or
the failure of the Company to provide the Executive with fringe benefits
substantially the same as those previously provided to the Executive under this
Agreement provided, however, that a change in the benefits available to the
executive officers of the Company shall not constitute such a failure so long as
such change of benefits is applied consistently with respect to all executive
officers of the Company;
(d) In the event that the Company shall terminate the employment of
the Executive without cause within 12 months after a Change in Control, the
Company shall pay to the Executive, in addition to all sums then accrued, due
and payable under this Agreement, an aggregate amount equal to 2.0 times the
Executive's one-year Base Salary as in effect on the date of the Change in
Control payable in a lump sum on the effective date of termination of
employment, provided that (i) such payment, together with all other payments
made to Executive in connection with such Change in Control, shall not exceed
the Maximum Amount and (ii) such payment shall not be payable until the
effective date of termination of employment. All stock options, warrants and
other rights to acquire the securities of the Company and any of its Affiliates,
and all rights to compensation based upon or measured by the stock price or
other indicia of value of the Company, issued to the Executive prior to the
termination shall immediately vest and become exercisable as of the effective
date of the termination and remain exercisable for a period ending one year
after the effective date of termination of employment.
9. Non-Competition. (a) Without the express written consent of the
Company having been given (which consent will not be unreasonably withheld), the
Executive agrees that for a period of one year after the expiration of the
Employment Term he shall not directly or indirectly, either individually or as
an employee, agent, partner, shareholder, director, consultant, employer, lender
of money, guarantor or in any other capacity, participate in, engage in or have
a financial interest or management position or other interest in any independent
oil and gas exploration and development company that competes directly against
the Company. The foregoing provisions of this Section shall not prohibit the
passive ownership by the Executive of (i) non-controlling, minority interests in
any private entities, to the extent that the Executive's
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investment in such entities does not exceed $150,000, or (ii) less than five
percent (5%) of any class of the capital stock of any public corporation.
(b) The Executive will not at any time during his employment with
the Company and for one year thereafter, directly or indirectly solicit (or
assist or encourage the solicitation of) or offer employment to any person who
has been an employee of the Company, or any of its subsidiaries or affiliates,
at any time during the six months immediately preceding such solicitation, to
work for the Executive or for any business, firm, corporation or other entity in
which the Executive, directly or indirectly, participates or engages (or expects
to participate or engage) or has (or expects to have) a financial interest or
management position; provided, however, that this paragraph shall not prohibit
an Executive who is no longer employed by the Company from soliciting or
offering employment to a former employee of the Company whose employment with
the Company had terminated prior to the date the Executive's employment with the
Company terminated.
(c) The Executive and the Company agree that this covenant not to
compete is a reasonable covenant under the circumstances and that any breach of
the covenants contained in this Section 9 would irreparably injure the Company.
Notwithstanding, if any of the covenants contained in this Section or any part
thereof is held by a court of competent jurisdiction to be unenforceable because
of the duration of such provision, the activity limited by or the subject of
such provision and/or the area covered thereby, then the court making such
determination shall construe such restriction so as to thereafter be limited or
reduced to be enforceable to the greatest extent permissible by applicable law.
10. Confidentiality. The Executive acknowledges that, during and as a
result of his employment hereunder, he may have access to trade secrets and
other confidential information of the Company, including, but not limited to,
the nature and material terms of business opportunities and proposals available
to the Company, technical memoranda, research reports, designs and
specifications, operating procedures, ledgers, and other information, data and
documents relating to the Company's present or future operations, including, but
not limited to geological, seismic, 3-D seismic, and all other studies conducted
by, or on behalf of, the Company's oil and gas properties and prospects
(collectively, the "Confidential Information"). The Executive covenants and
agrees that he shall not at any time during or following any termination of
employment, without the consent of the Company use or disclose (except for the
sole and exclusive benefit of the Company or as required to perform his duties
under this Agreement or as required by law or as is already in the public
domain) any Confidential Information which has been obtained by or disclosed to
him as a result of his employment with the Company.
11. Additional Remedy. If the Executive breaches any of the provisions
of Section 9 or 10 of this Agreement, then the Company, in addition to all other
rights and remedies hereunder, may cease making payments to Executive under
Sections 7 or 8 of this Agreement, require Executive to repay to the Company any
payments previously made under such Sections and obtain an injunction against
the Executive from any court having jurisdiction over the matter restraining any
further violation of this Agreement by the Executive.
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12. Notices. Any notice required or permitted to be given under this
Agreement shall be in writing, and shall be given by hand-delivery to the
addressee or by deposit in the U.S. mail, postage prepaid, certified mail,
return receipt requested, as follows:
If to the Company, to:
Forcenergy Inc
2730 S.W. 3rd Avenue
Miami, Florida 33129
Attention: President
If to Executive, to:
[Name]
--------------------------------
[Address]
--------------------------------
--------------------------------
or such other address as either party may specify by notice hereunder to the
other. Any notice sent in accordance with the foregoing provisions shall be
deemed given on the date of receipt if personally delivered, or on the date
three (3) days after being deposited in the mail, if mailed.
13. Miscellaneous. (a) This Agreement incorporates the entire agreement
between the parties hereto pertaining to the subject matter hereof, and
supersedes all prior and contemporaneous; agreements, understandings,
negotiations and discussions of the parties, whether oral or written, and there
are no warranties, representations and other agreements between the parties in
connection with the subject matter hereof, except as specifically set forth
herein. No amendment, supplement, modification or waiver of this Agreement shall
be binding upon a party hereto unless in writing and executed by such party.
(b) The domestic internal laws of the State of Florida shall govern
the validity, construction and effect of this Agreement, without regard to
Florida's conflicts of laws principles.
(c) Each of the provisions of this Agreement shall be independent
of all other provisions, and if any provision of this Agreement is declared void
or invalid by any court or other governmental agency of competent jurisdiction,
each other provision of this Agreement shall remain in full force and effect and
shall be construed to the extent possible as consistent with all other valid
provisions in order to carry out the intent of the parties hereto.
(b) Any dispute or misunderstanding arising out of or in connection
with this Agreement, except any alleged violation of Section 9 or 10, shall
first be settled, if possible, by the parties themselves through negotiation
and, failing success at negotiation, through mediation and, failing success at
mediation, shall be arbitrated in Miami, Florida, unless otherwise agreed upon
in writing by the Company and the Executive. Unless otherwise agreed upon in
writing by the Company and the Executive, the arbitration shall be had before
three arbitrators, each party designating an arbitrator and the two designees
naming a third arbitrator experienced in employment related controversies. The
arbitration procedure shall be in accordance with the rules and regulations of
the American Arbitration Association.
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(c) In any proceeding relating to the enforcement or breach of this
Agreement, if the Executive is the prevailing party, the Company shall pay the
reasonable costs of any legal fees, other fees and expenses which may be
incurred by the Executive in connection with such proceeding. If the Company is
the prevailing party in such proceeding, each party shall pay its own legal
fees, other fees and expenses which may be incurred in connection with the
proceeding. For purposes of this Agreement, the party initiating the proceeding
shall be deemed to be the prevailing party in such proceeding if the party
initiating the proceeding is awarded in excess of 50% of the amount sought in
the proceeding and the non-initiating party shall be deemed to be the prevailing
party if the party initiating the proceeding is awarded 50% or less of the
amount sought in the proceeding.
(d) This Agreement shall be binding upon and inure to the benefit
of the respective heirs, executors, administrators, successors and assigns of
the Company and the Executive. If the Company, shall, at any time, be merged
with or consolidated into or with any other corporation or person or if all or
substantially all of the assets of the Company are transferred to another
corporation or person, the provisions of this Agreement shall be binding upon
and inure to the benefit of the entity resulting from such merger or
consolidation or the corporation or person to which or to whom such assets shall
be transferred, and this provision shall apply in the event of any subsequent
mergers, consolidations or transfers of assets.
(e) This Agreement may be executed in counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
(f) The section headings of this Agreement are inserted for the
convenience of reference only and are not intended to affect the meaning or
interpretation of this Agreement.
(g) This Agreement shall be construed within the fair meaning of
each of its terms and not against the party drafting the document. IN WITNESS
WHEREOF, the parties hereto have executed this Agreement on and as of the date
first above written.
COMPANY:
FORCENERGY INC
By:
--------------------------------------
Stig Wennerstrom
President
EXECUTIVE:
-----------------------------------------
[Name]
-----------------------------------
8
<PAGE> 293
EXHIBIT 16
Forcenergy Inc
Investment Guidelines
Pursuant to Section 5.3(h) of the Plan of Reorganization, Reorganized Debtor
will reserve and segregate a sufficient amount of cash for the future
satisfaction of Disputed Claims in a particular Class, which if not for the fact
that the Claims were disputed as of the Effective Date, would otherwise be
entitled to cash settlement as of the Effective Date. Reorganized Debtor will
maintain such cash balances in a segregated account that will be used for the
sole purpose of funding Disputed Claims at the time that those claims are
determined to be valid. Cash balances segregated pursuant to this section will
be invested in one of the following methods:
(a) investments in open market commercial paper, maturing within 270 days
after acquisition thereof, which has the highest or second highest credit
rating given by either Standard & Poor's Corporation or Moody's Investors
Service, Inc.
(b) investments in marketable obligations, maturing within 12 months after
acquisition thereof, issued or unconditionally guaranteed by the United States
of America or an instrumentality or agency thereof and entitled to the full
faith and credit of the United States of America.
(c) investments in demand deposits, and time deposits (including
certificates of deposit) maturing within 12 months from the date of deposit
thereof, with any office of any national or state bank or trust company which
is organized under the laws of the United States of America or any state
therein, which has capital, surplus and undivided profits of at least
$500,000,000, and whose certificates of deposit have at least the third highest
credit rating given by either Standard & Poor's Corporation or Moody's
Investors Service, Inc.
(d) investments in money market or other mutual funds substantially all of
whose assets comprise securities of the types described in paragraphs (a)
through (c) above.
<PAGE> 294
EXHIBIT 17
This Agreement is included in the Motion to Substitute Revised Warrant
Agreements to be Filed as Part of Debtor's Amended Plan Supplement included in
this Form 8-K and is omitted from this Form 8-K.
<PAGE> 295
EXHIBIT 18
================================================================================
REGISTRATION RIGHTS AGREEMENT
BY AND AMONG
FORCENERGY INC
AND
THE PERSONS LISTED ON THE
SIGNATURE PAGES HEREOF
Dated as of _______________, 1999
================================================================================
<PAGE> 296
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
1. Definitions.....................................................1
2. Demand Registration.............................................4
2.1 Request for Registration...............................4
2.2 Effective Registration.................................5
2.3 Selection of Underwriters..............................5
2.4 Priority on Demand Registrations.......................5
3. Piggyback Registrations.........................................6
3.1 Holder Piggyback Registration..........................6
3.2 Priority on Piggyback Registrations....................6
4. Shelf Registration..............................................7
4.1 Shelf Request..........................................7
4.2 Required Period........................................7
5. Company Standstill and Suspension Periods.......................8
5.1 Standstill Period......................................8
5.2 Suspension Period......................................8
5.3 Holder Standstill Period...............................9
6. Registration Procedures.........................................9
6.1 Company Obligations....................................9
6.2 Holder Obligations....................................13
7. Indemnification................................................13
7.1 Indemnification by the Company........................13
7.2 Indemnification by the Holders........................14
7.3 Notice of Claims, Etc.................................14
7.4 Contribution..........................................15
7.5 Indemnification Payments..............................16
8. Registration Expenses..........................................16
9. Rule 144.......................................................16
10. Limitations on Subsequent Registration Rights..................17
</TABLE>
i
<PAGE> 297
<TABLE>
<S> <C> <C>
11. Miscellaneous..................................................17
11.1 Notice Generally......................................17
11.2 Successors and Assigns................................18
11.3 Amendments............................................18
11.4 Severability..........................................18
11.5 Headings..............................................18
11.6 Governing Law.........................................18
11.7 Counterparts..........................................18
11.8 Entire Agreement......................................18
11.9 Specific Performance..................................19
</TABLE>
ii
<PAGE> 298
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT ("this Agreement"), dated
as of ______________, 1999, by and among Forcenergy Inc, a Delaware corporation
(the "Company"), and each of the other persons or entities signatory hereto.
WITNESSETH:
WHEREAS, the Disclosure Statement and Joint Plan of
Reorganization, dated ___________, 1999 (the "Plan") was confirmed on
___________, 1999 by order of the United States Bankruptcy Court for the Eastern
District of Louisiana in Case No. 99-11391 "A";
WHEREAS, pursuant to the Plan, the Company will issue to the
Holders Common Stock, par value $0.01, in partial exchange for their claims
against the Company;
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged and
affirmed, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. DEFINITIONS.
All capitalized terms used but not defined in this Agreement have the
respective meanings assigned to such terms in the Plan. As used in this
Agreement, the following capitalized terms (in their singular and plural forms,
as applicable) have the following meanings:
"Action" has the meaning assigned to such term in Section 7.3.
"Affiliate" has the meaning assigned to such term in Rule 144(a)(1) of
the Securities Act.
"Agreement" has the meaning assigned to such term in the introductory
paragraph to this Agreement.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in the Borough of
Manhattan, The City of New York are authorized or obligated by law or executive
order to close.
"Confirmation Date" means the Effective Date of the Plan as confirmed.
"Commission" means the United States Securities and Exchange Commission
and any successor United States federal agency or governmental authority having
similar powers.
<PAGE> 299
"Company" has the meaning assigned to such term in the introductory
paragraph to this Agreement.
"Company Standstill Period" has the meaning assigned to such term in
Section 5.1.
"Demand Registration" has the meaning assigned to such term in Section
2.1.
"Demand Request" has the meaning assigned to such term in Section 2.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any successor statute, and the rules and regulations of the Commission
thereunder.
"Inspectors" has the meaning assigned to such term in Section 6.1(k).
"Joining Holder" has the meaning assigned to such term in Section 2.2.
"Holder" means each person or entity signatory hereto or any other
person or entity which (i) owns 5% or greater of the Company's then outstanding
Common Stock, provided, however, that at such time as any Holder shall cease to
own at least 1% of the Company's then outstanding Common Stock such person or
entity shall cease to be a "Holder" for purposes hereof, or (ii) with respect to
and for the purpose of covering only shares of Common Stock issuable upon the
exercise of Subscription Warrants (as defined in the Plan), the Standby
Purchasers (as defined in the Plan).
"Holder Shelf Offering" has the meaning assigned to such term in
Section 4.2(b).
"Loss" has the meaning assigned to such term in Section 7.1.
"Material Adverse Effect" has the meaning assigned to such term in
Section 2.5.
"Material Disclosure Event" means, as of any date of determination, any
pending or imminent event relating to the Company, which, in the determination
of the Board of Directors of the Company upon advice of counsel (i) requires
disclosure of material, non-public information relating to such event in any
registration statement so that such registration statement would not be
materially misleading, (ii) is otherwise not required to be publicly disclosed
at that time (e.g., on Form 8-K or Form 10-Q) under applicable federal or state
securities laws and (iii) if publicly disclosed at the time of such event, would
have a material adverse effect on the business, financial condition or prospects
of the Company.
"Permitted Assignee" means any (i) Affiliate of any Holder or (ii) any
person or entity that acquires, in a single transaction from any Holder, at
least 10% of the Company's then-
2
<PAGE> 300
outstanding shares of Common Stock, such percentage to be calculated immediately
after such acquisition.
"Piggyback Registration" has the meaning assigned to such term in
Section 3.1(a).
"Piggyback Sale" has the meaning assigned to such term in Section
3.1(a).
"Plan" has the meaning assigned to such term in the recitals to this
Agreement.
"Records" has the meaning assigned to such term in Section 6.1(k).
The terms "register," "registered" and "registration" means a
registration effected by preparing and filing with the Commission a registration
statement on an appropriate form in compliance with the Securities Act, and the
declaration or order of the Commission of the effectiveness of such registration
statement under the Securities Act.
"Registrable Securities" means the shares of Common Stock issued to the
Holders pursuant to the Plan; provided, however, that as to any Registrable
Securities, such securities shall cease to constitute "Registrable Securities"
for purposes of this Agreement if and when (i) a registration statement with
respect to the sale of such securities shall have been declared effective by the
Commission and such securities shall have been sold pursuant thereto in
accordance with the intended plan and method of distribution therefor set forth
in the final prospectus forming part of such registration statement or (ii) such
securities are no longer outstanding or (iii) such securities are distributed in
accordance with the provisions of Rule 144 (or any similar provision then in
force) under the Securities Act or (iv) such securities may be distributed to
the public free from any restrictions imposed by Rule 144 and without the
requirement of the filing of a registration statement covering such securities.
"Requesting Holder" has the meaning assigned to such term in Section
2.1.
"Required Filing Date" has the meaning assigned to such term in Section
2.1.
"Required Period" has the meaning assigned to such term in Section
4.2(a).
"Road Show" has the meaning assigned to such term in Section 6.1(j).
"Securities Act" means the Securities Act of 1933, as amended, or any
successor statute, and the rules and regulations of the Commission thereunder.
"Shelf Filing Deadline" has the meaning assigned to such term in
Section 4.1.
3
<PAGE> 301
"Shelf Registration Statement" has the meaning assigned to such term in
Section 4.1.
"Shelf Request" has the meaning assigned to such term in Section 4.1.
"Suspension Period" has the meaning assigned to such term in Section
5.2.
"Suspension Notice" has the meaning assigned to such term in Section
5.2.
2. DEMAND REGISTRATION.
2.1 Request for Registration. Subject to the provisions contained in
this Section 2.1, beginning on the date 120 days after the Confirmation Date,
any Holder or Holders may request (each, a "Requesting Holder") in writing (a
"Demand Request") that the Company effect the registration under the Securities
Act of that number of shares of Registrable Securities requested and owned by
the Requesting Holder(s) (a "Demand Registration"); provided, however, the
shares of Registrable Securities to be included in such Demand Registration
comprise the greater of 2,000,000 shares (subject to adjustment for any stock
split or stock dividend) or 5% of the outstanding Common Stock on such date;
provided, further, that the Company will in no event be required to effect more
than two Demand Registrations for the Holders in total in any 12- month period;
and provided, further, that upon the later of (i) such time as no Holder owns at
least 1% of the Company's then outstanding Common Stock and (ii) termination of
the Required Period (defined below), the Company will in no event be required to
effect more than one Demand Registration for the Holders in total in any
12-month period. Upon receipt of a Demand Request, the Company will cause to be
included in a registration statement on an appropriate form under the Securities
Act, filed with the Commission within 90 days after receiving a Demand Request
(the "Required Filing Date"), such Registrable Securities as may be requested by
such Requesting Holders in their Demand Request together with any other
Registrable Securities as requested by Joining Holders joining in such request
pursuant to Section 2.2. The Company shall use its reasonable best efforts to
cause any such registration statement to be declared effective by the Commission
as promptly as practicable after such filing but in any event not later than 150
days following the date of the Demand Request.
2.2 If at any time the Company proposes to register shares of Common
Stock for the account of the Requesting Holders pursuant to Section 2.1 then (i)
the Company shall give written notice of such proposed filing to the Holders as
soon as practicable (but in no event less than 30 days before the anticipated
filing date). Upon the written request of any Holder, received by the Company no
later than the 10th business day after receipt by such Holder of the notice sent
by the Company (each such Holder a "Joining Holder"), to register, on the same
terms and conditions as the securities otherwise being sold pursuant to such
Demand Registration, any of its Registrable Securities, the Company will use its
best efforts to cause the Registrable
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<PAGE> 302
Securities to be included in the securities to be covered by the registration
statement proposed to be filed by the Company on the same terms and conditions
as any similar securities included therein, all to the extent requisite to
permit the sale or other disposition by each Holder of the Registrable
Securities so registered.
2.3 Effective Registration. A registration will not count as a Demand
Registration until it has become effective (except with respect to any
Requesting Holder that withdraws all of its Registrable Securities for such
registration and the Company has performed its obligations hereunder in all
material respects, in which case such demand will count as a Demand Registration
on behalf of that Requesting Holder unless the Requesting Holder pays all
reasonable expenses actually incurred by the Company in connection with such
withdrawn registration); provided, however, that if, after it has become
effective, an offering of Registrable Securities pursuant to a registration
statement is terminated by any stop order, injunction, or other order of the
Commission or other governmental agency or court, such registration pursuant
thereto will be deemed not to have been effected and will not count as a Demand
Registration.
2.4 Selection of Underwriters. Unless the Requesting Holders otherwise
elect, all Demand Registrations will be underwritten offerings. With respect to
any offering of Registrable Securities pursuant to a Demand Registration in the
form of an underwritten offering, the Company shall select an investment banking
firm or firms of national standing to manage the underwritten offering, subject
to the consent of the Requesting Holders of a majority of the Registrable
Securities for such registration; provided, however, if a majority of the
Registrable Securities of the Requesting Holders are made by Lehman Brothers,
Inc. or its Affiliates, then the Company shall select Lehman Brothers, Inc. or
its Affiliates to manage the underwritten offering.
2.5 Priority on Demand Registrations. No securities to be sold for the
account of any person or entity (including the Company) other than Requesting
Holders or Joining Holders shall be included in a Demand Registration unless the
managing underwriter or underwriters shall advise the Requesting Holders in
writing that the inclusion of such securities will not materially and adversely
affect the price or success of the offering (a "Material Adverse Effect").
Furthermore, in the event that the managing underwriter or underwriters shall
advise the Requesting Holders that even after exclusion of all securities of the
other persons or entities pursuant to the immediately preceding sentence, the
amount of Registrable Securities proposed to be included in such Demand
Registration by Requesting Holders and Joining Holders is sufficiently large to
cause a Material Adverse Effect, the number of shares to be included in such
Demand Registration shall be allocated among all Holders pro rata based on the
ratio the number of shares each such Holder requests be included bears to the
total number of shares of all Holders that have been requested be included in
such registration.
5
<PAGE> 303
3. PIGGYBACK REGISTRATIONS.
3.1 Holder Piggyback Registration. If the Company proposes to file a
registration statement under the Securities Act with respect to an offering of
any securities for the Company's own account (except pursuant to registrations
on Form S-4 or any successor form or on Form S-8 or any successor form relating
solely to securities issued pursuant to any benefit plan) then (i) the Company
shall give written notice of such proposed filing to the Holders as soon as
practicable (but in no event less than (A) 20 days after the receipt of a Demand
Request pursuant to Section 2.1 hereof, or (B) 20 days before the anticipated
filing date in the case of any other registration). Upon the written request of
any Holder, received by the Company no later than the 10th business day after
receipt by such Holder of the notice sent by the Company, to register, on the
same terms and conditions as the securities otherwise being sold pursuant to
such registration, any of its Registrable Securities (which request shall state
the intended method of disposition thereof if the securities otherwise being
sold are being sold by more than one method of disposition), the Company will
use its best efforts to cause the Registrable Securities as to which
registration shall have been so requested to be included in the securities to be
covered by the registration statement proposed to be filed by the Company on the
same terms and conditions as any similar securities included therein, all to the
extent requisite to permit the sale or other disposition by each Holder of such
Registrable Securities so registered; provided, however, that, notwithstanding
the foregoing, the Company may at any time in its sole discretion, or at the
request of Holders holding a majority of the Registrable Securities included in
a Demand Registration without the consent of any other Holder, delay or abandon
the proposed offering in which any Holder had requested to participate or cease
the filing (or obtaining or maintaining the effectiveness) of or withdraw the
related registration statement or other governmental approvals, registrations or
qualifications.
3.2 Priority on Piggyback Registrations. If the Registrable Securities
requested to be included in a registration statement by any Holder pursuant to
Section 3.1 differ from the type of securities proposed to be registered by the
Company and the managing underwriter advises the Company that due to such
differences the inclusion of such Registrable Securities would cause a Material
Adverse Effect, then (i) the number of such Holder's or Holders' Registrable
Securities to be included in the registration statement shall be reduced to an
amount which, in the judgment of the managing underwriter, would eliminate such
Material Adverse Effect or (ii) if no such reduction would, in the judgment of
the managing underwriter, eliminate such Material Adverse Effect, then the
Company shall have the right to exclude all such Registrable Securities from
such registration statement provided no other securities of such type are
included and offered for the account of any other person or entity in such
registration statement. Any partial reduction in the number of Registrable
Securities to be included in the registration statement pursuant to clause (i)
of the immediately preceding sentence shall be effected pro rata based on the
ratio
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<PAGE> 304
which such Holder's Registrable Securities bears to the total number of
Registrable Securities requested to be included in such registration statement
by all Holders who have requested that their securities be included in such
registration statement. If the Registrable Securities requested to be included
in the registration statement pursuant to Section 3.1 are of the same type as
the securities being registered by the Company and the managing underwriter
advises the Company that the inclusion of such Registrable Securities would
cause a Material Adverse Effect, the Company will be obligated to include in
such registration statement, as to each Holder, only a portion of the
Registrable Securities such Holder has requested be registered equal to the
ratio which such Holder's requested securities bears to the total number of
shares of Registrable Securities requested to be included in such registration
statement by all Holders who have requested that their securities be included in
such registration statement.
4. SHELF REGISTRATION.
4.1 Shelf Request. Any Holder may request in writing (a "Shelf
Request") that the Company file a shelf registration statement pursuant to Rule
415 under the Securities Act (the "Shelf Registration Statement") relating to
the Holder's Registrable Securities beginning on the earlier of (i) the date on
which the Company is a registrant entitled to use Form S-3 or any successor
thereto to register shares of Common Stock and (ii) April 1, 2001; provided,
however, that the shares of Registrable Securities to be included in such Shelf
Registration Statement comprise the greater of 2,000,000 shares (subject to
adjustment for any stock split or stock dividend) or 5% of the outstanding
Common Stock on such date. Upon receipt of such request, the Company will, on or
before 90 days after such request (the "Shelf Filing Deadline"), file such Shelf
Registration Statement. The Company shall use its reasonable best efforts to
cause such registration statement to be declared effective by the Commission as
promptly as practicable after such filing but in any event not later than 150
days following the date of the Shelf Request.
4.2 Required Period and Shelf Registration Procedures.
(a) The Company shall (i) cause the Shelf Registration
Statement to include a resale prospectus intended to permit each Holder to sell,
at such Holder's election, all or part of the Registrable Securities held by
such Holder without restriction and (ii) use its reasonable best efforts to
prepare and file with the Commission such amendments and post-effective
amendments to the Shelf Registration Statement as may be necessary to keep the
Shelf Registration Statement continuously effective (subject to any Suspension
Periods referred to below) for a period (the "Required Period") ending on the
earlier of (1) the date which is three years after the date the Shelf
Registration Statement is declared effective plus the aggregate number of days
in all Suspension Periods and (2) the first date on which the securities covered
by the Shelf Registration Statement no longer constitute Registrable Securities
owned by a Holder,
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<PAGE> 305
and (iii) use its best efforts to cause the resale prospectus to be supplemented
by any required prospectus supplement.
(b) During the period of effectiveness of the Shelf
Registration Statement, any Holder shall be entitled to sell all or part of the
Registrable Securities registered on behalf of such Holder pursuant to the Shelf
Registration Statement ("Holder Shelf Offering").
(c) Any Holder may, by written notice to the Company, request
that the Company take any reasonable steps necessary to assist and cooperate
with such Holder to facilitate a Holder Shelf Offering, subject to the
provisions hereof. Such request will specify the number of shares of Registrable
Securities proposed to be sold and will also specify the intended method of
disposition thereof.
5. STANDSTILL AND SUSPENSION PERIODS.
5.1 Company Standstill Period. Except for distribution of Common Stock
pursuant to the Plan, without the prior written consent of the lead managing
underwriter in a Holder Shelf Offering during the Required Period the Company
agrees not to effect any public sale or distribution of any securities the same
as or similar to the Registrable Securities, or any securities convertible into
or exchangeable or exercisable for any Company securities the same as or similar
to the Registrable Securities (except pursuant to registrations on Form S-4 or
any successor form, or otherwise in connection with the acquisition of a
business or assets of a business, a merger, or an exchange offer for the
securities of the issuer of another entity, or registrations on Form S-8 or any
successor form relating solely to securities offered pursuant to any benefit
plan), during the 14-day period prior to and through the period (i) beginning on
the commencement of the public distribution of Registrable Securities pursuant
to the Shelf Registration Statement in an underwritten offering by or on behalf
of any Holder to the extent timely notified in writing by the selling Holders or
the underwriters managing such distribution and (ii) ending on the first to
occur of (A) the 90th day after such commencement and (B) the end of such
distribution (the "Company Standstill Period"), including that portion of such
period following an underwritten distribution commenced during the Company
Standstill Period that does not coincide with the Company Standstill Period.
