<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) - May 17, 1995
FOREST OIL CORPORATION
(Exact name of registrant as specified in its charter)
New York 0-4597 25-0484900
(State or other juris- (Commission (IRS Employer
diction of incorporation) file number) Identification No.)
1500 Colorado National Building, 950 - 17th Street, Denver, CO 80202
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (814) 368-7171
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<PAGE>
ITEM 5. OTHER EVENTS
On May 17, 1995 Forest Oil Corporation (the "Company") entered into a
Purchase Agreement (the "Anschutz Agreement") with The Anschutz Corporation
("Anschutz") with respect to the purchase of certain of the Company's
securities. In addition, on May 17, 1995 the Company entered into a Restructure
Agreement (the "JEDI Agreement") with Joint Energy Development Investments
Limited Partnership ("JEDI") with respect to the restructuring of the Company's
$62.1 million loan from JEDI.
On May 19, 1995, pursuant to the Anschutz Agreement, Anschutz loaned the
Company $9.9 million (the "Anschutz Loan"). The Anschutz Loan is evidenced
by a nonrecourse convertible secured promissory note (the "Anschutz Note").
The Company also entered into a Registration Rights Agreement with Anschutz
with respect to the registration under the Securities Act of 1933 of shares
of the Company's common stock acquired by Anschutz upon conversion of the
Anschutz Note or otherwise pursuant to or as contemplated by the Anschutz
Agreement. In connection with the Anschutz Agreement, (a) the Company (i)
obtained the requisite consent of the holders of the Company's 11 1/4% Senior
Subordinated Notes due 2003 (the "Subordinated Notes") to the waiver of the
change of control covenant in the Indenture pursuant to which the Subordinated
Notes were issued with respect to the transactions contemplated by the Anschutz
Agreement and the acquisition by Anschutz or its affiliates of any equity
securities of the Company, and (ii) amended the Company's bank revolving credit
agreement to permit the Company to enter into, and to grant security interests
in certain assets to secure, the Anschutz Loan, and (b) each executive officer
of the Company who is a party to a Severance Agreement with the Company waived
the obligations of the Company thereunder with respect to a Change of Control
(as defined in the Severance Agreement) as a consequence of the transactions
contemplated by the Anschutz Agreement or as a consequence of the acquisition
by Anschutz or its affiliates of beneficial ownership or the right to acquire
beneficial ownership of equity securities of the Company.
For additional information concerning this item, please refer to
Exhibits 99.1, 99.2, 99.3, and 99.4 hereto, which are incorporated
herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
(99.1) Forest Oil Corporation press release announcing the signing
of definitive agreements with The Anschutz Corporation and with Joint
Energy Development Investments Limited Partnership.
(99.2) Purchase Agreement dated as of May 17, 1995 between Forest
Oil Corporation and The Anschutz Corporation.
(99.3) Restructure Agreement dated as of May 17, 1995 between
Joint Energy Development Investments Limited Partnership and Forest Oil
Corporation.
(99.4) Forest Oil Corporation press release announcing the closing
of the first phase of Anschutz transaction.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FOREST OIL CORPORATION
(Registrant)
Dated: May 26, 1995 By /s/ Daniel L. McNamara
-----------------------------
Daniel L. McNamara
Secretary
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EXHIBIT INDEX PAGE NO.
Exhibit 99.1 Forest Oil Corporation press release announcing the
signing of definitive agreements with The Anschutz
Corporation and with Joint Energy Development
Investments Limited Partnership.
Exhibit 99.2 Purchase Agreement dated as of May 17, 1995 between
The Anschutz Corporation and Forest Oil Corporation.
Exhibit 99.3 Restructure Agreement dated as of May 17, 1995 between
Joint Energy Development Investments Limited
Partnership and Forest Oil Corporation.
Exhibit 99.4 Forest Oil Corporation press release announcing the
closing of the first phase of Anschutz transaction.
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FOR IMMEDIATE RELEASE
FOREST / ANSCHUTZ / ENRON SIGN DEFINITIVE AGREEMENTS
DENVER, COLORADO - MAY 18, 1995 - Forest Oil Corporation ("Forest") announced
that it has signed definitive agreements with The Anschutz Corporation
("Anschutz") and with an affiliate of Enron Corp. ("Enron") concerning the
transactions previously announced by Forest with Anschutz and Enron on April 18,
1995.
William L. Dorn, Chairman and Chief Executive Officer of Forest, stated "The
signing of definitive documentation represents a significant step toward the
completion of the Anschutz and Enron transactions. Consummation of these
transactions will allow Forest to pursue attractive acquisitions of properties
and companies utilizing our common stock as a significant component of the
consideration. The growth strategy will be guided by our commitment to build
on our established operating capabilities and to further improve our capital
structure."
The agreement with Anschutz specifies that Anschutz will purchase 18.8 million
shares of the Company's common stock and shares of a newly-issued preferred
stock that are convertible into 6.2 million additional shares of common stock
for a total consideration of $45 million, or $1.80 per share. The preferred
stock will have a liquidation preference and will receive dividends ratably
with the common stock. The investment will be made in two closings. In the
first closing, expected to occur later in May 1995, Anschutz will loan the
Company $9.9 million for a term of nine months. The loan may be converted
into 5.5 million shares of Forest's common stock at Anschutz's election, but
the loan must be so converted at the second closing. At the second closing,
expected to occur in July 1995 following receipt of the approval of Forest's
shareholders of the transactions, Anschutz will purchase 13.3 million shares
of common stock and the convertible preferred stock.
Agreement was also reached with Enron to restructure its existing non-recourse
secured loan of approximately $62.1 million. Under the terms of the Enron
agreement, the interest rate on the loan will be reduced in exchange for
warrants to purchase common stock of Forest. Forest anticipates that the loan
restructuring will reduce the recorded amount of the liability by
approximately $12 million and will lower its annual interest expense on the
loan by approximately $2.0 million. Enron will receive warrants to purchase
11.25 million shares at $2.00 per share. In addition, Forest will issue to
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PAGE 2 OF 3
Anschutz warrants to purchase 19.44 million shares of common stock at $2.10
per share. The $2.00 warrants expire on December 31, 2002, subject to earlier
expiration in certain circumstances. The $2.10 warrants are exercisable for
18 months, subject to extension in certain circumstances to 36 months. Enron
will grant Anschutz a 36-month option to purchase the shares issuable upon
exercise of the $2.00 warrants at an increasing option price capped at $3.10
per share. The proceeds from the exercise of both the $2.00 and $2.10
warrants will be used to repay remaining Enron indebtedness.
The first closing and the extension of the $9.9 million loan from Anschutz
are subject to the approval of certain of Forest's creditors. The transactions
with Anschutz to be consummated at the second closing, the restructure of the
Enron loan and the transactions between Anschutz and Enron described above
are also subject to, among other things, the prior approval of Forest's
shareholders and clearance under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976.
Upon approval of the transaction by Forest shareholders and the occurrence of
the second closing, Anschutz would own slightly less than 40% of Forest's
outstanding common stock and would have the right to acquire up to
approximately 36.9 million additional shares, subject to the following
restrictions. Anschutz has agreed that it will not exercise warrants or
options, convert preferred stock or otherwise acquire common stock if such
action would result in its ownership being equal to 40% or more of the
outstanding common stock. Further, Anschutz has agreed to voting restrictions
that limit its freely voted shares to 19.99% of the Forest outstanding voting
stock, with the remainder of the shares acquired by Anschutz in the
transaction or otherwise to be voted pro rata with other Forest shareholders.
Anschutz will also be subject to share transfer restrictions in certain
circumstances. The purchase, voting and transfer restrictions are subject to
certain exceptions and terminate after five years.
The Anschutz agreement contemplates that after the second closing Anschutz
will designate three board members out of a reconstituted 10-member Board of
Directors that will include two members of management and five directors who
are neither in management nor affiliated with Anschutz.
The agreements require Forest to pay certain expenses incurred by Anschutz
and Enron and to pay Anschutz certain fees including fees payable upon the
occurrence of certain subsequent events prior to the second closing. These
events include a merger, consolidation or other business combination between
Forest and a person other than Anschutz, or the acquisition by any other
person of 40% or more of the Forest common stock. In the Anschutz agreement,
Forest has agreed not to solicit proposals for transactions that would
require Forest to pay a subsequent event fee and to keep Anschutz generally
informed regarding the receipt and disposition by Forest of proposals
regarding such transactions made by other persons.
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PAGE 3 OF 3
The Anschutz Corporation is a member of the privately-held Anschutz group of
companies headquartered in Denver, Colorado. The group's principal businesses
include natural resources, transportation, communications, and real estate.
Forest Oil Corporation is engaged in the exploitation and acquisition of,
exploration for and development and production of natural gas and crude oil.
Its principal reserves and producing properties are located in the Gulf of
Mexico and Texas, Oklahoma and Wyoming. Forest Oil's common and preferred
stocks are traded on the NASDAQ/NMS system under the FOIL and FOILO symbols,
respectively.
May 18, 1995
###
<PAGE>
PURCHASE AGREEMENT
dated as of
May 17, 1995
between
FOREST OIL CORPORATION
and
THE ANSCHUTZ CORPORATION
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
TRANSACTIONS . . . . . . . . . . . . . . . 1
Section 1.1 Company and Purchaser. . . . . . . . . . . . . . . . . . . 1
Section 1.2 Company and JEDI.. . . . . . . . . . . . . . . . . . . . . 3
Section 1.3 Adjustments. . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE II
CLOSINGS . . . . . . . . . . . . . . . . 5
Section 2.1 First Closing. . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.2 Second Closing . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.3 Location of Closing. . . . . . . . . . . . . . . . . . . . 5
ARTICLE III
CONDITIONS OF CLOSINGS. . . . . . . . . . . . . 5
Section 3.1 Conditions Precedent to Both Closings. . . . . . . . . . . 5
Section 3.2 Additional Conditions Precedent to First Closing . . . . . 7
Section 3.3 Additional Conditions Precedent to Second Closing. . . . . 10
Section 3.4 Legends. . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY. . . . . . . 14
Section 4.1 Corporate Existence and Power. . . . . . . . . . . . . . . 14
Section 4.2 Authorization; Contravention . . . . . . . . . . . . . . . 15
Section 4.3 Approvals. . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.4 Binding Effect . . . . . . . . . . . . . . . . . . . . . . 16
Section 4.5 Financial Information. . . . . . . . . . . . . . . . . . . 16
Section 4.6 Absence of Certain Changes or Events . . . . . . . . . . . 17
Section 4.7 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.8 Litigation . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.9 Compliance with Laws . . . . . . . . . . . . . . . . . . . 19
Section 4.10 Licenses. . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.11 Employee Matters. . . . . . . . . . . . . . . . . . . . . 20
Section 4.12 Labor Disputes and Acts of God. . . . . . . . . . . . . . 24
Section 4.13 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . 24
Section 4.14 Property. . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 4.15 Oil and Gas Interests . . . . . . . . . . . . . . . . . . 26
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Section 4.16 Equipment . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 4.17 Leases. . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 4.18 Securities. . . . . . . . . . . . . . . . . . . . . . . . 30
Section 4.19 Proprietary Rights. . . . . . . . . . . . . . . . . . . . 31
Section 4.20 Insurance . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 4.21 Debt. . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 4.22 No Default. . . . . . . . . . . . . . . . . . . . . . . . 33
Section 4.23 Capitalization. . . . . . . . . . . . . . . . . . . . . . 33
Section 4.24 Environmental Matters . . . . . . . . . . . . . . . . . . 35
Section 4.25 Books and Records . . . . . . . . . . . . . . . . . . . . 38
Section 4.26 Material Contracts. . . . . . . . . . . . . . . . . . . . 39
Section 4.27 Misstatements . . . . . . . . . . . . . . . . . . . . . . 39
Section 4.28 SEC Documents . . . . . . . . . . . . . . . . . . . . . . 39
Section 4.29 Recommendations.. . . . . . . . . . . . . . . . . . . . . 40
Section 4.30 Required Vote.. . . . . . . . . . . . . . . . . . . . . . 40
Section 4.31 Section 912 of the NYBCL. . . . . . . . . . . . . . . . . 40
Section 4.32 No Merger Agreements. . . . . . . . . . . . . . . . . . . 40
Section 4.33 Aggregate Material Adverse Effect . . . . . . . . . . . . 41
Section 4.34 Continuing Representations and Warranties . . . . . . . . 41
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF THE PURCHASER . . . . . . . . . . . . . . 41
Section 5.1 Corporate Existence and Power. . . . . . . . . . . . . . . 41
Section 5.2 Authorization; Contravention . . . . . . . . . . . . . . . 42
Section 5.3 Approvals. . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 5.4 Binding Effect.. . . . . . . . . . . . . . . . . . . . . . 42
Section 5.5 Litigation.. . . . . . . . . . . . . . . . . . . . . . . . 43
Section 5.6 Compliance with Laws.. . . . . . . . . . . . . . . . . . . 43
Section 5.7 Investment Intent. . . . . . . . . . . . . . . . . . . . . 43
Section 5.8 Fees for Brokers and Finders . . . . . . . . . . . . . . . 43
Section 5.9 Financial Ability. . . . . . . . . . . . . . . . . . . . . 43
Section 5.10 Continuing Representations and Warranties . . . . . . . . 43
ARTICLE VI
COVENANTS OF THE COMPANY . . . . . . . . . . . . 44
Section 6.1 Affirmative Covenants. . . . . . . . . . . . . . . . . . . 44
Section 6.2 Negative Covenants . . . . . . . . . . . . . . . . . . . . 50
ARTICLE VII
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Page
----
ADDITIONAL COVENANTS OF THE PARTIES . . . . . . . . . 54
Section 7.1 Mutual Covenants of the Parties. . . . . . . . . . . . . . 54
Section 7.2 Additional Covenants of the Company. . . . . . . . . . . . 56
Section 7.3 Additional Covenant of the Purchaser . . . . . . . . . . . 58
ARTICLE VIII
HART-SCOTT-RODINO FILING . . . . . . . . . . . . 59
Section 8.1 Best Efforts to Comply . . . . . . . . . . . . . . . . . . 59
Section 8.2 Right to Terminate . . . . . . . . . . . . . . . . . . . . 59
Section 8.3 Exchange of Information. . . . . . . . . . . . . . . . . . 60
ARTICLE IX
TERMINATION . . . . . . . . . . . . . . . 60
Section 9.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . 60
Section 9.2 Expenses and Fees. . . . . . . . . . . . . . . . . . . . . 62
ARTICLE X
INDEMNIFICATION . . . . . . . . . . . . . . 63
Section 10.1 Indemnification by the Company. . . . . . . . . . . . . . 63
Section 10.2 Security for Indemnification Obligation . . . . . . . . . 66
Section 10.3 No Limitation on Other Rights of Recovery . . . . . . . . 66
ARTICLE XI
MISCELLANEOUS. . . . . . . . . . . . . . . 67
Section 11.1 Notices.. . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 11.2 No Waivers; Remedies; Specific Performance. . . . . . . . 67
Section 11.3 Amendments, Etc . . . . . . . . . . . . . . . . . . . . . 67
Section 11.4 Successors and Assigns. . . . . . . . . . . . . . . . . . 67
Section 11.5 Accounting Terms and Determinations . . . . . . . . . . . .68
Section 11.6 Governing Law . . . . . . . . . . . . . . . . . . . . . . 68
Section 11.7 Counterparts; Effectiveness . . . . . . . . . . . . . . . 68
Section 11.8 Severability of Provisions. . . . . . . . . . . . . . . . 68
Section 11.9 Headings and References . . . . . . . . . . . . . . . . . 68
Section 11.10 Entire Agreement . . . . . . . . . . . . . . . . . . . . 69
Section 11.11 Survival . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 11.12 Exclusive Jurisdiction . . . . . . . . . . . . . . . . . 69
Section 11.13 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . 69
Section 11.14 Affiliate. . . . . . . . . . . . . . . . . . . . . . . . 69
Section 11.15 Non-Recourse.. . . . . . . . . . . . . . . . . . . . . . 69
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<PAGE>
ANNEX
Annex A - Definitions
EXHIBITS
Exhibit A - Form of Purchaser Note
Exhibit B - Form of Registration Rights Agreement
Exhibit C - Form of Collateral Account Agreement
Exhibit D - Form of Guaranty
Exhibit E - Form of Mortgage Debenture
Exhibit F - Form of Share Pledge Agreement
Exhibit G - Form of Mortgage Debenture Deposit Agreement
Exhibit H - Form of Amendment to Certificate of Incorporation
Exhibit I - Form of Tranche A Warrants
Exhibit J - Form of Shareholders Agreement
** Exhibit K - Form of JEDI Restructure Agreement
Exhibit L - Form of Tranche B Warrants
Exhibit M - Form of JEDI/Purchaser Option
Exhibit N - Form of Environmental Indemnity
* Exhibit 3.1(f)(1) - Certificate of Secretary of the Company or
Purchaser
* Exhibit 3.1(f)(2) - Certificate of Officer of the Company or
Purchaser
* Exhibit 3.1(f)(6) - Opinion of Counsel for the Company
* Exhibit 3.1(f)(7) - Opinion of Counsel for Purchaser
* Exhibit 3.2(f)(6)(A) - Certificate of Secretary of Guarantor
* Exhibit 3.2(f)(6)(B) - Certificate of Officer of Guarantor
* Exhibit 3.2(f)(6)(E) - Opinion of Counsel for Guarantor
* Exhibit 3.2(g) - Opinion of Bennett Jones Verchere
* Exhibit 3.3(i)(6)(A) - Certificate of Secretary of Enron Capital Corp.
* Exhibit 3.3(i)(6)(B) - Certificate of Officer of Enron Capital Corp.
* Exhibit 3.3(i)(6)(D) - Opinion of Counsel for JEDI
* Exhibit 3.3(n) - Letter to JEDI
* Exhibits not included in Form 8-K
** See Exhibit 99.3 to Form 8-K
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<PAGE>
PURCHASE AGREEMENT
PURCHASE AGREEMENT dated as of May 17, 1995 between FOREST OIL
CORPORATION, a New York corporation (the "COMPANY"), and THE ANSCHUTZ
CORPORATION, a Kansas corporation (the "PURCHASER").
Terms not otherwise defined in this Agreement have the meanings
stated in Annex A.
The parties agree as follows:
ARTICLE I
TRANSACTIONS
SECTION 1.1 COMPANY AND PURCHASER. Subject to the terms and
conditions set forth in this Agreement,
(a) at the First Closing,
(1) the Company shall issue, sell and deliver to the Purchaser,
and the Purchaser shall purchase, accept and acquire from the Company,
a nonrecourse secured convertible promissory note (the "PURCHASER
NOTE") in the principal amount of $9,900,000 and substantially in the
form of EXHIBIT A attached hereto, at a price of $9,900,000, payable
in cash, upon the conversion of which pursuant to the terms thereof
the Company shall issue, sell and deliver to the Holder up to
5,500,000 shares of common stock, par value $.10 per share, together
with the associated Rights (the "COMMON STOCK"), of the Company (as
such number of shares may be adjusted pursuant to the terms of the
Purchaser Note, the "PURCHASER NOTE CONVERSION SHARES"), at a price of
$1.80 per Purchaser Note Conversion Share (as such price per share may
be adjusted pursuant to the terms of the Purchaser Note, the
"PURCHASER NOTE CONVERSION PRICE");
(2) the Company and the Purchaser shall execute and deliver the
Purchaser Registration Rights Agreement substantially in the form of
EXHIBIT B attached hereto, (the "PURCHASER REGISTRATION RIGHTS
AGREEMENT");
(3) the Company and the Purchaser shall execute and deliver the
Collateral Account Agreement substantially in the form of EXHIBIT C
attached hereto (the "COLLATERAL ACCOUNT AGREEMENT");
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<PAGE>
(4) each of Forest Oil of Canada Ltd. ("FOREST CANADA") and
604228 Alberta Ltd. (the "NUMBER CORPORATION"), each a corporation
organized under the laws of the Province of Alberta, Canada, and the
Purchaser shall execute and deliver a Guaranty Agreement substantially
in the form of EXHIBIT D attached hereto (a "GUARANTY");
(5) each of the Company and Forest Canada shall execute a
Mortgage Debenture substantially in the form of EXHIBIT E attached
hereto (a "MORTGAGE");
(6) each of the Company and Number Corporation shall execute and
deliver a Share Pledge Agreement substantially in the form of
EXHIBIT F hereto (a "SHARE PLEDGE AGREEMENT");
(7) each of the Company and Forest Canada shall execute a
Mortgage Debenture Deposit Agreement substantially in the form of
EXHIBIT G hereto (a "MORTGAGE DEBENTURE DEPOSIT AGREEMENT"); and
(8) the Company, Forest Canada and the Purchaser shall execute
and deliver the Environmental Indemnity substantially in the form of
Exhibit N attached hereto (the "ENVIRONMENTAL INDEMNITY").
(b) at the Second Closing,
(1) the Company shall issue, sell and deliver to the Purchaser,
and the Purchaser shall purchase, accept and acquire from the Company,
(A) 13,300,000 shares of Common Stock (as such number of
shares may be adjusted pursuant to Section 1.3 (a), the "PURCHASER
ADDITIONAL SHARES"), at a price of $1.80 per Purchaser Additional
Share (as such price per share may be adjusted pursuant to Section
1.3(a), the "PURCHASER COMMON SHARE PRICE"), payable in cash;
(B) 620,000 shares of Second Series Convertible Preferred
Stock, $.01 par value per share (the "PURCHASER PREFERRED SHARES"), at
a price of $18.00 per Purchaser Preferred Share, to be issued pursuant
to a Certificate of Amendment to the Certificate of Incorporation of
the Company (the "CERTIFICATE") substantially in the form of EXHIBIT H
attached hereto (as such price per share may be adjusted pursuant to
Section 1.3(a), the "PURCHASER PREFERRED SHARE PRICE"), payable in
cash, upon the conversion of which the Company shall issue, sell and
deliver to Purchaser or its assign up to 6,200,000 shares of Common
Stock (as such number of shares may be adjusted pursuant to the
Certificate, the "PURCHASER PREFERRED CONVERSION SHARES"), which
conversion may be made from time to time on or before the date that is
the fifth anniversary of the Second Closing Date but which in any
event shall be made on such fifth anniversary; and
(C) warrants substantially in the form of EXHIBIT I
attached hereto (the "TRANCHE A WARRANTS"), upon the exercise of which
in accordance with the terms
- 2 -
<PAGE>
thereof the Company shall sell, issue and deliver to or at the order
of the holder thereof up to 19,444,444 shares of Common Stock (as such
number of shares may be adjusted pursuant to the terms of the Tranche
A Warrants, the "TRANCHE A WARRANT SHARES"), on or before the date
that is 18 months after the Second Closing Date (or, upon the
occurrence of certain events specified in the Tranche A Warrants, the
date that is 36 months after the Second Closing Date), at an exercise
price of $2.10 per Tranche A Warrant Share (as such exercise price per
share may be adjusted pursuant to the terms of the Tranche A Warrants,
the "TRANCHE A WARRANT EXERCISE PRICE"), payable in cash; and
(2) the Company and the Purchaser shall execute and deliver the
Shareholders Agreement substantially in form of EXHIBIT J attached
hereto (the "SHAREHOLDERS AGREEMENT").
SECTION 1.2 COMPANY AND JEDI. Concurrently with the execution
and delivery of this Agreement, the Company and Joint Energy Development
Investments Limited Partnership, a Delaware limited partnership ("JEDI"), are
entering into the Restructure Agreement, substantially in the form of EXHIBIT K
attached hereto (the "JEDI RESTRUCTURE AGREEMENT"), with respect to the
restructuring of the terms of approximately $62,100,000 principal amount of
indebtedness outstanding under the JEDI Loan Agreement, pursuant to which the
following, among other things, shall occur on the Second Closing Date:
(a) the execution and delivery by the Company and JEDI of
the Second Amendment to Loan Agreement, substantially in the form of EXHIBIT B
to the JEDI Restructure Agreement (the "JEDI SECOND AMENDMENT"), and the
issuance to JEDI of the attached Tranche B Warrants substantially in the form of
EXHIBIT L attached hereto (the "TRANCHE B WARRANTS"), upon the exercise of which
in accordance with the terms thereof the Company shall sell, issue and deliver
to JEDI up to 11,250,000 shares of Common Stock (as such number of shares may be
adjusted pursuant to the terms of the Tranche B Warrants, the "TRANCHE B WARRANT
SHARES") on or before the dates specified therein at a price of $2.00 per
Tranche B Warrant Share (as such price per share may be adjusted pursuant to the
terms of the Tranche B Warrants, the "TRANCHE B WARRANT EXERCISE PRICE"),
payable either in cash or, in accordance with the terms of the Tranche B
Warrants, by application of the unpaid principal amount of certain indebtedness
referred to in the JEDI Second Amendment as the Tranche B Loan; and
(b) the execution and delivery by the Company and JEDI of
the JEDI Registration Rights Agreement substantially in the form of EXHIBIT B
attached hereto ( "JEDI REGISTRATION RIGHTS AGREEMENT"); and
(c) the execution and delivery to the Purchaser by JEDI,
without separate consideration, of the JEDI/Anschutz Option substantially in the
form of EXHIBIT M attached hereto (the "JEDI/PURCHASER OPTION"), pursuant to
which JEDI shall grant to the Purchaser an option to purchase the Tranche B
Warrant Shares from time to time on or before the Termination Date (as defined
in the JEDI/Purchaser Option), at a price per Tranche B
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Warrant Share that is equal to the lesser of (1) $2.00 as increased at the rate
of 18% per annum from the Second Closing Date to the date of the acquisition,
and (2) $3.10, in each case as such price per share may be adjusted pursuant to
the terms of the JEDI/Purchaser Option (the "JEDI OPTION PRICE"), payable in
cash.
SECTION 1.3 ADJUSTMENTS.
(a) Except as provided to the contrary in the following
sentence, the respective numbers of Purchaser Note Conversion Shares, Purchaser
Additional Shares, Purchaser Preferred Shares, Tranche A Warrant Shares, Tranche
B Warrant Shares and the Purchaser Note Conversion Price, the Purchaser Common
Share Price, the Purchaser Preferred Share Price, the JEDI Option Price, the
Tranche A Warrant Exercise Price and the Tranche B Warrant Exercise Price, in
each case as stated in this Section 1, shall in each case be adjusted in the
event of any change in Common Stock by reason of the issuance of any Equity
Securities, stock or other non-cash dividends, extraordinary cash dividends,
split-ups, mergers, recapitalizations, combinations, subdivisions, conversions,
exchanges of shares or the like on or before the First Closing Date (in the case
of the Purchaser Note Conversion Shares and the Purchaser Note Conversion Price)
or after the First Closing Date and on or before the Second Closing Date (in the
case of the Purchaser Additional Shares, Purchaser Preferred Shares, Tranche A
Warrant Shares and Tranche B Warrant Shares and the Purchaser Common Share
Price, the Purchaser Preferred Share Price, the JEDI Option Price, the Tranche A
Warrant Exercise Price and the Tranche B Warrant Exercise Price), such that, in
each case the Purchaser shall receive upon the payment of the Purchaser Note
Conversion Price, the Purchaser Common Share Price, the Purchaser Preferred
Share Price, the JEDI Option Price, the Tranche A Warrant Exercise Price or the
Tranche B Warrant Exercise Price, as the case may be, the number and class of
shares or other securities or property that would have been received in respect
of a share of Common Stock, as the case may be, if the First Closing Date or the
Second Closing Date, as the case may be, had occurred immediately prior to such
event, or the record date therefor, as applicable. Notwithstanding anything in
this Agreement or in any other Transaction Document to the contrary, no such
adjustments shall be required with respect to the conversion of shares of $.75
Convertible Preferred Stock, the exercise of Employee Options or Existing
Warrants outstanding as of the date of this Agreement, the payment of regular
dividends on the $.75 Convertible Preferred Stock in stock or cash in accordance
with the terms thereof and the issuance of shares of Common Stock pursuant to
the Section 401(k) plan sponsored by the Company in accordance with the terms
thereof (collectively, the "PERMITTED ISSUANCES").
(b) No adjustment made pursuant to this Section 1.3 shall
constitute or be deemed a waiver by the Purchaser of any breach of any of the
representations, warranties or obligations of the Company contained in this
Agreement.
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ARTICLE II
CLOSINGS
SECTION 2.1 FIRST CLOSING. The closing of the transactions
subject to Section 1.1(a) (the "FIRST CLOSING TRANSACTIONS") shall take place
(the "FIRST CLOSING") on May 19, 1995 or, at the election of the Purchaser, on
the second Business Day after the conditions precedent to the obligations of the
parties under this Agreement with respect thereto shall have been satisfied or
waived, as the case may be, or on such other date as the parties may agree in
writing (the "FIRST CLOSING DATE"), but in no event later than May 31, 1995.
SECTION 2.2 SECOND CLOSING. The closing of the transactions
subject to Section 1.1(b) and the closings of the transactions contemplated by
Section 1.2 (collectively, the "SECOND CLOSING TRANSACTIONS") shall take place
(the "SECOND CLOSING") on July 12, 1995 or, at the election of the Purchaser, on
the second Business Day after the conditions precedent to the obligations of the
parties under this Agreement with respect thereto shall have been satisfied or
waived, as the case may be, or on such other date as the parties may agree in
writing (the "SECOND CLOSING DATE"), but in no event later than July 31, 1995.
SECTION 2.3 LOCATION OF CLOSING. Each of the First Closing and
the Second Closing (collectively, the "CLOSINGS") shall take place at the
executive offices of the Company at its address stated on the signature pages of
this Agreement or at such other location as agreed to by the parties.
ARTICLE III
CONDITIONS OF CLOSINGS
SECTION 3.1 CONDITIONS PRECEDENT TO BOTH CLOSINGS. The
respective obligations of each party under this Agreement with respect to the
Transactions are subject to the satisfaction of each of the following
conditions, unless waived by the party, at or before the related Closing:
(a) each of the Company, its Consolidated Subsidiaries and
the Purchaser shall have obtained from each Governmental Body or other person
each Approval or taken all actions required to be taken in connection with each
Approval, and all waiting, review or appeal periods under the Hart-Scott-Rodino
Act or otherwise prescribed with respect to each Approval shall have terminated
or expired, as the case may be, in each case with respect to an Approval that is
required or advisable on the part of that person for (1) the due execution and
delivery by that person of each Transaction Document to which it is or may
become a party, (2) the conclusion of the First Closing Transactions or the
Second Closing Transactions, as the case may be, (3) the performance by that
person of its obligations under each Transaction Document to which it is or may
become a party with respect to the First Closing Transactions or the
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Second Closing Transactions, as the case may be, and (4) the exercise by that
person of its rights and remedies under each Transaction Document to which it is
or may become a party with respect to the First Closing Transactions or the
Second Closing Transactions, as the case may be;
(b) no Action shall be pending or, to the knowledge of any
of the Company, its Consolidated Subsidiaries or the Purchaser, threatened
against any of them or, to their knowledge, any other person that restricts in
any material respect or prohibits (or, if successful, would restrict or
prohibit) the conclusion of the First Closing Transactions or the Second Closing
Transactions, as the case may be;
(c) none of the Company, its Consolidated Subsidiaries and
the Purchaser (1) is in violation of or default, in any material respect, with
respect to any Regulation of any Governmental Body or any decision, ruling,
order or award of any arbitrator applicable to it or its business, properties or
operations, (2) would be in violation of or default, in any material respect,
with respect to the same in connection with or as a result of the conclusion of
the First Closing Transactions or the Second Closing Transactions, as the case
may be, or (3) has received notice that, in connection with or as a result of
the conclusion of the First Closing Transactions or the Second Closing
Transactions, as the case may be, it is or would be in violation of or default,
in any material respect, with respect to the same;
(d) the representations and warranties of the other party
contained in each Transaction Document to which it is a party shall be true and
correct in all material respects on and as of the First Closing Date or the
Second Closing Date, as the case may be, with the same force and effect as
though made on and as of such Closing Date;
(e) the other party shall have performed, in all material
respects, all of its covenants and other obligations required by each
Transaction Document required to be performed at or before the First Closing or
the Second Closing, as the case may be; and
(f) the party shall have received from the other party the
following, each dated the First Closing Date or the Second Closing Date, as the
case may be, in form and substance reasonably satisfactory to the party:
(1) a certificate of the Secretary or an Assistant Secretary of
such other party, substantially in the form of EXHIBIT 3.1(f)(1), with
respect to (i) the certificate of incorporation or articles of
incorporation, as the case may be, of such other party, (ii) the
bylaws of such other party, (iii) the resolutions of the Board of
Directors of such other party, approving each Transaction Document to
which such other party is a party and the other documents to be
delivered by it under the Transaction Documents and (iv) the names and
true signatures of the officers of such other party, authorized to
sign each Transaction Document to which such other party is a party
and the other documents to be delivered by such other party, under the
Transaction Documents;
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(2) a certificate of the President or a Vice President of such
other party, substantially in the form of EXHIBIT 3.1(f)(2) to the
effect that (i) the representations and warranties of such other party
contained in the Transaction Documents to which it is a party are true
and correct in all material respects as of the First Closing Date or
the Second Closing Date, as the case may be, and (ii) such other party
has performed, in all material respects, all covenants and other
obligations required by the Transaction Documents to which it is a
party to be performed by it at or before the First Closing or the
Second Closing, as the case may be;
(3) with respect to the Company, certified copies, or other
evidence satisfactory to the Purchaser, of all Approvals of all
Governmental Bodies and other persons with respect to the Company
referred to in Section 4.3(a) with respect to the First Closing Date
and Section 4.3(b) with respect to the Second Closing Date;
(4) with respect to the Purchaser, certified copies, or other
evidence satisfactory to the Company, of all Approvals of all
Governmental Bodies and other persons with respect to the Purchaser
referred to in Section 5.3;
(5) a certificate of the Secretary of State of the jurisdiction
in which such other party is incorporated, dated as of a recent date,
as to the good standing of and payment of taxes by such other party
and as to the charter documents of such other party on file in the
office of the Secretary of State; and
(6) with respect to the Company, a favorable opinion of one or
more counsel for the Company, which together are substantially in the
form of EXHIBIT 3.1(f)(6), in each case to the extent indicated
therein as applicable to the First Closing or the Second Closing, as
the case may be, and as to other matters reasonably requested by the
receiving party;
(7) with respect to the Purchaser, a favorable opinion of one or
more counsel for the Purchaser, which together are substantially in
the form of EXHIBIT 3.1(f)(7) and as to other matters reasonably
requested by the receiving party.
SECTION 3.2 ADDITIONAL CONDITIONS PRECEDENT TO FIRST CLOSING.
The respective obligations of each party under this Agreement with respect to
the First Closing Transactions are also subject to the satisfaction of each of
the following conditions at or before the First Closing, unless the conditions
are either required to be satisfied by the party or are waived by the party:
(a) the Company shall have duly executed and delivered to
the Purchaser the Purchaser Note substantially in the form of EXHIBIT A attached
hereto, with such changes therein as shall have been approved by the Company,
the Purchaser and JEDI;
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(b) the Purchaser shall have delivered to the Company an
amount in immediately available funds equal to the purchase price for the
Purchaser Note;
(c) such of the Company, Forest Canada and the Number
Corporation (Forest Canada and the Number Corporation, collectively, the
"GUARANTORS") as are parties thereto shall have executed and delivered the
Collateral Account Agreement, the Guaranties, the Mortgage Debentures, the Share
Pledge Agreements, the Mortgage Debenture Deposit Agreements and the
Environmental Indemnity, substantially in the forms of EXHIBIT C, EXHIBIT D,
EXHIBIT E, EXHIBIT F, EXHIBIT G and EXHIBIT N, respectively, attached hereto,
with such changes therein as shall have been approved by the Company, the
Purchaser and such Guarantors, in each case with respect to such Collateral as
shall have been approved by the Company and the Purchaser;
(d) the Company and the Purchaser shall have executed and
delivered the Purchaser Registration Rights Agreement substantially in the form
of EXHIBIT B attached hereto, with such changes therein as shall have been
approved by the Company, the Purchaser and JEDI; and
(e) the Company and JEDI shall have executed and delivered
the JEDI Restructure Agreement in the form of EXHIBIT K attached hereto (the
"JEDI RESTRUCTURE AGREEMENT"), with such changes therein as shall have been
approved by the Company, the Purchaser and JEDI.
(f) With respect to each Guarantor,
(1) the Guarantor shall have obtained from each Governmental
Body or other person each Approval or taken all actions required to be
taken in connection with each Approval, and all waiting, review or
appeal periods prescribed with respect to each Approval shall have
terminated or expired, as the case may be, in each case with respect
to an Approval that is required or advisable on the part of the
Guarantor for (1) the due execution and delivery by the Guarantor of
each Security Document to which it is or may become a party, (2) the
conclusion of the First Closing Transactions, (3) the performance by
the Guarantor of its obligations under each Security Document to which
it is or may become a party and (4) the exercise by the Guarantor of
its rights and remedies under each Security Document to which it is or
may become a party;
(2) no Action shall be pending or, to the knowledge of the
Guarantor, threatened against the Guarantor or, to the Guarantor's
knowledge, any other person that restricts in any material respect or
prohibits (or, if successful, would restrict or prohibit) the
conclusion of the First Closing Transactions;
(3) the Guarantor (i) shall not be in violation of or default,
in any material respect, with respect to any Regulation of any
Governmental Body or any decision, ruling, order or award of any
arbitrator applicable to it or its business, properties or
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operations, (ii) would not be in violation of or default, in any
material respect, with respect to the same in connection with or as a
result of the conclusion of the First Closing Transactions, and
(iii) has not received notice that, in connection with or as a result
of the conclusion of the First Closing Transactions, it is or would be
in violation of or default, in any material respect, with respect to
the same;
(4) the representations and warranties of the Guarantor
contained in each Security Document to which it is a party shall be
true and correct in all material respects on and as of the First
Closing Date, with the same force and effect as though made on and as
of the First Closing Date;
(5) the Guarantor shall have performed, in all material
respects, all of its covenants and other obligations required by each
Security Document to which it is a party required to be performed at
or before the First Closing;
(6) the Purchaser shall have received from the Guarantor, each
dated the First Closing Date, in form and substance reasonably
satisfactory to such party:
(A) a certificate of the Secretary or an Assistant
Secretary of the Guarantor, substantially in the form of Exhibit
3.2(f)(6)(A), with respect to its (i) articles of incorporation
or certificate of incorporation, as the case may be, (ii) its
bylaws, (iii) the resolutions of its Board of Directors approving
each Security Document to which it is a party and the other
documents to be delivered by the Guarantor under the Security
Documents and (iv) the names and true signatures of the officers
of the Guarantor authorized to sign each Security Document to
which the Guarantor is a party and the other documents to be
delivered by the Guarantor under the Security Documents;
(B) a certificate of the President or a Vice President of
the Guarantor, substantially in the form of Exhibit 3.2(f)(6)(B),
to the effect that (i) the representations and warranties of the
Guarantor contained in the Security Documents to which it is a
party are true and correct, in all material respects, as of the
First Closing Date, and (ii) the Guarantor has performed, in all
material respects, all covenants and other obligations required
by the Security Documents to which it is a party to be performed
by it at or before the First Closing;
(C) certified copies, or other evidence satisfactory to the
Purchaser, of all Approvals of all Governmental Bodies and other
persons with respect to the Guarantor referred to in Section 3.3
of the Guaranty;
(D) a certificate of the Secretary of State (or equivalent
foreign official) of the jurisdiction in which the Guarantor is
incorporated, dated as of a recent date, as to the good standing
of and payment of taxes by the Guarantor and as to
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the charter documents of the Guarantor on file in the office of the
Secretary of State (or equivalent foreign official); and
(E) a favorable opinion of one or more counsel for the
Guarantor, which together are substantially in the form of
Exhibit 3.2(f)(6)(E) and as to other matters reasonably requested
by the receiving party; and
(g) the Purchaser shall have received favorable opinions
from Bennett Jones Verchere substantially in the forms included in Exhibit
3.2(g).
