VOTING AGREEMENT
DATED AS OF DECEMBER 10, 1999
TABLE OF CONTENTS
1. VOTING AGREEMENT; RESTRICTION ON TRANSFER; FORBEARANCE..............-6-
2. CONDITIONS TO CONSUMMATION OF THE FINANCIAL RESTRUCTURING...........-8-
3. FINANCIAL RESTRUCTURING; THE JOINT PLAN.............................-9-
4. PAYMENTS............................................................-9-
5. REPRESENTATIONS OF THE CONSENTING HOLDERS...........................-9-
(a) CORPORATE POWER AND AUTHORITY.............................-10-
(b) AUTHORIZATION.............................................-10-
(c) NO CONFLICTS..............................................-10-
(d) BINDING OBLIGATION........................................-10-
(e) OWNERSHIP OF XXXXXXX NOTES................................-10-
6. REPRESENTATIONS OF THE XXXXXXX GROUP...............................-11-
(a) CORPORATE POWER AND AUTHORITY.............................-11-
(b) AUTHORIZATION.............................................-11-
(c) NO CONFLICTS..............................................-11-
(d) BINDING OBLIGATION........................................-11-
(e) NO MATERIALLY ADVERSE EFFECT..............................-12-
(f) STOCK OWNERSHIP...........................................-12-
(g) FINANCIAL STATEMENTS......................................-12-
(h) DISCLOSURE................................................-13-
7. TERMINATION OF AGREEMENT...........................................-14-
8. FURTHER TRANSACTIONS IN SECURITIES.................................-16-
9. AMENDMENTS.........................................................-16-
10. GOVERNING LAW; JURISDICTION........................................-16-
11. HEADINGS...........................................................-16-
12. SUCCESSORS AND ASSIGNS.............................................-16-
13. PRIOR NEGOTIATIONS.................................................-17-
14. COUNTERPARTS.......................................................-17-
15. NO THIRD-PARTY BENEFICIARIES.......................................-17-
16. CONSIDERATION......................................................-17-
17. NOTICES............................................................-17-
18. 8-K FILING.........................................................-17-
19. SPECIFIC PERFORMANCE...............................................-18-
EXHIBITS AND SCHEDULES
----------------------
Exhibit A - Marketing Process
Exhibit B - Term Sheet for Joint Plan
Exhibit C - Reorganization Budget and Payment Schedule
VOTING AGREEMENT
This Voting Agreement (the "Agreement") is entered into this 10th
day of December, 1999, among Xxxxxxx Petroleum Corporation, a Texas
corporation ("Xxxxxxx"), Xxxxxxx Holdings, Inc., a Texas corporation and the
sole shareholder of Xxxxxxx ("Holdings"), and each of the subsidiaries of
Xxxxxxx listed on the signature page hereto (the "Guarantor Subsidiaries,"
which together with Xxxxxxx and Holdings are collectively referred to herein
as the "Xxxxxxx Group") and the undersigned holders, severally and neither
jointly nor jointly and severally (collectively, and together with any other
persons who become signatories hereto, the "Consenting Holders"). Each member
of the Xxxxxxx Group and each of the Consenting Holders is sometimes referred
to individually as a "Party" and they are collectively referred to as the
"Parties."
R E C I T A L S
A. Xxxxxxx has issued and there remains outstanding $135 million principal
amount of 11-1/2% Senior Notes due 2005 (the "Xxxxxxx Notes"). An aggregate of
$7,762,500 of accrued interest through October 1, 1999 is also currently due and
payable.
B. Each of the Guarantor Subsidiaries has guaranteed the payment of the Xxxxxxx
Notes.
C. The Consenting Holders hold not less than the principal amount of the Xxxxxxx
Notes respectively, set forth on the signature pages hereto (the claims
evidenced by the Xxxxxxx Notes owned by the Consenting Holders on the date of
this Agreement and any Xxxxxxx Notes acquired by the Consenting Holders after
the date of this Agreement are referred to herein as the "Xxxxxxx Note Claims").
