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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): FEBRUARY 15, 2000
FORCENERGY INC
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 0-26444 65-0429338
(STATE OR OTHER JURISDICTION (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER
OF INCORPORATION) IDENTIFICATION NO.)
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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 5. OTHER EVENTS
The following information is being furnished in connection with the
consummation of the First Amended Joint Plan of Reorganization dated October 26,
1999, of Forcenergy Inc ("Forcenergy") and Forcenergy Resources Inc., as
modified and confirmed (the "Plan"). Terms not otherwise defined below have the
meaning as set forth in the Plan, a copy of which has been filed by Forcenergy
under Form 8-K on January 26, 2000.
On February 15, 2000, the Plan was consummated and became effective, thus
completing Forcenergy's financial restructuring.
Pursuant to the terms of the Plan, a new Board of Directors has been
appointed. The nine member Board of Directors includes four former directors -
Bruce L. Burnham, Eric Forss, Robert Issal and Stig Wennerstrom, Forcenergy's
President and Chief Executive Officer, as well as five new directors - Michael
F. Bennet, B. James Ford, Clifford P. Hickey, Stephen A. Kaplan and Gregory P.
Pipkin.
In connection with the consummation of the Plan, Forcenergy has entered
into a new Credit Agreement (the "Credit Agreement") with ING (U.S.) Capital
Corporation as Agent, which agreement provides for $250 million in Revolving
Credit Loans and $70 million in Term Loans.
Forcenergy has commenced distributions of Rights Offering Subscription
Forms to holders of Allowed General Unsecured Claims and set a Subscription
Rights Election Deadline of March 10, 2000. Forcenergy expects to complete the
Rights Offering and any issuance to the Standby Purchasers under the Commitment
Agreement as soon as practicable thereafter.
Pursuant to the Plan, certificates representing shares of old Forcenergy
common stock, including shares of Convest and Edisto that have not been
exchanged for shares of old Forcenergy common stock, and old Senior Subordinated
Notes have been canceled. Distributions of shares of New Forcenergy Common Stock
and Warrants are being made by American Stock Transfer & Trust Company,
Forcenergy's transfer agent and registrar. Holders of Old Common Stock and old
Senior Subordinated Notes may contact their brokers regarding these
distributions and information that may be required in connection with these
distributions.
Forcenergy has established an initial Reserve of 1,115,326 shares of New
Forcenergy Common Stock, or approximately $20 million, for Disputed Claim
Amounts of General Unsecured Claims. Holders of approximately $393,152,601 of
Allowed General Unsecured Claims will receive a Pro Rata Share of an initial
distribution of 21,924,674 shares of New Forcenergy Common Stock, or
approximately 1 share for each $17.93197 of Claims. Surplus Distributions of
shares for Allowed Claims that are unclaimed after one year and Disputed Claims
that are not Allowed, or are Allowed in an amount less than the Disputed Claim
Amount, will be made to holders of Allowed General Unsecured Claims as of the
Record Date on January 28, 2000 in accordance with the Plan.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
3.1 Amended and Restated Certificate of Incorporation of Forcenergy
Inc dated as of February 15, 2000.
3.2 Amended and Restated Bylaws of Forcenergy Inc dated as of
February 15, 2000.
4.1 Specimen Common Stock Certificate.
4.2 Certificate of Designation of the Powers Preferences and
Relative, Participating, Optional and other Special Rights of
14% Series A Cumulative Preferred Stock.
4.3 Specimen 14% Series A Cumulative Preferred Stock Certificate.
4.4 Warrant Agreement (Four Year Warrants), dated as of February 15,
2000 between Forcenergy Inc and American Stock Transfer and
Trust Company, including the form of Warrant Certificate for
the Four Year Warrants.
4.5 Warrant Agreement (Five Year Warrants), dated as of February 15,
2000 between Forcenergy Inc and American Stock Transfer and
Trust Company, including the form of Warrant Certificate for
the Five Year Warrants.
10.1 Forcenergy Inc 1999 Stock Plan.
10.2 Forcenergy Inc 1999 Employee Stock Purchase Plan.
10.3 Registration Rights Agreement dated as of February 15, 2000
among Forcenergy Inc and the parties identified on the
signature pages thereto.
10.4 Employment Agreement dated as of February 15, 2000 between
Forcenergy Inc and Stig Wennerstrom.
10.5 Employment Agreement dated as of February 15, 2000 between
Forcenergy Inc and J. Russell Porter.
10.6 Employment Agreement dated as of February 15, 2000 between
Forcenergy Inc and Thomas F. Getten.
10.7 Employment Agreement dated as of February 15, 2000 between
Forcenergy Inc and E. Joseph Grady.
10.8 Employment Agreement dated as of February 15, 2000 between
Forcenergy Inc and Gary E. Carlson.
10.9 Employment Agreement dated as of February 15, 2000 between
Forcenergy Inc and Mark Yelverton.
10.10 Employment Agreement dated as of February 15, 2000 between
Forcenergy Inc and Robert G. Gerdes.
10.11 Commitment Agreement dated December 10, 1999 between Forcenergy
Inc and the Standby Purchasers named therein.
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10.12 Credit Agreement dated as of February 15, 2000 between Forcenergy
Inc, ING (U.S.) Capital LLC, as Agent and certain financial
institutions named therein as Lenders.
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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
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E. Joseph Grady, Vice President and Chief
Financial Officer
Date: February 15, 2000
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INDEX TO EXHIBITS
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Exhibit
Number Description
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3.1 Amended and Restated Certificate of Incorporation of Forcenergy
Inc dated as of February 15, 2000.
3.2 Amended and Restated Bylaws of Forcenergy Inc dated as of
February 15, 2000.
4.1 Specimen Common Stock Certificate.
4.2 Certificate of Designation of the Powers Preferences and
Relative, Participating, Optional and other Special Rights of
14% Series A Cumulative Preferred Stock.
4.3 Specimen 14% Series A Cumulative Preferred Stock Certificate.
4.4 Warrant Agreement (Four Year Warrants), dated as of February 15,
2000 between Forcenergy Inc and American Stock Transfer and
Trust Company, including the form of Warrant Certificate for
the Four Year Warrants.
4.5 Warrant Agreement (Five Year Warrants), dated as of February 15,
2000 between Forcenergy Inc and American Stock Transfer and
Trust Company, including the form of Warrant Certificate for
the Five Year Warrants.
10.1 Forcenergy Inc 1999 Stock Plan.
10.2 Forcenergy Inc 1999 Employee Stock Purchase Plan.
10.3 Registration Rights Agreement dated as of February 15, 2000
among Forcenergy Inc and the parties identified on the
signature pages thereto.
10.4 Employment Agreement dated as of February 15, 2000 between
Forcenergy Inc and Stig Wennerstrom.
10.5 Employment Agreement dated as of February 15, 2000 between
Forcenergy Inc and J. Russell Porter.
10.6 Employment Agreement dated as of February 15, 2000 between
Forcenergy Inc and Thomas F. Getten.
10.7 Employment Agreement dated as of February 15, 2000 between
Forcenergy Inc and E. Joseph Grady.
10.8 Employment Agreement dated as of February 15, 2000 between
Forcenergy Inc and Gary E. Carlson.
10.9 Employment Agreement dated as of February 15, 2000 between
Forcenergy Inc and Mark Yelverton.
10.10 Employment Agreement dated as of February 15, 2000 between
Forcenergy Inc and Robert G. Gerdes.
10.11 Commitment Agreement dated December 10, 1999 between Forcenergy
Inc and the Standby Purchasers named therein.
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10.12 Credit Agreement dated as of February 15, 2000 between Forcenergy
Inc, ING (U.S.) Capital LLC, as Agent and certain financial
institutions named therein as Lenders.
</TABLE>
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EXHIBIT 3.1
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 this Certificate is being filed with
the Secretary of State of the State of Delaware (the "Secretary");
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 this
Certificate 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.
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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.
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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 15th day of February, 2000, and affirms under the penalties of
perjury that it is true and it is the act and deed of the Corporation.
FORCENERGY INC
By: /s/ STIG WENNERSTROM
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Stig Wennerstrom
President
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EXHIBIT 3.2
AMENDED AND RESTATED
BYLAWS
OF
FORCENERGY INC
A DELAWARE CORPORATION
DATED: FEBRUARY 15, 2000
<PAGE> 2
INDEX
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PAGE
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ARTICLE I
OFFICES AND FISCAL YEAR
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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 and Removal.................................................................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
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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 hm 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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<PAGE> 17
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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<PAGE> 18
(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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<PAGE> 19
(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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<PAGE> 20
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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<PAGE> 21
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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<PAGE> 22
CERTIFICATION
The undersigned duly elected Secretary of the corporation does hereby
certify as of February 15, 2000 that the foregoing Bylaws were adopted pursuant
to Section 303(c) and Section 103 of the General Corporation Law of the State
of Delaware and an order dated January 19, 2000 relating to 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.
/s/ THOMAS F. GETTEN
---------------------------------
Thomas F. Getten, Secretary
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<PAGE> 1
EXHIBIT 4.1
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 4.2
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 this Certificate of Designation is
being filed with the Secretary of State of the State of Delaware (the
"Secretary");
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 this
Certificate of Designation 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
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
<PAGE> 2
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.
2
<PAGE> 3
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
March 31, 2000 (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.
