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EXHIBIT 2.3
SUBSCRIPTION RIGHTS AGREEMENT
SUBSCRIPTION RIGHTS AGREEMENT (the "Agreement"), dated as of , 1997,
by and between WRT Energy Corporation, a Texas corporation (the "Company"),
and (the "Disbursing Agent") acting on behalf of the Holders
(defined below).
W I T N E S S E T H:
WHEREAS, on February 14, 1996, the Company filed a voluntary petition
for relief under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court
commencing the Chapter 11 Case (Case No. 96BK-50212);
WHEREAS, since the commencement of the Chapter 11 Case, the Company
has operated its business and held its assets and properties as a debtor-in-
possession under Section 1107 of the Bankruptcy Code;
WHEREAS, in order to emerge from bankruptcy, Debtor's and DLBW's
[First] Amended Joint Plan of Reorganization Under Chapter 11 of the United
States Bankruptcy Code (the "Plan") has been filed with the Bankruptcy Court;
WHEREAS, certain creditors of the Company will possess claims on the
Subscription Rights Record Date that are not secured by assets of the Company,
such claims having been classified in the Plan as Allowed Claims in Class D-3
(the "Claims Holders") or as Disputed Claims within or potentially within Class
D-3 (the "Disputed Claims Holders"; and together with the Claims Holders, the
"Holders");
WHEREAS, in connection with the execution and delivery of the Plan,
the Company will issue up to [4,000,000] common stock purchase rights as
hereinafter described (the "Subscription Rights") to purchase up to an
aggregate of [4,000,000] shares of New WRT Subscription Common Stock to the
Claims Holders and up to [ ] common stock purchase rights as
hereinafter described (the "Disputed Subscription Rights") to purchase up to an
aggregate of [ ] shares of Disputed New WRT Subscription Common Stock to
the Disputed Claims Holders, as is fully set forth in Articles 18.2 and 29 of
the Plan;
WHEREAS, the Disbursing Agent has been approved by the Bankruptcy
Court to receive on behalf of the Claims Holders the shares of New WRT
Subscription Common Stock and on behalf of the Disputed Claims Holders the
Disputed New WRT Subscription Common Stock and to disburse such shares to the
Holders as provided for in the Plan;
NOW, THEREFORE, in consideration of the foregoing and for the purpose
of defining the terms and provisions of the Subscription Rights, the Disputed
Subscription Rights and the respective rights and obligations thereunder of the
Company and the Holders, the parties hereto hereby agrees as follows:
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SECTION 1
DEFINITIONS
All capitalized terms used herein and not otherwise defined herein
shall have the meanings ascribed to such terms in the Plan.
SECTION 2
INITIAL ISSUANCE OF RIGHTS; TRANSFER OF RIGHTS
2.1 Initial Issuance of Rights. On and after the Subscription
Rights Record Date, the Subscription Rights and the Disputed Subscription
Rights shall be issued or deemed issued to the Holders in accordance with
Article 29 of the Plan. On the Subscription Rights Record Date, the Company
shall distribute to each Holder an election form (the "Subscription Rights
Election Form") which form shall state, among other things, the number of
Subscription Rights and/or Disputed Subscription Rights that such Holder is
entitled to. The Subscription Rights and the Disputed Subscription Rights
shall be evidenced, subject to the provisions of Section 3 hereof, by the
registration of the Holders in the Subscription Rights Register (as defined in
Section 3 hereof) and not by separate certificates.
2.2 Transfer of Rights. The Subscription Rights and Disputed
Subscription Rights registered in the names of the Holders shall not be
transferable.
SECTION 3
REGISTRATION OF RIGHTS
The Subscription Rights and Disputed Subscription Rights issued to
Holders shall be registered in a register (the "Subscription Rights Register")
on the Subscription Rights Record Date. The Company and New WRT shall keep the
Subscription Rights Register at its principal office in Houston, Texas. The
Subscription Rights Register shall show the names and addresses of the Holders
and the number of Subscription Rights and/or Disputed Subscription Rights held
by each Holder. The Company and New WRT shall be entitled to treat the Holder
of any Subscription Rights or Disputed Subscription Rights as the owner in fact
thereof for all purposes and shall not be bound to recognize any equitable or
other claim to or interest in such Subscription Rights or Disputed Subscription
Rights on the part of any other person, notwithstanding any notice to the
Company or New WRT to the contrary.