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D. Michael will conduct a marketing process for the sale of Xxxxxxx or its
assets (the "Marketing Process"), the terms and conditions of which are set
forth on, annexed hereto and made a part hereof as, EXHIBIT A.
E. The Parties desire to implement a financial restructuring (the "Financial
Restructuring") of the Xxxxxxx Notes substantially on the terms and conditions
set forth in the Term Sheet for Joint Reorganization Plan attached hereto as
EXHIBIT B (the "Joint Plan"). The principal component of the Financial
Restructuring is the completion of the Marketing Process, that contemplates the
sale of Xxxxxxx or its assets for a Net Consideration (as defined in the Term
Sheet for the Joint Plan) of at least $120,000,000 (the "Qualifying Asset
Sale"), on the terms provided herein and in Section III (a) of the Term Sheet
for the Joint Plan.
F. In order to implement the Financial Restructuring, it is contemplated that
Xxxxxxx and the Guarantor Subsidiaries will commence (the date of such
commencement being the "Petition Date") proceedings under Chapter 11 of the
Bankruptcy Code (the "Chapter 11 Proceedings") no later than December 10, 1999
and seek to obtain court approval of the Joint Plan and a disclosure statement
in respect thereof as promptly as practicable.
G. It is also contemplated that Xxxxxxx will operate its business substantially
as contemplated in the budget attached as EXHIBIT C hereto (the "Budget") and,
in particular, in accordance with all of the items under the caption "Expenses:"
and the "Capex", "Restructuring Fees", "Accounts Payable", "Bank Interest", and
"Bank Principal Payments" items therein (collectively, "Disbursements").
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H. This Agreement is being entered into in order to facilitate the
implementation of the Marketing Process and the Financial Restructuring, by the
Consenting Holders in consideration of the Xxxxxxx Group's agreement to promptly
commence and diligently conduct the Marketing Process and to commence the
Chapter 11 Proceedings, and to file and seek confirmation of the Joint Plan, and
by the Xxxxxxx Group in consideration of the Consenting Holders' agreement to
vote their claims to accept the Joint Plan and otherwise agree to the terms of
the Financial Restructuring, all on the terms and conditions set forth below.
A G R E E M E N T
Now, therefore, in consideration of the premises and the mutual
covenants and agreements set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:
1. VOTING AGREEMENT; RESTRICTION ON TRANSFER; FORBEARANCE.
(a) Each Consenting Holder, severally and neither jointly nor jointly and
severally, hereby agrees that it shall:
(i) Not commence and forbear from assisting or
encouraging any other person to commence any legal or
enforcement actions concerning the Xxxxxxx Group's
debts (nor encourage any other parties to take any of
the foregoing actions), for so long as no Termination
Event shall have occurred;
(ii) Subject to its receipt of appropriate disclosure and
solicitation materials meeting the requirements of
the Bankruptcy Code, timely vote its Xxxxxxx
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Note Claims and any other claims it might have or
acquire to accept the Joint Plan (and not revoke or
withdraw such vote);
(iii) Refrain from the sale, transfer, pledge or any other
assignment of any of the Xxxxxxx Notes in which it
holds a beneficial interest, or any voting interest
therein to any person unless such person agrees in
writing to become a party to, and be bound by the
terms and conditions of, this Agreement (it being
expressly acknowledged for the avoidance of doubt
that any Consenting Holder may disclose the terms of
this Agreement and any other information relating to
the parties hereto to any transferee or prospective
transferee of the Xxxxxxx Notes);
(iv) Not take any position in the Chapter 11 Proceedings
that conflicts with its obligations hereunder to
support the Joint Plan;
(v) Vote its Xxxxxxx Note Claims and any other claims it
might have or acquire to reject any bankruptcy plan
of reorganization for Xxxxxxx or the Guarantor
Subsidiaries other than the Joint Plan; and
(vi) Support venue for the Chapter 11 Proceedings in the
United States Bankruptcy Court for the Southern
District of Texas, Laredo Division.