5.2 Suspension Period. The Company may, by notice in writing to each
Holder, suspend the Demand Registration rights of the Holder and/or require the
Holders to suspend use of any resale prospectus included in the Shelf
Registration Statement for any period determined by the Company if there shall
occur a Material Disclosure Event (such period, a "Suspension Period").
Notwithstanding the foregoing, no Suspension Period shall exceed 30 days in any
one instance and, when combined with any other such Suspension Periods, 90 days
in any 12-month period; provided, however, that each day during any Suspension
Period shall only be counted
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<PAGE> 306
once in determining the aggregate number of days in such Suspension Period
notwithstanding the occurrence of multiple concurrent deferrals; and, provided,
further, if the Company deems it necessary to file a post-effective amendment to
the Shelf Registration Statement in order to comply with Section 4.1 hereof as a
result of any Shelf Request or other information provided by a Holder for
inclusion in the prospectus included in the Shelf Registration Statement, then
such period of time from the date of filing such post-effective amendment until
the date on which the Shelf Registration Statement is declared effective by the
commission shall not be treated as a Suspension Period. Each Holder agrees that,
upon receipt of notice from the Company of the occurrence of a Material
Disclosure Event (a "Suspension Notice"), such Holder will forthwith discontinue
disposition of Registrable Securities pursuant to the Shelf Registration
Statement or any public sale or distribution pursuant to Rule 144 until the
earlier of (i) the expiration of the Suspension Period and (ii) such Holder's
receipt of a notice from the Company to the effect that such suspension has
terminated. Any Suspension Notice shall be accompanied by a certificate of the
President or any Vice President of the Company confirming the existence of the
Material Disclosure Event. If so directed by the Company, such Holder will
deliver to the Company (at the Company's expense) all copies, other than
permanent file copies, then in such Holder's possession, of the most recent
prospectus covering such Registrable Securities at the time of receipt of such
Suspension Notice.
5.3 Holder Standstill Period. Without the prior written consent of the
Company or the lead managing underwriter prior to the closing, or the prior
written consent of the lead managing underwriter of the offering thereafter, no
Holder shall effect any disposition of Registrable Securities under the Shelf
Registration Statement or any public sale or distribution pursuant to Rule 144
(except in accordance with Section 3.1) during the 14-day period prior to, and
through the period (i) beginning on the commencement of the public distribution
of securities of the Company the same as or similar to the Registrable
Securities, or any securities convertible into or exchangeable or exercisable
for any Company securities the same as or similar to the Registrable Securities
in an underwritten offering by or on behalf of the Company or any other Holder
to the extent timely notified in writing (prior to such Holder giving any Demand
Request) by the Company, the Selling Holders or the underwriters managing such
distribution and (ii) ending on the first to occur of (A) the 90th day after
such commencement and (B) the end of such distribution.
6. REGISTRATION PROCEDURES.
6.1 Company Obligations. Whenever the Company is required pursuant to
this Agreement to register Registrable Securities, it will:
(a) provide the Holders with a reasonable opportunity to review and
comment on any registration statement to be filed pursuant to this Agreement
prior to the filing thereof
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<PAGE> 307
with the Commission, and shall make all changes thereto as any Holder may
request in writing to the extent such changes are required, in the judgment of
the Company, by the Securities Act;
(b) cause any such registration statement and the related
prospectus and any amendment or supplement thereto, as of the effective date of
such registration statement, amendment or supplement, (i) to comply in all
material respects with the applicable requirements of the Securities Act and the
rules and regulations of the Commission promulgated thereunder and (ii) not to
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, in
light of the circumstances under which they were made, not misleading;
(c) furnish to the Holders such number of conformed copies of
such registration statement and of each such amendment thereto (in each case
including all exhibits thereto), such number of copies of the prospectus
included in such registration statement (including each preliminary prospectus
and each supplement thereto), and such number of the documents, if any,
incorporated by reference in such registration statement or prospectus, as the
Holders reasonably may request;
(d) use its reasonable best efforts to register or qualify the
Registrable Securities covered by such registration statement under such
securities or "blue sky" laws of the states of the United States as the Holders
reasonably shall request, to keep such registration or qualification in effect
for so long as such registration statement remains in effect, and to do any and
all other acts and things that may be necessary or advisable to enable the
Holders to consummate the disposition in such jurisdictions of the Registrable
Securities covered by such registration statement, except that the Company shall
not for any such purpose be required to qualify generally to do business as a
foreign corporation in any jurisdiction in which it is not obligated to be so
qualified, or to subject itself to taxation in any such jurisdiction, or to
consent to general service of process in any such jurisdiction;
(e) immediately notify the Holders, at any time when a
prospectus or prospectus supplement relating thereto is required to be delivered
under the Securities Act, upon discovery that, or upon the occurrence of any
event as a result of which, the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state any 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, which untrue statement or omission requires amendment
of the registration statement or supplementing of the prospectus, and, at the
request of the Holders, prepare and furnish to the Holders a reasonable number
of copies of a supplement to such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated
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<PAGE> 308
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that with respect to Registrable Securities registered pursuant to such
registration statement, each Holder agrees that it will not sell any Registrable
Securities pursuant to such registration statement during the time after the
furnishing of the Company's notice that the Company is preparing and filing with
the Commission a supplement to or an amendment of such prospectus or
registration statement;
(f) use its reasonable best efforts to comply with all
applicable rules and regulations of the Commission, and make available to
holders of its securities, as soon as reasonably practicable, an earnings
statement covering the period of at least 12 months, but not more than 18
months, beginning with the first month of the first fiscal quarter after the
effective date of such registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act;
(g) provide and cause to be maintained a transfer agent and
registrar for the Registrable Securities covered by such registration statement
from and after a date not later than the effective date of such registration
statement; it being hereby agreed that the Holders shall furnish to the Company
such information regarding the Holders and the plan and method of distribution
of Registrable Securities intended by the Holders as the Company may from time
to time reasonably request in writing and as shall be required by law or by the
Commission in connection therewith;
(h) notify the Holders and the managing underwriters, if any,
promptly, and (if requested by any such person) confirm such notice in writing,
(i) when a prospectus, prospectus supplement or post-effective amendment related
to such registration statement has been filed, and, with respect to such
registration statement or any post-effective amendment thereto, when the same
has become effective, (ii) of any request by the Commission or any other federal
or state governmental authority for amendments or supplements to such
registration statement or related prospectus, (iii) of the issuance by the
Commission or any other federal or state governmental authority of any stop
order suspending the effectiveness of such registration statement or the
initiation of any proceedings for that purpose and (iv) of the receipt by the
Company of any notification with respect to the suspension of the qualification
or exemption from qualification of any of the Registrable Securities for sale in
any jurisdiction or the initiation or threatening of any proceeding for such
purpose;
(i) use reasonable commercial efforts to obtain the withdrawal
of any order suspending the effectiveness of such registration statement, or the
lifting of any suspension of the qualification (or exemption from qualification)
of any of the Registrable Securities for sale in any jurisdiction, at the
earliest possible moment;
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<PAGE> 309
(j) enter into customary agreements (including underwriting
agreements in customary form, which shall include "lock-up" obligations as may
be requested by the managing underwriters, not to exceed 90 days in duration,
but excluding shares that may be issued pursuant to benefit plans or in
connection with mergers or acquisitions) and take such other actions (including
using its reasonable efforts to make such domestic road show presentations (it
being agreed that such presentations by officers of the Company in excess of an
aggregate of fourteen days in duration during any 12-month period for all Demand
and Shelf Registrations under this Agreement shall be unreasonable) and
otherwise engaging in such reasonable marketing support in connection with any
underwritten offering, including without limitation the obligation to make its
executive officers available for such purpose if so requested by the selling
Holder (a "Road Show")) as are reasonably requested by any selling Holder in
order to expedite or facilitate the sale of any registrable securities covered
by a registration statement pursuant to an underwritten offering in accordance
herewith;
(k) make available for inspection by each Holder, any
underwriter participating in any disposition pursuant to such registration, and
any attorney, accountant or other agent retained by such Holder or any such
underwriter (collectively, the "Inspectors"), all financial and other records,
pertinent corporate documents and properties of the Company (collectively, the
"Records") as shall be reasonably necessary to enable them to exercise their due
diligence responsibility, and cause the officers, directors and employees of the
Company to supply all information reasonably requested by any such Inspector in
connection with such registration, provided, however, that (i) in connection
with any such inspection, any such Inspectors shall cooperate to the extent
reasonably practicable to minimize any disruption to the operation by the
Company of its business, (ii) Records and information obtained hereunder shall
be used by such Inspectors only to exercise their due diligence responsibility
and (iii) Records or information furnished or made available hereunder shall be
kept confidential and shall not be disclosed by such Holder, underwriter or
Inspectors unless (A) the disclosure of such Records or information is necessary
to avoid or correct a misstatement or omission in a registration statement, (B)
the release of such Records or information is ordered pursuant to a subpoena or
other order from a court or governmental authority of competent jurisdiction or
(C) such Records or information otherwise become generally available to the
public other than through disclosure by such Holder, underwriter or Inspector in
breach hereof or by any person in breach of any other confidentiality
arrangement; and
(l) use its best efforts to furnish to each Holder and to each
managing underwriter, if any, a signed counterpart, addressed to such Holder or
such underwriter, if any, of (i) an opinion or opinions of counsel to the
Company and (ii) a comfort letter or comfort letters from the Company's
independent public accountants pursuant to SAS 72, each in customary
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form and covering such matters of the type customarily covered by opinions or
comfort letters, as the case may be, as such Holder or the managing underwriter
reasonably requests.
6.2 Holder Obligations. Each Holder agrees that:
(a) information obtained by it or by its Inspectors shall be
deemed confidential and shall not be used by it as the basis for any market
transactions in the securities of the Company or its Affiliates unless and until
such information is made generally available to the public; and
(b) it will use all reasonable efforts, prior to making any
disclosure allowed by Section 6.1(k)(iii)(A) or (B), to inform the Company that
such disclosure is necessary to avoid or correct a misstatement or omission in
the registration statement or ordered pursuant to a subpoena or other order from
a court or governmental authority of competent jurisdiction or otherwise
required by law. Such Holder further agrees that it will, upon learning that
disclosure of such Records or information is sought by a court or governmental
authority or otherwise required by law, give notice to the Company and allow the
Company, at the expense of the Company, to undertake appropriate action to
prevent disclosure of the Records or information deemed confidential.
7. INDEMNIFICATION.
7.1 Indemnification by the Company. The Company shall indemnify and
hold harmless (i) each Holder and its Affiliates, with respect to any
registration statement filed pursuant to this Agreement, (ii) any underwriter or
selling agent selected by the Holders with respect to such Registrable
Securities and (iii) each person who controls the Holder or Affiliate thereof,
including directors and officers of each Holder, and any underwriter or selling
agent, within the meaning of Section 15 of the Securities Act and Section 20 of
the Exchange Act, against any losses, claims, damages, liabilities or expenses
(each a "Loss" and collectively "Losses"), joint or several, to which the Holder
or any such persons may become subject under the Securities Act or otherwise, to
the extent that such Losses (or related actions or proceedings) arise out of or
are based upon (A) any untrue statement or alleged untrue statement of any
material fact contained in an effective registration statement in which such
Registrable Securities were included for registration under the Securities Act,
any preliminary prospectus if used prior to the effective date of the
registration statement (unless such statement is corrected in the final
prospectus and the Company shall have furnished a sufficient number of copies
thereof to the Holder in a manner and at a time sufficient to permit delivery of
the same to prospective purchasers concurrently with or prior to the sale of the
related Registrable Securities), final prospectus (as supplemented, if the
Company shall have filed with the Commission any supplement thereto) if used
during the period in which the Company is required to keep the
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<PAGE> 311
registration statement to which such prospectus relates current and otherwise in
compliance with Section 10(a) of the Securities Act or (B) any omission or
alleged omission to state therein 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; provided, however, that the Company
shall have no obligation to provide any indemnification hereunder if any such
Losses (or actions or proceedings in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement, preliminary prospectus or final
prospectus, as the case may be, in reliance upon and in conformity with written
information furnished to the Company by the Holder or on the Holder's behalf
specifically for inclusion in such registration statement. The indemnity
provided in this Section 7.1 shall remain in full force and effect regardless of
any investigation made by or on behalf of the Holder or any such other persons
and shall survive the transfer of the Registrable Securities by the Holder or
any such other persons.
7.2 Indemnification by the Holders. Each Holder shall indemnify and
hold harmless (in the same manner and to the same extent as set forth in Section
7.1 hereof) the Company, each director and officer of the Company and each other
person, if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, with respect to any untrue
statement in or omission from any registration statement filed by the Company
pursuant to this Agreement, any preliminary prospectus or any final prospectus
included in such registration statement, or any amendment or supplement to such
registration statement or prospectus, as the case may be, of a material fact if
such statement or omission was made in reliance upon and in conformity with
written information furnished to the Company or any of its representatives by
the Holder or such other persons, if any, who control the Holder within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
or on the Holder's behalf, specifically for inclusion in such registration
statement, preliminary prospectus or final prospectus, as the case may be;
provided, a Holder's aggregate liability under this Agreement shall be limited
to an amount equal to the net proceeds (after deducting the underwriter's
discount but before deducting expenses) received by the Holder from the sale of
the securities effected pursuant to such registration.
7.3 Notice of Claims, Etc. Promptly after receipt by an indemnified
party of notice of the commencement of any action or proceeding (an "Action")
involving a claim referred to in Sections 7.1 and 7.2 hereof, such indemnified
party shall, if indemnification is sought against an indemnifying party, give
written notice to the indemnifying party of the commencement of such Action;
provided, however, that the failure of any indemnified party to give said notice
shall not relieve the indemnifying party of its obligations under Sections 7.1
or 7.2 hereof, except to the extent that the indemnifying party is actually and
materially prejudiced by such failure. In case an Action is brought against any
indemnified party, and such indemnified party notifies an
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<PAGE> 312
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent it may elect by written
notice delivered to the indemnified party promptly after receiving the aforesaid
notice, to assume the defense thereof with counsel reasonably satisfactory to
such indemnified party. Notwithstanding the foregoing, the indemnified party
shall have the right to employ its own counsel in any such case, but the fees
and expenses of such counsel shall be at the expense of such indemnified party,
unless (i) the employment of such counsel shall have been authorized in writing
by the indemnifying party, (ii) the indemnifying party shall not have employed
counsel (reasonably satisfactory to the indemnified party) to take charge of the
defense of such Action, within a reasonable time after notice of the
commencement thereof or (iii) such indemnified party reasonably shall have
concluded that there may be defenses available to it which are different from or
additional to those available to the indemnifying party which, if the
indemnifying party and the indemnified party were to be represented by the same
counsel, could result in a conflict of interest for such counsel or materially
prejudice the prosecution of the defenses available to such indemnified party.
If any of the events specified in clauses (i), (ii) or (iii) of the preceding
sentence shall have occurred or otherwise shall be applicable, then the fees and
expenses of one counsel (or firm of counsel) for the indemnified party shall be
borne by the indemnifying party. Anything in this Section 7.3 to the contrary
notwithstanding, an indemnifying party shall not be liable for the settlement of
any action effected without its prior written consent (which consent in the case
of an action exclusively seeking monetary relief shall not unreasonably be
withheld or delayed), but if settled with the prior written consent of the
indemnifying party, or if there be a final judgment adverse to the indemnified
party, the indemnifying party agrees to indemnify the indemnified party from and
against any loss or liability by reason of such settlement or judgment. No
indemnifying party shall, without the prior consent of the indemnified party,
consent to entry of any judgment or enter into any settlement which does not
include as a term thereof the unconditional release of the indemnified party
from all liability in respect of such claim or litigation.
7.4 Contribution. If the indemnification provided for in this Article 7
is unavailable or insufficient to hold harmless an indemnified party in respect
of any Losses, then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such indemnified
party as a result of such Losses in such proportion as appropriate to reflect
the relative fault of the Company, on the one hand, and the Holder, on the other
hand, and the parties' relative intent, knowledge, access to information and
opportunity to correct or mitigate the damage in respect of or prevent any
untrue statement or omission giving rise to such indemnification obligation. The
Company and the Holders agree that it would not be just and equitable if
contributions pursuant to this Section 7.4 were determined by pro rata
allocation or by any other method of allocation which did not take account of
the equitable considerations referred to above. No person guilty of fraudulent
misrepresentation (within the
15
<PAGE> 313
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who is not guilty of such fraudulent
misrepresentation.
7.5 Indemnification Payments. Periodic payments of amounts required to
be paid pursuant to this Article 7 shall be made during the course of the
investigation or defense, as and when reasonably itemized bills therefor are
delivered to the indemnifying party in respect of any particular Loss as
incurred.
8. REGISTRATION EXPENSES.
In connection with any offerings pursuant to a registration statement
hereunder, the Company will pay (i) all registration and filing fees, (ii) all
fees and expenses of compliance with state securities or Blue Sky Laws
(including reasonable fees and disbursements of counsel in connection with Blue
Sky Laws qualifications of the Registrable Securities), (iii) printing expenses,
(iv) internal expenses of the Company (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), (v) reasonable fees and disbursements of counsel for the
Company and fees and expenses of independent certified public accountants
retained by the Company (including the expenses of any comfort letters or costs
associated with the delivery by independent certified public accountants of a
comfort letter or comfort letters but excluding costs associated with special
audits), (vi) the reasonable fees and expenses of any special experts retained
by the Company in connection with such registration, (vii) fees and expenses in
connection with any review of underwriting arrangements by the National
Association of Securities Dealers, Inc. including fees and expenses of any
"qualified independent underwriter" in connection with an underwritten offering,
and (viii) reasonable fees and expenses of not more than one counsel for the
Holders (not to exceed $50,000). In connection with any offerings pursuant to a
registration statement, the selling Holders will pay (i) any underwriting fees,
discounts or commissions attributable to the sale of Registrable Securities by
such Holder in connection with an underwritten offering; (ii) costs of any
special audits in connection with an underwritten offering pursuant to a Demand
Registration Request or Shelf Registration Request; and (iii) any out-of-pocket
expenses of such Holder including any fees and expenses of counsel to such
Holder.
9. RULE 144.
The Company shall at all times comply with the requirements of Rule
144(c) under the Securities Act, as such Rule may be amended from time to time
(or any similar rule or regulation hereafter adopted by the Commission),
regarding the availability of current public information to the extent required
to enable any Holder to sell Registrable Securities without registration under
the Securities Act pursuant to the resale provisions of Rule 144 (or any similar
rule or regulation). Upon the request of any Holder, the Company will deliver to
such Holder a written
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<PAGE> 314
statement as to whether it has complied with such requirements and, upon such
Holder's compliance with the applicable provisions of Rule 144, will take such
action as may be required (including, without limitation, causing legal counsel
to issue an appropriate opinion) to cause its transfer agent to effectuate any
transfer of Registrable Securities properly requested by such Holder, in
accordance with the terms and conditions of Rule 144.
10. LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS.
Prior to the expiration of all registration rights granted hereunder,
the Company will not, without the prior written consent of each Holder, enter
into any agreement with any holder or prospective holder of any securities of
the Company that would grant such holder or prospective holder registration
rights with respect to securities of the Company other than piggyback
registration rights that do not interfere with, or cause the Company to be
unable to perform, the registration rights granted herein.
11. MISCELLANEOUS.
11.1 Notice Generally. Any notice, demand, request, consent, approval,
declaration, delivery or other communication hereunder to be made pursuant to
the provisions of this Agreement shall specify the Section of this Agreement
pursuant to which it is given or being made and shall be deemed sufficiently
given or made if in writing and signed by the party making the same, and either
delivered in person with receipt acknowledged or sent by registered or certified
mail, return receipt requested, postage prepaid, or by telecopy and confirmed by
telecopy answerback, addressed, if to any Holder, at the address of such Holder
as set forth on the signature pages hereto; and if to the Company, at
Forcenergy Inc
2730 SW 3rd Avenue
Suite 800
Miami, Florida 33129-2356
Attention: President
Telecopy Number: (305) 856-4300
With a copy to:
Andrews & Kurth L.L.P.
600 Travis, Suite 4200
Houston, Texas 77002
Attention: David C. Buck
Telecopy Number: (713) 220-4285
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or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration, delivery or other communication hereunder shall
be deemed to have been duly given or served on the date on which personally
delivered, with receipt acknowledged, telecopied and confirmed by telecopy
answerback or three Business Days after the same shall have been deposited in
the United States mail (by registered or certified mail, return receipt
requested, postage prepaid), whichever is earlier.
11.2 Successors and Assigns. This Agreement may not be assigned by any
Holder (except that this Agreement may be assigned by any Holder to a Permitted
Assignee, whereupon such Permitted Assignee shall be deemed to be an Holder for
all purposes of this Agreement). This Agreement shall be binding on all
successors to the Company and the Holders.
11.3 Amendments. This Agreement may be amended or modified only by a
written agreement signed by each party hereto.
11.4 Severability. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
11.5 Headings. The headings used in this Agreement are for the
convenience of reference only and shall not, for any purpose, be deemed a part
of this Agreement.
11.6 Governing Law. This Agreement shall be governed exclusively by,
construed and enforced in accordance with, the laws of the State of New York,
without regard to the provisions thereof relating to conflict of laws.
11.7 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.
11.8 Entire Agreement. This Agreement embodies the entire agreement and
understanding between the Company and the Holders in respect of the subject
matter contained herein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to the subject matter of this
Agreement.
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11.9 Specific Performance. The parties hereto acknowledge and agree
that they would not have adequate remedies at law and would be irreparably
harmed if any of the provisions of this Agreement were not performed by the
parties hereto in accordance with the specific terms hereof or were otherwise
breached, and that, in such case, it would be impossible to measure in money the
damages to such parties. It is accordingly agreed that the parties hereto shall
be entitled to injunctive relief or the enforcement of other equitable remedies,
without bond or other security, to compel performance and to prevent breaches of
this Agreement and specifically to enforce the terms and provisions hereof, in
addition to any other remedy to which they may be entitled, at law or in equity.
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IN WITNESS WHEREOF, the parties hereto have caused this Registration
Rights Agreement to be duly executed and delivered as of the date first above
written.
FORCENERGY INC
By:
-------------------------------
Name: Stig Wennerstrom
Title: President
By:
-------------------------------
Name:
Title:
Address:
By:
-------------------------------
Name:
Title:
Address:
20
<PAGE> 318
EXHIBIT 19
COMMON STOCK COMMON STOCK
NUMBER INCORPORATED UNDER THE LAWS SHARES
NFE- OF THE STATE OF DELAWARE
SEE REVERSE FOR
CERTAIN DEFINITIONS
CUSIP
FORCENERGY INC
THIS IS TO CERTIFY THAT
IS THE OWNER OF
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK $.01
PAR VALUE OF
Forcenergy Inc transferable on the books of the Corporation by
the holder hereof in person or by duly authorized attorney
upon surrender of this certificate properly endorsed. This
certificate and the shares represented hereby are issued and
shall be held subject to all of the provisions of the
Certificate of Incorporation of the Corporation and Amendments
thereof to all of which the holder by the acceptance hereby
assents. This Certificate is not valid unless countersigned
and registered by the Transfer Agent and Registrar.
Witness the facsimile seal of the Corporation and the
facsimile signatures of its duly authorized officers.
Dated
------------------------ -----------------------------
SECRETARY PRESIDENT
AUTHORIZED SIGNATURE
COUNTERSIGNED AND REGISTERED:
BY AMERICAN STOCK TRANSFER &
TRUST COMPANY
(New York, N.Y.)
TRANSFER AGENT
AND REGISTRAR
<PAGE> 1
EXHIBIT 2.4
UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF LOUISIANA
IN RE: NO. 99-11391 "A"
FORCENERGY INC CHAPTER 11
JOINTLY ADMINISTERED WITH
FORCENERGY RESOURCES INC. NO. 99-11392 "A"
CHAPTER 11
MOTION TO SUBSTITUTE REVISED WARRANT AGREEMENTS
TO BE FILED AS PART OF DEBTOR'S AMENDED PLAN SUPPLEMENT
NOW INTO COURT, through undersigned counsel, comes Forcenergy Inc
("Debtor"), who respectfully moves this Court for permission to substitute the
Revised Warrant Agreements attached hereto as Exhibits A and B to be filed as
part of Debtor's Amended Plan Supplement, replacing therein the documents
currently identified as Exhibits 9 and 17, respectively.
WHEREFORE, Debtor Forcenergy Inc respectfully requests that this Court
permit the substitution of said Revised Warrant Agreements to be filed as part
of Debtor's Amended Plan Supplement.
NEW ORLEANS, LOUISIANA this 10th day of December, 1999.
Respectfully Submitted,
/s/ JAN M. HAYDEN
-------------------------------------
JAN M. HAYDEN (LA BAR #6672)
BERNARD H. BERINS (LA BAR #3002)
<PAGE> 2
HELLER, DRAPER, HAYDEN & HORN, L.L.C.
650 Poydras Street, Suite 2500
New Orleans, Louisiana 70130-6103
Phone: 504/568-1888
Fax: 504/522-0949
Co-Counsel for Debtors
and
HUGH M. RAY (TX BAR #16611000)
JAMES DONNELL (TX BAR #05981300)
DOUGLAS G. WALTER (NY Bar #DW5817)
ANDREWS & KURTH, LLP
600 Travis, Suite 4200
Houston, Texas 77002
Phone: 713/220-4200
Fax: 713/220-4285
Co-Counsel for Debtors
UNITED STATES BANKRUPTCY COURT
2
<PAGE> 3
EASTERN DISTRICT OF LOUISIANA
IN RE: NO. 99-11391 "A"
FORCENERGY INC CHAPTER 11
JOINTLY ADMINISTERED WITH
FORCENERGY RESOURCES INC. NO. 99-11392 "A"
CHAPTER 11
ORDER
Considering the foregoing,
IT IS ORDERED
3
<PAGE> 4
EXHIBIT A
DRAFT 12/7/99
FORM OF AGREEMENT FOR PREFERRED STOCK PURCHASERS
================================================================================
WARRANT AGREEMENT
BETWEEN
FORCENERGY INC
AND
AMERICAN STOCK TRANSFER & TRUST COMPANY,
AS WARRANT AGENT
----------------------------------
DATED AS OF _________ [__], 1999
----------------------------------
Warrants to Purchase 1,800,000 Common Shares
================================================================================
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
AGREEMENT.........................................................................................................1
1. DEFINITIONS..............................................................................................1
2. WARRANT CERTIFICATES.....................................................................................5
2.1 Issuance of Warrants............................................................................5
2.2 Form, Denomination and Date of Warrants.........................................................5
2.3 Execution and Delivery of Warrant Certificates..................................................6
2.4 Legend; Transfer and Exchange...................................................................6
3. EXERCISE AND EXPIRATION OF WARRANTS......................................................................7
3.1 Right to Acquire Warrant Shares Upon Exercise...................................................7
3.2 Exercise and Expiration of Warrants.............................................................8
(a) Exercise of Warrants...................................................................8
(b) Expiration of Warrants.................................................................9
(c) Method of Exercise.....................................................................9
(d) Partial Exercise.......................................................................9
(e) Issuance of Warrant Shares............................................................10
(f) Time of Exercise......................................................................10
3.3 Payment of Taxes...............................................................................10
3.4 Surrender of Certificates......................................................................11
3.5 Shares Issuable................................................................................11
4. DISSOLUTION, LIQUIDATION OR WINDING UP..................................................................11
5. ADJUSTMENTS.............................................................................................12
5.1 Adjustments....................................................................................12
(a) Stock Dividends, Subdivisions and Combinations........................................12
(b) Reclassifications.....................................................................12
(c) Distribution of Warrants or Other Rights to Holders of Common Shares..................13
(d) Superseding Adjustment of Number of Warrant Shares into Which Each
Warrant is Exercisable................................................................13
(e) Other Provisions Applicable to Adjustments under this Section.........................14
(f) Warrant Price Adjustment..............................................................15
(g) Merger, Consolidation or Combination..................................................15
(h) Compliance with Governmental Requirements.............................................16
(i) Optional Tax Adjustment...............................................................16
(j) Warrants Deemed Exercisable...........................................................16
</TABLE>
<PAGE> 6
<TABLE>
<S> <C> <C>
5.2 Notice of Adjustment...........................................................................16
5.3 Statement on Warrant Certificates..............................................................16
5.4 Fractional Interest............................................................................16
6. LOSS OR MUTILATION......................................................................................17
7. RESERVATION AND AUTHORIZATION OF WARRANT SHARES.........................................................17
8. WARRANT TRANSFER BOOKS..................................................................................18
9. WARRANT HOLDERS.........................................................................................19
9.1 Voting or Dividend Rights......................................................................19
9.2 Rights of Action...............................................................................19
9.3 Treatment of Holders of Warrant Certificates...................................................19
9.4 Communications to Holders......................................................................20
10. NOTICES.................................................................................................20
10.1 Notices Generally..............................................................................20
10.2 Required Notices to Holders....................................................................21
11. APPLICABLE LAW..........................................................................................22
12. PERSONS BENEFITTING.....................................................................................22
13. COUNTERPARTS............................................................................................22
14. AMENDMENTS..............................................................................................23
15. INSPECTION..............................................................................................23
16. SUCCESSOR TO THE COMPANY................................................................................23
17. ENTIRE AGREEMENT........................................................................................23
18. HEADINGS................................................................................................24
</TABLE>
<PAGE> 7
EXHIBITS
<TABLE>
<S> <C>
A. Form of Warrant Certificate.........................................A-1
</TABLE>
<PAGE> 8
WARRANT AGREEMENT
This WARRANT AGREEMENT, dated as of __________ [ ], 1999, is entered
into among FORCENERGY INC, a Delaware corporation (the "Company") and American
Stock Transfer & Trust Company, Inc. ("Warrant Agent").
