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EXHIBIT 2.2
EXECUTION COPY
COMMITMENT AGREEMENT
COMMITMENT AGREEMENT, dated as of January 20, 1997, by and among WRT
Energy Corporation ("WRT"), a Texas corporation and a debtor and debtor-in-
possession in that certain voluntary proceeding under Chapter 11 of the
Bankruptcy Code referred to below, DLB Oil & Gas, Inc., an Oklahoma corporation
("DLB"), the investment funds listed on the signature page hereof (the "Wexford
Funds") and Wexford Management LLC, a Connecticut limited liability company, in
its capacity as investment manager and as agent for the Wexford Funds
("Wexford"; DLB and Wexford are collectively referred to herein as "DLBW").
Unless the context otherwise requires, all capitalized terms defined in the
Plan (as defined below) and not otherwise defined herein shall have the same
meanings herein as in the Plan.
W I T N E S S E T H:
WHEREAS, on Xxxxxxxx 00, 0000, XXX filed a voluntary petition for
relief under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court (the
United States Bankruptcy Court for the Western District of Louisiana,
Lafayette-Opelousas Division), commencing the Chapter 11 Case (Case No. 96BK-
50212);
WHEREAS, since the commencement of the Xxxxxxx 00 Xxxx, XXX has
operated its business and held its assets and properties as a debtor-in-
possession under Section 1107 of the Bankruptcy Code;
WHEREAS, on Xxxxxxx 00, 0000, XXX accepted and signed the proposal
submitted by DLBW on October 16, 1996 (the "DLBW Proposal") providing the terms
of a proposed capital investment in, and plan of reorganization for, WRT;
WHEREAS, by order dated December 24, 1996 (the "Expense Order"), the
Bankruptcy Court approved the reimbursement by WRT of certain of the third-
party expenses incurred DLBW in connection with the DLBW Proposal;
WHEREAS, subsequent to WRT's execution of the DLBW Proposal, DLB
commenced negotiations with Texaco and TEPI regarding, inter alia, (i) the
claim asserted by Texaco and TEPI against WRT and its affiliates (the "Texaco
Claim"), (ii) the WCBB Assets and (iii) the CAOA;
WHEREAS, the intent of the parties to those negotiations was that WRT
would purchase the WCBB Assets from Texaco and TEPI;
WHEREAS, DLB has represented and WRT believes that Texaco and TEPI
have insisted that, because of concerns over WRT's financial status certain
time exigencies and other matters relating to that certain Global Settlement
Agreement, DLB be in the chain of title of the WCBB Assets and furthermore that
DLB guarantee, for Texaco's and TEPI's benefit, the cost of performance of
certain plugging and abandonment obligations with respect to the WCBB Assets
should New WRT fail to perform those obligations;
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WHEREAS, as a result of the negotiations, Texaco, TEPI and DLB
reached an agreement embodied in the Purchase, Sale and Exchange Agreement
pursuant to which, inter alia, (i) DLB will purchase the Texaco Claim, (ii) as
required by Texaco and TEPI, DLB will purchase the WCBB Assets from TEPI, and
(iii) DLB will guarantee (the "P&A Guarantee") the performance of all plugging
and abandonment obligations related to both the WCBB assets and WRT's interests
in West Xxxx Xxxxxxx Bay Field and, in order to implement the P&A Guarantee,
will pay into a trust (the "P&A Trust") established for the benefit of the
State of Louisiana, $1,000,000 on or before the Effective Date and certain
other amounts;
WHEREAS, on Xxxxxxx 00, 0000, XXX and DLBW have jointly filed the
Plan, which Plan contemplates, inter alia, (i) the issuance to WRT's unsecured
creditors, on account of their Allowed Claims, an aggregate of 10 million
shares of New WRT Common Stock, (ii) the issuance to WRT's unsecured creditors,
on account of their Allowed Claims, of the right to purchase an additional
three million eight hundred thousand shares of New WRT Common Stock at a
purchase price of $3.50 per share (the "Rights Offering"), (iii) the exercise
by DLBW of its rights to purchase New WRT Common Stock pursuant to the Rights
Offering on account of its Allowed Claims, (iv) the purchase by DLBW of all
shares of New WRT Common Stock not otherwise purchased pursuant to the Rights
Offering, and (v) pursuant to the Transfer and Exchange Agreement, as part of
the Plan, (a) the transfer by DLB of the WCBB Assets to WRT, (b) as
consideration for the transfer of the WCBB Assets, the issuance by DLB of the
P&A Guarantee and the making by DLB of payments into the P&A Trust, (1) the
delivery to DLB of (A) 5 million shares of New WRT Common Stock and (B) the
number of shares of New WRT Common Stock obtained by dividing the net amount of
capital expenditures incurred by DLB as of the Effective Date as owner of the
WCBB Assets and/or operator of the Shallow Contract Area, to the extent not
disapproved by the Bankruptcy Court, by a purchase price of $3.50 per share,
(2) transfer by WRT to DLB of the Buyer's Leasehold and Facilities and (3) the
assumption by DLB of the Assumed Obligations, and (c) the payment in full of
the Texaco Claim;
WHEREAS, WRT desires that DLB and Wexford enter into this Commitment
Agreement in order to evidence their respective commitments and obligations;
and
WHEREAS, WRT, DLB and Wexford are willing to enter into this
Commitment Agreement upon the terms and conditions hereinafter set forth;
NOW THEREFORE, in consideration of the premises and for other good
and valuable consideration, receipt of which is hereby acknowledged, the
parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
As used herein, the following terms shall have the meanings set forth
in this Article I, in addition to the other capitalized terms defined in the
Plan.
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"Closing" shall mean the closing of the transactions contemplated by
this Commitment Agreement.
"Environmental Laws" shall mean all federal, state, local and foreign
laws and regulations relating to pollution or the environment (including,
without limitation, ambient air, surface water, ground water, land surface or
subsurface strata), including, without limitation, laws and regulations
relating to emissions, discharges, releases or threatened releases of Materials
of Environmental Concern, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Materials of Environmental Concern.
"Extant Bidder" shall mean each Person who (a) had, as of October 16,
1996, submitted to Xxxxxxxxx & Company, Inc., as part of the formal auction of
WRT conducted by Xxxxxxxxx & Company, Inc., either (i) a bid to purchase all or
any material part of the assets of WRT or (ii) a proposal for a plan of
reorganization for WRT or (b) was specifically identified as providing the
financing for such bid or proposed plan. An "Extant Bidder" shall not include
(x) any combination of an Extant Bidder with one or more Persons that are not
Extant Bidders, (y) any combination of two or more Extant Bidders or (z) any
combination of two or more Extant Bidders with one or more Persons that are not
Extant Bidders.
"GAAP" shall mean generally accepted accounting principles,
consistently applied.
"Material Adverse Effect" shall mean, in connection with WRT or any
of its Subsidiaries, any change or effect that is materially adverse to the
business, operations, properties (including intangible properties), condition
(financial or otherwise), prospects or assets or liabilities of WRT and its
Subsidiaries taken as a whole.
"Materials of Environmental Concern" shall mean hazardous substances
as defined under the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. Section 9601, et seq. and hazardous wastes as defined
under the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et
seq. and petroleum and petroleum products and such other chemicals, materials
or substances as are listed as "hazardous wastes", "hazardous materials",
"toxic substances", or words of similar import under any similar federal,
state, local or foreign laws.
"Permitted Liens" shall mean liens:
(a) for taxes, assessments or governmental charges or levies
if the same shall not at the time be delinquent or thereafter can be paid
without penalty or (if foreclosure, distraint, sale or other similar
proceedings shall not have been commenced) are being contested in good faith
and by appropriate proceedings diligently conducted, and such reserve or other
appropriate provision, if any, as shall be required by GAAP shall have been
made therefor;
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(b) of mechanics and materialmen for sums not yet due or
being contested in good faith and by appropriate proceedings diligently
conducted, if such reserve or other appropriate provision, if any, as shall be
required by GAAP shall have been made therefor; or
(c) constituting easements, rights of way, restrictions and
other similar encumbrances, not interfering in a material respect with the
ordinary conduct of the business of WRT and not materially detracting from the
value or current or intended use of the property to which they are applicable.
"Plan" shall mean the Debtor's and DLBW's First Amended Joint Plan of
Reorganization Under Chapter 11 of the United States Bankruptcy Code, dated as
of January 20, 1997, attached hereto as Exhibit A, as may be amended with the
consent of DLB and Wexford.
"Subsidiary" shall mean any corporation or other entity, a majority
of the shares of capital stock or other equity interests of which are owned,
directly or indirectly, by WRT.
ARTICLE II
THE CLOSING
Section 2.01. Obligations of DLB and Wexford. In reliance upon the
representation, warranties, covenants and agreements of WRT and upon the terms
and subject to the conditions of this Commitment Agreement:
(a) DLB and Wexford, jointly and severally, agree to
subscribe for and purchase at the Closing from New WRT, in the amount
determined pursuant to the Plan and the New WRT Subscription Rights Agreement,
(i) their full pro rata share of the New WRT Subscription Common Stock granted
to DLB and Wexford pursuant to the Plan and the New WRT Subscription Rights
Agreement on account of any and all Claims and (ii) all of the remaining New
WRT Subscription Common Stock not otherwise subscribed for and purchased as a
result of either Unexercised Subscription Rights pursuant to the Plan or the
failure of the Rights Offering to occur (the "Backstop Shares"), and WRT agrees
to cause New WRT and the Disbursing Agent to issue and sell to DLB and Wexford
such New WRT Subscription Common Stock. Such New WRT Subscription Common Stock
shall be paid for in the amount of its related Subscription Purchase Price in
the manner provided for in the Plan.
(b) DLB and Wexford, jointly and severally, agree to pay at
the Closing to New WRT an amount of cash equal to the Disputed Subscription
Purchase Price (or such lesser amount with respect to Exercised Disputed Claims
as may be required pursuant to the Plan). Such payment shall be made by wire
transfer of immediately available funds to such account as WRT shall designate
in writing at least two (2) Business Days prior to the Closing.
(c) DLB agrees to execute the Transfer and Exchange
Agreement and, in accordance with its terms, and the terms of the Plan,
transfer the WCBB Assets to New WRT and designate New WRT as operator of the
Shallow Contract Area. In exchange for the transfer of the WCBB Assets to New
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WRT, the issuance of the P&A Guarantee and the payments into the P&A Trust, (i)
DLB shall receive at the Closing (A) 5 million shares of New WRT Common Stock
and (B) the number of shares of New WRT Common Stock obtained by dividing the
amount of capital expenditures incurred by DLB (net of any net cash received by
DLB as owner of the WCBB Assets or as operator of the Shallow Contract Area) as
of the Effective Date as owner of the WCBB Assets and/or operator of the
Shallow Contract Area, to the extent not disapproved by the Bankruptcy Court,
by a purchase price of $3.50 per share (collectively, the "WCBB Shares") and
(ii) WRT shall transfer to DLB the Buyer's Leasehold and Facilities.