Notwithstanding the foregoing, nothing in this Agreement shall require a
Consenting Holder to take any action which is prohibited by the Bankruptcy Code
or by other applicable law or regulation or by any order or direction of any
court or any federal or state governmental authority.
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(b) The obligations of the Consenting Holders under subsection (a) of
this Section 1 shall be at all times subject to the continuing conditions that:
(i) any plan of reorganization being considered in the
Chapter 11 Proceedings contains all of the material
terms of the Joint Plan and contains no term
inconsistent therewith;
(ii) a Termination Event (as defined in Section 7 below)
shall not have occurred; and
(iii) Xxxxxxx and its agents and representatives shall be
in compliance in all material respects with the terms
and conditions of this Agreement.
2. CONDITIONS TO CONSUMMATION OF THE FINANCIAL RESTRUCTURING.
Consummation of the Financial Restructuring, including the Joint Plan, will be
subject to the following closing conditions, unless waived in writing by the
Parties:
(i) The absence of any pending or threatened action,
suit, or proceeding before any court or
quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction that
is reasonably likely to result in an unfavorable
injunction, judgment, order, decree, ruling, or
charge that would (A) prevent the Asset Sale, (B)
prevent the consummation of the Financial
Restructuring or (C) permit any or all of the
payments to be made in the Financial Restructuring to
the holders of the Xxxxxxx Notes to be rescinded;
(ii) The accuracy in all respects of the representations
and warranties of the Xxxxxxx Group set forth in this
Agreement, which shall be deemed to have
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been made again at and as of the effective date of
the Joint Plan (except for those representations and
warranties made as of a specific date);
(iii) The performance in all respects by the Xxxxxxx Group
of their covenants, agreements and obligations
hereunder and under the Joint Plan;
(iv) Completion of the Marketing Process substantially in
compliance with its terms and conditions set forth on
EXHIBIT A attached hereto, and execution of a
Definitive Agreement in respect of a Qualifying Asset
Sale; and
(v) The entry of orders of the Bankruptcy Court, which
orders shall be reasonably satisfactory in form and
substance to the Consenting Holders and, unless
finality is waived by the Consenting Holders, shall
have become final and non-appealable, confirming the
Joint Plan.
3. FINANCIAL RESTRUCTURING; THE JOINT PLAN. Each member of the Xxxxxxx Group
agrees to take all such steps as shall be reasonably necessary and desirable to
consummate the Financial Restructuring, including obtaining confirmation of the
material terms of the Joint Plan, as promptly as reasonably practicable.
4. PAYMENTS. The Consenting Holders acknowledge and agree (i) that Xxxxxxx shall
make monthly payments to ordinary course vendors and payments to Christiania
Bank in the approximate amounts set forth in EXHIBIT C attached hereto (subject
to Bankruptcy Court approval, as necessary) and (ii) that the dollar amounts for
the payments described in EXHIBIT C are estimates and may vary from the actual
payments that are made. The Xxxxxxx Group represents that the dollar amounts set
forth in EXHIBIT C attached hereto for capital expenditures, compensation and
other payments to
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affiliates, restructuring costs, interest on the Christiania Debt and
ordinary course corporate expenses are its good faith estimate of such
amounts through the date for consummation of the Joint Plan of June 1, 2000.
5. REPRESENTATIONS OF THE CONSENTING HOLDERS. Each Consenting Holder, severally
and neither jointly nor jointly and severally, represents and warrants to the
Xxxxxxx Group that each of the following statements is true, correct and
complete:
(a) CORPORATE POWER AND AUTHORITY. It has all requisite corporate
or trust power and authority to enter into this Agreement and
to carry out the transactions contemplated by, and to perform
its respective obligations under, this Agreement;
(b) AUTHORIZATION. The execution and delivery of this Agreement
and the performance of its obligations hereunder have been
duly authorized by all necessary corporate or trust action;
(c) NO CONFLICTS. The execution, delivery and performance of this
Agreement do not and shall not (i) violate any provision of
law, rule or regulation applicable to it, or its certificate
of incorporation or its bylaws, or its agreement and
declaration of trust, or (ii) conflict with, result in a
breach of or constitute (with due notice or lapse of time or
both) a default under any of its material contractual
obligations;
(d) BINDING OBLIGATION. This Agreement has been duly executed and
delivered and is a legal, valid and binding obligation,
enforceable against it in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency,
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reorganization, moratorium or other similar laws relating to
or limiting creditors' rights generally or by equitable
principles relating to enforceability; and
(e) OWNERSHIP OF XXXXXXX NOTES. It is the beneficial owner of,
and/or the investment adviser or manager for the beneficial
owners of (with the power to vote and dispose on behalf of
such beneficial owners), not less than the principal amount of
Xxxxxxx Notes set forth opposite its signature hereto.