(c) Dividends on the Preferred Stock shall be cumulative, but not
compounded, as follows:
3
<PAGE> 4
(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 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
4
<PAGE> 5
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 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.
5
<PAGE> 6
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 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
<PAGE> 7
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.
(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
7
<PAGE> 8
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 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,
8
<PAGE> 9
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;
(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
9
<PAGE> 10
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 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).
10
<PAGE> 11
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:
(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.
11
<PAGE> 12
(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 February 4, 2000 between the Corporation and
American Stock Transfer & Trust Company, 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 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.
12
<PAGE> 13
(m) "Corporation" shall mean Forcenergy Inc, a Delaware corporation.
(l) "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.
(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.
13
<PAGE> 14
(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 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,
14
<PAGE> 15
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 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
15
<PAGE> 16
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 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.
16
<PAGE> 17
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.
17
<PAGE> 18
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 4th day of February, 2000.
FORCENERGY INC
By: /s/ STIG WENNERSTROM
---------------------------
Stig Wennerstrom, President
Attest:
/s/ THOMAS F. GETTEN
--------------------------------
Thomas F. Getten, Secretary
18
<PAGE> 1
EXHIBIT 4.3
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> 1
EXHIBIT 4.4
================================================================================
WARRANT AGREEMENT
(FOUR YEAR WARRANTS)
BETWEEN
FORCENERGY INC
AND
AMERICAN STOCK TRANSFER & TRUST COMPANY,
AS WARRANT AGENT
-----------------------------------
DATED AS OF FEBRUARY 15, 2000
-----------------------------------
Warrants to Purchase 240,000 Common Shares
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
AGREEMENT......................................................................1
1. DEFINITIONS...............................................................1
2. WARRANT CERTIFICATES......................................................4
2.1 Issuance of Warrants.............................................4
2.2 Form, Denomination and Date of Warrants..........................5
2.3 Execution and Delivery of Warrant Certificates...................5
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..............................7
(a) Exercise of Warrants....................................7
(b) Expiration of Warrants..................................7
(c) Method of Exercise......................................7
(d) Partial Exercise........................................8
(e) Issuance of Warrant Shares..............................8
(f) Time of Exercise........................................9
3.3 Payment of Taxes.................................................9
3.4 Surrender of Certificates........................................9
3.5 Shares Issuable..................................................9
4. DISSOLUTION, LIQUIDATION OR WINDING UP...................................10
5. ADJUSTMENTS..............................................................10
5.1 Adjustments.....................................................10
(a) Stock Dividends, Subdivisions and Combinations.........10
(b) Reclassifications......................................11
(c) Distribution of Warrants or Other Rights to Holders
of Common Shares.......................................12
(d) Superseding Adjustment of Number of Warrant Shares
into Which Each Warrant is Exercisable.................12
(e) Other Provisions Applicable to Adjustments under
this Section...........................................13
(f) Warrant Price Adjustment...............................14
(g) Merger, Consolidation or Combination...................14
(h) Compliance with Governmental Requirements..............14
(i) Optional Tax Adjustment................................14
(j) Warrants Deemed Exercisable............................15
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
5.2 Notice of Adjustment............................................15
5.3 Statement on Warrant Certificates...............................15
5.4 Fractional Interest.............................................15
6. LOSS OR MUTILATION.......................................................15
7. RESERVATION AND AUTHORIZATION OF WARRANT SHARES..........................16
8. WARRANT TRANSFER BOOKS...................................................17
9. WARRANT HOLDERS..........................................................18
9.1 Voting or Dividend Rights.......................................18
9.2 Rights of Action................................................18
9.3 Treatment of Holders of Warrant Certificates....................18
9.4 Communications to Holders.......................................18
10. NOTICES..................................................................19
10.1 Notices Generally...............................................19
10.2 Required Notices to Holders.....................................20
11. APPLICABLE LAW...........................................................21
12. PERSONS BENEFITING.......................................................21
13. COUNTERPARTS.............................................................21
14. AMENDMENTS...............................................................21
15. INSPECTION...............................................................22
16. SUCCESSOR TO THE COMPANY.................................................22
17. ENTIRE AGREEMENT.........................................................22
18. HEADINGS.................................................................22
19. CONCERNING THE WARRANT AGENT.............................................22
</TABLE>
<PAGE> 4
EXHIBITS
A. Form of Warrant Certificate.............................................A-1
<PAGE> 5
WARRANT AGREEMENT
(FOUR YEAR WARRANTS)
This WARRANT AGREEMENT, dated as of February 15, 2000, 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 January 19, 2000 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 January 28, 2000 (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.
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"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.
"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 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.
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"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 February 15, 2000.
"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 January 28, 2000, which is the Record Date
specified in the Plan.
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"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 (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 $16.67, 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.
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(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 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
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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"):
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 (FOUR YEAR WARRANTS),
DATED AS OF FEBRUARY 15, 2000, 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
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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 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:
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(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 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
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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.
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.
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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.
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:
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(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) 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
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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 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.
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(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.
(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
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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.
(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.
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(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.
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
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<PAGE> 20
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.
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.
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<PAGE> 21
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 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.
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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.
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.
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(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)).
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.
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<PAGE> 24
(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 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.
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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.
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
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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.
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.
19. CONCERNING THE WARRANT AGENT.
The Warrant Agent acts hereunder as agent and in a ministerial capacity for
the Company, and its duties shall be determined solely by the provisions hereof.
The Warrant Agent shall not, by issuing and delivering Warrant Certificates or
by any other act hereunder be deemed to make any representations as to the
validity, value or authorization of the Warrant Certificates or the Warrants
represented thereby or of any securities or other property delivered upon
exercise of any Warrant or whether any stock issued upon exercise of any Warrant
is fully paid and nonassesable.
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The Warrant Agent shall not at any time be under any duty or
responsibility to any holder of Warrant Certificates to make or cause to be made
any adjustment of the Warrant Price provided in this Agreement, or to determine
whether any fact exists which may require any such adjustments, or with respect
to the nature or extent of any such adjustment, when made, or with respect to
the method employed in making the same. It shall not (i) be liable for any
recital or statement of facts contained herein or for any action taken, suffered
or omitted by it in reliance on any Warrant Certificate or other document or
instrument believed by it in good faith to be genuine and to have been signed or
presented by the property party or parties, (ii) be responsible for any failure
on the part of the Company to comply with any of its covenants and obligations
contained in this Agreement or in any Warrant Certificate, or (iii) be liable
for any act or omission in connection with this Agreement except for its own
negligence or wilful misconduct.
The Warrant Agent may at any time consult with counsel satisfactory to
it (who may be counsel for the Company) and shall incur no liability or
responsibility for any action taken, suffered or omitted by it in good faith in
accordance with the opinion or advice of such counsel.
Any notice, statement, instruction, request, direction, order or demand
of the Company shall be sufficiently evidenced by an instrument signed by the
Chairman of the Board, President, any Vice President, its Secretary, or
Assistant Secretary, (unless other evidence in respect thereof is herein
specifically prescribed). The Warrant Agent shall not be liable for any action
taken, suffered or omitted by it in accordance with such notice, statement,
instruction, request, direction, order or demand believed by it to be genuine.
The Company agrees to pay the Warrant Agent reasonable compensation for
its services hereunder and to reimburse it for its reasonable expenses hereunder
(in each case, as indicated in writing prior to or on the date of this
Agreement, or prior to the date of such subsequent services or the incurrence of
such expenses and agreed to by the Company); it further agrees to indemnify the
Warrant Agent and save it harmless against any and all losses, expenses and
liabilities, including judgments, costs and counsel fees, for anything done or
omitted by the Warrant Agent in execution of its duties and powers hereunder
except losses, expenses and liabilities arising as a result of the Warrant
Agent's negligence or wilful misconduct.
The Warrant Agent may resign its duties and be discharged from all
further duties and liabilities hereunder (except liabilities arising as a result
of the Warrant Agent's own negligence or wilful misconduct), after giving 30
days' prior written notice to the Company. At least 15 days prior to the date
such resignation is to become effective, the Warrant Agent shall cause a copy of
such notice of resignation to be mailed to the Holder of each Warrant
Certificate at the Company's expense. Upon such resignation, or any inability of
the Warrant Agent to act as such hereunder, the Company shall appoint a new
warrant agent in writing. If the Company shall fail to make such appointment
within a period of 15 days after it has been notified in writing of such
resignation by the resigning Warrant Agent, then the Holder of any Warrant
Certificate may apply to any court of competent jurisdiction for the appointment
of a new warrant agent. Any new warrant agent, whether appointed by the Company
or by such a court, shall be a bank or trust company having a capital and
-23-
<PAGE> 28
surplus, as shown by its last published report to its stockholders, of not less
than $10,000,000 or a stock transfer company that is a registered transfer agent
under the Securities Exchange Act of 1934. After acceptance in writing of such
appointment by the new warrant agent is received by the Company, such new
warrant agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named herein as the Warrant Agent,
without any further assurance, conveyance, act or deed; but if for any reason it
shall be necessary or expedient to execute and deliver any further assurance,
conveyance, act or deed, the same shall be done at the expense of the Company
and shall be legally and validly executed and delivered by the resigning Warrant
Agent. Not later than the effective date of any such appointment the Company
shall file notice thereof with the resigning Warrant Agent and shall forthwith
cause a copy of such notice to be mailed to the Holder of each Warrant
Certificate.