(h) the Purchaser shall have executed a consent to be
bound by the terms of the Archean Shareholders Agreement.
SECTION 3.3 ADDITIONAL CONDITIONS PRECEDENT TO SECOND CLOSING.
The respective obligations of each party under this Agreement with respect to
the Second Closing Transactions are also subject to the satisfaction of each of
the following conditions at or before the Second Closing, unless the conditions
are either required to be satisfied by the party or are waived by the party:
(a) the Company shall have duly executed and delivered to
the Purchaser one or more certificates representing the Purchaser Additional
Shares;
(b) the Company shall have duly executed and delivered to
the Purchaser one or more certificates representing the Purchaser Preferred
Shares;
(c) the Purchaser shall have delivered to the Company an
amount in immediately available funds equal to the aggregate purchase price for
the Purchaser Additional Shares and the Purchaser Preferred Shares;
(d) the Purchaser shall have delivered to the Company the
Purchaser Note, marked "cancelled";
(e) the Company and the Purchaser shall have executed and
delivered the Shareholders Agreement substantially in the form of EXHIBIT J
attached hereto, with such changes therein as shall have been approved by the
Company and the Purchaser;
(f) the Company shall have executed and delivered to the
Purchaser the Tranche A Warrants substantially in the form of EXHIBIT I attached
hereto, with such changes therein as the Company, the Purchaser and JEDI shall
have approved, and the Company shall have performed to the satisfaction of the
Purchaser the obligations of the Company then required to be performed
thereunder;
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(g) JEDI shall have executed and delivered to the Purchaser
the JEDI/Purchaser Option substantially in the form of EXHIBIT M attached
hereto, with such changes therein as shall have been approved by the Purchaser
and JEDI;
(h) the Company and JEDI shall have executed and delivered
the JEDI Registration Rights Agreement substantially in the form of EXHIBIT B
attached hereto, with such changes therein as shall have been approved by the
Company, the Purchaser and JEDI; and
(i) the JEDI Transactions shall have been completed and the
Company and JEDI shall have performed to the satisfaction of the Purchaser their
respective obligations with respect to each of the JEDI Transactions then
required to be performed, and in connection therewith:
(1) JEDI shall have obtained from each Governmental Body or
other person each Approval or taken all actions required to be taken
in connection with each Approval, and all waiting, review or appeal
periods under the Hart-Scott-Rodino Act or otherwise prescribed with
respect to each Approval shall have terminated or expired, as the case
may be, in each case with respect to an Approval that is required or
advisable on the part of JEDI for (1) the due execution and delivery
by JEDI of each Transaction Document to which it is or may become a
party, (2) the conclusion of the Second Closing Transactions, (3) the
performance by JEDI of its obligations under each Transaction Document
to which it is or may become a party, and (4) the exercise by JEDI of
its rights and remedies under each Transaction Document to which it is
or may become a party;
(2) no Action shall be pending or, to the knowledge of JEDI,
threatened against JEDI that restricts in any material respect or
prohibits (or, if successful, would restrict or prohibit) the
conclusion of the Second Closing Transactions;
(3) JEDI (i) is not in violation of or default, in any material
respect, with respect to any Regulation of any Governmental Body or
any decision, ruling, order or award of any arbitrator applicable to
it or its business, properties or operations, (ii) would not be in
violation of or default, in any material respect, with respect to the
same in connection with or as a result of the conclusion of the Second
Closing Transactions, and (iii) has not received notice that, in
connection with or as a result of the conclusion of the Second Closing
Transactions, it is or would be in violation of or default, in any
material respect, with respect to the same;
(4) the representations and warranties of JEDI contained in each
Transaction Document to which it is a party shall be true and correct
in all material respects on and as of the Second Closing Date, with
the same force and effect as though made on and as of the Second
Closing Date;
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(5) JEDI shall have performed, in all material respects, all of
its covenants and other obligations required by each Transaction
Document to which it is a party required to be performed at or before
the Second Closing;
(6) each of the Company and the Purchaser shall have received
from JEDI, each dated the Second Closing Date, in form and substance
reasonably satisfactory to such party:
(A) a certificate of the Secretary or an Assistant
Secretary of Enron Capital Corp., substantially in the form of
EXHIBIT 3.3(i)(6)(A), with respect to (i) the certificate of
incorporation of Enron Capital Corp., (ii) the bylaws of Enron
Capital Corp., (iii) the limited partnership agreement of JEDI,
(iv) the resolutions of the Board of Directors of Enron Capital
Corp., as the general partner of JEDI, approving each Transaction
Document to which JEDI is a party and the other documents to be
delivered by JEDI under the Transaction Documents and (v) the
names and true signatures of the officers of Enron Capital Corp.
authorized to sign each Transaction Document to which JEDI is a
party and the other documents to be delivered by JEDI under the
Transaction Documents;
(B) a certificate of the President or a Vice President of
Enron Capital Corp., substantially in the form of EXHIBIT
3.3(i)(6)(B) to the effect that (i) the representations and
warranties of JEDI contained in the JEDI/Anschutz Option and the
JEDI Restructure Agreement are true and correct, in all material
respects, as of the Second Closing Date, and (ii) JEDI has
performed, in all material respects, all covenants and other
obligations required by the JEDI Restructure Agreement to be
performed by it at or before the Second Closing;
(C) certificates of the Secretary of State of Delaware,
dated as of a recent date, as to the good standing of and payment
of taxes by Enron Capital Corp. and JEDI and as to the charter
documents of Enron Capital Corp. and JEDI on file in the office
of the Secretary of State; and
(D) a favorable opinion of one or more counsel for JEDI,
which together are substantially in the form of EXHIBIT
3.3(i)(6)(D) and as to other matters reasonably requested by the
receiving party;
(j) the Certificate substantially in the form of EXHIBIT H
attached hereto, with such changes therein as the Company, the Purchaser and
JEDI shall have approved, shall have been duly filed with and accepted by the
Department of State of the State of New York and evidence thereof shall have
been delivered to the Purchaser;
(k) the bylaws of the Company shall have been amended to
fix the number of Directors of the Company at ten, subject to increase or
decrease thereafter to the extent permitted by the Shareholders Agreement;
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(l) the Company shall have received the resignations,
effective as of the Second Closing Date, of not less than five directors
identified by the Company to the Purchaser on or before the date of this
Agreement; and
(m) three persons selected by the Purchaser shall have been
elected as directors of the Company effective as of the Second Closing Date, of
which one person (which need not be the same person in each instance), as
selected by the Purchaser, shall have been appointed to each of the Executive
Committee, the Compensation Committee, the Audit Committee and the Nominating
Committee of the Board of Directors of the Company.
(n) the Purchaser shall have executed and delivered to JEDI
a letter substantially in the form of Exhibit 3.3(n) confirming the provisions
of Section 4 of the JEDI/Anschutz Option.
SECTION 3.4 LEGENDS.
(a) Each certificate for Purchaser Shares and following
transfer to the Purchaser, each certificate for Tranche B Warrant Shares, and
any certificate issued in exchange therefor or on conversion or upon transfer,
except certificates issued in connection with a sale registered under the
Securities Act and except as provided below, shall bear legends to the following
effect:
(1) "The shares represented by this certificate have not been
registered under the Securities Act of 1933 and may not be offered,
sold, transferred or otherwise disposed of except in compliance with
said Act."
(2) "The shares represented by this certificate are subject to
the restrictions contained in the Registration Rights Agreement dated
as of __________, 1995, a copy of which is on file at the office of
the Secretary of the Company."
(3) "The shares represented by this certificate are subject to
the restrictions contained in a Shareholders Agreement dated as of
__________, 1995, a copy of which is on file at the office of the
Secretary of the Company."
(4) "This certificate also evidences and entitles the holder
hereof to certain Rights as set forth in a Rights Agreement between
Forest Oil Corporation and Mellon Securities Trust Company, dated as
of October 14, 1993 (the "RIGHTS AGREEMENT"), the terms of which are
hereby incorporated herein by reference and a copy of which is on file
at the principal executive offices of Forest Oil Corporation. Under
certain circumstances, as set forth in the Rights Agreement, those
Rights will be evidenced by separate certificates and will no longer
be evidenced by this certificate. Forest Oil Corporation will mail to
the holder of this certificate a copy of the Rights Agreement without
charge after receipt of a written request therefor. As described in
the Rights
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Agreement, Rights issued to or acquired by any Acquiring Person (as
defined in the Rights Agreement) shall, under certain circumstances,
become null and void."
(b) The Purchaser Note, each certificate for the Tranche A
Warrants and the JEDI/Purchaser Option, and any certificate issued in exchange
therefor or on conversion or upon transfer, shall bear the legends to the effect
stated in Section 3.4(a), MUTATIS MUTANDIS.
(c) The legend stated in Section 3.4(a)(1), and the
corresponding legend referred to in Section 3.4(b), shall be removed by delivery
of one or more substitute certificates without such legend if the holder thereof
shall have delivered to the Company a copy of a letter from the staff of the
Securities and Exchange Commission or an opinion of counsel, in form and
substance reasonably satisfactory to the Company, to the effect that the legend
is not required for purposes of the Securities Act.
(d) The legend stated in Section 3.4(a)(2) and the
corresponding legend referred to in Section 3.4(b) shall be removed at such time
as the related securities are no longer subject to the Registration Rights
Agreement referenced therein.
(e) The legend stated in Section 3.4(a)(3) and the
corresponding legend referred to in Section 3.4(b) shall be removed in
accordance with the terms of the Shareholders Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants as follows:
SECTION 4.1 CORPORATE EXISTENCE AND POWER. Each of the Company
and its Consolidated Subsidiaries (1) is a corporation duly incorporated,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation, (2) has all necessary corporate power and authority and all
material licenses, authorizations, consents and approvals required to own,
lease, license or use its properties now owned, leased, licensed or used and
proposed to be owned, leased, licensed or used and to carry on its business as
now conducted and proposed to be conducted, (3) is duly qualified as a foreign
corporation under the laws of each jurisdiction in which both (A) qualification
is required either (i) to own, lease, license or use its properties now owned,
leased, licensed and used or (ii) to carry on its business as now conducted and
(B) the failure to be so qualified could materially and adversely affect either
or both of (i) the business, properties, operations, prospects or condition
(financial or otherwise) of the Company and its Consolidated Subsidiaries, taken
as a whole, and (ii) the ability of the Company or the Consolidated Subsidiary,
as the case may be, to perform its obligations under any Transaction Document to
which it is or may become a party and (4) has all necessary
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corporate power and authority to execute and deliver each Transaction Document
to which it is or may become a party.
SECTION 4.2 AUTHORIZATION; CONTRAVENTION. Subject to obtaining
the Approvals referred to in Section 4.3, the execution and delivery by each of
the Company and its Consolidated Subsidiaries of each Transaction Document to
which it is or may become a party and the performance by it of its obligations
under each of those Transaction Documents have been duly authorized by all
necessary corporate action and do not and will not (1) contravene, violate,
result in a breach of or constitute a default under, (A) its articles of
incorporation or certificate of incorporation, as the case may be, or bylaws,
(B) any Regulation of any Governmental Body or any decision, ruling, order or
award of any arbitrator by which the Company or any Consolidated Subsidiary or
any of their properties may be bound or affected, including, but not limited to,
the Hart-Scott-Rodino Act, or (C) any agreement, indenture or other instrument
to which the Company or any Consolidated Subsidiary is a party or by which the
Company or any Consolidated Subsidiary or their properties may be bound or
affected or (2) except as contemplated by the Transaction Documents, result in
or require the creation or imposition of any Lien on any of the properties now
owned or hereafter acquired by the Company or any Consolidated Subsidiary.
SECTION 4.3 APPROVALS.
(a) Except with respect to the consents referred to in
Section 6.1(a) and the filing for recordation of the Mortgage Debentures and
certain financing statements, no Approval of any Governmental Body or other
person is required or advisable on the part of the Company or any Consolidated
Subsidiary for (1) the due execution and delivery by the Company or any
Consolidated Subsidiary, as the case may be, of any Transaction Document to
which it is or may become a party, (2) the conclusion of the First Closing
Transactions, (3) the performance by the Company or the Consolidated Subsidiary,
as the case may be, of its obligations under each Transaction Document to which
it is or may become a party with respect to the First Closing Transactions and
(4) the exercise by Purchaser of its rights and remedies under each Transaction
Document with respect to the First Closing Transactions. Each such Approval
shall have been obtained, all actions by each person required to be taken in
connection with each such Approval shall have been taken and all prescribed
waiting, review or appeal periods with respect to each such Approval shall have
terminated or expired, as the case may be, in each case on or before the First
Closing Date.
(b) Except with respect to the approval of the shareholders
of the Company referred to in Section 4.31, the Approval required under the
Hart-Scott-Rodino Act, the consents referred to in Sections 6.1(a), 6.1(b)(1),
6.1(b)(2) and 6.1(b)(3), the Approvals, if any, required in connection with the
performance by the Company of its obligations under Section 7.1(d), the filing
for recordation of the Mortgage Debentures and certain financing statements and
the conclusion of the JEDI Transaction, no Approval of any Governmental Body or
other person that is required or advisable on the part of the Company or any
Consolidated Subsidiary for (1) the due execution and delivery by the Company or
the Consolidated
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Subsidiary, as the case may be, of any Transaction Document to which it is or
may become a party, (2) the conclusion of the Second Closing Transactions, (3)
the performance by the Company or the Consolidated Subsidiary, as the case may
be, of its obligations under each Transaction Document to which it is or may
become a party with respect to the Second Closing and (4) the exercise by the
Purchaser of its rights and remedies under each of those Transaction Documents
with respect to the Second Closing Transactions. Each such Approval shall have
been obtained, all actions by each person required to be taken in connection
with each such Approval shall have been taken and all prescribed waiting, review
or appeal periods with respect to each such Approval shall have terminated or
expired, as the case may be, in each case on or before the Second Closing Date.
SECTION 4.4 BINDING EFFECT. Each Transaction Document to which
the Company or a Consolidated Subsidiary is or may become a party is, or when
executed and delivered in accordance with this Agreement will be, the legally
valid and binding obligation of the Company or the Consolidated Subsidiary, as
the case may be, enforceable against it in accordance with its terms, except as
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting creditors' rights generally and general
principles of equity, including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing and the possible unavailability of
specific performance or injunctive relief, regardless of whether considered in a
proceeding in equity or at law.
SECTION 4.5 FINANCIAL INFORMATION.
(a) The consolidated balance sheet of the Company and its
Consolidated Subsidiaries as of December 31, 1994 and the related consolidated
statements of operations, shareholders' equity and cash flows for the fiscal
year then ended, reported on by KMPG Peat Marwick LLP and filed with the
Securities and Exchange Commission in the Company's Annual Report on Form 10-K
for the year ended December 31, 1994, a true and complete copy of which has been
delivered to the Purchaser, fairly present the consolidated financial position
of the Company and its Consolidated Subsidiaries as of that date and their
consolidated results of operations and cash flows for the year then ended, in
accordance with GAAP applied on a consistent basis except as described in the
footnotes to the financial statements included in such Form 10-K or as disclosed
in writing to the Purchaser, which writing makes reference to to this Agreement.
(b) The Company has made available to the Purchaser copies
of each management letter delivered to the Company or any Consolidated
Subsidiary by KMPG Peat Marwick LLP in connection with the financial statements
referred to in this Section 4.5 or relating to any review by them of the
internal controls of the Company and its Consolidated Subsidiaries during the
three years ended December 31, 1994 or thereafter, and has made available for
inspection all reports and working papers produced or developed by them or
management in connection with their examination of those financial statements,
as well as all such reports and working papers for prior periods for which any
liability of the Company and its Consolidated Subsidiaries for Taxes has not
been finally determined or barred by applicable
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statutes of limitation.
SECTION 4.6 ABSENCE OF CERTAIN CHANGES OR EVENTS.
(a) Except as disclosed in writing to the Purchaser,
which writing makes reference to this Agreement, since December 31, 1994, there
has been no material adverse change in the business, properties, operations,
prospects or condition (financial or otherwise) of the Company and its
Consolidated Subsidiaries, taken as a whole, except in each case with respect to
each circumstance or event that shall have affected the oil and gas industry
generally, including, without limitation, warm weather in markets for the
consumption of oil and gas products.
(b) Since December 31, 1994, none of the Company and its
Consolidated Subsidiaries has done the following or entered into any agreement
or other arrangement with respect to the following, except in each case with
respect or pursuant to each Transaction Document to which it is or may become a
party:
(1) transferred any of its assets except in each case for fair
consideration and in the ordinary course of business; or
(2) except as previously disclosed to the Purchaser in writing,
which writing makes reference to this Agreement, waived, released,
cancelled, settled or compromised any debt, claim or right of any
material value except in each case in the ordinary course of business;
or
(3) transferred any right under any lease, license or agreement
or any Proprietary Right or other intangible asset except in each case
in the ordinary course of business; or
(4) except as previously disclosed to the Purchaser in writing,
which writing makes reference to this Agreement, paid or agreed to pay
any bonus, extra compensation, pension or severance pay, or otherwise
increased the wage, salary or compensation (of any nature) to its
shareholders, directors, officers or employees, or engaged any new
officer or employee at an annual rate of compensation in excess of
$50,000 in each case or for a period of employment of more than 180
days; or
(5) except as previously disclosed to the Purchaser in writing,
which writing makes reference to this Agreement, to the knowledge of
the Company, suffered any damage, destruction or casualty loss
(whether or not covered by insurance) of property the greater of cost
or fair market value of which exceeds $100,000 individually or in the
aggregate or any taking of any of its property or assets the greater
of cost or fair market value of which exceeds $100,000 individually or
in the aggregate by condemnation or eminent domain; or
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(6) except as previously disclosed to the Purchaser in writing,
which writing makes reference to this Agreement, made any loan to or
entered into any transaction with any of its shareholders having
beneficial ownership of 5% or more of the shares of Common Stock then
issued and outstanding, directors, officers or employees giving rise
to any claim or right of, by, or against any person in an amount or
having a value in excess of $10,000; or
(7) entered into any material agreement, arrangement,
commitment, contract or transaction, amended or terminated any of the
same or otherwise conducted any of its affairs, in any case not in the
ordinary course of business and consistent with past practices; or
(8) issued, sold or granted any Equity Securities or other
securities of any of the Company and its Consolidated Subsidiaries
except with respect to Permitted Issuances; or
(9) amended, or taken any action to amend, the Rights Agreement;
or
(10) except as previously disclosed to the Purchaser in writing,
which writing makes reference to this Agreement, made any
contribution, other than regularly scheduled contributions, to any
Company Employee Plan or made or incurred any commitment to establish
or increase the obligation of the Company or a Subsidiary to any
Company Employee Plan; or
(11) except as disclosed in the footnotes to the financial
statements referred to in Section 4.5, changed any accounting methods
or principles used in recording transactions on the books of the
Company or a Consolidated Subsidiary or in preparing the financial
statements of the Company or a Consolidated Subsidiary.
SECTION 4.7 TAXES.
(a) Each of the Company and its Consolidated Subsidiaries
has filed all Tax Returns that are required to be filed with any Governmental
Body and has paid all Taxes due pursuant to the Tax Returns or any assessment
received by it or otherwise required to be paid, except Taxes being contested in
good faith by appropriate proceedings and for which adequate reserves or other
provisions are maintained, and except for the filing of Tax Returns as to which
the failure to file could not, individually or in the aggregate, have a Material
Adverse Effect.
(b) None of the Company and its Subsidiaries (other than
Oklatex Corp.) is or has ever been a member of a "CONSOLIDATED GROUP" (as
defined by Section 1504 of the Code) other than the consolidated group
comprising the Company and its Consolidated Subsidiaries. Federal income tax
returns of the Company and its Consolidated Subsidiaries have been closed
through the year ended December 31, 1990. The Company knows of no basis for
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the assessment of any material amount of Taxes for any period covered by the Tax
Returns that are referred to in Section 4.7(a) that is not reflected on those
Tax Returns. None of the Company and its Consolidated Subsidiaries is a party
to any Action by any Governmental Body and no claim has been asserted or
threatened against it for assessment or collection of any Taxes. None of the
Company and its Consolidated Subsidiaries has executed or filed with the
Internal Revenue Service or any other taxing authority any agreement extending
the period of assessment or collection of any Taxes or any consent to have the
provisions of Section 341(f) of the Code applied to it except as required by the
dual consolidated loss rules under Treasury Regulation Section 1.1503-2T(c)(3).
No power of attorney granted by the Company or any Consolidated Subsidiary with
respect to tax matters is currently in force.
(c) All Taxes that the Company or a Consolidated Subsidiary
is required to withhold or collect have been withheld or collected and, to the
extent required, have been paid over to the proper Governmental Body on a timely
basis, and each of the Company and its Consolidated Subsidiaries has withheld
proper amounts from its employees for all periods in full compliance with tax
withholding provisions of applicable Regulations, except for withholdings or
collections as to which the failure to withhold or collect could not,
individually or in the aggregate, have a Material Adverse Effect.
(d) No portion of the real property or plant, structures,
fixtures or improvements of the Company or a Consolidated Subsidiary is subject
to any special assessment, the liability with respect to which, individually or
in the aggregate, could have a Material Adverse Effect. None of the Company and
its Consolidated Subsidiaries has knowledge or reason to know of any proposal
for any such assessment.
SECTION 4.8 LITIGATION.
(a) Except as previously disclosed to the Purchaser in
writing, which writing makes reference to this Agreement, there is no Action
pending or, to the knowledge of each of the Company and its Consolidated
Subsidiaries, threatened against the Company or a Consolidated Subsidiary that
(1) involves any of the Transactions or (2) individually or in the aggregate, if
determined adversely to any of them, could result in a liability to any of them
in an amount that exceeds $50,000 individually or $100,000 in the aggregate.
(b) There is no Action pending or, to the knowledge of each
of the Company and its Consolidated Subsidiaries, threatened against the
Company, a Consolidated Subsidiary or, to the knowledge of each of them, any
other person that involves any of the Transactions or any property owned,
leased, licensed or used by the Company or a Consolidated Subsidiary that,
individually or in the aggregate, if determined adversely to any of them, could
have a Material Adverse Effect.
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SECTION 4.9 COMPLIANCE WITH LAWS.
(a) None of the Company and its Consolidated Subsidiaries
is in, and none of them has received notice of, a violation of or default with
respect to, any Regulation of any Governmental Body or any decision, ruling,
order or award of any arbitrator applicable to it or its business, properties or
operations, including individual products or services sold or provided by it,
except for violations or defaults that, individually or in the aggregate, could
not have a Material Adverse Effect.
(b) On each Closing Date, the Company shall be in full
compliance with all of the provisions of the Hart-Scott-Rodino Act.
SECTION 4.10 LICENSES.
(a) To the knowledge of the Company, the Company or a
Consolidated Subsidiary is the registered holder of each license that is
required to be held by the Company or the Consolidated Subsidiary, as the case
may be, so that it may carry on its business as now conducted and proposed to be
conducted, the failure to hold which individually or in the aggregate, could
have a Material Adverse Effect.
(b) To the knowledge of the Company, each such License is
validly issued, in good standing and in full force and effect, unimpaired by any
act or omission by the Company or the Consolidated Subsidiary, as the case may
be. There is no Action pending or, to the knowledge of the Company, threatened
against the Company or a Consolidated Subsidiary that could result in the
revocation, termination, suspension or material and adverse modification of any
such License. None of the Company and its Consolidated Subsidiaries has any
reason to believe that any such License will not be renewed in the ordinary
course. The conclusion of the Transactions will not (and will not give any
Governmental Body a right to) terminate or modify any rights of, or accelerate
or increase any obligation of, the Company or any Consolidated Subsidiary under
any such License.
(c) Each of the Company and its Consolidated Subsidiaries
has filed or caused to be filed with each applicable Governmental Body all
reports, applications, documents, instruments and information required to be
filed by it pursuant to all applicable Regulations, other than those as to which
the failure to file could not have a Material Adverse Effect.
(d) Each of the Company and its Consolidated Subsidiaries
is in substantial compliance with each License, with all Regulations applicable
to the operations of its business as now conducted and proposed to be conducted
and with all terms and conditions of all operating agreements relating to its
business, non-compliance with which could have a Material Adverse Effect.
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SECTION 4.11 EMPLOYEE MATTERS.
(a) EMPLOYMENT AND LABOR RELATIONS. To the knowledge of
the Company,
(1) each of the Company and its Subsidiaries has substantially
complied with its obligations related to, and is not in default under,
any material written or oral employment agreements, material
collective bargaining agreements and any written personnel policies to
which any of the Company and its Subsidiaries is a party or by which
any of the Company and its Subsidiaries is bound;
(2) each of the Company and its Subsidiaries is in compliance
with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, and
are not engaged in any unfair labor practices, except for any failure
or unfair practice that could not have a Material Adverse Effect; and
(3) except as previously disclosed to the Purchaser in writing,
which writing makes reference to this Agreement,
(A) there is no unfair labor practice charge or complaint
against any of the Company and its Subsidiaries pending or
threatened before the National Labor Relations Board;
(B) there has not occurred nor has there been threatened, a
labor strike, request for representation, work stoppage or
lockout;
(C) there is no representation claim or petition pending
before the National Labor Relations Board respecting the
employees of any of the Company and its Subsidiaries;
(D) no grievance nor any arbitration proceeding arising out
of any collective bargaining agreement to which any of the
Company and its Subsidiaries is a party is pending;
(E) no charges with respect to or relating to any of the
Company and its Subsidiaries are pending before the Equal
Employment Opportunity Commission or any state, local or foreign
agency responsible for the prevention of unlawful employment
practices;
(F) no claims relating to employment or loss of employment
with any of the Company and its Subsidiaries are pending in any
federal, state or local court or in any other adjudicatory body
and, to the knowledge of the Company,
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no such claims against any of the Company and its Subsidiaries
have been threatened; and
(G) none of the Company and its Subsidiaries has received
notice of the intent of any federal, state, local or foreign
agency responsible for the enforcement of labor or employment
Regulations to conduct an investigation of or relating to any of
the Company and its Subsidiaries, and no such investigation is in
progress.
(b) EMPLOYEE PLANS OF THE COMPANY'S ERISA AFFILIATES. The
Company has previously disclosed to the Purchaser in writing, which writing
references this Agreement, a correct and complete list of all ERISA Plans and
Multiemployer Plans of any person who is an ERISA Affiliate of the Company,
other than any such ERISA Plans or Multiemployer Plans referred to in the list
referred to in Section 4.11(c)(1) below. There has been no Employee Plan Event
with respect to any ERISA Plan or Multiemployer Plan of any person who is an
ERISA Affiliate of the Company or who was an ERISA Affiliate of the Company at
any time during the five years before the date of this Agreement, other than any
ERISA Plan or Multiemployer Plan previously disclosed to the Purchaser in
writing, in respect of which there is any outstanding liability, or, to the
knowledge of the Company, in respect of which any liability could be expected to
be incurred by any of the Company and its Subsidiaries.
(c) COMPANY EMPLOYEE PLANS - GENERAL.
(1) The Company has previously disclosed to the Purchaser in
writing, which writing references this Agreement, a correct and
complete list of all Company Employee Plans. The Company has made
available to the Purchaser true and complete copies of the Company
Employee Plans and all related summary descriptions, including,
without limitation, copies of any employee handbooks listing or
describing any Company Employee Plans and summary descriptions of any
Company Employee Plan not otherwise is writing.
(2) Except for any failure or default that could not have a
Material Adverse Effect, each of the Company and its Subsidiaries has
fulfilled or has taken all actions necessary to enable it to fulfill
when due all of its obligations under each Company Employee Plan and
there is no existing default or event of default or any event which,
with or without the giving of notice or the passage of time, would
constitute a default by it under any Company Employee Plan.
(3) Each of the Company and its Subsidiaries is in full
compliance with the applicable provisions of ERISA and all other
Regulations applicable to each Company Employee Plan, except where
noncompliance could not have a Material Adverse Effect. There has
been no Employee Plan Event which is continuing or in respect of which
there is any outstanding liability of any of the Company and its
Subsidiaries that could have a Material Adverse Effect, and no such
Employee Plan Event is reasonably expected to
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occur, with respect to any Company Employee Plan.
(4) Except as previously disclosed to the Purchaser in writing,
which writing references this Agreement, the transactions contemplated
by the Transaction Documents will not cause the acceleration of
vesting in, or payment of, any benefits under any Company Employee
Plan.
(d) COMPANY QUALIFIED PLANS.
(1) Each Company Qualified Plan satisfies the requirements of
Section 401(a) of the Code, and each trust under each such plan is
exempt from Tax under Section 501(a) of the Code. To the knowledge of
the Company, no event has occurred that will or could give rise to
disqualification or loss of tax-exempt status of any such plan or
trust under such sections.
(2) The Company has made available to the Purchaser for each
Company Qualified Plan copies of the following documents: (A) the
Form 5500 filed in each of the most recent three plan years,
including but not limited to all schedules thereto and financial
statements with attached opinions of independent accountants, (B) the
most recent determination letter from the IRS, (C) the consolidated
statement of assets and liabilities of such plan as of its most recent
valuation date and (D) the statement of changes in fund balance and in
financial position or the statement of changes in net assets available
for benefits under such plan for the most recently ended plan year.
The financial statements so delivered fairly present the financial
condition and the results of operations of each Company Qualified Plan
as of such dates, in accordance with GAAP.
(e) COMPANY ERISA PLANS.
(1) The Company has previously disclosed to the Purchaser in
writing, which writing references this Agreement, for each Company
ERISA Plan, as of the effective date of its most recently prepared
actuarial report, the amount by which the fair market value of the
assets of the plan exceeded (or was less than) the actuarial present
value (determined on the basis of the actuarial assumptions set forth
in such report) of the "BENEFIT LIABILITIES" (within the meaning of
Section 4001(a)(16) of ERISA), whether or not vested, of the plan.
Since the effective date of the most recently prepared actuarial
report for each Company ERISA Plan, there has been no amendment or
change to the plan that would increase the amount of benefits
thereunder and, to the knowledge of the Company, there has been no
event or occurrence (other than the normal fluctuation in the value of
such plan's assets) that would cause the excess of assets over benefit
liabilities as previously disclosed to the Purchaser in writing to be
reduced or the amount by which benefit liabilities exceed assets as
previously disclosed to the Purchaser in writing to be increased.
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(2) The Company has made available to the Purchaser for each
Company ERISA Plan copies of the following documents: (A) the Form
PBGC-1 filed in each of the most recent three plan years and (B) the
most recently prepared actuarial report, which fairly presents the
financial condition and the results of operations of each such plan as
of the effective date of such report, in accordance with GAAP, and
which sets forth the minimum required contributions under Section 412
of the Code (and their due dates) and maximum deductible contributions
under Section 404 of the Code for the plan year following the
effective date of such report.
(f) MULTIEMPLOYER PLANS. No plan previously disclosed to
the Purchaser in writing, which writing references this Agreement, is a Company
Multiemployer Plan.
(g) HEALTH PLANS. Each Company Employee Plan that is a
group health plan within the meaning of Section 5000(b) of the Code has been
operated in substantial compliance with the group health plan continuation
coverage requirements of Sections 601 through 608 of ERISA and Section 4980B of
the Code, and except to the extent required under those provisions or as
previously disclosed to the Purchaser in writing, which writing references this
Agreement, no Company Employee Plan provides health or welfare benefits (through
the purchase of insurance or otherwise) for any retired or former employee of
the Company or any of its Subsidiaries.
SECTION 4.12 LABOR DISPUTES AND ACTS OF GOD. The business,
properties, operations, prospects and conditions (financial and otherwise) of
the Company and its Consolidated Subsidiaries, taken as a whole, and the ability
of each of the Company and its Consolidated Subsidiaries to perform its
obligations under any Transaction Document to which it is or may become a party,
have not been materially and adversely affected by any fire, explosion,
accident, strike, lockout, or other labor dispute, drought, storm, hail,
earthquake, embargo, act of God or of the public enemy, or other casualty
(whether or not covered by insurance), except in each case with respect to each
circumstance or event that shall have affected the oil and gas industry
generally, including, without limitation, warm weather in markets for the
consumption of oil and gas products.
SECTION 4.13 SUBSIDIARIES.
(a) The Company has previously delivered to the Purchaser a
correct and complete list of each Consolidated Subsidiary of the Company, which
list makes reference to this Agreement, showing the following as of the date of
this Agreement with respect to the Consolidated Subsidiary:
(1) the jurisdiction of its incorporation;
(2) the title of each authorized class or series of capital
stock;
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(3) the number of shares of each authorized class or series of
capital stock;
(4) the number of those shares outstanding;
(5) the number of outstanding shares owned directly or
indirectly by the Company;
(6) the percentage of outstanding shares owned directly or
indirectly by the Company;
(7) the number of authorized shares subject to issuance upon the
exercise, conversion or exchange of other outstanding Equity
Securities of the Consolidated Subsidiary;
(8) the number of authorized shares subject to issuance upon the
exercise, conversion or exchange of those other Equity Securities of
the Consolidated Subsidiary owned directly or indirectly by the
Company;
(9) the percentage of shares referred to in clauses (4) and (7),
assuming the issuance of all shares referred to in clause (7), that is
owned directly or indirectly by the Company; and
(10) the directors and officers of the Consolidated Subsidiary as
of the date of this Agreement.
(b) Except as previously disclosed to the Purchaser in
writing, which writing makes reference to this Agreement, no Consolidated
Subsidiary has outstanding any Equity Securities. The holders of the capital
stock of each Consolidated Subsidiary are not entitled to any preemptive rights
to subscribe to any additional shares of capital stock of the Consolidated
Subsidiary.
(c) All outstanding shares of capital stock of each
Consolidated Subsidiary are duly authorized, validly issued, fully paid and
nonassessable and are owned as set forth in the written notice delivered
pursuant to Section 4.13(a), directly or indirectly, beneficially and of record
by the Company, free and clear of all Liens other than Permitted Liens.
(d) Except as contemplated by the Transaction Documents:
(1) none of the Company and its Consolidated Subsidiaries is a
party to or has any knowledge of any agreement or arrangement
restricting the voting or transfer of any Equity Securities of a
Consolidated Subsidiary;
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(2) none of the Company and its Consolidated Subsidiaries is a
party to or subject to any agreement providing for the issuance of any
Equity Securities;
(3) none of the Company and its Consolidated Subsidiaries is
subject to any obligation, contingent or otherwise, to repurchase or
otherwise acquire or retire any Equity Securities of any Subsidiary;
and
(4) except for statutory restrictions of general application and
the provisions of each of the Credit Agreement, the Indenture, the
Subordinated Debentures and the Convertible Preferred Stock, there are
no legal, contractual or other restrictions on the payment of
dividends on any shares of the capital stock of any Consolidated
Subsidiary.
(e) Equity Securities of a Consolidated Subsidiary that
were issued and reacquired by the Consolidated Subsidiary were so reacquired
(and, if reissued, so reissued) in compliance with all applicable Regulations,
and neither the Company nor the Consolidated Subsidiary has any liability with
respect to the reacquisition or reissuance of the Equity Securities.
SECTION 4.14 PROPERTY.
(a) Each of the Company and its Consolidated Subsidiaries
owns, leases or licenses all real property and personal property, tangible or
intangible, other than Oil and Gas Interests, that are used or useful in its
business and operations as now conducted and proposed to be conducted, the
failure to own, lease or license which, individually or in the aggregate, could
have a Material Adverse Effect. Each of the properties, tangible or intangible,
so owned, leased, licensed or used by the Company or Consolidated Subsidiary, as
the case may be, are reflected in the financial statements referred to in
Section 4.5 in the manner and to the extent required to be reflected therein by
GAAP (other than any properties disposed of in the ordinary course of business,
consistent with past practice).
(b) Except as previously disclosed to the Purchaser in
writing, which writing makes reference to this Agreement, the Company or a
Consolidated Subsidiary has good and marketable title to, or in the case of
leased or licensed property has valid leasehold interests in or licenses to,
each of the properties (other than Oil and Gas Interests), tangible or
intangible, so owned, leased, licensed or used by the Company or the
Consolidated Subsidiary, as the case may be. The right, title and interest of
the Company or the Consolidated Subsidiary, as the case may be, in and to each
of those properties is free and clear of all Liens other than Permitted Liens.
(c) The Company or a Subsidiary has Good Title to such
portion of the Oil and Gas Interests included or reflected in the engineering
reports described in Section 4.15(a) and reflected in the financial statements
referred to in Section 4.5 (other than any Oil and Gas Interests disposed of
since the respective dates thereof in the ordinary course of business consistent
with past practices).
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SECTION 4.15 OIL AND GAS INTERESTS.
(a) The Company has furnished or made available to the
Purchaser a copy of the report entitled "Estimated Future Reserves and Income
Attributable to Certain Leasehold and Royalty Interests" prepared by Ryder,
Scott & Company (the "INDEPENDENT ENGINEERS"), dated as of December 31, 1994
setting forth the estimated future reserves and income attributable to the Oil
and Gas Interests of the Company and its Consolidated Subsidiaries.
(b) All logs, reservoir reports, production reports, cost
and expense data, tax information, pricing data, engineering and technical data,
geological and geophysical data, and all other data and information, in each
case to the extent furnished by the Company and its Consolidated Subsidiaries to
the Independent Engineers in preparing the reports referred to in Section
4.15(a), were consistent in all material respects with, or were provided without
adjustment in the form available on the internal records of the Company and its
Consolidated Subsidiaries.
(c) Since the acquisition of each Oil and Gas Interest by
the Company or a Consolidated Subsidiary, (i) with respect to each Oil and Gas
Interest operated by the Company or a Consolidated Subsidiary, such Oil and Gas
Interest has been operated in a reasonable manner and in accordance with
generally prevailing standards of the oil and gas industry for similarly
situated properties and (ii) with respect to each Oil and Gas Interest operated
by a person other than the Company or a Consolidated Subsidiary, the Company or
such Consolidated Subsidiary has maintained records with respect to such Oil and
Gas Interests in a reasonable manner and in accordance with generally prevailing
standards of the oil and gas industry applicable to non-operated interests in
oil and gas properties.
(d) Except as previously disclosed to the Purchaser in
writing, which writing makes reference to this Agreement:
(1) the oil and gas leases giving rise to Oil and Gas Interests
of the Company and its Consolidated Subsidiaries are in full force and
effect and, with respect to all Oil and Gas Interests of the Company
and its Consolidated Subsidiaries, neither the Company nor any
Consolidated Subsidiary has been advised by any lessor or any other
party of any default under any such oil and gas leases or other
Contract, which default has not heretofore been cured in all respects,
in each case except to the extent the failure of such Oil and Gas
Interest to be in full force and effect or the presence of such
default could not, individually or in the aggregate, have a Material
Adverse Effect;
(2) neither the Company nor any Consolidated Subsidiary is
currently in breach of or in default under any obligations under any
oil and gas lease or other Contract giving rise to a material Oil and
Gas Interest owned by the Company or the Consolidated Subsidiary, as
the case may be;
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(3) except for amounts held in suspense in accordance with
prudent industry practice, the Company and each Consolidated
Subsidiary has made or has caused to be made proper and timely
payments (including but not limited to royalties, delay rentals and
shut-in royalties), due under the oil and gas leases and other
Contracts giving rise to any material Oil and Gas Interests owned by
the Company or the Consolidated Subsidiary, as the case may be;
(4) the Company and each Consolidated Subsidiary is being paid,
in all material respects, its percentage of the net revenue interests
included in their respective Oil and Gas Interests, without suspense
and without indemnity other than those customarily found in the oil
and gas industry;
(5) the Company and each Consolidated Subsidiary has fulfilled
all material requirements for filings, certificates, disclosures of
parties in interest and other similar matters contained in (or
otherwise applicable thereto by Regulation) their respective Contracts
and is fully qualified to own and hold their respective Oil and Gas
Interests;
(6) no other party to a material Contract to which any of the
Company or a Consolidated Subsidiary is a party has given or
threatened to give notice of any Action to terminate, cancel, rescind
or procure a judicial reformation of any such Contract or any
provision thereof; and
(7) there are no express obligations to engage in continuous
development operations (i.e., drilling additional wells) in order to
maintain any Contract giving rise to any material Oil and Gas Interest
of the Company or a Consolidated Subsidiary.