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SECTION 4
TERM OF RIGHTS; EXERCISE OF SUBSCRIPTION RIGHTS; EXERCISE OF
DISPUTED SUBSCRIPTION RIGHTS; FAILURE TO PROPERLY EXERCISE;
DIVIDENDS; DE MINIMUS DISTRIBUTIONS
4.1 Term of Subscription Rights. (a) Subject to the terms of this
Agreement, each Holder shall have the right until the Subscription Rights
Election Deadline to subscribe to purchase from the Company the number of fully
paid and nonassessable shares of New WRT Subscription Common Stock and Disputed
New WRT Subscription Common Stock representing such Holder's Interim Pro Rata
Share (with any fractions being rounded down to the nearest whole number) upon
surrender to the Disbursing Agent of (a) a duly completed and executed
Subscription Rights Election Form which shall include (i) the name of the
Holder, (ii) an election to exercise the right of purchase represented by the
Subscription Rights and/or Disputed Subscription Rights, (iii) the number of
shares of New WRT Subscription Common Stock and/or Disputed New WRT
Subscription Common Stock to be purchased, (iv) the names, addresses and social
security numbers of the individuals to receive the certificates of such shares
and (v) the signature of the Holder (which signature shall be guaranteed by a
bank or trust company located in the United States or a broker or dealer that
is a member of a national securities exchange); and (b) payment of the
Subscription Purchase Price and/or the Disputed Subscription Purchase Price to
the Disbursing Agent in immediately available funds either by wire transfer to
the Subscription Rights Reserve Account in accordance with the wire
instructions set forth on the Subscription Rights Election Form or by certified
or bank check made payable in accordance with the instructions set forth on the
Subscription Rights Election Form.
(b) In order for any exercise of rights to be considered, the
Subscription Rights Election Form and the Subscription Purchase Price and/or
the Disputed Subscription Purchase Price must be received by the Disbursing
Agent on or before the Subscription Rights Election Deadline. To the extent
that the Subscription Rights Election Form or the Subscription Purchase Price
and/or the Disputed Subscription Purchase Price for any Holder is received
after the Subscription Rights Election Deadline, such Holder shall be deemed to
have not exercised its Subscription Rights and/or Disputed Subscription Rights
and the Disbursing Agent shall promptly return to the applicable Holders any
Subscription Purchase Price and/or any Disputed Subscription Purchase Price
received on behalf of such Holders.
4.2 Exercise of Subscription Rights. Subject to Section 5 hereof,
after such delivery of the Subscription Rights Election Form exercising the
Subscription Rights and payment of the Subscription Purchase Price to the
Disbursing Agent as aforesaid, New WRT shall issue and the Disbursing Agent
shall cause to be delivered as soon as practicable on or after the Effective
Date, but in no event more than ten (10) Business Days after the Effective
Date, to the address(es) and in such name(s) as the Claims Holder shall have
designated in the applicable Subscription Rights Election Form, a certificate
or certificates for the number of full shares of New WRT Subscription Common
Stock so purchased upon the exercise of such Subscription Rights. Such
certificate or certificates shall be deemed to have been issued and any person
so designated to be named therein shall be deemed to have become a holder of
record of such shares of New WRT Subscription Common Stock as of the Effective
Date. [The rights of purchase represented by the Subscription Rights shall be
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exercisable, at the election of the Claims Holders thereof, either is full or
from time to time in part, but in no event after the Subscription Rights
Election Deadline].
4.3 Exercise of Disputed Subscription Rights. (a) Subject to
Section 5 hereof, after such delivery of the Subscription Rights Election Form
exercising the Disputed Subscription Rights and payment of the Disputed
Subscription Purchase Price to the Disbursing Agent as aforesaid, New WRT shall
issue and the Disbursing Agent shall cause to be delivered as soon as
practicable on or after such time (a "Determination Date") as all or any
portion of an Exercised Disputed Claim becomes an Allowed Claim (an "Allowed
Disputed Claim"), but in no event more than ten (10) Business Days after such
Determination Date, (i) to the address(es) and in such name(s) as the Disputed
Claims Holder shall have designated in the Subscription Rights Election Form, a
certificate or certificates for the number of full shares (with any fractions
being rounded down to the nearest whole number) of Disputed New WRT
Subscription Common Stock that equals the number of shares so purchased upon
the exercise of the Disputed Subscription Rights that have become an Allowed
Disputed Claim, and (ii) to DLBW, the Disputed Subscription Purchase Price for
the Disputed New WRT Subscription Common Stock so delivered to the Holder.