WHEREAS, in connection with a plan of reorganization (the "Plan") as
confirmed on December __, 1999 by the United States Bankruptcy Court for the
Eastern District of Louisiana (the "Court") pursuant to Chapter 11 of Title 11
of the United States Code, the Company has agreed to issue to the Purchasers an
aggregate of 1,800,000 Warrants to purchase an aggregate of 1,800,000 Common
Shares (as defined below) of the Company at the Warrant Price (as defined below)
on and after the Issue Date (as defined below), subject to the availability of
an exemption from registration or an effective registration statement as
described below, and on or prior to the Expiration Date (as defined below),
subject to earlier expiration as described below. Pursuant to the Plan, each
Purchaser is entitled to receive Warrants to purchase 45 Common Shares for each
share of Series A Preferred Stock purchased; and
WHEREAS, the Company and the Warrant Agent desire to set forth in this
Agreement, among other things, the form and provisions of the certificates
representing the Warrants and the terms and conditions under which they may be
issued, transferred, exchanged, replaced and surrendered in connection with the
exercise of the Warrants;
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
1. DEFINITIONS
"Additional Common Shares" shall mean all Common Shares issued or
issuable by the Company after the date of this Agreement, other than the Warrant
Shares.
"Affiliate" shall mean, as to any Person, any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control of such Person. For purposes of this definition, "control" when used
with respect to any Person means the power to direct the management and policies
of such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agreement" shall mean this Warrant Agreement, as the same may be
amended, modified or supplemented from time to time.
"Bankruptcy Code" shall mean Chapter 11 of Title 11 of the United
States Code, as amended.
<PAGE> 9
"Business Day" shall mean a day which in New York, New York is neither
a legal holiday nor a day on which banking institutions are authorized by law or
regulation to close.
"Capital Stock" of any Person shall mean any and all shares, interests,
participations or other equivalents (however designated) of such Person's
capital stock, and any warrants, options or similar rights to acquire such
capital stock.
"Common Shares" shall mean (i) the common stock, par value $.01 per
share, of the reorganized Company, as constituted on the original issuance of
the Warrants, (ii) any Capital Stock into which such Common Shares may
thereafter be changed and (iii) except as provided in Section 5.1(b), any share
of Capital Stock of the Company of any other class issued to holders of Common
Shares upon any reclassification thereof.
"Company" shall mean the company identified in the preamble hereof, as
reorganized in accordance with the Plan, and its successors and assigns.
"Corporate Office" shall mean, (1) with respect to the Company, 2730
S.W. 3rd Avenue, Suite 800, Miami, Florida 33129-2356, or such other place as
the Company shall locate its executive offices, and (2) with respect to the
Warrant Agent, the executive offices of the Warrant Agent (or its successor) at
which at any particular time its principal business shall be administered, which
office is located as of the date hereof at 40 Wall Street, New York, NY 10005.
"Court" shall mean the United States Bankruptcy Court for the Eastern
District of Louisiana as identified in the preamble hereof.
"Current Market Price" shall mean, with respect to any security on any
date the average of the daily Market Price of such security for each Business
Day during the period commencing thirty (30) Business Days before such date and
ending on the date one Business Day prior to such date; provided, however, that
if (i) the Current Market Price per share of a security is determined during a
period following the Company's announcement of (A) a dividend or distribution on
such a security payable in shares of such a security or securities convertible
into shares of such a security, or (B) any subdivision, combination or
reclassification of such security and (ii) prior to the expiration of such
thirty (30) Business Day period before such date (or, if applicable, such lesser
number of Business Days before such date for which daily Market Prices are
available) the ex-dividend date for such dividend or distribution or the record
date for such subdivision, combination or reclassification occurs, then, in each
such case, the Current Market Price shall be properly adjusted to take into
account ex-dividend trading.
"Effective Date" shall mean _____, 1999, which is the Effective Date
specified in the Plan.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
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<PAGE> 10
"Expiration Date" shall mean the earlier of, (i) the tenth anniversary
of the Issue Date, (ii) the Expiration Notice Date, or (iii) such earlier date
as determined in accordance with Section 4.
"Expiration Notice" shall mean a notice of expiration of the Warrants
that may be given by the Company, in its sole discretion, on any date after the
fourth anniversary of the Issue Date if the Market Price has exceeded 300% of
the Warrant Price for a period of 30 consecutive Trading Days.
"Expiration Notice Date" shall mean the date 30 days after the date of
an Expiration Notice sent to Holders.
"Holder" or "Warrantholder" shall mean any Person in whose name at the
time any Warrant Certificate is registered upon the Warrant Register.
"Issue Date" shall mean ____________ [_], 1999.
"Initial Warrant Exercise Date" means the date which is the business
day on which the Warrants are issued to the Holders pursuant to the Plan.
"Market Price" at any date shall be deemed to be the last reported sale
price, or, in case no such reported sale takes place on such day, the average of
the last reported sale prices for the last three trading days, in either case as
officially reported by the principal securities exchange on which the securities
are listed or admitted to trading or by the NNM, or, if the securities are not
listed or admitted to trading on any national securities exchange or quoted by
NNM, the average closing bid price as furnished by the NASD through NNM or
similar organization if NNM is no longer reporting such information, or if the
securities are not quoted on NNM, as determined in good faith by resolution of
the Board of Directors of the Company.
"NASD" shall mean National Association of Securities Dealers, Inc.
"NNM" shall mean Nasdaq National Market.
"Non-Surviving Combination" shall mean any merger, consolidation or
other business combination by the Company with one or more other entities in a
transaction in which the Company is not the surviving entity or becomes a
wholly-owned subsidiary of another entity.
"Outstanding" shall mean, as of the time of determination, when used
with respect of any Warrants, all Warrants originally issued under this
Agreement except (i) Warrants that have been exercised pursuant to Section
3.2(a), (ii) Warrants that have expired pursuant to Sections 3.2(b), 4 or 6 and
(iii) Warrants that have otherwise been acquired by the Company; provided,
however, that in determining whether the Holders of the requisite amount of the
outstanding Warrants have given any request, demand, authorization, direction,
notice, consent or waiver under the provisions of this Agreement, Warrants owned
by the Company or any Subsidiary or Affiliate of the Company or any
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<PAGE> 11
Person that is at such time a party to a merger or acquisition agreement with
the Company shall be disregarded and deemed not to be outstanding.
"Person" shall mean any individual, corporation (including a business
trust), partnership, joint venture, association, joint-stock company, trust,
estate, limited liability company, unincorporated association, unincorporated
organization, government or agency or political subdivision thereof or any other
entity.
"Plan" shall mean the plan of reorganization as confirmed by the Court
pursuant to Chapter 11 of Title 11 of the United States Code.
"Purchasers" shall mean the initial purchasers of the Series A
Preferred Stock.
"Recipient" shall have the meaning given such term in Section 3.2(e).
"Record Date" shall mean _____, 1999, which is the Record Date
specified in the Plan.
"Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
"Series A Preferred Stock" shall mean the Company's 14% Series A
Cumulative Preferred Stock.
"Subsidiary" shall mean, with respect to any Person, any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of such Person or a combination
thereof.
"Trading Day" means any day on which the Common Shares of the Company
are traded or quoted on a U.S. securities exchange or quotation system.
"Warrant Certificates" shall mean those certain warrant certificates
evidencing the Warrants, substantially in the form of Exhibit A attached hereto.
"Warrant Legend" shall mean the legend set forth in Section 2.4(a).
"Warrant Price" shall mean the exercise price per Warrant Share,
initially set at $10.00, subject to adjustment as provided in Section 5.1(f).
"Warrant Register" shall have the meaning given such term in Section 8.
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<PAGE> 12
"Warrant Shares" shall mean the Common Shares issuable upon exercise of
the Warrants, the number and nature of which are subject to adjustment from time
to time in accordance with Section 5.
"Warrants" shall mean the 1,800,000 Warrants to purchase an aggregate
of 1,800,000 Common Shares from the Company at the Warrant Price, subject to the
terms and conditions described herein and subject to adjustment pursuant to
Section 5, and each "Warrant" shall represent the right to purchase one Common
Share of the Company at the Warrant Price, subject to the terms and conditions
described herein and subject to adjustment pursuant to Section 5.
2. WARRANT CERTIFICATES
2.1 Issuance of Warrants. (a) Upon the execution of this Agreement, the
Company will execute and deliver to the Warrant Agent one or more Warrant
Certificates representing the number of Warrants issued pursuant to the Plan.
Upon written order of the Company signed by its Chairman or President, or a Vice
President and its Secretary, the Warrant Agent shall countersign, issue and
deliver the Warrants in accordance with the Plan for the consideration set forth
in the Plan. Each Warrant Certificate issued pursuant to this Section 2.1 shall
evidence the number of Warrants specified therein, and each Warrant evidenced
thereby shall represent the right, subject to the provisions contained herein
and in the Warrant Certificate, to purchase one Warrant Share, subject to
adjustment as provided in Section 5.
(b) From time to time, up to the Expiration Date, the Warrant Agent
shall countersign and deliver Warrant Certificates in required whole number
denominations to the persons entitled thereto in connection with any
replacement, transfer, exchange, adjustment or other issuance permitted under
this Agreement; provided that no Warrant Certificates shall be issued except (i)
those initially issued hereunder; (ii) those issued on or after the Initial
Warrant Exercise Date, upon the exercise of fewer than all Warrants represented
by any Warrant Certificate, to evidence any unexercised Warrants held by the
exercising Holder; (iii) those issued upon any transfer or exchange pursuant to
Section 2.4 hereof; (iv) those issued in replacement of lost, stolen, destroyed
or mutilated Warrant Certificates pursuant to Section 6 hereof; and (v) at the
option of the Company, in such form may be approved by the Board of Directors,
to reflect any reasonable adjustment or change in the Warrant Price, the number
of shares of Common Stock purchasable upon exercise of the Warrants as provided
in Section 5 hereof.
2.2 Form, Denomination and Date of Warrants.
(a) Warrant Certificates shall be substantially in the form of
Exhibit A hereto. The Warrant Certificates shall be numbered, lettered or
otherwise distinguished in such manner as the officers of the Company executing
the same may determine. Each Warrant Certificate shall be dated the date of its
execution. Any of the Warrant Certificates may be issued with appropriate
insertions, omissions, substitutions and variations, and may have imprinted or
otherwise reproduced
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<PAGE> 13
thereon such legend or legends, as may be required to comply with any law or
with any rules or regulations pursuant thereto, or with the rules of any
securities market in which the Warrants or Common Shares are admitted to
trading, or to the extent not inconsistent with the provisions of this
Agreement, to conform to general usage. All Warrants shall be otherwise
substantially identical except as to denomination and as provided herein.
(b) Each Warrant Certificate issued pursuant to this Agreement
will bear the Restricted Warrant Legend unless removed in accordance with
Section 2.4.
2.3 Execution and Delivery of Warrant Certificates.
(a) Warrant Certificates evidencing the Warrants which may be
delivered under this Agreement are limited to Warrant Certificates evidencing
1,800,000 Warrants, except for Warrant Certificates delivered pursuant to
Sections 2.4, 3.2(d), 6 and 8 upon registration of transfer of, or in exchange
for, or in lieu of, one or more previously issued Warrant Certificates and as
may be necessary to reflect the adjustments required by Section 5.
(b) At any time and from time to time on or after the date of
this Agreement, Warrant Certificates evidencing the Warrants may be executed and
delivered by the Company for issuance upon transfer of Warrants pursuant to the
provisions of Section 2.4.
(c) The Warrant Certificates shall be executed in the
corporate name and on behalf of the Company by the Chairman (or any Co-Chairman)
of the Board, the Chief Executive Officer, the President or any one of the Vice
Presidents of the Company under corporate seal reproduced thereon and attested
to by the Secretary or one of the Assistant Secretaries of the Company, either
manually or by facsimile signature printed thereon. Warrant Certificates shall
be manually countersigned by the Warrant Agent and shall not be valid for any
purpose unless so countersigned. In case any officer of the Company whose
signature shall have been placed upon any of the Warrant Certificates shall
cease to be such officer of the Company before the date of issuance thereof, or
before the countersignature by the Warrant Agent and issue and delivery thereof,
such Warrant Certificates may, nevertheless, be countersigned by the Warrant
Agent issued and delivered with the same force and effect 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 such person as, at the actual date of
the execution of such Warrant Certificate, shall be a proper officer of the
Company, although at the date of the execution of this Agreement any such person
was not such an officer. After countersignature by the Warrant Agent, Warrant
Certificates shall be delivered by the Warrant Agent to the Holder without
further action by the Company, except as otherwise provided in this Agreement.
2.4 Legend; Transfer and Exchange.
(a) Each Warrant Certificate and each certificate representing
Warrant Shares shall bear the following legend (the "Warrant Legend"):
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<PAGE> 14
THE WARRANT REPRESENTED BY THIS CERTIFICATE AND THE OTHER
SECURITIES ISSUABLE UPON EXERCISE THEREOF ARE EXEMPT FROM THE
REGISTRATION AND QUALIFICATION REQUIREMENTS OF FEDERAL AND
STATE SECURITIES LAWS PURSUANT TO SECTION 1145 OF THE
BANKRUPTCY CODE AS SECURITIES ISSUED BY A DEBTOR PURSUANT TO A
PLAN OF REORGANIZATION APPROVED BY THE BANKRUPTCY COURT.
THE WARRANT REPRESENTED BY THIS CERTIFICATE AND THE OTHER
SECURITIES ISSUABLE UPON EXERCISE THEREOF ARE SUBJECT TO THE
CONDITIONS SPECIFIED IN THE WARRANT AGREEMENT, DATED
__________ __, 1999, AMONG THE COMPANY AND THE WARRANT AGENT.
A COPY OF THE WARRANT AGREEMENT IS ON FILE AT THE OFFICES OF
FORCENERGY INC. THE HOLDER OF THIS CERTIFICATE, BY ACCEPTANCE
OF THIS CERTIFICATE, AGREES TO BE BOUND BY THE PROVISIONS OF
THE WARRANT AGREEMENT.
(b) If a Holder of a Warrant wishes at any time to transfer
such Warrant to a Person who wishes to take delivery thereof, such Holder may,
subject to the restrictions on transfer set forth herein, cause the exchange of
such Warrant for one or more Warrants exercisable for the same aggregate number
of Warrant Shares. Upon receipt by the Warrant Agent at its Corporate Office of
(1) such Warrant, duly endorsed as provided herein, and (2) instructions from
such Holder directing the Company to execute and deliver one or more Warrants
exercisable for the same aggregate number of Warrant Shares as the Warrant to be
exchanged, such instructions to contain the name or names of the designated
transferee or transferees, the authorized denomination or denominations of the
Warrants to be so issued and appropriate delivery instructions, then the Company
shall cancel or cause to be canceled such Warrant and, concurrently therewith,
the Company shall execute, and the Warrant Agent shall countersign, issue and
deliver one or more Warrants to the effect set forth therein, in accordance with
the instructions referred to above.
(c) No service charge shall be made to a Holder for any
registration of transfer or exchange; provided, however, that 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 registration of transfer or
exchange of Warrant Certificates.
3. EXERCISE AND EXPIRATION OF WARRANTS
3.1 Right to Acquire Warrant Shares Upon Exercise. Each Warrant
Certificate shall entitle the Holder thereof, subject to the provisions thereof
and of this Agreement, to acquire from the Company, for each Warrant evidenced
thereby, one Warrant Share at the Warrant Price, subject
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<PAGE> 15
to adjustment as provided in Section 5.1. The Warrants are exercisable at any
time on and after the earlier of the date (i) the Company has obtained a
no-action letter from the staff of the U.S. Securities and Exchange Commission
confirming the issuance of the Common Stock upon the exercise of the Warrants
and subsequent resales will be exempt from registration under the Securities Act
pursuant to Section 1145 of the Bankruptcy Code, (ii) the Company has
determined, on advice of counsel, that an applicable exemption from registration
exists or that registration of the issuance and resales of such Common Stock is
unnecessary and (iii) the effectiveness of a registration statement filed by the
Company covering the offer and sale of the Common Stock pursuant to the Warrants
(subject to the effectiveness and availability of the registration statement),
until on or prior to the Expiration Date.
In the event the Company (x) does not obtain such no-action letter, or
the staff of the U.S. Securities and Exchange Commission does not confirm that
such issuance and resales of Common Stock will be exempt from registration under
the Securities Act pursuant to Section 1145 of the Bankruptcy Code, or (y) does
not make any such determination with respect to an exemption from or requirement
for registration, the Company will file a shelf registration statement to
register the continuous offer and sale of the Common Stock, which registration
statement will be effective within one year from the Issue Date; provided, the
Company may suspend the use of such registration statement at such time or times
as there may be material non-public information that requires the Company to
amend such registration statement or make filings with the Securities and
Exchange Commission that are incorporated by reference in the registration
statement to make the statements contained in the registration statement, in the
light of the circumstances under which the registration statement and the
prospectus contained therein are used, not misleading; provided further, that
the Company shall use its reasonable best efforts to file any amendment or
filings with the Securities and Exchange Commission as promptly as practicable
to terminate the suspension of the use of the registration statement if and when
such registration statement is suspended.
3.2 Exercise and Expiration of Warrants.
(a) Exercise of Warrants. Subject to the terms and conditions
set forth herein, including, without limitation, the exercise procedure
described in Section 3.2(c), a Holder of a Warrant Certificate may exercise all
or any whole number of the Warrants evidenced thereby, on any Business Day on
and after the earlier of the date (i) the Company has obtained a no-action
letter from the staff of the U.S. Securities and Exchange Commission confirming
the issuance of the Common Stock upon the exercise of the Warrants and
subsequent resales will be exempt from registration under the Securities Act
pursuant to Section 1145 of the Bankruptcy Code, (ii) the Company has
determined, on advice of counsel, that an applicable exemption from registration
exists or that registration of the issuance and resales of such Common Stock is
unnecessary and (iii) the effectiveness of a registration statement filed by the
Company covering the offer and sale of the Common Stock pursuant to the
Warrants, until 5:00 p.m., New York, New York time, on the Expiration Date
(subject to earlier expiration pursuant to Section 4) for the Warrant Shares
purchasable thereunder.
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<PAGE> 16
(b) Expiration of Warrants. The Warrants shall terminate and
become void as of 5:00 p.m., New York, New York time, on the Expiration Date,
subject to earlier expiration in accordance with Section 4. In the event that
the Warrants are to expire by reason of Section 4, the term "Expiration Date"
shall mean such earlier date for all purposes of this Agreement.
(c) Method of Exercise. The Holder may exercise all or any
whole number of the Warrants by either of the following methods:
(i) The Holder may deliver to the Warrant Agent at
its Corporate Office (A) a written notice of such Holder's
election to exercise Warrants, duly executed by such Holder in
the form set forth on the reverse of, or attached to, such
Warrant Certificate, which notice shall specify the number of
Warrant Shares to be purchased, (B) the Warrant Certificate
evidencing such Warrants and (C) a sum equal to the aggregate
Warrant Price for the Warrant Shares into which such Warrants
are being exercised, which sum shall be paid in any
combination elected by such Holder of (x) a certified or
official bank check payable to the order of the Company and
delivered to the Warrant Agent at its Corporate Office (which
the Warrant Agent shall transfer to the Company on the next
Business Day after receipt), or (y) wire transfers in
immediately available funds to the account of the Company at
such banking institution as the Company shall have given
notice to the Warrant Agent and the Holders in accordance with
Section 10.1(b); or
(ii) The Holder may also exercise all or any of the
Warrants in a "cashless" or "net-issue" exercise by delivering
to the Company at the Corporate Office (A) a written notice of
such Holder's election to exercise Warrants, duly executed by
such Holder in the form set forth on the reverse of, or
attached to, such Warrant Certificate, which notice shall
specify the number of Warrant Shares to be delivered to such
Holder and the number of Warrant Shares with respect to which
such Warrants are being surrendered in payment of the
aggregate Warrant Price for the Warrant Shares to be delivered
to the Holder, and (B) the Warrant Certificate evidencing such
Warrants. For purposes of this subparagraph (ii), each Warrant
Share as to which such Warrants are surrendered in payment of
the aggregate Warrant Price will be attributed a value equal
to (x) the Market Price per share of Common Shares minus (y)
the then-current Warrant Price. Solely for the purpose of this
paragraph, the Market Price shall be calculated as the average
of the Market Prices for each of the ten trading days
preceding the date the notice of exercise is delivered to the
Warrant Agent.
(d) Partial Exercise. If fewer than all the Warrants
represented by a Warrant Certificate are exercised or surrendered pursuant to
the provisions of Section 3.2(c)(ii), such Warrant Certificate shall be
surrendered and a new Warrant Certificate in the same form and for the number of
Warrants which were not exercised or surrendered shall be executed by the
Company. The Company, subject to the provisions of Section 8, as may be directed
in writing by the Holder, shall
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<PAGE> 17
issue and deliver the new Warrant Certificate to the Person or Persons in whose
name such new Warrant Certificate is so registered or as may be directed in
writing by the exercising Holder.
(e) Issuance of Warrant Shares. Upon surrender of a Warrant
Certificate evidencing Warrants in conformity with the foregoing provisions and
payment of the Warrant Price in respect of the exercise of one or more Warrants
evidenced thereby, when such payment is received, the Company shall within five
Business Days after the Warrant Agent receives such notice of exercise and
payment, execute or cause to be executed and deliver or cause to be delivered to
the Recipient (as defined below) a certificate or certificates representing the
aggregate number of Warrant Shares issuable upon such exercise (based upon the
aggregate number of Warrants so exercised), determined in accordance with
Section 3.5, together with an amount in cash in lieu of any fractional share(s)
determined in accordance with Section 5.4. The certificate or certificates so
delivered shall be, to the extent possible, in such denomination or
denominations as such Holder shall request in such notice of exercise and shall
be registered or otherwise placed in the name of, and delivered to, the Holder
or, subject to Section 2.4 and Section 3.3, such other Person as shall be
designated by the Holder in such notice (the Holder or such other Person being
referred to herein as the "Recipient").
(f) Time of Exercise. A Warrant shall be deemed to have been
exercised immediately prior to the close of business on the date on which all
requirements set forth in Section 3.2(c) applicable to such exercise have been
satisfied. Subject to Section 5.1(e)(iv), certificate(s) evidencing the Warrant
Shares issued upon the exercise of such Warrant shall be deemed to have been
issued and, for all purposes of this Agreement, the Recipient shall, as between
such Person and the Company, be deemed to be and entitled to all rights of the
holder of record of such Warrant Shares as of such time.
3.3 Payment of Taxes.
The Company shall pay any and all documentary stamp taxes, if any,
attributable to the initial issuance of Warrants or the delivery of Warrant
Shares issuable upon exercise of the Warrants. The Company shall not be
required, however, to pay any tax or other charge imposed in respect of (i) any
transfer (including any transfer effected pursuant to the provisions of Section
3.2(d) or (e)) or exchange of any Warrant Certificates or any certificates for
Warrant Shares or (ii) payment of cash to any Person other than the Holder of
the Warrant Certificate surrendered upon the exercise of a Warrant, and in case
of such transfer, exchange or payment, the Company shall not be required to
issue or deliver any certificate or pay any cash until (a) such tax or charge
has been paid or an amount sufficient for the payment thereof has been delivered
to the Company or (b) it has been established to the Company's satisfaction that
any such tax or other charge that is or may become due has been paid.
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<PAGE> 18
3.4 Surrender of Certificates.
Any Warrant Certificate surrendered for exercise shall be promptly
canceled by the Company and shall not be reissued by the Company.
3.5 Shares Issuable.
The number of Warrant Shares "issuable upon exercise" of Warrants at
any time shall be the number of Warrant Shares into which such Warrants are then
exercisable. The number of Warrant Shares "into which each Warrant is
exercisable" initially shall be one share, subject to adjustment as provided in
Section 5.1.
4. DISSOLUTION, LIQUIDATION OR WINDING UP
If, on or prior to the Expiration Date, the Company (or any other
Person controlling the Company) shall effect or otherwise be subject to a
voluntary or involuntary dissolution, liquidation or winding up of the affairs
of the Company, each Holder shall receive the securities, money or other
property which such Holder would have been entitled to receive had such Holder
been the holder of record of the Warrant Shares into which the Warrants were
exercisable immediately prior to such dissolution, liquidation or winding up
(net of the then applicable Warrant Price), and the rights to exercise such
Warrants shall terminate.
If, on or prior to the Expiration Date, the Company (or any other
Person controlling the Company) shall propose a voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the Company, the
Company shall give written notice thereof to the Warrant Agent and all Holders
of Warrant Certificates in the manner provided in Section 10 prior to the date
on which such transaction is expected to become effective or, if earlier, the
record date for such transaction. Such notice shall also specify the proposed
date (if then determinable) as of which the holders of record of the Common
Shares shall be entitled to exchange their shares for moneys, securities or
other property deliverable upon such dissolution, liquidation or winding up, as
the case may be, the proposed date (if then determinable) on which each Holder
of Warrant Certificates shall be entitled to receive the moneys, securities or
other property which such Holder would have been entitled to receive had such
Holder been the holder of record of the Warrant Shares into which the Warrants
were exercisable immediately prior to such dissolution, liquidation or winding
up (net of the then applicable Warrant Price) and the date on which the rights
to exercise the Warrants shall terminate.
In case of any such voluntary or involuntary dissolution, liquidation
or winding up of the Company, the Company shall retain any moneys, securities or
other property which the Holders are entitled to receive under this Agreement.
After any Holder has surrendered a Warrant Certificate to the Company, the
Company shall make payment in the appropriate amount to such Person or Persons
as it may be directed in writing by the Holder surrendering such Warrant
Certificate. The Company shall not be required to pay interest on any money
deposited pursuant to the provisions of this Section 4.