(e) Except as reflected in the financial statements
referred to in Section 4.5 or as otherwise previously disclosed to the Purchaser
in writing, which writing makes reference to this Agreement, neither the Company
nor any Consolidated Subsidiary:
(1) is obligated by virtue of a prepayment arrangement under any
gas contract containing a "take or pay" or similar provision, a
production payment (other than the Production Payments) or any other
arrangement to deliver a material amount of gas or oil attributable to
their respective Oil and Gas Interests at some future time without
then or thereafter receiving full payment therefor; or
(2) has received any funds or payments from purchasers of
production of gas under gas contracts which are subject to a potential
refund, which refunds, individually or in the aggregate, if required
to be made would have a Material Adverse Effect.
(f) Except as previously disclosed to the Purchaser in
writing, which writing makes reference to this Agreement:
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(1) all of the producing wells located on lands included in any
Oil and Gas Interests of the Company and the Consolidated Subsidiaries
have been drilled and completed within the boundaries of such lands or
within the limits otherwise permitted by contract, pooling or unit
agreement, lease instrument and by Regulation;
(2) all drilling and completion of the wells included in the Oil
and Gas Interests of the Company and the Consolidated Subsidiaries and
all development and operations on such Oil and Gas Interests have been
conducted in compliance with all applicable Regulations and licenses;
and
(3) except as may be reflected in the engineering reports
referred to in Section 4.15(a), no well located on lands included in
any Oil and Gas Interests of the Company and the Consolidated
Subsidiaries is subject to penalties on allowables because of any
overproduction (legal or illegal) which would prevent the full legal
and regular allowable (including maximum permissible tolerance) as
prescribed by any Governmental Body to be assigned to any such well;
except with respect to such failures of compliance which, individually or in the
aggregate, could have a Material Adverse Effect.
(g) Except as previously disclosed to the Purchaser in
writing, which writing makes reference to this Agreement:
(1) there exist no material impairments to any Approvals granted
by the Bureau of Land Management, Mineral Management Services, the
Bureau of Indian Affairs, the United States Geological Survey or any
other federal Governmental Body in the United States of America or to
any Approvals granted by any federal or provincial Governmental Body
in Canada, in each case with respect the assignments by the Company
and the Consolidated Subsidiary of an interest in any such federal or
provincial leases to any party; and
(2) the Company and each Consolidated Subsidiary has complied in
all material respects with all Regulations applicable to such federal
or provincial leases.
(h) Except as previously disclosed to the Purchaser in
writing, which writing makes reference to this Agreement, as of the most recent
date or dates before the date hereof for which information is available, with
respect to the Oil and Gas Interests of the Company and the Consolidated
Subsidiaries which are subject to a gas contract and a balancing agreement with
respect to the production of petroleum or other similar agreement, there has not
been delivered to or for the account of the Company or a Consolidated Subsidiary
more production of gas than the amount to which such person is entitled and none
of the Company and its Consolidated Subsidiaries is subject to any material
"make up" deliveries of gas out of such person's proportionate share of
production.
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SECTION 4.16 EQUIPMENT.
(a) Except with respect to Equipment in which the Company
or a Consolidated Subsidiary has an interest by virtue of the ownership of a
non-operating interest in an Oil and Gas Interest, the Company or a Consolidated
Subsidiary has exclusive possession and control of Equipment in which the
Company or the Consolidated Subsidiary, as the case may be, has an interest, the
failure to have exclusive possession and control of which, individually or in
the aggregate, could have a Material Adverse Effect.
(b) The Equipment and other personal property of the
Company or a Consolidated Subsidiary, the loss of use, forfeiture or other
disposition of which, individually or in the aggregate, could have a Material
Adverse Effect, are in good condition and repair, except for ordinary wear and
tear, are suitable and adequate for the uses for which they are used and
intended and to carry on the business of the Company or the Consolidated
Subsidiary as now conducted and as proposed to be conducted, comply in all
material respects with the terms and conditions of all agreements relating to
the Equipment and other personal property of the Company or the Consolidated
Subsidiary, as the case may be, and are in conformity in all material respects
with all Regulations and all decisions, rulings, orders and awards of any
arbitrator applicable to its or its business, properties or operations of any
Governmental Body currently in effect, scheduled to come into effect or proposed
to be adopted, entered or issued, as the case may be.
SECTION 4.17 LEASES.
(a) The Company has previously disclosed to the Purchaser
in writing, which writing makes reference to this Agreement, a correct and
complete description and list of the Leases in which the Company or a
Consolidated Subsidiary has an interest, whether as lessor or lessee, the
failure to hold which, individually or in the aggregate, could have a Material
Adverse Effect.
(b) Each such Lease in which the Company or a Consolidated
Subsidiary has an interest has, to the knowledge of the Company and the
Consolidated Subsidiary with respect to parties other than the Company or the
Consolidated Subsidiary, as the case may be, been duly authorized, executed and
delivered by all parties to such Lease, is in full force and effect and
constitutes the legal, valid and binding obligations of the parties to such
Lease or their respective successors or assigns, enforceable against them in
accordance with the terms of such Lease. There is no material liability or
obligation of the Company or the Consolidated Subsidiary, as the case may be,
with respect to any such Lease that, under the terms of such Lease, is required
to be paid or otherwise performed or is required to have been paid or otherwise
performed, in each case as of the date of this Agreement, but that has not been
paid or otherwise performed in full. Except as the Company has previously
disclosed to the Purchaser, there exists no default under any such Lease by any
party. The conclusion of any one or more of the Transactions will not (and will
not give any person a right to) terminate or
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modify any rights of, or accelerate or increase any obligation of, the Company
or any Consolidated Subsidiary under any such Lease.
SECTION 4.18 SECURITIES.
(a) The Company has previously disclosed to the Purchaser
in writing, which writing makes reference to this Agreement, a correct and
complete description and list of the Securities in which the Company or a
Consolidated Subsidiary has an interest as of the date of this Agreement, other
than the shares of capital stock of the Subsidiaries referred to in Section
4.13(a). Except as contemplated by the Transaction Documents, the right, title
and interest of the Company or a Consolidated Subsidiary in, to and under each
of the Securities is free and clear of all Liens other than Permitted Liens.
(b) Each of the Securities that is an equity security is
duly authorized, validly issued, fully paid and non-assessable. Each of the
Securities that is a debt security is duly authorized and validly issued and
constitutes the legal, valid and binding obligation of the issuer thereof and
each guarantor thereof except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally and general principles of equity, including, without
limitation, concepts of materiality, reasonableness, good faith and fair dealing
and the possible unavailability of specific performance or injunctive relief,
regardless of whether considered in a proceeding in equity or at law. All of
the Securities are owned, beneficially and of record, by the Company or a
Consolidated Subsidiary.
(c) Except as contemplated by the Transaction Documents and
except as previously disclosed by the Company to the Purchaser in writing, which
writing makes reference to this Agreement:
(1) except with respect to the Archean Shareholders Agreement,
there is no agreement or arrangement restricting the voting or
transfer of the Securities;
(2) the Company or the Consolidated Subsidiary, as the case may
be, is not subject to any obligation, contingent or otherwise, to sell
or otherwise transfer any of the Securities; and
(3) except for statutory restrictions of general application and
the provisions of the Convertible Preferred Stock, the Indenture, the
Subordinated Debentures and the Credit Agreement, there are no legal,
contractual or other restrictions on the payment of principal,
interest, dividends or other distributions or amounts on or in respect
of any of the Securities.
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SECTION 4.19 PROPRIETARY RIGHTS.
(a) The Company has previously disclosed to the Purchaser
in writing, which writing makes reference to this Agreement, a correct and
complete description and list of all Proprietary Rights in which the Company or
a Consolidated Subsidiary has an interest, the failure to hold which,
individually or in the aggregate, could have a Material Adverse Effect. The
conclusion of the Transactions will not (and will not give any person a right
to) terminate or modify any rights of, or accelerate or increase any obligation
of, the Company or any Consolidated Subsidiary under any such Proprietary Right.
None of the Company and its Consolidated Subsidiaries has received notice that
the validity of any such Proprietary Right or its title to or use of any such
Proprietary Right is being questioned in any Action.
(b) The Company or a Consolidated Subsidiary has good title
to each of the interests created by such Proprietary Rights. The right, title
and interest of the Company or a Consolidated Subsidiary in and to each such
Proprietary Right is free and clear of all Liens other than Permitted Liens.
(c) None of the Company and its Consolidated Subsidiaries
has reason to believe that any use has been or is being made of any such
Proprietary Right by any person other than the Company, the Consolidated
Subsidiary or a person duly authorized to make that use. All such Proprietary
Rights used by the Company or a Consolidated Subsidiary but previously owned or
held by any of its directors, officers, employees or agents have been duly
transferred to the Company or the Consolidated Subsidiary, as the case may be.
(d) There is no liability or obligation of the Company or a
Consolidated Subsidiary with respect to any such Proprietary Right that is
required to have been paid or otherwise performed, as of the date of this
Agreement, that has not been paid or otherwise performed in full.
SECTION 4.20 INSURANCE. The Company and each Consolidated
Subsidiary is insured with reputable insurers against all risks normally insured
against in accordance with generally prevailing practices in the oil and gas
industry and all of such insurance policies and bonds maintained by or for the
benefit of the Company and each Consolidated Subsidiary are in full force and
effect. The Company and its Consolidated Subsidiaries maintain insurance with
reputable insurance companies in such amounts and covering such risks as are
usually carried by companies engaged in the same or similar business and
similarly situated. There are no currently outstanding material losses for
which the Company or a Consolidated Subsidiary has failed to give or present
notice or claim under any policy. There are no requirements by any insurance
company or by any board of fire underwriters or other body exercising similar
functions or by any Governmental Body of which the Company has knowledge
requiring any repairs or other work to be done to any of the properties owned,
leased, licensed or used by the Company or a Consolidated Subsidiary or
requiring any equipment or facilities to be installed on or in connection with
any of the properties, the failure to complete which could result in the
cancellation of the policy of insurance. Policies for all the insurance are in
full force and effect
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<PAGE>
and none of the Company and its Consolidated Subsidiaries is in default in any
material respect under any of the policies. None of the Company and its
Consolidated Subsidiaries has knowledge of the cancellation or proposed
cancellation of any of the insurance or of any proposed increase in the
contributions for workers' compensation or unemployment insurance or of any
conditions or circumstances applicable to the business of the Company or the
Consolidated Subsidiary, as the case may be, which might result in a material
increase in those contributions.
SECTION 4.21 DEBT. The Company has previously disclosed to the
Purchaser in writing, which writing makes reference to this Agreement, a correct
and complete description and list of the following:
(a) all credit agreements, indentures, purchase agreements,
Guarantees, Capitalized Leases and other Investments, agreements and other
arrangements presently in effect providing for or relating to Debt in any amount
greater than $1,000,000 in respect of which the Company or a Consolidated
Subsidiary is in any manner directly or contingently obligated;
(b) the maximum principal or face amounts of such Debt
outstanding or which may be outstanding under each of those agreements and other
arrangements;
(c) the maturity date or dates of such Debt.
Except as disclosed by the Company to the Purchaser in writing, which writing
makes reference to this Agreement, the conclusion of any one or more of the
Transactions will not (and will not give any person a right to) terminate or
modify any rights of, or accelerate or increase any obligation of, the Company
or any Consolidated Subsidiary with respect to any such Debt. Without limiting
the generality of the foregoing, upon obtaining the consent referred to in
Section 6.1(a)(1), the conclusion of one or more of the Transactions will not
constitute or give rise to a "Change of Control" within the meaning of the
Indenture and will not require the Company to undertake any offer to purchase,
or to purchase, any Subordinated Debentures pursuant to Section 4.18 of the
Indenture or otherwise.
SECTION 4.22 NO DEFAULT. Except as previously disclosed to the
Purchaser in writing, which writing makes reference to this Agreement, neither
the Company nor any of its Consolidated Subsidiaries is in default in respect of
any obligation under any agreement, indenture, purchase agreement, Guarantee,
Capitalized Lease and other Investment referred to in Section 4.21(a), which
default either alone or together with any other default, entitles another party
thereto, with the giving of notice or the passage of time or both, to terminate
the rights and obligations of the parties thereunder or with respect thereto or
to accelerate or increase any obligation of the Company or any of its
Subsidiaries thereunder.
SECTION 4.23 CAPITALIZATION.
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(a) The authorized capital stock of the Company consists of
(1) 112,000,000 shares of Common Stock and (2) 10,000,000 shares of preferred
stock, par value $.01 per share, consisting of (A) a class of 7,350,000 shares
of preferred stock (the "SENIOR PREFERRED STOCK"), of which up to (x) 5,444,425
shares may be issued in a series designated as "$.75 Convertible Preferred
Stock" (the "$.75 CONVERTIBLE PREFERRED STOCK") and (y) as of the Second Closing
Date, 620,000 shares will be authorized to be issued in a series designated as
"Second Series Convertible Preferred Stock", and (B) a class of 2,650,000 shares
of preferred stock (the "JUNIOR PREFERRED STOCK"), of which up to 1,000,000
shares may be issued in a series designated "First Series Junior Preferred
Stock" (the "RIGHTS PREFERRED STOCK.").
(b) As of March 31, 1995, there were (1) 28,250,647 shares
of Common Stock issued and outstanding, (2) 44,664 shares of Common Stock held
in the treasury of the Company, (3) 3,270,000 shares of Common Stock reserved
for issuance upon exercise of outstanding stock options issued by the Company to
current and former employees of the Company and its Consolidated Subsidiaries
(the "EMPLOYEE OPTIONS") (of which 1,490,000 shares with an exercise price of
$3.00 per share and of which 1,780,000 shares with an exercise price of $5.00
per share, are exercisable), (4) 10,083,406 shares of Common Stock reserved for
issuance upon conversion of the $.75 Convertible Preferred Stock, (5) 1,244,715
shares of Common Stock reserved for issuance upon exercise of warrants at an
exercise price of $3.00 per share issued under the Warrant Agreement dated as of
December 31, 1991, between the Company and Mellon Securities Trust Company, as
Warrant Agent, successor to The Chase Manhattan Bank (National Association) (the
"EXISTING WARRANTS"), (6) 2,880,973 shares of $.75 Convertible Preferred Stock
issued and outstanding, (7) 1,244,715 Existing Warrants issued and outstanding,
each of which, upon exercise, entitles the holder thereof to purchase one share
of Common Stock at a price of $3.00 per share and (8) 282,507 shares of Rights
Preferred Stock reserved for issuance upon the exercise of the rights (the
"RIGHTS") distributed to the holders of shares of Common Stock pursuant to the
Rights Agreement dated as of October 14, 1993 between the Company and Mellon
Securities Trust Company, as Rights Agent (the "RIGHTS AGREEMENT"), none of
which are issued or outstanding.
(c) As of the date hereof, there are (1) 5,500,000 shares
of Common Stock reserved for issuance upon conversion of the Purchaser Note
Conversion Shares, (2) 13,300,000 shares of Common Stock reserved for issuance
as Purchaser Additional Shares, (3) 19,444,444 shares of Common Stock reserved
for issuance upon exercise of the Tranche A Warrants, (4) 11,250,000 shares of
Common Stock reserved for issuance upon exercise of the Tranche B Warrants, (5)
620,000 shares of Second Series Convertible Preferred Shares reserved for
issuance as Purchaser Preferred Shares and (6) 6,200,000 shares of Common Stock
reserved for issuance as Purchaser Preferred Conversion Shares.
(d) Except as set forth above and except as provided in the
Transaction Documents, no Equity Securities of the Company are issued, reserved
for issuance or outstanding.
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(e) All outstanding shares of capital stock of the Company
are, and all shares which may be issued pursuant to the exercise of the Employee
Options or the Existing Tranche A Warrants, the conversion of the $.75
Convertible Preferred Stock or the Purchaser Preferred Shares (if the same shall
be executed and delivered) or pursuant to the terms of this Agreement, the
Purchaser Note, the Tranche A Warrants (if the same shall be executed and
delivered) or the Tranche B Warrants (if the same shall be executed and
delivered), as the case may be, will be, when issued, duly authorized, validly
issued, fully paid and nonassessable and, except as provided in the Transaction
Documents, are not subject to preemptive rights.
(f) Except with respect to the outstanding shares of Common
Stock, the Employee Options, the Existing Warrants, the $.75 Convertible
Preferred Stock, the Rights and the Transaction Documents, there are no
outstanding bonds, debentures, notes or other indebtedness or other securities
of the Company having the right to vote (or convertible into, or exchangeable
for, securities having the right to vote) on any matters on which shareholders
of the Company may vote.
(g) Except with respect to the Employee Options, the
Existing Warrants, the $.75 Convertible Preferred Stock, the Rights, and the
Transaction Documents, there is no agreement or arrangement restricting the
voting or transfer of the Equity Securities of the Company;
(h) Except with respect to the Employee Options, the
Existing Warrants, the $.75 Convertible Preferred Stock, the Rights and the
Transaction Documents, there are no outstanding securities, options, warrants,
calls, rights, commitments, agreements, arrangements or undertakings of any kind
to which the Company or any of its Subsidiaries is a party or by which any of
them is bound obligating the Company or any of its Subsidiaries to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares of
capital stock or other Equity Securities of the Company or of any of its
Subsidiaries or obligating the Company or any of its Subsidiaries to issue,
grant, extend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking.
(i) Except with respect to the Rights and the obligations
of the Company under this Agreement, there are no outstanding contractual
obligations, commitments, understandings or arrangements of the Company or any
of its Subsidiaries to repurchase, redeem or otherwise acquire, require or make
any payment in respect of any shares of Equity Securities of the Company or any
of its Subsidiaries.
(j) Except with respect to statutory restrictions of
general application and the provisions of the $.75 Convertible Preferred Stock,
the Purchaser Preferred Shares, the Indenture, the Subordinated Debentures and
the Credit Agreement, there are no legal, contractual or other restrictions on
the payment of dividends or other distributions or amounts on or in respect of
any of the Equity Securities of the Company.
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(k) Except as contemplated by the Registration Rights
Agreements, there are no agreements or arrangements to which the Company or any
of its Subsidiaries is a party pursuant to which the Company is or could be
required to register shares of Common Stock or other securities under the
Securities Act.
(l) Equity Securities of the Company that were issued and
reacquired by the Company were so reacquired (and, if reissued, so reissued) in
compliance with all applicable Regulations, and the Company has no liability
with respect to the reacquisition or reissuance of the Equity Securities.
SECTION 4.24 ENVIRONMENTAL MATTERS.
(a) Each of the Company and its Subsidiaries and, to the
knowledge of the Company, each operator of any Oil and Gas Interests has
obtained all environmental, health and safety permits, licenses and other
authorizations required under all Environmental Laws to carry on its business as
now being or as proposed to be conducted, except to the extent failure to have
any such permit, license or authorization would not have a Material Adverse
Effect. Each of such permits, licenses and authorizations is in full force and
effect and each of the Company and its Subsidiaries and each operator of any Oil
and Gas Interests is in compliance with the terms and conditions thereof, and is
also in compliance with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in any applicable Environmental Law or in any regulation, code, plan,
order, decree, judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder, except to the extent failure to comply
therewith would not have a Material Adverse Effect.
(b) Except as previously disclosed to the Purchaser in
writing, which writing makes reference to this Agreement:
(1) no written notice, notification, demand, request for
information, citation, summons or order has been issued, no complaint
has been filed, no penalty has been assessed and, to the knowledge of
the Company, no investigation or review is pending or threatened by
any Governmental Body or other entity with respect to any alleged
failure by the Company or any of its Subsidiaries to have any
environmental, health or safety permit, license or other authorization
required under any Environmental Law in connection with the conduct of
the business of the Company or any of its Subsidiaries or with respect
to any generation, treatment, storage, recycling, transportation,
discharge or disposal, or any Environmental Release of any Hazardous
Materials generated by the Company or any of its Subsidiaries
(collectively, an "ENVIRONMENTAL NOTICE"), and, to the knowledge of
the Company, there is no Environmental Notice against any operator of
any Oil and Gas Interest;
(2) none of the Company, its Subsidiaries or, to the knowledge
of the Company, any operator of any Oil and Gas Interest owns,
operates or leases a treatment,
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storage or disposal facility requiring a permit under the Resource
Conservation and Recovery Act of 1976, as amended, or under any
comparable state or local statute; and
(A) to the knowledge of the Company, no polychlorinated
biphenyls (PCB's) are or have been present at any site or
facility now or previously owned, operated or leased by the
Company or any of its Subsidiaries in excess of concentrations
allowed by Environmental Laws;
(B) to the knowledge of the Company, no friable asbestos or
asbestos-containing materials are present at any site or facility
now or previously owned, operated or leased by the Company or any
of its Subsidiaries in excess of concentrations allowed by the
Environmental Laws;
(C) to the knowledge of the Company after due inquiry,
there are no underground storage tanks or surface impoundments
for Hazardous Materials, active or abandoned, at any site or
facility now or previously owned, operated or leased by the
Company or any of its Subsidiaries except such as are or were (at
the time owned, operated or leased by the Company or any of its
Subsidiaries) in compliance with Environmental Laws; and
(D) to the knowledge of the Company, there has not been any
Environmental Release of Hazardous Materials at, on or under any
site or facility now or previously owned, operated or leased by
the Company or any of its Subsidiaries in violation of any
Environmental Laws.
(3) to the knowledge of the Company, neither the Company nor any
of its Subsidiaries has transported or arranged for the transportation
of any Hazardous Material to any location that is listed on the
National Priorities List ("NPL") under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended
("CERCLA"), listed for possible inclusion on the NPL by the
Environmental Protection Agency in the Comprehensive Environmental
Response and Liability Information System, as provided for by 40
C.F.R. 300.5 ("CERCLIS"), or on any similar state or local list or
that is the subject of Federal, state or local enforcement actions or
other investigations that may lead to Environmental Claims against the
Company or any of its Subsidiaries;
(4) there has not been any Environmental Release, recycling,
treatment, storage or disposal of Hazardous Material generated by the
Company or any of its Subsidiaries or by any operator of Oil and Gas
Interests in violation of Environmental Laws at any location other
than those previously disclosed to the Purchaser in writing, which
writing makes reference to this Agreement;
(5) no oral or written notification of an Environmental Release
of a Hazardous Material in violation of an Environmental Law has been
filed by or on behalf of the
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Company or any of its Subsidiaries or, to the knowledge of the
Company, by any operator of Oil and Gas Interests, and no site or
facility now or previously owned, operated or leased by the Company or
any of its Subsidiaries is listed or proposed for listing on the NPL,
CERCLIS or any similar state list of sites requiring investigation or
clean-up;
(6) no Liens have arisen under or pursuant to any Environmental
Laws on any site or facility owned, operated or leased by the Company
or any of its Subsidiaries, and no government action has been taken or
is in process that could subject any such site or facility to such
Liens and, to the knowledge of the Company, neither the Company nor
any of its Subsidiaries is required to place any notice or restriction
relating to the presence of Hazardous Materials at any site or
facility owned by it in any deed to the real property on which such
site or facility is located;
(7) there have been no environmental investigations, studies,
audits, tests, reviews or other analyses conducted by or that are in
the possession of the Company or any of its Subsidiaries in relation
to any site or facility now or previously owned, operated or leased by
the Company or any of its Subsidiaries which have not been made
available to the Purchaser;
(8) any Hazardous Material handled or dealt with in any way in
connection with the business, properties or operations of the Company
or a Subsidiary, whether before or during the period the same have
been under the control of the Company or the Subsidiary, as the case
may be, has been and is being handled or dealt with in all respects in
substantial compliance with applicable Regulations and otherwise in a
manner that could not have a Material Adverse Effect;
(9) no sewage, waste or by-product is being or has been
discharged, spilled on or stored, processed or treated at, any real
property or other facilities now or previously owned, leased, licensed
or used by the Company or a Subsidiary, including, but not limited to,
the Real Property, the Leaseholds and the Oil and Gas Interests, which
discharge, spill, storage, processing or treatment could have a
Material Adverse Effect;
(10) during the five years ending on the date of this Agreement,
no employee or other person has made a written claim or demand or, to
the knowledge of the Company, an oral claim or demand against the
Company or a Subsidiary based on alleged damage to health caused by
any Hazardous Material or by any sewage, waste or by-product;
(11) during the five years ending on the date of this Agreement,
none of the Company and its Subsidiaries has been charged in writing
by any Governmental Body or, to the knowledge of the Company, any
other person with improperly using, handling, storing, discharging or
disposing of any Hazardous Material or with causing or
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permitting any pollution of any ground water aquifer, surface
waters or other lakes, streams, rivers or bodies of water in violation
of Environmental Laws.
SECTION 4.25 BOOKS AND RECORDS.
(a) The records and books of account of each of the Company
and its Consolidated Subsidiaries are correct and complete in all material
respects, have been maintained in accordance with good business practices and
are reflected accurately in the financial statements referred to in Section 4.5.
Each of the Company and its Consolidated Subsidiaries has accounting controls
sufficient to insure that its transactions are (1) executed in accordance with
management's general or specific authorization and (2) recorded in conformity
with GAAP so as to maintain accountability for assets.
(b) The minute books of each of the Company and its
Consolidated Subsidiaries contain accurate records of all meetings and
accurately reflect all corporate action of the shareholders and the board of
directors (including committees) of the Company or the Consolidated Subsidiary,
as the case may be.
(c) The stock books and ledgers of each of the Company and
its Consolidated Subsidiaries correctly record all transfer and issuances of all
capital stock of the Company or the Consolidated Subsidiary, as the case may be,
and contain all cancelled and unused stock certificates of the Company or the
Consolidated Subsidiary, as the case may be.
SECTION 4.26 MATERIAL CONTRACTS. The Company has previously
disclosed to the Purchaser in writing, which writing makes reference to this
Agreement, a correct and complete description and list of the following
(collectively, the "MATERIAL CONTRACTS"):
(1) agreements with investment bankers, brokers, finders,
consultants and advisers engaged by the Company or a Consolidated
Subsidiary with respect to the Transactions or other transactions
contemplating the recapitalization of the Company or the Consolidated
Subsidiary, the purchase or sale by the Company or a Consolidated
Subsidiary of assets not in the ordinary course of business or the
issuance and sale by the Company or a Consolidated Subsidiary of any
Equity Securities or Debt of the Company or the Consolidated
Subsidiary, as the case may be;
(2) agreements with any shareholder having beneficial ownership
of 5% or more of the shares of Common Stock then issued and
outstanding, director or officer of the Company or a Consolidated
Subsidiary and all shareholders' agreements and voting trusts; and
(3) agreements not made in the ordinary course of business and
which are materially adverse to the business of the Company or a
Consolidated Subsidiary.
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SECTION 4.27 MISSTATEMENTS. Except to the extent revised or
superseded by a subsequent certificate, schedule or report furnished to the
Purchaser, no information, certificate, schedule or report furnished by the
Company to the Purchaser with respect to the Company or a Consolidated
Subsidiary in connection with the negotiation of any Transaction Document or the
satisfaction of any condition under any Transaction Document contained as of the
date thereof any untrue statement of a material fact or omitted to state a
material fact necessary to make the statement contained therein, in the light of
the circumstances under which it was made, not misleading.
SECTION 4.28 SEC DOCUMENTS. The Company has filed with the
Securities and Exchange Commission all reports, schedules, forms, statements and
other documents required by the Exchange Act to be filed by the Company since
January 1, 1993 (collectively, and in each case including all exhibits and
schedules thereto and documents incorporated by reference therein, the "SEC
DOCUMENTS"). The Company has delivered or made available to the Purchaser all
SEC Documents. As of their respective dates, except to the extent revised or
superseded by a subsequent filing with the Securities and Exchange Commission,
the SEC Documents complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and none of the SEC
Documents (including any and all financial statements included therein) as of
such dates contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The consolidated financial statements of the Company and the
Consolidated Subsidiaries included in all SEC Documents, including any
amendments thereto (the "SEC FINANCIAL STATEMENTS"), comply as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the Securities and Exchange Commission with respect
thereto.
SECTION 4.29 RECOMMENDATIONS. The Board of Directors of the
Company, at a meeting duly called and held, has duly (1) determined that the
Transactions, taken as a whole, are in the best interests of the Company and its
shareholders, (2) resolved to recommend that holders of shares of Common Stock
approve the Transactions (collectively, the "RECOMMENDATIONS") and (3) approved
the Transaction Documents and the Transactions, which approval constitutes
approval of each of the Transaction Documents and each of the Transactions for
purposes of Section 912 of the NYBCL if the provisions thereof were to apply to
any of the Transaction Documents or any of the Transactions. Dillon, Read & Co.
Inc. has delivered to the Board of Directors of the Company its written opinion
to the effect that the terms of the Transactions, taken as a whole, represent a
reasonable means under the circumstances of raising capital for the Company and
that it is reasonable to conclude that the consideration to be received by the
Company in the Transactions is fair to the Company and the common shareholders
of the Company from a financial point of view.
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SECTION 4.30 REQUIRED VOTE. The affirmative vote of a majority
of the shares of the Common Stock voted at the duly convened Shareholders
Meeting (or any other duly convened meeting of the holders of the Common Stock)
is the only vote of the holders of any class or series of the Equity Securities
of the Company necessary to approve the Transaction Documents and the
Transactions. None of the First Closing Transactions is required to be approved
by the holders of shares of any class of Equity Securities of the Company.
SECTION 4.31 SECTION 912 OF THE NYBCL. The provisions of
Section 912 of the NYBCL do not apply to any of the Transaction Documents and
Transactions. The Company has taken all steps necessary to irrevocably exempt
the Transactions from any other applicable state takeover law and, except with
respect to Section 4.18 of the Indenture, from any applicable charter or
contractual provision containing anti-takeover provisions. No provision of the
certificate of incorporation or bylaws of the Company would, directly or
indirectly, restrict or impair the right or ability of the Purchaser to vote, or
otherwise to exercise the rights and receive the benefits of a shareholder with
respect to, Equity Securities of the Company that may be acquired or controlled
by the Purchaser or permit any other shareholder to acquire securities of the
Company on a basis not available to the Purchaser if the Purchaser were to
acquire Equity Securities of the Company.
SECTION 4.32 NO MERGER AGREEMENTS. None of the Company and its
Consolidated Subsidiaries has entered into any agreement with any person which
has not been terminated as of the date of this Agreement and under which there
remains any liability or obligation of any of the Company and its Consolidated
Subsidiaries with respect to a merger or consolidation with any of the Company
and its Consolidated Subsidiaries, an acquisition of any Equity Securities of
any of the Company and its Consolidated Subsidiaries or any other acquisition of
a substantial amount of the assets of any of the Company and its Consolidated
Subsidiaries.
SECTION 4.33 AGGREGATE MATERIAL ADVERSE EFFECT. There is no
circumstance or event that satisfies all of the following conditions: (a) such
circumstance or event, whether considered individually or in the aggregate with
all other such circumstances and events, constitutes a breach of one or more
representations, warranties, covenants or other agreements of the Company or any
of its Consolidated Subsidiaries in any Transaction Document or that would
constitute such a breach if such representation, warranty, covenant or agreement
did not include a reference therein to the possible occurrence of a Material
Adverse Effect, (b) such circumstance or event negatively affects, or could
negatively affect, the value of the Company and the Consolidated Subsidiaries,
taken as a whole, in the amount of $250,000 or more and (c) such circumstance or
event, considered in the aggregate with all other such circumstances and events,
could constitute a Material Adverse Effect.
SECTION 4.34 CONTINUING REPRESENTATIONS AND WARRANTIES. Each of
the representations and warranties made with respect to the Company or a
Consolidated Subsidiary in this Agreement or in any other Transaction Document
as of any date other than a Closing Date shall be true and correct in all
material respects on and as of the Closing Date except as
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otherwise contemplated by such Transaction Document, and except that the Company
will prepare and deliver to the Purchaser such updates or other revisions of the
written disclosures referred to in this Article IV as have been delivered by the
Company to the Purchaser as shall be necessary in order to make each of such
written disclosures correct and complete in all material respects on and as of
the Closing Date. The requirement to prepare and deliver updates or other
revisions of the written disclosures, and the receipt by the Purchaser of
information pursuant to Section 6.1 or otherwise on or before a Closing Date,
shall not limit the right of the Purchaser under Article III to require as a
condition precedent to the performance of its obligations under this Agreement
on such Closing Date the accuracy in all material respects of the
representations and warranties and the performance in all material respects of
the covenants of the Company made in the Transaction Documents (without regard
to such updates or other revisions) and to receive an unqualified certificate
with respect to the same.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF THE PURCHASER
The Purchaser represents and warrants as follows:
SECTION 5.1 CORPORATE EXISTENCE AND POWER. The Purchaser (1) is
a corporation duly incorporated, validly existing and in good standing under the
laws of the State of Kansas, (2) has all necessary corporate and all material
licenses, authorizations, consents and approvals required to own, lease, license
or use its properties now owned, leased, licensed or used and proposed to be
owned, leased, licensed or used and to carry on its business as now conducted
and proposed to be conducted, (3) is duly qualified as a foreign corporation
under the laws of each jurisdiction in which both (A) qualification is required
either (i) to own, lease, license or use its properties now owned, leased,
licensed or used or (ii) to carry on its business as now conducted and (B) the
failure to be so qualified could materially and adversely affect either or both
of (i) the business, properties, operations, prospects or condition (financial
or otherwise) of the Purchaser and (ii) the ability of the Purchaser to perform
its obligations under any Transaction Document to which it is or may become a
party and (4) has all necessary corporate power and authority to execute and
deliver each Transaction Document to which it is or may become a party.
SECTION 5.2 AUTHORIZATION; CONTRAVENTION. Subject to obtaining
the Approvals referred to in Section 5.3, the execution and delivery by the
Purchaser of each Transaction Document to which it is or may become a party and
the performance by it of its obligations under each of those Transaction
Documents have been duly authorized by all necessary corporate action and do not
and will not (1) contravene, violate, result in a breach of or constitute a
default under, (A) its articles of incorporation or bylaws, (B) any Regulation
or any decision, ruling, order or award of any arbitrator by which the Purchaser
or any of its properties may be bound or affected, including, but not limited
to, the Hart-Scott-Rodino Act or (C) any agreement,
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indenture or other instrument to which it is a party or by which it or its
properties may be bound or affected or (2) result in or require the creation or
imposition of any Lien on any property now owned or hereafter acquired by it.
SECTION 5.3 APPROVALS. Except with respect to the Approval
required under the Hart-Scott-Rodino Act, no Approval of any Governmental Body
or other person is required or advisable on the part of the Purchaser, for (1)
the due execution and delivery by the Purchaser of any Transaction Document, (2)
the conclusion of the Transactions and (3) the performance by the Purchaser of
its obligations under each Transaction Document to which it is or may become a
party. Each Approval shall have been obtained, all actions by each person
required to be taken in connection with each Approval shall have been taken and
all prescribed waiting, review or appeal periods with respect to each Approval
shall have terminated or expired, as the case may be, in each case on or before
each Closing Date.
SECTION 5.4 BINDING EFFECT. Each Transaction Document to which
the Purchaser is or may become a party is, or when executed and delivered in
accordance with this Agreement will be, the legally valid and binding obligation
of the Purchaser, enforceable against it in accordance with its terms, except as
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting creditors' rights generally and general
principles of equity, including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing and the possible unavailability of
specific performance or injunctive relief, regardless of whether considered in a
proceeding in equity or at law.
SECTION 5.5 LITIGATION. There is no Action pending or, to the
Purchaser's knowledge, threatened against the Purchaser or, to its knowledge,
any other person or that involves any of the Transactions or any property owned,
leased, licensed or used by the Purchaser that, individually or in the
aggregate, if determined adversely to the party or the other person, could
materially and adversely affect the ability of the Purchaser to perform its
obligations under any Transaction Document to which it is or may become a party.
SECTION 5.6 COMPLIANCE WITH LAWS. The Purchaser is neither in,
nor has received notice of a, violation of or default with respect to any
Regulation of any Governmental Body or any decision, ruling, order or award of
any arbitrator applicable to it or its business, properties or operations, which
violation or default, individually or in the aggregate, could materially and
adversely affect the ability of the Purchaser to perform its obligations under
any Transaction Document to which it is or may become a party. On each Closing
Date, the Purchaser shall be in full compliance with all of the provisions of
the Hart-Scott-Rodino Act.
SECTION 5.7 INVESTMENT INTENT. The Purchaser acknowledges that
the Company is issuing and selling the Purchaser Note (and, upon conversion
thereof, the Purchaser Note Conversion Shares), the Purchaser Additional Shares,
the Purchaser Preferred Shares (and, upon conversion thereof, the Purchaser
Preferred Conversion Shares) and the Tranche A Warrants (and, upon exercise
thereof, the Tranche A Warrant Shares) pursuant to the terms of the Transaction
Documents in reliance upon the exemption afforded by Section 4(2) of the
Securities
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Act for transactions by an issuer not involving any public offering. The
Purchaser represents that (1) it is acquiring such securities for investment and
without any view toward distribution of any of the securities to any other
person, (2) it will not sell or otherwise dispose of the securities except in
compliance with the registration requirements or exemption provisions under the
Securities Act and (3) before any sale or other disposition of any of such
securities other than in a sale registered under the Securities Act, or pursuant
to Rule 144 under the Securities Act unless the Company shall have been advised
by counsel that the sale does not meet the requirements of Rule 144 for the
sale, it will deliver to the Company an opinion of counsel reasonably
satisfactory to the Company to the effect that such registration is unnecessary.
SECTION 5.8 FEES FOR BROKERS AND FINDERS. The Purchaser has not
authorized any person to act as financial advisor, broker, finder or other
intermediary that might be entitled to any fee, commission, expense
reimbursement or other payment of any kind from the Purchaser upon the
conclusion of or in connection with any of the Transactions.
SECTION 5.9 FINANCIAL ABILITY. The Purchaser has sufficient
financial resources to perform its obligations on the First Closing Date and the
Second Closing Date.
SECTION 5.10 CONTINUING REPRESENTATIONS AND WARRANTIES. Each of
the representations and warranties made by the Purchaser in this Agreement or in
any other Transaction Document as of a date other than a Closing Date shall be
true on and as of each Closing Date except as otherwise contemplated by the
Transaction Documents.
ARTICLE VI
COVENANTS OF THE COMPANY
SECTION 6.1 AFFIRMATIVE COVENANTS.
(a) PRIOR TO THE FIRST CLOSING DATE. The Company agrees
that prior to the First Closing Date, the Company shall do the following:
(1) CONSENT OF HOLDERS OF SUBORDINATED DEBENTURES. The Company
shall obtain the consent of the holders of not less than a majority of
the outstanding principal amount of the Subordinated Debentures with
respect to the Transaction Documents and the Transactions, on terms
and conditions that shall have been approved by the Purchaser, which
approval may not be unreasonably withheld.