(d) At the discretion of DLB and Wexford, the payments due
WRT or New WRT under this Section 2.01 may be offset against any or all
payments that DLB, Wexford or the Wexford Funds would otherwise receive under
the Plan on the Effective Date.
(e) DLB and Wexford each agree to (i) vote all Claims held
by them to accept the Plan, and (ii) exercise any and all rights that they have
under the Plan on account of all Claims held by them in Classes C-1 through C-
16 (including, without limitation, the Texaco Claim) (such Claims being the
"Exchangeable Claims") to elect to receive a Distribution of New WRT Common
Stock in lieu of a Distribution of Cash.
Section 2.02. Obligations of WRT. WRT agrees that it shall:
(a) In connection with the sale of the WCBB Assets by Texaco
and TEPI to DLB, WRT will (i) consent to the designation by Texaco and TEPI of
DLB (or its designee) as operator of the Shallow Contract Area under the CAOA
provided that DLB (or its designee) shall have become qualified as an operator
under Louisiana law; and (ii) waive any preference rights that WRT may have
under the CAOA arising from or related to such sale.
(b) Provide Texaco and TEPI with the ability to use certain
facilities in connection with TEPI's operation of the portion of the producing
Contract Area under, and as defined in the CAOA other than the Shallow Contract
Area, the use of such facilities to be on terms to be agreed.
(c) Execute the Transfer and Exchange Agreement and, in
accordance with its terms, (i) deliver to DLB on the Effective Date the WCBB
Shares and (ii) transfer to DLB on the Effective Date the Buyer's Leasehold and
Facilities.
Section 2.03. Closing. (a) The Closing shall take place at the
offices of Xxxxxxx Xxxx & Xxxxx LLP, 900 Third Avenue, New York, New York, or
at such other location as the parties may agree, on the Effective Date.
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(b) At the Closing:
(i) New WRT shall deliver to DLB and Wexford, jointly and
severally, certificates of New WRT Common Stock representing DLB's and
Wexford's pro rata portion of the New WRT Common Stock distributed to holders
of Allowed General Unsecured Claims pursuant to the Plan, in definitive form
and registered in the name(s) specified in writing by DLB and Wexford at least
two (2) Business Days prior to the Closing;
(ii) New WRT shall deliver to DLB and Wexford, jointly and
severally, against payment therefor, certificates of New WRT Subscription
Common Stock, in definitive form and registered in the name(s) specified in
writing by DLB and Wexford at least two (2) Business Days prior to the Closing,
representing DLB's and Wexford's pro rata portion of the New WRT Subscription
Common Stock subscribed for and purchased pursuant to Section 2.01(a)(i) hereof
and the Backstop Shares subscribed for and purchased pursuant to Section
2.01(a)(ii) hereof;
(iii) New WRT shall deliver to DLB, certificates of New WRT
Common Stock, in definitive form and registered in the name(s) specified in
writing by DLB at least two (2) Business Days prior to the Closing,
representing the WCBB Shares;
(iv) Pursuant to the terms of the Plan, WRT shall deliver
to DLB and Wexford, jointly and severally, certificates of New WRT Common Stock
to be distributed to them under the Plan on account of the Exchangeable Claims.
(v) New WRT shall issue, and the Disbursing Agent shall
reserve, shares of New WRT Subscription Common Stock representing the Disputed
New WRT Subscription Common Stock to be held by the Disbursing Agent in a
Disputed Claims Reserve Account.
(c) At the Closing, each party to this Commitment Agreement
shall deliver to the other parties such other documents, instruments and
writings as may be required to be delivered in accordance with this Commitment
Agreement or as may be reasonably requested by such other party.
Section 2.04. Reliance by WRT and New WRT. Each of WRT and New WRT
shall be entitled to rely on and assume that it has fully satisfied its
obligations to both DLB and Wexford through any payment made or document
delivered to DLB and Wexford in accordance with any provision of this
Commitment Agreement; provided that such payment or delivery is made in the
manner specified by DLB and Wexford. The division of any such payment or
sharing of any such document shall be the sole responsibility of DLB and
Wexford and WRT shall have no obligations or liabilities relating thereto.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF WRT
WRT hereby represents and warrants, as of the execution and delivery
hereof, to DLB & Wexford as follows:
Section 3.01. Organization and Qualification. WRT is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Texas, and has full power and authority to own, operate
and lease its properties and to carry on its business as now being conducted.
WRT is duly qualified to do business as a foreign corporation in each
jurisdiction set forth on Schedule 3.01 hereto. Such jurisdictions are the
only jurisdictions in which the nature of WRT's properties and/or business
makes such qualification necessary, except where the failure to so qualify
would not have a Material Adverse Effect.
Section 3.02. Subsidiaries. Except for WRT Technology, Inc., WRT
does not have any Subsidiaries and, except as set forth on Schedule 3.02
hereto, to the best of its knowledge WRT is not a partner or joint venturer
with any person in any enterprise or undertaking. As of the Closing, New WRT
will have no Subsidiaries.
Section 3.03. Authority, Authorization and Validity. Subject to
approval of this Commitment Agreement by the Bankruptcy Court and the issuance
of the Confirmation Order, WRT has full power and authority to execute, deliver
and perform this Commitment Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this
Commitment Agreement by WRT, and the consummation by WRT of the transactions
contemplated hereby to be performed by WRT, have been duly authorized by all
requisite action of its Board of Directors and, if required, shareholders of
WRT, and this Commitment Agreement constitutes the valid and binding obligation
of WRT, enforceable against WRT in accordance with its terms, subject, where
applicable, to entry of the Confirmation Order.
Section 3.04. Capitalization. (a) Except as set forth on
Schedule 3.04 hereto, as of the date of this Commitment Agreement, there are no
outstanding securities of WRT or any of its Subsidiaries or any outstanding
subscriptions, options, warrants, calls or other commitments or agreements
(other than this Commitment Agreement) to which WRT is a party or by which it
is bound requiring the issuance by WRT of additional shares of capital stock or
other securities.
(b) The securities set forth on Schedule 3.04 hereto are
duly authorized, validly issued, fully paid and non-assessable and are free of
preemptive rights and entitle the holders thereof to all the rights of a holder
of such securities in accordance with the certificate of incorporation and by-
laws of WRT and the laws of the State of Texas.
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(c) The shares of New WRT Common Stock to be issued by New
WRT pursuant to this Commitment Agreement and/or the Plan, or upon exercise of
the New WRT Warrants pursuant to the New WRT Warrant Agreement, when so issued
as provided in the Plan and/or this Commitment Agreement, or pursuant to the
new WRT Warrant Agreement, as the case may be, will be duly authorized, validly
issued, fully paid and non-assessable and free of preemptive rights and will
entitle the holders thereof to all of the rights of a holder of New WRT Common
Stock in accordance with the New WRT Certificate of Incorporation, the New WRT
By-Laws and the laws of the State of Delaware.
Section 3.05. Approvals and Consents. Except for (i) approval by
the Bankruptcy Court of the provisions of this Commitment Agreement, (ii) any
required filings under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 0000
(xxx "XXX Xxx") and the expiration or earlier termination of the applicable
waiting periods thereunder, and (iii) the issuance of the Confirmation Order,
no consent, approval, order or authorization of, and no registration,
declaration or filing with, any federal, state, local or foreign government or
governmental authority is required to be made or obtained by WRT in connection
with the execution and delivery by WRT of this Commitment Agreement or the
consummation by WRT of the transactions contemplated hereby to be performed by
WRT.
Section 3.06. No Conflicts. From and after the Effective Date,
the consummation of the Plan and the transactions contemplated thereby and
hereby will not conflict with, violate or result in any breach of any of the
terms, conditions or provisions of, or constitute a default under or result in
the creation of a lien (other than Permitted Liens), or the acceleration of any
obligation or the loss of a benefit under, (i) the New WRT Certificate of
Incorporation or the New WRT By-Laws, (ii) any note, indenture, deed of trust,
material lease, or other material instrument, contract or agreement to which
New WRT may then be a party or by which it or its respective properties and
assets may then be bound, or (iii) any law, ordinance, rule or regulation of
any government or governmental authority or judgment, order or decree of any
court or governmental authority.
Section 3.07. SEC Reports, Financial Statements. (a) WRT has
heretofore delivered to DLB and Wexford copies of (i) its Annual Report on Form
10-K for the fiscal year ended December 31, 1995 (the "WRT 10-K"), (ii) its
proxy or information statements relating to meetings of, or actions taken
without a meeting by, the stockholders of WRT held since January 1, 1996 and
(iii) all of the other reports, statements and schedules filed with the
Securities and Exchange Commission (the "Commission") since January 1, 1996.
(b) The WRT 10-K (i) was filed with the Commission on or
about June 12, 1996 and (ii) except as described in the Disclosure Statement
and the exhibits thereto, at the time of filing thereof did not contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements made therein, in light of the circumstances
under which they were made, not misleading. As of its filing date, each such
other report or statement filed pursuant to the Securities Exchange Act of
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1934, as amended (the "Exchange Act"), complied as to form in all material
respects with the Exchange Act and did not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading.
(c) No event has occurred since the filing of the WRT 10-K
which would necessitate the filing by WRT with the Commission of a Current
Report on Form 8-K, other than events with respect to which such a Current
Report on Form 8-K has been filed with the Commission and delivered to DLB and
Wexford and a Current Report on Form 8-K which will be filed to report the
transactions contemplated hereby.
Section 3.08. Financial Statement. The audited consolidated balance
sheets of WRT and Subsidiaries as of December 31, 1995 and 1994, and the
related consolidated statements of operations, stockholders' equity (deficit)
and cash flows for each of the three fiscal years in the period ended December
31, 1995 (the "Historical WRT Financial Statements"), and, except as described
in the Disclosure Statement and the exhibits thereto, all financial statements
contained in any periodic or other report of WRT, or filed with the Commission
after the date of the WRT 10-K and prior to the Effective Date, (i) did and
will fairly present, as of the relevant dates and/or for the relevant periods
set forth therein, the consolidated financial position, results of operations,
changes in stockholders' equity (deficit) (in the case of annual financial
statements) and changes in the consolidated financial position of WRT and
Subsidiaries, subject in the case of statements for interim periods to normal
year-end adjustments; (ii) were and will be prepared in accordance with GAAP
applied on a basis consistent with prior periods, except as indicated in the
notes thereto, and subject, in the case of audited financial statements, to the
qualifications stated in the report thereon of KPMG Peat Marwick LLP; and (iii)
contained and will contain notes, if required, which were and will be true,
accurate and complete in all material respects.