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5. ADJUSTMENTS
5.1 Adjustments.
The number of Warrant Shares into which each Warrant is exercisable and
the Warrant Price shall be subject to adjustment from time to time after the
date hereof in accordance (and only in accordance) with the provisions of this
Section 5:
(a) Stock Dividends, Subdivisions and Combinations. In case at
any time or from time to time after the date hereof and before the Expiration
Date the Company shall:
(i) pay to all holders of outstanding Common Shares a
dividend payable in, or make any other distribution on any class of its
capital stock in, Common Shares (other than a dividend or distribution
upon a merger or consolidation or sale to which Section 5.1(g)
applies);
(ii) subdivide its outstanding Common Shares into a
larger number of Common Shares (other than a subdivision upon a merger
or consolidation or sale to which Section 5.1(g) applies); or
(iii) combine its outstanding Common Shares into a
smaller number of Common Shares (other than a combination upon a merger
or consolidation or sale to which Section 5.1(g) applies);
then, (x) in the case of any such dividend or distribution, effective
immediately after the opening of business on the day after the date for the
determination of the holders of Common Shares entitled to receive such dividend
or distribution or (y) in the case of any subdivision or combination, effective
immediately after the opening of business on the day after the date upon which
such subdivision or combination becomes effective, the number of Warrant Shares
into which each Warrant is exercisable shall be adjusted to that number of
Warrant Shares determined by (A) in the case of any such dividend or
distribution, multiplying the number of Warrant Shares into which each Warrant
is exercisable at the opening of business on the day after the date for
determination by a fraction (not to be less than one), (1) the numerator of
which shall be equal to the sum of the number of Common Shares outstanding at
the close of business on such date for determination and the total number of
shares constituting such dividend or distribution and (2) the denominator of
which shall be equal to the number of Common Shares outstanding at the close of
business on such date for determination, or (B) in the case of any such
combination, by proportionately reducing, or, in the case of any such
subdivision, by proportionately increasing, the number of Warrant Shares into
which each Warrant is exercisable at the opening of business on the day after
the date upon which such subdivision or combination becomes effective.
(b) Reclassifications. A reclassification of the Common Shares
(other than any such reclassification in connection with a merger or
consolidation or sale to which Section 5.1(g)
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<PAGE> 20
applies and other than a change in par value, or from par value to no par value,
or from no par value to par value) into Common Shares and shares of any other
class of stock shall be deemed a distribution by the Company to the holders of
its Common Shares of such shares of such other class of stock for the purposes
and within the meaning of Section 5.1(b) (and the effective time of such
reclassification shall be deemed to be "the time for the determination of the
holders of Common Shares entitled to receive such distribution" for the purposes
and within the meaning of Section 5.1(b)) and, if the outstanding number of
Common Shares shall be changed into a larger or smaller number of Common Shares
as a part of such reclassification, such change shall be deemed a subdivision or
combination, as the case may be, of the outstanding Common Shares for the
purposes and within the meaning of Section 5.1(a) (and the effective time of
such reclassification shall be deemed to be "the time as of which such
subdivision or combination becomes effective" for the purposes and within the
meaning of Section 5.1(a)).
(c) Distribution of Warrants or Other Rights to Holders of
Common Shares. In case at any time or from time to time after the date hereof
and before the Expiration Date the Company shall make a distribution to all
holders of outstanding Common Shares of any warrants, options or other rights to
subscribe for or purchase any Additional Common Shares or securities convertible
into or exchangeable for Additional Common Shares (other than a distribution of
such warrants, options or rights upon a merger or consolidation or sale to which
Section 5.1(g) applies), whether or not the rights to subscribe or purchase
thereunder are immediately exercisable, and the gross consideration per share
(computed as the gross amount of cash or the fair market value (as determined in
good faith by the Company's Board of Directors) of other assets received by the
Company before deduction of any underwriting or similar commissions,
compensation, discounts or concessions paid or allowed by the Company in
connection with such issue or sale and before deduction of any other expenses
payable in connection therewith) for which Additional Common Shares may
thereafter be issuable pursuant to such warrants or other rights shall be less
than the Current Market Price per Common Share on the date fixed for
determination of the holders of Common Shares entitled to receive such
distribution, then, and for each such case, effective immediately after the
opening of business on the day after the date for determination, the number of
Warrant Shares into which each Warrant is exercisable shall be adjusted to that
number determined by multiplying the number of Warrant Shares into which each
Warrant is exercisable immediately prior to such time for determination by a
fraction (not less than one), (i) the numerator of which shall be the number of
Common Shares outstanding immediately prior to such time for determination plus
the maximum number of Additional Common Shares issuable pursuant to all such
warrants or other rights issued in the distribution which triggered the
adjustment and (ii) the denominator of which shall be the number of Common
Shares outstanding immediately prior to such time for determination plus the
number of Common Shares that the minimum consideration received and receivable
by the Company for the issuance of such maximum number of Additional Common
Shares pursuant to the terms of such warrants or other rights would purchase at
such Current Market Price.
(d) Superseding Adjustment of Number of Warrant Shares into
Which Each Warrant is Exercisable. In case at any time after any adjustment of
the number of Warrant Shares
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<PAGE> 21
into which each Warrant is exercisable shall have been made pursuant to Section
5.1(c) on the basis of the distribution of warrants or other rights or after any
new adjustment of the number of Warrant Shares into which each Warrant is
exercisable shall have been made pursuant to this Section 5.1(d), such warrants
or rights shall expire, and all or a portion of such warrants or rights shall
not have been exercised, then, and in each such case, upon the election of the
Company such previous adjustment in respect of such warrants or rights which
have expired without exercise shall be rescinded and annulled as to any then
outstanding Warrants, and the Additional Common Shares that were deemed for
purposes of the computations set forth in Section 5.1(c) to have been issued or
sold by virtue of such adjustment in respect of such warrants or rights shall no
longer be deemed to have been distributed.
(e) Other Provisions Applicable to Adjustments under this
Section. The following provisions shall be applicable to the making of
adjustments of the number of Warrant Shares into which each Warrant is
exercisable and to the Warrant Price under this Section 5.1:
(i) Treasury Stock. The sale or other disposition of
any issued Common Shares owned or held by or for the account of the
Company shall be deemed an issuance or sale of Additional Common Shares
for purposes of this Section 5 if the gross consideration to be
received by the Company per Common Share (before reduction for any
underwriting discounts or commission or brokerage commissions) is less
than the Current Market Price. The Company shall not pay any dividend
on or make any distribution on Common Shares held in the treasury of
the Company. For the purposes of this Section 5.1, the number of Common
Shares at any time outstanding shall not include shares held in the
treasury of the Company but shall include shares issuable in respect of
scrip certificates issued in lieu of fractions of Common Shares.
(ii) When Adjustments Are to be Made. The adjustments
required by Sections 5.1(a), 5.1(b), 5.1(c) and 5.1(d) shall be made
whenever and as often as any specified event requiring an adjustment
shall occur, except that no adjustment of the Warrant Shares into which
each Warrant is exercisable that would otherwise be required shall be
made unless and until such adjustment either by itself or with other
adjustments not previously made increases or decreases the Warrant
Shares into which each Warrant is exercisable immediately prior to the
making of such adjustment by at least 1%. Any adjustment representing a
change of less than such minimum amount (except as aforesaid) shall be
carried forward and made as soon as such adjustment, together with
other adjustments required by Sections 5.1(a), 5.1(b), 5.1(c) and
5.1(d) and not previously made, would result in such minimum
adjustment.
(iii) Fractional Interests. In computing adjustments
under this Section 5, fractional interests in Common Shares shall be
taken into account to the nearest one-thousandth of a share.
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<PAGE> 22
(iv) Deferral of Issuance upon Exercise. In any case
in which this Section 5 shall require that an adjustment to the Warrant
Shares into which each Warrant is exercisable be made effective
pursuant to Section 5.1(a) or 5.1(c) prior to the occurrence of a
specified event and any Warrant is exercised after the time at which
the adjustment became effective but prior to the occurrence of such
specified event, the Company may elect to defer until the occurrence of
such specified event the issuing to the Holder of the Warrant
Certificate evidencing such Warrant (or other Person entitled thereto)
of, and may delay registering such Holder or other Person as the
recordholder of, the Warrant Shares over and above the Warrant Shares
issuable upon such exercise determined in accordance with Section 3.5
on the basis of the Warrant Shares into which each Warrant is
exercisable prior to such adjustment determined in accordance with
Section 3.5; provided, however, that the Company shall deliver to such
Holder or other person a due bill or other appropriate instrument
evidencing the right of such Holder or other Person to receive, and to
become the record holder of, such Additional Common Shares, upon the
occurrence of the event requiring such adjustment.
(f) Warrant Price Adjustment. Whenever the number of Warrant
Shares into which a Warrant is exercisable is adjusted as provided in this
Section 5.1, the Warrant Price payable upon exercise of the Warrant shall
simultaneously be adjusted by multiplying such Warrant Price immediately prior
to such adjustment by a fraction, the numerator of which shall be the number of
Warrant Shares into which such Warrant was exercisable immediately prior to such
adjustment, and the denominator of which shall be the number of Warrant Shares
into which such Warrant was exercisable immediately thereafter.
(g) Merger, Consolidation or Combination. In the event the
Company merges, consolidates or otherwise combines with or into any Person after
the date hereof and before the Expiration Date, then, as a condition of such
merger, consolidation or combination, lawful and adequate (in the good faith
judgment of the Board of Directors of the Company) provisions shall be made
whereby Holders shall, in addition to their other rights hereunder, thereafter
have the right to purchase and receive upon the basis and upon the terms and
conditions specified in this Agreement upon exercise of the Warrants and in lieu
of the Warrant Shares immediately theretofore purchasable and receivable upon
the exercise of the rights represented hereby, such shares of stock, securities
or assets as may be issued or payable with respect to or in exchange for a
number of outstanding Common Shares equal to the number of Warrant Shares
immediately theretofore purchasable and receivable upon the exercise of the
rights represented hereby, and in any such case appropriate provision shall be
made (including the execution by the Person formed by consolidation, merger or
combination of a supplemental Warrant Agreement) with respect to the rights and
interests of the Holders to the end that the provisions hereof (including,
without limitation, provisions for adjustments of the number of Warrant Shares)
shall thereafter be applicable, as nearly as may be practicable (in the good
faith judgment of the Board of Directors of the Company), in relation to any
shares of stock, securities or assets thereafter deliverable upon the exercise
hereof. This Section 5.1(g) shall similarly apply to successive consolidations,
mergers or combinations.
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<PAGE> 23
(h) Compliance with Governmental Requirements. Before taking
any action that would cause an adjustment reducing the Warrant Price below the
then par value of any of the Warrant Shares into which the Warrants are
exercisable, the Company will take any corporate action that may be necessary in
order that the Company may validly and legally issue fully paid and
non-assessable Warrant Shares at such adjusted Warrant Price.
(i) Optional Tax Adjustment. The Company may at its option, at
any time during the term of the Warrants, increase the number of Warrant Shares
into which each Warrant is exercisable, or decrease the Warrant Price, in
addition to those changes required by Section 5.1(a), 5.1(b), 5.1(c), 5.1(d) or
5.1(f), as deemed advisable by the Board of Directors of the Company, in order
that any event treated for Federal income tax purposes as a dividend of stock or
stock rights shall not be taxable to the Recipients.
(j) Warrants Deemed Exercisable. For purposes solely of this
Section 5, the number of Warrant Shares which the holder of any Warrant would
have been entitled to receive had such Warrant been exercised in full at any
time or into which any Warrant was exercisable at any time shall be determined
assuming such Warrant was exercisable in full at such time, although such
Warrant may not be exercisable in full at such time pursuant to Section 3.2(a).
5.2 Notice of Adjustment.
Whenever the number of Warrant Shares into which a Warrant is
exercisable is to be adjusted, or the Warrant Price is to be adjusted, in either
case as herein provided, the Company shall compute the adjustment in accordance
with Section 5.1, and shall, promptly after such adjustment becomes effective,
cause a notice of such adjustment or adjustments to be given to all Holders in
accordance with Section 10.1(b).
5.3 Statement on Warrant Certificates.
Irrespective of any adjustment in the number or kind of shares into
which the Warrants are exercisable, Warrant Certificates theretofore or
thereafter issued may continue to express the same price and number and kind of
shares initially issuable pursuant to this Agreement.
5.4 Fractional Interest.
The Company shall not issue fractional Warrant Shares on the exercise
of Warrants. If Warrant Certificates evidencing more than one Warrant shall be
presented for exercise at the same time by the same Holder, the number of full
Warrant Shares which shall be issuable upon such exercise thereof shall be
computed on the basis of the aggregate number of Warrants so to be exercised. If
any fraction of a Warrant Share would, except for the provisions of this Section
5.4, be issuable on the exercise of any Warrant (or specified portion thereof),
the Company shall, in lieu of issuing any fractional Warrant Shares, pay an
amount in cash calculated by it to be equal to the then Current Market Price per
Common Share on the date of such exercise multiplied by such
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<PAGE> 24
fraction computed to the nearest whole cent. The Holders, by their acceptance of
the Warrant Certificates, expressly waive their right to receive any fraction of
a Warrant Share or a stock certificate representing a fraction of a Warrant
Share.
6. LOSS OR MUTILATION
Upon (i) receipt by the Warrant Agent of evidence reasonably
satisfactory to the Warrant Agent of the ownership of and the loss, theft,
destruction or mutilation of any Warrant Certificate and such reasonable and
customary security or indemnity as may be required by the Warrant Agent and the
Company to hold the Company and the Warrant Agent harmless and (ii) surrender,
in the case of mutilation, of the mutilated Warrant Certificate to the Warrant
Agent and cancellation thereof, then, in the absence of notice to the Warrant
Agent that the Warrants evidenced thereby have been acquired by a bona fide
purchaser, the Company shall execute, and the Warrant Agent shall countersign,
issue and deliver to the registered Holder of the lost, stolen, destroyed or
mutilated Warrant Certificate, in exchange therefor or in lieu thereof, a new
Warrant Certificate of the same tenor and for a like aggregate number of
Warrants. At the written request of such registered Holder, the new Warrant
Certificate so issued shall be retained by the Company as having been
surrendered for exercise, in lieu of delivery thereof to such Holder, and shall
be deemed for purposes of Section 3.2 to have been surrendered for exercise on
the date the conditions specified in clauses (i) and (ii) of the immediately
preceding sentence were first satisfied.
Upon the issuance of any new Warrant Certificate under this Section 6,
the Company may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto.
All Warrant Certificates surrendered for exercise or for exchange in
case of mutilated Warrant Certificates shall be promptly canceled by the Warrant
Agent and thereafter retained by the Warrant Agent until termination of this
Agreement or its resignation as Warrant Agent, or disposed of or destroyed, at
the direction of the Company.
The provisions of this Section 6 are exclusive and shall preclude (to
the extent lawful) all other rights or remedies with respect to the replacement
of mutilated, lost, stolen, or destroyed Warrant Certificates.
7. RESERVATION AND AUTHORIZATION OF WARRANT SHARES
The Company shall at all times reserve and keep available, free from
preemptive rights, solely for issue upon the exercise of Warrants as herein
provided, such number of its authorized but unissued Warrant Shares deliverable
upon the exercise of Warrants as will be sufficient to permit the exercise in
full of all outstanding Warrants. The Company covenants that all Warrant Shares
will, at all times that Warrants are exercisable, be duly approved for listing
subject to official notice of issuance on each securities exchange, if any, or
the NNM, if applicable, on which the Common Shares are then listed or traded.
The Company covenants that (i) all Warrant Shares that may be
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<PAGE> 25
issued upon due exercise of Warrants shall upon issuance be duly and validly
authorized, issued and fully paid and nonassessable and free of preemptive or
similar rights and (ii) the stock certificates issued to evidence any such
Warrant Shares will comply with Section 158 of the Delaware General Corporation
Law (or its successor) and any other applicable law.
The Company hereby authorizes and directs its current and future
transfer agents for the Common Shares at all times to reserve stock certificates
for such number of authorized shares as shall be requisite for such purpose. The
Company will supply such transfer agents with duly executed stock certificates
for such purposes.
8. WARRANT TRANSFER BOOKS
Warrant Certificates may be surrendered for registration of transfer or
exchange of Warrants evidenced thereby at the Corporate Office of the Warrant
Agent. Warrant Certificates may be surrendered for exercise at the Corporate
Office of the Warrant Agent. The Warrant Agent and the Company and the Company
will give prompt written notice to all Holders of Warrant Certificates of any
change in the location of their respective Corporate Offices.
The Warrant Agent shall cause to be kept at its Corporate Office a
warrant register (the "Warrant Register") in which, subject to such reasonable
regulations as it may prescribe and such regulations as may be prescribed by
applicable law, the Company shall provide for the registration of Warrant
Certificates and of transfers or exchanges of Warrant Certificates as herein
provided.
Subject to the provisions of Sections 2.4, 3.2 and 3.3, upon surrender
for registration of transfer of any Warrant Certificate at the Corporate Office
of the Warrant Agent, the Company shall execute, and the Warrant Agent shall
countersign, issue and deliver, in the name of the designated transferee or
transferees, one or more new Warrant Certificates evidencing a like aggregate
number of Warrants.
Subject to Section 2.4, (i) at the option of the Holder, Warrant
Certificates may be exchanged at the Corporate Office of the Warrant Agent upon
payment of the charges herein provided for other Warrant Certificates evidencing
a like aggregate number of Warrants and (ii) whenever any Warrant Certificates
are so surrendered for exchange, the Company shall execute, and the Warrant
Agent shall countersign, issue and deliver the Warrant Certificates of the same
tenor and evidencing the same number of Warrants as evidenced by the Warrant
Certificates surrendered by the Holder making the exchange.
All Warrant Certificates issued upon any registration of transfer or
exchange of Warrant Certificates shall be the valid obligations of the Company,
evidencing the same obligations, and entitled to the same benefits under this
Agreement, as the Warrant Certificates surrendered for such registration of
transfer or exchange.
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Subject to Section 2.4, every Warrant Certificate surrendered for
registration of transfer or exchange shall (if so required by the Warrant Agent
or the Company) be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Warrant Agent or the Company, duly executed
by the Holder thereof or his attorney duly authorized in writing with signature
guarantees by an acceptable participant in a recognized Medallion program.
9. WARRANT HOLDERS
9.1 Voting or Dividend Rights.
Prior to the exercise of the Warrants, except as may be specifically
provided for herein, (i) no Holder of a Warrant Certificate, as such, shall be
entitled to any of the rights of a holder of Common Shares, including, without
limitation, the right to vote at or to receive any notice of any meetings of
stockholders of the Company; (ii) the consent of any Holder shall not be
required with respect to any action or proceeding of the Company; (iii) except
as provided in Section 4, no Holder, by reason of the ownership or possession of
a Warrant or the Warrant Certificate representing the same, shall have any right
to receive any stock dividends, allotments or rights or other distributions
paid, allotted or distributed or distributable to the stockholders of the
Company prior to, or for which the relevant record date preceded, the date of
the exercise of such Warrant; and (iv) no Holder shall have any right not
expressly conferred by this Agreement or Warrant Certificate held by such
Holder.
9.2 Rights of Action.
All rights of action against the Company in respect of this Agreement
are vested in the Holders of the Warrant Certificates, and any Holder of any
Warrant Certificate, without the consent of the Holder of any other Warrant
Certificate, may, on such Holder's own behalf and for such Holder's own benefit,
enforce and may institute and maintain any suit, action or proceeding against
the Company suitable to enforce, or otherwise in respect of, such Holder's right
to exercise, exchange or tender for purchase such Holder's Warrants in the
manner provided in this Agreement.
9.3 Treatment of Holders of Warrant Certificates.
Every Holder of a Warrant Certificate, by accepting the same, consents
and agrees with the Company and with every subsequent holder of such Warrant
Certificate that, prior to due presentment of such Warrant Certificate for
registration of transfer, the Company and any agent of the Company may treat the
Person in whose name the Warrant Certificate is registered as the owner thereof
for all purposes and as the Person entitled to exercise the rights granted under
the Warrants represented by such Warrant Certificate, and neither the Company,
the Warrant Agent nor any other agent of the Company shall be affected by any
notice to the contrary.
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9.4 Communications to Holders.
(a) If any Holder of a Warrant Certificate applies in writing
to the Company and such application states that the applicant desires to
communicate with other Holders with respect to its rights under this Agreement
or under the Warrants, then the Company shall, within five (5) Business Days
after the receipt of such application, and upon payment to the Company by such
applicant of the reasonable expenses of preparing such list, provide to such
applicant a list of the names and addresses of all Holders of Warrant
Certificates as of the most recent practicable date.
(b) Every Holder of Warrant Certificates, by receiving and
holding the same, agrees with the Company that neither the Company nor any agent
of the Company shall be held accountable by reason of the disclosure of any such
information as to the names and addresses of the Holders in accordance with
Section 9.4(a).
10. NOTICES
10.1 Notices Generally.
(a) Any request, notice, direction, authorization, consent,
waiver, demand or other communication required, permitted or authorized by this
Agreement to be made upon, given or furnished to or filed with the Company or
the Warrant Agent by the other party hereto or by any Holder shall be sufficient
for every purpose hereunder if in writing (including telecopy communication) and
telecopied or delivered by hand (including by courier service) as follows:
If to the Company, to it at:
Forcenergy Inc
2730 S.W. 3rd Avenue
Suite 800
Miami, Florida 33129-2356
Attention: Chief Financial Officer
Telecopy No.: (305) 856-8500
(or such other address as shall have been set forth in a
notice delivered in accordance with this Section 10.1(a)).
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If to the Warrant Agent, to:
American Stock Transfer & Trust Company
40 Wall Street, 46th Fl.
New York, NY 10005
Attention:Executive Vice President
Telecopy No.: (718) 236-4588
All such communications shall, when so telecopied or delivered by hand,
be effective when telecopied with confirmation of receipt or received by the
addressee, respectively.
Any Person that telecopies any communication hereunder to any Person
shall, on the same date as such telecopy is transmitted, also send, by first
class mail, postage prepaid and addressed to such Person as specified above, an
original copy of the communication so transmitted.
(b) Where this Agreement provides for notice to Holders of any
event, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage prepaid, to
each Holder affected by such event, at the address of such Holder as it appears
in the Warrant Register, not later than the latest date (if any), and not
earlier than the earliest date (if any), prescribed for the giving of such
notice. In any case where notice to Holders is given by mail, neither the
failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders. Where this Agreement provides for notice in any manner, such
notice may be waived in writing by the Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification as shall be made by a method reasonably approved in good
faith by the Company as one which would be most reliable under the circumstances
for successfully delivering the notice to the addressees shall constitute a
sufficient notification for every purpose hereunder.
10.2 Required Notices to Holders.
In case the Company shall propose (i) to pay any dividend payable in
stock of any class to the holders of its Common Shares, to pay a dividend or
distribution payable otherwise than in cash, or a cash dividend or distribution
payable otherwise than out of current or retained earnings or other
extraordinary cash dividend, or to make any other distribution to the holders of
its Common Shares for which an adjustment is required to be made pursuant to
Section 5, (ii) to distribute to all holders of its outstanding Common Shares
rights to subscribe for or to purchase any Additional Common Shares or shares of
stock of any class or any other securities, rights or options, (iii) to effect
any reclassification of its Common Shares, (iv) to effect any transaction
described in Section 5.1(g) or (v) to effect the liquidation, dissolution or
winding up of the Company or a sale of all or substantially
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<PAGE> 29
all of its assets, then, and in each such case, the Company shall give to each
Holder of a Warrant Certificate, in accordance with Section 10.1(b), a notice of
such proposed action or event. Such notice shall specify (x) the date on which a
record is to be taken for the purposes of such dividend or distribution; and (y)
the date on which the Company expects such reclassification, transaction, event,
liquidation, dissolution or winding up to become effective and the date as of
which the Company expects that holders of Common Shares of record will be
entitled to exchange their Common Shares for securities, cash or other property
deliverable upon such reclassification, transaction, event, liquidation,
dissolution or winding up. Such notice shall be given, in the case of any action
covered by clause (i) or (ii) above, at least fifteen (15) days prior to the
record date for determining holders of the Common Shares for purposes of such
action or, in the case of any action covered by clauses (iii) through (v), at
least twenty (20) days prior to the applicable effective or expiration date
specified above or, in any such case, prior to such earlier time as notice
thereof shall be required to be given pursuant to Rule 10b-17 under the Exchange
Act, if applicable.
If at any time the Company shall cancel any of the proposed
transactions for which notice has been given under this Section 10.2 prior to
the consummation thereof, the Company shall give each Holder prompt notice of
such cancellation in accordance with Section 10.1(b) hereof.
11. APPLICABLE LAW
THIS AGREEMENT, EACH WARRANT CERTIFICATE ISSUED HEREUNDER, EACH WARRANT
EVIDENCED THEREBY AND ALL RIGHTS ARISING HEREUNDER SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING
EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS TO THE EXTENT THE APPLICATION OF THE
LAW OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
12. PERSONS BENEFITTING
This Agreement shall be binding upon and inure to the benefit of the
Company, the Warrant Agent, and their respective successors and assigns and the
Holders from time to time. Nothing in this Agreement is intended or shall be
construed to confer upon any Person, other than the Company, the Warrant Agent
and the Holders, any right, remedy or claim under or by reason of this Agreement
or any part hereof. Each Holder, by acceptance of a Warrant Certificate, agrees
to all of the terms and provisions of this Agreement applicable thereto.
13. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of
which shall for all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same instrument.
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14. AMENDMENTS
This Agreement may be amended by the Company only with the consent of
the Holders of a majority of the then outstanding Warrants. Notwithstanding the
foregoing, the consent of each Holder of a Warrant affected shall be required
for any amendment pursuant to which the Warrant Price would be increased or the
number of Warrant Shares purchasable upon exercise of Warrants would be
decreased (other than pursuant to adjustments provided for herein).
Upon execution and delivery of any amendment pursuant to this Section
14, such amendment shall be considered a part of this Agreement for all purposes
and every Holder of a Warrant Certificate theretofore or thereafter delivered
hereunder shall be bound thereby.
Promptly after the execution by the Company of any such amendment, the
Company shall give notice to the Holders, setting forth in general terms the
substance of such amendment, in accordance with the provisions of Section
10.1(b). Any failure of the Company to mail such notice or any defect therein,
shall not, however, in any way impair or affect the validity of any such
amendment.
15. INSPECTION
The Company may require each Holder to submit his Warrant Certificate
for inspection by the Company.
16. SUCCESSOR TO THE COMPANY
So long as Warrants remain outstanding, the Company will not enter into
any Non-Surviving Combination unless the acquirer (or its parent company under
any triangular acquisition) shall expressly assume by a supplemental agreement,
executed and delivered to the Company, in form reasonably satisfactory to the
Company, the due and punctual performance of every covenant of this Agreement on
the part of the Company to be performed and observed and shall have provided for
exercise rights in accordance with Section 5.1(g). Upon the consummation of such
Non-Surviving Combination, the acquirer (or its parent company under any
triangular acquisition) shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Agreement with the
same effect as if such acquirer (or its parent company under any triangular
acquisition) had been named as the Company herein.
17. ENTIRE AGREEMENT
This Agreement sets forth the entire agreement of the parties hereto as
to the subject matter hereof and supersedes all previous agreements among all or
some of the parties hereto with respect thereto, whether written, oral or
otherwise.
-23-
<PAGE> 31
18. HEADINGS
The descriptive headings of the several Sections of this Agreement are
inserted for convenience and shall not control or affect the meaning or
construction of any of the provisions hereof.
-24-
<PAGE> 32
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
FORCENERGY INC
By:
-------------------------------------
Stig Wennerstrom
President and Chief Executive Officer
-25-
<PAGE> 33
EXHIBIT A
FORM OF FACE OF WARRANT CERTIFICATE
THE WARRANT REPRESENTED BY THIS CERTIFICATE [AND THE OTHER SECURITIES
ISSUABLE UPON EXERCISE THEREOF] ARE EXEMPT FROM THE REGISTRATION AND
QUALIFICATION REQUIREMENTS OF FEDERAL AND STATE SECURITIES LAWS
PURSUANT TO SECTION 1145 OF THE BANKRUPTCY CODE AS SECURITIES ISSUED BY
A DEBTOR PURSUANT TO A PLAN OF REORGANIZATION APPROVED BY THE
BANKRUPTCY COURT.