(2) CONSENT OF BANKS. The Company shall obtain the consent of
the Banks (as defined in the Credit Agreement) with respect to the
Transaction Documents and the Transactions on terms and conditions
that shall have been approved by the Purchaser, which approval may not
be unreasonably withheld.
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(3) CONSENT OF CERTAIN EMPLOYEES. The Company shall obtain from
each employee with whom the Company or any Subsidiary has entered into
a severance agreement a waiver of the obligation of the Company or the
Subsidiary thereunder with respect to a Change of Control (as defined
therein) as a consequence of the Transactions or as a consequence of
the acquisition by the Purchaser or its Affiliates, at any time on and
after the First Closing Date, of beneficial ownership or the right to
acquire beneficial ownership of Equity Securities of the Company.
(b) PRIOR TO THE SECOND CLOSING DATE. The Company agrees
that, prior to the Second Closing Date, the Company shall, and with respect to
the matters subject to clauses (2) through (9), inclusive, of this Section
6.1(b), shall cause each of its Consolidated Subsidiaries to do the following:
(1) SHAREHOLDERS MEETING; PREPARATION OF PROXY STATEMENT.
(A) The Company, acting through its Board of Directors, shall,
in accordance with applicable law, as soon as practicable following
the execution and delivery of this Agreement (i) duly call, give
notice of, convene and, subject to Section 6.1(b)(1)(D), hold the
annual meeting of its shareholders (including any adjournments
thereof, the "SHAREHOLDERS MEETING") for the purpose, among other
things, of considering and taking action upon the Transaction
Documents and the Transactions, and prepare and file with the
Securities and Exchange Commission a proxy statement (such proxy
statement including the form of proxy and all such other materials
distributed in connection therewith, as amended or supplemented from
time to time, the "PROXY STATEMENT"), (ii) use its best efforts (x) to
obtain and furnish the information required to be included by it in
the Proxy Statement and, after consultation with the Purchaser respond
promptly to any comments made by the Securities and Exchange
Commission with respect to the Proxy Statement and any preliminary
version thereof and cause the Proxy Statement to be mailed to its
shareholders at the earliest practicable time following the execution
and delivery of this Agreement and (y) to solicit proxies in favor of
the Transactions and otherwise obtain the approval by its shareholders
of the Transactions and (iii) cause the Proxy Statement and the
distribution thereof to comply in all material respects with the
Exchange Act and ensure that the Proxy Statement will not, at the date
the Proxy Statement (or any amendment thereof or supplement thereto)
is first mailed to shareholders and at the time of the Shareholders
Meeting, be false or misleading with respect to any material fact, or
omit to state any material fact required to be stated therein or
necessary in order to make the statements made therein, in the light
of the circumstances under which they are made, not misleading or
necessary to correct any statement in any earlier communication with
respect to the solicitation of proxies for the Shareholders Meeting
which has become false or misleading.
(B) Subject to the Company's right pursuant to clause (z) of the
proviso to Section 6.1(b)(2) to withdraw or modify the
Recommendations, the Company shall include in the Proxy Statement the
recommendation of its Board of Directors that holders
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of Common Stock vote in favor of the approval of the Transaction
Documents and the Transactions.
(C) Notwithstanding the other provisions of this Section 6.1(b),
the Company agrees that its obligations pursuant to Section
6.1(b)(1)(A) (including, without limitation, the obligation to submit
the Transactions to a vote of its shareholders), shall not be affected
by the withdrawal or modification of the Recommendations.
(D) If the Company is advised by its proxy solicitors prior to
the Shareholders Meeting or otherwise determines that a vote in favor
of the Transactions is not likely to be obtained at the Shareholders
Meeting, the Shareholders Meeting shall, at the request of the
Purchaser, be adjourned from time to time, provided that in no event
will the Shareholders Meeting be required hereunder to be held more
than fifty days from the date that the Proxy Statement was first
mailed to the Company's shareholders, which fifty day period shall be
extended by the number of days, if any, that the Company is enjoined
from soliciting proxies in connection with the Shareholders Meeting or
that the holding of the Shareholders Meeting or the vote thereat is
enjoined.
(2) NO SOLICITATION. None of the Company and its
Consolidated Subsidiaries shall, nor shall any of the Company and its
Consolidated Subsidiaries authorize or permit any of its officers, directors or
employees or any financial advisor, attorney, accountant or other representative
retained by it to,
(A) solicit, initiate or encourage (including, without
limitation, by way of furnishing information), any inquiry or the
making of any proposal to the Company or its shareholders from any
person (other than (1) the Purchaser or any Affiliate of, or any
person acting in concert with, the Purchaser, and (2) the persons
previously identified by the Company to the Purchaser) which
constitutes, or may reasonably be expected to lead to, in each case
whether in one transaction or in a series of transactions, (i) an
acquisition from the Company or its shareholders of any Equity
Securities of any of the Company and its Consolidated Subsidiaries
(other than the Transactions), (ii) any acquisition of a substantial
amount of assets of any of the Company and its Consolidated
Subsidiaries, (iii) a merger or consolidation of any of the Company
and its Consolidated Subsidiaries or (iv) any tender offer (including
a self-tender offer) or exchange offer, recapitalization, liquidation,
dissolution or similar transaction involving any of the Company and
its Consolidated Subsidiaries (other than the Transactions) or any
other transaction the consummation of which would or could reasonably
be expected to impede, interfere with, prevent or materially delay the
conclusion of any of the Transactions or which would or could
reasonably be expected to materially reduce the benefits to the
Purchaser of the Transactions (collectively, the "TRANSACTION
PROPOSALS") or agree to or endorse any Transaction Proposal; or
(B) enter into or participate in any discussions or negotiations
regarding any of the foregoing, or furnish to any other person any
information with respect to the
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business, properties, operations, prospects or conditions (financial
or otherwise) of the Company and its Consolidated Subsidiaries or any
of the foregoing, or otherwise cooperate in any way with, or assist or
participate in, facilitate or encourage, any effort or attempt by any
other person to do or seek any of the foregoing;
PROVIDED, HOWEVER, that the foregoing clauses (i) and (ii) of Section
6.1(b)(2)(A) and 6.1(b)(2)(B) shall not prohibit the Company from (x) furnishing
to a third party who has made a written Transaction Proposal information
pursuant to an appropriate confidentiality letter concerning the Company and its
Consolidated Subsidiaries and the business, properties, operations, prospects or
conditions (financial or otherwise) of the Company and its Consolidated
Subsidiaries, (y) engaging in discussions or negotiations with such a third
party who has made such a Transaction Proposal or (z) following receipt of a
Transaction Proposal, taking and disclosing to its shareholders a position
contemplated by Rule 14e-2(a) under the Exchange Act or changing the
Recommendations, but in each case referred to in the foregoing clauses (x)
through (z) only after the Board of Directors of the Company concludes in good
faith that such action is necessary or appropriate in order for the Board of
Directors of the Company to act in a manner which is consistent with its
fiduciary obligations under applicable law. If the Board of Directors of the
Company receives a Transaction Proposal, then the Company shall promptly inform
the Purchaser of the terms and conditions of such proposal and the identity of
the person making the Transaction Proposal and shall keep the Purchaser
generally informed with reasonable promptness of any steps it is taking pursuant
to the proviso to this Section 6.1(b)(2) with respect to the Transaction
Proposal.
(3) RIGHTS AGREEMENT. Amend the Rights Agreement to the
effect that (A) the execution or the delivery of one or more of the Transaction
Documents or the conclusion of one or more of the Transactions (including,
without limitation, (i) the acquisition by the Purchaser or any of its
Affiliates of the Purchaser Note, the Purchaser Note Conversion Shares, the
Purchaser Additional Shares, the Purchaser Preferred Shares, the Purchaser
Preferred Conversion Shares, the Tranche A Warrants, the Tranche A Warrant
Shares, the JEDI/Purchaser Option, the Tranche B Warrants, the Tranche B Warrant
Shares and such other shares and securities as may be acquired by the Purchaser
or any of its Affiliates pursuant to the terms of the Purchaser Note, the
Purchaser Preferred Shares (or the Certificate), the Tranche A Warrants, the
JEDI/Anschutz Option or the Tranche B Warrants and (ii) the "beneficial
ownership" (as defined in the Rights Agreement) by any of the Purchaser and its
Affiliates of any of the foregoing) will not cause or permit the Rights to
become exercisable, the Rights to be separated from the stock certificates to
which they are attached or any provision of the Rights Agreement to apply to the
Purchaser or any other person by reason of or in connection with the Transaction
Documents or the Transactions, including, without limitation, the designation of
the Purchaser or any other person as an Acquiring Person (as defined in the
Rights Agreement), the occurrence of a Distribution Date (as defined in the
Rights Agreement) and the occurrence of a Shares Acquisition Date (as defined in
the Rights Agreement) and (B) for the purposes of the Rights Agreement, none of
the Purchaser and its Affiliates shall at any time be deemed to be the
Beneficial Owner (as defined in the Rights Agreement) of the shares of Common
Stock and other securities referred to in the preceding clause (A); PROVIDED,
HOWEVER, that such amendment shall
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not effect any amendment of the Rights Agreement with respect to the acquisition
or beneficial ownership of Voting Securities (as defined in the Rights
Agreement) that are not referred to in the preceding clause (A) that may be
acquired or owned beneficially by any of the Purchaser and its Affiliates from
time to time.
(4) MAINTENANCE OF RECORDS. Keep adequate records and
books of account reflecting all its financial transactions, keep minute books
containing accurate records of all meetings and accurately reflecting all
corporate action of its shareholders and its board of directors (including
committees) and keep stock books and ledgers correctly recording all transfers
and issuances of all capital stock.
(5) MAINTENANCE OF PROPERTIES. Maintain, keep and preserve
all its real property and personal property used or useful in the proper conduct
of its business in good working order and condition, ordinary wear and tear
excepted.
(6) CONDUCT OF BUSINESS. Except as otherwise contemplated
by the Transaction Documents, continue to engage in an efficient and economical
manner solely in a business of the same general type as conducted by it on the
date of this Agreement in the ordinary course, consistent with past practices;
and use its best efforts to preserve the business of the Company and its
Consolidated Subsidiaries and to preserve the goodwill of customers, suppliers
and others having business relations with the Company and its Consolidated
Subsidiaries.
(7) MAINTENANCE OF INSURANCE. Maintain insurance such that
the representations and warranties stated in Section 4.20 shall at all times
remain true.
(8) COMPLIANCE WITH LAWS. Comply in all respects with each
Regulation of all Governmental Bodies and each decision, ruling, order or award
of all arbitrators applicable to it or its business, properties or operations,
including, but not limited to, all of the provisions of the Hart-Scott-Rodino
Act, if a failure to comply with any of the foregoing, individually or in the
aggregate, could materially and adversely affect its business, properties,
operations, prospects or condition (financial or otherwise) of the Company and
its Consolidated Subsidiaries, taken as a whole, or the ability of the Company
or the Consolidated Subsidiary, as the case may be, to perform its obligations
under any Transaction Document to which it is or may become a party.
(9) PAYMENT OF TAXES. Timely file all Tax Returns that are
required to be filed by it and pay before they become delinquent all Taxes due
pursuant to those Tax Returns or any assessment received by it or otherwise
required to be paid, except Taxes being contested in good faith by appropriate
proceedings and for which adequate reserves or other provisions are maintained,
and except for the filing of such Tax Returns as to which the failure to file
could not, individually or in the aggregate, have a Materially Adverse Effect.
(10) REPORTING REQUIREMENTS. Furnish to the Purchaser:
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(A) ADVERSE EVENTS. Promptly after the occurrence, or failure
to occur, of any such event, information with respect to any event (A)
which could have a Material Adverse Effect, (B) which, if known as of
the date of this Agreement, would have been required to be disclosed
to the Purchaser or (C) which would be likely to cause any
representation or warranty contained in any Transaction Document with
respect to the Company or a Subsidiary to be untrue or inaccurate in
any material respect at any time from the date of this Agreement to
the Second Closing Date;
(B) MONTHLY FINANCIAL STATEMENTS. As soon as available, and in
any event within 35 days after the end of each month, the consolidated
balance sheet of the Company and its Consolidated Subsidiaries as of
the end of the month and the related consolidated statements of income
and retained earnings and changes in financial position for the
portion of the fiscal year of the Company ended with the last day of
the month, all in reasonable detail and stating in comparative form
the respective consolidated figures for the corresponding date and
period in the previous fiscal year (subject to year-end adjustments);
(C) QUARTERLY FINANCIAL STATEMENTS. As soon as available and in
any event within 50 days after the end of each of the first three
quarters of each fiscal year of the Company, the consolidated balance
sheet of the Company and its Consolidated Subsidiaries as of the end
of the quarter and the related consolidated statements of operations,
shareholders' equity and change in financial position for the portion
of the fiscal year ended with the last day of the quarter, all in
reasonable detail and stating in comparative form the respective
consolidated figures for the corresponding date and period in the
previous fiscal year and certified by the chief financial officer of
the Company (subject to year-end adjustments);
(D) ANNUAL FINANCIAL STATEMENTS. As soon as available and in
any event within 95 days after the end of each fiscal year of the
Company, the consolidated balance sheet of the Company and its
Consolidated Subsidiaries as of the end of the fiscal year and the
related consolidated statement of operations, shareholders' equity and
change in financial position for the fiscal year, all in reasonable
detail and stating in comparative form the respective consolidated
figures for the corresponding date and period in the prior fiscal year
and accompanied by an opinion acceptable to the Purchaser by KPMG Peat
Marwick LLP or other independent accountants of recognized national
standing selected by the Company;
(E) NOTICE OF LITIGATION. Promptly after the commencement of
each such matter, notice of all Actions affecting the Company or a
Consolidated Subsidiary that, if adversely determined, could
materially and adversely affect the business, properties, operations,
prospects or condition (financial or otherwise) of the Company and its
Consolidated Subsidiaries, taken as a whole, or the ability of the
Company or the Consolidated Subsidiary, as the case may be, to perform
its obligations under any Transaction Document to which it is or may
become a party;
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(F) ACCESS TO INFORMATION. Afford to the Purchaser, and to the
officers, employees, financial advisors, attorneys, accountants and
other representatives of the Purchaser, reasonable access during
normal business hours to all its properties, books, contracts
commitments, personnel and records; furnish as promptly as practicable
to the Purchasers and their respective representatives such
information with respect to the business, properties, operations,
prospects or conditions (financial or otherwise) of the Company and
its Consolidated Subsidiaries as they may from time to time reasonably
request; and to the extent reasonably requested by the Purchaser,
cause its employees, independent public accountants and other
representatives to, provide information regarding the Company to, and
otherwise cooperate with, the Purchaser so as to enable the Purchaser
to account for its investment in the Company and prepare financial
statements in accordance with GAAP;
(G) REPORTS TO CREDITORS. Promptly after the furnishing of each
such document, copies of any statement or report furnished to any
party pursuant to the terms of the Credit Agreement, the JEDI Loan
Agreement, the Indenture or the $.75 Convertible Preferred Stock or,
at the request of the Purchaser, any other indenture, loan or credit
or similar agreement and not otherwise required by any other clause of
this Section 6.1 to be furnished to the Purchaser;
(H) PROXY STATEMENTS, ETC. Promptly after the sending or filing
of each such document, copies of all proxy statements, financial
statements and reports which the Company sends to its shareholders,
and copies of all regular, periodic and special reports and all
registration statements that the Company files with the Securities and
Exchange Commission or any Governmental Body which may be substituted
in its place or with NASDAQ/NMS; and
(I) GENERAL INFORMATION. Such other information respecting the
condition or operations, financial or otherwise, of any of the Company
and its Subsidiaries as the Purchaser may from time to time reasonably
request.
SECTION 6.2 NEGATIVE COVENANTS. The Company agrees that, before
the Second Closing Date and except as contemplated by the Transaction Documents
or with the prior approval of the Purchaser, the Company shall not, and shall
not permit any of its Consolidated Subsidiaries to, do any of the following or
to enter into any agreement or other arrangement (other than the Transaction
Documents) with respect to any of the following:
(a) CHARTER DOCUMENTS. Amend its articles of incorporation
or certificate of incorporation, as the case may be, or its bylaws.
(b) CAPITALIZATION. Issue any shares of capital stock or
other Equity Securities other than Permitted Issuances, except that the Company
may enter into an agreement or arrangement restricting the voting or transfer of
any shares of the capital stock of any of the Company and its Consolidated
Subsidiaries.
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(c) LIENS. Create, incur, assume, or suffer to exist any
Lien upon or with respect to any of its properties, now owned or hereafter
acquired, except Permitted Liens.
(d) DEBT. Create, incur, assume or suffer to exist any
Debt other than:
(1) the Subordinated Debentures and "Permitted Indebtedness"
within the meaning of the Indenture (giving effect to other terms and
provisions of the Indenture that are directly or indirectly
incorporated or referenced by the definition of "Permitted
Indebtedness"); and
(2) Debt the existence of which, without regard to the giving of
notice, the passage of time or the existence or occurrence of any
other condition, does not permit the holder of any other Debt of the
Company or a Consolidated Subsidiary in an amount greater than
$100,000 to cause such other Debt to become due and payable or to seek
to enforce or realize upon its rights in or with respect to property
or assets of the Company or the Consolidated Subsidiary, as the case
may be, that secure such Debt.
(e) RESTRICTED PAYMENTS. Declare or make any Restricted
Payment or permit a Consolidated Subsidiary to acquire for value any Equity
Securities of any of the Company and its Subsidiaries.
(f) INVESTMENTS. Make or acquire any Investment in any
person other than:
(1) "Permitted Investments" within the meaning of the Indenture
(giving effect to other terms and provisions of the Indenture that are
directly or indirectly incorporated or referenced by the definition of
"Permitted Liens"); and
(2) other Investments in Subsidiaries existing on the date of
this Agreement, including any extension of the maturity, renewal,
refunding or modification of those Investments, and all amendments,
extensions, modifications, refundings, renewals and substitutions of
those Investments, but only if the aggregate amount of Investments so
permitted shall not increase except as a result of the accrual of
interest, dividends and other amounts payable in respect of those
Investments.
(g) MERGERS, ETC. Merge or consolidate with any person,
sell, lease, license or otherwise dispose of all or substantially all of its
assets (whether now owned or hereafter acquired) to any person or acquire all or
substantially all of the assets or the business of any person, in each case
whether in one transaction or in a series of transactions, except that a
Consolidated Subsidiary may merge into or transfer assets to the Company or a
Wholly-Owned Consolidated Subsidiary.
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(h) LEASES. Create, incur, assume or suffer to exist,
pursuant to a Guarantee or otherwise, any obligation as lessee for the rental or
hire of any real or personal property, except the following:
(1) Capitalized Leases that are Permitted Liens;
(2) leases existing on the date of this Agreement and any
extensions or renewals of those leases; and
(3) leases (other than Capitalized Leases) entered into in the
ordinary course of business, consistent with past practices.
(i) SALE AND LEASEBACK. Transfer any real or personal
property to any person and thereafter directly or indirectly lease back the same
or similar property.
(j) SALE OF ASSETS. Transfer any of its assets now owned
or hereafter acquired (including, but not limited to, shares of stock and
indebtedness of Subsidiaries and leasehold interests) except the following:
(1) hydrocarbons or other mineral products disposed of in the
ordinary course of business, excluding, without limitation, production
payment obligations recorded either as liabilities or as deferred
revenue in accordance with GAAP;
(2) assets transferred for fair value;
(3) assets transferred that are no longer used or useful in the
conduct of its business.
(k) CONFIDENTIAL INFORMATION. Except as otherwise
expressly permitted by the proviso to the first sentence of Section 6.1(b)(2)
with respect to a Transaction Proposal or pursuant to confidentiality agreements
with respect to the business, properties and operations of the Company and its
Consolidated Subsidiaries in effect as of the date of this Agreement or entered
into thereafter in the ordinary course of business and consistent with past
practice, use or disclose to any person (other than (1) the Purchaser or any
Affiliate of, or any person acting in concert with, the Purchaser, and (2) the
persons previously identified by the Company to the Purchaser), except as
required by law, any material non-public information concerning the business,
properties, operations, prospects or condition (financial or otherwise) of the
Company and its Consolidated Subsidiaries.
(l) COMPLIANCE WITH ERISA. Permit there to occur an
Employee Plan Event that results in any material liability of the Company or a
Subsidiary to an Employee Plan of any of the Company and its Subsidiaries.
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(m) TRANSACTIONS WITH AFFILIATES. Enter into any
transaction (including, but not limited to, the purchase, sale or exchange of
property or the rendering of any service) with any Affiliate except as
contemplated by the Transaction Documents or in the ordinary course of its
business, consistent with past practices, pursuant to the reasonable
requirements of its business and upon fair and reasonable terms no less
favorable to it than it would obtain in a comparable arm's length transaction
with a person not an Affiliate.
(n) ACCOUNTING CHANGES. Make or permit any significant
change in accounting policies or reporting practices, except for any change
required by GAAP, in the opinion of the Company's independent accountants.
(o) STOCK. Create any class of capital stock, whether
voting or nonvoting, other than those in existence on the date of this
Agreement, or alter, modify or otherwise change any rights, preferences,
privileges, qualifications or limitations of or on any existing class of its
capital stock or authorize or, except as otherwise expressly permitted by
Section 6.3(b), issue any additional shares of any existing class of its capital
stock or cancel any of its existing capital stock.
(p) STOCK OF SUBSIDIARY. Transfer any shares of capital
stock of any Subsidiary, except in connection with a transaction permitted by
Section 6.2(g).
(q) COMPENSATION. Permit an increase in the amount of
accrued cash compensation of any executive officer of any of the Company and its
Consolidated Subsidiaries (including base salaries and bonuses of all types,
whether paid or accrued) in excess of that accruing as of January 1, 1995 or
permit the adoption or amendment of any bonus, profit sharing, compensation,
severance, termination, stock option, stock appreciation right, pension,
retirement, employment or other employee benefit agreement, trust, plan or other
arrangement for the benefit or welfare of any director, officer or employee of
any of the Company and its Consolidated Subsidiaries or permit the payment of
any benefit not required by any existing agreement or place any assets in any
trust for the benefit of employees or directors of any of Company and its
Consolidated Subsidiaries; PROVIDED, HOWEVER, that notwithstanding the
foregoing, (1) any amendments required to be made to the provisions of any
employee pension plan which is intended to be qualified under Section 401(a) of
the Code in order to maintain such qualified status may be made, (2) employee
severance agreements in effect as of the date of this Agreement and disclosed to
the Purchaser in writing, which writing makes reference to this Agreement may be
extended to a date not later than December 15, 1997 without modification
(subject to Section 6.1(a)(3) and except with respect to the expiration thereof
and the percentage amount of ownership of Voting Stock (as defined in the
Indenture) at which a "Change of Control" (as defined therein) shall be deemed
to occur).
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(r) RECOMMENDATIONS. Subject to clause (z) of the proviso
to Section 6.1(b)(2), withdraw or modify the Recommendations.
(s) UNION CONTRACTS. Enter into or amend any agreements
with any labor union or other collective bargaining group, other than in the
ordinary course of business.
(t) TAXES. Make any tax election or settle or compromise
any income tax liability.
(u) SETTLE LITIGATION. Settle or compromise any litigation
(whether or not commenced prior to the date of this Agreement) or settle, pay or
compromise any claims not required to be paid (which are not payable or
reimbursable under policies of insurance maintained by or on behalf of any of
the Company and its Subsidiaries), individually in an amount in excess of
$50,000 and in the aggregate in an amount in excess of $200,000, other than in
consultation and cooperation with Purchaser, and, with respect to any such
settlement, with the prior written consent of Purchaser.
(v) DELISTING. Take any action which would cause any
securities of the Company currently listed on a national securities exchange or
on NASDAQ/NMS to no longer be listed on the national securities exchange or on
NASDAQ/NMS or registered pursuant to Section 13 or 15(d) of the Exchange Act,
other than with respect to any such debt securities that have become due as a
result of the maturity thereof.
(w) TRANSACTION DOCUMENTS. Amend any Transaction Document
without the prior written approval of the Purchaser, which approval may be
granted or withheld by the Purchaser in its discretion.
ARTICLE VII
ADDITIONAL COVENANTS OF THE PARTIES
SECTION 7.1 MUTUAL COVENANTS OF THE PARTIES. Each party shall
do the following until the Second Closing and, with respect to Section 7.1(h),
indefinitely after the Second Closing:
(a) MAINTENANCE OF EXISTENCE. Preserve and maintain its
corporate existence and good standing in the jurisdiction of its incorporation
and qualify and remain qualified as a foreign corporation in each jurisdiction
in which both (1) qualification is required either (A) to own, lease, license or
use its properties now owned, leased, licensed or used and proposed to be owned,
leased, licensed or used or (B) to carry on its business as now conducted or
proposed to be conducted and (2) the failure to be so qualified could materially
and adversely affect either or both of (A) the business, properties, operations,
prospects or condition (financial
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or otherwise) of the party and (B) the ability of the party to perform its
obligations under any Transaction Document to which it is or may become a party.
(b) COMPLIANCE WITH LAWS. Comply in all respects with all
Regulations of each Governmental Body and all decisions, rulings, orders and
awards of each arbitrator applicable to it or its business, properties or
operations, including, but not limited to, all of the provisions of the Hart-
Scott-Rodino Act, in connection with the Transactions.
(c) BEST EFFORTS. Upon the terms and subject to the
conditions provided in the Transaction Documents, each of the Company and the
Purchasers shall, subject to Section 9.2(c), use its best efforts to take, or
cause to be taken, all action, and to do, or cause to be done, and to assist and
cooperate with the other party hereto in doing all things necessary, proper or
advisable under applicable Regulations to ensure that the conditions set forth
in Article III and to the conclusion of the Transactions are satisfied and to
conclude and make effective, in the most expeditious manner practicable, the
Transactions including, without limitation, using its best efforts to obtain all
necessary Approvals.
(d) NASDAQ/NMS. The Company shall take all action
required, if any, to cause the Purchaser Shares and the Tranche B Warrant Shares
to be qualified for inclusion in the National Association of Securities Dealers
Automated Quotation/National Market System (the "NASDAQ/NMS"), and shall give
such notice as required, if any, to the National Association of Securities
Dealers, Inc. with respect to the Transaction Documents and the Transactions.
(e) NOTIFICATION. Give prompt notice to the other parties
to this Agreement or any other Transaction Document, as the case may be, of (1)
the occurrence, or failure to occur, of any event that would be likely to cause
any representation or warranty of the party contained in the Transaction
Document to be untrue or inaccurate in any material respect at any time from the
date of this Agreement to the Second Closing Date and (2) any failure of the
party to perform or otherwise comply with, in any material respect, any
covenant, condition or agreement to be performed or complied with by it under
the Transaction Documents; which covenant of notification shall not limit the
right of the other party under Article III to require as a condition precedent
to the performance of its obligations under this Agreement the continuing
accuracy and performance of the representations and warranties and covenants of
the notifying party made in the Transaction Documents and to receive an
unqualified certificate with respect to the same.
(f) PUBLICITY AND REPORTS. The initial press release with
respect to the Transactions shall be mutually satisfactory to the parties hereto
and thereafter, except as may be required by applicable laws, court process or
by obligations pursuant to any listing agreement with a national securities
exchange or on NASDAQ/NMS, neither the Company nor the Purchaser shall issue any
press release or make any public filings with respect to the Transactions,
without affording the other party the opportunity to review and comment upon
such release or filing.
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(g) CONFIDENTIALITY. The obligations of the Purchaser
under paragraphs (1) through (3), inclusive, of the letter dated March 6, 1995
between the Company and the Purchaser shall remain in full force and effect. In
addition, information disclosed by any party or its representatives to any other
party or its representatives, whether before or after the date of this
Agreement, in connection with the Transactions or the discussions and
negotiations preceding the execution of the Transaction Documents, shall be kept
confidential by the other party and its representatives and shall not be used by
those persons other than as contemplated by the Transaction Documents, except in
each case to the extent that (1) the information was known by the recipient when
received or the information is or hereafter becomes lawfully obtainable from
other sources, (2) disclosure to a Governmental Body having jurisdiction over
the parties is necessary or appropriate, (3) disclosure may otherwise be
required by applicable Regulations or (4) the duty as to confidentiality is
waived in writing by the other party. If this Agreement is terminated, each
party shall use reasonable efforts to return upon written request from the other
party all documents (and reproductions of those documents) received by it or its
representatives from the other party (and, in the case of reproductions, all
reproductions made by the receiving party) that include information not within
the exceptions contained in the preceding sentence, unless the recipients
provide assurances reasonably satisfactory to the requesting party that the
documents have been destroyed.
(h) FURTHER ASSURANCES. Promptly upon request by any other
party, correct any defect or error that may be discovered in any Transaction
Document or in the execution or acknowledgement of any Transaction Document and
execute, acknowledge, deliver, file, re-file, register and re-register, any and
all such further acts, certificates, assurances and other instruments as the
requesting party may require from time to time in order (1) to carry out more
effectively the purposes of each Transaction Document, (2) to enable the
requesting party to exercise and enforce its rights and remedies and collect any
payments and proceeds under each Transaction Document and (3) to better
transfer, preserve, protect and confirm to the requesting party the rights
granted or now or hereafter intended to be granted to the requesting party under
each Transaction Document or under each other instrument executed in connection
with any Transaction Document.
SECTION 7.2 ADDITIONAL COVENANTS OF THE COMPANY.
(a) RESERVED SHARES. The Company shall at all times
maintain, free from preemptive rights, sufficient authorized but unissued shares
of Common Stock so that the Purchaser Note Conversion Shares, the Purchaser
Additional Shares, the Purchaser Preferred Conversion Shares, the Tranche A
Warrant Shares and the Tranche B Warrant Shares may be issued and sold by the
Company in accordance with the terms of the Transaction Documents, in each case
without additional authorization of Common Stock.
(b) STATED CAPITAL FOR PURCHASER PREFERRED CONVERSION
SHARES. Prior to the receipt of the Purchaser Preferred Share Price, the Board
of Directors of the Company by resolution shall direct that $.10 of the
Purchaser Preferred Share Price per Purchaser Preferred Share shall be
transferred to stated capital in respect of each Purchaser Preferred
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Conversion Share into which a Purchaser Preferred Share is converted effective
as of the date of such conversion.
(c) LEGENDS ON TRANCHE B WARRANT SHARES. The Company shall
place on each certificate for the Tranche B Warrants and the Tranche B Warrant
Shares, and any certificate issued in exchange therefor or on conversion thereof
or upon transfer, the legends set forth in clauses (1), (2) and (4) of Section
3.4 and the following legend (the "OPTION LEGEND"):
"The shares represented by this certificate are subject to an
option to purchase contained in the JEDI/Anschutz Option dated as
of __________, 1995 from JEDI Energy Development Investments
Limited Partnership to The Anschutz Corporation."
; PROVIDED, HOWEVER, that following the date that is 36 months after the Second
Closing Date, the Option Legend can be removed from any certificate for Tranche
B Warrant Shares then outstanding.
(d) JEDI RESTRUCTURE AGREEMENT AND TRANCHE B WARRANTS.
Without the prior written approval of the Purchaser or its assigns, which
approval may be granted or withheld in its discretion, the Company (a) prior to
the Second Closing shall not amend or modify the JEDI Restructure Agreement and
(2) after the Second Closing and prior to the Termination Date (as defined in
the JEDI/Anschutz Option), shall not amend or modify the definition of "Option
Commencement Date" in the JEDI Loan Agreement, Sections 8.02 and 8.07 of the
JEDI Loan Agreement or the Tranche B Warrants.
(e) OTHER RESTRICTIONS ON THE PURCHASER. Before the
earliest of (i) the Second Closing Date, (ii) the date that is the third
anniversary of the First Closing Date and (iii) the first date after the First
Closing Date on which the Purchaser shall have beneficial ownership of less than
5% of the shares of Common Stock then issued and outstanding, the Company shall
not take or recommend to its shareholders any action which would impose
limitations on the legal rights to be enjoyed by the Purchaser as a shareholder
of the Company, other than those imposed pursuant to the express terms of the
Transaction Documents, including, without limitation, any action which would
impose restrictions on the Purchaser (1) based upon the size of its security
holdings, the business in which it is engaged or other considerations applicable
to it and not to security holders generally or (2) by means of the issuance of,
or proposal to issue, any other class of securities having voting power
disproportionately greater than the equity investment in the Company represented
by such securities or by charter or by-law amendment. The parties acknowledge
that, if the Second Closing Date shall not occur, the Rights Agreement will not
be amended to the effect stated in Section 6.1(b)(4). The parties also
acknowledge that, after the Second Closing Date, the Company will be subject to
substantially the same restrictions pursuant to Section 2.3 of the Shareholders
Agreement.
(f) CONSENTS. The Company shall not do the following:
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(1) without the prior written approval of the Purchaser, which
approval may not be unreasonably withheld, consent to the transfer of
the Tranche B Loan (or any interest therein) or the Tranche B Warrants
(or any interest therein) on or before the date that is 36 months
after the Second Closing Date.
(2) if the JEDI/Purchaser Option shall not then have been
exercised in full or terminated, without the prior written approval of
the Purchaser, which approval may be granted or withheld in the
discretion of the Purchaser, consent to, or elect to exercise, the
Conveyance Option (as defined in the JEDI Second Amendment).
(g) RIGHTS AGREEMENT. If the Company shall at any time
after the First Closing Date amend, modify or waive the Rights Agreement with
respect to any person or any Voting Securities (as defined in the Rights
Agreement) or other securities "beneficially owned" (as defined in the Rights
Agreement) by such person or otherwise, in any manner, directly or indirectly,
exempt any person or any Voting Securities or any other securities beneficially
owned by such person from the provisions, limitations or effects of the Rights
Agreement, then, concurrently therewith, the Company shall, with respect to the
Purchaser and its Affiliates and the Voting Securities and other securities
beneficially owned by any of them, take the same action with respect to the
Rights Agreement so that as a result thereof each of the Purchaser and its
Affiliates and the Voting Securities and other securities beneficially owned by
any of them are subject to the Rights Agreement in the same manner and to the
same extent as such other person and the Voting Securities or other securities
beneficially owned by such other person.
SECTION 7.3 ADDITIONAL COVENANT OF THE PURCHASER.
(a) CONDITIONS TO RELEASE OF COLLATERAL. At any time and
from time to time after the First Closing Date, the Company may obtain a Release
of the Lien in respect of all, but not a portion of, the Pledged Share
Collateral (as defined in the Share Pledge Agreement between the Company and the
Purchaser; the "COMPANY SHARE PLEDGE COLLATERAL") or the Mortgaged Property (as
defined in the Mortgage Debenture executed by the Company; the "COMPANY
MORTGAGED PROPERTY") upon compliance with the following terms and conditions on
the applicable Release Date:
(1) the Company shall have delivered written notice to the
Purchaser not less than 15 days prior to the proposed Release Date
specifying the proposed Release Date and the Pledged Share Collateral
or Mortgaged Property, as the case may be;
(2) no default in the payment of the Obligations shall have
occurred and be continuing, as of the date of the delivery of the
notice pursuant to clause (1) above or as of the Release Date or would
exist after giving effect to such Release;
(3) any of the following shall obtain:
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(A) there shall have been deposited in the Cash Collateral
Account (as defined in the Collateral Account Agreement) on or before
the Release Date cash in an amount equal to the Release Price for the
purpose of effecting such Release; or
(B) if the Company shall have requested such Release in
connection with the transfer of such Pledged Share Collateral or
Mortgaged Property, as the case may be, the Purchaser shall have
consented in writing to the Release, which consent may be granted or
withheld in the discretion of the Purchaser (except that, if the
Purchaser determines that the fair market value of the Net Release
Proceeds is equal to or greater than the Release Price of the Pledged
Share Collateral or Mortgaged Property, as the case may be, the
consent may not be unreasonably withheld), and the non-cash portion of
the Net Release Proceeds shall be transferred to the Purchaser
together with such instruments, agreements and other documents as are
necessary to grant Purchaser a perfected first priority security
interest in the non-cash portion of the Net Release Proceeds on
substantially the same terms as contained in the Security Document
under which the Lien was granted on such Collateral; or
(C) the aggregate amount of the Cash Collateral is equal to or
greater than the then outstanding principal amount of the Purchaser
Note;
(4) the Company shall have delivered to the Purchaser an
officer's certificate dated the Release Date, certifying as to the
matters referred to in clause (2) above; and
(5) all other proceedings taken or to be taken in connection
with such Release and all documents incidental thereto shall be
satisfactory, in form and substance, to the Purchaser and the
Purchaser's counsel, the Purchaser and such counsel shall have
received all such counterpart originals or certified copies of such
documents as the Purchaser may reasonably request and counsel for the
Purchaser shall have received such documents and evidence that such
counsel shall require in order to establish compliance with the
conditions set forth in this subsection.
(b) EFFECT OF RELEASE. Upon any Release of any Company
Collateral in accordance with this Section then as to that Company Collateral
only, the security interest in such Company Collateral shall be released.
(c) ADDITIONAL RELEASE. Concurrently with the Release of (1)
the Company Pledged Share Collateral, the Purchaser shall Release the Collateral
which is subject to the Lien of the Mortgage Debenture executed and delivered by
Forest Canada and (2) Collateral which is subject to the Lien of the Mortgage
Debenture executed and delivered by Forest Canada, the Purchaser will Release
the Company Pledged Share Collateral.
(d) RELEASE OF ALL COLLATERAL. Promptly following the full
satisfaction of the obligations of the Company under the Purchaser Note
(including, if applicable, the conversion of the full amount of the Purchaser
Note in accordance with the terms thereof), the Purchaser
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will cause the Collateral to be Released from the Liens of the Security
Documents.
ARTICLE VIII
HART-SCOTT-RODINO FILING
SECTION 8.1 BEST EFFORTS TO COMPLY. Each party shall from time
to time use its best efforts to comply with any applicable requirements under
the Hart-Scott-Rodino Act relating to filing and furnishing information to the
Department of Justice and the Federal Trade Commission, including, but not
limited to, the following:
(1) assisting in the preparation and filing of the "Antitrust
Improvements Act Notification and Report Form for Certain Mergers and
Acquisitions" and taking all other action required by 16 C.F.R. Parts
801-803 (or any successor form or Regulation);
(2) complying with any additional request for documents or
information made by the Department of Justice or the Federal Trade
Commission or by a court; and
(3) causing all affiliated persons of the "ultimate parent
entity" of the party within the meaning of the Hart-Scott-Rodino Act
to cooperate and assist in the filing and compliance.
SECTION 8.2 RIGHT TO TERMINATE. If the conclusion of any of the
Second Closing Transactions is challenged by the Department of Justice or the
Federal Trade Commission or any other Governmental Body by an action for
preliminary injunction to enjoin the conclusion of any of such transactions,
then the Purchaser may terminate the obligations of the Company and the
Purchaser under the Company/Purchaser Transaction Documents with respect to the
Second Closing Transactions. If a preliminary injunction is granted, then the
Purchaser may terminate the obligations of the Company and the Purchaser under
the Company/Purchaser Transaction Documents with respect to the Second Closing
Transactions by prompt written notice to the Company. If any other form of
equitable relief affecting either party is granted to the Department of Justice,
the Federal Trade Commission or any other Governmental Body, then the Purchaser
may terminate the obligations of the Company and the Purchaser under the
Company/Purchaser Transaction Documents with respect to the Second Closing
Transactions by prompt written notice to the Company.
SECTION 8.3 EXCHANGE OF INFORMATION. Each party shall exchange
information as may reasonably be requested by the other in connection with the
matters referred to in this Article.
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ARTICLE IX
TERMINATION
SECTION 9.1 TERMINATION.