Section 3.09. Disclosure Statement. On January 21, 1997, WRT and
DLBW filed with the Bankruptcy Court an amended disclosure statement pursuant
to Section 1125 of the Bankruptcy Code. Such amended disclosure statement, in
the form approved by the Bankruptcy Court for use by WRT and DLBW in the
solicitation of acceptances or rejections of the Plan, is herein called the
"Disclosure Statement." The Disclosure Statement, as of the Mailing Date (as
hereinafter defined), will contain "adequate information" (as defined in
Section 1125(a)(1) of the Bankruptcy Code) with respect to the Plan, and will
describe accurately in all material respects the provisions of the Plan and
this Commitment Agreement.
Section 3.10. Indebtedness, Liabilities and Obligations. Except
as set forth on Schedule 3.10 hereto and except for such as will be fully
discharged and extinguished upon confirmation of the Plan without any
distribution in respect thereof by WRT, any Subsidiary of WRT or New WRT,
neither WRT nor any subsidiary of WRT has any indebtedness, liabilities
(actual, contingent or other), obligations or commitments, contingent or
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otherwise, or any of the foregoing (material or otherwise) which are otherwise
required to be disclosed in the Historical WRT Financial Statements or in a
disclosure statement prepared in accordance with the Bankruptcy Code, which are
not either (i) fairly and adequately reflected in the Historical WRT Financial
Statements or described in the notes thereto, or (ii) described in the
Disclosure Statement. Any indebtedness, liabilities, obligations or
commitments which are not required to be so disclosed are not in the aggregate
material to the business, operations or financial condition of WRT or any
Subsidiary of WRT, taken as a whole.
Section 3.11. Taxes. Complete and correct copies of the federal
income tax returns, and all amendments thereto, for the years ended December
31, 1993, 1994 and 1995, heretofore filed by WRT with the Internal Revenue
Service for the taxable years then ended, have been delivered to DLB and
Wexford. For purposes of this Commitment Agreement, the term "tax" shall
include all federal, state, local and foreign taxes, assessments, levies,
imposts, duties, license fees, registration fees, withholding or other
governmental charges and any interest or penalty on, and any addition to, any
of the foregoing and any right to a credit or deduction against, or a reduction
of, any of the foregoing, and "tax return" means any return, report, statement
or other document relating to any tax. Except as set forth on Schedule 3.11
hereto, (i) WRT and each Subsidiary have filed all tax returns required to be
filed, all such tax returns are correct and complete and all taxes shown to be
due on such tax returns have been paid, (ii) there are no material unpaid taxes
which have given rise to a lien on the properties and assets of WRT, except
liens for taxes not yet due and payable, (iii) all material taxes not yet due
and payable which require accrual in accordance with applicable financial
accounting practices have been properly accrued on the books of account of WRT
and, if applicable with respect to periods ended on or prior to December 31,
1995, reflected in the Historical WRT Financial Statements, (iv) the charges,
accruals and reserves shown in the Historical WRT Financial Statements, if any,
in respect of taxes for all fiscal periods covered thereby are adequate in all
material respects with respect to such periods, and there are not pending or
known to WRT proposed assessments by any taxing authority for additional taxes
for which WRT does not have adequate book reserves for any such fiscal period ,
(v) since the date of the Historical WRT Financial Statements, neither WRT nor
any Subsidiary has incurred any liability for taxes other than in the ordinary
course of business, (vi) no audits or administrative or judicial proceedings
are pending or threatened with respect to WRT or any Subsidiary, (vii) neither
WRT nor any Subsidiary is liable for taxes of another Person under Treasury
Regulation 1.1502-6, as transferee or successor, by contract or otherwise,
(viii) there are no unexpired waivers of applicable statutes of limitation, or
extensions thereof, with respect to any taxes, (ix) all monies required to be
withheld by WRT from employees for income taxes, social security, unemployment
insurance taxes, or similar taxes or assessments have been collected or
withheld and either paid to the respective governmental agencies or set aside
in accounts for such purpose.
Section 3.12. Properties. Except as otherwise provided in
Section 3.21 hereto:
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(a) There is set forth in the Schedules a correct and
complete list of all material items of real property, including leased
property, and any material buildings, structures and improvements thereon or
therein, which are owned or used by WRT or any of its Subsidiaries. With
respect to any material real property of WRT or any of its Subsidiaries,
including any leased property, and any material buildings, structures and
improvements located thereon or therein, such buildings, fixtures and
improvements, and the present use thereof, comply in all material respects with
all zoning laws, ordinances and regulations of the governmental or other
authorities having jurisdiction thereof, including provisions relating to
permissible nonconforming uses, if any, and such premises are not affected, nor
to the best of WRT's knowledge threatened, by any condemnation or eminent
domain proceeding. All material leases of real or personal property by WRT or
any of its Subsidiaries, are, except as a result solely of the pendency of the
Chapter 11 Case, valid and subsisting leases and, except as contemplated by
this Commitment Agreement or the Plan, or terminated in the ordinary course of
business or in accordance with their terms, from and after the Effective Date
and the consummation of the transactions contemplated hereby, will continue to
entitle New WRT to the use and possession of the real or personal property
purported to be covered thereby for the terms specified in such leases and for
the purposes for which such real or personal property is now used.
(b) WRT has good title to all property and assets (whether
real or personal, tangible or intangible) reflected in the WRT Historical
Financial Statements or acquired after the date thereof. None of such property
or assets is subject to any lien, mortgage, claim, interest, charge, security
interest or other encumbrance or adverse interest of any nature whatsoever
("Liens"), except:
(i) Liens disclosed in the WRT Historical Financial
Statements;
(ii) Permitted Liens; or
(iii) Liens which do not materially detract from the
value or materially interfere with any present or intended use of such property
or assets.
(c) There are no developments affecting any such property or
assets (whether real or personal) pending or, to the knowledge of WRT,
threatened which might materially detract from the value of such property or
assets or materially interfere with any present or intended use of any such
property or assets.
Section 3.13. Contracts and Agreements. Except as set forth on
Schedule 3.13 hereto, the Schedules set forth a correct and complete list of
all contracts, agreements, leases and instruments to which WRT or any of its
Subsidiaries is a party or by which it is or its properties or assets are bound
(i) that provide for potential payment or receipt (or the provision of services
or products having a value) to or from WRT or any of its Subsidiaries
(page) 11
12
in excess of $50,000 or are otherwise material to the financial condition,
operations, business, assets and liabilities of WRT, (ii) that pertain to
employment or severance benefits for any officer or director of WRT or any of
its Subsidiaries or for any employee of WRT or any of its Subsidiaries to whom
such contracts, agreements or instruments provide employment benefits of more
than $100,000 per year, including in the form of stock distributions or
distributions-in-kind, or severance benefits of more than $50,000, including in
the form of stock distributions and distributions-in-kind, other than employees
covered by collective bargaining contracts with trade unions, a list of whom
has heretofore been provided to DLB and Wexford, (iii) that cover or relate to
the lease or charter of vessels, or (iv) that will be assumed by WRT pursuant
to the Plan. Neither WRT, nor any of its Subsidiaries nor, to WRT's knowledge
but without investigation, any other party to any such contract, commitment,
undertaking, agreement or instrument to which WRT or any of such Subsidiaries
is a party is in material default thereunder except as a result of the pendency
of the Chapter 11 Case or as disclosed in the Disclosure Statement, and except
as so disclosed or as may result solely from the pendency of the Chapter 11
Case, each such contract, commitment, undertaking, agreement and instrument is
in full force and effect and is valid and legally binding. WRT is not in
violation of, or in default with respect to, any term of its certificate of
incorporation or by-laws.
Section 3.14. Insurance. WRT maintains policies of fire,
liability, business interruption and other forms of insurance covering its
properties, businesses, officers and directors against such losses and risks as
are generally insured against by companies in the same or similar businesses in
such amounts as are adequate to prevent WRT from being a co-insurer within the
terms of such policies, except to the extent such status as a co-insurer may
result solely from the provision in the policies of deductibles not in excess
of those customarily contained in policies of companies in the same or similar
businesses or solely from claims in excess of policy limits. Set forth on
Schedule 3.14 hereto is a correct and complete list of all such insurance
policies currently maintained by WRT. Each such policy is in full force and
effect and will remain in full force and effect following consummation of the
Plan. No such policy has premiums in arrears and no notice of cancellation or
termination has been received with respect to any such policy.
Section 3.15. Litigation. Except as set forth on the Schedules,
there is no suit, action, proceeding or governmental investigation pending or,
to the best of the knowledge of WRT, threatened against WRT or any of its
Subsidiaries (other than any suit, action or proceeding in which WRT or any of
such Subsidiaries is the plaintiff and in which no counterclaim or cross-claim
against WRT or any of such Subsidiaries has been filed) nor has WRT or any of
such Subsidiaries or any of their respective officers or directors been subject
to any suit, action, proceeding or governmental investigation as a result of
which any such officer or director is or may be entitled to indemnification by
WRT or any of such Subsidiaries, except for suits, actions or proceedings
(other than suits, actions or proceedings commenced by any government or
governmental authority) which if resolved adversely to WRT or
(page) 12
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any of such Subsidiaries would not in the aggregate have a Material Adverse
Effect or which in any manner challenges or seeks to prevent, enjoin, alter or
materially delay the transactions contemplated hereby. Except as so disclosed,
there is not outstanding against WRT or any of such Subsidiaries any judgment,
decree, injunction, rule or order of any court, government, department,
commission, agency, instrumentality or arbitrator, nor is WRT or any of such
Subsidiaries in violation of any applicable law, regulation, ordinance, order,
injunction, decree or requirement of any governmental body or court which
violation would have a Material Adverse Effect.
Section 3.16. Employee Benefits. WRT has delivered to DLB and
Wexford a true and complete copy of its employee benefit plans and programs
(including, without limitation, any of the foregoing covering retirees)
maintained by WRT or its Subsidiaries (the "Benefit Plans"). Neither WRT, its
Subsidiaries nor any entity treated as a single employer with WRT or its
Subsidiaries under Sections 414(b), (c), (m) or (o) of the Internal Revenue
Code of 1986, as amended (the "Code"), sponsors, maintains or contributes to
any Benefit Plan that is subject to Title IV of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), including any "multiemployer plan"
within the meaning of Section 4001(a)(3) of ERISA or, within the preceding five
(5) years, sponsored, maintained or contributed to any such Benefit Plan. None
of the Benefit Plans, and neither WRT nor its Subsidiaries, have any liability
with respect to medical or life insurance coverage for retirees or other
terminated employees, other than as required under Section 4980B of the Code.