6. REPRESENTATIONS OF THE XXXXXXX GROUP. Each member of the Xxxxxxx Group
represents and warrants to each Consenting Holder that each of the following
statements is true, correct and complete with respect to it:
(a) CORPORATE POWER AND AUTHORITY. It has all requisite corporate
power and authority to enter into this Agreement and to carry
out the transactions contemplated by, and to perform its
respective obligations under, this Agreement;
(b) AUTHORIZATION. The execution and delivery of this Agreement
and the performance of its obligations hereunder have been
duly authorized by all necessary corporate action;
(c) NO CONFLICTS. The execution, delivery and performance of this
Agreement do not and shall not (i) subject to receipt of
required government approvals, consents and authorizations,
violate any provision of law, rule or regulation applicable to
it or any of its subsidiaries or its certificate of
incorporation or bylaws, or (ii) except as contemplated by the
terms hereof, conflict with,
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result in a breach of or constitute (with due notice or lapse
of time or both) a default under any of its material
contractual obligations or those of any of its subsidiaries;
(d) BINDING OBLIGATION. This Agreement has been duly executed and
delivered and is the legal, valid and binding obligation of
each member of the Xxxxxxx Group, enforceable against each in
accordance with its terms, except as enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws relating to or limiting creditors'
rights generally or by equitable principles relating to
enforceability;
(e) NO MATERIALLY ADVERSE EFFECT. Since the date of this Agreement
and except for general trends in the oil and natural gas
exploration, development and production industry, there has
not been and there is not expected to be any event or
occurrence that could reasonably be expected to have a
materially adverse effect on the consolidated financial
condition and results of operations of the Xxxxxxx Group taken
as a whole; provided, however, a continuation of trends in
Michael's business as reflected in its filings with the
Securities and Exchange Commission ("SEC") during the past 12
months shall not constitute a material adverse effect;
(f) STOCK OWNERSHIP. Holdings represents it is the sole record and
beneficial owner of, and has good and marketable title to, all
of the issued and outstanding common stock, par value $.10 per
share, of Xxxxxxx. Xxxxxxx
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represents it is the sole record owner and beneficial owner
of, and has good and marketable title to, all of the issued
and outstanding common stock of the Guarantor Subsidiaries;
(g) FINANCIAL STATEMENTS. (A) The audited consolidated balance
sheets and statements of operations, changes in stockholders'
equity, and cash flow (collectively, the "Financial
Statements") as of and for the fiscal years ended December 31,
1998 and December 31, 1997 as contained in the most recent
Annual Report on Form 10-K filed by Xxxxxxx with the SEC have
been prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the
periods covered thereby (except as noted therein), are correct
and complete in all material respects and present fairly the
consolidated financial condition of Xxxxxxx as of such dates
and the consolidated results of operations of Xxxxxxx for such
periods and are consistent in all material respects with the
books and records of Xxxxxxx and its subsidiaries, and (B) the
unaudited consolidated balance sheet, statements of operations
and cash flows as of and for the nine months ended September
30, 1999 for Xxxxxxx, as contained in the Quarterly Report on
Form 10-Q for the quarter ended September 30, 1999 as filed
with the SEC, has been prepared in accordance with GAAP
applied on a consistent basis throughout the period covered
thereby (except as noted therein), are correct and complete in
all material respects, present fairly the consolidated
financial condition of
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Xxxxxxx, and the consolidated results of operations of Xxxxxxx
for such period(s), and are consistent in all material
respects with the books and records of Xxxxxxx and its
subsidiaries;
7. TERMINATION OF AGREEMENT. All obligations hereunder shall terminate
automatically upon the occurrence of any Termination Event, unless the
occurrence of such Termination Event is waived in writing by all of the parties
hereto. If any Termination Event occurs (and has not been waived) at a time when
court permission shall be required for a Consenting Holder to change or withdraw
(or cause to be changed or withdrawn) its vote in favor of the Joint Plan, the
members of the Xxxxxxx Group shall not oppose any attempt by such Consenting
Holder to change or withdraw (or cause to be changed or withdrawn) such vote.