(a) The obligations of the parties under Section 1.1 and
Articles VI and VII with respect to the First Closing Transactions may be
terminated at any time prior to the First Closing, and the obligations of the
parties under Sections 1.1(b), 1.2 and 7.1, clauses (a) (except with respect to
the Purchaser Note Conversion Shares), (b), (c), (d) and (f) of Section 7.2 and
Article VI may be terminated at any time prior to the Second Closing, in each
case by:
(1) the mutual consent of the Company and the Purchaser;
(2) the Company, if (A) the conditions to be satisfied by the
Purchaser set forth in Sections 3.1, 3.2 and 3.3 shall not have been
met with respect to the First Closing by May 31, 1995 or with respect
to the Second Closing by July 31, 1995 and (B) the Company shall have
paid in full to the Purchaser all amounts then owed to the Purchaser
pursuant to Section 9.2, if any;
(3) the Company, if a representation, warranty or covenant of
the Purchaser set forth in a Transaction Document is breached or
violated by the Purchaser in any material respect;
(4) the Purchaser, if the conditions to be satisfied by the
Company set forth in Sections 3.1, 3.2 and 3.3 shall not have been met
(or, in the reasonable judgment of the Purchaser, shall not be capable
of being met) with respect to the First Closing by May 31, 1995 or
with respect to the Second Closing by July 31, 1995;
(5) the Purchaser, if a representation, warranty or covenant of
the Company set forth in a Transaction Document is breached or
violated by the Company in any material respect;
(6) the Purchaser, if the Company shall have modified or amended
in any respect materially adverse to the Purchaser or withdrawn its
approval of any of the Recommendations; PROVIDED, HOWEVER, that any
communication of the Company that advises that the Company has
received a Transaction Proposal or is engaging in an activity
permitted by clauses (x) or (y) of the proviso to the first sentence
of Section 6.1(b)(2) with respect to a Transaction Proposal and that
takes no action or position with respect to the Transactions or any
Transaction Proposal shall not be deemed to be a withdrawal,
modification or amendment of the Recommendations or the Company's
approval thereof; and, PROVIDED, FURTHER, that a
"stop-look-and-listen" communication with respect to the Transactions
of the nature contemplated in Rule 14d-9(e) under the Exchange Act
made by the Company as a result of a Transaction Proposal (whether or
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not a tender offer), without more, shall not be deemed to be a
modification or amendment of the Recommendations or the Company's
approval thereof that is materially adverse to the Purchaser if,
within ten business days after the date of such communication, the
Company shall have reaffirmed its Recommendations;
(7) the Company, if there shall have occurred a Subsequent Event
and the Company shall have paid in full to the Purchaser all amounts
then owed to the Purchaser pursuant to Section 9.2;
(8) the Purchaser, if there shall have occurred a Subsequent
Event;
(9) the Purchaser, if the shareholders of the Company shall not
have approved the Transaction Documents and the Transactions on or
before July 31, 1995; or
(10) the Purchaser, if the consents referred to in Section 6.1(a)
shall not have been received by the Company on or before May 19, 1995.
(b) Any termination of the obligations of the parties shall
be made by written agreement or by written notice from the terminating party to
the other parties.
(c) The termination of the obligations of the parties under
this Section 9.1 shall not relieve any party of any liability for a breach of
any warranty, covenant or agreement, or for any misrepresentation, under this
Agreement, or be deemed to constitute a waiver of any available remedy
(including specific performance if available) for any breach or
misrepresentation.
SECTION 9.2 EXPENSES AND FEES.
(a) EXPENSES. If (1) the Purchaser shall properly
exercise any right of termination pursuant to Section 9.1(a) (other than clause
(1) thereof) or (2) the Company shall properly exercise any right of termination
pursuant to Section 9.1(a)(7), or (3) the First Closing Date shall not occur on
or before May 19, 1995 or the Second Closing Date shall not occur on or before
July 31, 1995 and, on or before the specified date, the Company shall not then
have exercised its right of termination pursuant to Section 9.1(a)(3), then, the
Company shall promptly, but in no event later than two Business Days following
written notice from the Purchaser the occurrence of an event specified in clause
(1), (2) or (3) above, together with related bills or receipts, reimburse the
Purchaser for all of its Expenses (as defined below) up to a maximum aggregate
amount of $500,000, exclusive of Mortgage Expenses (as defined below). If the
First Closing Date or the Second Closing Date, as the case may be, shall occur
thereafter, the Purchaser shall repay to the Company the amount paid by the
Company to the Purchaser pursuant to this Section 9.2(a). "EXPENSES" shall
include all reasonable out-of-pocket expenses and fees, including, without
limitation, the fees and disbursements of counsel, experts, consultants and
accountants, whether incurred prior to, on or after the date hereof, incurred
in connection with this Agreement, the other Transaction Documents or the
Transactions.
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Notwithstanding anything to the contrary contained in this Agreement and in
addition (but not duplication) of any amounts paid pursuant to the first
sentence of Section 9.2(a), the Company shall promptly, but in no event later
than two Business Days following written notice thereof, together with related
bills or receipts, reimburse the Purchaser for all of the Mortgage Expenses up
to a maximum amount of $10,000. "MORTGAGE EXPENSES" shall include all
reasonable fees and expenses of Purchaser's counsel incurred in connection with
the review of title matters with respect to properties which are the subject of
the Mortgage Debentures and the delivery of opinions to Purchaser with respect
to the Mortgage Debentures and Mortgage Debenture Deposit Agreements.
(b) COLLECTION EXPENSES. In addition to the other
provisions of this Section 9.2, the Company shall promptly, but in no event
later than two business days following written notice thereof, together with
related bills or receipts, reimburse the Purchaser for all reasonable
out-of-pocket costs, fees and expenses, including, without limitation, the
reasonable fees and disbursements of counsel and the expenses of litigation,
incurred in connection with collecting Expenses and any other fees due under
this Agreement or any of the other Transaction Documents as a result of any
willful breach by the Company of its obligations under this Section 9.2.
(c) OTHER EXPENSES. Except as otherwise provided in this
Section 9.2, whether or not the Transactions are concluded, all costs and
expenses incurred in connection with the Transaction Documents and the
Transactions shall be paid by the party incurring such expenses.
Notwithstanding the foregoing, the costs and expenses of preparing and
distributing the Proxy Statement and obtaining and complying with the antitrust
requirements of any Governmental Body shall be paid by the Company.
(d) SUBSEQUENT EVENT FEE. If a Subsequent Event shall
occur on or before the date that is the first anniversary of the date of this
Agreement (and prior to the Second Closing Date), the Company shall pay to the
Purchaser promptly following the public announcement of such Subsequent Event
the greater of (1) $1,000,000 and (2) the lesser of (A) $2,500,000 and (B) the
product of (1) 5,500,000 MULTIPLIED BY (2) the amount by which the Determined
Price exceeds $2.00.
(e) FEES FOR BROKERS AND FINDERS. Except with respect to
Batchelder & Partners, Inc., Dillon, Read & Co. Inc. and Smith Barney Inc., none
of the Company and the Consolidated Subsidiaries has authorized any person to
act as financial advisor, broker, finder or other intermediary that might be
entitled to any fee, commission, expense reimbursement or other payment of any
kind from any person upon the conclusion of or in connection with any of the
Transactions. The Company shall pay or cause to be paid to each of Batchelder &
Partners, Inc., Dillon, Read & Co. Inc. and Smith Barney Inc. the entire amount
of the fee, commission, expense reimbursement or other payment to which
Batchelder & Partners, Inc., Dillon, Read & Co. Inc. or Smith Barney Inc., as
the case may be, shall become so entitled in connection with the Transactions,
all without cost, expense or any other liability whatsoever to the Purchaser or
any other person.
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ARTICLE X
INDEMNIFICATION
SECTION 10.1 INDEMNIFICATION BY THE COMPANY.
(a) Subject to, and without limiting the effect of, any
term or provision of any Transaction Document that limits the Purchaser's
recourse against the Company in the event of a failure by the Company to perform
a certain covenant or agreement specified therein, and whether or not the First
Closing or the Second Closing or both shall occur, the Company shall indemnify
the Purchaser and its "CONTROLLING PERSONS" (within the meaning of Section 20 of
the Exchange Act) and their respective shareholders, directors, officers,
employees, agents and Affiliates against, and hold each of those persons
harmless from, any and all Losses in any way relating to or allegedly arising
out of any of the following:
(1) any breach of the representations, warranties, covenants or
agreements of the Company contained in any Transaction Document,
whether or not the Transactions are concluded or the obligations of
the parties under the Transaction Documents are terminated pursuant to
Article IX or otherwise;
(2) any untrue statement of a material fact contained in the
Proxy Statement, other notification, or any materials filed by the
Company with the Securities and Exchange Commission or distributed or
otherwise disseminated to the public (or any amendment or supplement
thereto) relating to the Transaction Documents and the Transactions or
any failure to state a material fact required to make any statement
contained therein not misleading unless the statement or omission is
based upon information furnished in writing to the Company by the
Purchaser or any other Indemnified Person expressly for inclusion in
the material in question;
(3) any other matter as to which the Company in other provisions
of this Agreement or any other Transaction Document has agreed to
indemnify any of those persons; or
(4) the failure of any of the Company and the Guarantors to pay
the Obligations in full in cash, when and as due, and otherwise in
accordance with the respective terms thereof; PROVIDED, HOWEVER, that
nothing contained in this clause (4) or elsewhere in this Article X
shall be construed (i) to obligate the Company to pay any Obligation
which is pursuant to its terms nonrecourse to either the Company or
any Guarantor or (ii) to allow the Purchaser to set off any amounts
payable to the Company with respect to any Obligation which pursuant
to its terms is nonrecourse to either the Company or any Guarantor.
The Company shall have no obligation under this Section to the Purchaser or any
other person indemnified under this Section with respect to any of the foregoing
arising primarily out of the
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gross negligence or willful misconduct of the Purchaser or the other indemnified
person, as the case may be, as determined by a final judgment of a court of
competent jurisdiction.
(b) If any Action indemnifiable under this Section shall be
brought, asserted or threatened against any person indemnified under this
Section, the indemnified person shall promptly notify the indemnifying person.
A failure to notify the indemnifying person timely or at all shall reduce the
liabilities and obligations of the indemnifying person under this Section only
to the extent the indemnifying person actually shall be prejudiced by such
failure. The indemnifying person shall assume the defense of the Action,
including the employment of counsel satisfactory to the indemnified person and
the payment of all related fees and expenses, but the indemnified person may
employ separate counsel in the Action and participate in the defense of the
Action at its own expense. However, the indemnified person may by written
notice to the indemnifying person assume the defense of the Action, including
the employment of counsel, at the expense of the indemnifying person (except
that the indemnifying person shall not be liable for the fees and expenses of
more than one such separate counsel with respect to the Action) if:
(1) without a delay that shall be prejudicial to the interests
of the indemnified person, the indemnifying person fails to take one
or more of the following actions: (A) acknowledge in writing to the
indemnified person the liability of the indemnifying person to the
indemnified person under this Section with respect to the Action, (B)
assume the defense, (C) post an indemnity or similar bond (in form and
substance satisfactory to the indemnified person) in an amount equal
to the full amount for which the indemnified person may be liable as a
result of the Action (including penalties and interest) or provide
other evidence satisfactory to the indemnified person of the ability
of the indemnifying person to pay that amount in full or (D) employ
counsel reasonably satisfactory to the indemnified person; or
(2) the persons against whom the Action shall have been brought,
asserted or threatened (including any impleaded parties) include both
the indemnified person and the indemnifying person and the indemnified
person is advised by counsel that there may be one or more legal
defenses available to the indemnified person that are different from
or additional to those available to the indemnifying person; or
(3) the indemnified person reasonably believes that the Action
or an unfavorable resolution of the Action may materially and
adversely affect the business, properties, operations, prospects or
condition (financial or otherwise) of the indemnified person and its
Affiliates other than as a result of the payment of money damages.
If the indemnified person has assumed the defense of the Action pursuant to any
of the three conditions stated above, then the indemnifying person shall not
have the right to assume the defense of the Action on behalf of the indemnified
person and the indemnified person shall have the right to control the defense,
compromise or settlement of any indemnifiable Action on behalf of and for the
account and risk of the indemnifying person. The indemnifying person shall be
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bound by the result of the defense of any Action, whether the defense shall have
been assumed by the indemnifying person or by the indemnified person, and shall
indemnify the indemnified person against, and hold the indemnified person
harmless from, all Losses in any way relating to or allegedly arising in
connection with the matter or matters that shall be the basis of the Action or
otherwise connected to the Action, except that the indemnifying person shall not
be liable for the payment of the amount of money damages provided in a
settlement of an indemnifiable Action defended by the indemnified person
pursuant to the second or third conditions stated above that shall have been
effected without the written consent of the indemnifying person, which consent
shall not be unreasonably withheld.
(c) Notwithstanding anything in this Section to the
contrary, if, in connection with an Action indemnifiable under this Section, a
Governmental Body or other person having authority or jurisdiction over a matter
or matters related to the Action shall have rendered, entered or granted a
binding judgment, decision, ruling, order or award with respect to the matter or
matters providing for the payment of money damages or the claimant and the
indemnifying party shall have agreed to settle the Action for an amount of money
damages without reservation of any rights or defenses against the indemnified
person, and if the indemnified person elects to appeal the judgment, decision,
ruling, order or award or declines to agree to the proposed settlement, as the
case may be, then the indemnified person may continue to defend the Action, free
of any participation by the indemnifying person, but the amount of any ultimate
liability of the indemnifying party under this Section with respect to Losses
related to or allegedly arising in connection with the matter or matters that
shall have been comprehended by the judgment, decision, ruling, order or award
or by the proposed settlement, as the case may be, shall then be limited to the
amount of the judgment, decision, ruling, order or award or the amount of the
proposed settlement, as the case may be, plus the other indemnified Losses of
the indemnified person relating to the matter or matters through the date of its
election to appeal or its rejection of the proposed settlement, as the case may
be.
(d) If the indemnification provided for in this Section is
unavailable to an indemnified person (other than by reason of exceptions
provided in this Section), or is insufficient to hold harmless an indemnified
person in respect of any Loss then the indemnifying person, in lieu of
indemnifying the indemnified person, shall contribute to the amount paid or
payable by the indemnified person as a result of the Loss in the proportion that
is appropriate to reflect the relative fault of the indemnifying person on the
one part and of the indemnified person on the other part in connection with the
events or circumstances which resulted in the Loss as well as any other relevant
equitable considerations. The relative fault of the indemnifying person on the
one part and of the indemnified person on the other part shall be determined by
reference to, among other things, those persons' relative intent, knowledge,
access to information and opportunity to correct or prevent the events or
circumstances resulting in the Loss. The amount of any Loss suffered, incurred
or paid any person shall be deemed to include all expenses incurred or paid by
the person in connection with investigating or defending any Action, including,
but not limited to, the fees and expenses of counsel.
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SECTION 10.2 SECURITY FOR INDEMNIFICATION OBLIGATION. If any
matter as to which the Purchaser or any other indemnified person shall have
asserted a claim under this Article or otherwise against an indemnifying person
on or before the Second Closing Date is pending or unresolved at the time any
payment is due from the Purchaser under any Transaction Document, the Purchaser
shall have the right, in addition to other rights and remedies (whether under
the Transaction Document or applicable law), to withhold from the payment an
amount equal to the amount of the claim until the matter is resolved. The
Purchaser shall act as agent for each of the other indemnified persons entitled
to any payment under this Article. If it is finally determined that a claim is
indemnifiable under this Article or is otherwise payable by the indemnifying
person, the amount of the claim may be offset against the retained payments as
of the date the retained payment was withheld and the remainder, if any, of the
retained payment shall be delivered to the indemnifying person pursuant to the
applicable Transaction Document together with interest on the remainder payable
from the date the retained payment was withheld until the remainder is paid at
the rate of 8.0% per annum.
SECTION 10.3 NO LIMITATION ON OTHER RIGHTS OF RECOVERY. The
indemnification set forth in this Article shall be in addition to any other
obligations or liabilities of an indemnifying person to an indemnified person at
common law or otherwise. The provisions of this Article shall not eliminate or
otherwise limit the right of any indemnified person or any other person to seek
to recover contribution, damages or otherwise enforce its rights against the
indemnifying person or any other person without regard to the provisions of this
Article. If at any time all or any part of any indemnification payment
hereunder is or must be rescinded or returned to the person making such
indemnity payment for any reason whatsoever (including, without limitation, the
insolvency, bankruptcy or reorganization of any person) the indemnification
obligations of the person making such payment shall be reinstated with respect
to such payment so rescinded or returned as though such payment had never been
made or received.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 NOTICES. All notices, requests and other
communications to any party or under any Transaction Document shall be in
writing. Communications may be made by telecopy or similar writing. Each
communication shall be given to the party at its address stated on the signature
pages of this Agreement or at any other address as the party may specify for
this purpose by notice to the other party. Each communication shall be
effective (1) if given by telecopy, when the telecopy is transmitted to the
proper address and the receipt of the transmission is confirmed, (2) if given by
mail, 72 hours after the communication is deposited in the mails properly
addressed with first class postage prepaid or (3) if given by any other means,
when delivered to the proper address and a written acknowledgement of delivery
is received.
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SECTION 11.2 NO WAIVERS; REMEDIES; SPECIFIC PERFORMANCE.
(a) No failure or delay by any party in exercising any
right, power or privilege under any Transaction Document shall operate as a
waiver of the right, power or privilege. A single or partial exercise of any
right, power or privilege shall not preclude any other or further exercise of
the right, power or privilege or the exercise of any other right, power or
privilege. The rights and remedies provided in the Transaction Documents shall
be cumulative and not exclusive of any rights or remedies provided by law.
(b) In view of the uniqueness of the Transactions and the
business, properties, operations, prospects and condition (financial and
otherwise) of the Company and its Consolidated Subsidiaries, neither of the
parties would have an adequate remedy at law for money damages in the event that
any of the Transaction Documents is not performed in accordance with its terms,
and therefore each of the parties agrees that the other party shall be entitled
to specific enforcement of the terms of each Transaction Document in addition to
any other remedy to which it may be entitled, at law or in equity.
SECTION 11.3 AMENDMENTS, ETC. No amendment, modification,
termination, or waiver of any provision of any Transaction Document, and no
consent to any departure by a party to a Transaction Document from any provision
of the Transaction Document, shall be effective unless it shall be in writing
and signed and delivered by the other parties to the Transaction Document, and
then it shall be effective only in the specific instance and for the specific
purpose for which it is given.
SECTION 11.4 SUCCESSORS AND ASSIGNS.
(a) The Purchaser may assign to a Wholly-Owned Subsidiary
thereof its rights and delegate its obligations under this Agreement before a
Closing; such assignee shall accept those rights and assume those obligations
for the benefit of the Company in writing in form reasonably satisfactory to the
Company. Thereafter, without any further action by any person, all references
in this Agreement to the "Purchaser", and all comparable references, shall be
deemed to be references to the transferee, but the Purchaser shall not be
released from any obligation or liability under this Agreement.
(b) Except as provided in Section 11.4(a), no party to this
Agreement may assign its rights under the Transaction Document. Any delegation
in contravention of this Section shall be void AB INITIO and shall not relieve
the delegating party of any obligation under this Agreement.
(c) The provisions of each Transaction Document shall be
binding upon and inure to the benefit of the parties to the Transaction Document
and their respective successors and permitted assigns.
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SECTION 11.5 ACCOUNTING TERMS AND DETERMINATIONS. Unless
otherwise specified, all accounting terms shall be interpreted, all accounting
determinations shall be made, all records and books of account shall be kept and
all financial statements required to be prepared or delivered shall be prepared
in accordance GAAP, applied on a basis consistent (except for changes approved
by the Company's independent public accountants) with the latest audited
financial statements referred to in Section 4.5.
SECTION 11.6 GOVERNING LAW. Each Transaction Document shall be
governed by and construed in accordance with the internal laws of the State of
New York. All rights and obligations of the Company and the Purchaser shall be
in addition to and not in limitation of those provided by applicable law.
SECTION 11.7 COUNTERPARTS; EFFECTIVENESS. Each Transaction
Document may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if all signatures were on the same instrument.
SECTION 11.8 SEVERABILITY OF PROVISIONS. Any provision of any
Transaction Document that is prohibited or unenforceable in any jurisdiction
shall, as to that jurisdiction, be ineffective to the extent of the prohibition
or unenforceability without invalidating the remaining provisions of the
Transaction Document or affecting the validity or enforceability of the
provision in any other jurisdiction.
SECTION 11.9 HEADINGS AND REFERENCES. Article and section
headings in any Transaction Document are included in the Transaction Document
for the convenience of reference only and do not constitute a part of the
Transaction Document for any other purpose. References to parties and articles
and sections in any Transaction Document are references to the parties to or the
articles and sections of the Transaction Document, as the case may be, unless
the context shall require otherwise.
SECTION 11.10 ENTIRE AGREEMENT. Except as otherwise
specifically provided in this Section, the Transaction Documents embody the
entire agreement and understanding of the respective parties and supersede all
prior agreements or understandings with respect to the subject matters of those
documents. The Purchaser shall remain subject to paragraphs (1) through (3),
inclusive, of the letter agreement dated March 6, 1995 between the Company and
the Purchaser in accordance with the terms thereof.
SECTION 11.11 SURVIVAL. Except as otherwise specifically
provided in any Transaction Document, and notwithstanding any investigation or
notice to the contrary or any waiver by any other party of a related condition
precedent to the performance by the other party of an obligation under the
Transaction Document, (1) each representation and warranty of each party to the
Transaction Document contained in or made pursuant to the Transaction Document
shall survive each Closing and remain in full force and effect until the date
that is the first anniversary of the Second Closing Date or, if the Second
Closing Date shall then not have occurred, the date that is the first
anniversary of the First Closing Date and (2) the other party
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may assert or commence an Action against the party with respect to the breach of
any such representation or warranty of the party on or before such date and may
maintain any such Action thereafter. Each covenant or agreement of a party to a
Transaction Document required to be performed on or after a Closing shall remain
in full force and effect thereafter in accordance with its terms.
SECTION 11.12 EXCLUSIVE JURISDICTION. Each party (1) agrees
that any Action with respect to any Transaction Document shall be brought
exclusively in the courts of the State of New York or of the United States of
America for the Southern District of New York, (2) accepts for itself and in
respect of its property, generally and unconditionally, the jurisdiction of
those courts and (3) irrevocably waives any objection, including, without
limitation, any objection to the laying of venue or based on the grounds of
FORUM NON CONVENIENS, which it may now or hereafter have to the bringing of any
Action in those jurisdictions; PROVIDED, HOWEVER, that any party may assert in
an Action in any other jurisdiction or venue each mandatory defense, third-party
claim or similar claim that, if not so asserted in such Action, may thereafter
not be asserted by such party in an original Action in the courts referred to in
clause (1) above.
SECTION 11.13 WAIVER OF JURY TRIAL. Each party waives any right
to a trial by jury in any Action to enforce or defend any right under any
Transaction Document or any amendment, instrument, document or agreement
delivered, or which in the future may be delivered, in connection with any
Transaction Document and agrees that any Action shall be tried before a court
and not before a jury.
SECTION 11.14 AFFILIATE. Nothing contained in the Transaction
Documents shall constitute the Purchaser an "affiliate" of any of the Company
and its Subsidiaries within the meaning of Rule 13e-3 under the Exchange Act.
SECTION 11.15 NON-RECOURSE. No recourse under any of the
Transaction Documents shall be had against any "controlling person" (within the
meaning of Section 20 of the Exchange Act) of any party or the shareholders,
directors, officers, employees, agents and Affiliates of the party or such
controlling persons, whether by the enforcement of any assessment or by any
legal or equitable proceeding, or by virtue of any Regulation, it being
expressly agreed and acknowledged that no personal liability whatsoever shall
attach to, be imposed on or otherwise be incurred by such controlling person,
shareholder, director, officer, employee, agent or Affiliate, as such, for any
obligations of the party under this Agreement or any other Transaction Document
or for any claim based on, in respect of or by reason of such obligations or
their creation.
___________________________
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IN WITNESS WHEREOF, the parties have executed and delivered this
Purchase Agreement as of the date first written above in New York, New York.
FOREST OIL CORPORATION
By: /S/ WILLIAM L. DORN
---------------------------
William L. Dorn
Chairman and Chief Executive Officer
Address: Forest Oil Corporation
1500 Colorado National Building
950 - 17th Street
Denver, Colorado 80202
Telecopy: (303) 592-2510
THE ANSCHUTZ CORPORATION
By: /S/ PHILIP F. ANSCHUTZ
--------------------------
Philip F. Anschutz
Chairman and President
Address: The Anschutz Corporation
2400 Anaconda Tower
555 Seventeenth Street
Denver, Colorado 80202
Telecopy: (303) 298-8881
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DEFINITION ANNEX
"ACTION" against a person means an action, suit, investigation,
complaint or other proceeding pending against or affecting the person or its
property, whether civil or criminal, in law or equity or before any arbitrator
or Governmental Body.
"AFFILIATE" of a person means any other person (1) that directly or
indirectly controls, is controlled by or is under common control with, the
person or any of its Subsidiaries, (2) that directly or indirectly beneficially
owns or holds 5% or more of any class of voting stock of the person or any of
its Subsidiaries or (3) 5% or more of the voting stock of which is directly or
indirectly beneficially owned or held by the person or any of its Subsidiaries.
The term "CONTROL" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a person,
whether through the ownership of voting securities, by contract or otherwise.
"APPROVAL" means an authorization, consent, approval or waiver of,
clearance by, notice to or registration or filing with, or any other similar
action by or with respect to a Governmental Body or any other person and the
expiration or termination of all prescribed waiting, review or appeal periods
with respect to any of the foregoing.
"ARCHEAN SHAREHOLDERS AGREEMENT" means the Shareholders Agreement of
Archean Energy Ltd. dated as of June 24, 1994 among the Company, the Number
Corporation, The Erin Mills Development Corporation, CanEagle Resources
Corporation, Eagle Resources Ltd. and Archean Energy Ltd.
"BENEFICIAL OWNERSHIP" has the meaning assigned to that term in
Section 13(d) of the Exchange Act.
"BEST EFFORTS" means the use of all reasonable efforts, including,
without limitation, the expenditure of amounts reasonably related to the
objective sought to be achieved, with respect to matters and actions over which
the person has or could reasonably be expected to exert any control or
influence.
"BUSINESS DAY" means any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of the State of Colorado or is a day on
which banking institutions located in such state are authorized or required by
law or other governmental action to close.
"CAPITAL EXPENDITURE" of a person means payments that are made by the
person for the rental, lease, purchase, construction or use of any property the
value or cost of which should be capitalized and appear on the balance sheet of
the person in the category of property,
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plant or equipment, without regard to the manner in which the payments or the
instrument pursuant to which they are made are characterized by the person
including, without but not limited to, payments for the installment purchase of
property and payments under Capitalized Leases.
"CAPITALIZED LEASE" means any lease that is or should be capitalized
and appear on the balance sheet of the lessee.
"COLLATERAL ACCOUNT AGREEMENT" means the Collateral Account Agreement
substantially in the form of EXHIBIT C attached hereto with such changes as are
approved by the Company and the Purchaser.
"CERCLA" has the meaning stated in Section 4.24(b)(3) of this
Agreement.
"CERCLIS" has the meaning stated in Section 4.24(b)(3) of this
Agreement.
"CERTIFICATE" means the Certificate of Amendment to the Certificate of
Incorporation of the Company substantially in the form of EXHIBIT H hereto, with
such changes therein as shall have been approved by the Company and Purchaser.
"CLOSINGS" has the meaning stated in Section 2.3 of this Agreement.
"CLOSING DATE" means the First Closing Date or the Second Closing
Date, as the context may require.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COLLATERAL" means all property, whether real, personal or mixed,
tangible or intangible, owned or to be owned or leased or to be leased or
otherwise held or to be held by the Company any of the Company and its
Subsidiaries or in which any of the Company and its Subsidiaries has or shall
acquire an interest, to the extent of the interest therein of the Company or the
Subsidiary, as the case may be, now or hereafter granted, assigned, transferred,
mortgaged or pledged to the Holder or Purchaser, as the case may be, or in which
a security interest is granted to the Holder or Purchaser, as the case may be,
to secure all or any part of the Obligations or any guarantee thereof, in any
such case pursuant to the Security Documents.
"COMMON STOCK" has the meaning stated in Section 1.1 of this
Agreement.
"COMPANY" means Forest Oil Corporation, a New York corporation, and
its successors.
"COMPANY EMPLOYEE PLAN" means any Employee Plan of the Company or any
of its Subsidiaries.
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"COMPANY ERISA PLAN" means any ERISA Plan of the Company or any of its
Subsidiaries.
"COMPANY MORTGAGED PROPERTY" has the meaning stated in Section 7.3(a)
of this Agreement.
"COMPANY MULTIEMPLOYER PLAN" means any Multiemployer Plan of the
Company or any of its Subsidiaries.
"COMPANY PLEDGED SHARE COLLATERAL" has the meaning stated in
Section 7.3(a) of this Agreement.
"COMPANY QUALIFIED PLAN" means any Qualified Plan of the Company or
any of its Subsidiaries.
"COMPANY/PURCHASER TRANSACTIONS" means the transactions contemplated
by Section 1.1 of this Agreement.
"COMPANY/PURCHASER TRANSACTION DOCUMENTS" means this Agreement, the
Purchaser Note, the Tranche A Warrants, the Security Documents, the Purchaser
Registration Rights Agreement, the Shareholders Agreement and all other
instruments and documents executed and delivered by any person in connection
with the conclusion of one or more of the transactions contemplated thereby.
"CONSOLIDATED" means, as applied to any financial or accounting term,
the term determined on a consolidated basis for a person and its Consolidated
Subsidiaries, excluding intercompany items and minority interests.
"CONSOLIDATED SUBSIDIARY" of a person at any date means any Subsidiary
of the person or other entity the accounts of which would be consolidated with
those of the person in its consolidated financial statements as of that date.
"CONTRACTS" means all oil and gas purchase, sale and other agreements
and contracts, processing agreements, operating, pooling, unitization or
communitization and related agreements and all other agreements or contracts
relating to the operation or ownership of Oil and Gas Interests.
"$.75 CONVERTIBLE PREFERRED STOCK" has the meaning stated in Section
4.23(a) of this Agreement.
"CREDIT AGREEMENT" means the Credit Agreement dated as of December 1,
1993, as amended as of December 28, 1993, January 27, 1994, June 3, 1994 and
April 13, 1995, between The Chase Manhattan Bank (National Association), as
Agent, the banks party thereto and the Company.
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"DEBT" of a person at any date means, without duplication, the sum of
(1) all obligations of the person (A) for borrowed money, (B) evidenced by
bonds, debentures, notes or other similar instruments, (C) to pay the deferred
purchase price of property or services, except trade accounts payable arising in
the ordinary course of business, (D) as lessee under Capitalized Leases, (E)
under letters of credit issued for the account of the person and (F) arising
under acceptance facilities, plus (2) all Debt of others Guaranteed by the
person, plus (3) all Debt of others secured by a Lien on any asset of the person
and whether or not such Debt is assumed by the person plus (4) the aggregate
Unfunded Vested Liabilities under each Plan of the person.
"DEPARTMENT OF JUSTICE" means the Department of Justice of the United
States of America.
"DETERMINED PRICE" means the highest of (i) the highest price per
share of Common Stock at which a Subsequent Event which is or results from a
tender offer or exchange offer therefor has been made, (ii) the price per share
of Common Stock to be paid by any third party pursuant to an agreement with the
Company or (iii) in the event of a sale of assets representing 33% or more of
the value of the consolidated assets of the Company and its consolidated
subsidiaries, the sum of the price paid in such sale for such assets and the
current market value of the remaining assets of the Company as determined by a
nationally recognized investment banking firm selected by the Purchaser and
approved by the Company, which approval shall not be unreasonably withheld,
DIVIDED BY the number of shares of Common Stock outstanding at the time of such
sale. In determining the Determined Price, the value of consideration other
than cash shall be determined by a nationally recognized investment banking firm
selected by the Purchaser.
"DOLLAR-DENOMINATED PRODUCTION PAYMENTS" means production payments
granted by the Company or a Subsidiary that burden specified Oil and Gas
Interests of the Company or the Subsidiary, as the case may be, and entitle the
holder thereof to receive a specified sum on money payable out of a specified
percentage of the gross proceeds from the sale of hydrocarbons produced from
such Oil and Gas Interests.
"DOLLARS" AND "$" refer to United States dollars and other lawful
currency of the United States of America from time to time in effect.
"EMPLOYEE OPTIONS" has the meaning stated in Section 4.23(b) of this
Agreement.
"EMPLOYEE PLAN" of a person means any plan, contract, commitment,
program, policy, arrangement or practice maintained or contributed to by the
person and providing benefits to any employee, former employee, director or
agent of the person, including, without limitation, (1) any ERISA Plan, (2) any
Multiemployer Plan, (3) any other "EMPLOYEE BENEFIT PLAN" (within the meaning of
Section 3(3) of ERISA), (4) any profit-sharing, deferred compensation, bonus,
stock option, stock purchase, pension, retainer, consulting, retirement,
severance, welfare or incentive plan, contract, commitment, program, policy,
arrangement or
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practice and (5) any plan, contract, commitment, program, policy, arrangement or
practice providing for "FRINGE BENEFITS" or perquisites, including, without
limitation, benefits relating to automobiles, clubs, vacation, child care,
parenting, sabbatical or sick leave and medical, dental, hospitalization, life
insurance and other types of insurance.
"EMPLOYEE PLAN EVENT" means any of the following:
(1) a "REPORTABLE EVENT" (within the meaning of Section 4043 of
ERISA) with respect to any ERISA Plan for which the requirement of notice
within 30 days to the PBGC is not waived or which is described in 29 C.F.R.
Section 2615.12 or 2615.15;
(2) the failure to meet the minimum funding standard of Section 412
of the Code with respect to any ERISA Plan (whether or not waived in
accordance with Section 412(d) of the Code) or the failure to make by its
due date a required installment under Section 412(m) of the Code with
respect to any ERISA Plan;
(3) the provision by the administrator of any ERISA Plan pursuant to
Section 4041(a)(2) of ERISA of a notice of intent to terminate such plan in
a distress termination described in Section 4041(c) of ERISA;
(4) the withdrawal from any ERISA Plan during a plan year by a
"SUBSTANTIAL EMPLOYER" as defined in Section 4001(a)(2) of ERISA resulting
in liability pursuant to Section 4062(e) or Section 4063 of ERISA;
(5) the institution by the PBGC of proceedings to terminate any ERISA
Plan, or the occurrence of any event or condition which might constitute
grounds under ERISA for the termination of, or the appointment of a trustee
to administer, any ERISA Plan;
(6) the imposition of liability pursuant to Sections 4064 or 4069 of
ERISA or by reason of the application of Section 4212(c) of ERISA;
(7) the withdrawal in a complete or partial withdrawal (within the
meaning of Sections 4203 and 4205 of ERISA) from any Multiemployer Plan if
there is any potential liability therefor, or the receipt of notice from
any Multiemployer Plan that it is in reorganization or insolvency pursuant
to Sections 4241 or 4245 of ERISA, or that it intends to terminate or has
terminated under Sections 4041A or 4042 of ERISA;
(8) the occurrence of an act or omission which could give rise to the
imposition on the sponsor of an Employee Plan of fines, penalties, taxes or
related charges under Chapter 43 of the Code or under Sections 409, 502(c),
502(i), 502(l) or 4071 of ERISA in respect of any such Employee Plan;
(9) the assertion of a material claim (other than routine claims for
benefits) against any Employee Plan other than a Multiemployer Plan or the
assets of any
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Employee Plan, or against the person maintaining or contributing to such
plan in connection with any such plan;
(10) receipt from the IRS of notice of the failure of any Qualified
Plan to qualify under Section 401(a) of the Code, or the failure of any
trust forming part of any Qualified Plan to fail to qualify for exemption
from taxation under Section 501(a) of the Code; or
(11) the imposition of a lien on any assets of the person maintaining
or contributing to any ERISA Plan pursuant to Sections 401(a)(29) or 412(n)
of the Code or pursuant to ERISA.
"ENFORCEMENT EXPENSES" means all costs and expenses, including
reasonable attorneys' fees and expenses, incurred in enforcing any of the
obligations of any of the Company and the Guarantors under any of the
Transaction Documents.
"ENRON CAPITAL CORP." means Enron Capital Corp., a Delaware
corporation and the general partner of JEDI, and its successors.
"ENVIRONMENTAL CLAIM" means, with respect to any person, (a) any
written or oral notice, claim, demand or other communication (collectively, a
"claim") by any other Person alleging or asserting such person's liability for
investigatory costs, cleanup costs, governmental response costs, damages to
natural resources or other Property, personal injuries, fines or penalties
arising out of, based on or resulting from (i) the presence, or Environmental
Release into the environment, of any Hazardous Material at any location, whether
or not owned by such person, or (ii) circumstances forming the basis of any
violation, or alleged violation, of any Environmental Law. The term
"ENVIRONMENTAL CLAIM" shall include, without limitation, any claim by any
governmental authority for enforcement, cleanup, removal, response, remedial or
other actions or damages pursuant to any applicable Environmental Law, and any
claim by any third party seeking damages, contribution, indemnification, cost
recovery, compensation or injunctive relief resulting from the presence of
Hazardous Materials or arising from alleged injury or threat of injury to
health, safety or the environment.
"ENVIRONMENTAL INDEMNITY" means the Environmental Indemnity between
the Company and Purchaser in the form attached as EXHIBIT N hereto, with such
changes as shall have been approved by the Company and the Purchaser.
"ENVIRONMENTAL LAWS" means any and all presently existing Federal,
state, local and foreign laws, rules or regulations, and any orders or decrees,
in each case as now or hereafter in effect, relating to the regulation or
protection of human health, safety or the environment or to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals or toxic or hazardous substances or wastes into the indoor or outdoor
environment, including, without limitation, ambient air, soil, surface water,
ground water, wetlands, land or subsurface strata, or otherwise relating to the
manufacture, processing,
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distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, chemicals or toxic or hazardous substances or wastes.
"ENVIRONMENTAL NOTICE" has the meaning stated in Section 4.24(b)(1).
"ENVIRONMENTAL RELEASE" means any satisfaction, release, assignment
instrument, deed of reconveyance or similar instrument or instruments (each in
recordable form or otherwise in form reasonably satisfactory to the Company but
without any representation or warranty of the Purchaser (other than a warranty
as to the Purchaser's own acts)) necessary to release from the Lien of all
applicable Security Documents any Collateral in which a security interest was
granted by the Company to the Purchaser.
"EQUIPMENT" means all tangible personal property of a person,
including but not limited to, all equipment in all of its forms, wherever
located, now or hereafter existing.
"EQUITY SECURITIES" of a person means the capital stock of the person
and all other securities convertible into or exchangeable or exercisable for any
shares of its capital stock, all rights to subscribe for or to purchase, all
options for the purchase of, and all calls, commitments or claims of any
character relating to, any shares of its capital stock and any securities
convertible into or exchangeable or exercisable for any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974 and
the related Regulations, in each case as amended as of the date hereof and as
the same may be amended or modified from time to time. References to titles,
subtitles, sections, paragraphs or other provisions of ERISA and the related
Regulations also refer to successor provisions.
"ERISA AFFILIATE", as applied to any person, means (1) any corporation
which is a member of a controlled group of corporations within the meaning of
Section 414(b) of the Code of which that person is a member, (2) any trade or
business (whether or not incorporated) which is a member of a group of trades or
businesses under common control within the meaning of Section 414(c) of the Code
of which that person is a member, and (3) any member of an affiliated service
group within the meaning of Section 414(m) or (o) of the Code of which that
person, any corporation described in clause (1) above or any trade or business
described in clause (2) above is a member.