Any corporation into which the Warrant Agent or any new warrant agent
may be converted or merged or any corporation resulting from any consolidation
to which the Warrant Agent or any new warrant agent shall be a party or any
corporation succeeding to the trust business of the Warrant Agent shall be a
successor warrant agent under this Agreement without any further act, provided
that such corporation is eligible for appointment as successor to the Warrant
Agent under the provisions of the preceding paragraph. Any such successor
warrant agent shall promptly cause notice of its succession as warrant agent to
be mailed to the Company and to the Registered Holder of each Warrant
Certificate.
The Warrant Agent, its subsidiaries and affiliates, and any of its or
their officers or directors, may buy and hold or sell Warrants or other
securities of the Company and otherwise deal with the Company in the same manner
and to the same extent and with like effects as though it were not Warrant
Agent. Nothing herein shall preclude the Warrant Agent from acting in any other
capacity for the Company or for any other legal entity.
-24-
<PAGE> 29
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: /s/ STIG WENNERSTROM
----------------------------------------
Stig Wennerstrom
President and Chief Executive Officer
-25-
<PAGE> 30
AMERICAN STOCK TRANSFER
& TRUST COMPANY
By: /s/ HERBERT J. LEMMER
----------------------------------------
Name: Herbert J. Lemmer
Title: Vice President
-26-
<PAGE> 31
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 (FOUR YEAR WARRANTS),
DATED AS OF FEBRUARY 15, 2000, 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
FEBRUARY 15, 2004
CUSIP No. ______________
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
A-1
<PAGE> 32
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 $16.67 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 February 15, 2004 (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: President
ATTEST:
- -------------------------------
Name:
Title:
Dated: [ ], 2000
--------------
COUNTERSIGNED:
AMERICAN STOCK TRANSFER & TRUST COMPANY
By: --------------------------
Name:
Title:
A-2
<PAGE> 33
[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 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 (Four Year Warrants),
dated as of February 15, 2000 (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.
A-3
<PAGE> 34
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, 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 February 15, 2004, 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.
A-4
<PAGE> 35
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-5
<PAGE> 36
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-6
<PAGE> 37
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-7
<PAGE> 38
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> 39
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 4.5
================================================================================
WARRANT AGREEMENT
(FIVE YEAR WARRANTS)
BETWEEN
FORCENERGY INC
AND
AMERICAN STOCK TRANSFER & TRUST COMPANY,
AS WARRANT AGENT
-----------------------------------
DATED AS OF FEBRUARY 15, 2000
-----------------------------------
Warrants to Purchase 240,000 Common Shares
================================================================================
<PAGE> 2
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 .................................................... 5
2.3 Execution and Delivery of Warrant Certificates ............................................. 5
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 ........................................................ 7
(a) Exercise of Warrants .............................................................. 7
(b) Expiration of Warrants ............................................................ 7
(c) Method of Exercise ................................................................ 7
(d) Partial Exercise .................................................................. 8
(e) Issuance of Warrant Shares ........................................................ 8
(f) Time of Exercise .................................................................. 9
3.3 Payment of Taxes ........................................................................... 9
3.4 Surrender of Certificates .................................................................. 9
3.5 Shares Issuable ............................................................................ 9
4. DISSOLUTION, LIQUIDATION OR WINDING UP .............................................................. 10
5. ADJUSTMENTS ......................................................................................... 10
5.1 Adjustments ................................................................................ 10
(a) Stock Dividends, Subdivisions and Combinations .................................... 10
(b) Reclassifications ................................................................. 11
(c) Distribution of Warrants or Other Rights to Holders of Common Shares .............. 12
(d) Superseding Adjustment of Number of Warrant Shares into Which Each Warrant is
Exercisable ....................................................................... 12
(e) Other Provisions Applicable to Adjustments under this Section ..................... 13
(f) Warrant Price Adjustment .......................................................... 14
(g) Merger, Consolidation or Combination .............................................. 14
(h) Compliance with Governmental Requirements ......................................... 14
(i) Optional Tax Adjustment ........................................................... 14
(j) Warrants Deemed Exercisable ....................................................... 15
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
5.2 Notice of Adjustment ....................................................................... 15
5.3 Statement on Warrant Certificates .......................................................... 15
5.4 Fractional Interest ........................................................................ 15
6. LOSS OR MUTILATION .................................................................................. 15
7. RESERVATION AND AUTHORIZATION OF WARRANT SHARES ..................................................... 16
8. WARRANT TRANSFER BOOKS .............................................................................. 17
9. WARRANT HOLDERS ..................................................................................... 18
9.1 Voting or Dividend Rights .................................................................. 18
9.2 Rights of Action ........................................................................... 18
9.3 Treatment of Holders of Warrant Certificates ............................................... 18
9.4 Communications to Holders .................................................................. 18
10. NOTICES ............................................................................................. 19
10.1 Notices Generally .......................................................................... 19
10.2 Required Notices to Holders ................................................................ 20
11. APPLICABLE LAW ...................................................................................... 21
12. PERSONS BENEFITING .................................................................................. 21
13. COUNTERPARTS ........................................................................................ 21
14. AMENDMENTS .......................................................................................... 21
15. INSPECTION .......................................................................................... 22
16. SUCCESSOR TO THE COMPANY ............................................................................ 22
17. ENTIRE AGREEMENT .................................................................................... 22
18. HEADINGS ............................................................................................ 22
19. CONCERNING THE WARRANT AGENT ........................................................................ 22
</TABLE>
<PAGE> 4
EXHIBITS
<TABLE>
<S> <C>
A. Form of Warrant Certificate........................................ A-1
</TABLE>
<PAGE> 5
WARRANT AGREEMENT
(FIVE YEAR WARRANTS)
This WARRANT AGREEMENT, dated as of February 15, 2000, 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 January 19, 2000 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 January 28, 2000 (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.
<PAGE> 6
"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.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Expiration Date" shall mean the 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.
-2-
<PAGE> 7
"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 February 15, 2000.
"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 January 28, 2000, which is the Record Date
specified in the Plan.
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"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 (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 $20.83, 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.
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<PAGE> 9
(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 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
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<PAGE> 10
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"):
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 (FIVE YEAR
WARRANTS), DATED AS OF FEBRUARY 15, 2000, 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
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<PAGE> 11
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
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:
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<PAGE> 12
(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 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
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<PAGE> 13
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.
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.
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<PAGE> 14
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.
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:
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<PAGE> 15
(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) 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
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<PAGE> 16
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 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.
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<PAGE> 17
(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.
(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
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<PAGE> 18
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.
(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.
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<PAGE> 19
(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.
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
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<PAGE> 20
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.
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.
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<PAGE> 21
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 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.
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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.
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.
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(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)).
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.
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(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 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.
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<PAGE> 25
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.
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
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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.
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.
19. CONCERNING THE WARRANT AGENT.
The Warrant Agent acts hereunder as agent and in a ministerial
capacity for the Company, and its duties shall be determined solely by the
provisions hereof. The Warrant Agent shall not, by issuing and delivering
Warrant Certificates or by any other act hereunder be deemed to make any
representations as to the validity, value or authorization of the Warrant
Certificates or the Warrants represented thereby or of any securities or other
property delivered upon exercise of any Warrant or whether any stock issued upon
exercise of any Warrant is fully paid and nonassesable.
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The Warrant Agent shall not at any time be under any duty or
responsibility to any holder of Warrant Certificates to make or cause to be made
any adjustment of the Warrant Price provided in this Agreement, or to determine
whether any fact exists which may require any such adjustments, or with respect
to the nature or extent of any such adjustment, when made, or with respect to
the method employed in making the same. It shall not (i) be liable for any
recital or statement of facts contained herein or for any action taken, suffered
or omitted by it in reliance on any Warrant Certificate or other document or
instrument believed by it in good faith to be genuine and to have been signed or
presented by the property party or parties, (ii) be responsible for any failure
on the part of the Company to comply with any of its covenants and obligations
contained in this Agreement or in any Warrant Certificate, or (iii) be liable
for any act or omission in connection with this Agreement except for its own
negligence or wilful misconduct.
The Warrant Agent may at any time consult with counsel
satisfactory to it (who may be counsel for the Company) and shall incur no
liability or responsibility for any action taken, suffered or omitted by it in
good faith in accordance with the opinion or advice of such counsel.
Any notice, statement, instruction, request, direction, order
or demand of the Company shall be sufficiently evidenced by an instrument signed
by the Chairman of the Board, President, any Vice President, its Secretary, or
Assistant Secretary, (unless other evidence in respect thereof is herein
specifically prescribed). The Warrant Agent shall not be liable for any action
taken, suffered or omitted by it in accordance with such notice, statement,
instruction, request, direction, order or demand believed by it to be genuine.
The Company agrees to pay the Warrant Agent reasonable
compensation for its services hereunder and to reimburse it for its reasonable
expenses hereunder (in each case, as indicated in writing prior to or on the
date of this Agreement, or prior to the date of such subsequent services or the
incurrence of such expenses and agreed to by the Company); it further agrees to
indemnify the Warrant Agent and save it harmless against any and all losses,
expenses and liabilities, including judgments, costs and counsel fees, for
anything done or omitted by the Warrant Agent in execution of its duties and
powers hereunder except losses, expenses and liabilities arising as a result of
the Warrant Agent's negligence or wilful misconduct.