THE WARRANT REPRESENTED BY THIS CERTIFICATE AND THE OTHER
SECURITIES ISSUABLE UPON EXERCISE THEREOF ARE SUBJECT TO THE
CONDITIONS SPECIFIED IN THE WARRANT AGREEMENT, DATED
__________ __, 1999, AMONG THE COMPANY AND THE WARRANT AGENT.
A COPY OF THE WARRANT AGREEMENT IS ON FILE AT THE OFFICES OF
FORCENERGY INC. THE HOLDER OF THIS CERTIFICATE, BY ACCEPTANCE
OF THIS CERTIFICATE, AGREES TO BE BOUND BY THE PROVISIONS OF
THE WARRANT AGREEMENT.
FORCENERGY INC
WARRANT CERTIFICATE
EVIDENCING
WARRANTS TO PURCHASE COMMON SHARES
EXERCISABLE ON OR BEFORE
5:00 P.M. NEW YORK,
NEW YORK TIME,
ON
__________ [ ], [200__]
(OR ON AN EARLIER EXPIRATION NOTICE DATE AFTER DELIVERY
BY THE COMPANY OF AN EXPIRATION NOTICE AFTER _______, 200___)
No. Warrants
--------------- ----------------
THIS CERTIFIES THAT, for value received, ______________________________
___________________________, or registered assigns, is the registered owner of
______________________ Warrants to Purchase Common Shares of Forcenergy Inc, a
Delaware
A-1
<PAGE> 34
corporation (the "Company," which term includes any successor thereto under the
Warrant Agreement), and is entitled, subject to and upon compliance with the
provisions hereof and of the Warrant Agreement, at such Holder's option, at any
time when the Warrants evidenced hereby are exercisable, to purchase from the
Company one Warrant Share for each Warrant evidenced hereby, at the purchase
price of $[_______] per share (as adjusted from time to time, the "Warrant
Price"), payable in full at the time of purchase, the number and nature of
Warrant Shares into which and the Warrant Price at which each Warrant shall be
exercisable, each being subject to adjustment as provided in Section 5 of the
Warrant Agreement.
The Holder of this Warrant Certificate may exercise all or any whole
number of the Warrants evidenced hereby, on any Business Day on and after the
earlier of the date (i) the Company has obtained a no-action letter from the
staff of the U.S. Securities and Exchange Commission confirming the issuance of
the Common Stock upon the exercise of the Warrants and subsequent resales will
be exempt from registration under the Securities Act pursuant to Section 1145 of
the Bankruptcy Code, (ii) the Company has determined, on advice of counsel, that
an applicable exemption from registration exists or that registration of the
issuance and resales of such Common Stock is unnecessary and (iii) the
effectiveness of a registration statement filed by the Company covering the
offer and sale of the Common Stock pursuant to the Warrants (subject to the
effectiveness and availability of the registration statement), until 5:00 p.m.,
New York, New York time, on the earlier of (x) __________ [ ], 2009, (y) the
date 30 days after the date of an "Expiration Notice", which means a notice of
expiration of the Warrants that may be given by the Company, in its sole
discretion, on any date after the fourth anniversary of the Issue Date if the
Market Price has exceeded 300% of the Warrant Price for a period of 30
consecutive Trading Days, and (z) any earlier expiration date pursuant to
Section 4 of the Warrant Agreement (the "Expiration Date") for the Warrant
Shares purchasable hereunder.
Reference is hereby made to the further provisions of this Warrant
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
A-2
<PAGE> 35
IN WITNESS WHEREOF, the Company has caused this certificate to be duly
executed under its corporate seal.
FORCENERGY INC
[SEAL] By:
---------------------------------
Name: Stig Wennerstrom
Title: Chief Executive Officer
ATTEST:
- -----------------------------
Name:
Title:
Dated: [ ], 1999
---------
COUNTERSIGNED:
AMERICAN STOCK TRANSFER & TRUST COMPANY
By:
--------------------------
Name:
Title:
A-3
<PAGE> 36
[FORM OF REVERSE OF WARRANT CERTIFICATE]
FORCENERGY INC
WARRANT CERTIFICATE
EVIDENCING
WARRANTS TO PURCHASE COMMON SHARES
1. General.
Each Warrant evidenced hereby is one of a duly authorized issue of
Warrants of the Company designated as its Warrants to Purchase Common Shares
("Warrants"), limited in aggregate number to 1,800,000 Warrants and 1,800,000
Common Shares (subject to adjustment pursuant to Section 5 of the Warrant
Agreement) issued under and in accordance with the Warrant Agreement, dated as
of __________ [ ], 1999 (the "Warrant Agreement"), between the Company and the
Warrant Agent, to which Warrant Agreement and all amendments thereto reference
is hereby made for a statement of the respective rights, limitations of rights,
duties and immunities thereunder of the Company, the Warrant Agent, the Holders
of this Warrant Certificate and the owners of the Warrants evidenced hereby. A
copy of the Warrant Agreement is available during normal business hours at the
Corporate Office of the Company for inspection by the Holder hereof.
In the event of the exercise of less than all of the Warrants evidenced
hereby, a new Warrant Certificate in the same form and for the number of
Warrants which are not exercised shall be issued by the Company in the name or
upon the written order of the Holder of this Warrant Certificate upon the
cancellation hereof.
All Warrant Shares issuable by the Company upon the exercise of
Warrants shall, upon such issuance, be duly authorized, validly issued, fully
paid and nonassessable and free of preemptive or similar rights.
The Company shall pay any and all documentary stamp taxes, if any,
attributable to the initial issuance of Warrants or the delivery of Warrant
Shares issuable upon exercise of the Warrants. The Company shall not be required
to pay any tax or other charge imposed in respect of (i) any transfer (including
any transfer effected pursuant to the provisions of Section 3.2(d) or (e)) or
exchange of any Warrant Certificate or any certificates for Warrant Shares or
(ii) payment of cash to any Person other than the Holder of the Warrant
Certificate surrendered upon the exercise of a Warrant, and in case of such
transfer, exchange or payment, the Company shall not be required to issue or
deliver any certificate or pay any cash until (a) such tax or charge has been
paid or an amount sufficient for the payment thereof has been delivered to the
Company or (b) it has been established to the Company's satisfaction that any
such tax or other charge that is or may become due has been paid.
The Warrant Certificates are issuable only in registered form in
denominations of whole numbers of Warrants. Upon surrender at the Corporate
Office of the Warrant Agent and payment of
A-4
<PAGE> 37
the charges specified herein and in the Warrant Agreement, this Warrant
Certificate may be exchanged for Warrant Certificates in other authorized
denominations or the transfer hereof may be registered in whole or in part in
authorized denominations to one or more designated transferees, subject to the
restrictions on transfer set forth herein and in the Warrant Agreement;
provided, however, that such other Warrant Certificates issued upon exchange or
registration of transfer shall evidence the same aggregate number of Warrants as
this Warrant Certificate. The Warrant Agent shall cause to be kept at its
Corporate Office the Warrant Register in which, subject to such reasonable
regulations as the Warrant Agent may prescribe and such regulations as may be
prescribed by applicable law, the Company and the Warrant Agent shall provide
for the registration of Warrant Certificates and of transfers or exchanges of
Warrant Certificates as provided in the Warrant Agreement.
2. Expiration.
Except as provided in Section 4 of the Warrant Agreement and Section 3
of this Warrant Certificate, all outstanding Warrants shall expire and all
rights of the Holders of Warrant Certificates evidencing such Warrants shall
terminate and cease to exist, as of 5:00 p.m., New York, New York time, on the
Expiration Date. "Expiration Date" shall the earlier of (i) __________ [ ],
2009, (ii) the date 30 days after the date of an "Expiration Notice", which
means a notice of expiration of the Warrants that may be given by the Company,
in its sole discretion, on any date after the fourth anniversary of the Issue
Date if the Market Price has exceeded 300% of the Warrant Price for a period of
30 consecutive Trading Days, and (iii) any earlier expiration date pursuant to
Section 4 of the Warrant Agreement and Section 3 of this Warrant Certificate.
3. Liquidation of the Company.
If, on or prior to the Expiration Date, the Company (or any other
Person controlling the Company) shall propose or otherwise be subject to a
voluntary or involuntary dissolution, liquidation or winding up of the affairs
of the Company, each Holder shall receive the securities, money or other
property which such Holder would have been entitled to receive had such Holder
been the holder of record of the Warrant Shares into which the Warrants were
exercisable immediately prior to such dissolution, liquidation or winding up
(net of the then applicable Warrant Price), and the rights to exercise such
Warrants shall terminate.
4. Anti-Dilution Adjustments.
The number and nature of Warrant Shares issuable upon exercise of a
Warrant and the Warrant Price shall be adjusted on occurrence of certain events
as provided in the Warrant Agreement, including, without limitation, the
distribution of rights to purchase Common Shares (or securities convertible into
or exchangeable for Common Shares) at a price below the Current Market Price.
Pursuant to the Warrant Agreement, an adjustment may also be made in the event
of a combination, subdivision or reclassification of the Common Shares.
Adjustments will be made
A-5
<PAGE> 38
whenever and as often as any specified event requires an adjustment to occur in
accordance with the Warrant Agreement.
In such event, the Company will, at the request of the Holder, execute,
and the Warrant Agent shall countersign, issue and deliver a new Warrant
Certificate evidencing the adjustment in the Warrant Price and the number and/or
nature of securities or property issuable upon the exercise of the Warrants;
provided however, that the failure of the Company to execute, or the Warrant
Agent to countersign, issue and deliver such new Warrant Certificates shall not
in any way change, alter, or otherwise impair, the rights of the Holder as set
forth in the Warrant Agreement.
5. Procedure for Exercising Warrant.
Subject to the provisions hereof and of the Warrant Agreement, the
Holder of this Warrant Certificate may exercise all or any whole number of the
Warrants evidenced hereby by either of the following methods:
(A) The Holder may deliver to the Warrant Agent at its
Corporate Office (i) a written notice of such Holder's election to
exercise all or a portion of the Warrants evidenced hereby, duly
executed by such Holder in the form set forth below, which notice shall
specify the number of Warrant Shares to be purchased, (ii) this Warrant
Certificate evidencing such Warrants and (iii) a sum equal to the
aggregate Warrant Price for the Warrant Shares into which the Warrants
represented by this Warrant Certificate are being exercised, which sum
shall be paid in any combination elected by such Holder of (x) a
certified or official bank check payable to the order of the Company
and delivered to the Warrant Agent at its Corporate Office (which the
Warrant Agent shall transfer to the Company on the next Business Day
after receipt), or (y) wire transfers in immediately available funds to
the account of the Company at such banking institution as the Company
shall have given notice to the Warrant Agent and the Holders in
accordance with the Warrant Agreement; or
(B) The Holder may also exercise all or any of the Warrants in
a "cashless" or "net-issue" exercise by delivering to the Warrant Agent
at its Corporate Office (i) a written notice of such Holder's election
to exercise all or a portion of the Warrants evidenced hereby, duly
executed by such Holder in the form set forth below, which notice shall
specify the number of Warrant Shares to be delivered to such Holder and
the number of Warrant Shares with respect to which Warrants represented
by this Warrant Certificate are being surrendered in payment of the
aggregate Warrant Price for the Warrant Shares to be delivered to the
Holder, and (ii) this Warrant Certificate evidencing such Warrants. For
purposes of this subparagraph (B), each Warrant Share as to which such
Warrants are surrendered in payment of the aggregate Warrant Price will
be attributed a value equal to (x) the Market Price per share of Common
Shares minus (y) the then-current Warrant Price. Solely for the purpose
of this paragraph, the Market Price shall be calculated as the average
of the Market Prices for each of the ten trading days preceding the
date the notice of exercise is delivered to the Company.
A-6
<PAGE> 39
6. Registered Holder.
Prior to and including due presentment of this Warrant Certificate for
registration of transfer, the Company, the Warrant Agent and any other agent of
the Company may treat the Person in whose name this Warrant Certificate is
registered as the owner hereof for all purposes, and neither the Company, the
Warrant Agent nor any other agent of the Company shall be affected by notice to
the contrary.
7. Amendment.
The Warrant Agreement permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company or the Warrant Agent and the rights of the Holders of
Warrant Certificates under the Warrant Agreement at any time by the Company and
the Warrant Agent with the consent of the Holders of a majority of the then
outstanding Warrants.
8. Status as Holder.
Prior to the exercise of the Warrants, except as may be specifically
provided for in the Warrant Agreement, (i) no Holder of a Warrant Certificate,
as such, shall be entitled to any of the rights of a holder of Common Shares of
the Company, including, without limitation, the right to vote at, or to receive
any notice of, any meetings of stockholders of the Company; (ii) the consent of
any Holder shall not be required with respect to any action or proceeding of the
Company; (iii) except as provided in the Warrant Agreement with respect to the
dissolution, liquidation or winding up of the Company, no Holder, by reason of
the ownership or possession of a Warrant or the Warrant Certificate representing
the same, shall have any right to receive any stock dividends, allotments or
rights or other distributions (except as specifically provided in the Warrant
Agreement), paid, allotted or distributed or distributable to the stockholders
of the Company prior to or for which the relevant record date preceded the date
of the exercise of such Warrant; and (iv) no Holder shall have any right not
expressly conferred by the Warrant Agreement or Warrant Certificate held by such
Holder.
9. Governing Law.
THIS WARRANT CERTIFICATE, EACH WARRANT EVIDENCED HEREBY AND THE WARRANT
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF DELAWARE, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS TO
THE EXTENT THAT APPLICATION OF THE LAW OF ANOTHER JURISDICTION WOULD BE REQUIRED
THEREBY.
A-7
<PAGE> 40
10. Definitions.
All terms used in this Warrant Certificate which are defined in the
Warrant Agreement shall have the meanings assigned to them in the Warrant
Agreement.
FORM OF EXERCISE
In accordance with and subject to the terms and conditions hereof and
of the Warrant Agreement, the undersigned registered Holder of this Warrant
Certificate hereby irrevocably elects to exercise ____________________ Warrants
evidenced by this Warrant Certificate and represents that such Holder has
tendered the Warrant Price for each of the Warrants evidenced hereby being
exercised in the aggregate amount of $_________ in the indicated combination of:
(i) cash ($____________);
(ii) certified bank check in funds payable to the order
of the Company ($________);
(iii) official bank check in funds payable to the order
of the Company ($_________);
(iv) or wire transfer in immediately available funds to
the account designated by the Company for such purpose ($________); or
(v) "cashless" or "net-issue" exercise with respect to
________ Warrants pursuant to Section 3.2(c)(ii) of the Warrant
Agreement and Section 5(B) of this Warrant Certificate.
The undersigned requests that the Warrant Shares issuable upon exercise
be in fully registered form in such denominations and registered in such names
and delivered, together with any other property receivable upon exercise, in
such manner as is specified in the instructions set forth below.
If the number of Warrants exercised is less than all of the Warrants
evidenced hereby, the undersigned requests that a new Warrant Certificate
representing the remaining Warrants evidenced hereby be issued and delivered to
the undersigned unless otherwise specified in the instructions below.
A-8
<PAGE> 41
Dated: Name:
-------------------------------- ----------------------------------
(Please Print)
- --------------------------------------
(Insert Social Security or Other
Identifying Number of Holder) Address:
-------------------------------
---------------------------------------
---------------------------------------
Signature
Medallion Signature Guarantee Required:
- --------------------------
Instructions (i) as to denominations and names of Warrant Shares
issuable upon exercise and as to delivery of such securities and any other
property issuable upon exercise and (ii) if applicable, as to Warrant
Certificates evidencing unexercised Warrants:
A-9
<PAGE> 42
Assignment
(Form of Assignment To Be Executed If Holder Desires To
Transfer Warrant Certificate)
FOR VALUE RECEIVED _________________________ hereby sells, assigns and
transfers unto
Please insert social security
or other identifying number
--------------------------------
- --------------------------------------------------
(Please print name and address including zip code)
- --------------------------------------------------
the Warrants represented by the within Warrant Certificate and does hereby
irrevocably constitute and appoint _________________ Attorney, to transfer said
Warrant Certificate on the books of the within-named Company with full power of
substitution in the premises.
Dated:
------------------------------------------
Signature
(Signature must conform in all respects to
the name of the Holder as specified on the
face of the Warrant Certificate)
Medallion Signature Guarantee Required:
A-10
<PAGE> 43
EXHIBIT B
FORM OF AGREEMENT FOR FOUR-YEAR AND FIVE-YEAR WARRANTS
================================================================================
WARRANT AGREEMENT
BETWEEN
FORCENERGY INC
AND
AMERICAN STOCK TRANSFER & TRUST COMPANY,
AS WARRANT AGENT
-----------------------------------
DATED AS OF _________ [_], 1999
-----------------------------------
Warrants to Purchase 240,000 Common Shares
================================================================================
<PAGE> 44
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
AGREEMENT................................................................................1
1. DEFINITIONS.........................................................................1
2. WARRANT CERTIFICATES................................................................4
2.1 Issuance of Warrants...........................................................4
2.2 Form, Denomination and Date of Warrants........................................4
2.3 Execution and Delivery of Warrant Certificates.................................5
2.4 Legend; Transfer and Exchange..................................................5
3. EXERCISE AND EXPIRATION OF WARRANTS.................................................6
3.1 Right to Acquire Warrant Shares Upon Exercise..................................6
3.2 Exercise and Expiration of Warrants............................................6
(a) Exercise of Warrants..................................................6
(b) Expiration of Warrants................................................7
(c) Method of Exercise....................................................7
(d) Partial Exercise......................................................7
(e) Issuance of Warrant Shares............................................8
(f) Time of Exercise......................................................8
3.3 Payment of Taxes...............................................................8
3.4 Surrender of Certificates......................................................9
3.5 Shares Issuable................................................................9
4. DISSOLUTION, LIQUIDATION OR WINDING UP..............................................9
5. ADJUSTMENTS........................................................................10
5.1 Adjustments...................................................................10
(a) Stock Dividends, Subdivisions and Combinations.......................10
(b) Reclassifications....................................................10
(c) Distribution of Warrants or Other Rights to Holders of Common Shares.11
(d) Superseding Adjustment of Number of Warrant Shares into Which Each
Warrant is Exercisable...............................................11
(e) Other Provisions Applicable to Adjustments under this Section........12
(f) Warrant Price Adjustment.............................................13
(g) Merger, Consolidation or Combination.................................13
(h) Compliance with Governmental Requirements............................14
(i) Optional Tax Adjustment..............................................14
(j) Warrants Deemed Exercisable..........................................14
5.2 Notice of Adjustment..........................................................14
</TABLE>
<PAGE> 45
<TABLE>
<S> <C>
5.3 Statement on Warrant Certificates.............................................14
5.4 Fractional Interest...........................................................14
6. LOSS OR MUTILATION.................................................................15
7. RESERVATION AND AUTHORIZATION OF WARRANT SHARES....................................15
8. WARRANT TRANSFER BOOKS.............................................................16
9. WARRANT HOLDERS....................................................................17
9.1 Voting or Dividend Rights.....................................................17
9.2 Rights of Action..............................................................17
9.3 Treatment of Holders of Warrant Certificates..................................17
9.4 Communications to Holders.....................................................17
10. NOTICES............................................................................18
10.1 Notices Generally.............................................................18
10.2 Required Notices to Holders...................................................19
11. APPLICABLE LAW.....................................................................20
12. PERSONS BENEFITING.................................................................20
13. COUNTERPARTS.......................................................................20
14. AMENDMENTS.........................................................................20
15. INSPECTION.........................................................................21
16. SUCCESSOR TO THE COMPANY...........................................................21
17. ENTIRE AGREEMENT...................................................................21
18. HEADINGS...........................................................................21
</TABLE>
<PAGE> 46
EXHIBITS
A. Form of Warrant Certificate.............................................A-1
<PAGE> 47
WARRANT AGREEMENT
This WARRANT AGREEMENT, dated as of __________ [ ], 1999, is entered
into among FORCENERGY INC, a Delaware corporation (the "Company") and American
Stock Transfer & Trust Company, Inc. ("Warrant Agent").
WHEREAS, in connection with a plan of reorganization (the "Plan") as
confirmed on December __, 1999 by the United States Bankruptcy Court for the
Eastern District of Louisiana (the "Court") pursuant to Chapter 11 of Title 11
of the United States Code, the Company has agreed to issue to certain holders of
equity interests in the Company as of ____________, 1999 (the "Record Date"), an
aggregate of 240,000 Warrants, as hereinafter described, to purchase from time
to time at the Warrant Price (as defined below) an aggregate of 240,000 Common
Shares (as defined below) of the Company on and after the Initial Warrant
Exercise Date (as defined below) and on or prior to the Expiration Date (as
defined below); and
WHEREAS, the Company and the Warrant Agent desire to set forth in this
Agreement, among other things, the form and provisions of the certificates
representing the Warrants and the terms and conditions under which they may be
issued, transferred, exchanged, replaced and surrendered in connection with the
exercise of the Warrants;
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
1. DEFINITIONS
"Additional Common Shares" shall mean all Common Shares issued or
issuable by the Company after the date of this Agreement, other than the Warrant
Shares.
"Affiliate" shall mean, as to any Person, any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control of such Person. For purposes of this definition, "control" when used
with respect to any Person means the power to direct the management and policies
of such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agreement" shall mean this Warrant Agreement, as the same may be
amended, modified or supplemented from time to time.
"Business Day" shall mean a day which in New York, New York is neither
a legal holiday nor a day on which banking institutions are authorized by law or
regulation to close.
"Capital Stock" of any Person shall mean any and all shares, interests,
participations or other equivalents (however designated) of such Person's
capital stock, and any warrants, options or similar rights to acquire such
capital stock.
<PAGE> 48
"Common Shares" shall mean (i) the common stock, par value $.01 per
share, of the reorganized Company, as constituted on the original issuance of
the Warrants, (ii) any Capital Stock into which such Common Shares may
thereafter be changed and (iii) except as provided in Section 5.1(b), any share
of Capital Stock of the Company of any other class issued to holders of Common
Shares upon any reclassification thereof.
"Company" shall mean the company identified in the preamble hereof, as
reorganized in accordance with the Plan, and its successors and assigns.
"Corporate Office" shall mean, (1) with respect to the Company, 2730
S.W. 3rd Avenue, Suite 800, Miami, Florida 33129-2356, or such other place as
the Company shall locate its executive offices, and (2) with respect to the
Warrant Agent, the executive offices of the Warrant Agent (or its successor) at
which at any particular time its principal business shall be administered, which
office is located as of the date hereof at 40 Wall Street, New York, NY 10005.
"Court" shall mean the United States Bankruptcy Court for the Eastern
District of Louisiana as identified in the preamble hereof.
"Current Market Price" shall mean, with respect to any security on any
date the average of the daily Market Price of such security for each Business
Day during the period commencing thirty (30) Business Days before such date and
ending on the date one Business Day prior to such date; provided, however, that
if (i) the Current Market Price per share of a security is determined during a
period following the Company's announcement of (A) a dividend or distribution on
such a security payable in shares of such a security or securities convertible
into shares of such a security, or (B) any subdivision, combination or
reclassification of such security and (ii) prior to the expiration of such
thirty (30) Business Day period before such date (or, if applicable, such lesser
number of Business Days before such date for which daily Market Prices are
available) the ex-dividend date for such dividend or distribution or the record
date for such subdivision, combination or reclassification occurs, then, in each
such case, the Current Market Price shall be properly adjusted to take into
account ex-dividend trading.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Expiration Date" shall mean the [FOURTH][FIFTH] anniversary of the
Issue Date or such earlier date as determined in accordance with Section 4.
"Holder" shall mean any Person in whose name at the time any Warrant
Certificate is registered upon the Warrant Register.
"Initial Warrant Exercise Date" means the date which is the business
day on which the Warrants are issued to the Holders pursuant to the Plan.
"Issue Date" shall mean ____________ [ ], 1999.
-2-
<PAGE> 49
"Market Price" at any date shall be deemed to be the last reported sale
price, or, in case no such reported sale takes place on such day, the average of
the last reported sale prices for the last three trading days, in either case as
officially reported by the principal securities exchange on which the securities
are listed or admitted to trading or by the NNM, or, if the securities are not
listed or admitted to trading on any national securities exchange or quoted by
NNM, the average closing bid price as furnished by the NASD through NNM or
similar organization if NNM is no longer reporting such information, or if the
securities are not quoted on NNM, as determined in good faith by resolution of
the Board of Directors of the Company.
"NASD" shall mean National Association of Securities Dealers, Inc.
"NNM" shall mean Nasdaq National Market.
"Non-Surviving Combination" shall mean any merger, consolidation or
other business combination by the Company with one or more other entities in a
transaction in which the Company is not the surviving entity or becomes a
wholly-owned subsidiary of another entity.
"outstanding" shall mean, as of the time of determination, when used
with respect of any Warrants, all Warrants originally issued under this
Agreement except (i) Warrants that have been exercised pursuant to Section
3.2(a), (ii) Warrants that have expired pursuant to Sections 3.2(b), 4 or 6 and
(iii) Warrants that have otherwise been acquired by the Company; provided,
however, that in determining whether the Holders of the requisite amount of the
outstanding Warrants have given any request, demand, authorization, direction,
notice, consent or waiver under the provisions of this Agreement, Warrants owned
by the Company or any Subsidiary or Affiliate of the Company or any Person that
is at such time a party to a merger or acquisition agreement with the Company
shall be disregarded and deemed not to be outstanding.
"Person" shall mean any individual, corporation (including a business
trust), partnership, joint venture, association, joint-stock company, trust,
estate, limited liability company, unincorporated association, unincorporated
organization, government or agency or political subdivision thereof or any other
entity.
"Plan" shall mean the plan of reorganization as confirmed by the Court
pursuant to Chapter 11 of Title 11 of the United States Code.
"Recipient" shall have the meaning given such term in Section 3.2(e).
"Record Date" shall mean _____, 1999, which is the Record Date
specified in the Plan.
"Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
"Subsidiary" shall mean, with respect to any Person, any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled
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(without regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by such Person or one or more of the other Subsidiaries
of such Person or a combination thereof.
"Warrant Certificates" shall mean those certain warrant certificates
evidencing the Warrants, substantially in the form of Exhibit A attached hereto.
"Warrant Legend" shall mean the legend set forth in Section 2.4(a).
"Warrant Price" shall mean the exercise price per Warrant Share,
initially set at $[____], subject to adjustment as provided in Section 5.1(f).
"Warrant Register" shall have the meaning given such term in Section 8.
"Warrant Shares" shall mean the Common Shares issuable upon exercise of
the Warrants, the number and nature of which are subject to adjustment from time
to time in accordance with Section 5.
"Warrants" shall mean the 240,000 Warrants to purchase an aggregate of
240,000 Common Shares from the Company at the Warrant Price, subject to the
terms and conditions described herein and subject to adjustment pursuant to
Section 5, and each "Warrant" shall represent the right to purchase one Common
Share of the Company at the Warrant Price, subject to the terms and conditions
described herein and subject to adjustment pursuant to Section 5.
2. WARRANT CERTIFICATES
2.1 Issuance of Warrants.
(a) Upon the execution of this Agreement, the Company will execute
and deliver to the Warrant Agent one or more Warrant Certificates representing
the number of Warrants issued pursuant to the Plan. Upon written order of the
Company signed by its Chairman or President, or a Vice President and its
Secretary, the Warrant Agent shall countersign, issue and deliver the Warrants
in accordance with the Plan. Each Warrant Certificate issued pursuant to this
Section 2.1 shall evidence the number of Warrants specified therein, and each
Warrant evidenced thereby shall represent the right, subject to the provisions
contained herein and in the Warrant Certificate, to purchase one Warrant Share,
subject to adjustment as provided in Section 5.
(b) From time to time, up to the Expiration Date, the Warrant
Agent shall countersign and deliver Warrant Certificates in required whole
number denominations to the persons entitled thereto in connection with any
replacement, transfer, exchange, adjustment or other issuance permitted under
this Agreement; provided that no Warrant Certificates shall be issued except (i)
those initially issued hereunder; (ii) those issued on or after the Initial
Warrant Exercise Date, upon the exercise of fewer than all Warrants represented
by any Warrant Certificate, to evidence any unexercised Warrants held by the
exercising Holder; (iii) those issued upon any transfer or exchange
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pursuant to Section 2.4 hereof; (iv) those issued in replacement of lost,
stolen, destroyed or mutilated Warrant Certificates pursuant to Section 6
hereof; and (v) at the option of the Company, in such form may be approved by
the Board of Directors, to reflect any reasonable adjustment or change in the
Warrant Price, the number of shares of Common Stock purchasable upon exercise of
the Warrants as provided in Section 5 hereof.