"ERISA PLAN" of a person means an "EMPLOYEE PENSION BENEFIT PLAN"
(within the meaning of Section 3(2) of ERISA), other than a Multiemployer Plan,
that is covered by Title IV of ERISA or subject to the minimum funding standards
of Section 412 of the Code that is maintained by the person, to which the person
contributes or has an obligation to contribute or with respect to which the
person is an "EMPLOYER" (within the meaning of Section 3(5) of ERISA).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the related rules and regulations thereunder.
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"EXISTING WARRANTS" has the meaning stated in Section 4.23(b) of this
Agreement.
"EXPENSES" has the meaning stated in Section 9.2(a) of this Agreement.
"FEDERAL TRADE COMMISSION" means the Federal Trade Commission of the
United States of America.
"FIRST CLOSING" has the meaning stated in Section 2.1 of this
Agreement.
"FIRST CLOSING DATE" has the meaning stated in Section 2.1 of this
Agreement.
"FIRST CLOSING TRANSACTIONS" has the meaning stated in Section 2.1 of
this Agreement.
"FOREST CANADA" means Forest Oil of Canada Ltd., a corporation
organized under the laws of the Province of Alberta, Canada, and its successors.
"GAAP" means generally accepted accounting principles as in effect in
the United States of America from time to time.
"GOOD TITLE" means, with respect to the Oil and Gas Interests, good
and defensible title that (1) entitles the Company or a Consolidated Subsidiary
to receive not less than the net revenue interests set forth in the engineering
reports described in Section 4.15(a) of all oil and gas produced, saved and sold
from a particular property included in the Oil and Gas Interests without
reduction, suspension or termination throughout the productive life of such
property, (2) obligates the Company or a Consolidated Subsidiary to bear a
portion of the costs and expenses of operation and development of such property
in an amount not greater than the working interests set forth in such
engineering reports without increase throughout the productive life or such
property and (3) is free and clear of all Liens, encumbrances and defects, other
than Permitted Liens and Liens that a reasonably prudent purchaser of oil and
gas properties in an arm's length transaction would accept in light of the value
of the property affected, the improbability of assertion of the defect or
irregularity and the degree of difficulty or the cost of performing curative
work.
"GOVERNMENTAL BODY" means any agency, bureau, commission, court,
department, official, political subdivision, tribunal or other instrumentality
of any government, whether federal, state, county or local, domestic or foreign.
"GUARANTEE" by any person means any obligation, contingent or
otherwise, of the person directly or indirectly guaranteeing any Debt of any
other person or in any manner providing for the payment of any Debt of any other
person or the investment of funds in any other person or otherwise protecting
the holder of the Debt against loss (whether by agreement to indemnify, to lease
assets as lessor or lessee, to purchase assets, goods, securities or services,
or to take-or-pay or otherwise), but the term "GUARANTEE" does not include
endorsements for
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collection or deposit in the ordinary course of business. The term "GUARANTEE"
used as a verb has a correlative meaning.
"GUARANTIES" means the Guaranties in the form attached as EXHIBIT D
hereto, with such changes as may have been approved by the Company and the
Purchaser.
"GUARANTORS" means, collectively, Forest Canada and the Number
Corporation.
"HART-SCOTT-RODINO ACT" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the related rules, regulations and
published interpretations thereunder.
"HAZARDOUS MATERIAL" means, collectively, (a) any petroleum or
petroleum products, geothermal products, natural gas, flammable explosives,
radioactive materials, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation, and transformers or other equipment that
contain dielectric fluid containing polychlorinated biphenyls (PCB's), (b) any
chemicals or other materials or substances which are now or hereafter become
defined as or included in the definition of "hazardous substances", "hazardous
wastes", "hazardous materials", "extremely hazardous wastes", "restricted
hazardous wastes", "toxic substances", "toxic pollutants", "contaminants",
"pollutants" or words of similar import under any Environmental Law and (c) any
other chemical or other material or substance, exposure to which is now or
hereafter prohibited, limited or regulated under any Environmental Law and which
are present in concentrations or at locations that present a threat to human
health or the environment.
"HOLDER" means Purchaser, and its successors, as payee under the
Purchaser Note.
"INDENTURE" means the indenture dated as of September 8, 1993 between
the Company and Shawmut Bank Connecticut, N.A., under which the Subordinated
Debentures were issued.
"INVESTMENT" of a person means any investment in any other person,
whether by means of loan, capital contribution, purchase of capital stock,
obligations or other securities, purchase of all or any integral part of the
business of the person or any commitment or option to make an investment or
otherwise.
"IRS" means the United States Internal Revenue Service or any
Governmental Body succeeding to any or all of its functions.
"JEDI" means Joint Energy Development Investments Limited Partnership,
a Delaware limited partnership, and its successors.
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"JEDI LOAN AGREEMENT" means the Loan Agreement dated as of December
28, 1993 between JEDI and the Company, as amended or modified and as the same
may be further amended and modified from time to time.
"JEDI RESTRUCTURE AGREEMENT" means the Restructure Agreement dated as
of the First Closing Date between the Company and JEDI substantially in the form
of EXHIBIT K attached hereto (excluding Exhibit A to the JEDI Restructure
Agreement) with such changes as may be approved by the Company, Purchaser and
JEDI.
"JEDI SECOND AMENDMENT" means the Second Amendment to Loan Agreement
between the Company and JEDI, substantially in the form of EXHIBIT B to the
Restructure Agreement, with such changes as may have been approved by the
Company, the Purchaser and JEDI.
"JEDI OPTION PRICE" has the meaning stated in Section 1.2(c) of this
Agreement.
"JEDI REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement between the Company and JEDI, substantially in the form of EXHIBIT B
attached hereto, with such changes therein as shall have been approved by the
Company, Purchaser and JEDI.
"JEDI TRANSACTION DOCUMENTS" means the JEDI Restructure Agreement, the
JEDI Second Amendment, the Tranche B Warrants, the JEDI Registration Rights
Agreement, JEDI/Purchaser Option and all other instruments and documents
executed and delivered by any person in connection with the conclusion of one
or more of the transactions contemplated thereby.
"JEDI TRANSACTIONS" means the transactions contemplated by Sections
1.2 of this Agreement.
"JEDI/PURCHASER OPTION" means the JEDI/Purchaser Option, substantially
in the form of EXHIBIT M attached hereto, with such changes therein as shall
have been approved by Purchaser and JEDI.
"KNOWLEDGE OF THE COMPANY" with respect to a representation or
warranty of the Company contained in any Transaction Document means, after due
inquiry by the Company of each of the following persons, the actual knowledge of
any of the officers or other employees of the Company having managerial
responsibility for the portion of the operations, assets or liabilities of the
Company and its Consolidated Subsidiaries with respect to which such knowledge
of the Company is being represented.
"LEASEHOLDS" means all real property interests (other than Oil and Gas
Interests) as lessee, together with all tenements, hereditaments, easements,
rights of way, privileges and appurtenances to those and improvements on or to
those interests.
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"LEASES" means all writings which evidence a lease of Equipment and
other personal property.
"LICENSE" means any license, permit, franchise, certificate of
authority, or order, or any extension, modification or waiver of the foregoing,
required to be issued by a Governmental Body.
"LIEN" means any mortgage, deed of trust, lien (statutory or
otherwise), pledge, hypothecation, charge, deposit arrangement, preference,
priority, security interest or encumbrance of any kind (including, but not
limited to, any conditional sale agreement or other title retention agreement,
any Capitalized Lease or financing lease having substantially the same economic
effect as the foregoing and the filing of or agreement to give any financing
statement under the Uniform Commercial Code or comparable law of any
jurisdiction to evidence any of the foregoing).
"LOSS" means any cost, damage, disbursement, expense, liability,
judgment, loss, deficiency, obligation, penalty or settlement of any kind or
nature, whether foreseeable or unforeseeable, including, but not limited to,
interest or other carrying costs, penalties, legal, accounting, expert witness,
consultant and other professional fees and expenses incurred in the
investigation, collection, prosecution and defense of claims and amounts paid in
settlement, that may be imposed on or otherwise incurred or suffered by the
specified person.
"MATERIAL ADVERSE EFFECT" means, with respect to a circumstance or
event subject to a representation, warranty, covenant or other agreement of the
Company or any of its Consolidated Subsidiaries in any Transaction Document that
includes a reference therein to the possible occurrence of a Material Adverse
Effect, whether considered individually or together in the aggregate with all
other circumstances or events that are the subject of the same representation,
warranty, covenant or other agreement, a material adverse effect on the
business, properties, operations, prospects, condition (financial or otherwise)
or capitalization of the Company and its Consolidated Subsidiaries, taken as a
whole, or the ability of the Company or a Consolidated Subsidiary to perform its
obligations under any Transaction Document to which it is or may become a party;
PROVIDED, that when the term Material Adverse Effect is used in any Security
Document to which a Consolidated Subsidiary is a party and the term is used with
respect to such Consolidated Subsidiary, then Material Adverse Effect shall be
with respect to such Consolidated Subsidiary and its Consolidated Subsidiaries,
taken as a whole.
"MATERIAL CONTRACT" means an agreement referred to in Section 4.26.
"MORTGAGE DEBENTURE" means the Mortgage Debenture, substantially in
the form of EXHIBIT E attached hereto, with such changes as shall have been
approved by the Company and the Purchaser.
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"MORTGAGE DEBENTURE DEPOSIT AGREEMENT" means the Mortgage Debenture
Deposit Agreement, substantially in the form of EXHIBIT G attached hereto, with
such changes therein as shall have been approved by the Company and the
Purchaser.
"MORTGAGE EXPENSES" has the meaning stated in Section 9.2(a) of this
Agreement.
"MULTIEMPLOYER PLAN" of a person means a "MULTIEMPLOYER PLAN" (within
the meaning of Section 3(37) of ERISA) to which the person contributes or has an
obligation to contribute or which provides benefits to any employee, former
employee, director or agent of the person.
"NASDAQ/NMS" has the meaning stated in Section 7.1(d) of this
Agreement.
"NET RELEASE PROCEEDS" means the gross proceeds received by the
Company in connection with the transfer of any Collateral with respect to which
a Release is requested pursuant to Section 7.3 LESS the actual, reasonable and
customary fees and expenses paid in cash to third-parties which are not
Affiliates of the Company.
"NGPA" means Natural Gas Policy Act of 1978, as amended, and the
related rules and regulations.
"NUMBER CORPORATION" means 604228 Alberta Ltd., a corporation
organized under the laws of the Province of Alberta, Canada, and its successors.
"NYBCL" means the New York State Business Corporation Law.
"NPL" has the meaning stated in Section 4.24(b)(3) of this Agreement.
"OBLIGATIONS" means, collectively, the following:
(1) all obligations of the Company owed to Purchaser pursuant to
Section 9.2 and Article X of this Agreement and all obligations of the
Company owed to the Holder of the Note pursuant to the terms thereof;
(2) all obligations of the Company and the Guarantors owed to the
Purchaser pursuant to the Security Documents pursuant to the terms thereof;
(3) interest that, but for the filing of a petition in bankruptcy
with respect to the Company or a Guarantor, as the case may be, would
accrue on the obligations described in this definition;
(4) to the extent that the Company is liable for the same pursuant to
the terms of the Company/Purchaser Transaction Documents, fees, expenses,
indemnities or otherwise, whether voluntary or involuntary, direct or
indirect, absolute or contingent, liquidated or unliquidated, incurred in
connection with the Company/Purchaser
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Transactions pursuant to the terms of the Company/Purchaser Transaction
Documents, whether or not jointly owed with others, and whether or not from
time to time decreased or extinguished and later increased, created or
incurred;
(5) all Enforcement Expenses; and
(6) all or any portion of the obligations described in this
definition or other liabilities that are paid, to the extent all or any
part of such payment is avoided or recovered directly or indirectly from
the Purchaser as a preference, fraudulent transfer or otherwise.
"OIL AND GAS INTERESTS" means all right, title and interest of the
Company and its Consolidated Subsidiaries in and to any oil and gas leases, oil,
gas and other mineral leases, fee mineral interests, royalties, overriding
royalties, production payments, net profits interests and other nonworking
interests and nonoperating interests and contractual interests pursuant to which
the Company or a Consolidated Subsidiary is entitled to rights in respect of
oil, gas and other minerals and hydrocarbons or revenues therefrom.
"OPTION LEGEND" has the meaning stated in Section 7.2(d) of this
Agreement.
"OWNER" has the meaning set forth in Section 6.4(a) of this
Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"PERMITTED ISSUANCES" has the meaning stated in Section 1.3(a) of this
Agreement.
"PERMITTED LIENS" means, collectively, (1) "Permitted Liens" within
the meaning of the Indenture (giving effect to other terms and provisions of the
Indenture that are directly or indirectly incorporated or referenced by the
definition of "Permitted Liens"), (2) the Production Payments and (3) other
Liens the existence of which, without regard to the giving of notice, the
passage of time or the existence or occurrence of any other condition, do not
permit the holder of any Debt of the Company or a Consolidated Subsidiary in an
amount greater than $100,000 to cause such Debt to become due and payable or to
seek to enforce or realize upon the rights of the holder in or with respect to
property or assets of the Company or the Consolidated Subsidiary, as the case
may be, that secure such Debt.
"PERSON" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
Governmental Body.
"PRODUCTION PAYMENTS" means, collectively, Dollar-Denominated
Production Payments and Volumetric Production Payments.
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"PROPERTY" means any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible.
"PROPRIETARY RIGHTS" means all copyrights, uncopyrighted works,
trademarks, trademark rights, service marks, trade names, trade name rights,
patents, patent rights, unpatented inventions, licenses, permits, trade secrets,
know-how, inventions, computer software, seismic data and intellectual property
rights and other proprietary rights together with applications and licenses for,
and the goodwill of the business relating to, any of the foregoing.
"PROXY STATEMENT" has the meaning stated in Section 6.1(b)(1) of this
Agreement.
"PURCHASER" means The Anschutz Corporation, a Kansas corporation, and
its successors.
"PURCHASER ADDITIONAL SHARES" has the meaning stated in Section
1.1(b)(1) of this Agreement.
"PURCHASER COMMON SHARE PRICE" has the meaning stated in Section
1.1(b)(1) of this Agreement.
"PURCHASER NOTE" has the meaning stated in Section 1.1(a)(1).
"PURCHASER NOTE CONVERSION PRICE" has the meaning stated in
Section 1.1(a)(1) of this Agreement.
"PURCHASER NOTE CONVERSION SHARES" has the meaning stated in
Section 1.1(a)(1) of this Agreement.
"PURCHASER PREFERRED CONVERSION SHARES" has the meaning stated in
Section 1.1(b)(1).
"PURCHASER PREFERRED SHARE PRICE" has the meaning stated in
Section 1.1(b)(1) of this Agreement.
"PURCHASER PREFERRED SHARES" has the meaning stated in Section
1.1(b)(1).
"PURCHASER REGISTRATION RIGHTS AGREEMENT" means the Registration
Rights Agreement between the Company and Purchaser dated as of the date of this
Agreement, substantially in the form attached hereto as EXHIBIT B.
"PURCHASER SHARES" means, collectively, the Purchaser Note Conversion
Shares, the Purchaser Additional Shares, the Purchaser Preferred Conversion
Shares, the Tranche A Warrant Shares and, when acquired by Purchaser upon the
exercise of the JEDI/Purchaser Option, the Tranche B Warrant Shares.
A-15
<PAGE>
"QUALIFIED PLAN" of a person means any ERISA Plan of the person and
any other pension, profit sharing or stock bonus plan within the meaning of
Section 401(a) of the Code maintained by the person or to which the person
contributes or has an obligation to contribute.
"REAL PROPERTY" means all real property interests (other than Oil and
Gas Interests), other than as lessee, together with all tenements,
hereditaments, easements, rights of way, privileges and appurtenances to those
interests and improvements and fixtures on or to those interests.
"RECOMMENDATIONS" has the meaning set forth in Section 4.29 of this
Agreement.
"RECORD DATE" means the date determined by the Board of Directors of
the Company with respect to which holders of Common Stock at such date will be
entitled to vote with respect to Transaction Documents and the Transactions at
the Shareholders Meeting.
"REGISTRATION RIGHTS AGREEMENTS" means, collectively, the Purchaser
Registration Rights Agreement and the JEDI Registration Rights Agreement, each
substantially in the form of EXHIBIT B attached hereto, with such changes
therein as shall have been approved by each of the Company, Purchaser and JEDI.
"REGULATION" means (1) any applicable law, rule, regulation, judgment,
decree, ruling, order, award, injunction, recommendation or other official
action of any Governmental Body and (2) any official change in the
interpretation or administration of any of the foregoing by the Governmental
Body or by any other Governmental Body or other person responsible for the
interpretation or administration of any of the foregoing.
"RELEASE" means any satisfaction, release, assignment instrument, deed
of reconveyance or similar instrument or instruments (each in recordable form or
otherwise in form reasonably satisfactory to the Company but without any
representation or warranty of the Purchaser (other than a warranty as to the
Purchaser's own acts)) necessary to release from the Lien of all applicable
Security Documents any Collateral.
"RELEASE DATE" means the date of a release of the Lien of the Security
Documents on any Collateral pursuant to Section 7.3.
"RELEASE PRICE" means, as calculated at any Release Date, the amount
that is equal, in each case, to $900,000 with respect to the Company Pledged
Share Collateral, $9,750,000 with respect to the Pledged Share Collateral (as
defined in the Share Pledge Agreement between the Number Corporation and the
Purchaser), $1,200,000 with respect to the Company Mortgaged Property and
$900,000 with respect to the Mortgaged Property (as defined in the Mortgage
Debenture executed and delivered by Forest Canada).
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<PAGE>
"RESTRICTED PAYMENT" with respect to a person means the following:
(1) any dividend or other distribution of any kind on any shares of
or person's capital stock, except
(A) cash dividends with respect to the $.75 Convertible
Preferred Stock in accordance with the terms thereof, and
(B) dividends payable solely in shares of its capital stock,
other than an Equity Security of the person which by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable or exercisable), or upon the happening of any event or with
the passage of time, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or is redeemable at the option of the
holder thereof, in whole or in part, or which is convertible into or
exchangeable or exercisable for debt securities of the person or any of its
Subsidiaries, and
(2) any payments in cash or otherwise, on account of the purchase,
redemption, retirement or acquisition of any Equity Securities of the
person.
"RIGHTS" has the meaning stated in Section 4.23(b) of this Agreement.
"RIGHTS AGREEMENT" has the meaning stated in Section 4.23(b) of this
Agreement.
"RIGHTS PREFERRED STOCK" has the meaning stated in Section 4.23(b) of
this Agreement.
"SEC DOCUMENTS" has the meaning stated in Section 4.28 of this
Agreement.
"SEC FINANCIAL STATEMENTS" has the meaning set forth in Section 4.28
of this Agreement.
"SECOND CLOSING" has the meaning stated in Section 2.2 of this
Agreement.
"SECOND CLOSING DATE" has the meaning stated in Section 2.2 of this
Agreement.
"SECOND CLOSING TRANSACTIONS" has the meaning stated in Section 2.2 of
this Agreement.
"SECURITIES" means all of the following assets:
(1) all shares of the capital stock at any time outstanding of the
corporations referred to in Section 4.18, the certificates representing the
shares and all dividends,
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<PAGE>
cash, instruments and other property from time to time received, receivable
or otherwise distributed in respect of or in exchange for all or any of the
shares (the "STOCK");
(2) all indebtedness referred to in Section 4.18, and issued by the
obligors named in the schedule, the notes, certificates, instruments and
other documents constituting or evidencing the indebtedness and all
interest, cash, instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for all or
any of the indebtedness (the "INDEBTEDNESS");
(3) all additional shares of stock of any issuer of the Stock from
time to time acquired by the Company or a Consolidated Subsidiary in any
manner, the certificates representing the additional shares and all
dividends, cash, instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for all or
any of the additional shares;
(4) all additional indebtedness from time to time owed by any obligor
of the Indebtedness, the notes, certificates, instruments and other
documents constituting or evidencing the additional indebtedness and all
interest, cash, instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for all or
any of the additional indebtedness;
(5) all notes, certificates of deposit and all other instruments from
time to time delivered or otherwise possessed in substitution for or in
addition to all or part of the Stock or the Indebtedness; and
(6) all rights to subscribe for securities incident to the Stock or
the Indebtedness.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
related rules and regulations thereunder.
"SECURITY DOCUMENTS" means, collectively, the Guaranties, the Mortgage
Debentures, the Share Pledge Agreements, the Mortgage Debenture Deposit
Agreements, the Collateral Account Agreement and the Environmental Indemnity.
"SENIOR PREFERRED STOCK" has the meaning stated in Section 4.23(a).
"SHAREHOLDERS AGREEMENT" means the Shareholders Agreement among the
Company and the Purchaser substantially in the form of EXHIBIT J attached
hereto, with such changes therein as shall have been approved by each of the
Company and the Purchaser.
"SHAREHOLDERS MEETING" has the meaning stated in Section 6.1(b)(1) of
this Agreement.
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<PAGE>
"SHARE PLEDGE AGREEMENT" means the Share Pledge Agreement
substantially in the form of EXHIBIT F attached hereto, with such changes
therein as shall have been approved by the Company and the Purchaser.
"SHARES" means, without duplication, the Purchaser Shares and the JEDI
Shares.
"STATE" means the State of New York.
"SUBORDINATED DEBENTURES" means the outstanding 11 1/4% Senior
Subordinated Notes due 2003 of the Company issued under the Indenture.
"SUBSEQUENT EVENT" means any of the following, in each case whether or
not any of the Company, the Purchaser and JEDI shall have exercised and
delivered, or exercised any rights or performed any obligations under, any of
the Transaction Documents:
(1) any of the Company and its Consolidated Subsidiaries,
without having received Purchaser's prior written consent, shall have
entered into an agreement with respect to a Transaction Proposal, or the
Board of Directors of the Company shall have recommended that the
shareholders of the Company approve or accept any Transaction Proposal;
(2) any of the Company and the Consolidated Subsidiaries,
without having received the Purchaser's prior written consent, shall have
authorized, recommended, proposed or publicly announced its intention to
authorize, recommend or propose, an agreement with respect to a Transaction
Proposal, or the Board of Directors of the Company shall have publicly
withdrawn or modified, or publicly announced its intent to withdraw or
modify, the Recommendations;
(3) any person other than the Purchaser or any Affiliate of the
Purchaser shall have acquired beneficial ownership or the right to acquire
beneficial ownership of 40% or more of the outstanding shares of Common
Stock then issued and outstanding; or
(4) any person shall have made a Transaction Proposal (A) that
the Board of Directors of the Company determines in its good faith judgment
is more favorable to the Company's shareholders than the Transactions and
(B) as a result of which the Board of Directors concludes in good faith
that termination of the Transaction Documents is necessary or appropriate
in order for the Board of Directors to act in a manner which is consistent
with its fiduciary obligations under applicable law.
"SUBSIDIARY" of a person means (i) any corporation or other entity of
which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are at the time directly or indi-
A-19
<PAGE>
rectly owned by the person or (ii) a partnership in which the person or a
Subsidiary of the person is, at the date of determination, a general or limited
partner of such partnership, but only if the person or its Subsidiary is
entitled to receive more than fifty percent of the assets of such partnership
upon its dissolution. For purpose of the foregoing definition, an arrangement
by which a person who owns an Oil and Gas Interest is subject to a joint
operating agreement, processing agreement, net profits interest, overriding
royalty interest, farmout agreement, development agreement, area of mutual
interest agreement, joint bidding agreement, unitization agreement, pooling
arrangement or other similar agreement or arrangement shall not, by reason of
such agreement or arrangement alone, be considered a Subsidiary. Unless the
context otherwise requires, references to one or more Subsidiaries shall be
references to Subsidiaries of the Company.
"TAXES" means all taxes, charges, fees, levies, duties, imposts,
withholdings, restrictions, fines, interest, penalties, additions to tax or
other assessments or charges, including, but not limited to, income, excise,
property, withholding, sales, use, gross receipts, value added and franchise
taxes, license recording, documentation and registration fees and custom duties
imposed by any Governmental Body.
"TAX RETURN" means a report, return or other information required to
be filed by a person with or submitted to a Governmental Body with respect to
Taxes, including, where permitted or required, combined or consolidated returns
for any group of entities that includes the person.
"TERMINATION FEE" has the meaning stated in Section 9.2(d) of this
Agreement.
"TRANCHE A WARRANT EXERCISE PRICE" has the meaning stated in
Section 1.2(a)(2) of this Agreement.
"TRANCHE A WARRANT SHARES" has the meaning stated in Section
1.1(b)(1)(C) of this Agreement.
"TRANCHE A WARRANTS" means the Tranche A Warrants of the Company,
substantially in the form of EXHIBIT I attached hereto, with such changes
therein as shall have been approved by the Company, the Purchaser and JEDI.
"TRANCHE B WARRANT EXERCISE PRICE" has the meaning stated in Section
1.2(a) of this Agreement.
"TRANCHE B WARRANT SHARES" has the meaning stated in Section 1.2(a) of
this Agreement.
"TRANCHE B WARRANTS" means the Tranche B Warrants, substantially in
the form of EXHIBIT L attached hereto, with such changes therein as shall have
been approved by the Company and the Purchaser.
A-20
<PAGE>
"TRANSACTION DOCUMENTS" means, collectively, the Company/Purchaser
Transaction Documents and the JEDI Transaction Documents.
"TRANSACTION PROPOSALS" has the meaning stated in Section 6.1(b)(2)(A)
of this Agreement.
"TRANSACTIONS" means, collectively, the transactions undertaken
pursuant to or otherwise contemplated by, the Transaction Documents, including,
without limitation, the First Closing Transactions and the Second Closing
Transactions.
"TRANSFER" means a sale, an assignment, a lease, a license, a grant, a
transfer or other disposition of an asset or any interest of any nature in an
asset. The term "TRANSFER" used as a verb has a correlative meaning.
"VOLUMETRIC PRODUCTION PAYMENTS" means production payments granted by
the Company or any of its Subsidiaries to a person that burden specified Oil and
Gas Interests of the Company or the Subsidiary, as the case may be, and entitle
the holder thereof to receive a specified volume of hydrocarbons payable out of
a specified percentage of the hydrocarbons produced from such Oil and Gas
Interests.
"WHOLLY-OWNED CONSOLIDATED SUBSIDIARY" of a person means any
Consolidated Subsidiary all of the shares of capital stock or other ownership
interests of which, except directors' qualifying shares, are at the time
directly or indirectly owned by the person.
A-21
<PAGE>
EXHIBIT A
FORM OF
FOREST OIL CORPORATION
NONRECOURSE SECURED CONVERTIBLE PROMISSORY NOTE
DUE __________, 1996(1)
THIS NOTE AND THE SHARES OF COMMON STOCK ISSUABLE UPON THE CONVERSION HEREOF
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY
NOT BE OFFERED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE
WITH SAID ACT. THIS NOTE AND SUCH SHARES ARE ALSO SUBJECT TO THE RESTRICTIONS
CONTAINED IN A REGISTRATION RIGHTS AGREEMENT DATED AS OF __________, 1995 AND
THE RESTRICTIONS CONTAINED IN A SHAREHOLDERS AGREEMENT DATED AS OF __________,
1995, COPIES OF WHICH ARE ON FILE AT THE OFFICE OF THE SECRETARY OF THE COMPANY.
$9,900,000.00 New York, New York
May __, 1995
FOR VALUE RECEIVED, FOREST OIL CORPORATION, a New York corporation
(the "COMPANY"), promises to pay to the order of THE ANSCHUTZ CORPORATION or its
assigns (the "HOLDER"), on __________, 1996(1) (the "MATURITY DATE"), the
principal amount of NINE MILLION NINE HUNDRED THOUSAND AND NO/100 DOLLARS
($9,900,000.00).
The Company also promises to pay interest on the unpaid principal
amount hereof, from the date hereof until paid in full, (a) at the rate of 8.0%
per annum from the date hereof to and including __________, 1995(2) and (b) at
the rate of 12.5% per annum thereafter. Interest on this Note shall be payable
in arrears on and to the last calendar day of each month, upon any payment or
conversion of this Note (to the extent accrued on the amount being paid or
- -------------------------------
(1) The date that is nine months after the First Closing Date.
(2) The date that is 16 weeks after the First Closing Date.
<PAGE>
converted) and at maturity (including final maturity) of this Note. Interest
shall be computed on the basis of a year of twelve 30-day months.
SECTION 1. PURCHASE AGREEMENT. This Note is the "Purchaser Note"
referred to in the Purchase Agreement dated __________, 1995 between the Company
and The Anschutz Corporation (as amended or modified from time to time, the
"PURCHASE AGREEMENT"), to which reference is hereby made for a more complete
statement of the terms and conditions under which the indebtedness evidenced
hereby was incurred and is to be repaid. Terms not otherwise defined herein
have the respective meanings assigned in the Purchase Agreement. No reference
herein to the Purchase Agreement and no provision of this Note (other than as
set forth in Section 9) or the Purchase Agreement shall alter or impair the
obligations of the Company, which are absolute and unconditional, to pay the
principal of and interest on this Note at the place, at the respective times,
and in the currency herein prescribed.
SECTION 2. PAYMENT.
(a) All payments of principal and interest in respect of this
Note shall be made in lawful money of the United States of America in same day
funds at the office of the Holder located at 555 - 17th Street, Denver, Colorado
80202, or at such other place as shall be designated in writing by the Holder.
Until notified in writing of the transfer or assignment of this Note, the
Company shall be entitled to deem the Holder or any subsequent permitted
assignee of this Note as the owner and holder of this Note. Each of the Holder
and any subsequent assignee of this Note agrees, by its acceptance hereof, that
before disposing of this Note or any part hereof it will make a notation hereon
of all principal payments previously made hereunder and of the date to which
interest hereon has been paid; PROVIDED, HOWEVER, that the failure to make a
notation of any payment made on this Note shall not limit or otherwise affect
the obligations of the Company hereunder with respect to payments of principal
of or interest on this Note.
(b) Whenever any payment on this Note shall be stated to be due
on a day which is not a Business Day, such payment shall be made on the next
succeeding Business Day and such extension of time shall be included in the
computation of the payment of interest on this Note.
(c) No principal amount of this Note may be paid before such
principal amount is due, whether at stated maturity, by acceleration or
otherwise, except pursuant to the conversion hereof in accordance with
Section 6.
SECTION 3. SECURITY DOCUMENTS. This Note is secured by certain
assets pursuant to the Security Documents.
SECTION 4. EVENTS OF DEFAULT. If any of the following conditions
or events ("EVENTS OF DEFAULT") shall occur:
2
<PAGE>
(a) FAILURE TO MAKE PAYMENTS WHEN DUE. Failure to pay any
amount of principal of this Note when due, whether at stated maturity, by
acceleration, or otherwise, or failure to pay interest or any other amount due
under this Agreement, in either case, within 5 days after the date due; or
(b) DEFAULT IN OTHER AGREEMENTS. (i) Failure of the Company or
any of its Material Subsidiaries (as such term is defined in the Credit
Agreement) to pay when due any principal of or interest on any Debt (other than
this Note) in the aggregate amount of $500,000 beyond the end of any grace
period provided therefor; or (ii) breach or default by the Company or any of its
Material Subsidiaries with respect to any other material term of (A) any
evidence of any Debt or (B) any loan agreement, mortgage, indenture or other
agreement relating to such Debt, if the effect of such breach or default is to
cause, or to permit the holder or holders of that Debt (or a trustee on behalf
of such holder or holders) to cause, that Debt to become or be declared due and
payable prior to its stated maturity or the stated maturity of any underlying
obligation, as the case may be (upon the giving or receiving of notice, lapse of
time, both, or otherwise); or (iii) termination of the Purchase Agreement
pursuant to paragraph (5) of Section 9.1(a) thereof; or
(c) BREACH OF WARRANTY. Any representation, warranty,
certification or other statement of the Company made in any Transaction Document
or in any statement or certificate at any time given in writing pursuant hereto
or thereto or in connection therewith shall be false in any material respect on
the date as of which made and such default shall not have been remedied or
waived within 30 days after the earlier of (i) the Company's obtaining knowledge
of such default or (ii) receipt by the Company of notice from the Holder of such
default; PROVIDED, HOWEVER, that if such default cannot be cured solely by the
payment of money and the cure of such default requires a period in excess of 30
days, and if the Company is diligently and continuously prosecuting such cure,
then such default shall not be an Event of Default unless the Company fails to
cure such default within 90 days after the Company's obtaining knowledge or
notice thereof, as the case may be; or
(d) FAILURE OF SECURITY. Any Transaction Document shall, at any
time, cease to be in full force and effect (other than, in the case of a
Security Document, by reason of a release of Collateral in accordance with the
terms thereof) or shall be declared null and void by a court of competent
jurisdiction, or the validity or enforceability thereof shall be contested by
the Company, or the Holder shall not have or cease to have a valid and perfected
first priority Lien or security interest in the Collateral (except as otherwise
permitted by the Security Documents), in each case for any reason other than the
failure of the Holder to take any action within its control; or
(e) OTHER DEFAULTS UNDER TRANSACTION DOCUMENTS. The Company
shall default in any material respect in the performance of or compliance with
any term contained in any Transaction Document, other than any such term
referred to in any other clause of this subsection, and such default shall not
have been remedied or waived within 30 days after the earlier of (i) the
Company's obtaining knowledge of such default or (ii) receipt by the Company
3
<PAGE>
of notice from the Holder of such default; PROVIDED, HOWEVER, that if such
default cannot be cured solely by the payment of money and the cure of such
default requires a period in excess of 30 days, and if the Company is diligently
and continuously prosecuting such cure, then such default shall not be an Event
of Default unless the Company fails to cure such default within 90 days after
the Company's obtaining knowledge or notice thereof, as the case may be; or
(f) INVOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC. (i) A
court having jurisdiction in the premises shall enter a decree or order for
relief in respect of any of the Company, its Material Subsidiaries or a
Guarantor in an involuntary case under Title 11 of the United States Code
entitled "Bankruptcy" as now and hereafter in effect, and any successor statute,
(the "BANKRUPTCY CODE") or under any other applicable bankruptcy, insolvency or
similar law now or hereafter in effect, which decree or order is not stayed; or
any other similar relief shall be granted under any applicable federal or state
law; or (ii) an involuntary case shall be commenced against any of the Company,
its Material Subsidiaries or a Guarantor under the Bankruptcy Code or under any
other applicable bankruptcy, insolvency or similar law now or hereafter in
effect; or a decree or order of a court having jurisdiction in the premises for
the appointment of a receiver, liquidator, sequestrator, trustee, custodian or
other officer having similar powers over any of the Company, its Material
Subsidiaries, or a Guarantor, or over all or a substantial part of its property,
shall have been entered; or there shall have occurred the involuntary
appointment of an interim receiver, trustee or other custodian of any of the
Company, its Material Subsidiaries or a Guarantor for all or a substantial part
of its property; or a warrant of attachment, execution or similar process shall
have been issued against any substantial part of the property of any of the
Company, its Material Subsidiaries or a Guarantor, and any such event described
in this clause (ii) shall continue for 60 days unless dismissed, bonded or
discharged; or
(g) VOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC. (i) Any
of the Company, its Material Subsidiaries or a Guarantor shall have an order for
relief entered with respect to it, in connection with, or shall commence, a
voluntary case under the Bankruptcy Code or under any other applicable
bankruptcy, insolvency or similar law now or hereafter in effect, or shall
consent to the entry of an order for relief in an involuntary case, or to the
conversion of an involuntary case to a voluntary case, under any such law, or
shall consent to the appointment of or taking possession by a receiver, trustee
or other custodian for all or a substantial part of its property; or any of the
Company, its Material Subsidiaries or a Guarantor shall make any assignment for
the benefit of creditors; or (ii) any of the Company and its Material
Subsidiaries shall be unable, or shall fail generally, or shall admit in writing
its inability, to pay its debts as such debts become due; or the Board of
Directors (or any committee thereof) of the Company, its Material Subsidiaries
or a Guarantor shall adopt any resolution or otherwise authorize any action to
approve any of the actions referred to in clause (i) above or this clause (ii);
or
4
<PAGE>
(h) JUDGMENTS AND ATTACHMENTS. Any money judgment, writ or
warrant of attachment or similar process involving in the aggregate at any time
an amount in excess of $1,000,000 (not adequately covered by insurance as to
which a solvent and unaffiliated insurance company has acknowledged coverage)
shall be entered or filed against any of the Company and its Material
Subsidiaries or any of their respective assets and shall remain undischarged,
unvacated, unbonded or unstayed for a period of 60 days (or in any event later
than five days prior to the date of any proposed sale thereunder); it being
understood and agreed that, in the event the Company posts a bond pursuant to
this Section 4(h), such bond shall not be considered Debt of the Company for
purposes of this Note; or
(i) DISSOLUTION. Any order, judgment or decree shall be entered
against the Company decreeing the dissolution or split up of the Company and
such order shall remain undischarged or unstayed for a period in excess of 30
days; or
(j) EMPLOYEE BENEFIT PLANS. There shall occur one or more
Employee Plan Events which individually or in the aggregate results in or might
reasonably be expected to result in liability of the Company or any of its ERISA
Affiliates in excess of $100,000 on or before the Maturity Date; or there shall
exist an amount of unfunded benefit liabilities (as defined in
Section 4001(a)(18) of ERISA), individually or in the aggregate for all Employee
Plans (excluding for purposes of such computation any Employee Plans with
respect to which assets exceed benefit liabilities and all Multiemployer Plans),
which exceeds $500,000.
(k) CHANGE IN CONTROL. There shall occur a "Change of Control"
within the meaning of the Indenture;
then, (A) upon the occurrence of any Event of Default described in Section 4(f)
or 4(g), each of (1) the unpaid principal amount of and accrued interest on this
Note and (2) all other Obligations shall automatically become immediately due
and payable, without notice, presentment, demand, protest or other requirements
of any kind, all of which are hereby expressly waived by the Company, and
(B) upon the occurrence and during the continuance of any other Event of
Default, the Holder may, by written notice to the Company, declare all or any
portion of the amounts described in clauses (1) and (2) above to be, and the
same shall forthwith become, immediately due and payable.
SECTION 5. REMEDIES.
(a) Upon the occurrence and during the continuation of an Event
of Default, all or any one or more of the rights, powers, privileges and other
remedies available to the Holder against the Company under this Note, the
Security Documents or any of the other Transaction Documents, or at law or in
equity, may be exercised by the Holder at any time and from time to time,
whether or not all or any portion of the Obligations shall be declared due and
payable, and whether or not the Holder shall have commenced any foreclosure
proceeding or other action for the enforcement of their rights and remedies
under any of the Security Documents with respect to any Collateral. Any such
actions taken by the Holder shall be
5
<PAGE>
cumulative and concurrent and may be pursued independently, singly,
successively, together or otherwise, at such time and in such order as the
Holder may determine in its sole discretion, to the fullest extent permitted by
law, without impairing or otherwise affecting the other rights and remedies of
the Holder permitted by law, equity or contract or as set forth herein or in the
other Transaction Documents.