The Warrant Agent may resign its duties and be discharged from
all further duties and liabilities hereunder (except liabilities arising as a
result of the Warrant Agent's own negligence or wilful misconduct), after giving
30 days' prior written notice to the Company. At least 15 days prior to the date
such resignation is to become effective, the Warrant Agent shall cause a copy of
such notice of resignation to be mailed to the Holder of each Warrant
Certificate at the Company's expense. Upon such resignation, or any inability of
the Warrant Agent to act as such hereunder, the Company shall appoint a new
warrant agent in writing. If the Company shall fail to make such appointment
within a period of 15 days after it has been notified in writing of such
resignation by the resigning Warrant Agent, then the Holder of any Warrant
Certificate may apply to any court of competent jurisdiction for the appointment
of a new warrant agent. Any new warrant agent, whether appointed by the Company
or by such a court, shall be a bank or trust company having a capital and
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surplus, as shown by its last published report to its stockholders, of not less
than $10,000,000 or a stock transfer company that is a registered transfer agent
under the Securities Exchange Act of 1934. After acceptance in writing of such
appointment by the new warrant agent is received by the Company, such new
warrant agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named herein as the Warrant Agent,
without any further assurance, conveyance, act or deed; but if for any reason it
shall be necessary or expedient to execute and deliver any further assurance,
conveyance, act or deed, the same shall be done at the expense of the Company
and shall be legally and validly executed and delivered by the resigning Warrant
Agent. Not later than the effective date of any such appointment the Company
shall file notice thereof with the resigning Warrant Agent and shall forthwith
cause a copy of such notice to be mailed to the Holder of each Warrant
Certificate.
Any corporation into which the Warrant Agent or any new
warrant agent may be converted or merged or any corporation resulting from any
consolidation to which the Warrant Agent or any new warrant agent shall be a
party or any corporation succeeding to the trust business of the Warrant Agent
shall be a successor warrant agent under this Agreement without any further act,
provided that such corporation is eligible for appointment as successor to the
Warrant Agent under the provisions of the preceding paragraph. Any such
successor warrant agent shall promptly cause notice of its succession as warrant
agent to be mailed to the Company and to the Registered Holder of each Warrant
Certificate.
The Warrant Agent, its subsidiaries and affiliates, and any of
its or their officers or directors, may buy and hold or sell Warrants or other
securities of the Company and otherwise deal with the Company in the same manner
and to the same extent and with like effects as though it were not Warrant
Agent. Nothing herein shall preclude the Warrant Agent from acting in any other
capacity for the Company or for any other legal entity.
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<PAGE> 29
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: /s/ STIG WENNERSTROM
---------------------------------------
Stig Wennerstrom
President and Chief Executive Officer
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<PAGE> 30
AMERICAN STOCK TRANSFER
& TRUST COMPANY
By: /s/ HERBERT J. LEMMER
---------------------------------------
Name: Herbert J. Lemmer
Title: Vice President
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<PAGE> 31
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 (FIVE YEAR
WARRANTS), DATED AS OF FEBRUARY 15, 2000, 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
FEBRUARY 15, 2005
CUSIP No. 345 206 122
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
A-1
<PAGE> 32
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 $20.83 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 February 15, 2004
(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: President
ATTEST:
- ------------------------------
Name:
Title:
Dated: _________ [ ], 2000
COUNTERSIGNED:
AMERICAN STOCK TRANSFER & TRUST COMPANY
By:
---------------------------
Name:
Title:
A-2
<PAGE> 33
[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 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 (Five Year Warrants),
dated as of February 15, 2000 (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.
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<PAGE> 34
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, 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 February 15, 2005, 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> 35
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-5
<PAGE> 36
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.
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<PAGE> 37
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-7
<PAGE> 38
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> 39
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 10.1
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.
"Change in Control" shall mean the occurrence of any one of the
following:
<PAGE> 2
(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.
"Employee" shall mean any employee of the Company or an Affiliate.
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<PAGE> 3
"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.
"Person" shall mean individual, corporation, partnership, association,
joint-stock company, trust, unincorporated organization, government or
political subdivision thereof or other entity.
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<PAGE> 4
"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, 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
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<PAGE> 5
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.
SECTION 5. Eligibility.
Any Employee, Director or Consultant shall be eligible to be
designated a Participant and receive an Award under the Plan.
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<PAGE> 6
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.
(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
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<PAGE> 7
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.
(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.
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(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 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.
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<PAGE> 9
(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.
(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.
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(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.
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
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<PAGE> 11
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.
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
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<PAGE> 12
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.
(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.
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<PAGE> 13
(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 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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<PAGE> 1
EXHIBIT 10.2
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.
<PAGE> 2
(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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<PAGE> 3
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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<PAGE> 4
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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<PAGE> 5
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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<PAGE> 6
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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<PAGE> 8
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.
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<PAGE> 9
(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.
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<PAGE> 1
EXHIBIT 10.3
================================================================================
REGISTRATION RIGHTS AGREEMENT
BY AND AMONG
FORCENERGY INC
AND
THE PERSONS LISTED ON THE
SIGNATURE PAGES HEREOF
Dated as of February 15, 2000
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
1. Definitions...............................................................................1
2. Demand Registration.......................................................................4
2.1 Request for Registration..............................................................5
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>
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<PAGE> 3
<TABLE>
<S> <C> <C>
11. Miscellaneous............................................................................18
11.1 Notice Generally....................................................................18
11.2 Successors and Assigns..............................................................18
11.3 Amendments..........................................................................19
11.4 Severability........................................................................19
11.5 Headings............................................................................19
11.6 Governing Law.......................................................................19
11.7 Counterparts........................................................................19
11.8 Entire Agreement....................................................................19
11.9 Specific Performance................................................................19
</TABLE>
ii
<PAGE> 4
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT ("this Agreement"), dated
as of February 15, 2000, by and among Forcenergy Inc, a Delaware corporation
(the "Company"), and each of the other persons or entities signatory hereto.
W I T N E S S E T H :
WHEREAS, the First Amended Disclosure Statement and Joint Plan
of Reorganization, dated as of October 26, 1999, as modified (the "Plan") was
confirmed on January 19, 2000 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.
<PAGE> 5
"Commission" means the United States Securities and Exchange Commission
and any successor United States federal agency or governmental authority having
similar powers.
"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 (i) each person or entity signatory hereto or any other
person or entity which 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.
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<PAGE> 6
"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-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.
3
<PAGE> 7
"Shelf Filing Deadline" has the meaning assigned to such term in
Section 4.1.
"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.
(a) 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
4
<PAGE> 8
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 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.
2.2 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.
2.3 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.
2.4 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.
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<PAGE> 9
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
6
<PAGE> 10
clause (i) of the immediately preceding sentence shall be effected pro rata
based on the ratio 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> 11
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
8
<PAGE> 12
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> 13
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
10
<PAGE> 14
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> 15
(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
12
<PAGE> 16
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
13
<PAGE> 17
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
14
<PAGE> 18
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> 19
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
16
<PAGE> 20
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.
17
<PAGE> 21
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
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.
18
<PAGE> 22
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.
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.
19
<PAGE> 23
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: /s/ STIG WENNERSTORM
---------------------------------
Name: Stig Wennerstrom
Title: President
[Remainder of Page Intentionally Left Blank - additional signature pages of
Holders to follow]
20
<PAGE> 24
The Anschutz Corporation
By: /s/ Craig Slater
------------------------------
Name: Craig Slater
Title: Vice President
Address: 555 17th Street,
Suite 2400
Denver, CO 80202
Lehman Brothers, Inc.
By: /s/ J. Robert Chambers
------------------------------
Name: J. Robert Chambers
Title: Senior Vice President
Address: 600 Travis St.,
Suite 7330
Houston, TX 77002
Oaktree Capital Management, LLC,
as general partner or investment
manager of the funds and
accounts set forth on Schedule I
hereto
By: /s/ Bruce Karsm
------------------------------
Name: Bruce Karsm
Title: President
Address: 333 South Grand Avenue
LA, CA 90071
By: /s/ Stephen Kaplan
------------------------------
Name: Stephen Kaplan
Title: Principal
Address: 333 South Grand Avenue
LA, CA 90071
21
<PAGE> 25
SCHEDULE I
Oaktree Capital management, LLC is acting as general partner or investment
manager of the following funds and accounts:
OCM Principal Opportunities Fund, L.P.
OCM Opportunities Fund II, L.P.
Columbia/ HCA Master Retirement Trust
22
<PAGE> 1
EXHIBIT 10.4
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") made as of the Effective
Date by and between Stig Wennerstrom (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 September 14, 1993, 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 President, Chief
Executive Officer, and Chairman of the Board of Directors, 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 of the Company. The
Executive shall also serve as a member of the Executive Committee of the Board
of Directors. 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 $759,000 per annum for the period commencing on the Effective
Date and ending on
<PAGE> 2
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 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.