Each Benefit Plan has been administered and maintained in compliance with all
applicable laws, including, without limitation, ERISA and the Code, and in
accordance with its terms. No nonexempt "prohibited transaction" (as defined
in Section 406 of ERISA and Section 4975 of the Code) has occurred with respect
to any Benefit Plan. WRT and its Subsidiaries have complied with all
reporting, disclosure and other obligations as may be imposed under all
applicable laws by reason of the operation of any Benefit Plan. The terms of
each Benefit Plan permit the sponsor to amend, modify or terminate each such
Benefit Plan and no representations, written or oral, would limit the ability
of WRT or its Subsidiaries to amend, modify or terminate any Benefit Plan.
With respect to each Benefit Plan intended to qualify under Section 401(a) of
the Code, the Internal Revenue Service has issued a favorable determination
letter that such Benefit Plan is qualified under Section 401(a) of the Code and
such Benefit Plan is exempt from federal taxation under Section 501(a) of the
Code; a copy of the most recent of all such determination letters has been made
available to DLB and Wexford and nothing has occurred since the date of such
letter that could reasonably be expected to cause any such Benefit Plan to lose
such qualification or exemption.
Section 3.17. Absence of Certain Changes. Since the date of the WRT
Historical Financial Statements and except as disclosed in the WRT 10-K or the
Disclosure Statement, the business of WRT has been conducted in the ordinary
course consistent with past practices and there has not been:
(i) any event, occurrence, development or state of
circumstances or facts which has had or could reasonably be expected to have a
Material Adverse Effect;
(page) 13
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(ii) any declaration, setting aside or payment of any
dividend or other distribution with respect to any shares of capital stock of
WRT, or any repurchase, redemption or other acquisition by WRT or any
Subsidiary of any outstanding shares of capital stock or other securities of,
or other ownership interests in, WRT or any Subsidiary;
(iii) any amendment of any material term of any
outstanding security of WRT or any Subsidiary;
(iv) any incurrence, assumption or guarantee by WRT or
any Subsidiary of any indebtedness for borrowed money;
(v) any creation or assumption by WRT or any Subsidiary
of any Lien on any material asset other than in the ordinary course of business
consistent with past practices;
(vi) any making of any loan, advance or capital
contributions to or investment in any Person;
(vii) any damage, destruction or other casualty loss
(whether or not covered by insurance) affecting the business or assets of WRT
or any Subsidiary which, individually or in the aggregate, has had or would
reasonably be expected to have a Material Adverse Effect;
(viii) any transaction or commitment made, or any
contract or agreement entered into, by WRT or any Subsidiary relating to its
assets or business (including the acquisition or disposition of any assets) or
any relinquishment by WRT or any Subsidiary of any contract or other right, in
either case, material to WRT and its Subsidiaries, taken as a whole, other than
transactions and commitments in the ordinary course of business consistent with
past practices and those contemplated by this Commitment Agreement;
(ix) any (A) employment, deferred compensation,
severance, retirement or other similar agreement entered into with any
director, officer or employee of WRT or any Subsidiary (or any amendment to any
such existing agreement), (B) grant of any severance or termination pay to any
director, officer or employee of WRT or any Subsidiary, or (C) change in
compensation or other benefits payable to any director, officer or employee of
WRT or any Subsidiary pursuant to any severance or retirement plans or policies
thereof;
(x) any labor dispute, other than routine individual
grievances, or any activity or proceeding by a labor union or representative
thereof to organize any employees of WRT or any Subsidiary, which employee was
not previously subject to a collective bargaining agreement, or any lockouts,
strikes, slowdowns, work stoppages or threats thereof by or with respect to any
employees of WRT or any Subsidiary; or
(xi) any agreement to do any of the forgoing.
(page) 14
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Section 3.18. Environmental Matters. (a) WRT and its Subsidiaries
have obtained all permits, licenses and other authorizations, and have made all
registrations and given all notifications, that are required with respect to
the operation of their respective businesses under all applicable Environmental
Laws other than those permits, licenses, other authorizations, registrations
and notifications the failure of which to obtain or make, individually or in
the aggregate, would not have a Material Adverse Effect.
(b) WRT and its Subsidiaries are in compliance in all
material respects with all terms and conditions of the required permits,
licenses and other authorizations referred to in paragraph (a) above, and are
also in compliance in all material respects with any other limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in the Environmental Laws or contained in
any regulation, code, plan, order, decree, judgment, injunction, settlement
agreement, notice or demand letter issued, entered, promulgated or approved
thereunder, other than where the failure to be in such compliance, individually
or in the aggregate, would not have a Material Adverse Effect.
(c) There is no civil, criminal or administrative action,
suit, demand, claim, hearing, notice of violation, investigation, proceeding,
notice or demand letter (collectively "Actions") pending or, to the knowledge
of WRT, threatened against WRT or any of its Subsidiaries (including without
limitations, any claims made against or with respect to the Buyer's Leasehold
and Facilities) relating in any way to Environmental Laws or any regulation,
code, plan, order, decree, judgment, injunction, notice or demand letter
issued, entered, promulgated or approved thereunder other than Actions that, if
determined adversely to WRT or such Subsidiaries, would not reasonably be
expected to have a Material Adverse Effect.
Section 3.19. Intellectual Property. (a) Set forth on Schedule
3.19 hereto is a correct and complete list of all patent rights or licenses or
other rights to use patent rights, inventions, trademarks, service marks, trade
names and copyrights owned by WRT or its Subsidiaries. WRT and its
Subsidiaries own or possess adequate patent rights or licenses or other rights
to use patent rights, inventions, trademarks, service marks, trade names and
copyrights used or necessary to conduct the general business now operated by
them and neither WRT nor any of its Subsidiaries has received any notice of
infringement or conflict with asserted rights of others with respect to any
patent, patent rights, inventions, trademarks, service marks, trade names or
copyrights which, individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect.
(b) None of the processes and formulae, research and
development results and other know-how of WRT or any Subsidiary, the value of
which to WRT or such Subsidiary is contingent upon maintenance of the
confidentiality thereof, has been disclosed by WRT or any Subsidiary to any
Person other than employees, representatives and agents of WRT or any
Subsidiary all of whom are bound by written confidentiality agreements.
(page) 15
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Section 3.20 Licenses and Permits. Schedule 3.20 correctly
describes each license, franchise, permit or other similar authorization
affecting, or relating in any way to, the assets or business of WRT and its
Subsidiaries (the "Permits") together with the name of the government agency or
entity issuing such Permit. Such Permits are valid and in full force and
effect and none of the Permits will be terminated or impaired or become
terminable, in whole or in part, as a result of the transactions contemplated
hereby.
Section 3.21 Labor Matters. Neither WRT nor any of its
Subsidiaries are, or, within the preceding three (3) years, have been, parties
to any collective bargaining agreements covering employees or former employees.
WRT and its Subsidiaries are in compliance with all applicable labor and
employment laws, except where the failure so to comply could not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.
To the best of the knowledge of WRT, no employee or former employee has a
reasonable basis for any action against WRT or its Subsidiaries arising out of
any statute, ordinance or regulation relating to discrimination in employment
practices.
Section 3.22 Oil and Gas Representations. (a) Royalties and
Rentals; Full Force and Effect. The oil, gas and mineral lease forming a
portion of the Buyer's Leasehold and Facilities is in full force and effect.
WRT has paid, or has caused to be paid, timely all royalties, rentals or other
payments due under the Buyer's Leasehold and Facilities except for those
payments which are subject to a bona fide dispute and which will not result in
grounds for cancellation of any portion of the Buyer's Leasehold and Facilities
and has taken or has caused to be taken all necessary action required to
preserve the Buyer's Leasehold and Facilities in full force and effect. WRT
has not received any demand (which has not been satisfied) from, nor is it a
party to any dispute concerning the Buyer's Leasehold and Facilities, and, to
WRT's knowledge, no other person owning an interest in the Buyer's Leasehold
and Facilities has received any such demand or is a party to any such dispute.
Additionally, there has not occurred any event, fact or circumstance which with
the lapse of time or the giving of notice, or both, would constitute a breach
or default on behalf of WRT or, to the knowledge of WRT, on behalf of any other
party, under the oil, gas and mineral lease forming a part of the Buyer's
Leasehold and Facilities.
(b) Prepayment Arrangements. WRT is not obligated by
virtue of any prepayment arrangement under any contract for the sale of
hydrocarbons containing a take-or-pay or similar provision, or a production
payment or of any other prepayment arrangement, to deliver hydrocarbons whose
production is or may be attributable to the Buyer's Leasehold and Facilities at
some future time without then or thereafter having the right to receive and
retain full payment therefor.
(c) Call on Production. No party has any call upon, option
to purchase or other preferential purchase right with respect to hydrocarbon
production from or attributable to the Buyer's Leasehold and Facilities.
(page) 16
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(d) Oil and Gas Taxes. All ad valorem, property,
production, excise, severance, windfall profits and other similar taxes and
assessments based on or measured by the ownership of the Buyer's Leasehold and
Facilities or the production of hydrocarbons or the receipt of proceeds
therefrom for all years prior to the year 1997, which are not foreclosed by
reason of the expiration of any applicable statutes of limitation or the
receipt of any closing letters from relevant taxing authorities, have been
properly paid, and all such taxes and assessments which become due and payable
prior to Closing shall be properly paid by WRT.
(e) Liens; Claims; Litigation. There are no liens, claims
or demands or suits, actions or other proceedings pending or, to the knowledge
of WRT, threatened before any court or governmental body or agency or arbitral
body which could result in impairment or loss of WRT's title to any part of the
Buyer's Leasehold and Facilities or the value thereof or which might hinder or
impede the operation of the Buyer's Leasehold and Facilities.
(f) Condition of Personal Property. Except as disclosed to
DLB, all of the equipment, facilities, fixtures, appurtenances and other
personal property which form a part of the Buyers Leasehold and Facilities have
been maintained in a state of repair that is adequate for normal operations,
and are in good working order.
(g) Accuracy of Data. All of the written data, including
production records, computer printouts and other such data, whether similar or
dissimilar, at the time furnished by WRT to DLB, in conjunction with DLB's
evaluation of the Buyer's Leasehold and Facilities, was complete to the best of
WRT's knowledge, and the information reported therein was not materially false,
and it did not omit any material fact necessary to make the reported
information not misleading. WRT has no knowledge of any matter which
materially and adversely affects (or may materially and adversely affect) the
operations, prospects or condition of any portion of the Buyer's Leasehold and
Facilities, which has not been set forth in this Agreement or in the Schedules
thereto.