(b) In the event of the foreclosure or other action by the
Holder to enforce its remedies in connection with the Collateral, the Holder
shall apply all net proceeds received to repay the Obligations, the Obligations
shall be reduced to the extent of such net proceeds and the remaining portion of
the Obligations shall remain outstanding and secured by the Security Documents,
it being understood and agreed by the Company that, subject to the terms of
Section 9 of this Note, the Company is liable for the repayment of the
Obligations and that any "excess" foreclosure proceeds are part of the cross-
collateralized and cross-defaulted security granted to the Holder pursuant to
the Security Documents; PROVIDED, HOWEVER, that, if the Holder in its sole
discretion so elects, this Note shall be deemed to have been accelerated only to
the extent of the net proceeds actually received by the Holder with respect to
any individual property (or, in the event that the Holder is the purchaser of
such property by credit bid at a foreclosure sale, this Note shall be deemed to
have been accelerated to the extent of such credit bid) and applied in reduction
of the Obligations in accordance with the provisions of the Purchase Agreement
and this Note, after payment by the Company of all transaction costs and
expenses and costs of enforcement.
(c) Upon the occurrence and during the continuation of an Event
of Default, the Holder shall have the right, to the extent permitted by law, to
impound and take possession of books, records, notes, and other documents
evidencing the Company's deposit accounts, accounts receivable and other claims
for payment of money (including rents) arising in connection with the
Collateral, to give notice to the obligors thereunder of the Holder's interest
therein, and to make direct collections on such deposit accounts, accounts
receivable and claims.
(d) The rights, powers and remedies of the Holder under this
Note shall be cumulative and not exclusive of any other right, power or remedy
which the Holder may have against the Company pursuant to the Purchase
Agreement, this Note or the other Transaction Documents or existing at law or in
equity or otherwise. The rights, powers and remedies of the Holder may be
pursued singly, concurrently or otherwise, at such time and in such order as the
Holder may determine in its sole discretion. No delay or omission to exercise
any remedy, right or power accruing upon an Event of Default shall impair any
such remedy, right or power or shall be construed as a waiver thereof, but any
such remedy, right or power may be exercised from time to time and as often as
may be deemed expedient. A waiver of any Event of Default with respect to the
Company shall not be construed to be a waiver of any subsequent Event of Default
by the Company or to impair any remedy, right or power consequent thereon.
(e) The remedies set forth in this Section 5 are subject to the
provisions of Section 9.
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SECTION 6. CONVERSION.
(a) OPTIONAL CONVERSION. This Note may be converted into shares
of Common Stock, as follows:
(1) Subject to and upon compliance with the provisions of this
Section 6, at the option of the Holder, this Note or any portion of the
principal amount hereof which is $1,000 or an integral multiple thereof,
may, at any time on or before the close of business on the Maturity Date,
be converted at the principal amount thereof into shares of Common Stock,
as said shares shall be constituted on the date on which this Note shall be
surrendered for conversion and notice given in accordance with the
provisions of this Section (the "CONVERSION DATE"), at the Conversion Price
(as defined below) in effect at the Conversion Date.
(2) In order to exercise the conversion privilege, the Holder shall
surrender this Note to the Company at its executive offices, together with
the conversion notice in the form attached hereto as Exhibit A (or similar
separate written notice) duly executed, and, if so required by the Company,
accompanied by instruments of transfer, in form satisfactory to the
Company, duly executed by the Holder or by its duly authorized attorney in
writing. As promptly as practicable after the surrender of this Note for
conversion as aforesaid, the Company shall deliver at its executive office
to such Holder, or on its written order, a certificate or certificates for
the number of full shares of Common Stock deliverable upon the conversion
of this Note or portion thereof (the "CONVERSION SHARES") and a check or
cash in respect of any fraction of a share of Common Stock otherwise
deliverable upon such conversion, all as provided in this Section 6,
together with a Note in principal amount equal to the unconverted and
unredeemed portion, if any, of this Note so converted. Such conversion
shall be deemed to have been effected on the date on which such notice
shall have been received at said executive offices and this Note shall have
been surrendered as aforesaid, and the person or persons in whose name or
names any certificate or certificates for Conversion Shares shall be
deliverable upon such conversion shall be deemed to have become on said
date the holder or holders of record of the shares represented thereby;
PROVIDED, HOWEVER, that any such surrender on any date when the stock
transfer books of the Company shall be closed shall constitute the person
or persons in whose name or names the certificates are to be delivered as
the record holder or holders thereof for all purposes on the next
succeeding day on which such stock transfer books are open, but such
conversion shall be at the Conversion Price in effect on the date of such
surrender. Subject to the foregoing, no payment or adjustment shall be
made for dividends on any Shares that shall be delivered upon the
conversion of this Note.
(b) MANDATORY CONVERSION. This Note shall be converted into
shares of Common Stock, as follows:
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(1) If any portion of the principal amount hereof is outstanding on
the Second Closing Date (as defined in the Purchase Agreement), and if the
Second Closing Transactions (as defined in the Purchase Agreement) shall
then be concluded, then such principal amount shall be converted at the
principal amount thereof into shares of Common Stock, as said shares shall
be constituted on the Second Closing Date (which, for the purposes of this
Section, shall be the Conversion Date) at the Conversion Price in effect at
the Second Closing Date.
(2) The Holder shall surrender this Note to the Company at the
location of the Second Closing (as defined in the Purchase Agreement),
together with the conversion notice in the form attached hereto as Exhibit
A (or similar separate written notice) duly executed, and, if so required
by the Company, accompanied by instruments of transfer, in form
satisfactory to the Company, duly executed by the Holder or by its duly
authorized attorney in writing. Upon the surrender of this Note for
conversion as aforesaid, the Company shall deliver at such location to such
Holder, or on its written order, a certificate or certificates for the
number of Conversion Shares deliverable upon the conversion of this Note
and a check or cash in respect of any fraction of a share of Common Stock
otherwise deliverable upon such conversion, all as provided in this Section
6. Such conversion shall be deemed to have been effected on the Second
Closing Date, and the person or persons in whose name or names any
certificate or certificates for Conversion Shares shall be deliverable upon
such conversion shall be deemed to have become on said date the holder or
holders of record of the shares represented thereby. Subject to the
foregoing, no payment or adjustment shall be made for dividends on any
Shares that shall be delivered upon the conversion of this Note.
(c) FRACTIONAL INTERESTS. The Company shall not be required to
deliver fractions of shares of Common Stock upon conversions of this Note. If
any fractional interest in a share of Common Stock would be deliverable upon the
conversion of this Note, the Company shall make an adjustment therefor in cash
equal to the average market price per share (determined as provided below) of
the Common Stock on the Conversion Date.
(d) MECHANICAL ADJUSTMENTS. The number of Conversion Shares
issuable upon the conversion of this Note and the Conversion Price shall be
subject to adjustment from time to time, as follows:
(1) If the Company shall at any time pay a dividend on its Common
Stock (including, if applicable, shares of such stock held by the Company
in treasury) in shares of its Common Stock, subdivide its outstanding
shares of Common Stock into a larger number of shares or combine its
outstanding shares of Common Stock into a smaller number of shares, the
number of Conversion Shares issuable upon conversion of this Note
immediately prior thereto shall be adjusted so that this Note shall
thereafter be exercisable for the number of Conversion Shares equal to the
number of shares of Common Stock which the Holder would have held after the
happening of any of the events described above had this Note been converted
in full immediately prior to the
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<PAGE>
happening of such event. An adjustment made pursuant to this paragraph (1)
shall become effective retroactively to the record date in the case of a
dividend and shall become effective on the effective date in the case of a
subdivision or combination.
(2) If the Company shall issue rights or warrants to all holders of
shares of Common Stock for the purpose of entitling them (for a period not
exceeding forty-five (45) days from the date of issuance) to subscribe for
or purchase shares of Common Stock at a price per share (taking into
account any consideration received by the Company for such rights or
warrants, the value of such consideration, if other than cash, to be
determined in good faith by the Board of Directors) less than the average
market price per share (determined as provided below) of the Common Stock
on the declaration date for such issuance, then in each such case, the
number of Conversion Shares thereafter issuable upon conversion of this
Note after such record date shall be determined by multiplying the number
of Conversion Shares issuable upon conversion of this Note on the date
immediately preceding such declaration date by a fraction, the numerator of
which shall be the sum of the number of shares of Common Stock outstanding
on such declaration date and the number of additional shares of Common
Stock so offered for subscription or purchase in connection with such
rights or warrants, and the denominator of which shall be the sum of the
number of shares of Common Stock outstanding on such declaration date and
the number of shares of Common Stock which the aggregate offering price of
the total number of shares so offered would purchase at such average market
price; PROVIDED, HOWEVER, if all the shares of Common Stock offered for
subscription or purchase are not delivered upon the exercise of such rights
or warrants, upon the exercise of such rights or warrants the number of
Conversion Shares issuable upon conversion of this Note shall thereafter be
readjusted to the number of Conversion Shares which would have been in
effect had the numerator and the denominator of the foregoing fraction and
the resulting adjustment been made based upon the number of shares of
Common Stock actually delivered upon the exercise of such rights or
warrants rather than upon the number of shares of Common Stock offered for
subscription or purchase. Such adjustment shall be made whenever any such
rights or warrants are issued, and shall become effective on the date of
issuance retroactive to the record date for determination of shareholders
entitled to receive such rights or warrants. For the purposes of this
paragraph (2), the number of shares of Common Stock at any time outstanding
shall not include shares held in the treasury of the Company.
(3) If the Company shall distribute to all the holders of Common
Stock (A) any rights or warrants to subscribe for or purchase any security
of the Company (other than those referred to in paragraph (2) above) or any
evidence of indebtedness or other securities of the Company (other than
Common Stock), or (B) assets (other than cash) having a fair market value
(as determined in a resolution adopted by the Board of Directors of the
Company, which shall be conclusive evidence of such fair market value) in
an amount during any 12-month period equal to more than 10% of the market
capitalization (as defined below) of the Company, then in each such case
the number of
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<PAGE>
Conversion Shares issuable upon conversion of this Note shall be, after the
record date for determination of the shareholders entitled to receive such
distribution, determined by multiplying the number of Conversion Shares
issuable upon conversion of this Note on the day immediately preceding the
date of declaration or authorization by the Board of Directors of the
Company of such distribution by a fraction, the numerator of which shall be
the average market price per share (determined as provided in paragraph (5)
below) of the Common Stock on such declaration date, and the denominator of
which shall be such average market price per share less the then fair
market value (as determined by the Board of Directors of the Company as
provided above) of the portion of the assets, rights, warrants, evidences
of indebtedness or other securities so distributed applicable to one share
of Common Stock. Such adjustment shall become effective retroactively
immediately after the declaration date. The term "market capitalization"
shall mean an amount determined by multiplying the number of shares of
Common Stock outstanding on such declaration date by the average market
price per share (determined as provided in paragraph (5) below) of the
Common Stock on such declaration date.
(4) In case of any capital reorganization or any reclassification
(other than a change in par value) of the capital stock of the Company, or
of any conversion of the Common Stock into securities of another
corporation, or in case of the consolidation or merger of the Company with
or into any other person (other than a merger which does not result in any
reclassification, conversion, exchange or cancellation of outstanding
shares of Common Stock) or in case of any sale or conveyance of all or
substantially all of the assets of the Company, the person formed by such
consolidation or resulting from such capital reorganization,
reclassification or merger or which acquires such assets, as the case may
be, shall make provision such that this Note shall thereafter be
convertible for the kind and amount of shares of stock, other securities,
cash and other property receivable upon such capital reorganization,
reclassification of capital stock, consolidation, merger, sale or
conveyance, as the case may be, by a holder of the shares of Common Stock
equal to the number of Conversion Shares issuable upon conversion of this
Note immediately prior to the effective date of such capital
reorganization, reclassification of capital stock, consolidation, merger,
sale or conveyance, assuming (A) such holder of Common Stock of the Company
is not a person with which the Company consolidated or into which the
Company merged or which merged into the Company or to which such sale or
transfer was made as the case may be ("constituent entity"), or an
Affiliate of a constituent entity, and (B) such person failed to exercise
his rights of election, if any, as to the kind or amount of securities,
cash and other property receivable upon such capital reorganization,
reclassification of capital stock, consolidation, merger, sale or
conveyance and, in any case appropriate adjustment (as determined by the
Board of Directors) shall be made in the application of the provisions
herein set forth with respect to rights and interests thereafter of the
Holder, to the end that the provisions set forth herein (including the
specified changes in and other adjustments of the number of Conversion
Shares issuable upon conversion of this Note) shall thereafter be
applicable, as near as reasonably may be, in relating to any shares of
stock or other securities or other property thereafter deliverable upon
conversion of this Note.
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<PAGE>
(5) For the purpose of any computation under this Section 6, the
average market price per share of Common Stock on any date shall be the
average of the daily closing prices for the fifteen (15) consecutive
trading days commencing twenty (20) trading days before the date of
declaration or authorization by the Board of Directors of the Company of
such issuance or distribution. The closing price for each day shall be the
last reported sales price regular way or, in case no such sale takes place
on such day, the average of the closing bid and asked prices regular way,
in either case on the principal national securities exchange on which the
Common Stock is listed or admitted to trading, or, if not listed or
admitted to trading on any national securities exchange, on NASDAQ National
Market System or, if the Common Stock is not listed or admitted to trading
on any national securities exchange or quoted on NASDAQ National Market
System, the average of the closing bid and asked prices as furnished by any
New York Stock Exchange member firm selected from time to time by the Board
of Directors of the Company for such purpose or if no such prices are
available, the fair market value of the Common Stock as determined by good
faith action of the Board of Directors of the Company.
(6) All calculations under this Section 6 shall be made to the
nearest one-thousandth of a share of Common Stock.
(7) The price payable by the Holder for the issuance of Conversion
Shares by the Company upon conversion of this Note (the "CONVERSION PRICE")
is $1.80 per Conversion Share at the date of this Note. Whenever the
number of Conversion Shares issuable upon the conversion of this Note is
adjusted as herein provided, the Conversion Price payable upon conversion
of this Note shall be adjusted by multiplying such Conversion Price
immediately prior to such adjustment by a fraction, the numerator of which
shall be the number of Conversion Shares issuable upon the conversion of
this Note immediately prior to such adjustment, and the denominator of
which shall be the number of Conversion Shares so issuable immediately
thereafter.
(8) For the purpose of this Section 6, the term "shares of Common
Stock" shall mean (A) the class of stock designated as the Common Stock of
the Company at the date of this Note or (B) any other class of stock
resulting from successive changes or reclassification of such shares
consisting solely of changes in par value, or from par value to no par
value, or from no par value to par value. In the event that at any time,
as a result of an adjustment made pursuant to paragraph (1) through (4)
above, the Holder shall become entitled to receive any shares of the
Company other than shares of Common Stock, thereafter the number of such
other shares so receivable upon conversion of this Note and the Conversion
Price shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to
the Conversion Shares contained in paragraphs (1) through (7), inclusive,
above, and the provisions of Sections 6(e), 6(f) and 6(g), inclusive, with
respect to the Conversion Shares, shall apply on like terms to any such
other shares.
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<PAGE>
(9) Upon the expiration of any rights, options, warrants or
conversion or exchange privileges the issuance of which shall have resulted
in an adjustment of the Conversion Price, if any thereof shall not have
been exercised, the Conversion Price shall, upon such expiration, be
readjusted and shall thereafter be such as it would have been had it been
originally adjusted (or had the original adjustment not been required, as
the case may be) as if (A) the only shares of Common Stock so issued were
the shares of Common Stock, if any, actually issued or sold upon the
exercise of such rights, options, warrants, exchange privileges or
conversion rights and (B) such shares of Common Stock, if any, were issued
or sold for the consideration actually received by the Company upon such
exercise plus the consideration, if any, actually received by the Company
for the issuance, sale or grant of all of such rights, options, warrants or
conversion rights whether or not exercised; PROVIDED that no such
readjustment shall have the effect of increasing the Conversion Price or
decreasing the number of Conversion Shares issuable upon the conversion of
this Note by an amount in excess of the amount of the adjustment initially
made in respect to the issuance, sale or grant of such rights, options,
warrants or conversion rights.
(10) Notwithstanding anything herein to the contrary, there shall be
no adjustment in the number of Conversion Shares or in the Conversion Price
in respect of Permitted Issuances.
(e) TIME OF ADJUSTMENTS. Each adjustment required by Section 6
shall be effective as and when the event requiring such adjustment occurs.
(f) NOTICE OF ADJUSTMENT. Whenever the number of Conversion
Shares issuable upon the conversion of this Note or the Conversion Price is
adjusted as herein provided, the Company shall promptly mail by first class
mail, postage prepaid, to the Holder notice of such adjustment or adjustments,
and shall deliver to the Holder a certificate of a firm of independent public
accountants selected by the Board of Directors of the Company (who may be the
regular accountants employed by the Company) setting forth the number of
Conversion Shares issuable upon the conversion of this Note and the Conversion
Price after such adjustment, setting forth a brief statement of the facts
requiring such adjustment and setting forth the computation by which such
adjustment was made. Such certificate shall be conclusive evidence of the
correctness of such adjustment.
(g) NO ADJUSTMENT FOR DIVIDENDS. Except as provided in Section
6(d), no adjustment in respect of any dividends shall be made during the term of
this Note or upon the conversion of this Note.
(h) CONSOLIDATION, MERGER, SALE, ETC. In case of any
consolidation or merger of the Company with or into another entity (whether or
not the Company is the surviving entity) or in case of any sale, transfer or
lease of all or substantially all of the assets of the Company, the Company or
such successor or purchasing entity, as the case may be, shall execute with the
Holder an agreement that the Holder shall have the right thereafter upon
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<PAGE>
payment of the Conversion Price in effect immediately prior to such action to
purchase upon conversion of this Note the kind and amount of shares and other
securities, cash and property that the Holder would have owned or would have
been entitled to receive after the happening of such consolidation, merger,
sale, transfer, lease or conveyance had this Note been converted in full
immediately prior to such action, and if the successor or purchasing entity is
not a corporation, such person shall provide appropriate tax indemnification
with respect to such shares or other securities and property so that upon
conversion of this Note, the Holder would have the same benefits the Holder
otherwise would have had if such successor or purchasing person were a
corporation. Such agreement shall provide for adjustments that shall be as
nearly equivalent as may be practicable to the adjustments provided for in
Sections 6(d), 6(e), 6(f) and 6(g), inclusive. The provisions of this Section
6(h) shall similarly apply to successive consolidations, mergers, sales or
conveyances. No payment or adjustment shall be made upon any conversion on
account of any interest accrued on this Note (or portions thereof) surrendered
for conversion or on account of any dividends on the Common Stock issued upon
such conversion; PROVIDED, HOWEVER, that nothing contained in this Section 6
shall alter or impair the obligation of the Company to pay interest on this Note
pursuant to the terms hereof notwithstanding the conversion of this Note.
(i) TAXES. The issue of stock certificates on conversions of
this Note shall be made without charge to the Holder for any tax in respect of
the issue thereof. The Company shall not, however, be required to pay any tax
which may be payable in respect of any transfer involved in the issue and
delivery of shares in any name other than that of the Holder, and the Company
shall not be required to issue or deliver any such stock certificate unless and
until the person or persons requesting the issue thereof shall have paid to the
Company the amount of such tax or shall have established to the satisfaction of
the Company that such tax has been paid.
(j) RESERVATION OF SHARES. The Company shall at all times
reserve and keep available out of the aggregate of its authorized but unissued
shares or its issued shares held in its treasury, or both, for the purpose of
effecting the conversion of this Note, such number of its duly authorized shares
of Common Stock as shall from time to time be sufficient to effect the
conversion, exchange or exercise of outstanding securities of the Company
convertible into or exchangeable or exercisable for any shares of the Common
Stock, all rights to subscribe for or to purchase, all options for the purchase
of, and all calls, commitments or claims of any character relating to, any
shares of Common Stock and any securities convertible into or exchangeable or
exercisable for any of the foregoing.
(k) REGISTRATION OR APPROVAL. If any shares of Common Stock
reserved or to be reserved for the purpose of conversion of this Note require
registration with or approval of any governmental authority under any federal or
state law before such shares may be validly delivered upon conversion, then the
Company covenants that it will in good faith and as expeditiously as possible
endeavor to secure such registration or approval, as the case may be.
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<PAGE>
(l) VALIDLY ISSUED, ETC. The Company covenants that all shares
of Common Stock which may be delivered upon conversion of this Note shall upon
delivery be validly issued, fully paid and non-assessable and free from all
taxes, liens and charges with respect to the issue or delivery thereof.
(m) NOTICE. In the event:
(1) that the Company shall pay any dividend or make any distribution
to the holders of shares of Common Stock otherwise than in cash charged
against capital surplus, consolidated net earnings or retained earnings of
the Company and its Material Subsidiaries; or
(2) that the Company shall offer for subscription or purchase, pro
rata, to all of the holders of shares of Common Stock any additional shares
of stock of any class or any securities convertible into or exchangeable
for stock of any class; or
(3) of any reclassification or change of outstanding shares of the
class of Common Stock issuable upon the conversion of this Note (other than
a change in par value, or from par value to no par value, or from no par
value to par value, or as a result of a subdivision or combination), or of
any merger or consolidation of the Company with, or merger of the Company
into, another corporation (other than a merger or consolidation in which
the Company is the continuing corporation and which does not result in any
reclassification or change of outstanding shares of Common Stock issuable
upon conversion of this Note) or of any sale or conveyance to another
corporation of the property of the Company as an entirety or substantially
as an entirety;
then, and in any one or more of such events, the Company will give to the Holder
written notice thereof at least fifteen days prior to (A) the record date fixed
with respect to any of the events specified in (1) and (2) above, and (B) the
effective date of any of the events specified in (3) above. Failure to give
such notice, or any defect therein, shall not affect the legality or validity of
such dividend, distribution, reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation or winding up.
SECTION 7. LEGENDS.
(a) Each certificate for Conversion Shares and any certificate
issued in exchange therefor or on conversion or upon transfer, except
certificates issued in connection with a sale registered under the Securities
Act of 1933, as amended, and except as provided below, shall bear the legends to
the following effects:
1. "The shares represented by this certificate have not been
registered under the Securities Act of 1933 and may not be offered, sold,
transferred or otherwise disposed of except in compliance with said Act."
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2. "The shares represented by this certificate are subject to
restrictions set forth in the Registration Rights Agreement dated as of
__________, 1995, a copy of which is on file in the office of the Secretary
of the Company."
3. "The shares represented by this certificate are subject to the
restrictions contained in a Shareholders Agreement dated as of __________,
1995, a copy of which is on file in the office of the Secretary of the
Company."
4. "This certificate also evidences and entitles the holder hereof
to certain Rights as set forth in a Rights Agreement between Forest Oil
Corporation and Mellon Securities Trust Company, dated as of October 14,
1993 (the "Rights Agreement"), the terms of which are hereby incorporated
herein by reference and a copy of which is on file at the principal
executive offices of Forest Oil Corporation. Under certain circumstances,
as set forth in the Rights Agreement, those Rights will be evidenced by
separate certificates and will no longer be evidenced by this certificate.
Forest Oil Corporation will mail to the holder of this certificate a copy
of the Rights Agreement without charge after receipt of a written request
therefor. As described in the Rights Agreement, Rights issued to or
acquired by any Acquiring Person (as defined in the Rights Agreement)
shall, under certain circumstances, become null and void."
(b) The legend stated in Section 7(a)(1) shall be removed by
delivery of one or more substitute certificates without such legend if the
holder thereof shall have delivered to the Company a copy of a letter from the
staff of the Securities and Exchange Commission or an opinion of counsel, in
form and substance reasonably satisfactory to the Company, to the effect that
the legend is not required for purposes of the Securities Act of 1933, as
amended.
(c) The legend stated in Section 7(a)(2) shall be removed at
such time as the Warrant Shares are no longer subject to the Registration Rights
Agreement referenced therein.
(d) The legend stated in Section 7(a)(3) shall not be required
unless and until the Shareholders Agreement shall be executed and delivered by
the parties thereto and thereafter shall be removed in accordance with the terms
of the Shareholders Agreement.
SECTION 8. COSTS AND EXPENSES. Subject to Section 9, the Company
promises to pay all costs and expenses, including reasonable attorneys' fees
incurred in the collection and enforcement of this Note. The Company and any
endorsers of this Note hereby consent to renewals and extensions of time at or
after the maturity hereof, without notice, and hereby waive diligence,
presentment, protest, demand and notice of every kind and, to the full extent
permitted by law, the right to plead any statute of limitations as a defense to
any demand hereunder.
SECTION 9. NONRECOURSE. Notwithstanding anything herein or in any
other Transaction Document to the contrary, except as otherwise set forth in
this Section 9 to the
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contrary, the Holder agrees (a) to look solely to the Collateral for payment of
the principal amount of and interest on this Note and for the payment of the
Enforcement Expenses, (b) that its sole recourse for the repayment of the
principal amount of and interest on this Note and the Enforcement Expenses shall
be to the Collateral, and (c) that it shall not seek repayment of the principal
amount of or interest on this Note or the Enforcement Expenses or to enforce
this Note or the payment of such amounts by any action or proceeding wherein a
money judgment shall be sought against the Company, or any stockholder, officer,
director, agent or employee of the Company, except that the Holder may bring an
action for declaratory judgment, action for injunction or an action for specific
performance solely for the purpose of enabling the Holder to realize upon the
Collateral. The Holder may also bring a foreclosure action, action for specific
performance, or other appropriate action or proceeding (including to obtain a
deficiency judgment) solely for the purpose of enabling the Holder to realize
upon (i) the Company's interest in the Collateral and (ii) the income arising
from the Collateral to the extent received, directly or indirectly, by the
Company after the occurrence of an Event of Default (the "RECOURSE
DISTRIBUTIONS") (collectively, the "DEFAULT COLLATERAL"); PROVIDED, HOWEVER,
that any judgment in any such action or proceeding shall be enforceable against
the Company only to the extent of any such Default Collateral; PROVIDED FURTHER,
HOWEVER, that the provisions of this Section 9 shall not (A) impair the validity
of the Obligations or in any way affect or impair the Lien of any Security
Document or the right of the Holder to foreclose any Security Document following
the occurrence and during the continuation of an Event of Default; (B) impair
the right of the Holder to name the Company as a party defendant in any action
or suit for judicial foreclosure and sale under any Security Document; (C)
affect the validity or enforceability of this Note or the other Transaction
Documents; (D) impair the right of the Holder to obtain the appointment of a
receiver with respect to the Collateral; (E) impair the right of the Holder to
bring suit for recovery of a money judgment against the Company for recovery of
damages attributable to fraud or intentional misrepresentation by the Company or
any other person in connection with the Purchase Agreement, this Note or any
other Transaction Documents; (F) impair the right of the Holder to obtain a
money judgment against the Company or any stockholder, officer, director or
employee of the Company for the Recourse Distributions received by such person;
(G) impair the right of the Holder to bring suit for recovery of a money
judgment against the Company or any stockholder, officer, director or employee
of the Company with respect to the Company's misappropriation of escrows or
income collected in advance with respect to the Collateral; (H) impair the right
of the Holder to obtain insurance proceeds or condemnation proceeds due to the
Holder pursuant to any Security Document; (I) impair the right of the Holder to
obtain a money judgment or otherwise enforce the provisions of Section 4.4 or
Article X of the Purchase Agreement even after repayment in full by the Company
of the Obligations; (J) prevent or in any way hinder the Holder from exercising,
or constitute a defense, counterclaim, or other basis for relief in respect of
the exercise of, any other remedy against any or all of the Collateral for this
Note as provided in the Security Documents; or (K) impair the right of the
Holder to bring suit for recovery of a money judgment against the Company or any
stockholder, officer, director or employee of the Company with respect to any
misapplication of insurance proceeds or condemnation proceeds approved or
received by any such person with respect to the Collateral. The parties agree
that this Section 9 shall be subject to 11 U.S.C. 1111(b) of the Bankruptcy
Code.
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SECTION 10. THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK.
SECTION 11. SEVERABILITY OF PROVISIONS. Any provision of this Note
that is prohibited or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of the prohibition or
unenforceability without invalidating the remaining provisions of this Note or
affecting the validity or enforceability of the provision in any other
jurisdiction.
SECTION 12. HEADINGS AND REFERENCES. Headings in this Note are
included for the convenience of reference only and do not constitute a part of
this Note for any other purpose. References to sections in this Note are
references to the sections of this Note, unless the context shall require
otherwise.
SECTION 13. EXCLUSIVE JURISDICTION. Each of the Company and the
Holder, by acceptance hereof, (1) agrees that any legal action with respect to
this Note shall be brought exclusively in the courts of the State of New York or
of the United States of America for the Southern District of New York, (2)
accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of those courts, and (3) irrevocably waives
any objection, including, without limitation, any objection to the laying of
venue or based on the grounds of FORUM NON CONVENIENS, which it may now or
hereafter have to the bringing of any legal action in those jurisdictions;
PROVIDED, HOWEVER, that each of the Company and the Holder may assert in a legal
action in any other jurisdiction or venue each defense, third-party claim or
similar claim that, if not so asserted in such legal action, may thereafter not
be asserted by such party in an original legal action in the courts referred to
in clause (1) above.
SECTION 14. WAIVER OF JURY TRIAL. Each of the Company and the
Holder, by acceptance hereof, waives any right to a trial by jury in any legal
action to enforce or defend any right under this Note or any amendment,
instrument, document or agreement delivered, or which in the future may be
delivered, in connection with this Note and agrees that any legal action shall
be tried before a court and not before a jury.
SECTION 15. NO RECOURSE AGAINST OTHERS. A director, officer,
employee or stockholder, as such, of the Company shall not have any liability
for any obligations of the Company under this Note or for any claim based on, in
respect of or by reason of, such obligations or its creation. The Holder by
accepting this Note waives and releases all such liability. The waiver and
release are part of the consideration for the issue of this Note.
17
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Note to be duly
executed and delivered by its officer thereunto duly authorized as of the date
and at the place first written above.
FOREST OIL CORPORATION
By:
---------------------------
Title:
------------------------
S-18
<PAGE>
EXHIBIT A
[FORM OF CONVERSION NOTICE]
TO FOREST OIL CORPORATION
The undersigned owner of this Note hereby irrevocably exercises the
option to convert this Note, or portion hereof (which is $1,000 or an integral
multiple thereof) below designated, into shares of Common Stock of the Company
in accordance with the terms of this Note, and directs that the shares issuable
and deliverable upon the conversion, together with any check in payment for
fractional shares and a Note representing any unconverted principal amount
hereof, be issued and delivered to the registered holder hereof unless a
different name has been indicated below. If shares are to be issued in the name
of a person other than the undersigned, the undersigned will pay all transfer
taxes payable with respect hereto.
Dated:
-------------
-------------------------
A-1
<PAGE>
EXHIBIT B
FORM OF
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT dated as of __________, 1995 between
FOREST OIL CORPORATION, a New York corporation (the "COMPANY"), and
[** FOR PURCHASER REGISTRATION RIGHTS AGREEMENT **] [** THE ANSCHUTZ
CORPORATION, a New York corporation **] [** FOR JEDI REGISTRATION RIGHTS
AGREEMENT **] [** JOINT ENERGY DEVELOPMENT INVESTMENTS LIMITED PARTNERSHIP, a
Delaware limited partnership ("JEDI") **] (the "SHAREHOLDER").
Terms not otherwise defined herein have the meanings stated in [** FOR
PURCHASER REGISTRATION RIGHTS AGREEMENT: **] [** the Purchase Agreement **] [**
FOR JEDI REGISTRATION RIGHTS AGREEMENT **] [** the Restructure Agreement **] (as
defined below).
RECITALS
[** FOR PURCHASER REGISTRATION RIGHTS AGREEMENT: **]
A. The Shareholder and the Company are parties to the Purchase
Agreement (the "PURCHASE AGREEMENT") dated as of __________, 1995, pursuant to
which, among other things, (i) on the First Closing Date, the Shareholder will
purchase the Purchaser Note and may, upon the conversion thereof, thereafter
acquire the Purchaser Note Conversion Shares and (ii) on the Second Closing
Date, the Shareholder may purchase the Purchaser Additional Shares, the
Purchaser Preferred Shares and the Tranche A Warrants and may, upon the
conversion of the Purchaser Preferred Shares and exercise of the Tranche A
Warrants, thereafter acquire the Purchaser Preferred Conversion Shares and the
Tranche A Warrant Shares, respectively. The Purchaser Note Conversion Shares,
the Purchaser Additional Shares, the Purchaser Preferred Conversion Shares and
the Tranche A Warrant Shares are collectively referred to as the "SHAREHOLDER
SHARES".
B. The parties expect that on or before the Second Closing Date,
Joint Energy Development Investments Limited Partnership, a Delaware limited
partnership (the "OTHER SHAREHOLDER") will acquire (i) the JEDI Note, and
(ii) the Tranche B Warrants to purchase the
<PAGE>
Tranche B Warrant Shares. Tranche B Warrant Shares acquired by JEDI are
referred to as the "OTHER SHAREHOLDER SHARES".
C. The parties expect that on or before the Second Closing Date the
Company will enter into a Registration Rights Agreement with the Other
Shareholder (the "OTHER REGISTRATION RIGHTS AGREEMENT"), pursuant to which the
Company will grant to the Other Shareholder and certain other persons certain
rights with respect to the registration under the Securities Act of the
disposition of the Other Shareholder Shares. The Other Shareholder and such
other persons are collectively referred to as the "OTHER REGISTERING
SHAREHOLDERS".
D. The parties expect that on or before the Second Closing Date, the
Other Shareholder will execute and deliver to the Shareholder the JEDI/Purchaser
Option providing for an option to purchase the Tranche B Warrant Shares. The
Shareholder Shares and, when acquired by the Shareholder and the Tranche B
Warrant Shares, are collectively referred to as the "REGISTRABLE SHARES".
E. The Company and the Shareholder desire to enter into this
Agreement providing for the registration under the Securities Act of the
disposition of the Registrable Shares.
[** FOR JEDI REGISTRATION RIGHTS AGREEMENT: **]
A. The Shareholder and the Company are parties to the Loan Agreement
dated as of December 28, 1993, as amended as of the date hereof and by the
Restructure Agreement dated as of the date hereof (the "RESTRUCTURE AGREEMENT"),
pursuant to which, concurrently herewith, the Shareholder is acquiring the
Tranche B Warrants to purchase the Tranche B Warrant Shares. The Tranche B
Warrant Shares acquired by JEDI are referred to as the "REGISTRABLE SHARES".
B. The Company and The Anschutz Corporation, a Kansas corporation
(the "OTHER SHAREHOLDER"), are parties to a Purchase Agreement (the "PURCHASE
AGREEMENT") dated as of __________, 1995, pursuant to which, among other things,
(i) on __________, 1995 the Other Shareholder purchased the Purchaser Note (as
defined in the Purchase Agreement) and may, upon the conversion thereof,
thereafter acquire the Purchaser Note Conversion Shares (as defined in the
Purchase Agreement) and (ii) concurrently herewith the Other Shareholder is
purchasing the Purchaser Additional Shares, the Purchaser Preferred Shares and
the Tranche A Warrants (each as defined in the Purchase Agreement) and may, upon
conversion of the Purchaser Preferred Shares and exercise of the Tranche A
Warrants, thereafter acquire the Purchaser Preferred Conversion Shares and the
Tranche A Warrant Shares (each as defined in the Purchase Agreement). The
Purchaser Note Conversion Shares, the Purchaser Additional Shares, the Purchaser
Preferred Conversion Shares and the Tranche A Warrant Shares are collectively
referred to as the "OTHER SHAREHOLDER SHARES".
- 2 -
<PAGE>
C. Pursuant to the Purchase Agreement, on __________, 1995 the
Company and the Other Shareholder entered into a Registration Rights Agreement
(the "OTHER REGISTRATION RIGHTS AGREEMENT") pursuant to which the Company
granted to the Other Shareholder and certain other persons (the Other
Shareholder and such other persons, collectively, the "OTHER REGISTERING
SHAREHOLDERS") certain rights with respect to the registration under the
Securities Act of the disposition of the Other Registrable Shares (as defined
below).
D. Concurrently herewith, the Shareholder will execute and deliver
to the Other Shareholder the JEDI/Anschutz Option providing for an option to
purchase the Tranche B Warrant Shares. The Other Shareholder Shares and, when
acquired by the Other Shareholder, the Tranche A Warrant Shares and the Tranche
B Warrant Shares are hereinafter referred to as the "OTHER REGISTRABLE SHARES".
E. The Company and the Shareholder desire to enter into this
Agreement providing for the registration under the Securities Act of the
disposition of the Registrable Shares.
AGREEMENT
The parties agree as follows:
SECTION 1. REGISTRATION RIGHTS.
(a) [** FOR PURCHASER REGISTRATION RIGHTS AGREEMENT: **] [**
From and after the date that is nine months after the First Closing Date or, if
the Second Closing Date shall have occurred on or before such date, the date
that is nine months after the Second Closing Date [** FOR JEDI REGISTRATION
RIGHTS AGREEMENT: **] [** From and after the date that is the Termination Date
(as defined in the JEDI/Anschutz Option)**] (the "EFFECTIVE DATE") and to and
including the tenth anniversary of the Effective Date, subject to extension
pursuant to Section 1(f), on one or more occasions when the Company shall have
received the written request of the Shareholder, any pledgee of Registrable
Shares from the Shareholder or holders of at least 1,000,000 Registrable Shares
in the aggregate (as such number of shares may be adjusted in the event of any
change in the Registerable Shares by reason of stock dividends, split-ups,
reverse split-ups, mergers, recapitalizations, subdivisions, conversions,
exchanges of shares or the like) that shall have been acquired directly or
indirectly from the Shareholder, in each case in a transaction or series of
transactions not constituting a Rule 144 Transaction (as defined in
Section 1(h)) (each such person, when requesting registration under this Section
1 and thereafter in connection with any such registration, being hereinafter
referred to as a "REGISTERING SHAREHOLDER"), as expeditiously as practicable the
Company shall include not less than 1,000,000 Registrable Shares (as such number
may be adjusted) specified by the Registering Shareholder in a Registration
Statement (as defined in Section 1(h)). If the requested registration pursuant
to this Section 1(a) shall involve an underwritten offering, the Registering
Shareholder initiating a request for registration of Registrable Shares pursuant
to this Section 1(a) shall select
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<PAGE>
(with the consent of the Company, not to be unreasonably withheld) the managing
underwriter in connection with the offering and any additional investment
bankers and managers to be used in connection with the offering.
Notwithstanding anything to the contrary in the foregoing:
(1) [** FOR PURCHASER REGISTRATION RIGHTS AGREEMENT: **] [** the
Company shall not be required to prepare and file pursuant to this Section
1 more than two Registration Statements if the Second Closing shall not
occur and not more than four Registration Statements if the Second Closing
shall occur **] [** FOR JEDI REGISTRATION RIGHTS AGREEMENT: **] [** the
Company shall not be required to prepare and file pursuant to this Section
1 more than two Registration Statements **]; PROVIDED, that if 10% or more
of the Registrable Shares requested to be registered by the Registering
Shareholder initiating a request for registration of Registrable Shares
pursuant to this Section 1(a) are excluded from any registration in
accordance with Section 1(a)(2) and an investment banking firm of
recognized national standing shall advise the Company that the number of
the Registerable Shares requested to be registered by the Registering
Shareholder was not so great, at the time of the request and in light of
the market conditions then prevailing, as would adversely affect the
offering, including the price at which the Registerable Shares can be sold,
there shall be provided one additional registration under this Section
(1)(a)(1) in respect of each such exclusion, and
(2) if a requested registration pursuant to this Section 1(a) shall
involve an underwritten offering, and if the managing underwriter shall
advise in writing the Company and the Registering Shareholders that, in its
opinion, the number of Registrable Shares of any class proposed to be
included in the registration (including securities of the Company which are
proposed to be offered by persons other than Registering Shareholders)
exceeds the number which would have an adverse effect on the offering,
including the price at which the Registrable Shares can be sold, the
Company will include in the registration the maximum number of securities
which it is so advised can be sold without the adverse effect, allocated as
follows:
(A) FIRST, all Registrable Shares owned by Registering
Shareholders and requested to be included in such registration (if
necessary, allocated pro rata among all Registering Shareholders on the
basis of the relative number of Registrable Shares each such Registering
Shareholder has requested to be included in the registration);
(B) SECOND, any Other Registrable Shares owned by Other
Registering Shareholders and requested to be included in the registration
or otherwise (if necessary, allocated pro rata among all Other Registering
Shareholders on the basis of the relative number of Other Registrable
Shares each such Other Registering Shareholder has requested to be included
in the registration); and
(C) THIRD, any other securities proposed to be included in the
registration.