2
<PAGE> 3
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
3
<PAGE> 4
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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<PAGE> 5
(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
5
<PAGE> 6
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:
Stig Wennerstrom
28 Harbor Point
Key Biscayne, Florida 33149
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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<PAGE> 8
(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: /s/ THOMAS F. GETTEN
----------------------------
Thomas F. Getten
Vice President
EXECUTIVE:
/s/ STIG WENNERSTROM
-------------------------------
Stig Wennerstrom
8
<PAGE> 1
EXHIBIT 10.5
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") made as of the Effective
Date by and between J. Russell Porter (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 July 1, 1996, 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 Executive Vice President of
the Company, 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 $350,000 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
<PAGE> 2
Base Salary, subject to the withholding of such amounts relating to the taxes
and other 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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<PAGE> 3
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
3
<PAGE> 4
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;
4
<PAGE> 5
(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
5
<PAGE> 6
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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<PAGE> 7
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:
J. Russell Porter
3990 El Prado Blvd.
Coconut Grove, Florida 33133
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.
7
<PAGE> 8
(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: /s/ STIG WENNERSTROM
------------------------------
Stig Wennerstrom
President
EXECUTIVE:
/s/ J. RUSSELL PORTER
---------------------------------
J. Russell Porter
8
<PAGE> 1
EXHIBIT 10.6
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") made as of the Effective
Date by and between Thomas F. Getten (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 January 1, 1997, 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 a Vice President of the Company
and the Company's General Counsel, 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 $300,000 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
<PAGE> 2
Base Salary, subject to the withholding of such amounts relating to the taxes
and other 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.
2
<PAGE> 3
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
3
<PAGE> 4
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;
4
<PAGE> 5
(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
5
<PAGE> 6
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.
6
<PAGE> 7
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:
Thomas F. Getten
785 Crandon Blvd., #1202
Key Biscayne, Florida 33149
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.
7
<PAGE> 8
(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: /s/ STIG WENNERSTROM
------------------------------
Stig Wennerstrom
President
EXECUTIVE:
/s/ THOMAS F. GETTEN
---------------------------------
Thomas F. Getten
8
<PAGE> 1
EXHIBIT 10.7
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") made as of the Effective Date
by and between E. Joseph Grady (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 September 1, 1996, 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 a Vice President of the Company
and the Company's Chief Financial Officer, 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 $300,000 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
<PAGE> 2
Base Salary, subject to the withholding of such amounts relating to the taxes
and other 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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<PAGE> 3
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
3
<PAGE> 4
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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<PAGE> 5
(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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<PAGE> 6
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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<PAGE> 7
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:
E. Joseph Grady
11040 S.W. 69th Avenue
Miami, Florida 33156
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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<PAGE> 8
(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: /s/ STIG WENNERSTROM
------------------------------------
Stig Wennerstrom
President
EXECUTIVE:
/s/ E. JOSEPH GRADY
----------------------------------------
E. Joseph Grady
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<PAGE> 1
EX 10.8
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") made as of the Effective
Date by and between Gary E. Carlson (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 January 1, 1999 (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 a Vice President of the
Company, 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 $275,000 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> 2
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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<PAGE> 3
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
3
<PAGE> 4
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 ss.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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<PAGE> 5
(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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<PAGE> 6
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:
Gary E. Carlson
235 Botanical Circle
Anchorage, Alaska 99515
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: /s/ STIG WENNERSTROM
------------------------------
Stig Wennerstrom
President
EXECUTIVE:
/s/ GARY E. CARLSON
---------------------------------
Gary E. Carlson
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<PAGE> 1
EXHIBIT 10.9
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") made as of the Effective
Date by and between Mark Yelverton (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 January 1, 1999 (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 a Vice President of the
Company, 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 $200,000 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> 2
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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<PAGE> 3
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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<PAGE> 4
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 ss.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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<PAGE> 5
(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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<PAGE> 6
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:
Mark Yelverton
342 Garden Road
River Ridge, Louisiana 77055
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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<PAGE> 8
(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: /s/ STIG WENNERSTROM
-------------------------------
Stig Wennerstrom
President
EXECUTIVE:
/s/ MARK YELVERTON
----------------------------------
Mark Yelverton
8
<PAGE> 1
EXHIBIT 10.10
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") made as of the Effective
Date by and between Robert G. Gerdes (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 January 1, 1999 (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 a Vice President of the
Company, 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 $200,000 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> 2
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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<PAGE> 3
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
3
<PAGE> 4
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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<PAGE> 5
(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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<PAGE> 6
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.
6
<PAGE> 7
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:
Robert G. Gerdes
646 Adair Street
Mandeveille, Louisiana 70448
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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<PAGE> 8
(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: /s/ STIG WENNERSTROM
-------------------------------
Stig Wennerstrom
President
EXECUTIVE:
/s/ ROBERT G. GERDES
----------------------------------
Robert G. Gerdes
8
<PAGE> 1
EXHIBIT 10.11
COMMITMENT AGREEMENT
THIS COMMITMENT AGREEMENT, dated as of December 10, 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 Lehman Brothers, Inc., Moore Global
Investments, LTD, Remington Investment Strategies, L.P., Oaktree Capital
Management, LLC, acting as general partner or investment manager of the funds
and accounts party hereto, 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:
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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.
"Closing Date" shall mean the date of the closing of the Rights
Offering.
"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 Date" shall have the meaning set forth in the Plan.
"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,
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surface water, ground water, land surface or subsurface strata), including,
without limitation, laws and regulations relating to emissions, discharges,
releases or threatened releases of Materials of Environmental Concern, or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Materials of Environmental Concern.
"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) Subject to Section 2.1 (c), 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) Subject to Section 2.1 (c), 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. Subject
to Section 2.1 (c), 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.
(c) Notwithstanding any other provision in this Agreement to the
contrary, the obligations of the Initial Purchasers pursuant to this Agreement,
including, without limitation, with respect to the subscription, purchase and
payment for any shares of the Securities, shall terminate on the date fifteen
(15) months after the Confirmation Date.
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 Closing 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
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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;
(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 1976 (the "HSR Act") and the expiration or earlier
termination of the applicable waiting periods
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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);
(iii) any amendment of any material term of any outstanding
security of the Company or any Subsidiary;
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(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 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
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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, limited partnership, trust or
limited liability company duly organized, validly existing and in good standing
under the laws of its state of incorporation, formation, 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, partners 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, 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.
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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,
bylaws, partnership agreement, limited liability company agreement, or other
organizational document 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 Closing 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.
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
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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 Closing 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 Closing
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.
(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 Closing 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
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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 Closing 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, 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
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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.
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
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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.
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 Closing 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 Closing Date, as if made
by each Initial Purchasers, respectively, on and as of such date.
(d) At the Closing 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 Closing 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.
13
<PAGE> 14
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:
(a) Prior to the Closing 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 Closing
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 Closing 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 Closing 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 Closing Date, as if made by the Company on
and as of such date, other than the representations and warranties in Sections
3.7 and 3.8, which shall have been true and correct in
14
<PAGE> 15
all material respects on and as of the Effective Date, and the Initial
Purchasers shall have received a certificate of an executive officer of the
Company to such effect.
(g) At the Closing 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 Closing Date, and
the Initial Purchasers have received a certificate of an executive officer of
the Company to such effect.
(h) At the Closing 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 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
Closing 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(e) 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 Closing Date shall not occur and the parties hereto shall have such
right and obligations as are expressly set forth herein.
15
<PAGE> 16
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 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, upon
the Effective Date, the obligation of the Company to pay the Commitment Fee
shall become irrevocable, and 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)
16
<PAGE> 17
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
If to the Initial Purchasers:
Lehman Brothers
600 Travis, Suite 7330
Houston, Texas 77002
Attention: J. Robert Chambers
- and -
The Anschutz Corporation
555 17th Street, Suite 2400
Denver, Colorado 80202
Attention: Craig Slater
- and -
OCM Principal Opportunities Fund, L.P.
c/o Oaktree Capital Management, LLC
333 South Grand Avenue, 28th Floor
Los Angeles, California 90071
Attention: Steve Kaplan
- and -
OCM Opportunities Fund II, L.P.
c/o Oaktree Capital Management, LLC
333 South Grand Avenue, 28th Floor
Los Angeles, California 90071
Attention: Bruce Karsh
- and -
17
<PAGE> 18
Columbia/HCA Master Retirement Trust
c/o Oaktree Capital Management, LLC
333 South Grand Avenue, 28th Floor
Los Angeles, California 90071
Attention: Bruce Karsh
- and -
Moore Global Investments, LTD
1251 Avenue of the Americas
New York, New York 10020
Attention: Chris Kane
- and -
Remington Investment Strategies, L.P.
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
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
18
<PAGE> 19
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 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
Unless expressly stated to the contrary, the representations and
warranties of the parties hereto shall survive only until the Effective Date but
not thereafter.
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
19
<PAGE> 20
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.
IN WITNESS WHEREOF, the parties hereto have caused this Commitment Agreement
[LEFT INTENTIONALLY BLANK]
20
<PAGE> 21
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: /s/ STIG WENNERSTROM
---------------------------------------
Name: Stig Wennerstrom
Title: President
THE ANSCHUTZ CORPORATION
By: /s/ CRAIG D. SLATER
---------------------------------------
Name: Craig D. Slater
Title: Executive Vice President
OAKTREE CAPITAL MANAGEMENT,
LLC, as general partner or investment
manager of the funds and accounts set forth
on Schedule I hereto
By: /s/ BRUCE A. KARSH
---------------------------------------
Name: Bruce A. Karsh
Title: President
By: /s/ STEPHEN A. KAPLAN
---------------------------------------
Name: Stephen A. Kaplan
Title: Principal
LEHMAN BROTHERS, INC.