2.2 Form, Denomination and Date of Warrants.
(a) Warrant Certificates shall be substantially in the form of
Exhibit A hereto. The Warrant Certificates shall be numbered, lettered or
otherwise distinguished in such manner as the officers of the Company executing
the same may determine. Each Warrant Certificate shall be dated the date of its
execution. Any of the Warrant Certificates may be issued with appropriate
insertions, omissions, substitutions and variations, and may have imprinted or
otherwise reproduced thereon such legend or legends, as may be required to
comply with any law or with any rules or regulations pursuant thereto, or with
the rules of any securities market in which the Warrants or Common Shares are
admitted to trading, or to the extent not inconsistent with the provisions of
this Agreement, to conform to general usage. All Warrants shall be otherwise
substantially identical except as to denomination and as provided herein.
(b) Each Warrant Certificate issued pursuant to this Agreement
will bear the Restricted Warrant Legend unless removed in accordance with
Section 2.4.
2.3 Execution and Delivery of Warrant Certificates.
(a) Warrant Certificates evidencing the Warrants which may be
delivered under this Agreement are limited to Warrant Certificates evidencing
240,000 Warrants, except for Warrant Certificates delivered pursuant to Sections
2.4, 3.2(d), 6 and 8 upon registration of transfer of, or in exchange for, or in
lieu of, one or more previously issued Warrant Certificates and as may be
necessary to reflect the adjustments required by Section 5.
(b) At any time and from time to time on or after the date of this
Agreement, Warrant Certificates evidencing the Warrants may be executed and
delivered by the Company for issuance upon transfer of Warrants pursuant to the
provisions of Section 2.4.
(c) The Warrant Certificates shall be executed in the corporate
name and on behalf of the Company by the Chairman (or any Co-Chairman) of the
Board, the Chief Executive Officer, the President or any one of the Vice
Presidents of the Company under corporate seal reproduced thereon and attested
to by the Secretary or one of the Assistant Secretaries of the Company, either
manually or by facsimile signature printed thereon. Warrant Certificates shall
be manually countersigned by the Warrant Agent and shall not be valid for any
purpose unless so countersigned. In case any officer of the Company whose
signature shall have been placed upon any of the Warrant Certificates shall
cease to be such officer of the Company before the date of issuance thereof, or
before the countersignature by the Warrant Agent and issue and delivery thereof,
such Warrant Certificates may, nevertheless, be countersigned by the Warrant
Agent, issued and delivered
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with the same force and effect 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 such person as, at the actual date of the execution of such
Warrant Certificate, shall be a proper officer of the Company, although at the
date of the execution of this Agreement any such person was not such an officer.
After countersignature by the Warrant Agent, Warrant Certificates shall be
delivered by the Warrant Agent to the Holder without further action by the
Company, except as otherwise provided in this Agreement.
2.4 Legend; Transfer and Exchange.
(a) Each Warrant Certificate and each certificate
representing Warrant Shares shall bear the following legend (the "Warrant
Legend"):
THE WARRANT REPRESENTED BY THIS CERTIFICATE AND THE OTHER
SECURITIES ISSUABLE UPON EXERCISE THEREOF ARE EXEMPT FROM THE
REGISTRATION AND QUALIFICATION REQUIREMENTS OF FEDERAL AND
STATE SECURITIES LAWS PURSUANT TO SECTION 1145 OF THE
BANKRUPTCY CODE AS SECURITIES ISSUED BY A DEBTOR PURSUANT TO A
PLAN OF REORGANIZATION APPROVED BY THE BANKRUPTCY COURT.
THE WARRANT REPRESENTED BY THIS CERTIFICATE AND THE OTHER
SECURITIES ISSUABLE UPON EXERCISE THEREOF ARE SUBJECT TO THE
CONDITIONS SPECIFIED IN THE WARRANT AGREEMENT, DATED
__________ __, 1999, AMONG THE COMPANY AND THE WARRANT AGENT.
A COPY OF THE WARRANT AGREEMENT IS ON FILE AT THE OFFICES OF
FORCENERGY INC. THE HOLDER OF THIS CERTIFICATE, BY ACCEPTANCE
OF THIS CERTIFICATE, AGREES TO BE BOUND BY THE PROVISIONS OF
THE WARRANT AGREEMENT.
(b) If a Holder of a Warrant wishes at any time to
transfer such Warrant to a Person who wishes to take delivery thereof, such
Holder may, subject to the restrictions on transfer set forth herein, cause the
exchange of such Warrant for one or more Warrants exercisable for the same
aggregate number of Warrant Shares. Upon receipt by the Warrant Agent at its
Corporate Office of (1) such Warrant, duly endorsed as provided herein, and (2)
instructions from such Holder directing the Company to execute and deliver one
or more Warrants exercisable for the same aggregate number of Warrant Shares as
the Warrant to be exchanged, such instructions to contain the name or names of
the designated transferee or transferees, the authorized denomination or
denominations of the Warrants to be so issued and appropriate delivery
instructions, then the Company shall cancel or cause to be canceled such Warrant
and, concurrently therewith, the Company shall execute, and the Warrant Agent
shall countersign, issue and deliver one or more Warrants to the effect set
forth therein, in accordance with the instructions referred to above.
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(c) No service charge shall be made to a Holder for any
registration of transfer or exchange; provided, however, that 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 registration of transfer or
exchange of Warrant Certificates.
3. EXERCISE AND EXPIRATION OF WARRANTS
3.1 Right to Acquire Warrant Shares Upon Exercise.
Each Warrant Certificate shall entitle the Holder thereof, subject to
the provisions thereof and of this Agreement, to acquire from the Company, for
each Warrant evidenced thereby, one Warrant Share at the Warrant Price, subject
to adjustment as provided in Section 5.1. The Warrants are exercisable at any
time on and after the Issue Date and on or prior to the Expiration Date.
3.2 Exercise and Expiration of Warrants.
(a) Exercise of Warrants. Subject to the terms and
conditions set forth herein, including, without limitation, the exercise
procedure described in Section 3.2(c), a Holder of a Warrant Certificate may
exercise all or any whole number of the Warrants evidenced thereby, on any
Business Day on and after the Issue Date until 5:00 p.m., New York, New York
time, on the Expiration Date (subject to earlier expiration pursuant to Section
4) for the Warrant Shares purchasable thereunder.
(b) Expiration of Warrants. The Warrants shall terminate
and become void as of 5:00 p.m., New York, New York time, on the Expiration
Date, subject to earlier expiration in accordance with Section 4. In the event
that the Warrants are to expire by reason of Section 4, the term "Expiration
Date" shall mean such earlier date for all purposes of this Agreement.
(c) Method of Exercise. The Holder may exercise all or
any whole number of the Warrants by either of the following methods:
(i) The Holder may deliver to the Warrant Agent
at its Corporate Office (A) a written notice of such Holder's
election to exercise Warrants, duly executed by such Holder in
the form set forth on the reverse of, or attached to, such
Warrant Certificate, which notice shall specify the number of
Warrant Shares to be purchased, (B) the Warrant Certificate
evidencing such Warrants and (C) a sum equal to the aggregate
Warrant Price for the Warrant Shares into which such Warrants
are being exercised, which sum shall be paid in any
combination elected by such Holder of (x) a certified or
official bank check payable to the order of the Company and
delivered to the Warrant Agent at its Corporate Office (which
the Warrant Agent shall transfer to the Company on the next
Business Day after receipt), or (y) wire transfers in
immediately available funds to the account of the Company at
such banking institution as the Company shall have given
notice to the Warrant Agent and the Holders in accordance with
Section 10.1(b); or
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(ii) The Holder may also exercise all or any of
the Warrants in a "cashless" or "net-issue" exercise by
delivering to the Warrant Agent at its Corporate Office (A) a
written notice of such Holder's election to exercise Warrants,
duly executed by such Holder in the form set forth on the
reverse of, or attached to, such Warrant Certificate, which
notice shall specify the number of Warrant Shares to be
delivered to such Holder and the number of Warrant Shares with
respect to which such Warrants are being surrendered in
payment of the aggregate Warrant Price for the Warrant Shares
to be delivered to the Holder, and (B) the Warrant Certificate
evidencing such Warrants. For purposes of this subparagraph
(ii), each Warrant Share as to which such Warrants are
surrendered in payment of the aggregate Warrant Price will be
attributed a value equal to (x) the Market Price per share of
Common Shares minus (y) the then-current Warrant Price. Solely
for the purpose of this paragraph, the Market Price shall be
calculated as the average of the Market Prices for each of the
ten trading days preceding the date the notice of exercise is
delivered to the Warrant Agent.
(d) Partial Exercise. If fewer than all the Warrants
represented by a Warrant Certificate are exercised or surrendered pursuant to
the provisions of Section 3.2(c)(ii), such Warrant Certificate shall be
surrendered and a new Warrant Certificate in the same form and for the number of
Warrants which were not exercised or surrendered shall be executed by the
Company. The Company, subject to the provisions of Section 8, as may be directed
in writing by the Holder, shall issue and deliver the new Warrant Certificate to
the Person or Persons in whose name such new Warrant Certificate is so
registered or as may be directed in writing by the exercising Holder.
(e) Issuance of Warrant Shares. Upon surrender of a
Warrant Certificate evidencing Warrants in conformity with the foregoing
provisions and payment of the Warrant Price in respect of the exercise of one or
more Warrants evidenced thereby, when such payment is received, the Company
shall within five Business Days after the Warrant Agent receives such notice of
exercise and payment, execute or cause to be executed and deliver or cause to be
delivered to the Recipient (as defined below) a certificate or certificates
representing the aggregate number of Warrant Shares issuable upon such exercise
(based upon the aggregate number of Warrants so exercised), determined in
accordance with Section 3.5, together with an amount in cash in lieu of any
fractional share(s) determined in accordance with Section 5.4. The certificate
or certificates so delivered shall be, to the extent possible, in such
denomination or denominations as such Holder shall request in such notice of
exercise and shall be registered or otherwise placed in the name of, and
delivered to, the Holder or, SUBJECT TO SECTION 2.4 AND SECTION 3.3, such other
Person as shall be designated by the Holder in such notice (the Holder or such
other Person being referred to herein as the "Recipient").
(f) Time of Exercise. A Warrant shall be deemed to have
been exercised immediately prior to the close of business on the date on which
all requirements set forth in Section 3.2(c) applicable to such exercise have
been satisfied. Subject to Section 5.1(e)(iv), certificate(s) evidencing the
Warrant Shares issued upon the exercise of such Warrant shall be deemed to have
been issued and, for all purposes of this Agreement, the Recipient shall, as
between
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such Person and the Company, be deemed to be and entitled to all rights of the
holder of record of such Warrant Shares as of such time.
3.3 Payment of Taxes.
The Company shall pay any and all documentary stamp taxes, if any,
attributable to the initial issuance of Warrants or the delivery of Warrant
Shares issuable upon exercise of the Warrants. The Company shall not be
required, however, to pay any tax or other charge imposed in respect of (i) any
transfer (including any transfer effected pursuant to the provisions of Section
3.2(d) or (e)) or exchange of any Warrant Certificates or any certificates for
Warrant Shares or (ii) payment of cash to any Person other than the Holder of
the Warrant Certificate surrendered upon the exercise of a Warrant, and in case
of such transfer, exchange or payment, the Company shall not be required to
issue or deliver any certificate or pay any cash until (a) such tax or charge
has been paid or an amount sufficient for the payment thereof has been delivered
to the Company or (b) it has been established to the Company's satisfaction that
any such tax or other charge that is or may become due has been paid.
3.4 Surrender of Certificates.
Any Warrant Certificate surrendered for exercise shall be promptly
canceled by the Company and shall not be reissued by the Company.
3.5 Shares Issuable.
The number of Warrant Shares "issuable upon exercise" of Warrants at
any time shall be the number of Warrant Shares into which such Warrants are then
exercisable. The number of Warrant Shares "into which each Warrant is
exercisable" initially shall be one share, subject to adjustment as provided in
Section 5.1.
4. DISSOLUTION, LIQUIDATION OR WINDING UP
If, on or prior to the Expiration Date, the Company (or any other
Person controlling the Company) shall effect or otherwise be subject to a
voluntary or involuntary dissolution, liquidation or winding up of the affairs
of the Company, each Holder shall receive the securities, money or other
property which such Holder would have been entitled to receive had such Holder
been the holder of record of the Warrant Shares into which the Warrants were
exercisable immediately prior to such dissolution, liquidation or winding up
(net of the then applicable Warrant Price), and the rights to exercise such
Warrants shall terminate.
If, on or prior to the Expiration Date, the Company (or any other
Person controlling the Company) shall propose a voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the Company, the
Company shall give written notice thereof to the Warrant Agent and all Holders
of Warrant Certificates in the manner provided in Section 10 prior to the date
on which such transaction is expected to become effective or, if earlier, the
record date for such transaction. Such
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notice shall also specify the proposed date (if then determinable) as of which
the holders of record of the Common Shares shall be entitled to exchange their
shares for moneys, securities or other property deliverable upon such
dissolution, liquidation or winding up, as the case may be, the proposed date
(if then determinable) on which each Holder of Warrant Certificates shall be
entitled to receive the moneys, securities or other property which such Holder
would have been entitled to receive had such Holder been the holder of record of
the Warrant Shares into which the Warrants were exercisable immediately prior to
such dissolution, liquidation or winding up (net of the then applicable Warrant
Price) and the date on which the rights to exercise the Warrants shall
terminate.
In case of any such voluntary or involuntary dissolution, liquidation
or winding up of the Company, the Company shall retain any moneys, securities or
other property which the Holders are entitled to receive under this Agreement.
After any Holder has surrendered a Warrant Certificate to the Company, the
Company shall make payment in the appropriate amount to such Person or Persons
as it may be directed in writing by the Holder surrendering such Warrant
Certificate. The Company shall not be required to pay interest on any money
deposited pursuant to the provisions of this Section 4.
5. ADJUSTMENTS
5.1 Adjustments.
The number of Warrant Shares into which each Warrant is exercisable and
the Warrant Price shall be subject to adjustment from time to time after the
date hereof in accordance (and only in accordance) with the provisions of this
Section 5:
(a) Stock Dividends, Subdivisions and Combinations. In
case at any time or from time to time after the date hereof and before the
Expiration Date the Company shall:
(i) pay to all holders of outstanding Common
Shares a dividend payable in, or make any other distribution on any
class of its capital stock in, Common Shares (other than a dividend or
distribution upon a merger or consolidation or sale to which Section
5.1(g) applies);
(ii) subdivide its outstanding Common Shares into
a larger number of Common Shares (other than a subdivision upon a
merger or consolidation or sale to which Section 5.1(g) applies); or
(iii) combine its outstanding Common Shares into a
smaller number of Common Shares (other than a combination upon a merger
or consolidation or sale to which Section 5.1(g) applies);
then, (x) in the case of any such dividend or distribution, effective
immediately after the opening of business on the day after the date for the
determination of the holders of Common Shares entitled to receive such dividend
or distribution or (y) in the case of any subdivision or combination,
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effective immediately after the opening of business on the day after the date
upon which such subdivision or combination becomes effective, the number of
Warrant Shares into which each Warrant is exercisable shall be adjusted to that
number of Warrant Shares determined by (A) in the case of any such dividend or
distribution, multiplying the number of Warrant Shares into which each Warrant
is exercisable at the opening of business on the day after the date for
determination by a fraction (not to be less than one), (1) the numerator of
which shall be equal to the sum of the number of Common Shares outstanding at
the close of business on such date for determination and the total number of
shares constituting such dividend or distribution and (2) the denominator of
which shall be equal to the number of Common Shares outstanding at the close of
business on such date for determination, or (B) in the case of any such
combination, by proportionately reducing, or, in the case of any such
subdivision, by proportionately increasing, the number of Warrant Shares into
which each Warrant is exercisable at the opening of business on the day after
the date upon which such subdivision or combination becomes effective.
(b) Reclassifications. A reclassification of the Common
Shares (other than any such reclassification in connection with a merger or
consolidation or sale to which Section 5.1(g) applies and other than a change in
par value, or from par value to no par value, or from no par value to par value)
into Common Shares and shares of any other class of stock shall be deemed a
distribution by the Company to the holders of its Common Shares of such shares
of such other class of stock for the purposes and within the meaning of Section
5.1(b) (and the effective time of such reclassification shall be deemed to be
"the time for the determination of the holders of Common Shares entitled to
receive such distribution" for the purposes and within the meaning of Section
5.1(b)) and, if the outstanding number of Common Shares shall be changed into a
larger or smaller number of Common Shares as a part of such reclassification,
such change shall be deemed a subdivision or combination, as the case may be, of
the outstanding Common Shares for the purposes and within the meaning of Section
5.1(a) (and the effective time of such reclassification shall be deemed to be
"the time as of which such subdivision or combination becomes effective" for the
purposes and within the meaning of Section 5.1(a)).
(c) Distribution of Warrants or Other Rights to Holders
of Common Shares. In case at any time or from time to time after the date hereof
and before the Expiration Date the Company shall make a distribution to all
holders of outstanding Common Shares of any warrants, options or other rights to
subscribe for or purchase any Additional Common Shares or securities convertible
into or exchangeable for Additional Common Shares (other than a distribution of
such warrants, options or rights upon a merger or consolidation or sale to which
Section 5.1(g) applies), whether or not the rights to subscribe or purchase
thereunder are immediately exercisable, and the gross consideration per share
(computed as the gross amount of cash or the fair market value (as determined in
good faith by the Company's Board of Directors) of other assets received by the
Company before deduction of any underwriting or similar commissions,
compensation, discounts or concessions paid or allowed by the Company in
connection with such issue or sale and before deduction of any other expenses
payable in connection therewith) for which Additional Common Shares may
thereafter be issuable pursuant to such warrants or other rights shall be less
than the Current Market Price per Common Share on the date fixed for
determination of the holders of Common Shares entitled to receive such
distribution, then, and for each such case, effective
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immediately after the opening of business on the day after the date for
determination, the number of Warrant Shares into which each Warrant is
exercisable shall be adjusted to that number determined by multiplying the
number of Warrant Shares into which each Warrant is exercisable immediately
prior to such time for determination by a fraction (not less than one), (i) the
numerator of which shall be the number of Common Shares outstanding immediately
prior to such time for determination plus the maximum number of Additional
Common Shares issuable pursuant to all such warrants or other rights issued in
the distribution which triggered the adjustment and (ii) the denominator of
which shall be the number of Common Shares outstanding immediately prior to such
time for determination plus the number of Common Shares that the minimum
consideration received and receivable by the Company for the issuance of such
maximum number of Additional Common Shares pursuant to the terms of such
warrants or other rights would purchase at such Current Market Price.
(d) Superseding Adjustment of Number of Warrant Shares
into Which Each Warrant is Exercisable. In case at any time after any adjustment
of the number of Warrant Shares into which each Warrant is exercisable shall
have been made pursuant to Section 5.1(c) on the basis of the distribution of
warrants or other rights or after any new adjustment of the number of Warrant
Shares into which each Warrant is exercisable shall have been made pursuant to
this Section 5.1(d), such warrants or rights shall expire, and all or a portion
of such warrants or rights shall not have been exercised, then, and in each such
case, upon the election of the Company such previous adjustment in respect of
such warrants or rights which have expired without exercise shall be rescinded
and annulled as to any then outstanding Warrants, and the Additional Common
Shares that were deemed for purposes of the computations set forth in Section
5.1(c) to have been issued or sold by virtue of such adjustment in respect of
such warrants or rights shall no longer be deemed to have been distributed.
(e) Other Provisions Applicable to Adjustments under this
Section. The following provisions shall be applicable to the making of
adjustments of the number of Warrant Shares into which each Warrant is
exercisable and to the Warrant Price under this Section 5.1:
(i) Treasury Stock. The sale or other
disposition of any issued Common Shares owned or held by or for the
account of the Company shall be deemed an issuance or sale of
Additional Common Shares for purposes of this Section 5 if the gross
consideration to be received by the Company per Common Share (before
reduction for any underwriting discounts or commission or brokerage
commissions) is less than the Current Market Price. The Company shall
not pay any dividend on or make any distribution on Common Shares held
in the treasury of the Company. For the purposes of this Section 5.1,
the number of Common Shares at any time outstanding shall not include
shares held in the treasury of the Company but shall include shares
issuable in respect of scrip certificates issued in lieu of fractions
of Common Shares.
(ii) When Adjustments Are to be Made. The
adjustments required by Sections 5.1(a), 5.1(b), 5.1(c) and 5.1(d)
shall be made whenever and as often as any specified event requiring an
adjustment shall occur, except that no adjustment of the Warrant
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Shares into which each Warrant is exercisable that would otherwise be
required shall be made unless and until such adjustment either by
itself or with other adjustments not previously made increases or
decreases the Warrant Shares into which each Warrant is exercisable
immediately prior to the making of such adjustment by at least 1%. Any
adjustment representing a change of less than such minimum amount
(except as aforesaid) shall be carried forward and made as soon as such
adjustment, together with other adjustments required by Sections
5.1(a), 5.1(b), 5.1(c) and 5.1(d) and not previously made, would result
in such minimum adjustment.
(iii) Fractional Interests. In computing
adjustments under this Section 5, fractional interests in Common Shares
shall be taken into account to the nearest one-thousandth of a share.
(iv) Deferral of Issuance upon Exercise. In any
case in which this Section 5 shall require that an adjustment to the
Warrant Shares into which each Warrant is exercisable be made effective
pursuant to Section 5.1(a) or 5.1(c) prior to the occurrence of a
specified event and any Warrant is exercised after the time at which
the adjustment became effective but prior to the occurrence of such
specified event, the Company may elect to defer until the occurrence of
such specified event the issuing to the Holder of the Warrant
Certificate evidencing such Warrant (or other Person entitled thereto)
of, and may delay registering such Holder or other Person as the
recordholder of, the Warrant Shares over and above the Warrant Shares
issuable upon such exercise determined in accordance with Section 3.5
on the basis of the Warrant Shares into which each Warrant is
exercisable prior to such adjustment determined in accordance with
Section 3.5; provided, however, that the Company shall deliver to such
Holder or other person a due bill or other appropriate instrument
evidencing the right of such Holder or other Person to receive, and to
become the record holder of, such Additional Common Shares, upon the
occurrence of the event requiring such adjustment.
(f) Warrant Price Adjustment. Whenever the number of
Warrant Shares into which a Warrant is exercisable is adjusted as provided in
this Section 5.1, the Warrant Price payable upon exercise of the Warrant shall
simultaneously be adjusted by multiplying such Warrant Price immediately prior
to such adjustment by a fraction, the numerator of which shall be the number of
Warrant Shares into which such Warrant was exercisable immediately prior to such
adjustment, and the denominator of which shall be the number of Warrant Shares
into which such Warrant was exercisable immediately thereafter.
(g) Merger, Consolidation or Combination. In the event
the Company merges, consolidates or otherwise combines with or into any Person
after the date hereof and before the Expiration Date, then, as a condition of
such merger, consolidation or combination, lawful and adequate (in the good
faith judgment of the Board of Directors of the Company) provisions shall be
made whereby Holders shall, in addition to their other rights hereunder,
thereafter have the right to purchase and receive upon the basis and upon the
terms and conditions specified in this Agreement upon exercise of the Warrants
and in lieu of the Warrant Shares immediately theretofore purchasable
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and receivable upon the exercise of the rights represented hereby, such shares
of stock, securities or assets as may be issued or payable with respect to or in
exchange for a number of outstanding Common Shares equal to the number of
Warrant Shares immediately theretofore purchasable and receivable upon the
exercise of the rights represented hereby, and in any such case appropriate
provision shall be made (including the execution by the Person formed by
consolidation, merger or combination of a supplemental Warrant Agreement) with
respect to the rights and interests of the Holders to the end that the
provisions hereof (including, without limitation, provisions for adjustments of
the number of Warrant Shares) shall thereafter be applicable, as nearly as may
be practicable (in the good faith judgment of the Board of Directors of the
Company), in relation to any shares of stock, securities or assets thereafter
deliverable upon the exercise hereof. This Section 5.1(g) shall similarly apply
to successive consolidations, mergers or combinations.
(h) Compliance with Governmental Requirements. Before
taking any action that would cause an adjustment reducing the Warrant Price
below the then par value of any of the Warrant Shares into which the Warrants
are exercisable, the Company will take any corporate action that may be
necessary in order that the Company may validly and legally issue fully paid and
nonassessable Warrant Shares at such adjusted Warrant Price.
(i) Optional Tax Adjustment. The Company may at its
option, at any time during the term of the Warrants, increase the number of
Warrant Shares into which each Warrant is exercisable, or decrease the Warrant
Price, in addition to those changes required by Section 5.1(a), 5.1(b), 5.1(c),
5.1(d) or 5.1(f), as deemed advisable by the Board of Directors of the Company,
in order that any event treated for Federal income tax purposes as a dividend of
stock or stock rights shall not be taxable to the Recipients.
(j) Warrants Deemed Exercisable. For purposes solely of
this Section 5, the number of Warrant Shares which the holder of any Warrant
would have been entitled to receive had such Warrant been exercised in full at
any time or into which any Warrant was exercisable at any time shall be
determined assuming such Warrant was exercisable in full at such time, although
such Warrant may not be exercisable in full at such time pursuant to Section
3.2(a).
5.2 Notice of Adjustment.
Whenever the number of Warrant Shares into which a Warrant is
exercisable is to be adjusted, or the Warrant Price is to be adjusted, in either
case as herein provided, the Company shall compute the adjustment in accordance
with Section 5.1, and shall, promptly after such adjustment becomes effective,
cause a notice of such adjustment or adjustments to be given to all Holders and
the Warrant Agent in accordance with Section 10.1(b).
5.3 Statement on Warrant Certificates.
Irrespective of any adjustment in the number or kind of shares into
which the Warrants are exercisable, Warrant Certificates theretofore or
thereafter issued may continue to express the same price and number and kind of
shares initially issuable pursuant to this Agreement.
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5.4 Fractional Interest.
The Company shall not issue fractional Warrant Shares on the exercise
of Warrants. If Warrant Certificates evidencing more than one Warrant shall be
presented for exercise at the same time by the same Holder, the number of full
Warrant Shares which shall be issuable upon such exercise thereof shall be
computed on the basis of the aggregate number of Warrants so to be exercised. If
any fraction of a Warrant Share would, except for the provisions of this Section
5.4, be issuable on the exercise of any Warrant (or specified portion thereof),
the Company shall, in lieu of issuing any fractional Warrant Shares, pay an
amount in cash calculated by it to be equal to the then Current Market Price per
Common Share on the date of such exercise multiplied by such fraction computed
to the nearest whole cent. The Holders, by their acceptance of the Warrant
Certificates, expressly waive their right to receive any fraction of a Warrant
Share or a stock certificate representing a fraction of a Warrant Share.
6. LOSS OR MUTILATION
Upon (i) receipt by the Warrant Agent of evidence reasonably
satisfactory to the Warrant Agent of the ownership of and the loss, theft,
destruction or mutilation of any Warrant Certificate and such reasonable and
customary security or indemnity as may be required by the Warrant Agent and the
Company to hold the Company and the Warrrant Agent harmless and (ii) surrender,
in the case of mutilation, of the mutilated Warrant Certificate to the Warrant
Agent and cancellation thereof, then, in the absence of notice to the Warrant
Agent that the Warrants evidenced thereby have been acquired by a bona fide
purchaser, the Company shall execute, and the Warrant Agent shall countersign,
issue and deliver to the registered Holder of the lost, stolen, destroyed or
mutilated Warrant Certificate, in exchange therefor or in lieu thereof, a new
Warrant Certificate of the same tenor and for a like aggregate number of
Warrants. At the written request of such registered Holder, the new Warrant
Certificate so issued shall be retained by the Company as having been
surrendered for exercise, in lieu of delivery thereof to such Holder, and shall
be deemed for purposes of Section 3.2 to have been surrendered for exercise on
the date the conditions specified in clauses (i) and (ii) of the immediately
preceding sentence were first satisfied.