Such certificate or certificates shall be deemed to have been issued and any
person so designated to be named therein shall be deemed to have become a
holder of record of such shares of Disputed New WRT Subscription Common Stock
as of the Determination Date. [The rights of purchase represented by the
Disputed Subscription Rights shall be exercisable, at the election of the
Disputed Claims Holders thereof, either is full or from time to time in part,
but in no event after the Subscription Rights Election Deadline].
(b) Subject to Section 5 hereof, after such delivery of the
Subscription Rights Election Form exercising the Disputed Subscription Rights
and payment of the Disputed Subscription Purchase Price to the Disbursing Agent
as aforesaid, New WRT shall issue and the Disbursing Agent shall cause to be
delivered as soon as practicable on or after any time (a "Denial Date") as all
or any portion of an Exercised Disputed Claim is determined not to be an
Allowed Claim (a "Denied Disputed Claim"), but in no event more than ten (10)
Business Days after such Denial Date, (i) to the address(es) and in such
name(s) as DLBW shall have designated, a certificate or certificates for the
number of full shares (with any fractions being rounded down to the nearest
whole number) of Disputed New WRT Subscription Common Stock that equals the
number of shares that the Disputed Claims Holder elected to purchase upon the
exercise of the Disputed Subscription Rights that have become a Denied Disputed
Claim and (ii) to the applicable Disputed Claims Holder, the Disputed
Subscription Purchase Price for the Disputed New WRT Subscription Common Stock
so delivered to DLBW. Such certificate or certificates shall be deemed to have
been issued and any person so designated to be named therein shall be deemed to
have become a holder of record of such shares of Disputed New WRT Subscription
Common Stock as of the Denial Date.
4.4 Failure to Properly Exercise. (a) If any Holder exercising
Subscription Rights or Disputed Subscription Rights does not indicate on the
Subscription Rights Election Form the number of Subscription Rights and/or
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Disputed Subscription Rights being exercised, or does not forward full payment
of the aggregate Subscription Purchase Price and/or Disputed Subscription
Purchase Price for the number of Subscription Rights and/or Disputed
Subscription Rights that the Holder indicates are being exercised, then the
Holder shall be deemed to have exercised the Subscription Rights and/or
Disputed Subscription Rights with respect to the maximum number of Subscription
Rights and/or Disputed Subscription Rights that may be exercised for the
aggregate Subscription Purchase Price and/or Disputed Subscription Purchase
Price delivered by the Holder.
(b) To the extent that the aggregate payment delivered by the
Holder exceeds the appropriate Subscription Purchase Price and Disputed
Subscription Purchase Price, such excess payment shall be returned promptly to
the Holder.
(c) If any Holder is exercising both Subscription Rights and
Disputed Subscription Rights, then the payment received shall first be applied
to the exercise of Subscription Rights and to the extent that the payment
exceeds the Subscription Purchase Price, the excess shall then be applied to
the exercise of Disputed Subscription Rights.
4.5 Dividends. All dividends or distributions on account of shares
of Disputed New WRT Subscription Common Stock shall be held in trust by the
Disbursing Agent and shall be distributed along with the applicable shares of
Disputed New WRT Subscription Common Stock.
4.6 De Minimus Distributions. No Holder whose Interim Pro Rata
Share of the Subscription Rights and/or Disputed Subscription Rights would
entitle such Holder to purchase fewer than five (5) shares of New WRT
Subscription Common Stock and Disputed New WRT Subscription Common Stock shall
be entitled to receive any Subscription Rights and/or Disputed Subscription
Rights pursuant to this Agreement or the Plan.
SECTION 5
PAYMENT OF TAXES
The Company and New WRT shall pay all documentary stamp taxes, if
any, attributable to the initial issuance of shares of New WRT Subscription
Common Stock issuable upon the exercise of Subscription Rights and the initial
issuance of shares of Disputed New WRT Subscription Common Stock issuable upon
the exercise of Disputed Subscription Rights to the Holders; provided, however,
that the Company and New WRT shall not be required to pay, and the Holders
shall pay, any tax or taxes that may be payable in respect of any transfer
involved in the issue or delivery of any certificates for shares of New WRT
Subscription Common Stock and/or Disputed New WRT Subscription Common Stock in
a name other than that of the registered Holder of the Subscription Rights
and/or Disputed Subscription Rights that were exercised.