By: /s/ J. ROBERT CHAMBERS
---------------------------------------
Name: J. Robert Chambers
Title: Senior Vice President
MOORE GLOBAL INVESTMENTS, LTD
By: /s/ ANDREW S. PARETS
---------------------------------------
Name: Andrew S. Parets
Title:
REMINGTON INVESTMENT STRATEGIES, L.P.
By: /s/ ANDREW S. PARETS
---------------------------------------
Name: Andrew S. Parets
Title:
21
<PAGE> 22
SCHEDULE I
Oaktree Capital Management, LLC is acting as general partner or investment
manager of the following funds and accounts:
OCM Principal Opportunities Fund, L.P. 75.1%
OCM Opportunities Fund II, L.P. 24.5%
Columbia/HCA Master Retirement Trust 0.4%
22
<PAGE> 1
EXHIBIT 10.12
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 Facility
$70,000,000 Term Loans
February 15, 2000
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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CREDIT AGREEMENT..................................................................................................1
RECITALS:.........................................................................................................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...................................................20
Section 2.4. Continuations and Conversions of Existing Loans.......................................21
Section 2.5. Use of Proceeds.......................................................................22
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.............................................................28
Section 2.12. Letters of Credit.....................................................................29
Section 2.13. Requesting Letters of Credit..........................................................29
Section 2.14. Reimbursement and Participations......................................................30
Section 2.15. Letter of Credit Fees.................................................................31
Section 2.16. No Duty to Inquire....................................................................31
Section 2.17. LC Collateral.........................................................................32
Section 2.18. Reorganization Plan...................................................................33
Section 2.19. Required LC...........................................................................34
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...............................36
Section 3.4. Availability..........................................................................36
Section 3.5. Funding Losses........................................................................37
Section 3.6. Reimbursable Taxes....................................................................37
Section 3.7. Change of Applicable Lending Office...................................................38
</TABLE>
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Section 3.8. Replacement of Lenders................................................................39
ARTICLE IV - Conditions Precedent to Lending.....................................................................39
Section 4.1. Documents to be Delivered.............................................................39
Section 4.2. Approval and Closing of Reorganization and Additional Conditions
Precedent to Effectiveness............................................................41
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.........................................................................43
Section 5.4. No Conflicts or Consents..............................................................43
Section 5.5. Enforceable Obligations...............................................................43
Section 5.6. Initial Financial Statements..........................................................43
Section 5.7. Other Obligations and Restrictions....................................................43
Section 5.8. Full Disclosure.......................................................................44
Section 5.9. Litigation............................................................................44
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..........................................................45
Section 5.13. Names and Places of Business..........................................................47
Section 5.14. Borrower's Subsidiaries...............................................................47
Section 5.15. Title to Properties, Licenses.........................................................47
Section 5.16. Government Regulation.................................................................48
Section 5.17. Insider...............................................................................48
Section 5.18. Solvency..............................................................................48
Section 5.19. Officers, Directors and Shareholders..................................................48
Section 5.20. Immaterial Subsidiaries...............................................................48
ARTICLE VI - Affirmative Covenants of Borrower...................................................................49
Section 6.1. Payment and Performance...............................................................49
Section 6.2. Books, Financial Statements and Reports...............................................49
Section 6.3. Other Information and Inspections.....................................................52
Section 6.4. Notice of Material Events and Change of Address.......................................52
Section 6.5. Maintenance of Properties.............................................................53
Section 6.6. Maintenance of Existence and Qualifications...........................................53
Section 6.7. Payment of Trade Liabilities, Taxes, etc..............................................53
Section 6.8. Insurance.............................................................................54
Section 6.9. Performance on Borrower's Behalf......................................................54
Section 6.10. Interest..............................................................................54
Section 6.11. Compliance with Agreements and Law....................................................54
Section 6.12. Environmental Matters; Environmental Reviews..........................................55
Section 6.13. Evidence of Compliance................................................................55
</TABLE>
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Section 6.14. Agreement to Deliver Security Documents...............................................56
Section 6.15. Perfection and Protection of Security Interests and Liens.............................56
Section 6.16. Bank Accounts; Offset.................................................................57
Section 6.17. Guaranties of Borrower's Subsidiaries.................................................57
Section 6.18. Production Proceeds...................................................................57
ARTICLE VII - Negative Covenants of Borrower.....................................................................58
Section 7.1. Indebtedness..........................................................................58
Section 7.2. Limitation on Liens...................................................................58
Section 7.3. Hedging Contracts.....................................................................58
Section 7.4. Limitation on Mergers, Issuances of Securities........................................59
Section 7.5. Limitation on Sales of Property.......................................................60
Section 7.6. Limitation on Dividends and Redemptions and Debt......................................60
Section 7.7. Limitation on Investments and New Businesses..........................................60
Section 7.8. Limitation on Credit Extensions.......................................................61
Section 7.9. Transactions with Affiliates..........................................................61
Section 7.10. Prohibited Contracts..................................................................61
Section 7.11. Current Ratio.........................................................................61
Section 7.12. Fixed Charge Coverage Ratio...........................................................61
Section 7.13. Interest Coverage.....................................................................61
Section 7.14. Tangible Net Worth....................................................................61
Section 7.15. Capital Expenditures..................................................................62
Section 7.16. Immaterial Subsidiaries...............................................................63
ARTICLE VIII - Events of Default and Remedies....................................................................63
Section 8.1. Events of Default.....................................................................63
Section 8.2. Remedies..............................................................................65
ARTICLE IX - Agent...............................................................................................66
Section 9.1. Appointment and Authority.............................................................66
Section 9.2. Exculpation, Agent's Reliance, Etc....................................................66
Section 9.3. Credit Decisions......................................................................67
Section 9.4. Indemnification.......................................................................67
Section 9.5. Rights as Lender......................................................................67
Section 9.6. Sharing of Set-Offs and Other Payments................................................68
Section 9.7. Investments...........................................................................68
Section 9.8. Benefit of Article IX.................................................................68
Section 9.9. Resignation...........................................................................69
ARTICLE X - Miscellaneous........................................................................................69
Section 10.1. Waivers and Amendments; Acknowledgments...............................................69
Section 10.2. Survival of Agreements; Cumulative Nature.............................................71
Section 10.3. Notices...............................................................................71
Section 10.4. Payment of Expenses; Indemnity........................................................72
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Section 10.5. Joint and Several Liability; Parties in Interest; Assignments.........................73
Section 10.6. Confidentiality.......................................................................75
Section 10.7. Governing Law; Submission to Process..................................................75
Section 10.8. Limitation on Interest................................................................76
Section 10.9. Termination; Limited Survival.........................................................76
Section 10.10. Severability..........................................................................77
Section 10.11. Counterparts; Fax.....................................................................77
Section 10.12. Waiver of Jury Trial, Punitive Damages, etc...........................................77
</TABLE>
Schedules and Exhibits:
Schedule 1 - Lender Schedule
Schedule 2 - Disclosure Schedule
Schedule 3 - Security Schedule
Schedule 4 - Insurance Schedule
Schedule 5 - Reorganization Documents
Schedule 6 - Approved Debt
Schedule 7 - Post Closing Title Opinions
Exhibit A-1 - Revolving Credit Promissory Note
Exhibit A-2 - 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 - Required LC
iv
<PAGE> 6
CREDIT AGREEMENT
THIS CREDIT AGREEMENT is made as of February 15, 2000, 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:
WHEREAS, on March 21, 1999 , Borrower filed a voluntary petition for
relief commencing a reorganization case under Chapter 11 of the United States
Bankruptcy Code with the United States Bankruptcy Court for the Eastern District
of Louisiana (the "Bankruptcy Court") under Case No. 99-11391"A" and Forcenergy
Resources Inc., a Texas corporation, as debtor and debtor-in-possession ("FRI"),
filed a voluntary petition for relief commencing a reorganization case under
Chapter 11 of the Bankruptcy Code with the Bankruptcy Court under Case No.
99-11393 "A"; such cases are now being jointly administered under Case No.
99-11391"A";
WHEREAS, Borrower and FRI have continued to operate their businesses
and manage their respective properties as debtors and debtors-in-possession
under Sections 1107 and 1108 of the Bankruptcy Code;
WHEREAS, by orders dated January 19, 2000 and February 3, 2000,
respectively, (collectively, the "Confirmation Order"), the First Amended Joint
Plan of Reorganization of Borrower and FRI dated October 26, 1999, as modified
(the "Reorganization Plan") was confirmed, and Borrower has been authorized to
enter into this Agreement as the New Senior Credit Facility referred to in the
Reorganization Plan;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, the parties agree as follows:
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
<PAGE> 7
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.
"Applicable Base Rate Margin" means, on each day, (i) one percent
(1.0%) per annum in respect of Revolving Credit Loans and (ii) two and one-half
percent (2.5%) per annum in respect of Term Loans.
"Applicable Eurodollar Margin" means, on each day, (i) two percent
(2.0%) per annum in respect of Revolving Credit Loans and (ii) three and
one-half percent (3.5%) per annum in respect of 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 6.
"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
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<PAGE> 8
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; provided, however, that the
Borrowing Base shall never exceed the Revolving Credit Commitment.
"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.
"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
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<PAGE> 9
(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.
"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.
"Commitment Agreement" has the meaning given such term in the
Reorganization Plan.
"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, plus (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,
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<PAGE> 10
plus (iii) 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.