A "Termination Event" shall mean any of the following:
(a) Any of the following elements of the Marketing Process shall
not have been completed by the dates indicated:
(i) Negotiation of Confidentiality Agreements and
distribution of Offering Memoranda by December 22,
1999;
(ii) Receipt of initial indications of interest, including
at least one such indication in an amount sufficient
for a Qualifying Asset Sale, by February 21, 2000;
and
(iii) Receipt of final bids, including at least one such
bid in an amount sufficient for a Qualifying Asset
Sale, by March 17, 2000;
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(b) The Marketing Process at any time shall cease or shall not
have been completed, or a Definitive Agreement relating to the
terms of a Qualifying Asset Sale shall not have been executed
on or before April 14, 2000;
(c) An injunction, judgment, order, decree, ruling or charge shall
have been entered which prevents completion of the Marketing
Process or consummation of the Financial Restructuring;
(d) Xxxxxxx or any member of the Xxxxxxx Group shall file or
support confirmation or fail to actively oppose confirmation
of any plan of reorganization embodying terms materially
different from those contemplated by the Joint Plan;
(e) Closing on the Qualifying Asset Sale shall have not occurred
and the Joint Plan shall not have been substantially
consummated pursuant to Section 1101(2) of the Bankruptcy Code
by June 1, 2000.
(f) The Bankruptcy Court shall have entered an order pursuant to
Section 1104 of the Bankruptcy Code appointing a trustee or an
examiner with expanded powers with respect to one or more of
Xxxxxxx or the Guarantor Subsidiaries;
(g) The Bankruptcy Court shall have entered an order dismissing
any of the Chapter 11 Proceedings or an order pursuant to
Section 1112 of the Bankruptcy Code converting any of the
Chapter 11 Proceedings to cases under Chapter 7 of the
Bankruptcy Code;
(h) Any breach of this Agreement by any member of the Xxxxxxx
Group or the Consenting Holders;
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(i) There shall occur any adverse variance for salaries and
benefits or an adverse variance of more than ten percent (10%)
for the aggregate of all Disbursements for any monthly period,
or, provided that Xxxxxxx xxx make loans of up to $135,000 in
the aggregate to employees to the extent that the same are
evidenced by promissory notes payable on the earlier of demand
or June 1, 2000, together with interest at the rate of 10% per
annum and all costs and expenses of collection, including
reasonable attorneys fees, and otherwise on terms and
conditions acceptable to counsel to the Consenting Holders;
(j) The Chapter 11 Proceedings shall not have been commenced on or
prior to December 10, 1999;
(k) Xxxxxxx or any member of the Xxxxxxx Group shall fail to carry
on its business in the normal course and substantially in the
same manner as heretofore conducted during calendar year 1999;
(l) Xxxxxxx or any member of the Xxxxxxx Group shall fail to
comply with all applicable laws which if violated might
materially impair the conduct of its business or impose
liability on the business; or
(m) without limitation of Paragraph 7 (i), Xxxxxxx or any member
of the Xxxxxxx Group shall make any payments which are
materially inconsistent with EXHIBIT C attached hereto,
including, without limitation, capital expenditures or any
compensation or other payments to affiliates, without the
consent of the Consenting Holders owning
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or holding in excess of 51% of the aggregate principal amount
of the outstanding Xxxxxxx Notes.