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SECTION 6
ISSUANCE OF NEW WRT SUBSCRIPTION COMMON STOCK AND DISPUTED
NEW WRT SUBSCRIPTION COMMON STOCK
6.1 Issuance of New WRT Subscription Common Stock. On the
Effective Date, New WRT shall issue out of its authorized common stock
[4,000,000] shares of New WRT Subscription Common Stock. Such shares shall be
delivered to the Disbursing Agent for distribution as provided in Section 4.2
hereof and in Article 29 of the Plan.
6.2 Issuance of Disputed New WRT Subscription Common Stock. On any
applicable Determination Date or Denial Date, New WRT shall issue out of its
authorized common stock shares of Disputed New WRT Subscription Common Stock
equal to the number of shares represented by an Allowed Disputed Claim or a
Denied Disputed Claim on such date. Such shares shall be delivered to the
Disbursing Agent for distribution as provided in Section 4.3 hereof and in
Article 29 of the Plan.
6.3 Issuance of New WRT Common Stock By Transfer Agent. The
Disbursing Agent is hereby irrevocably authorized to requisition from time to
time from New WRT and the transfer agent for the New WRT Subscription Common
Stock and the Disputed New WRT Subscription Common Stock (the "Transfer Agent")
stock certificates in the name of the Holders receiving such shares upon the
exercise of the Subscription Rights and/or the Disputed Subscription Rights in
accordance with the terms of this Agreement.
SECTION 7
RESERVATION OF SHARES OF DISPUTED NEW WRT SUBSCRIPTION COMMON STOCK
On the Effective Date and at all times until all outstanding Disputed
Subscription Rights shall either have become an Allowed Disputed Claim or a
Denied Disputed Claim (the "Final Determination Date"), New WRT shall reserve
out of its authorized New WRT Common Stock a number of shares sufficient to
provide for the exercise of the right of purchase represented by the
outstanding Disputed Subscription Rights. The Transfer Agent and every
subsequent transfer agent for any shares of New WRT's capital stock issuable
upon the exercise of any of the rights of purchase aforesaid will be
irrevocably authorized and directed at all times to reserve such number of
authorized shares as shall be requisite for such purpose. New WRT will keep a
copy of this Agreement on file with the Transfer Agent and with every
subsequent transfer agent for any shares of New WRT's capital stock issuable
upon the exercise of the rights of purchase represented by the Disputed
Subscription Rights. Promptly after the Final Determination Date, New WRT
shall certify to the Transfer Agent that all Disputed New WRT Subscription
Common Stock has been distributed by the Disbursing Agent and thereafter no
shares shall be subject to reservation in respect of such Disputed Subscription
Rights.
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SECTION 8
NO RIGHTS AS STOCKHOLDERS
Nothing contained in this Agreement or in any of the Subscription
Rights or Disputed Subscription Rights shall be construed as conferring upon
the Holders the right to vote or to receive dividends or to consent to or to
receive notice as stockholders in respect of any meeting of stockholders for
the election of directors of the Company or New WRT or any other matter, or any
rights whatsoever as stockholders of the Company or New WRT.
SECTION 9
INSPECTION OF RIGHTS AGREEMENT
The Company shall keep copies of this Agreement, any notices given or
received hereunder and any other documents related hereto and required to be
held by the Company available for inspection by the Holders during normal
business hours at its principal office in Houston, Texas.
SECTION 10
METHOD OF DELIVERY
The method of delivery of the Subscription Rights Election Form and
the payment of the Subscription Purchase Price and/or the Disputed Subscription
Price to the Disbursing Agent are at the election and risk of the Holders.
Holders are urged to allow a sufficient amount of time to ensure delivery of
the Subscription Rights Election Form and the Subscription Purchase Price
and/or the Disputed Subscription Price to the Disbursing Agent.
SECTION 11
FAILURE OF EFFECTIVE DATE TO OCCUR
On and after the Subscription Rights Election Deadline, if the
Company or New WRT determines in its sole discretion that it is unlikely that
there will be an Effective Date under the Plan, then the Company or New WRT
shall instruct the Disbursing Agent to return the Subscription Purchase Price
and/or the Disputed Subscription Purchase Price to the Holders.
SECTION 12
INTEREST
No interest shall accrue and be payable hereunder at any time with
respect to funds delivered in payment of the Subscription Purchase Price and
the Disputed Subscription Purchase Price.