"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.
"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 2 hereto.
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"Domestic Lending Office" means, with respect to any Lender, the office
of such Lender specified as its "Domestic Lending Office" on the Lender Schedule
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.
"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" on the Lender
Schedule 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%)
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<PAGE> 12
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.
"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.
"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" means the First Amended Joint Disclosure
Statement with
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<PAGE> 13
respect to the Reorganization Plan dated October 26, 1999, as modified, as
approved by the Bankruptcy Court.
"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
instruments, (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 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.
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"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.
"Immaterial Subsidiary" means each of the following Subsidiaries of
Borrower: Forcenergy Ltd, Forcenergy Drilling Inc., Forcenergy GOM Inc.,
Forecenergy Invest AB, FAB Holding LLC, Mint Holding Co., Edisto Energy Inc.,
and Edisto Canada Inc.
"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),
(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,
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(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.
"Initial Financial Statements" means the proforma Consolidated
financial statements of Borrower as of the Effective Date (incorporating actual
results of operations, balance sheet and statement of cash flows as reflected on
the internal financial statements of Debtor for the eleven (11) month period
ending November 30, 1999) reflecting the estimated effect of the Reorganization
and the effect of fresh start accounting rules as of February 1, 2000, i.e. the
updated Reorganization Model, 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
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<PAGE> 16
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 Revolving Credit 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.
"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.
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"Lender Parties" means Agent, LC Issuer, and all Lenders.
"Lender Schedule" means Schedule 1 attached hereto.
"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 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%).
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"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 August 15, 2003.
"Maximum Credit Amount" means the amount of $320,000,000.
"Maximum Term Loan Amount" means $70,000,000. Each Term Lender's
Maximum Term Loan Amount shall be the amount as set forth opposite such Term
Lender's name on the Lender Schedule.
"Moody's" means Moody's Investor Service, Inc., or its successor.
"Notes" means the Revolving Credit Notes and the Term Notes,
collectively.
"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 a Guarantor but 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
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(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 Hedging Contracts (to the extent permitted by Section 7.3), 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;
(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
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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 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
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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 of Borrower other than common
stock.
"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.
"Reorganization" means the consummation of all of the transactions
contemplated by the Reorganization Documents, including but not limited to the
transactions listed on Schedule 5A.
"Reorganization Documents" means the Reorganization Plan, the
Confirmation Order, and those documents listed on Schedule 5 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.
"Required LC" has the meaning given such term in Section 4.2(b) hereof.
"Required LC Period" has the meaning given such term in Section 4.2(b)
hereof.
"Required Preferred Stock Issuance" means the issuance by Borrower of
Preferred Stock as contemplated by the Reorganization Plan, the Commitment
Agreement and/or that certain Agreement dated as of February 15, 2000 among
Borrower and the Standby Purchasers named therein, which results in the receipt
of net cash proceeds by Borrower and/or by Agent for the benefit of Borrower in
an aggregate amount of at least $40,000,000 minus the commitment fee
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provided for under the Commitment Agreement.
"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 as such
amount is permanently 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 (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 on the
Lender Schedule 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.
"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.
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"Security Schedule" means Schedule 3 hereto.
"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 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 Lender" means a holder of a Term Note.
"Term Loan" has the meaning given in Section 2.2.
"Term Note" has the meaning given in Section 2.2.
"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
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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.
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
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does not exceed the Borrowing Base determined as of the date on which the
requested Revolving Credit Loans are to be made, and (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. 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 Revolving Credit Loans hereunder.
Section 2.2. Term Loans. Subject to the terms and conditions hereof,
each Term Lender agrees to make a single loan to Borrower on the date hereof,
provided that (a) such Term Lender's Term Loan (herein called such Term Lender's
"Term Loan") shall equal such Term Lender's Maximum Term Loan Amount and (b) the
aggregate amount of all Term Loans does not exceed the total Maximum Term Loan
Amount. Portions of each Term Lender's 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 Term Lender the amount of such Term Loan made by
such Term Lender, together with interest accruing in connection therewith, shall
be evidenced by a single promissory note (herein called such Term Lender's "Term
Note") made by Borrower payable to the order of such Term Lender in the form of
Exhibit A-2 with appropriate insertions. The amount of principal owing on any
Term Lender's Term Note shall be the amount of such Term Lender's Term Loan
minus all payments of principal theretofore received by such Term Lender on such
Term Note. Interest on each Term Note shall accrue and be due and payable as
provided herein and therein. Each 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 Term Loan which has been repaid may be reborrowed.
Borrower will, in addition to paying any interest then due on the Term
Loans, make principal payments, with each such payment applied ratably to each
Term Note, in accordance with the following schedule:
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Payment Date Amount of Payment
------------ -----------------
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 $2,500,000
August 15, 2003 $45,000,000
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
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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 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
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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
(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/Con version 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.
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(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
Rate.
(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 and each Term Lender's commitment to
make Term Loans, Borrower will pay to Agent for the account of each Revolving
Credit Lender and each Term Lender a facility fee in the amount of one-quarter
of one percent (.25%) of such Revolving Credit Lender's Revolving Credit
Commitment and one-quarter of one percent (.25%) of such Term Lender's Maximum
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
exceeds the Conforming Borrowing Base, a fee shall accrue calculated at two
percent (2.0%) per annum multiplied by the amount of 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 based upon a
fraction the numerator of which is such Lender's weighted average outstanding
Revolving Credit Loans and LC Obligations, and the denominator of which is the
weighted average total Facility Usage 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 permanently
reduce 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, 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.
(e) Each prepayment of a Term Loan pursuant to this Section shall be
made pro-rata with respect to all Term Loans.
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 Term Loans
until the Term Loans have been paid in full, and (ii) then as 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).
(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 other than the Required
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Preferred Stock Issuance), 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 Term Loans
until the Term Loans have been paid in full, and (ii) then as 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 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);
provided, however, if the 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 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, and Conforming Borrowing Base (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 Term Loans
shall be applied to the principal installments thereof in inverse order of
maturity. Each permanent reduction of the Revolving Credit Commitments shall be
applied ratably to such Revolving Credit Commitments of each Revolving Credit
Lender based upon the fraction, the numerator of which is the Revolving Credit
Commitment of such Revolving Credit Lender and the denominator of which is the
sum of the total Revolving Credit Commitments.
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.
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'
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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,
(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
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(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 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
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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 15 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 Facility Usage 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.
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
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such time; and
(b) the amount of each Letter of Credit shall not exceed
$5,000,000 (unless consented to by Majority Lenders) with the exception
of a single Letter of Credit in favor of Bank of America, N.A. relating
to the Cook Inlet Pipeline which shall not exceed $6,000,000 (the "B of
A Letter of Credit"), 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) with the exception of the B of A Letter of Credit, 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 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 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.
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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.
(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
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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
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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 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.
Section 2.18. Reorganization Plan.
(a) Capitalized terms used in this Section and not otherwise defined in
this Agreement shall have the meanings given them in the Reorganization Plan. In
order to provide for an Effective Date prior to the consummation of the Required
Preferred Stock Issuance, but without waiving provisions of Section 8.1(m):
(i) Pursuant to Section 1.117 of the Reorganization Plan, each
Lender hereby consents to a Subscription Rights Election Deadline of
March 10, 2000, or such later date designated by Borrower which is on
or prior to May 2, 2000.
(ii) Pursuant to Sections 8.2 and 9.1 of the Reorganization
Plan, each Lender
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hereby consents to the issuance of the Subscription Rights to Persons
entitled thereto on or as soon as practicable after the Effective Date.
(iii) Pursuant to Section 9.1 of the Reorganization Plan, each
Lender hereby consents to the entering into of the Subscription Warrant
Agreement with the Warrant Agent named therein on the date of the
closing of the Rights Offering or the Commitment Agreement, which is
the earliest practicable date after the Effective Date.
(b) As of the Effective Date, Borrower and Lenders hereby agree that
(i) the principal amount of Existing Obligations shall be deemed the Term Loans
to the extent of the principal amount of $70,000,000 and shall be the initial
Revolving Credit Loans hereunder in the principal amount of the balance thereof
after giving effect to the payments thereon made on the Effective Date, and (ii)
all existing letters of credit issued and outstanding by the LC Issuer for the
account of Borrower shall be outstanding under and payable pursuant to this
Agreement.
Section 2.19. Required LC.
(a) To the extent that a drawing is permitted under the terms of the
Required LC, unless such drawing is waived by all Lenders Agent shall give such
notice and submit such drawing as is contemplated by the Required LC in
accordance with and in the amount contemplated by the terms thereof prior to the
expiration of the Required LC Period. The proceeds of any drawing upon the
Required LC shall be applied as a voluntary prepayment of the Revolving Credit
Loans, without reducing the Revolving Credit Commitment.
(b) Upon the consummation of the Required Preferred Stock Issuance
(other than as a result of a drawing on the Required LC), and delivery to the
Agent of the evidence of "Offering Proceeds Received" set forth in Annex 2 to
the Required LC in the amount of $40,000,000, Agent shall return the Required LC
to the account party named therein for cancellation.