8. FURTHER TRANSACTIONS IN SECURITIES. This Agreement shall in no way be
construed to preclude the Consenting Holders from acquiring additional Xxxxxxx
Notes or, subject to Paragraph 1(a)(3) hereof, disposing of Xxxxxxx Notes.
9. AMENDMENTS. This Agreement may not be modified, amended or supplemented
except in writing signed by each of the Parties.
10. GOVERNING LAW; JURISDICTION. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York, without
regard to any conflicts of law provision which would require the application of
the law of any other jurisdiction.
11. HEADINGS. The Headings of the Sections, paragraphs and subsections of this
Agreement are inserted for convenience only and shall not affect the
interpretation hereof.
12. SUCCESSORS AND ASSIGNS. This Agreement is intended to bind and inure to the
benefit of the parties and their respective successors, assigns, heirs,
executors, administrators and representatives. The agreements, representations
and obligations of the Consenting Holders under this Agreement are several and
neither joint nor joint and several in all respects. Except as set forth herein,
no party may assign any of its rights or obligations hereunder without the prior
consent of all other parties.
13. PRIOR NEGOTIATIONS. This Agreement supersedes all prior negotiations,
understandings and agreements with respect to the subject matter hereof.
14. COUNTERPARTS. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original and all of which shall constitute one
and the same Agreement.
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15. NO THIRD-PARTY BENEFICIARIES. Unless expressly stated herein, this
Agreement shall be solely for the benefit of the parties hereto and no other
person or entity shall be a third-party beneficiary hereof.
16. CONSIDERATION. It is hereby acknowledged by the parties that no
consideration shall be due or paid to the Consenting Holders for their agreement
to forbear from enforcing remedies under the Senior Note Indenture or commencing
involuntary bankruptcy proceedings or to vote to accept the Joint Plan and to
reject any other plan in accordance with the terms and conditions of this
Agreement other than the Xxxxxxx Group's agreement to conduct the Marketing
Process and to commence the Chapter 11 Proceedings and to file and seek
confirmation of the Joint Plan.
17. NOTICES. All notices and communications in connection with this Agreement
shall be in writing and will be deemed to have been duly given when delivered by
hand (with written confirmation of receipt), overnight courier (receipt
requested), certified mail, return receipt requested, or facsimile transmission
(with written confirmation of receipt), at the addresses set forth in the
signature pages hereto.
18. 8-K FILING. Xxxxxxx will promptly file a Report on Form 8-K with the
Securities and Exchange Commission which contains a description of the material
terms of this Agreement.
19. SPECIFIC PERFORMANCE. It is understood and agreed by each of the parties
hereto that money damages would not be a sufficient remedy for any breach of
this Agreement by any party and each non-breaching party shall be entitled to
specific performance and injunctive or other equitable relief as a remedy of any
such breach.
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SIGNED this 10th day of December, 1999.
XXXXXXX PETROLEUM CORPORATION
00000 Xxxxxxxxx Xxxxxxx (XX 000)
Xxxxx 000
Xxxxxxx, Xxxxx 00000
By:__________________________________
Its:_________________________________
XXXXXXX PETROLEUM ALPHA
CORPORATION
00000 Xxxxxxxxx Xxxxxxx (XX 000)
Xxxxx 000
Xxxxxxx, Xxxxx 00000
By:__________________________________
Its:_________________________________
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GAS NATURALE DE XXXXXX, INC.
00000 Xxxxxxxxx Xxxxxxx (XX 290)
Xxxxx 000
Xxxxxxx, Xxxxx 00000
By:__________________________________
Its:_________________________________
XXXXXXX HOLDINGS, INC.