(h) Title. Seller owns Defensible Title (as hereinafter
defined) to no less than the net revenue interest and no more than the working
interest in the oil, gas and mineral lease forming a part of the Buyer's
Leasehold and Facilities as is set forth in Schedule 3.22. The term
"Defensible Title" as used herein shall mean, as to the Buyer's Leasehold and
Facilities, such title that (1) entitles WRT to receive a percentage of all
oil, gas and other hydrocarbon minerals which are produced, saved and marketed
from or attributable to the Buyer's Leasehold and Facilities not less than the
interest shown as the net revenue interest of WRT on Schedule 3.22 hereto,
without reduction, suspension or termination for the productive life of Buyer's
Leasehold and Facilities; (2) obligates WRT to bear a percentage of the costs
and expenses relating to operations on the maintenance and development of the
Buyer's Leasehold and Facilities not greater than the
(page) 17
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interest shown as the working interest of WRT on Schedule 3.22 hereto, without
increase for the productive life of the Buyer's Leasehold and Facilities
(unless the net revenue interest increases at least proportionately); and (3)
is free and clear of all production payments, debts, liens, mortgages, security
interests, contract obligations, restrictions on transferability, preferential
purchase rights, claims, defects and encumbrances except for the Permitted
Encumbrances (as hereinafter defined). The term "Permitted Encumbrances" as
used herein shall mean:
(1) liens securing amounts not yet owing for taxes;
(2) mechanic's, materialmen's, repairmen's or similar
liens or charges which relate to obligations not yet delinquent or the validity
of which is being contested in good faith;
(3) liens of a form and scope customary in the oil and
gas industry under operating agreements and other similar instruments and
agreements;
(4) such defects or irregularities, if any, in the
title to the Buyer's Leasehold and Facilities that individually or in the
aggregate do not impair the Buyer's Leasehold and Facilities or the value
thereof, affect the obligation of WRT under this Agreement or materially
adversely affect the use of the Buyer's Leasehold and Facilities; and
(5) royalties, overriding royalties, production
payments and other burdens on production from or attributable to the Buyer's
Leasehold and Facilities that are usual and customary in the oil and gas
industry and that have been taken into account in the net revenue interests set
forth in Schedule 3.22.
(j) Licenses and Permits; Filings. All authorizations,
licenses and permits required under federal, state and local laws have been
obtained, and all filings necessary to obtain such authorizations, licenses and
permits have been made, to own and operate the Buyer's Leasehold and Facilities
as presently being owned and operated. Such authorizations, licenses, permits
and filings are in full force and effect, and no material violations exist with
respect to any of the same, and WRT has not received notice of any violation of
or investigation relating thereto.
(k) AFE's and Other Extant Obligations. There are no
outstanding authorities for expenditure or other contracts or agreements,
except that certain Global Settlement by and among the State of Louisiana,
Texaco, Inc. and the Louisiana Land and Exploration Company, dated February 22,
1994, that;
(l) require the drilling of xxxxx or other material
development operations in order to earn or to continue to hold all or any
portion of the Buyer's Leasehold and Facilities; or
(2) obligate WRT to make payments of any material
amounts in connection with drilling of xxxxx or other material capital
expenditures affecting the Buyer's Leasehold and Facilities.
(page) 18
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(l) Xxxxx, Plugging and Abandonment. There are no xxxxx
located on the Buyer's Leasehold and Facilities, or bottom-holed under the
Buyer's Leasehold and Facilities, which are currently producing, or capable of
producing, hydrocarbons. All xxxxx located on, or bottom-holed under, the
Buyer's Leasehold and Facilities have been plugged and abandoned in accordance
with all applicable laws, ordinances, rules, regulations and permits of any
governmental body or agency having jurisdiction thereover; and there are no
xxxxx located on, or bottom-holed under, the Buyer's Leasehold and Facilities
that WRT, the subject operator or any other party owning an interest in the
Buyer's Leasehold and Facilities is obligated by order or other action of any
governmental body or agency to plug and abandon within a time certain.
(m) Existing Documents. For purposes of this Agreement,
the term "Existing Documents" shall mean all the oil, gas and other mineral
leases, assignments or other instruments or agreements that comprise the
Buyer's Leasehold and Facilities and all contractually binding arrangements to
which the Buyer's Leasehold and Facilities may be subject and which will be
binding on the Buyer's Leasehold and Facilities or DLB after closing
(including, without limitation, oil, gas and farm-in agreements, option
agreements, forced pooling orders, assignments of production payments, unit
agreements, joint operating agreements, balancing agreements, unit operating
agreements, production contracts, processing contracts, gas sales contracts,
marketing and transportation contracts and division orders). With respect to
the Buyer's Leasehold and Facilities and insofar as the following could
materially prevent DLB from receiving the proceeds of production attributable
to, or otherwise receiving the economic benefits deriving from, the Buyer's
Leasehold and Facilities or result in he cancellation of DLBW's interest
therein, (i) all Existing Documents are in full force and effect and are the
valid and legally binding obligations of the parties thereto and are
enforceable in accordance with their respective terms, except as may result
from the pendency of the Chapter 11 Case or as disclosed in the Disclosure
Statement; (ii) WRT is not in material breach or default with respect to any of
its obligations pursuant to any such Existing Documents or any regulations
incorporated therein or governing same, except as a result of the pendency of
the Chapter 11 Case or as disclosed in the Disclosure Statement; and (iii) all
payments (including, without limitation, royalties, delay rentals, shut-in
royalties and valid calls under unit or operating agreements) and obligations
due thereunder have been made and satisfied by or on behalf of WRT.
Section 3.23. Full Disclosure. WRT has disclosed to DLB and Wexford
all material facts concerning WRT's and its Subsidiaries assets, business,
operations, financial condition and prospects. No representation or warranty
by WRT in this Commitment Agreement and no statement made by WRT contained in
the Plan, the Disclosure Statement (other than statements made by DLBW therein)
or any document delivered or to be delivered by or on behalf of WRT to DLB and
Wexford in accordance with this Commitment Agreement contained or will contain
any untrue statement of material fact or omitted or will omit to state a
material fact necessary to make the statements contained in this Commitment
Agreement or in any such document, in light of the circumstances under which
they were made, not misleading.
(page) 19
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF DLB AND WEXFORD
Section 4.01. Representations and Warranties of DLB. DLB hereby
represents and warrants to, and covenants and agrees with, WRT and Wexford that
(i) this Commitment Agreement has been duly authorized by DLB and has been duly
executed and delivered on its behalf and constitutes the valid and binding
obligation of DLB, enforceable against DLB in accordance with its terms,
subject, as to enforceability, to bankruptcy, insolvency, moratorium,
reorganization and similar laws affecting creditors' rights generally and to
general principles of equity, whether considered in a proceeding at law or in
equity, (ii) it has and will have full power and authority to contribute at the
closing the funds required pursuant to Article II hereof to the capital of New
WRT, (iii) the execution and delivery by DLB of this Commitment Agreement, and
the consummation by DLB of the transactions contemplated hereby, will not, to
the best of DLB's knowledge, conflict with, violate, or result in any breach
of, any of the terms, conditions or provisions of, or constitute a default
under, or result in the creation of a lien on, or the acceleration of any
obligation or the loss of a benefit under, (I) DLB's certificate of
incorporation or by-laws, (II) any note, indenture, deed of trust, material
lease, or other material instrument, contract or agreement to which DLB may
then be a party or by which it or its respective properties and assets may then
be bound, or (III) any law, ordinance, rule or regulation of any government or
governmental authority or judgment, order or decree of any court or
governmental authority, (iv) subject to such filings as may be required under
the Exchange Act, the HSR Act and the entry of the Confirmation Order, all
consents, approvals, orders and authorizations of, and all registrations,
declarations and filings with, any federal or state government or governmental
authority required to be made or obtained by DLB for the consummation by it of
the transactions contemplated hereby have been made or obtained or will be made
or obtained prior to the Effective Date and (v) the information provided by DLB
in writing expressly for inclusion in the Disclosure Statement does not, and
will not, contain an untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
Section 4.02 Representations and Warranties of Wexford. Wexford
hereby represents and warrants to, and covenants and agrees with, WRT and DLB
that (i) this Commitment Agreement has been duly authorized by Wexford in its
capacity as investment manager for the Wexford Funds and, if necessary, by each
of the Wexford Funds, has been duly executed and delivered on its behalf and
constitutes the valid and binding obligation of the Wexford Funds, enforceable
against the Wexford Funds in accordance with its terms, subject, as to
enforceability, to bankruptcy, insolvency, moratorium, reorganization and
similar laws affecting creditors' rights generally and to general principles of
equity, whether considered in a proceeding at law or in equity, (ii) the
Wexford Funds have and will have full power and authority to contribute at the
Closing the funds required pursuant to Article II hereof to the capital of new
WRT, (iii) the execution and delivery by Wexford and the
(page) 20
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Wexford Funds of this Commitment Agreement, and the consummation by the Wexford
Funds of the transactions contemplated hereby, will not, to the best of
Wexford's knowledge, conflict with, violate, or result in any breach of, any of
the terms, conditions or provisions of, or constitute a default under, or
result in the creation of a lien on, or the acceleration of any obligation or
the loss of a benefit under, (I) Wexford's operating agreement or the
partnership agreements of the Wexford Funds, (II) any note, indenture, deed of
trust, material lease, or other material instrument, contract or agreement to
which Wexford or the Wexford Funds may then be a party or by which they or
their respective properties and assets may then be bound, or (III) any law,
ordinance, rule or regulation of any government or governmental authority or
judgment, order or decree of any court or governmental authority, (iv) subject
to such filings as may be required under the Exchange Act, the HSR Act and the
entry of the Confirmation Order, all consents, approvals, orders and
authorizations of, and all registrations, declarations and filings with, any
federal or state government or governmental authority required to be made or
obtained by Wexford for the consummation by it of the transactions contemplated
hereby have been made or obtained or will be made or obtained prior to the
Effective Date and (v) the information provided by Wexford in writing expressly
for inclusion in the Disclosure Statement does not, and will not, contain an
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading.
Section 4.03. Financing. DLB and the Wexford Funds have, or will
have prior to the Closing, sufficient cash, available lines of credit or other
sources of immediately available funds to enable it to make payment of the
funds required pursuant to Article II hereof and any other amounts to be paid
by it hereunder.
Section 4.04. Purchase for Investment. DLB and the Wexford Funds
are purchasing the New WRT Common Stock and the New WRT Subscription Common
Stock for investment for their own respective accounts and not with a view to,
or for sale in connection with, any distribution thereof in violation of the
Securities Act of 1933, as amended. DLB, Wexford and the Wexford Funds(either
alone or together with their advisors) have sufficient knowledge and experience
in financial and business matters so as to be capable of evaluating the merits
and risks of its investments in the New WRT Common Stock and the New WRT
Subscription Common Stock and are capable of bearing the economic risks of such
investment.