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
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the subject of any Borrowing Notice and which cannot lawfully or practicably be
maintained or 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
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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, 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
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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 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
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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 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 Andrews & Kurth, L.L.P., counsel for
Restricted Persons, substantially in the form set forth in Exhibit E, a
favorable opinion of Opinion of Liskow & Lewis, special Louisiana counsel for
Lenders, a favorable opinion of Brown, Drew, Massey, & Sullivan, special Wyoming
counsel for Lenders, a favorable opinion of Kimball, Parr, Waddoups, Brown &
Gee, special Utah counsel for Lenders, a favorable opinion of Hinkle, Cox,
Eaton, Coffield & Hensley, special New Mexico counsel for Lenders, and a
favorable opinion of Guess & Rudd, special Alaskan counsel for Restricted
Persons.
(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.
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(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:
(a) 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.
(b) A single letter of credit shall have been issued in favor of Agent,
substantially in the form attached hereto as Exhibit H and by Bank of Tokyo
Mitsubishi Trust Company, for the account of one or more of the Initial
Purchasers party to the Commitment Agreement in the face amount of $40,000,000
(the "Required LC"), providing for an unconditional right to draw upon such
letter of credit at any time during the period from and after the Effective Date
until and including June 2, 2000 (such period is herein referred to as the
"Required LC Period") in the event that the Required Preferred Stock Issuance
does not occur before May 2, 2000.
Borrower, for itself and on behalf of any other 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
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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.
(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.
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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
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
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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 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
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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.ss.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 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:
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(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;
(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.
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(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 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
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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 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. ss. 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. ss. 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.
Section 5.20. Immaterial Subsidiaries. No Immaterial Subsidiary has any
assets, other than assets which do not exceed $50,000 in the aggregate with
respect to any single Immaterial Subsidiary (other than the tax refund claim of
Edisto Canada Inc. in the amount of approximately
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$150,000). No Immaterial Subsidiary has had revenues or conducted operations in
any calendar month from and after December 31, 1999. From and after December 31,
1999, Borrower has not permitted any Restricted Person to engage in any
transaction with, transfer any asset to, or otherwise conduct any business with,
any Immaterial Subsidiary.
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 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.
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(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 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
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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 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.
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(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.
(m) Within 30 days after the Effective Date and thereafter within 5
days after any request by Agent, a report in form and detail satisfactory to
Agent with respect to all claims payable under the Reorganization Plan setting
forth (i) all payments made on such claims, (ii) all releases of Liens received
with respect to such claims, and (iii) the status of each unpaid claim
(including, without limitation, whether any such claim is stipulated or
contested and whether any such claim will be paid in a lump sum or in
installments).
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 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.
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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.
Section 6.6. Maintenance of Existence and Qualifications. Each
Restricted Person (other than an Immaterial Subsidiary) 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
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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, premiums or other amounts
required to be paid by any Restricted Person under any Loan
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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. Borrower will timely pay all claims provided
to be paid under the Reorganization Documents in accordance with the
Reorganization Documents. With respect to all claims set forth in the
Reorganization Plan that are secured by a Lien (other than Liens in respect of
assumed executory contracts and unexpired leases as those terms are defined in
the Bankruptcy Code), Borrower shall obtain a valid release of each such Lien
with respect to each such claim in a form approved by Agent contemporaneously
with any payment of each such claim; provided, however, that with respect to
claims for which the claimant thereof has elected to receive payments in
installments pursuant to the Reorganization Plan, Borrower shall obtain such
release contemporaneously with the payment of the final installment with respect
to such claim. Borrower shall promptly record all such Lien releases received
and provide evidence to Agent with respect to the recordation thereof. Borrower
will, and will cause each Restricted Person to, comply with all provisions of
each Reorganization Document.
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
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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.
(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
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matters as Agent may request. Without limiting the foregoing, Borrower further
agrees to deliver to Agent within 30 days after the Effective Date, title
opinions complying with the foregoing requirements and in form, substance, and
authorship acceptable to Agent with respect to the oil and gas properties
referred to on Schedule 7. 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, 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 (other than an Immaterial Subsidiary) 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 (other than an Immaterial Subsidiary) 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.
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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, 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
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(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 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 $15,000,000 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
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(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.
Section 7.4. Limitation on Mergers, Issuances of Securities. No
Restricted Person will merge or consolidate with or into any other Person except
that (a) any Immaterial Subsidiary may be merged or consolidated with any other
Immaterial Subsidiary and (b) any Subsidiary of Borrower may be merged into or
consolidated with (i) another Subsidiary of Borrower, so long as a Guarantor is
the surviving business entity, or (ii) 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; and
(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.
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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 Restricted Persons 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 a Restricted Person (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.
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
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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.
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
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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 and
other burdens to be based on the amounts reflected in the Engineering Report
prepared as of the January 1 or July 1 on which such Applicable Measurement
Period begins 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 (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.
Section 7.16. Immaterial Subsidiaries. No Restricted Person shall
transfer any assets to, make any loan or commitment to, extend credit to, enter
into any business or transaction with, incur any material obligation to, or make
any investment in, any Immaterial Subsidiary. Borrower shall promptly dissolve
each Immaterial Subsidiary, except (a) any Immaterial Subsidiary which has or
may have Liabilities or (b) where the continued existence of such Immaterial
Subsidiary is necessary for the recovery of a tax refund claim or other asset or
for another reasonable business purpose.
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;
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(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 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:
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(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 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;
(l) Any Material Adverse Change occurs; and
(m) The Required Preferred Stock Issuance does not occur on or
before June 2, 2000.
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,
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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.
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.
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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.
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
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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.
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,
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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 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.
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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 (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, (8) amend or waive any of the provisions of Section 2.19(a)
(provided that the Required LC Period may be extended to a date which is not
later than 150 days after the Effective Date with only the consent of the
Majority Lenders), or (9) 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.
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(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.
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
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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
Lender Schedule (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 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
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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 benefitting 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,
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
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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.
(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:
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(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 Notes and be committed to make that Percentage
Share of all future Loans, the assignee Lender shall have a fixed
Percentage Share in such Loans and Notes and be committed to make that
Percentage Share of all future Loans, and the Maximum Credit Amount
multiplied by the Percentage Share of each of the assignor Lender and
assignee Lender 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 and such Lender's 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.
(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 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.
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(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 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
77
<PAGE> 83
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 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.
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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.
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<PAGE> 85
IN WITNESS WHEREOF, this Agreement is executed as of the date first
written above.
FORCENERGY INC, as Borrower
By:/s/ STIG WENNERSTROM
--------------------
Stig Wennerstrom
President
Address:
2730 S.W. 3rd Avenue, Suite 800
Miami, Florida 33129-2356
Attention: President
Telephone: (305) 856-8500
Fax: (305) 856-4300
<PAGE> 86
ING (U.S.) CAPITAL LLC,
Agent, LC Issuer and Lender
By:/s/ PETER Y. CLINTON
------------------------
Peter Y. Clinton
Senior Vice President
<PAGE> 87
DEN NORSKE BANK ASA
By: /s/ J. MORTEN KRENTZ
-------------------------
J. Morten Krentz
First Vice President
By: /s/ NILS FYSKE
---------------------------
Nils Fykse
First Vice President
<PAGE> 88
MEESPIERSON CAPITAL CORP.
By: /s/ KARLO LOUMAN
--------------------------------
Name: Karlo Louman
Title: Managing Director
By: /s/ DARRELL W. HOLLEY
--------------------------------
Name: Darrell W. Holley
Title: Managing Director
<PAGE> 89
BANK OF SCOTLAND
By: /s/ ANNIE GLYNN
----------------------------
Name: Annie Glynn
Title: Senior Vice President
<PAGE> 90
CREDIT AGRICOLE INDOSUEZ
By: /s/ RICHARD MANIX
---------------------------------
Name: Richard Manix
Title: First Vice President
By: /s/ MICHAEL G. HAGGARTY
---------------------------------
Name: Michael G. Haggarty
Title: Vice President
<PAGE> 91
NATEXIS BANQUE BFCE
By: /s/ TIMOTHY L. POLVADO
----------------------------------
Name: Timothy L. Polvado
Title: Vice President and
Group Manager
By: /s/ N. ERIC DITGES
----------------------------------
Name: N. Eric Ditges
Title: Vice President
<PAGE> 92
SOCIETE GENERALE, SOUTHWEST
AGENCY
By: /s/ MARK A. COX
-------------------------
Name: Mark A. Cox
Title: Director
<PAGE> 93
GENERAL ELECTRIC CAPITAL CORP.
By: /s/ ERIC A. SCHAEFER
----------------------------
Name: Eric A. Schaefer
Title: Manager - Operations
<PAGE> 94
BANK OF AMERICA, N.A.
By: /s/ EDWARD HARMON
-------------------------
Name: Edward Harmon
Title: Vice President
<PAGE> 95
AVENUE SPECIAL SITUATIONS FUND, L.P.
By: Avenue Capital Partners, LLC, General
Partner
By: GLR Partners, LLC, Managing
Member of General Partner
By: /s/ MARC LASRY
------------------------------
Name: Marc Lasry
Title: Member
<PAGE> 96
MERRILL LYNCH PIERCE, FENNER &
SMITH INCORPORATED
By: /s/ GRAHAM GOLDSMITH
-------------------------------------
Name: Graham Goldsmith
Title: Director
<PAGE> 97
FARALLON ENERGY INVESTORS, LLC
By: Farallon Capital Management, LLC
By: /s/ MERIDEE MOORE
----------------------------------
Name: Meridee Moore
Title: Managing Partner