00000 Xxxxxxxxx Xxxxxxx (US 290)
Xxxxx 000
Xxxxxxx, Xxxxx 00000]
By:__________________________________
Its:__________________________________
[CONSENTING NOTEHOLDER SIGNATURE PAGES OMITTED]
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EXHIBIT B
XXXXXXX PETROLEUM CORPORATION
TERM SHEET FOR RESTRUCTURING
December 10, 1999
I. PARTIES TO RESTRUCTURING
- Xxxxxxx Petroleum Corporation ("MPC") and its subsidiaries
(collectively, the "Company")
- Holders of MPC 11 1/2% Senior Notes due 2005 (the
"Noteholders")
- Christiania Bank ("Christiania")
- All other Secured and Unsecured Creditors of the Company,
other than Old Equity ("Trade Creditors")
- Xxxxxxx Holdings, Inc. and its current equityholders ("Old
Equity")
II. FRAMEWORK
The Company and/or all the assets of the Company would be sold as
promptly as practicable. The Sale Process would be substantially as
outlined on Exhibit A to the Voting Agreement. During the sale process,
the Company will continue to operate its business in the ordinary
course, including managing its trade accounts payable in the ordinary
course consistent with past practice during 1999, paying Christiania
interest at the current default rate (as approved by the Bankruptcy
Court, if necessary), and continuing its current one-rig drilling
program.
III. SALE TERMS
(a) At the end of the sales process, the Company will accept the
highest offer for the sale of the Company for consideration,
as of May 1, 2000, of at least $120MM, minus all costs
attributable to rejection of executory contracts, plus or
minus working capital items assumed, and net of all costs of
sale, including all investment banking fees of the Company and
the Noteholders however the same are funded or defeased ("Net
Consideration"). Both Old Equity and the Noteholders agree
that the highest bid in excess of $120MM of Net Consideration,
will be accepted unless such bid is rejected by both parties.
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Acceptance of a bid less than $120MM will require the
agreement of the Noteholders and the Company. Acceptance of a
bid for any consideration other than cash will require the
agreement of the Noteholders and, if such consideration does
not include sufficient cash to pay the Christiania Debt, trade
creditors and Old Equity as contemplated hereby, will also
require the agreement of the Company.
(b) The Company will implement the sale in accordance with the
procedures attached to the Voting Agreement incorporating the
economic terms set forth herein relative to the allocation of
sales proceeds.
(c) At the closing on any sale, the first proceeds will be used to
pay the outstanding amount of the Christiania Debt (currently
estimated $24MM) in full.
(d) If a binding agreement for the sale of the Company for Net
Consideration of at least $120MM is executed on or before
April 14, 2000, Old Equity will receive a distribution (in
lieu of all other consideration, including severance and
similar payments) in the amount of $5MM; in addition Old
Equity would be entitled to 8% of the Net Consideration in
excess of $120MM but less than $175MM; plus 50% of the Net
Consideration in excess of $175MM until the Noteholders
investment is repaid in full with interest. After the
Noteholders have so recovered their investment, all excess
consideration shall be allocated to Old Equity. If a binding
agreement for the sale of the Company is executed after April
14, 2000 from the date the Voting Agreement is signed, the 8%
share of Net Consideration in excess of $120MM and below
$175MM shall be reduced to 5%.
(e) All claims of Trade Creditors either will be paid in cash in
full at closing, in the ordinary course, or as agreed by the
Company and the applicable Trade Creditor.
(f) Any tax claims either will be paid in cash in full at closing,
in the ordinary course when due or in accordance with the
Bankruptcy Code.
IV. IMPLEMENTATION
The Company will file Chapter 11 bankruptcy and commence the Sale
Process no later than December 8, 1999. The Company thereafter will
implement the Sale Process as contemplated hereby and by the Voting
Agreement. The Company also will file a plan of reorganization (the
"Plan") and, if necessary or required by the buyer, a Section 363 Sale
Motion as promptly as practicable. The Plan will provide for the
distribution of the sale proceeds in accordance with the terms set
forth above.
The Company and the Noteholders will continue to negotiate in good
faith with respect to
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the terms of a standalone plan of reorganization to be implemented in
the event that a binding agreement for the sale of the Company for Net
Consideration of at least $120 million cannot be obtained and, in the
event that an agreement on such terms is reached, such terms will be
incorporated into the Plan.
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