Section 4.05. Litigation. There is no action, suit, investigation
or proceeding pending against, or to the knowledge of DLB, Wexford or the
Wexford Funds threatened against or affecting, DLB, Wexford or the Wexford
Funds before any court or arbitrator or any governmental body, agency or
official which in any manner challenges or seeks to prevent, enjoin, alter or
materially delay the transactions contemplated by this Commitment Agreement.
(page) 21
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ARTICLE V
COVENANTS OF WRT
WRT covenants and agrees with DLB and Wexford that, from and after
the date hereof and until the Effective Date, except as otherwise expressly
provided herein or in the Plan and subject to the terms and conditions hereof:
Section 5.01 Conduct of Business. (a) WRT shall carry on its
business diligently and consistent with good business practice, maintain its
properties in customary repair, order and condition, ordinary wear and tear
excepted, and use all reasonable commercial efforts to maintain and preserve
its business organization.
(b) WRT will not (i) take or agree or commit to take any
action that would make any representation and warranty of WRT hereunder
inaccurate in any material respect at, or as of any time prior to, the
Effective Date or (ii) omit or agree or commit to omit to take any action
necessary to prevent any such representation or warranty from being inaccurate
in any material respect at any such time.
Section 5.02 Actions in the Chapter 11 Case.
(a) Subject to its fiduciary obligations as debtor-in-
possession in the Xxxxxxx 00 Xxxx, XXX shall use its best efforts, diligently
and in good faith, to cause the Plan to be confirmed by the Bankruptcy Court.
Without limiting the application of the foregoing sentence, so long as this
Commitment Agreement is in full force and effect, WRT will not propose or in
any way support any plan that fails to provide for the full payment in cash at
the Closing of the Texaco Claim. WRT shall not amend the Plan or permit the
Plan to be amended without the prior written consent of DLB and Wexford and,
upon the request of DLB and Wexford, shall promptly file with the Bankruptcy
Court all such amendments to the Plan and to the Disclosure Statement or any
exhibit to the Plan or Disclosure Statement as are necessary in order to give
effect to the provisions of this Commitment Agreement. Subject to the
confirmation of the Plan, WRT shall take all actions not inconsistent with the
terms of this Commitment Agreement that are necessary or appropriate in order
to effect the consummation of the Plan and the transactions contemplated by
this Commitment Agreement.
(b) Promptly after the execution and delivery hereof, WRT
shall make such filings (which shall be in form and substance satisfactory to
DLB and Wexford) with the Bankruptcy Court as are necessary in order to obtain
the approval of the Bankruptcy Court of the terms and provisions of this
Commitment Agreement on or before entry of an order approving the Disclosure
Statement, including, without limitation, the provisions of Sections 10.02 and
10.03 hereof. WRT shall use its best efforts, diligently and in good faith, to
obtain such approval as promptly as practicable and shall submit a motion for
such approval, substantially in the form of Exhibit B hereto, to the Bankruptcy
Court no later than the close of business on January 28, 1997.
(page) 22
23
(c) WRT shall use its best efforts, diligently and in good
faith, to file with the Bankruptcy Court and to prosecute objections to all
Claims that WRT, DLB or Wexford believes in good faith are subject to objection
in whole or in part, including, without limitation, objections to the amount of
such Claims and to any lien, mortgage or other security interest asserted with
respect to such Claims, and shall not settle any such objection except with the
consent of DLB and Wexford, which consent shall not be unreasonably withheld.
(d) WRT shall not take any actions or omit to take any
actions that are inconsistent with the provisions of this Commitment Agreement
or that interfere in any manner with the provisions of this Commitment
Agreement.
(e) WRT shall exercise all reasonable efforts, diligently
and in good faith, to have the New WRT Common Stock qualified, prior to the
Effective Date, for quotation on the NASDAQ system upon issuance thereof.
Section 5.03 Negative Covenants. WRT will not, except as
expressly or specifically contemplated by this Commitment Agreement or as
expressly and specifically permitted in the Plan, engage in any of the
following activities or transactions without the express written consent of DLB
and Wexford, which shall not be unreasonably withheld:
(a) propose or in any way support any plan of reorganization
for WRT other than the Plan;
(b) sell, lease, dispose of or transfer, or agree to sell,
lease, dispose of or transfer, any material leases or any other material assets
or rights, or cancel or agree to cancel any material liabilities owed to WRT;
(c) issue, sell, deliver or agree to issue, sell or deliver
any shares of capital stock, bonds, debentures, notes or other corporate
securities of which WRT is the issuer or grantor, or grant or issue, or agree
to grant or issue, any options, warrants, bonuses or other similar rights
calling for the issuance of such securities;
(d) borrow, or agree to borrow, any funds or voluntarily
incur, or assume or become subject to, whether directly or by way of guarantee
or otherwise, any obligation or liability for borrowed money;
(e) except for (i) Permitted Liens and (ii) leases entered
into in the ordinary course of business and not otherwise prohibited hereby,
mortgage, pledge or otherwise encumber any part of its assets;
(f) enter, or agree to enter, into any agreement or
arrangement (i) granting any rights of first refusal or similar preferential
rights to purchase any assets of WRT, other than in the ordinary course of
business and with respect to non-material assets, or (ii) requiring the consent
of any Person to the consummation of any of the transactions contemplated by
this Commitment Agreement or the Plan;
(page) 23
24
(g) breach, amend (other than in the ordinary course of
business consistent with past practices) or terminate (other than in accordance
with its terms) any material agreement, contract or instrument to which WRT is
a party;
(h) merge or consolidate with or into any other Person,
acquire control or acquire any capital shares or other securities of any other
Person, or take any steps incidental to or in furtherance of any such actions,
whether by entering into an agreement providing therefor or otherwise;
(i) enter into any material contract, arrangement or
agreement (other than contracts, agreements or arrangements entered into in the
ordinary course of business consistent with past practices);
(j) except as required by law or by GAAP, made any material
alteration in the manner of keeping its books, accounts or records or in the
accounting practices reflected therein;
(k) enter into any material transaction or acquire any
capital assets other than in the ordinary course of business consistent with
past practices;
(l) reject any executory contract or unexpired lease with
respect to which the damages resulting from such rejection would exceed
$50,000;
(m) amend its certificate of incorporation or by-laws or
change its authorized or outstanding capital stock;
(n) except in amounts that individually or in the aggregate
are not material, (i) grant to any director or officer or to any employee or
consultant any increase in compensation in any form, (ii) grant to any such
person any severance or termination pay or benefit, or (iii) make any loan or
advance to, or enter into, amend, modify, terminate or renew any compensation
benefit or employment agreement or arrangement with, any such person; or
(o) take any other action inconsistent with the terms of
this Commitment Agreement or the Plan or that could reasonably be expected to
impair the consummation of the transactions contemplated hereby or thereby.
Section 5.04 Delivery of Certain Documents.
(a) WRT shall promptly furnish to DLB and Wexford from the
date hereof until the Effective Date a copy of each such report, including
financial statements and schedules, hereafter filed by WRT pursuant to the
Exchange Act, and all material documents served upon or served by WRT in
connection with the Chapter 11 Case or any action or proceeding which may be
initiated with respect to any transaction contemplated by this Commitment
Agreement.
(page) 24
25
(b) WRT shall give DLB and Wexford and their respective
accountants, counsel and other designated representatives access during normal
business hours throughout the period from the date hereof to the Effective Date
to all premises, books, records and other information of and concerning WRT
(including, without limitation, all work papers relating to tax and accounting
information used in connection with the preparation of financial statements and
tax returns), and shall cause its officers and managerial employees to furnish
to DLB and Wexford such financial and operating data and other information with
respect to its business and properties as either may reasonably request. No
investigation made by or information furnished to DLB or Wexford pursuant to
this Commitment Agreement shall be deemed to impact DLB's and Wexford's ability
to rely on any representations or warranties by WRT or the conditions to the
obligations of the parties to consummate the transactions contemplated by this
Commitment Agreement.
Section 5.05 Notification. WRT shall promptly notify DLB and
Wexford of (a) the occurrence of any change, event or condition that has had,
or could reasonably be expected to have, an effect on the Closing or a Material
Adverse Effect, (b) the commencement or threat of commencement of any
litigation that might reasonably be expected to have a Material Adverse Effect
or that relate to the consummation of the transactions contemplated by this
Commitment Agreement or the Plan, (c) any notice or other communication from
any Person alleging that the consent of such Person is or may be required in
connection with the consummation of the transactions contemplated by this
Commitment Agreement or the Plan, (d) any notice or other communication from
any governmental or regulatory agency or authority in connection with the
transactions contemplated by this Commitment Agreement or the Plan or (e) any
change in the senior management of WRT.
Section 5.06. Updating Disclosures. From time to time through
the Effective Date, WRT will promptly deliver to DLB and Wexford any
information concerning events subsequent to the date of this Commitment
Agreement or which becomes available to WRT after the date hereof which is
necessary to supplement the representations and warranties of WRT contained
herein, in order that such representations and warranties are kept current,
complete and accurate in all material respects. Such delivery shall, to the
extent of any new disclosure the substance of which has had or could be
reasonably expected to have a Material Adverse Effect, provide DLB and Wexford
the right to terminate this Commitment Agreement or pursue any other legal
remedy hereunder.
Section 5.07. Maintenance of Insurance. Through the Effective
Date, WRT will keep in force substantially the same kinds and amounts of
insurance which is carried as of the date hereof.
Section 5.08 Government Filings. WRT will (i) duly and timely
file (subject to authorized extensions) all reports or returns required to be
filed with federal authorities and all material reports and returns required to
be filed with state, foreign, local or other authorities, (ii) except as
contemplated by the Plan, unless contesting such in good faith and having
established adequate book reserves therefor, promptly pay, as and when due,
(page) 25
26
all federal, state, local and foreign taxes, assessments and governmental
charges to the extent such taxes, assessments and charges constitute expenses
of administration under Section 503 of the Bankruptcy Code and (iii) duly
observe and conform to all lawful requirements of any governmental authority
relating to any of its properties or to the operation and conduct of its
business and to all covenants, terms and conditions upon, or under which, any
of its properties are held where the failure so to observe, conform or comply
would have a Material Adverse Effect.
Section 5.09 Management Reports. Subject to its fiduciary duties
as debtor-in-possession, WRT shall prepare, consistently with its current
practice, and deliver to DLB and Wexford copies of its monthly operating
statements, variance reports and other internal reports and documents,
simultaneously with the customary internal circulation thereof within WRT.