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SECTION 13
VALIDITY OF EXERCISES
All questions concerning the timeliness, validity, form and
eligibility of any exercise of Subscription Rights and Disputed Subscription
Rights will be determined by the Company or New WRT, in its sole discretion,
whose determination shall be final and binding. The Company and New WRT
reserve the absolute right to reject any subscription if such subscription is
not in proper form or if the acceptance thereof or the issuance of New WRT
Subscription Common Stock or Disputed New WRT Subscription Common Stock
pursuant thereto could, in the opinion of the Company's or New WRT's counsel,
be deemed unlawful. The Company also reserves the right to waive any defect
with regard to any particular subscription or to reject any purported
subscription by reason of any defect or irregularity in such exercise. Neither
the Company, New WRT nor the Disbursing Agent shall be under any duty to give
notification of any defects or irregularities in subscriptions, nor shall any
of them incur any liability for failure to give such notification.
SECTION 14
NO REVOCATION
After any Holder has exercised any Subscription Right and/or any
Disputed Subscription Right, such exercise may not be revoked by such Holder.
SECTION 15
NOTICES
Any notice, demand, claim or other communications under this
Agreement shall be in writing and shall be deemed to have been given upon
personal delivery thereof, or upon receipt thereof if sent by registered mail,
return receipt requested, postage prepaid, or upon confirmation of delivery
thereof by courier service, if sent by recognized overnight courier service, to
the respective address of the parties set forth below (or such other address as
a party may specify by notice given as herein provided):
(a) If to the Company or New WRT, to:
WRT Energy Corporation
5718 Westheimer, Suite 1201
Houston, Texas 77057
Attention: Mr. Raymond P. Landry
Copies to:
Sheinfeld, Maley, & Kay, P.C.
1001 Fannin Street, Suite 3700
Houston, Texas 77002-6797
Attention: Joel P. Kay, Esq.
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and
Schulte Roth & Zabel LLP
900 Third Avenue
New York, New York 10022
Attention: Jeffrey S. Sabin, Esq.
(b) If to the Disbursing Agent, to:
______________________
______________________
______________________
Attention: ___________
(c) If to any Holder, to:
The address of such Holder as
reflected in the Rights Register.
SECTION 16
SUPPLEMENTS AND AMENDMENTS
The Company may from time to time supplement or amend this Agreement
without the approval of any Holder in order to cure any ambiguity or to correct
or supplement any provision contained herein that may be defective or
inconsistent with any other provisions herein or to make any other provisions
with regard to matters or questions arising hereunder that the Company may deem
necessary or desirable and that shall not adversely affect the interests of the
Holders.
SECTION 17
SUCCESSORS
This Agreement and all the provisions hereof shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
(including, without limitation, any trustee of the Company and New WRT) and
permitted assigns, but neither this Agreement nor any of the rights, interests
or obligations hereunder may be assigned by any of the parties hereto without
the prior written consent of the other parties.
SECTION 18
APPLICABLE LAW
Except to the extent inconsistent with the Bankruptcy Code, this
Agreement and the legal relations between the parties hereto shall be governed
by, and construed and enforced in accordance with, the laws of the State of New
York, without giving effect to the provisions, principles or policies thereof
respecting conflict or choice of laws.
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SECTION 19
BENEFITS OF THIS AGREEMENT
Nothing in this Agreement shall be construed to give any person or
corporation other than the Company, New WRT and the Holders any legal or
equitable right, remedy or claim under the Agreement; and this Agreement shall
be for the sole and exclusive benefit of the Company, New WRT, the Holders and
their respective successors and assigns hereunder.
SECTION 20
COUNTERPARTS
This Agreement may be executed in any number of counterparts and each
of such counterparts shall for all purposes be deemed to be an original, and
all such counterparts shall together constitute but one and the same
instrument.
SECTION 21
CAPTIONS
The captions of the Sections and Subsections of this Agreement have
been inserted for convenience only and shall not affect the interpretation
hereof.
SECTION 22
SEVERABILITY
In the event any term, provision, covenant or restriction of this
Agreement shall, for any reason, be held by a court of competent jurisdiction
to be invalid, illegal, void or unenforceable, such invalidity, illegality or
unenforceability shall not affect any other term or provision of this Agreement
and the remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated. It is hereby stipulated and declared to be
the intention of the Company and the Holders that they would have executed the
remaining terms, provisions, covenants and restrictions of this Agreement
without including any of such provisions that may be hereafter declared
invalid, illegal, void or unenforceable.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
WRT ENERGY CORPORATION
By:
--------------------------------------
Name:
Title:
, as Disbursing
------------------
Agent
By:
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Name:
Title:
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