Upon the issuance of any new Warrant Certificate under this Section 6,
the Company may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto.
All Warrant Certificates surrendered for exercise or for exchange in
case of mutilated Warrant Certificates shall be promptly cancelled by the
Warrant Agent and thereafter retained by the Warrant Agent until termination of
this Agreement or its resignation as Warrant Agent, or disposed of or destroyed,
at the direction of the Company.
The provisions of this Section 6 are exclusive and shall preclude (to
the extent lawful) all other rights or remedies with respect to the replacement
of mutilated, lost, stolen, or destroyed Warrant Certificates.
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7. RESERVATION AND AUTHORIZATION OF WARRANT SHARES
The Company shall at all times reserve and keep available, free from
preemptive rights, solely for issue upon the exercise of Warrants as herein
provided, such number of its authorized but unissued Warrant Shares deliverable
upon the exercise of Warrants as will be sufficient to permit the exercise in
full of all outstanding Warrants. The Company covenants that all Warrant Shares
will, at all times that Warrants are exercisable, be duly approved for listing
subject to official notice of issuance on each securities exchange, if any, or
the NNM, if applicable, on which the Common Shares are then listed or traded.
The Company covenants that (i) all Warrant Shares that may be issued upon due
exercise of Warrants shall upon issuance be duly and validly authorized, issued
and fully paid and nonassessable and free of preemptive or similar rights and
(ii) the stock certificates issued to evidence any such Warrant Shares will
comply with Section 158 of the Delaware General Corporation Law (or its
successor) and any other applicable law.
The Company hereby authorizes and directs its current and future
transfer agents for the Common Shares at all times to reserve stock certificates
for such number of authorized shares as shall be requisite for such purpose. The
Company will supply such transfer agents with duly executed stock certificates
for such purposes.
8. WARRANT TRANSFER BOOKS
Warrant Certificates may be surrendered for registration of transfer or
exchange of Warrants evidenced thereby at the Corporate Office of the Warrant
Agent. Warrant Certificates may be surrendered for exercise at the Corporate
Office of the Warrant Agent. The Warrant Agent and the Company will give prompt
written notice to all Holders of Warrant Certificates of any change in the
location of their respective Corporate Offices.
The Warrant Agent shall cause to be kept at its Corporate Office a
warrant register (the "Warrant Register") in which, subject to such reasonable
regulations as it may prescribe and such regulations as may be prescribed by
applicable law, the Company shall provide for the registration of Warrant
Certificates and of transfers or exchanges of Warrant Certificates as herein
provided.
Subject to the provisions of Sections 2.4, 3.2 and 3.3, upon surrender
for registration of transfer of any Warrant Certificate at the Corporate Office
of the Warrant Agent, the Company shall execute, and the Warrant Agent shall
countersign, issue and deliver, in the name of the designated transferee or
transferees, one or more new Warrant Certificates evidencing a like aggregate
number of Warrants.
Subject to Section 2.4, (i) at the option of the Holder, Warrant
Certificates may be exchanged at the Corporate Office of the Warrant Agent upon
payment of the charges herein provided for other Warrant Certificates evidencing
a like aggregate number of Warrants and (ii) whenever any Warrant Certificates
are so surrendered for exchange, the Company shall execute, and the Warrant
Agent shall countersign, issue and deliver the Warrant Certificates of the same
tenor and evidencing the
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same number of Warrants as evidenced by the Warrant Certificates surrendered by
the Holder making the exchange.
All Warrant Certificates issued upon any registration of transfer or
exchange of Warrant Certificates shall be the valid obligations of the Company,
evidencing the same obligations, and entitled to the same benefits under this
Agreement, as the Warrant Certificates surrendered for such registration of
transfer or exchange.
Subject to Section 2.4, every Warrant Certificate surrendered for
registration of transfer or exchange shall (if so required by the Warrant Agent
or the Company) be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Warrant Agent or the Company, duly executed
by the Holder thereof or his attorney duly authorized in writing with signature
guarantees by an acceptable participant in a recognized Medallion program.
9. WARRANT HOLDERS
9.1 Voting or Dividend Rights.
Prior to the exercise of the Warrants, except as may be specifically
provided for herein, (i) no Holder of a Warrant Certificate, as such, shall be
entitled to any of the rights of a holder of Common Shares, including, without
limitation, the right to vote at or to receive any notice of any meetings of
stockholders of the Company; (ii) the consent of any Holder shall not be
required with respect to any action or proceeding of the Company; (iii) except
as provided in Section 4, no Holder, by reason of the ownership or possession of
a Warrant or the Warrant Certificate representing the same, shall have any right
to receive any stock dividends, allotments or rights or other distributions
paid, allotted or distributed or distributable to the stockholders of the
Company prior to, or for which the relevant record date preceded, the date of
the exercise of such Warrant; and (iv) no Holder shall have any right not
expressly conferred by this Agreement or Warrant Certificate held by such
Holder.
9.2 Rights of Action.
All rights of action against the Company in respect of this Agreement
are vested in the Holders of the Warrant Certificates, and any Holder of any
Warrant Certificate, without the consent of the Holder of any other Warrant
Certificate, may, on such Holder's own behalf and for such Holder's own benefit,
enforce and may institute and maintain any suit, action or proceeding against
the Company suitable to enforce, or otherwise in respect of, such Holder's right
to exercise, exchange or tender for purchase such Holder's Warrants in the
manner provided in this Agreement.
9.3 Treatment of Holders of Warrant Certificates.
Every Holder of a Warrant Certificate, by accepting the same, consents
and agrees with the Company and with every subsequent holder of such Warrant
Certificate that, prior to due presentment of such Warrant Certificate for
registration of transfer, the Company and any agent of the Company may treat the
Person in whose name the Warrant Certificate is registered as the owner
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thereof for all purposes and as the Person entitled to exercise the rights
granted under the Warrants represented by such Warrant Certificate, and neither
the Company, the Warrant Agent nor any other agent of the Company shall be
affected by any notice to the contrary.
9.4 Communications to Holders.
(a) If any Holder of a Warrant Certificate applies in
writing to the Company and such application states that the applicant desires to
communicate with other Holders with respect to its rights under this Agreement
or under the Warrants, then the Company shall, within five (5) Business Days
after the receipt of such application, and upon payment to the Company by such
applicant of the reasonable expenses of preparing such list, provide to such
applicant a list of the names and addresses of all Holders of Warrant
Certificates as of the most recent practicable date.
(b) Every Holder of Warrant Certificates, by receiving
and holding the same, agrees with the Company that neither the Company nor any
agent of the Company shall be held accountable by reason of the disclosure of
any such information as to the names and addresses of the Holders in accordance
with Section 9.4(a).
10. NOTICES
10.1 Notices Generally.
(a) Any request, notice, direction, authorization,
consent, waiver, demand or other communication required, permitted or authorized
by this Agreement to be made upon, given or furnished to or filed with the
Company or the Warrant Agent by the other party hereto or by any Holder shall be
sufficient for every purpose hereunder if in writing (including telecopy
communication) and telecopied or delivered by hand (including by courier
service) as follows:
If to the Company, to it at:
Forcenergy Inc
2730 S.W. 3rd Avenue
Suite 800
Miami, Florida 33129-2356
Attention: Chief Financial Officer
Telecopy No.: (305) 856-8500
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(or such other address as shall have been set forth in a
notice delivered in accordance with this Section 10.1(a)).
If to the Warrant Agent, to:
American Stock Transfer & Trust Company
40 Wall Street, 46th Fl.
New York, NY 10005
Attention:Executive Vice President
Telecopy No.: (718) 236-4588
All such communications shall, when so telecopied or delivered by hand,
be effective when telecopied with confirmation of receipt or received by the
addressee, respectively.
Any Person that telecopies any communication hereunder to any Person
shall, on the same date as such telecopy is transmitted, also send, by first
class mail, postage prepaid and addressed to such Person as specified above, an
original copy of the communication so transmitted.
(b) Where this Agreement provides for notice to Holders
of any event, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage prepaid, to
each Holder affected by such event, at the address of such Holder as it appears
in the Warrant Register, not later than the latest date (if any), and not
earlier than the earliest date (if any), prescribed for the giving of such
notice. In any case where notice to Holders is given by mail, neither the
failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders. Where this Agreement provides for notice in any manner, such
notice may be waived in writing by the Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification as shall be made by a method reasonably approved in good
faith by the Company as one which would be most reliable under the circumstances
for successfully delivering the notice to the addressees shall constitute a
sufficient notification for every purpose hereunder.
10.2 Required Notices to Holders.
In case the Company shall propose (i) to pay any dividend payable in
stock of any class to the holders of its Common Shares, to pay a dividend or
distribution payable otherwise than in cash, or a cash dividend or distribution
payable otherwise than out of current or retained earnings or other
extraordinary cash dividend, or to make any other distribution to the holders of
its Common Shares for which an adjustment is required to be made pursuant to
Section 5, (ii) to distribute to all holders of its outstanding Common Shares
rights to subscribe for or to purchase any Additional Common Shares or shares of
stock of any class or any other securities, rights or options, (iii) to effect
any
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reclassification of its Common Shares, (iv) to effect any transaction described
in Section 5.1(g) or (v) to effect the liquidation, dissolution or winding up of
the Company or a sale of all or substantially all of its assets, then, and in
each such case, the Company shall give to each Holder of a Warrant Certificate,
in accordance with Section 10.1(b), a notice of such proposed action or event.
Such notice shall specify (x) the date on which a record is to be taken for the
purposes of such dividend or distribution; and (y) the date on which the Company
expects such reclassification, transaction, event, liquidation, dissolution or
winding up to become effective and the date as of which the Company expects that
holders of Common Shares of record will be entitled to exchange their Common
Shares for securities, cash or other property deliverable upon such
reclassification, transaction, event, liquidation, dissolution or winding up.
Such notice shall be given, in the case of any action covered by clause (i) or
(ii) above, at least fifteen (15) days prior to the record date for determining
holders of the Common Shares for purposes of such action or, in the case of any
action covered by clauses (iii) through (v), at least twenty (20) days prior to
the applicable effective or expiration date specified above or, in any such
case, prior to such earlier time as notice thereof shall be required to be given
pursuant to Rule 10b-17 under the Exchange Act, if applicable.
If at any time the Company shall cancel any of the proposed
transactions for which notice has been given under this Section 10.2 prior to
the consummation thereof, the Company shall give each Holder prompt notice of
such cancellation in accordance with Section 10.1(b) hereof.
11. APPLICABLE LAW
THIS AGREEMENT, EACH WARRANT CERTIFICATE ISSUED HEREUNDER, EACH WARRANT
EVIDENCED THEREBY AND ALL RIGHTS ARISING HEREUNDER SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING
EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS TO THE EXTENT THE APPLICATION OF THE
LAW OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
12. PERSONS BENEFITING
This Agreement shall be binding upon and inure to the benefit of the
Company, the Warrant Agent and their respective successors and assigns and the
Holders from time to time. Nothing in this Agreement is intended or shall be
construed to confer upon any Person, other than the Company, the Warrant Agent
and the Holders, any right, remedy or claim under or by reason of this Agreement
or any part hereof. Each Holder, by acceptance of a Warrant Certificate, agrees
to all of the terms and provisions of this Agreement applicable thereto.
13. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of
which shall for all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same instrument.
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14. AMENDMENTS
This Agreement may be amended by the Company only with the consent of
the Holders of a majority of the then outstanding Warrants. Notwithstanding the
foregoing, the consent of each Holder of a Warrant affected shall be required
for any amendment pursuant to which the Warrant Price would be increased or the
number of Warrant Shares purchasable upon exercise of Warrants would be
decreased (other than pursuant to adjustments provided for herein).
Upon execution and delivery of any amendment pursuant to this Section
14, such amendment shall be considered a part of this Agreement for all purposes
and every Holder of a Warrant Certificate theretofore or thereafter delivered
hereunder shall be bound thereby.
Promptly after the execution by the Company of any such amendment, the
Company shall give notice to the Holders, setting forth in general terms the
substance of such amendment, in accordance with the provisions of Section
10.1(b). Any failure of the Company to mail such notice or any defect therein,
shall not, however, in any way impair or affect the validity of any such
amendment.
15. INSPECTION
The Company may require each Holder to submit his Warrant Certificate
for inspection by the Company.
16. SUCCESSOR TO THE COMPANY
So long as Warrants remain outstanding, the Company will not enter into
any Non-Surviving Combination unless the acquirer (or its parent company under
any triangular acquisition) shall expressly assume by a supplemental agreement,
executed and delivered to the Company, in form reasonably satisfactory to the
Company, the due and punctual performance of every covenant of this Agreement on
the part of the Company to be performed and observed and shall have provided for
exercise rights in accordance with Section 5.1(g). Upon the consummation of such
Non-Surviving Combination, the acquirer (or its parent company under any
triangular acquisition) shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Agreement with the
same effect as if such acquirer (or its parent company under any triangular
acquisition) had been named as the Company herein.
17. ENTIRE AGREEMENT
This Agreement sets forth the entire agreement of the parties hereto as
to the subject matter hereof and supersedes all previous agreements among all or
some of the parties hereto with respect thereto, whether written, oral or
otherwise.
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18. HEADINGS
The descriptive headings of the several Sections of this Agreement are
inserted for convenience and shall not control or affect the meaning or
construction of any of the provisions hereof.
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<PAGE> 69
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
FORCENERGY INC
By:
--------------------------------------
Stig Wennerstrom
President and Chief Executive Officer
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EXHIBIT A
FORM OF FACE OF WARRANT CERTIFICATE
THE WARRANT REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES
ISSUABLE UPON EXERCISE THEREOF ARE EXEMPT FROM THE REGISTRATION AND
QUALIFICATION REQUIREMENTS OF FEDERAL AND STATE SECURITIES LAWS
PURSUANT TO SECTION 1145 OF THE BANKRUPTCY CODE AS SECURITIES ISSUED BY
A DEBTOR PURSUANT TO A PLAN OF REORGANIZATION APPROVED BY THE
BANKRUPTCY COURT.
THE WARRANT REPRESENTED BY THIS CERTIFICATE AND THE OTHER
SECURITIES ISSUABLE UPON EXERCISE THEREOF ARE SUBJECT TO THE
CONDITIONS SPECIFIED IN THE WARRANT AGREEMENT, DATED
____________, 1999, AMONG THE COMPANY AND THE WARRANT AGENT. A
COPY OF THE WARRANT AGREEMENT IS ON FILE AT THE OFFICES OF
FORCENERGY INC. THE HOLDER OF THIS CERTIFICATE, BY ACCEPTANCE
OF THIS CERTIFICATE, AGREES TO BE BOUND BY THE PROVISIONS OF
THE WARRANT AGREEMENT.
FORCENERGY INC
WARRANT CERTIFICATE
EVIDENCING
WARRANTS TO PURCHASE COMMON SHARES
EXERCISABLE ON OR BEFORE
5:00 P.M. NEW YORK,
NEW YORK TIME,
ON
__________ [ ], [200__]
No. Warrants
--------------- ----------------
THIS CERTIFIES THAT, for value received, _______________________
___________________________, or its registered assigns, is the registered owner
of ______________________ Warrants to Purchase Common Shares of Forcenergy Inc,
a Delaware corporation (the "Company," which term includes any successor thereto
under the Warrant Agreement), and is entitled, subject to and upon compliance
with the provisions hereof and of the Warrant Agreement, at such Holder's
option, at any time when the Warrants evidenced hereby are exercisable, to
purchase from the Company one Warrant Share for each Warrant evidenced hereby,
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<PAGE> 71
at the purchase price of $[_______] per share (as adjusted from time to time,
the "Warrant Price"), payable in full at the time of purchase, the number and
nature of Warrant Shares into which and the Warrant Price at which each Warrant
shall be exercisable, each being subject to adjustment as provided in Section 5
of the Warrant Agreement.
The Holder of this Warrant Certificate may exercise all or any whole
number of the Warrants evidenced hereby, on any Business Day on and after the
Issue Date until 5:00 p.m., New York, New York time, on __________ [ ], 200__
(subject to earlier expiration pursuant to Section 4 of the Warrant Agreement,
the "Expiration Date") for the Warrant Shares purchasable hereunder.
Reference is hereby made to the further provisions of this Warrant
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
IN WITNESS WHEREOF, the Company has caused this certificate to be duly
executed under its corporate seal.
FORCENERGY INC
[SEAL] By:
-----------------------------
Name: Stig Wennerstrom
Title: Chief Executive Officer
ATTEST:
- --------------------------
Name:
Title:
Dated: _________ [ ], 1999
COUNTERSIGNED:
AMERICAN STOCK TRANSFER & TRUST COMPANY
By:
-----------------------
Name:
Title:
[FORM OF REVERSE OF WARRANT CERTIFICATE]
FORCENERGY INC
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<PAGE> 72
WARRANT CERTIFICATE
EVIDENCING
WARRANTS TO PURCHASE COMMON SHARES
1. General.
Each Warrant evidenced hereby is one of a duly authorized issue of
Warrants of the Company designated as its Warrants to Purchase Common Shares
("Warrants"), limited in aggregate number to 240,000 Warrants and 240,000 Common
Shares (subject to adjustment pursuant to Section 5 of the Warrant Agreement)
issued under and in accordance with the Warrant Agreement, dated as of
__________ [ ], 1999 (the "Warrant Agreement"), between the Company and the
Warrant Agent, to which Warrant Agreement and all amendments thereto reference
is hereby made for a statement of the respective rights, limitations of rights,
duties and immunities thereunder of the Company, the Warrant Agent, the Holders
of this Warrant Certificate and the owners of the Warrants evidenced hereby. A
copy of the Warrant Agreement is available during normal business hours at the
Corporate Office of the Company for inspection by the Holder hereof.
In the event of the exercise of less than all of the Warrants evidenced
hereby, a new Warrant Certificate in the same form and for the number of
Warrants which are not exercised shall be issued by the Company in the name or
upon the written order of the Holder of this Warrant Certificate upon the
cancellation hereof.
All Warrant Shares issuable by the Company upon the exercise of
Warrants shall, upon such issuance, be duly authorized, validly issued, fully
paid and nonassessable and free of preemptive or similar rights.
The Company shall pay any and all documentary stamp taxes, if any,
attributable to the initial issuance of Warrants or the delivery of Warrant
Shares issuable upon exercise of the Warrants. The Company shall not be required
to pay any tax or other charge imposed in respect of (i) any transfer (including
any transfer effected pursuant to the provisions of Section 3.2(d) or (e)) or
exchange of any Warrant Certificate or any certificates for Warrant Shares or
(ii) payment of cash to any Person other than the Holder of the Warrant
Certificate surrendered upon the exercise of a Warrant, and in case of such
transfer, exchange or payment, the Company shall not be required to issue or
deliver any certificate or pay any cash until (a) such tax or charge has been
paid or an amount sufficient for the payment thereof has been delivered to the
Company or (b) it has been established to the Company's satisfaction that any
such tax or other charge that is or may become due has been paid.
The Warrant Certificates are issuable only in registered form in
denominations of whole numbers of Warrants. Upon surrender at the Corporate
Office of the Warrant Agent and payment of the charges specified herein and in
the Warrant Agreement, this Warrant Certificate may be exchanged for Warrant
Certificates in other authorized denominations or the transfer hereof may be
registered in whole or in part in authorized denominations to one or more
designated transferees, subject to the restrictions on transfer set forth herein
and in the Warrant Agreement; provided,
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<PAGE> 73
however, that such other Warrant Certificates issued upon exchange or
registration of transfer shall evidence the same aggregate number of Warrants as
this Warrant Certificate. The Warrant Agent shall cause to be kept at its
Corporate Office the Warrant Register in which, subject to such reasonable
regulations as the Warrant Agent may prescribe and such regulations as may be
prescribed by applicable law, the Company and the Warrant Agent shall provide
for the registration of Warrant Certificates and of transfers or exchanges of
Warrant Certificates as provided in the Warrant Agreement.
2. Expiration.
Except as provided in Section 4 of the Warrant Agreement and Section 3
of this Warrant Certificate, all outstanding Warrants shall expire and all
rights of the Holders of Warrant Certificates evidencing such Warrants shall
terminate and cease to exist, as of 5:00 p.m., New York, New York time, on the
Expiration Date. "Expiration Date" shall mean _______ [ ], 200__, or such
earlier date as determined in accordance with Section 4 of the Warrant Agreement
and Section 3 of this Warrant Certificate.
3. Liquidation of the Company.
If, on or prior to the Expiration Date, the Company (or any other
Person controlling the Company) shall propose or otherwise be subject to a
voluntary or involuntary dissolution, liquidation or winding up of the affairs
of the Company, each Holder shall receive the securities, money or other
property which such Holder would have been entitled to receive had such Holder
been the holder of record of the Warrant Shares into which the Warrants were
exercisable immediately prior to such dissolution, liquidation or winding up
(net of the then applicable Warrant Price), and the rights to exercise such
Warrants shall terminate.
4. Anti-Dilution Adjustments.
The number and nature of Warrant Shares issuable upon exercise of a
Warrant and the Warrant Price shall be adjusted on occurrence of certain events
as provided in the Warrant Agreement, including, without limitation, the
distribution of rights to purchase Common Shares (or securities convertible into
or exchangeable for Common Shares) at a price below the Current Market Price.
Pursuant to the Warrant Agreement, an adjustment may also be made in the event
of a combination, subdivision or reclassification of the Common Shares.
Adjustments will be made whenever and as often as any specified event requires
an adjustment to occur in accordance with the Warrant Agreement.
In such event, the Company will, at the request of the Holder, execute,
and the Warrant Agent shall countersign, issue and deliver, a new Warrant
Certificate evidencing the adjustment in the Warrant Price and the number and/or
nature of securities or property issuable upon the exercise of the Warrants;
provided however, that the failure of the Company to execute, or the Warrant
Agent to countersign, issue and deliver such new Warrant Certificates shall not
in any way change, alter, or otherwise impair, the rights of the Holder as set
forth in the Warrant Agreement.
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<PAGE> 74
5. Procedure for Exercising Warrant.
Subject to the provisions hereof and of the Warrant Agreement, the
Holder of this Warrant Certificate may exercise all or any whole number of the
Warrants evidenced hereby by either of the following methods:
(A) The Holder may deliver to the Warrant Agent at its
Corporate Office (i) a written notice of such Holder's election to
exercise all or a portion of the Warrants evidenced hereby, duly
executed by such Holder in the form set forth below, which notice shall
specify the number of Warrant Shares to be purchased, (ii) this Warrant
Certificate evidencing such Warrants and (iii) a sum equal to the
aggregate Warrant Price for the Warrant Shares into which the Warrants
represented by this Warrant Certificate are being exercised, which sum
shall be paid in any combination elected by such Holder of (x) a
certified or official bank check payable to the order of the Company
and delivered to the Warrant Agent at its Corporate Office (which the
Warrant Agent shall transfer to the Company on the next Business Day
after receipt), or (y) wire transfers in immediately available funds to
the account of the Company at such banking institution as the Company
shall have given notice to the Warrant Agent and the Holders in
accordance with the Warrant Agreement; or
(B) The Holder may also exercise all or any of the Warrants in
a "cashless" or "net-issue" exercise by delivering to the Warrant Agent
at its Corporate Office (i) a written notice of such Holder's election
to exercise all or a portion of the Warrants evidenced hereby, duly
executed by such Holder in the form set forth below, which notice
shall specify the number of Warrant Shares to be delivered to such
Holder and the number of Warrant Shares with respect to which Warrants
represented by this Warrant Certificate are being surrendered in
payment of the aggregate Warrant Price for the Warrant Shares to be
delivered to the Holder, and (ii) this Warrant Certificate evidencing
such Warrants. For purposes of this subparagraph (B), each Warrant
Share as to which such Warrants are surrendered in payment of the
aggregate Warrant Price will be attributed a value equal to (x) the
Market Price per share of Common Shares minus (y) the then-current
Warrant Price. Solely for the purpose of this paragraph, the Market
Price shall be calculated as the average of the Market Prices for each
of the ten trading days preceding the date the notice of exercise is
delivered to the Company.
6. Registered Holder.
Prior to and including due presentment of this Warrant Certificate for
registration of transfer, the Company, the Warrant Agent and any other agent of
the Company may treat the Person in whose name this Warrant Certificate is
registered as the owner hereof for all purposes, and neither the Company, the
Warrant Agent nor any other agent of the Company shall be affected by notice to
the contrary.
A-5
<PAGE> 75
7. Amendment.
The Warrant Agreement permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company or the Warrant Agent and the rights of the Holders of
Warrant Certificates under the Warrant Agreement at any time by the Company and
the Warrant Agent with the consent of the Holders of a majority of the then
outstanding Warrants.
8. Status as Holder.
Prior to the exercise of the Warrants, except as may be specifically
provided for in the Warrant Agreement, (i) no Holder of a Warrant Certificate,
as such, shall be entitled to any of the rights of a holder of Common Shares of
the Company, including, without limitation, the right to vote at, or to receive
any notice of, any meetings of stockholders of the Company; (ii) the consent of
any Holder shall not be required with respect to any action or proceeding of the
Company; (iii) except as provided in the Warrant Agreement with respect to the
dissolution, liquidation or winding up of the Company, no Holder, by reason of
the ownership or possession of a Warrant or the Warrant Certificate representing
the same, shall have any right to receive any stock dividends, allotments or
rights or other distributions (except as specifically provided in the Warrant
Agreement), paid, allotted or distributed or distributable to the stockholders
of the Company prior to or for which the relevant record date preceded the date
of the exercise of such Warrant; and (iv) no Holder shall have any right not
expressly conferred by the Warrant Agreement or Warrant Certificate held by such
Holder.
9. Governing Law.
THIS WARRANT CERTIFICATE, EACH WARRANT EVIDENCED HEREBY AND THE WARRANT
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF DELAWARE, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS TO
THE EXTENT THAT APPLICATION OF THE LAW OF ANOTHER JURISDICTION WOULD BE REQUIRED
THEREBY.
10. Definitions.
All terms used in this Warrant Certificate which are defined in the
Warrant Agreement shall have the meanings assigned to them in the Warrant
Agreement.
FORM OF EXERCISE
In accordance with and subject to the terms and conditions hereof and
of the Warrant Agreement, the undersigned registered Holder of this Warrant
Certificate hereby irrevocably elects to exercise ____________________ Warrants
evidenced by this Warrant Certificate and represents
A-6
<PAGE> 76
that such Holder has tendered the Warrant Price for each of the Warrants
evidenced hereby being exercised in the aggregate amount of $_________ in the
indicated combination of:
(i) cash ($____________);
(ii) certified bank check in funds payable to the order
of the Company ($--------);
(iii) official bank check in funds payable to the order
of the Company ($---------);
(iv) or wire transfer in immediately available funds to
the account designated by the Company for such purpose
($________); or
(v) "cashless" or "net-issue" exercise with respect to
________ Warrants pursuant to Section 3.2(c)(ii) of the
Warrant Agreement and Section 5(B) of this Warrant
Certificate.
The undersigned requests that the Warrant Shares issuable upon exercise
be in fully registered form in such denominations and registered in such names
and delivered, together with any other property receivable upon exercise, in
such manner as is specified in the instructions set forth below.
If the number of Warrants exercised is less than all of the Warrants
evidenced hereby, the undersigned requests that a new Warrant Certificate
representing the remaining Warrants evidenced hereby be issued and delivered to
the undersigned unless otherwise specified in the instructions below.
A-7
<PAGE> 77
Dated: Name:
---------------------------- -----------------------------------
(Please Print)
- --------------------------------
(Insert Social Security or Other
Identifying Number of Holder) Address:
-----------------------------------
-----------------------------------
-----------------------------------
Signature
Medallion Signature Guarantee Required:
- -----------------------------
Instructions (i) as to denominations and names of Warrant Shares
issuable upon exercise and as to delivery of such securities and any other
property issuable upon exercise and (ii) if applicable, as to Warrant
Certificates evidencing unexercised Warrants:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
A-8
<PAGE> 78
Assignment
(Form of Assignment To Be Executed If Holder Desires To Transfer Warrant
Certificate)
FOR VALUE RECEIVED _________________________ hereby sells, assigns and
transfers unto
Please insert social security
or other identifying number
----------------------------
- --------------------------------------------------
(Please print name and address including zip code)
- --------------------------------------------------
the Warrants represented by the within Warrant Certificate and does hereby
irrevocably constitute and appoint _________________ Attorney, to transfer said
Warrant Certificate on the books of the within-named Company with full power of
substitution in the premises.