Section 5.10 Board Meetings. WRT shall give DLB and Wexford at
least two days' prior notice of any board meeting or meeting of a committee of
the board and, subject to WRT's fiduciary duties as a debtor-in-possession, DLB
and Wexford each shall have the right to have a representative attend all such
meetings.
Section 5.11 Further Assurances. WRT shall (a) execute and
deliver such instruments and take such other actions as DLB and Wexford may
reasonably require in order to carry out the intent and purpose of this
Commitment Agreement and the Plan, (b) use its best efforts, diligently and in
good faith, to obtain any consents required herein to be obtained, (c) subject
to its fiduciary duties as debtor-in-possession, diligently support this
Commitment Agreement and the Plan in any proceeding before the Bankruptcy Court
or any other governmental or regulatory authority whose approval of the
transaction contemplated hereby and by the Plan is required, (d) subject to its
fiduciary duties as debtor-in-possession, use its best efforts, diligently and
in good faith, to oppose any litigation that seeks to restrain or prohibit the
consummation of the transactions contemplated hereby or by the Plan or which
would have a Material Adverse Effect and (e) use its best efforts, diligently
and in good faith, to cause the conditions precedent set forth in Article IX
hereof to be satisfied.
ARTICLE VI
COVENANTS OF DLB AND WEXFORD
Section 6.01 General Covenants. Each of DLB and Wexford, jointly
and severally, covenants and agrees, subject to the terms and conditions
hereof, that they will (a) execute and deliver such instruments and take such
other actions as WRT may reasonably require in order to carry out the intent
and purpose of this Commitment Agreement and the Plan, (b) use their best
efforts, diligently and in good faith, to obtain any consents required herein
to be obtained by them, (c) diligently support this Commitment Agreement and
the Plan in any proceeding before the Bankruptcy Court or any
(page) 26
27
other governmental or regulatory authority whose approval of the transaction
contemplated hereby and by the Plan is required, (d) vote the Claims held by
them in favor of the confirmation of the Plan, (e) use their best efforts,
diligently and in good faith, to oppose any litigation that seeks to restrain
or prohibit the consummation of the transactions contemplated hereby or by the
Plan and (f) use their best efforts, diligently and in good faith, to cause the
conditions precedent set forth in Article VIII hereof to be satisfied.
ARTICLE VII
COVENANTS OF WRT, DLB AND WEXFORD
WRT, DLB and Wexford agree that:
Section 7.01 Best Efforts. Subject to the terms and conditions
of this Commitment Agreement, WRT, DLB and Wexford will use their best efforts
to take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary or desirable under applicable laws and regulations to
consummate the transactions contemplated by this Commitment Agreement. WRT,
DLB and Wexford agree to execute and deliver such other documents,
certificates, agreements and other writings and to take such other actions as
may be necessary or desirable in order to consummate or implement expeditiously
the transactions contemplated by this Commitment Agreement.
Section 7.02 Certain Filings. WRT, DLB and Wexford shall
cooperate with one another (i) in determining whether any action by or in
respect of, or filing with, any governmental body, agency, official or
authority is required, or any actions, consents, approvals or waivers are
required to be obtained from parties to any material contracts, in connection
with the consummation of the transactions contemplated by this Commitment
Agreement and (ii) in taking such actions or making any such filings,
furnishing information required in connection therewith and seeking timely to
obtain any such actions, consents, approvals or waivers.
Section 7.03 Public Announcements. The parties agree to consult
with each other before making any press release or making any public statement
with respect to this Commitment Agreement or the transactions contemplated
hereby and, except as may be required by applicable law or any listing
agreement with any national securities exchange, will not issue any such press
release or make any such public statement prior to such consultation.
Section 7.04 Confidential Treatment. Each of DLB and Wexford,
severally and not jointly, on the one hand and WRT on the other hand agrees
that all non-public information provided or made available to it or any of its
affiliates by or on behalf of the other party hereunder or pursuant hereto
shall be kept confidential and shall not be used by it or such affiliates for
any purpose other than in connection with the transactions contemplated by this
Commitment Agreement; provided, however that the foregoing shall not apply to
any such information which becomes publicly available (i) other than
(page) 27
28
through breach of this Section 7.04, (ii) from a third party not under a
confidentiality obligation to the parties hereto or (iii) because it is
included in the Disclosure Statement as required pursuant to Section 1125 of
the Bankruptcy Code.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF WRT
Section 8.01. Conditions Precedent to WRT's Obligations. The
obligations of WRT to consummate the transactions contemplated by this
Commitment Agreement, including, without limitation, to issue shares of New WRT
Common Stock and New WRT Subscription Common Stock as provided herein and in
the Plan at the times herein and therein provided, shall be subject to the
satisfaction, or to the waiver by WRT, of each of the following conditions:
(a) The Bankruptcy Court shall have entered the Confirmation
Order.
(b) At the Effective Date, all required consents and
approvals of any governmental agency, authority, commission or other party
shall have been obtained and the same shall be in full force and effect, any
applicable waiting period (and any extension thereof) applicable to the
consummation of the Plan under the HSR Act shall have expired or been earlier
terminated and no preliminary or permanent injunction or other order, decree or
ruling barring consummation of the Plan shall have been entered with respect to
or in connection with any application under the HSR Act.
(c) The representations and warranties of DLB and Wexford
contained herein shall have been true and correct when made, and shall be true
and correct in all material respects on and as of the Effective Date, as if
made by DLB and Wexford, respectively, on and as of such date.
(h) At the Effective Date, each of DLB and Wexford shall
have complied or shall concurrently comply with each covenant and agreement
required herein to be complied with by it on or prior to the Effective Date.
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF DLB AND WEXFORD
Section 9.01. Conditions to Respective Obligations of DLB and
Wexford. The joint and several obligations of DLB and Wexford to consummate
the transactions contemplated by this Commitment Agreement, including, without
limitation, to make or effect or cause to be made or effected, the payments
required pursuant to Article II hereof at the times therein provided, shall be
subject to the satisfaction, or to the waiver by each of DLB and Wexford
(except as expressly provided in this Section 9.01), of each of the following
conditions:
(a) Prior to the Effective Date, there shall have been
(page) 28
29
approved pursuant to an order of the Bankruptcy Court (which order,
contemplated to be the Confirmation Order, shall have become a Final Order) the
issuance to DLB and Wexford of the shares of New WRT Common Stock and New WRT
Subscription Common Stock issuable to DLB and Wexford, the payment in full of
the Texaco Claim and all the other provisions of Article II hereof and at the
Effective Date, no action, suit or proceeding by or before any court,
governmental agency or other tribunal shall be pending or threatened against
WRT, DLB or Wexford, arising out of or with respect to the transactions
contemplated by this Commitment Agreement, the Plan or the Disclosure
Statement.
(b) The Bankruptcy Court shall have entered the Confirmation
Order, which order shall have become a Final Order, and such Final Order shall
contain, inter alia, provisions approving the amount of the fees and expenses
paid or payable to DLB and Wexford and shall be in form and substance
satisfactory to each of DLB and Wexford.
(c) Prior to the initial date of mailing of the Disclosure
Statement, as approved by the Bankruptcy Court to the creditors and
shareholders of WRT (the "Mailing Date"), the Bankruptcy Court shall have
entered an order (which order shall become a Final Order) approving certain
provisions of this Commitment Agreement, including, without limitation,
Sections 2.02(a) and (b), 10.02 and 10.03 and Articles V and VII.
(d) At the Effective Date, no action, suit or proceeding by
or before any court, governmental agency or other tribunal shall be pending or
threatened, other than those actions, suits and proceedings described in the
Schedules, against WRT the adverse determination of which would have a Material
Adverse Effect.
(e) From the date hereof through and including the Effective
Date, there shall have been no material adverse change in the business,
properties, financial condition, results of operations or prospects of WRT or
New WRT.
(f) All consents and approvals of any governmental agency,
authority, commission or other party shall have been obtained and the same
shall be in full force and effect on and as of the Effective Date, any waiting
period (and any extension thereof) applicable to the consummation of the Plan
under the HSR Act shall have expired or been earlier terminated and no
preliminary or permanent injunction or other order, decree or ruling barring
consummation of the Plan shall have been entered with respect to or in
connection with any application under the HSR Act.
(g) The representations and warranties of WRT contained
herein shall have been true and correct when made, and shall be true and
correct in all material respects on and as of the Effective Date, as if made by
New WRT on and as of such date, and DLB and Wexford shall have received a
certificate of an executive officer of New WRT to such effect.
(page) 29
30
(h) At the Effective Date, each of WRT and New WRT shall
have complied or shall concurrently comply with each covenant and agreement
required herein to be complied with by it on or prior to the Effective Date,
and DLB and Wexford have received a certificate of an executive officer of New
WRT to such effect.
(i) At the Effective Date, the New WRT Certificate of
Incorporation shall have been duly adopted and filed with the Secretary of
State for the State of Delaware and the New WRT By-Laws shall have been duly
adopted and each shall contain provisions acceptable to DLB and Wexford.
(j) The Registration Rights Agreement, the New WRT
Subscription Rights Agreement and the Administrative Services Agreement shall
have been executed and delivered by the parties thereto and such agreements
shall contain substantially the terms described in the Disclosure Statement,
and all Exhibits and Schedules to the Plan and Disclosure Statement shall be in
form and substance reasonably satisfactory to each of DLB and Wexford.
(k) The Louisiana State Mineral Board shall have executed a
consent to the transfer of the WCBB Assets to DLB (or its designee) pursuant to
the terms of the Purchase, Sale and Exchange Agreement.
(l) There shall not have occurred (i) any material adverse
change in the condition of the financial markets generally, in the United
States, or in the worldwide market for geophysical services, or any outbreak of
hostilities if such hostilities materially adversely affect the oil markets or
the market for geophysical services or involve the United States, or other
national or international calamity or crisis the effect of which shall be such
as to make it, in the reasonable judgment of DLB and Wexford, impracticable to
consummate the transactions contemplated hereby to be consummated at the
Effective Date, or (ii) any suspension in trading in any securities of WRT or
New WRT by the Commission or any national or regional securities exchange, or
the establishment of minimum or maximum prices for trading, or maximum ranges
for prices for securities, by said exchange or by order of the Commission or
any other government authority, or any declaration of a banking moratorium by
Federal, New York or Texas authorities.
(m) DLB and Wexford shall have received an opinion, dated
the Effective Date, of Xxxxxxxxx, Xxxxx & Xxx, P.C., counsel to WRT, in form
and substance satisfactory to DLB and Wexford.
Section 9.02. Waivers. On the date (which shall not be prior to 15
days after entry of an order confirming the Plan) on which WRT notifies DLB and
Wexford that the remaining conditions to the obligations of DLB and Wexford set
forth in Section 9.01 hereof have been satisfied or waived and WRT delivers all
such instruments, certificates and opinions in appropriate form as required
under this Commitment Agreement, DLB and Wexford shall determine whether the
conditions set forth in Sections 9.01(d), 9.01(g) and 9.01(k) have been
satisfied, or if such conditions have not been satisfied shall determine
whether or not to waive the same, and shall notify New WRT of the results of
said determination and in the event that all of such conditions are not
satisfied or waived, the Effective Date shall not occur and the parties hereto
shall have such right and obligations as are expressly set forth herein.
(page) 30
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ARTICLE X
MISCELLANEOUS
Section 10.01. Compliance with Plan. Without limiting the
obligations of WRT under this Commitment Agreement, WRT hereby covenants and
agrees with DLB and Wexford that it will comply in all respects with the
provisions of the Plan from and after the entry by the Bankruptcy Court of the
Confirmation Order with the same force and effect as if such provisions were
set forth in full herein.
Section 10.02. Break-Up Fee. If (a) WRT breaches in any material
respect any of its covenants or obligations under this Commitment Agreement or
the Plan, (b) WRT reaches an agreement in principle with respect to, accepts a
commitment for the purchase of, contracts to sell or sells WRT or a material
portion of its assets or operations, or, pursuant to a plan of reorganization
or otherwise, debt or equity securities of WRT, to any person other than an
Extant Bidder, DLB and Wexford or persons approved by DLB and Wexford, or WRT
terminates this Commitment Agreement for any reason other than as a result of a
material breach hereof by DLB and Wexford or (c) a plan of reorganization for
WRT other than the Plan or a plan proposed solely by an Extant Bidder is
confirmed (collectively, a "Break-Up Event"), then (x) DLB and Wexford shall
have the right to terminate this Commitment Agreement or pursue any other legal
remedy hereunder and (y) WRT shall immediately pay to DLB and Wexford, in
addition to the reimbursement of out-of-pocket expenses set forth in Section
10.03 hereof, a fee (the "Break-Up Fee") in the amount of $700,000, payable
following written demand therefor by DLB and Wexford; provided, however, that
the Break-Up Fee shall not be payable if (x) any of the conditions precedent
contained in this Commitment Agreement or the Plan is not met or (y) DLB and
Wexford breaches any of their covenants or obligations under this Commitment
Agreement. The Break-Up Fee shall be an administrative expense claim under
Section 503(b)(1)(A) of the Bankruptcy Code payable at the time all other such
administrative expenses are paid (other than professional fees and
administrative expenses paid in the ordinary course). The Break-Up Fee shall
be payable to DLB and Wexford if, and only if, at the occurrence of the Break-
Up Event, DLB and Wexford shall have not theretofore exercised any right or
stated its intent to terminate or not perform its obligations under this
Commitment Agreement, except as a consequence of the failure of WRT to perform
its material covenants or obligations under this Commitment Agreement or the
Plan.
Section 10.03. Expense Reimbursement. The reasonable out-of-pocket
expenses (including, without limitation, the reasonable fees and expenses of
counsel and other advisors to DLB and Wexford) incurred in connection with the
preparation, negotiation and consummation of this Commitment Agreement, the
Plan and all related documents and transactions shall be for WRT's account and
shall be an allowed administrative expense claim under Section 503(b)(1)(A) of
the Bankruptcy Code, whether or not the transactions contemplated by this
Commitment Agreement are consummated; provided, however, that if such
transactions are not consummated as a result of the material breach by DLB and
Wexford of their covenants or obligations under this Commitment Agreement, WRT
(page) 31
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shall have no obligation to pay the fees and expenses of DLB and Wexford.
Payment of such reasonable out-of-pocket costs and expenses shall be made from
time to time promptly, and in no event later than 15 days, following written
demand therefor by DLB and Wexford accompanied by appropriate invoices, except
that the fees and expenses incurred by DLB and Wexford prior to October 22,
1996 shall be paid only if the Bankruptcy Court enters an order, which may be
the Confirmation Order, approving such fees and expenses. Any costs and
expenses paid to DLB and Wexford for which it is not eligible pursuant to the
proviso in the first sentence of this Section 10.03 shall be promptly returned
to WRT. The obligation of WRT to reimburse DLB and Wexford for their
reasonable out-of-pocket costs and expenses shall not exceed $1,000,000 in
excess of any and all out-of-pocket expenses of DLB and Wexford the
reimbursement of which has already been approved by the Bankruptcy Court
pursuant to the Expense Order, (whether or not DLB and Wexford have actually
sought or obtained reimbursement of any or all of such amount). DLB and
Wexford will not seek, as part of the expense reimbursement provided pursuant
to this Section 10.03, reimbursement of expenses incurred by it (a) in
connection with the negotiation and closing of any consensual arrangement among
Texaco, DLB and WRT relating to WCBB and (b) in connection with any litigation
between WRT and Texaco related to WCBB and Texaco's claims related thereto.
Section 10.04. Liquidated Damages. If DLB or Wexford breaches in
any material respect any of its covenants or obligations under this Commitment
Agreement, then DLB and Wexford shall pay to WRT liquidated damages in the
amount of $700,000, payable following written demand therefor by WRT. The
payment of such liquidated damages shall be in addition to any other remedies
available to WRT as a result of such breach.
Section 10.05. Waivers. Any failure of WRT, DLB or Wexford to
comply with any obligation, covenant, agreement or condition herein may be
expressly waived by the party to which such obligation, covenant or agreement
is owed or for whose benefit such condition exists to the extent permitted
under applicable law. Any such waiver shall be in a writing signed by an
officer or agent of the party giving such waiver thereunto duly authorized.
Any waiver or any failure to insist upon strict compliance with any such
obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure.
Section 10.06. Brokers and Finders; Expenses. Except for Jefferies
& Company, Inc., which will be compensated as described in the Disclosure
Statement, each of WRT, DLB and Wexford represents and warrants to the others
of them that no broker or finder (including any of its officers, directors or
agents) is entitled to any brokerage or finder's fee or other commission from
it based on agreements, arrangements or undertakings made by it in connection
with this Commitment Agreement or the transactions contemplated hereby. Except
as otherwise provided in this Commitment Agreement, each party shall bear its
own costs and expenses in connection herewith.
(page)32
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Section 10.07. Notices. Any notice, demand, claim or other
communications under this Commitment Agreement shall be in writing and shall be
deemed to have been given upon personal delivery thereof, or upon receipt
thereof if sent by registered mail, return receipt requested, postage prepaid,
or upon confirmation of delivery thereof by courier service, if sent by
recognized overnight courier service, to the respective address of the parties
set forth below (or such other address as a party may specify by notice given
as herein provided):
If to WRT, to:
WRT Energy Corporation
Attention: Xx. Xxxxxxx X. Xxxxxx
0000 Xxxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Copy to:
Sheinfeld, Maley, & Xxx, P.C.
Attention: Xxxx X. Xxx, Esq.
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
If to DLB, Wexford and the Wexford Funds, to:
DLB Oil & Gas, Inc.
Attention: Xxxx Xxxxxxx
0000 X.X. Xxxxxxxxxx, Xxxxx 000
Xxxxxxxx Xxxx, XX 00000-0000
- and -
Wexford Management LLC
Attention: Xxxxxx Xxxxx, Esq.
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Copy to:
Xxxxxxx Xxxx & Xxxxx LLP
Attention: Xxxxxxx X. Xxxxx, Esq.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Section 10.08. Successors and Assigns. This Commitment Agreement
and all the provisions hereof shall be binding upon and inure to the benefit of
the parties hereto and their respective successors (including, without
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34
limitation, any trustee of WRT and New WRT) and permitted assigns, but neither
this Commitment Agreement nor any of the rights, interests or obligations
hereunder may be assigned by any of the parties hereto without the prior
written consent of the other parties.
Section 10.9. Headings. The headings of the Articles and Sections of
this Commitment Agreement are inserted for convenience only and shall not
affect the interpretation hereof.
Section 10.10. Entire Agreement. This Commitment Agreement, the New
WRT Subscription Rights Agreement, the Administrative Services Agreement and
the Plan (including the Exhibits and Schedules hereto and thereto) contains the
entire understanding of the parties hereto with respect to the subject matter
hereof. There are no restrictions promises, representations, warranties,
covenants, or undertakings among the parties relating to the subject matter
hereof other than those expressly set forth or referred to herein or therein,
subject to the approval of the Bankruptcy Court. This Commitment Agreement
supersedes all prior agreements and understandings among the parties with
respect to the subject matter hereof. In the event of any inconsistency
between the term and provisions of this Commitment Agreement and the terms and
provisions of the Plan, then, and in such event, the terms and provisions of
this Commitment Agreement shall control.
Section 10.11. Counterpart. This Commitment Agreement may be
executed in two or more counterparts, and each such counterpart shall be deemed
an original but all such counterparts together shall constitute one and the
same agreement.
Section 10.12. Governing Law. Except to the extent inconsistent
with the Bankruptcy Code, this Commitment Agreement and the legal relations
between the parties hereto shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York, without giving effect to
the provisions, principles or policies thereof respecting conflict or choice of
laws.
Section 10.13. Survival. The representations and warranties of the
parties hereto shall survive only until the Effective Date but not thereafter.
Section 10.14. Effectiveness of Agreement. The provisions of this
Commitment Agreement shall become effective upon the entry by the Bankruptcy
Court of an order approving the terms and conditions hereof; provided, however,
that the provisions of Sections 5.02(b), 5.02(d) and 7.04 hereof shall be
effective upon the execution and delivery hereof.
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35
IN WITNESS WHEREOF, the parties hereto have caused this Commitment
Agreement to be duly executed by their officers, partners or agents thereunto
duly authorized as of the day and year first above written.
WRT ENERGY CORPORATION, INC., Debtor
and Debtor-in-Possession
By: /s/ Xxxxxxx Xxxxxx
-----------------------------------------
Name:
Title:
DLB OIL & GAS, INC.
By: /s/ Xxxx Xxxxxxx
-----------------------------------------
Name:
Title:
WEXFORD MANAGEMENT LLC
By: /s/ Xxxxxxx Xxxxxxxx
-----------------------------------------
Name:
Title:
WEXFORD MANAGEMENT LLC, as agent for:
WEXFORD CAPITAL PARTNERS II, L.P.
WEXFORD OVERSEAS PARTNERS I, L.P.
WEXFORD SPECIAL SITUATIONS 1996, L.P.
WEXFORD SPECIAL SITUATIONS 1996
INSTITUTIONAL, L.P.
WEXFORD-EURIS SPECIAL SITUATIONS 1996, L.P.
WEXFORD SPECIAL SITUATIONS 1996, LIMITED
By: /s/ Xxxxxxx Xxxxxxxx
-----------------------------------------
Name:
Title:
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