Dated:
--------------------------------------------
Signature
Signature must conform in all respects to the
name of the Holder as specified on the face of
the Warrant Certificate)
Medallion Signature Guarantee Required:
- ---------------------------------------
A-9
<PAGE> 1
Exhibit 2.5
UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF LOUISIANA
IN THE MATTER OF NUMBER
FORCENERGY, INC. 99-11391
SECTION A
DEBTOR CHAPTER 11
JOINTLY ADMINISTERED WITH
IN THE MATTER OF NUMBER
FORCENERGY RESOURCES, INC. 99-11392
SECTION A
DEBTOR CHAPTER 11
FINDINGS OF FACT AND CONCLUSIONS OF LAW
AND ORDER CONFIRMING PLAN OF REORGANIZATION
On December 13 and 20, 1999, the Court conducted a hearing to consider
confirmation of the First Amended Joint Plan of Reorganization dated October 26,
1999 ("Plan"), as modified on December 13 and 20, 1999 ("Modifications"),
proposed by the Debtors, Forcenergy, Inc. and Forcenergy Resources, Inc. After
considering the evidence presented, the statements of counsel, and the
Objections to the Plan filed by various parties-in-interest, and after reviewing
the Plan and other pleadings on file, this Court finds and concludes as follows:
1. Jurisdiction. This is a core proceeding within the meaning of 28
U.S.C. Section. 157(b)(2)(L). This matter arises under the Bankruptcy Code,
Title 11 of the United States Code, 11 U.S.C. Section. 101 et seq., and
jurisdiction is vested in this Court to enter a
<PAGE> 2
final order by virtue of 28 U.S.C.Section.1334 (a) and (b), and 28
U.S.C. Section.151, 157(a) and (b)(1). These findings of fact and conclusions of
law are being entered under Bankruptcy Rules 7052 and 9014.
2. The Plan Complies With the Applicable Provisions of the Bankruptcy
Code (Section 1129(a)(1)).
(a) The Debtors are corporations organized under the laws of various
states of the United States and are eligible to be debtors under Section 109 of
the Bankruptcy Code.
(b) On March 21, 1999, the Debtors filed their respective voluntary
Petitions for Relief under Chapter 11 of the Bankruptcy Code.
(c) The Debtors are each proper proponents of a plan pursuant to
Section 1121(c) of the Bankruptcy Code in each of the Debtors' Chapter 11 Cases.
(d) On November 3, 1999, the Debtors caused, inter alia, the First
Amended Joint Disclosure Statement with respect to the Plan to be mailed to all
parties required by this Court's Order Approving Voting Procedures dated October
26, 1999, advising them of, among other things, the time and place of the
confirmation hearing and the procedures for objecting to, and voting for, the
Plan.
-2-
<PAGE> 3
(e) All appropriate governmental units (as defined in Section 101 of
the Bankruptcy Code) were given adequate notice of the confirmation hearing.
(f) Any party-in-interest entitled to receive notice of the
confirmation hearing was given adequate notice of the hearing.
(g) All parties-in-interest and all governmental units (as defined in
Section 101 of the Bankruptcy Code) had the opportunity to appear and be heard
at the confirmation hearing.
(h) The Plan complies with Rule 3016.
3. Proper Classification (Sections 1122 and 1123(a)(1)). The
classification of claims and equity interests under the Plan complies with
Sections 1122 and 1123(a)(1) of the Bankruptcy Code. Each claim and equity
interest placed in a particular Class pursuant to the Plan is substantially
similar to the other claims or equity interests, as the case may be, in such
Class.
4. Unimpaired Classes (Section 1123(a)(2)). Claims classified in
Classes 1, 2, 4A, 5, 6 and 7 and the equity interests classified in Class 11 are
not impaired under the Plan, and the Plan so specifies.
5. Treatment of Impaired Classes (Section 1123(a)(3)). The Plan
specifies the treatment of impaired Classes 3, 4B, 8, 9 and 10 in Article IV of
the Plan.
-3-
<PAGE> 4
6. No Discrimination (Section 1123(a)(4)). The Plan provides for the
same treatment of each claim or equity interest in a particular Class, unless a
holder of a claim or equity interest therein has agreed to a less favorable
treatment.
7. Implementation of the Plan (Section 1123(a)(5)). The Plan provides
adequate means for the Plan's implementation, as set forth in Article VIII of
the Plan.
8. Debtors' Charter Provisions (Section 1123(a)(6)). The Plan provides
for the inclusion in the charters of each of the Debtors of a provision
prohibiting the issuance of nonvoting equity securities. The Plan further
satisfies all requirements of 11 U.S.C. Section 1123(a)(6).
9. Selection of Directors (Section 1123(a)(7)). The Plan contains only
provisions that are consistent with the interests of creditors and equity
security holders and with public policy with respect to the manner of selection
of directors for any of the Reorganized Debtors, and any of their successors.
10. Executory Contracts and Unexpired Leases (Section 1123(b)(2)). The
Plan provides for the Debtors to assume and/or assign, or reject, executory
contracts and unexpired leases pursuant to Article VI of the Plan and Section
365 of the Bankruptcy Code. The Debtors have provided adequate assurance of
future performance under each such executory contract and unexpired lease
assumed in accordance with the Plan or pursuant to prior
-4-
<PAGE> 5
final orders of this Court, including, without limitation, the final order
approving the Debtors' Motion for Determination of Adequate Assurance of Future
Performance with Respect to Certain Joint Operating Agreements.
11. The Debtors Have Complied With the Bankruptcy Code (Section
1129(a)(2)). The Debtors have complied with the applicable provisions of the
Bankruptcy Code. The solicitation of acceptances and rejections from holders of
impaired claims and equity interests has been in compliance with applicable
provisions of the Bankruptcy Code and Rules, including, without limitation, 11
U.S.C. Sections 1125 and 1126. The modifications to the Plan set forth in the
Modifications satisfy, and the Debtors have satisfied, 11 U.S.C.Section 1127.
12. Plan Proposed in Good Faith (Section 1129(a)(3)). The question of
good faith was raised by at least one set of objectors, Escopeta Production
Alaska, Inc., Escopeta Oil & Gas Corp., Walter D. Wells, Danny S. Davis and
Robert Warthen (collectively, "Escopeta"). However, the Court has been presented
no evidence of a lack of good faith, only allegations. Despite Escopeta's
contentions, the Court finds no showing of bad faith on the part of the Debtors
in proposing the Plan. On the contrary, the Court finds that the Plan has been
proposed in good faith and not by any means forbidden by law. The Plan has been
proposed for valid business purposes, to satisfy substantial obligations of the
-5-
<PAGE> 6
Debtors and to provide relief under Chapter 11 to the Debtors, their creditors
and equity security holders.
13. Payments of Costs and Expenses (Section 1129(a)(4)). Any payment
made or to be made pursuant to the Plan for services or costs and expenses
incurred in or in connection with the Debtors' Chapter 11 cases has been
approved by, or will be subject to the approval of, the Court.
14. Directors and Officers (Section 1129(a)(5)). The Debtors have
disclosed the identity of the proposed directors of the Reorganized Debtors and
the identity and compensation of the proposed officers of the Reorganized
Debtors as required by 11 U. S. C. Section1129(a)(5). While the officers are
clearly to be well compensated, the appointment and compensation of these
proposed directors and officers, pursuant to the terms disclosed by the Debtors,
is not inconsistent with the interests of creditors and equity security holders
and with public policy.
15. No Rate Change (Section 1129(a)(6)). No rate changes are provided
for in the Plan that would require governmental regulatory commission approval.
16. Best Interests of Creditors (Section 1129(a)(7)). The Court is
satisfied that the expert evaluation presented showed that, with respect to each
impaired Class of claims or equity interests, each holder of a claim or equity
interest will receive or retain under the Plan on account of such claim or
equity
-6-
<PAGE> 7
interest property of a value, as of the Effective Date of the Plan, that is not
less than the amount that such holder would so receive or retain if the Debtors
were liquidated under Chapter 7 of the Bankruptcy Code on the Effective Date of
the Plan.
17. Plan Acceptance (Section 1129(a)(8)). Allowed claims or equity
interests in Classes 1, 2, 4A, 5, 6, 7 and 11 are unimpaired within the meaning
of 11 U.S.C. Section.1124, and the holders thereof are conclusively presumed to
have accepted the Plan under 11 U.S.C. Section.1126(f). Classes 3, certain
separate sub-classes of Class 4B, 8, 9 and 10, each an impaired Class under the
Plan, all have accepted the Plan. Holders of claims in certain separate sub-
classes of Class 4B have rejected the Plan.
18. Plan Treatment of Administrative Expense Claims and Tax Claims
(Section 1129(a)(9)). Except to the extent that the holder of a particular claim
has agreed to a different treatment of such claim, the Plan provides that each
holder of a claim of a kind specified in 11 U.S.C. Section 507(a)(1) through
507(a)(8) , on the later of the Effective Date of the Plan and the date on which
such claim becomes allowed, or within ten (10) days thereof, will receive on
account of such claim cash equal to the allowed amount of such claim.
19. At Least One Impaired Class Accepted the Plan (Section
1129(a)(10)). Classes 3, 4B, 8, 9 and 10, each an impaired Class under the Plan,
have accepted the Plan. Classes 3,
-7-
<PAGE> 8
4B and 8 include no insider of the Debtors. Classes 9 and 10 include insiders of
the Debtors.
20. Feasibility (Section 1129(a)(11)). The two Objections which were
primarily dealt with at the confirmation hearings, those of Escopeta and Texaco,
Inc., Texaco Exploration and Production, Inc., Conoco, Inc. and the Marathon Oil
Company (collectively, "Operators"), focused on the issue of Plan feasibility.
The Debtors bear the burden of proving feasibility. Matter of T-H New Orleans
Ltd. Partnership, 116 F.3d 790 (5th Cir. 1997). The Court need not be provided
with "'a guarantee of success ..., [o]nly a reasonable assurance of commercial
viability is required.'" Id. at 801, quoting In re Briscoe Enterprises, Ltd.,
II, 994 F.2d 1160, 1165-66 (5th Cir. 1993). Additionally, "'[w]here the
[debtor's] projections are credible, based upon the balancing of all testimony,
evidence, and documentation, even if the projections are aggressive, the court
may find the plan feasible.'" T-H New Orleans, 116 F.3d at 802, quoting In re
Lakeside Global II, Ltd., 116 B.R. 499, 508 n.20 (Bankr. S.D. Tex. 1989).
Here, the Debtors have presented, through documentation and the
testimony of, particularly, Dean Swick, an expert from the Global Energy Group
of Arthur Anderson, credible evidence of a reasonable probability of success in
reorganization. They have shown, inter alia, that there will be satisfactory
post-
-8-
<PAGE> 9
confirmation capital through the New Senior Credit Facility, the Rights Offering
and existing cash assets, that Plan terms and earning projections are consistent
with industry standards, that they have met ongoing costs of operation, that
assets have been increased with new wells, that the bank debt will be reduced
significantly upon the Plan's Effective Date and that there is adequate
management in place. Sufficient funds are to be made available to make the
distributions required by the Plan as described in Articles VIII and IX of the
Plan. Confirmation of the Plan is not likely to be followed by the need for
further financial reorganization or liquidation of any of the Debtors. The Court
finds that the Plan is feasible.
21. United States Trustee Fees (Section 1129(a)(12)). All fees due and
payable under 28 U.S.C.Section 1930 will be paid by the Debtors in accordance
with Sections 2.5 of the Plan.
22. Retiree Benefits (Section 1129(a)(13)). The Debtors do not have any
obligations in respect of retiree benefits.
23. Cramdown (Section 1129(b)).
(a) All applicable requirements of 11 U.S.C. Section1129(a), other than
those of subsection 1129(a)(8), have been met with respect to the Plan.
(b) The Plan does not discriminate unfairly.
(c) The only Classes rejecting the Plan are certain sub- Classes of
Class 4B.
-9-
<PAGE> 10
(d) The Plan provides that the holders of Miscellaneous Secured Claims
in sub-Classes of Class 4B shall retain the Liens, if any, securing such Secured
Claims, and the holder of each such Secured Claim shall realize the indubitable
equivalent of such Secured Claim on the later of the Effective Date and the date
such Secured Claim becomes an Allowed Secured Claim, or within ten (10) days
thereof.
24. Transfer Instrument. The making and delivery of any bill of sale or
any other related instruments contemplated under the Plan constitutes "the
making or delivery of an instrument of transfer under a plan confirmed under
Section 1129" within the meaning of 11 U.S.C.Section 1146(c).
25. Transfer or Exchange of Security. The transfer or exchange of a
security pursuant to the Plan or this Confirmation Order constitute "[t]he . . .
transfer, or exchange of a security . . . under a plan confirmed under Section
1129" within the meaning of 11 U.S.C.Section 1146(c).
26. The Record Date shall be the close of business on January 28, 2000.
Finding that the Plan is confirmable for all of the foregoing reasons,
and based upon the foregoing Findings of Fact and Conclusions of Law, which are
fully incorporated by reference into this Confirmation Order below,
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<PAGE> 11
IT IS HEREBY ORDERED, ADJUDGED AND DECREED THAT:
A. Confirmation. The Plan is hereby confirmed.
B. Binding Plan and Order. The provisions of the Plan and this
Confirmation Order hereby are made binding upon each of the Debtors, the
Reorganized Debtors and all other holders of claims or equity interests, whether
or not such claims or equity interests are impaired under the Plan and whether
or not such holder of a claim or equity interest has filed, or is deemed to have
filed, a proof of claim or proof of equity interest or has accepted the Plan.
Except as otherwise may be set forth in the Plan, all persons and entities that
are the holders of claims or equity interests, and their respective servants,
agents, employees, officers, directors, partners, successors and assigns are
hereby enjoined and restrained from commencing or continuing any suit, action or
proceeding or otherwise attempting to obtain possession of, or interfering with
the Reorganized Debtors' possession or distribution of, all property of the
estates of the Reorganized Debtors and all proceeds thereof, so as to enable the
Reorganized Debtors and the Proponents to implement, effectuate and carry out
all of the provisions of the Plan.
C. Obligations Under Plan. Nothing in this Confirmation Order or the
Plan shall operate as a discharge of any Debtor from claims, obligations or
liabilities to be paid or performed under or pursuant to the Plan.
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<PAGE> 12
D. Discharge of Debtors. The rights afforded herein and the treatment
of all claims and equity interests herein shall be in exchange for and in
complete satisfaction, discharge, and release of claims and equity interests of
any nature whatsoever, including any interest accrued on such claims from and
after the Commencement Date, against the Debtors and the Debtors in Possession,
or any of their assets or properties, including, without limitation, any Liens
and Security Interests. Except as otherwise provided in the Plan or a final
order incorporated therein, on the Effective Date, all such claims against and
equity interests in the Debtors shall be satisfied, discharged and released in
full, and all persons shall be precluded from asserting against the Reorganized
Debtors, their successors, or their assets or properties any other or further
claims or equity interests based upon any act or omission, transaction or other
activity of any kind or nature that occurred prior to the Confirmation Date.
E. New Senior Credit Facility.
(1) The Debtors and their respective directors, officers, agents and
attorneys are hereby authorized and empowered to cause Reorganized Forcenergy to
execute, effective on the Effective Date, definitive documentation containing
the terms set forth in the New Senior Credit Facility contained in the Plan
Supplement and to perform in accordance with the terms thereof.
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<PAGE> 13
(2) Effective on the Effective Date, Reorganized Forcenergy is
authorized and directed to enter into the New Senior Credit Facility with ING
(US) Capital, L.L.C., ("Agent"), Den Norske Bank A.S.A., Bank of Scotland,
MeesPierson Capital Corp., Bank of America, N.A., Credit Agricole Indosuez,
General Electric Capital Corporation, Societe Generale Southwest Agency, Natexis
Banque BFCE, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Avenue Capital
Management LLC, and Farallon Capital Management LLC ("Bank Group"), as
contemplated in the New Senior Credit Facility.
(3) To secure the loans to and other obligations and liabilities of
Reorganized Forcenergy under the New Senior Credit Facility and all documents
related thereto, the Bank Group is hereby granted as of the Confirmation Date,
subject to the occurrence of the Effective Date, liens, security interests, and
assignments. (collectively, "New Bank Group Liens") in all of the assets of
Forcenergy and Reorganized Forcenergy (as contemplated by the New Senior Credit
Facility), without further action of any kind by this Court, the Debtors,
Reorganized Forcenergy, the Bank Group, or any other person. Nothing contained
in this Confirmation Order shall impair any lien securing present or future
claims under assumed executory contracts or unexpired leases or any other rights
deemed not to be impaired under the Plan or under any final order incorporated
in the Plan.
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<PAGE> 14
(4) Effective on the Effective Date, Reorganized Forcenergy shall
execute, in form reasonably satisfactory to the Bank Group and Reorganized
Forcenergy, loan and security documents reasonably necessary to implement the
New Senior Credit Facility, including, without limitation, documents reasonably
necessary to evidence and perfect the New Bank Group Liens and to maintain the
liens, security interests and other interests held by the Bank Group as of the
Confirmation Date but before entry of this Confirmation Order.
(5) In addition to the priority established by recordation of the New
Bank Group Liens, in advance of any such recordation, and without further action
of any kind by this Court, the Debtors, Reorganized Forcenergy, the Bank Group,
or any other person, all liens and security interests granted to the Bank Group
prior to the entry of this Confirmation Order shall be deemed valid,
enforceable, perfected and unavoidable in all respects, and to have been
perfected at the time such lien or security interest was recorded, filed, or, in
the case of possessory liens or security interests, at the time possession was
obtained.
(6) The Secured Claim of the Bank Group is allowed in the sum of:
(i) The outstanding and unpaid principal indebtedness under
the Senior Credit Facility;
(ii) Accrued interest on the principal indebtedness set forth
in (i) above at the non-default rate of interest provided in the Senior
Credit Facility both
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<PAGE> 15
prior to and after the Commencement Date through the Effective Date;
and
(iii) All professional fees, costs or other charges actually
incurred by the Bank Group or any individual member thereof prior to
and after the Commencement Date through the Effective Date, as provided
for under the Senior Credit Facility and the New Senior Credit
Facility, as agreed between the Bank Group and the Debtors.
(7) Upon satisfaction of all conditions required under the Plan or this
Confirmation Order to occur prior to or on the Effective Date in order to
obligate and bind other interested parties, unless waived in writing by the Bank
Group, the Bank Group is authorized to lend and Reorganized Forcenergy is
authorized to borrow under the New Senior Credit Facility.
(8) Unless waived in writing by the Bank Group, no less than $40
million of principal indebtedness plus the amounts described in paragraphs 6(ii)
and 6(iii) hereinabove shall be paid in full on or before the Effective Date by
wire transfer of immediately available funds to the Agent.
(9) In accordance with Sections 4.3 (b) of the Plan, the obligations of
the Reorganized Debtors under the New Senior Credit Facility, together with the
payments to the Bank Group described in the Plan and this Confirmation Order,
shall be in replacement and full substitution of all Bank Group Claims (except
that the existing Liens, Collateral and other Security Interests of the Bank
Group shall be maintained and preserved), and any causes of action arising prior
to the Effective Date which the Debtors or the
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<PAGE> 16
Reorganized Debtors could otherwise assert against any holder of a Bank Group
Claim (or any of such holder's affiliates, officers, employees, agents or
professionals) to the extent such causes of action relate to, arise from or
could otherwise be asserted in respect of the Senior Credit Facility, or any
related Liens, Collateral, Security Interests or Loan Documents (as such term is
defined in the Senior Credit Facility) are, by the confirmation of the Plan and
entry of this Confirmation Order, released.
F. All Objections to the Plan are overruled.
New Orleans, Louisiana, January 19, 2000.
/s/ THOMAS M. BRAHNEY, III
------------------------------
THOMAS M. BRAHNEY, III
UNITED STATES BANKRUPTCY JUDGE
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<PAGE> 1
EXHIBIT 99.1
FORCENERGY INC
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT RATIOS)
11/30/99
<TABLE>
<CAPTION>
ASSETS CURRENT PRIOR PRIOR
MONTH MONTH BUDGET YEAR-END
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Cash - non-debtor $ 5,735 $ 5,807 $ -- $ 1,690
Cash - debtor 90,795 86,744 -- --
Accounts Receivable 39,210 38,428 -- 28,433
Prepaid Expenses 2,869 2,939 -- 3,635
Other 27,547 22,736 -- 16,033
---------- ---------- ---------- ----------
TOTAL CURRENT ASSETS 166,156 156,654 -- 49,791
---------- ---------- ---------- ----------
PROPERTY AND EQUIPMENT AT COST
Oil and Gas Properties 1,537,374 1,529,216 -- 1,479,709
Property & Equipment 13,288 13,236 -- 9,809
---------- ---------- ---------- ----------
1,550,662 1,542,452 -- 1,489,518
Accumulated Depletion, Depreciation & Amortization (986,484) (978,285) -- (878,570)
---------- ---------- ---------- ----------
NET PROPERTY & EQUIPMENT 564,178 564,167 -- 610,948
---------- ---------- ---------- ----------
OTHER ASSETS 15,123 15,951 -- 17,729
---------- ---------- ---------- ----------
TOTAL ASSETS $ 745,457 $ 736,772 $ -- $ 678,468
========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES & STOCKHOLDER'S EQUITY
DEBTOR NON-DEBTOR
---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Accounts Payable $ 7,935 $ 3,367 $ 11,302 $ 13,269 $ -- $ --
Accrued Interest 17,917 -- 17,917 15,483 -- --
Revenue and Royalties Payable 4,335 4,335 3,003 -- --
Accrued Drilling Costs 12,805 1,000 13,805 10,231 -- --
Other Accrued Expenses 7,735 576 8,311 9,869 -- --
Deferred Taxes 5,737 5,737 4,218 -- --
Notes Payable 559 559 639 -- --
---------- ---------- ---------- ---------- ---------- ----------
TOTAL POST-PETITION LIABILITIES 57,023 4,943 61,966 56,712 -- --
---------- ---------- ---------- ---------- ---------- ----------
Accounts Payable 67,369 67,518 -- 42,183
Revenue and Royalties Payable 4,764 4,764 -- 4,588
Accrued Interest 9,019 9,019 -- 10,799
Accrued Drilling Costs -- -- -- 25,725
Other Accrued Expenses 1,979 647 -- 23,724
Notes Payable 1,562 1,785 -- --
Current Maturities of Long-term Debt 689,473 689,473 -- 27,112
---------- ---------- ---------- ----------
TOTAL PRE-PETITION LIABILITIES 774,166 773,206 -- 134,131
---------- ---------- ---------- ----------
TOTAL CURRENT LIABILITIES 836,132 829,918 -- 134,131
---------- ---------- ---------- ----------
LONG-TERM DEBT -- -- -- 644,588
---------- ---------- ---------- ----------
STOCKHOLDER'S EQUITY
Common Stock 248 248 -- 247
Capital in excess of par value 346,446 346,446 -- 346,135
Retained Earnings (Deficit) - Post-petition 24,203 21,732 -- --
Retained Earnings (Deficit) - Pre-petition (461,572) (461,572) -- (466,634)
---------- ---------- ---------- ----------
TOTAL STOCKHOLDERS EQUITY (90,675) (93,146) -- (120,252)
---------- ---------- ---------- ----------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 745,457 $ 736,772 $ -- $ 658,468
========== ========== ========== ==========
OUTSTANDING COMMON SHARES 24,756 24,756 -- 24,747
</TABLE>
<PAGE> 1
EXHIBIT 99.2
WEDNESDAY JANUARY 19, 6:41 PM EASTERN TIME
COMPANY PRESS RELEASE
FORCENERGY INC. ANNOUNCED CONFIRMATION OF PLAN OF
REORGANIZATION
DETAILS ON CANCELLATION OF EXISTING STOCK AND ISSUANCE OF NEW STOCK AND WARRANTS
MIAMI--(BUSINESS WIRE)--Jan. 19, 2000-- Forcenergy Inc. (FENYQ.OB) announced
today that on Jan. 19, 2000 (the Confirmation Date) the company received
confirmation of its Plan of Reorganization from the United States Bankruptcy
Court, Eastern District of Louisiana, New Orleans, Louisiana.
The Plan of Reorganization is expected to become effective and have an Effective
Date 15 to 30 days after the Confirmation Date, provided the various conditions
under the Plan of Reorganization have been satisfied.
The Record Date
Under the Plan of Reorganization, registered owners of Forcenergy existing
common stock as of the end of business on Jan. 28, 2000 (the Record Date as
specified in the Plan of Reorganization) will be issued, following the Effective
Date, a pro-rata share of:
o (i) 960,000 shares of new Forcenergy common stock;
o (ii) warrants to acquire 240,000 new Forcenergy common shares at a price
of $16.67; and
o (iii) warrants to acquire 240,000 new Forcenergy common shares at a price
of $20.83.
The warrants will have terms of four and five years, respectively. The holders
of general unsecured claims, including the holders of the company's Senior
Subordinated Notes, will receive pro-rata shares of 23,040,000 new Forcenergy
common shares.
After the close of business on the Record Date, Forcenergy's transfer agents in
the United States and Sweden will not process any further changes in the record
holders of Forcenergy's existing common stock and Forcenergy will not recognize
any such transfers. Monitoring any transfers after the Record Date but prior to
the Effective Date will be the responsibility of the transacting parties. The
Swedish Depository Receipt ("SDR") program maintained on the Stockholm Stock
Exchange will be terminated.
The issuance of new common stock certificates and the warrants will be processed
by Forcenergy's transfer agent - American Stock Transfer & Trust Company. The
issuance and distribution of the
<PAGE> 2
new Forcenergy shares and warrants will take place as soon as possible after the
Effective Date of the Plan of Reorganization.
Halt of Trading
At the present time Forcenergy common shares are traded on the OTC Bulleting
Board under the symbol "FENYQ.OB." Forcenergy expects that trading of its
existing common stock will cease on the Stockholm Stock Exchange (Sweden) and
NASD (USA). Even so, the company has been informed that trading is likely to
occur on the OTC Bulleting Board until the Effective Date of the Plan of
Reorganization when the existing common stock will be cancelled. The company has
also been informed that the new Forcenergy common shares could immediately begin
trading on the OTC Bulleting Board upon issuance. Forcenergy has applied for a
listing on the Nasdaq National Market under the symbol "FORC" and, assuming
approval of the application, expects that the new Forcenergy common shares will
begin trading on the Nasdaq 20 to 30 trading days after the issuance of the new
shares.
Delisting in Sweden
Forcenergy's new common stock and warrants will not be listed on the Stockholm
Stock Exchange nor will the SDR (Swedish Depository Receipts) program continue.
Stockholders residing outside the United States should be able to trade the new
Forcenergy common stock through their existing brokers. The warrants issued to
the holders of new Forcenergy common stock will not be listed on any exchange.
Following the reorganization, Forcenergy will have a total of 24 million new
common shares outstanding. Fully diluted shares will initially be estimated at
25.8 million shares to account for warrants to acquire Forcenergy common stock
that will be attached to the rights offering for preferred stock being made
available to the members of the general unsecured class.
Forcenergy Inc. is an independent oil and gas company engaged in the
exploration, acquisition, development, exploitation and production of oil and
natural gas. Forcenergy's primary areas of operation are the Gulf of Mexico and
Cook Inlet, Alaska.
Certain statements in this news release regarding future expectations and plans
for future activities may be regarded as "forward looking statements" within the
meaning of the Securities Litigation Reform Act. They are subject to various
risks, such as financial market conditions, decisions of courts of law,
operating hazards, drilling risks, and the inherent uncertainties in
interpreting engineering data relating to underground accumulations of oil and
natural gas, as well as other risks discussed in detail in the company's SEC
filings, including the Form 10-K for the year ended Dec. 31, 1998. Actual
results and outcomes may vary materially.
Contact:
Forcenergy Inc., Miami
J. Russell Porter, 305/856-8500
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