- 4 -
<PAGE>
(b) From and after the Effective Date to and including the tenth
anniversary thereof, if the Company shall determine to register or qualify by a
registration statement filed under the Securities Act and under any applicable
state securities laws, any offering of any Equity Securities of the Company,
whether pursuant to Section 1(a) or otherwise, the Company shall give notice of
such determination to each potential Registering Shareholder and Other
Registering Shareholder (collectively, the "TRANSACTION REGISTERING
SHAREHOLDERS" about which the Company has knowledge; it being understood that
without prior notice to the Company, the Company shall not be deemed to have
knowledge of the existence of any pledgee of Registrable Shares. The Company
shall, as expeditiously as possible and in good faith, include in the
registration statement such Registrable Shares and Other Registrable Shares
(collectively, the "TRANSACTION REGISTRABLE SHARES"), as those persons shall
specify by notice received by the Company not later than 30 days after the
giving of the notice by the Company (each person so notifying the Company being
hereinafter referred to as a "PIGGY-BACK SHAREHOLDER"). Notwithstanding
anything in the foregoing to the contrary,
(1) the Company shall not be required to include any shares owned by
Piggy-Back Shareholders in a registration statement on Form S-4 or S-8 (or
any successor form) or a registration statement filed in connection with an
exchange offer or other offering of securities solely to the then existing
shareholders of the Company;
(2) if a registration pursuant to this Section 1(b) is made with
respect to a registration under Section 1(a) of the Other Registration
Rights Agreement, and if the registration involves an underwritten
offering, the Other Shareholder shall select (with the consent of the
Company, not to be unreasonably withheld) the managing underwriter for the
offering and any additional investment bankers and managers to be used in
connection with the offering, and if the managing underwriter advises the
Company in writing that, in its opinion, the number of securities requested
to be included in the registration is so great as would adversely affect
the offering, including the price at which the Registrable Shares can be
sold, the Company will include in the registration the maximum number of
securities which it is so advised can be sold without the adverse effect,
allocated as follows:
(A) FIRST, all Other Registrable Shares proposed to be
registered pursuant to the request under the Other Registration Rights
Agreement (if necessary, allocated pro rata among the Other Registering
Shareholders on the basis of the relative number of Other Registrable
Shares each such Other Registering Shareholder has requested to be included
in the registration); and,
(B) SECOND, all Registrable Shares owned by Registering
Shareholders and requested to be included in the registration (if
necessary, allocated pro rata among all the Registering Shareholders on the
basis of the relative number of Registrable Shares each such Registering
Shareholder has requested to be included in the registration), and
- 5 -
<PAGE>
(C) THIRD, any other securities proposed to be registered by the
Company; and
(3) if a registration pursuant to this Section 1(b) is not made
pursuant to a request under Section 1(a) of the Other Registration Rights
Agreement, and if the registration involves an underwritten offering, the
Company shall select the managing underwriter for the offering and any
additional investment bankers and managers to be used in connection with
the offering, and if the managing underwriter advises the Company in
writing that, in its opinion, the number of securities requested to be
included in the registration is so great as would adversely affect the
offering, including the price at which the Registrable Shares can be sold,
the Company will include in the registration the maximum number of
securities which it is so advised can be sold without the adverse effect,
allocated as follows:
(A) FIRST, all securities proposed to be registered by the
Company for its own account,
(B) SECOND, all Transaction Registrable Shares requested to be
included in the registration under Section 1(b) of this Agreement or under
Section 1(b) of the Other Registration Rights Agreement (if necessary,
allocated pro rata among all requesting Transaction Registering
Shareholders, on the basis of the relative number of Transaction
Registrable Shares, each Transaction Registering Shareholder has requested
to be included in the registration); and
(C) THIRD, any other securities proposed to be registered by the
Company other than for its own account;
[** FOR PURCHASER REGISTRATION RIGHTS AGREEMENT: **] [** PROVIDED, HOWEVER, that
in no event will the number of Registrable Shares included in the Registration
pursuant to this Section 1(b)(3) be reduced to less than 10% of the aggregate
number of securities included in the registration. **]
(c) The Company shall provide each Registering Shareholder and
its representatives reasonable opportunity for due diligence in connection with
each registration of Registrable Shares of the Registering Shareholder pursuant
to this Section 1.
(d) At the request of one or more of the Registering
Shareholders or the Company in connection with any registration pursuant to this
Section 1, the Company and the requesting Registering Shareholders shall enter
into an appropriate underwriting agreement containing terms and provisions
customary in agreements of that nature, including provisions with respect to
expenses substantially the same as those set forth in Section 2 and provisions
with respect to indemnification and contribution substantially the same as those
set forth in Section 3.
- 6 -
<PAGE>
(e) Notwithstanding anything herein to the contrary, the Company
shall not be required to include in any registration pursuant to this Section 1
any Registrable Shares owned by a Registering Shareholder (1) if the Company
shall deliver to the Registering Shareholder an opinion, satisfactory in form,
scope and substance to the Registering Shareholder and addressed to the
Registering Shareholder by legal counsel satisfactory to the Registering
Shareholder, to the effect that the distribution of Registrable Shares proposed
by the Registering Shareholder is exempt from registration under the Securities
Act and all applicable state securities laws or (2) if such Registering
Shareholder or any underwriter of Registrable Shares shall fail to furnish to
the Company the information in respect of the distribution of the shares that
may be required under this Agreement to be furnished by the Registering
Shareholder or the underwriter to the Company.
(f) Upon written notice to each Registering Shareholder, the
Company may postpone effecting a registration pursuant to this Section 1 on one
occasion during any period of nine consecutive months, may require other holders
of shares registered pursuant to this Section 1 to refrain from disposing of the
shares under the registration or may require Transaction Registering
Shareholders to refrain from otherwise disposing of any shares of Equity
Securities of the Company owned by them (whether pursuant to Rule 144 under the
Securities Act or otherwise), in each case for a reasonable time specified in
the notice but not exceeding 90 days (which period may not be extended or
renewed), if (1) an investment banking firm of recognized national standing
shall advise the Company and the Registering Shareholders in writing that
effecting the registration or disposition would materially and adversely affect
an offering of Equity Securities of the Company the preparation of which had
then been commenced or (2) the Company is in possession of material non-public
information the disclosure of which during the period specified in such notice
the Company believes would not be in the best interests of the Company. The
period during which the rights granted under Section 1 may be exercised by a
Registering Shareholder shall be extended by one day beyond the tenth-
anniversary of the Effective Date for each day that pursuant to this Section
1(f), the Company postpones effecting a registration, requires the Registering
Shareholder to refrain from disposing of Registrable Shares under a registration
or otherwise requires the Registering Shareholder to refrain from disposing of
shares of Equity Securities of the Company pursuant to this Section 1(f).
(g) In the event the registration of Registrable Shares shall be
required by this Section 1:
(1) Each Registering Shareholder shall furnish, and shall cause each
underwriter of the Registrable Shares of the Registering Shareholder to be
distributed pursuant to the registration to furnish, to the Company in
writing promptly upon the request of the Company the additional information
regarding the Registering Shareholder or the underwriter, the contemplated
distribution of the Registrable Shares and the other information regarding
the proposed distribution by the Registering Shareholder and the
underwriter that shall be required in connection with the proposed
distribution by the applicable securities laws of the United States of
America and the states thereof in which
- 7 -
<PAGE>
the Registrable Shares are contemplated to be distributed. The information
furnished by any Registering Shareholder or any underwriter shall be
certified by the Registering Shareholder or the underwriter, as the case
may be, and shall be stated to be specifically for use in connection with
the registration.
(2) The Company shall prepare and file with the Securities and
Exchange Commission the Registration Statement, including the Prospectus
(as defined in Section 1(h)), under the Securities Act and as required
under any applicable state securities laws, on the form that is then
required or available for use by the Company to permit each Registering
Shareholder, upon the effective date of the Registration Statement, to use
the Prospectus in connection with the contemplated distribution by the
Registering Shareholder of the Registrable Shares so registered. The
Company shall deliver to each Registering Shareholder one executed copy of
the Registration Statement and each amendment thereof. If the registration
shall have been initiated solely by the Company or shall not have been
initiated by the Registering Shareholder, the Company shall not be
obligated to prosecute the registration, and may withdraw the Registration
Statement at any time prior to the effectiveness thereof, if the Company
shall determine in good faith not to proceed with the offering of
securities included in the Registration Statement. In all other cases, the
Company shall use its best efforts to cause the Registration Statement to
become effective and, as soon as practicable after the effectiveness
thereof, shall deliver to each Registering Shareholder evidence of the
effectiveness and a reasonable supply of copies of the Prospectus. In
addition, if necessary for resale by the Registering Shareholders, the
Company shall qualify or register in such states as may be reasonably
requested by each Registering Shareholder the Registrable Shares of the
Registering Shareholder that shall have been included in the Registration
Statement; PROVIDED that the Company shall not be obligated to file any
general consent to service of process or to qualify as a foreign
corporation in any state in which it is not subject to process or qualified
as of the date of the request.
(3) The Company shall use its best efforts to cause the Registration
Statement and the Prospectus to remain current, including the filing of
necessary amendments and supplements, and shall furnish copies of such
amendments and supplements to the Registering Shareholders, so as to permit
distributions by the Registering Shareholders during the respective
contemplated periods of distribution, but in no event longer than three
months from the effective date of the Registration Statement; PROVIDED that
the period shall be increased by the number of days that any Registering
Shareholder shall have been required by Section 1(f) to refrain from
disposing of the Registrable Shares owned by the Registering Shareholder in
the distribution. Notwithstanding anything in the foregoing to the
contrary, the Company may at any time upon notice to each Registering
Shareholder terminate the effectiveness of the Registration Statement or
upon notice to any Registering Shareholder withdraw from the Registration
Statement the Registrable Shares of the Registering Shareholder if, in the
opinion of counsel for the Company, there shall have arisen any legal
impediment to the offer of the Registrable Shares made by the Prospectus or
if any legal action or administrative proceeding shall
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<PAGE>
have been instituted or threatened or any other claim shall have been made
relating to the offer made by the Prospectus or against any of the parties
involved in the offer; PROVIDED that, promptly after those matters shall be
resolved to the satisfaction of counsel for the Company, pursuant to this
Section 1 the Company shall cause the registration of Registrable Shares
formerly covered by the Registration Statement that were removed from
registration by the action of the Company.
(4) Each Registering Shareholder shall report to the Company
distributions made by the Registering Shareholder of Registrable Shares
pursuant to the Prospectus and, upon written notice by the Company that an
event has occurred as a result of which an amendment or supplement to the
Registration Statement or the Prospectus is required, the Registering
Shareholder shall cease further distributions pursuant to the Prospectus
until notified by the Company of the effectiveness of the amendment or
supplement. Each Registering Shareholder shall distribute Registrable
Shares only in accordance with the manner of distribution contemplated by
the Prospectus with respect to the Registrable Shares. Each Registering
Shareholder, by participating in a registration pursuant to this Section 1,
acknowledges that the remedies of the Company at law for failure by the
Registering Shareholder to comply with the undertaking contained in this
Section 1(g) would be inadequate and that the failure would not be
adequately compensable in damages and would cause irreparable harm to the
Company, and therefore agrees that undertakings made by the Registering
Shareholder in this Section 1(g) may be specifically enforced.
(5) The Company shall deliver to the Registering Shareholders, their
counsel and the underwriters, if any, of Registrable Shares owned by
Registering Shareholders to be distributed pursuant to such registration,
the certificates, opinions of counsel and comfort letters that are
customarily delivered in connection with underwritten public offerings.
(h) For the purposes of this Section 1, the following terms
shall have the following meanings:
[** FOR JEDI REGISTRATION RIGHTS AGREEMENT **]
(1) [** "ACTION" against any person means an action, suit,
investigation, complaint or other proceeding pending against or affecting
the person or its property, whether civil or criminal, in law or in equity
or before any Governmental Body. **]
(2) [** "AFFILIATE" of a person means any other person (1) that
directly or indirectly controls, is controlled by or is under common
control with, the person or any of its subsidiaries, (2) that directly or
indirectly beneficially owns or holds 5% or more of any class of voting
stock of the person or any of its subsidiaries or (3) 5% or more of the
voting stock of which is directly or indirectly beneficially owned or held
by the person or any of its subsidiaries. The term "CONTROL" means the
possession, directly or
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<PAGE>
indirectly, of the power to direct or cause the direction of the management
and policies of a person, whether through the ownership of voting
securities, by contract or otherwise. **]
(3) [** "CONSOLIDATED SUBSIDIARY" of a person at any date means any
subsidiary of the person or other entity the accounts of which would be
consolidated with those of the person in its consolidated financial
statements as of that date.**]
(4) [** "EQUITY SECURITIES" of a person means the capital stock of
the person and all other securities convertible into or exchangeable or
exercisable for any shares of its capital stock, all rights to subscribe
for or to purchase, all options for the purchase of, and all calls,
commitments or claims of any character relating to, any shares of its
capital stock and any securities convertible into or exchangeable or
exercisable for any of the foregoing. **]
(5) "REGISTRATION STATEMENT" means a registration statement filed by
the Company in accordance with Section 1(g)(2), including exhibits and
financial statements thereto, in the form in which it shall become
effective and, in the event of any amendment thereto after the effective
date of the registration statement, also means (from and after the
effectiveness of the amendment) the registration statement as so amended;
(6) "RULE 144 TRANSACTION" means a transaction involving the sale of
Registrable Shares to a person other than an affiliate of the Company under
circumstances in which all of the applicable conditions of Rule 144 or Rule
144A (or any similar provisions then in force) under the Securities Act are
satisfied.
(7) "PROSPECTUS" means the prospectus relating to the Registrable
Shares owned by the Registering Shareholders included in a Registration
Statement at the time it becomes effective and, in the event of any
amendment or supplement to the Prospectus after the effective date of the
Registration Statement, also means (from and after the effectiveness of the
amendment or the filing with the Securities and Exchange Commission of the
supplement) the Prospectus as so amended or supplemented; and
SECTION 2. EXPENSES.
(a) The Company shall bear all expenses of the following:
(1) preparing, printing and filing each Registration Statement and
Prospectus and each qualification required to be filed under federal and
state securities laws in connection with a registration pursuant to Section
1;
(2) furnishing to each Registering Shareholder one executed copy of
the related Registration Statement and the number of copies of the related
Prospectus that
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<PAGE>
may be required by Sections 1(g)(2) and 1(g)(3) to be so furnished,
together with a like number of copies of each amendment or supplement;
(3) performing its obligations under Section 1(g)(5);
(4) printing and issuing share certificates, including the transfer
agent's fees, in connection with each distribution so registered; and
(5) preparing audited financial statements required by the Securities
Act and the rules and regulations thereunder to be included in the
Registration Statement and preparing audited financial statements for use
in connection with the registration other than audited financial statements
required by the Securities Act and the rules and regulations thereunder;
(6) internal expenses (including without limitation, all salaries and
expenses of its officers and employees performing legal or accounting
duties;
(7) listing of the Registrable Shares; and
(8) fees and expenses of any special experts retained by the Company
in connection with the registration.
(b) The Registering Shareholders shall bear all other expenses
incident to the distribution by the respective Registering Shareholders of their
Registrable Shares in connection with a registration pursuant to Section 1,
including without limitation the selling expenses of the Registering
Shareholders, commissions, underwriting discounts, insurance, fees of counsel
for the Registering Shareholders and their underwriters.
SECTION 3. INDEMNIFICATION
(a) The Company shall indemnify and hold harmless each
Registering Shareholder participating in a registration pursuant to Section 1,
each underwriter of any of the Registrable Shares owned by the Registering
Shareholder to be distributed pursuant to the registration, each partner in each
Registering Shareholder, the officers and directors of the Registering
Shareholder and the underwriter and each person, if any, who controls the
Registering Shareholder, each partner in each Registering Shareholder or the
underwriter within the meaning of Section 15 (or any successor provision) of the
Securities Act, and their respective successors, against all claims, losses,
damages and liabilities to third parties (or actions in respect thereof) arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in the Registration Statement or the Prospectus or other
document incident thereto or any omission (or alleged omission) to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, and shall reimburse each such Registering
Shareholder and each other person indemnified pursuant to this Section 3(a) for
any legal and any other expenses reasonably incurred in connection with
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<PAGE>
investigating or defending any such claim, loss, damage, liability or action;
PROVIDED that the Company shall not be liable in any case to the extent that any
such claim, loss, damage or liability arises out of or is based on any untrue
statement or omission based upon written information furnished to the Company by
any Registering Shareholder or underwriter for a Registered Shareholder
specifically for use in the Registration Statement or the Prospectus.
(b) Each Registering Shareholder, by participating in a
registration pursuant to Section 1, thereby agrees to indemnify and to hold
harmless the Company and its officers and directors and each person, if any, who
controls any of them within the meaning of Section 15 (or any successor
provision) of the Securities Act, and their respective successors, against all
claims, losses, damages and liabilities to third parties (or actions in respect
thereof) arising out of or based upon any untrue statement (or alleged untrue
statement) of a material fact contained in the Registration Statement or the
Prospectus or other document incident thereto or any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and shall reimburse the
Company and each other person indemnified pursuant to this Section 3(b) for any
legal and any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or action;
PROVIDED that this Section 3(b) shall apply only if (and only to the extent
that) the statement or omission was made in reliance upon and in conformity with
information furnished to the Company in writing by the Registering Shareholder
specifically for use in the Registration Statement or the Prospectus.
(c) If any action or proceeding (including any governmental
investigation or inquiry) shall be brought or asserted against any person
indemnified under this Section 3, the indemnified person shall promptly notify
the indemnifying party in writing, and the indemnifying party shall assume the
defense of the action or proceeding, including the employment of counsel
satisfactory to the indemnified person and the payment of all expenses. The
indemnified person shall have the right to employ separate counsel in any action
or proceeding and to participate in the defense of the action or proceeding, but
the fees and expenses of that counsel shall be at the expense of the indemnified
person unless
(1) the indemnifying party shall have agreed to pay those fees and
expenses; or
(2) the indemnifying party shall have failed to assume the defense of
the action or proceeding or shall have failed to employ counsel reasonably
satisfactory to the indemnified person in the action or proceeding; or
(3) the named parties to the action or proceeding (including any
impleaded parties) include both the indemnified person and the indemnifying
party, and the indemnified person shall have been advised by counsel that
there may be one or more legal defenses available to the indemnified person
that are different from or additional to those available to the
indemnifying party (in which case, if the indemnified person notifies the
indemnifying party in writing that it elects to employ separate counsel at
the
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<PAGE>
expense of the indemnifying party, the indemnifying party shall not have
the right to assume the defense of such action or proceeding on behalf of
the indemnified person; it being understood, however, that the indemnifying
party shall not, in connection with any one action or proceeding or
separate but substantially similar or related actions or proceedings in the
same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than
one separate firm of attorneys at any time for the indemnified person,
which firm shall be designated in writing by the indemnified person).
The indemnifying party shall not be liable for any settlement of any action or
proceeding effected without its written consent, but if settled with its written
consent, or if there be a final judgment for the plaintiff in any such action or
proceedings, the indemnifying party shall indemnify and hold harmless the
indemnified person from and against any loss or liability by reason of the
settlement or judgment.
(d) If the indemnification provided for in this Section 3 is
unavailable to an indemnified person (other than by reason of exceptions
provided in this Section 3) in respect of losses, claims, damages, liabilities
or expenses referred to in this Section 3, then each applicable indemnifying
party, in lieu of indemnifying the indemnified person, shall contribute to the
amount paid or payable by the indemnified person as a result of the losses,
claims, damages, liabilities or expenses in such proportion as is appropriate to
reflect the relative fault of the indemnifying party on the one hand and of the
indemnified person on the other in connection with the statements or omissions
which resulted in the losses, claims, damages, liabilities or expenses as well
as any other relevant equitable considerations. The relative fault of the
indemnifying party on the one hand and of the indemnified person on the other
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the indemnifying
party or by the indemnified person and by these persons' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The amount paid or payable by a person as a result of
the losses, claims, damages, liabilities and expenses shall be deemed to include
any legal or other fees or expenses reasonably incurred by the person in
connection with investigating or defending any action or claim.
(e) Each Registering Shareholder participating in a registration
pursuant to Section 1 shall cause each underwriter of any of the Registrable
Shares owned by the Registering Shareholder to be distributed pursuant to the
registration to agree in writing on terms reasonably satisfactory to the Company
to indemnify and to hold harmless the Company and its officers and directors and
each person, if any, who controls any of them within the meaning of Section 15
(or any successors provision) of the Securities Act, and their respective
successors, against all claims, losses, damages and liabilities to third parties
(or actions in respect thereof) arising out of or based upon any untrue
statement (or alleged untrue statement) of a material fact contained in the
Registration Statement or the Prospectus or other document incident thereto or
any omission (or alleged omission) to state therein a material fact required to
be stated therein
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<PAGE>
or necessary to make the statements therein not misleading, and to reimburse the
Company and each other person indemnified pursuant to the agreement for any
legal or any other expense reasonably incurred in connection with investigating
or defending any claim, loss, damage, liability or action; PROVIDED that the
agreement shall apply only if (and only to the extent that) the statement or
omission was made in reliance upon and in conformity with information furnished
to the Company in writing by the underwriter specifically for use in the
Registration Statement or the Prospectus.
SECTION 4. TRANSFER RESTRICTIONS.
(a) The Shareholder acknowledges that the Company issued and
sold the Registrable Shares owned by the Shareholder in reliance upon the
exemption afforded by Section 4(2) of the Securities Act for transactions by an
issuer not involving any public offering. The Shareholder represents that (1)
it has acquired the [** FOR PURCHASER REGISTRATION RIGHTS AGREEMENT **] [** the
Tranche A Warrants and Registrable Shares **] [** FOR JEDI REGISTRATION RIGHTS
AGREEMENT **] [** the Tranche B Warrants **] for investment and without any view
toward distribution of any of the shares to any other person, (2) it will not
sell or otherwise dispose of the Registrable Shares except in compliance with
the registration requirements or exemption provisions under the Securities Act
and (3) before any sale or other disposition of any of the Registrable Shares
other than in a sale registered under the Securities Act, or pursuant to Rule
144 under the Securities Act unless the Company shall have been advised by
counsel that the sale does not meet the requirements of Rule 144 for the sale,
it will deliver to the Company an opinion of counsel reasonably satisfactory to
the Company to the effect that such registration is unnecessary.
(b) Each certificate for Registrable Shares and any certificate
issued in exchange therefor or on conversion or upon transfer, except
certificates issued in connection with a sale registered under the Securities
Act and except as provided below, shall bear the legends to the following
effect:
(1) "The shares represented by this certificate have not been
registered under the Securities Act of 1933 and may not be offered, sold,
transferred or otherwise disposed of except in compliance with said Act."
(2) "The shares represented by this certificate are subject to the
restrictions contained in the Registration Rights Agreement dated as of
__________, 1995, a copy of which is on file at the office of the Secretary
of the Company."
(3) "This certificate also evidences and entitles the holder hereof
to certain Rights as set forth in a Rights Agreement between Forest Oil
Corporation and Mellon Securities Trust Company, dated as of October 14,
1993 (the "RIGHTS AGREEMENT"), the terms of which are hereby incorporated
herein by reference and a copy of which is on file at the principal
executive offices of Forest Oil Corporation. Under certain
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<PAGE>
circumstances, as set forth in the Rights Agreement, those Rights will be
evidenced by separate certificates and will no longer be evidenced by this
certificate. Forest Oil Corporation will mail to the holder of this
certificate a copy of the Rights Agreement without charge after receipt of
a written request therefor. As described in the Rights Agreement, Rights
issued to or acquired by any Acquiring Person (as defined in the Rights
Agreement) shall, under certain circumstances, become null and void."
(c) The legend stated in Section 4(b)(1) shall be removed by
delivery of one or more substitute certificates without such legend if the
holder thereof shall have delivered to the Company a copy of a letter from the
staff of the Securities and Exchange Commission or an opinion of counsel, in
form and substance reasonably satisfactory to the Company, to the effect that
the legend is not required for purposes of the Securities Act.
(d) The legend stated in Section 4(b)(2) shall be removed at
such time as the related securities are no longer subject to this Agreement.
SECTION 5. FILINGS. The Company shall make all filings with the
Securities and Exchange Commission required in order to make available to the
holders of Registrable Shares the exemption from the registration requirements
provided by Rule 144 (or any successor regulation) under the Securities Act.
SECTION 6. MERGER, CONSOLIDATION, EXCHANGE, ETC. In the event,
directly or indirectly, (1) the Company shall merge with and into, or
consolidate with, or consummate a share exchange pursuant to Article 9 of the
New York Business Corporation Law (or successor provisions or statutes) with,
any other person, or (2) any person shall merge with and into, or consolidate,
the Company and the Company shall be the surviving corporation of such merger or
consolidation and, in connection with such merger or consolidation, all or part
of the Registrable Shares shall be changed into or exchanged for stock or other
securities of any other person, then, in each such case, proper provision shall
be made so that such other person shall be bound by the provisions of this
Agreement and the term "Company" shall thereafter be deemed to refer to such
other person.
SECTION 7. OTHER AGREEMENTS.
(a) The Company shall cause the Other Registration Rights
Agreement at all times to contain provisions consistent with clause (2) of the
last sentence of Section 1(a) and with clauses (2) and (3) of the last sentence
of Section 1(b) (collectively, the "PRIORITY CLAUSES").
(b) The Company, on behalf of itself and its Affiliates (other
than a Registering Shareholder), agrees (1) not to effect any public sale or
distribution of any securities similar to the Registrable Shares being
registered pursuant to this Agreement or any securities convertible into or
exchangeable or exercisable for such Registrable Shares during the 14 days prior
to, and during the 90-day period beginning on, the effective date of the
Registration
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Statement (except (x) on Form S-4 or Form S-8 (or comparable form) or (y) as
part of the Registration Statement; PROVIDED, that with respect to clause (y) in
the case of a registration pursuant to Section 1(a) the Registering Shareholder
initiating the registration consents to such inclusion), or the commencement of
a public distribution of Registrable Shares; (2) not to enter into any agreement
inconsistent with any of the Priority Clauses or any other provision of this
Agreement; (3) that any agreement entered into after the date of this Agreement
pursuant to which the Company issues or agrees to issue any privately placed
securities shall contain a provision under which holders of such securities
agree not to effect any public sale or distribution of any of the securities
during the periods described in clause (1) of this Section 7(b), in each case
including a sale in a Rule 144 Transaction (except as part of any such
registration, if permitted); PROVIDED, the provisions of this Section 7(b) shall
not prevent the conversion or exchange of any securities pursuant to their terms
into or for other securities or the issuance of Common Stock in lieu of cash
dividends otherwise payable in respect of the Convertible Preferred Stock.
(c) If and to the extent requested by the Company in the case of
a non-underwritten public offering and if and to the extent requested by the
managing underwriter in the case of an underwritten public offering, the
Registering Shareholder agrees not to effect any public sale or distribution of
any securities similar to the securities being registered or any securities
convertible into or exchangeable or exercisable for such securities during the
14 days prior to, and during the 90-day period beginning on, the effective date
of such registration statement (except as part of such registration agreement).
SECTION 8. NOTICES. All notices, requests and other communications
to any party under this Agreement shall be in writing. Communications may be
made by telecopy or similar writing. Each communication shall be given to the
party at its address stated on the signature pages of this Agreement or at any
other address as the party may specify for this purpose by notice to the other
party. Each communication shall be effective (1) if given by telecopy, when the
telecopy is transmitted to the proper address and the receipt of the
transmission is confirmed, (2) if given by mail, 72 hours after the
communication is deposited in the mails properly addressed with first class
postage prepaid or (3) if given by any other means, when delivered to the proper
address and a written acknowledgement of delivery is received.
SECTION 9. NO WAIVERS; REMEDIES. No failure or delay by any party in
exercising any right, power or privilege under this Agreement shall operate as a
waiver of the right, power or privilege. A single or partial exercise of any
right, power or privilege shall not preclude any other or further exercise of
the right, power or privilege or the exercise of any other right, power or
privilege. The rights and remedies provided in this Agreement shall be
cumulative and not exclusive of any rights or remedies provided by law.
SECTION 10. AMENDMENTS, ETC.
(a) No amendment, modification, termination or waiver of any
provision of this Agreement, and no consent to any departure by a party to this
Agreement from
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<PAGE>
any provision of this Agreement, shall be effective unless it shall be in
writing and signed and delivered by the other party to this Agreement, and then
it shall be effective only in the specific instance and for the specific purpose
for which it is given.
(b) If and so long as any Other Registrable Shares remain
subject to the Other Registration Rights Agreement, (1) the Company shall not
agree to any amendment or modification of this Agreement without the prior
written consent of the Other Shareholder and (2) the Company shall not agree to
any amendment or modification of the Other Registration Rights Agreement without
the prior written consent of the Shareholder.
SECTION 11. SUCCESSORS AND ASSIGNS.
(a) The Shareholder may assign to any transferee of [** FOR
PURCHASER REGISTRATION RIGHTS AGREEMENT **] [** Tranche A Warrants or **] [**
FOR JEDI REGISTRATION RIGHTS AGREEMENT **] [** Tranche B Warrants or **]
Registrable Shares its rights and delegate its obligations under this Agreement;
provided that such transferee assignee shall accept those rights and assume
those obligations for the benefit of the Company in writing in form reasonably
satisfactory to the Company. Thereafter, without any further action by any
person, all references in this Agreement to the "Shareholder", and all
comparable references, shall be deemed to be references to the transferee, and
the Shareholder shall be released from any obligation or liability under this
Agreement with respect to the [** FOR PURCHASER REGISTRATION RIGHTS AGREEMENT
**] [** Tranche A Warrants or **] [** FOR JEDI REGISTRATION RIGHTS AGREEMENT **]
[** Tranche B Warrants or **] Registrable Shares so transferred.
(b) The provisions of this Agreement shall be binding upon and
inure to the benefit of the parties to this Agreement and their respective
successors and permitted assigns pursuant to Section 11(a). The provisions of
Section 10(b) shall inure to the benefit of the Other Shareholder.
SECTION 12. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York. All
rights and obligations of the Company and the Shareholder shall be in addition
to and not in limitation of those provided by applicable law.
SECTION 13. COUNTERPARTS; EFFECTIVENESS. This Agreement may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as if all signatures were on the same instrument.
SECTION 14. SEVERABILITY OF PROVISIONS. Any provision of this
Agreement that is prohibited or unenforceable in any jurisdiction shall, as to
that jurisdiction, be ineffective to the extent of the prohibition or
unenforceability without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of the provision in any other
jurisdiction.
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<PAGE>
SECTION 15. HEADINGS AND REFERENCES. Section headings in this
Agreement are included for the convenience of reference only and do not
constitute a part of this Agreement for any other purpose. References to
parties and sections in this Agreement are references to the parties to or the
sections of this Agreement, as the case may be, unless the context shall require
otherwise.
SECTION 16. ENTIRE AGREEMENT. Except as otherwise specifically
provided in the following sentence, the Transaction Documents embody the entire
agreement and understanding of the respective parties and supersede all prior
agreements or understandings with respect to the subject matters of those
documents. [** FOR PURCHASER REGISTRATION RIGHTS AGREEMENT: **] [** The
Shareholder shall remain subject to paragraphs (1) through (3), inclusive, of
the letter agreement dated March 6, 1995 between the Company and the Shareholder
in accordance with the terms thereof. **]
SECTION 17. SURVIVAL. Except as otherwise specifically provided in
this Agreement, each representation, warranty or covenant of each party to this
Agreement contained in or made pursuant to this Agreement shall survive each
Closing and remain in full force and effect, notwithstanding any investigation
or notice to the contrary or any waiver by any other party of a related
condition precedent to the performance by the other party of an obligation under
this Agreement.
[**FOR PURCHASER REGISTRATION RIGHTS AGREEMENT**]
[**SECTION 18. EXCLUSIVE JURISDICTION. Each party (1) agrees that
any Action with respect to this Agreement shall be brought exclusively in the
courts of the State of New York or of the United States of America for the
Southern District of New York, (2) accepts for itself and in respect of its
property, generally and unconditionally, the jurisdiction of those courts and
(3) irrevocably waives any objection, including, without limitation, any
objection to the laying of venue or based on the grounds of FORUM NON
CONVENIENS, which it may now or hereafter have to the bringing of any Action in
those jurisdictions; PROVIDED, HOWEVER, that any party may assert in an Action
in any other jurisdiction or venue each mandatory defense, third-party claim or
similar claim that, if not so asserted in such Action, may not be asserted in an
original Action in the courts referred to in clause (1) above.**]
[**FOR JEDI REGISTRATION RIGHTS AGREEMENT**]
[**SECTION 19. NON-EXCLUSIVE JURISDICTION. Each party (1) agrees
that any legal action with respect to this Agreement may be brought in the
courts of the State of New York or of the United States of America for the
Southern District of New York, (2) accepts for itself and in respect of its
property, generally and unconditionally, the jurisdiction of those courts and
(3) irrevocably waives any objection, including, without limitation, any
objection to the laying of venue or based on the grounds of FORUM NON
CONVENIENS, which it may now or hereafter have to the bringing of any legal
action in those jurisdictions.**]
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<PAGE>
SECTION 20. WAIVER OF JURY TRIAL. Each party waives any right to a
trial by jury in any Action to enforce or defend any right under this Agreement
or any amendment, instrument, document or agreement delivered, or which in the
future may be delivered, in connection with this Agreement and agrees that any
Action shall be tried before a court and not before a jury.
SECTION 21. AFFILIATE. Nothing contained in this Agreement shall
constitute the Shareholder an "affiliate" of any of the Company and its
Subsidiaries within the meaning of Rule 13e-3 under the Exchange Act.
____________________________
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<PAGE>
IN WITNESS WHEREOF, the parties have executed and delivered this
Registration Rights Agreement as of the date first written above in New York,
New York.
FOREST OIL CORPORATION
By:
---------------------------------------
Name:
Title:
Address: 1500 Colorado National Building
950 - 17th Street
Denver, Colorado 80202
Telecopy: (303) 592-2602
[** SHAREHOLDER **]
By:
---------------------------------------
Name:
Title:
Address:
--------------------------------
--------------------------------
--------------------------------
Telecopy:
--------------------------------
S-1
<PAGE>
EXHIBIT C
FORM OF
COLLATERAL ACCOUNT AGREEMENT
This COLLATERAL ACCOUNT AGREEMENT (this "AGREEMENT") is dated as of
May 19, 1995 and entered into by and among FOREST OIL CORPORATION, a New York
corporation (the "COMPANY"), THE ANSCHUTZ CORPORATION, a Kansas corporation
("PURCHASER"), and THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION) ("BANK").
Terms not otherwise defined herein have the meaning stated in the
Purchase Agreement (as defined below).
RECITALS
A. Contemporaneously with the execution and delivery of this
Agreement, the Company and Purchaser are entering into a Purchase Agreement
dated as of the date hereof (as amended or modified from time to time, the
"PURCHASE AGREEMENT") pursuant to which, among other things, the Company shall
sell, issue and deliver to Purchaser and Purchaser shall purchase, accept and
acquire from the Company a nonrecourse secured convertible promissory note in
the principal amount of $9,900,000 (as amended or modified from time to time,
the "PURCHASER NOTE").
B. To secure the payment of the Obligations of the Company, the
Company is, among other things, pledging to Purchaser and granting to Purchaser
a security interest in, the Cash Collateral (as hereinafter defined).
C. The execution and delivery of this Agreement is a condition
precedent to the purchase of the Purchaser Note by Purchaser.
<PAGE>
AGREEMENT
Each of the parties agrees as follows:
SECTION 1. CERTAIN DEFINITIONS. The following terms used in this
Agreement shall have the following meanings:
"CASH COLLATERAL" means (i) the Cash Collateral Account, (ii) all
amounts on deposit from time to time in the Cash Collateral Account, (iii) all
interest, cash, instruments, securities and other property from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of the Cash Collateral, and (iv) to the extent not covered by clauses
(i) through (iii) above, all proceeds of any or all of the foregoing Cash
Collateral.
"CASH COLLATERAL ACCOUNT" means the restricted deposit account
established and maintained by the Company with Bank pursuant to Section 2(a).
"EXCESS CASH COLLATERAL" means Cash Collateral in excess of
$10,150,000 at the time of determination.
SECTION 2. ESTABLISHMENT AND OPERATION OF CASH COLLATERAL ACCOUNT.
(a) The Company hereby authorizes and directs Purchaser to
establish with Bank at its office at 1 Chase Manhattan Plaza, New York, New York
10081, as a blocked account in the name of the Company but under the sole
dominion and control of Purchaser, a restricted deposit account designated as
"Forest Oil Corporation Cash Collateral Account f/b/o The Anschutz Corporation
as Secured Party".
(b) The Cash Collateral Account shall be operated in accordance
with the terms of this Agreement.
(c) Purchaser shall be fully protected and shall suffer no
liability in acting in accordance with any written instructions reasonably
believed by it to have been given by the Company with respect to any aspect of
the operation of the Cash Collateral Account.
(d) Anything contained herein to the contrary notwithstanding,
the Cash Collateral Account shall be subject to such applicable laws, and such
applicable regulations of the Board of Governors of the Federal Reserve System
and of any other appropriate banking or governmental authority, as may now or
hereafter be in effect.
2
<PAGE>
SECTION 3. DEPOSITS OF CASH COLLATERAL. All deposits of funds in the
Cash Collateral Account shall be made by wire transfer (or, if applicable, by
intra-bank transfer from another account of the Company) of immediately
available funds, in each case addressed as follows:
Account No.: E-11571
ABA No.: 021000021
Reference: Forest Oil Corporation f/b/o The Anschutz
Corporation as Secured Party
Attention: Vicky Caldas
The Company shall, promptly after initiating a transfer of funds to the Cash
Collateral Account, give notice to Purchaser by telefacsimile of the date,
amount and method of delivery of such deposit.
SECTION 4. PLEDGE OF SECURITY FOR OBLIGATIONS. The Company hereby
pledges and assigns to Purchaser, and hereby grants to Purchaser a security
interest in, all of the Company's right, title and interest in and to the Cash
Collateral as collateral security for the prompt payment or performance in full
when due, whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise (including the payment of amounts that would
become due but for the operation of the automatic stay under Section 362(a) of
the Bankruptcy Code, 11 U.S.C. Section 362(a)), of all Obligations.
SECTION 5. NO INVESTMENT OF AMOUNTS IN THE CASH COLLATERAL ACCOUNT;
INTEREST ON AMOUNTS IN THE CASH COLLATERAL ACCOUNT.
(a) Cash held by Purchaser in the Cash Collateral Account shall
not be invested by Purchaser but instead shall be maintained as a cash deposit
in the Cash Collateral Account pending application thereof as elsewhere provided
in this Agreement.
(b) To the extent permitted under Regulation Q of the Board of
Governors of the Federal Reserve System, any cash held in the Cash Collateral
Account shall bear interest at the standard rate paid by Bank to its customers
for deposits of like amounts and terms.
(c) Notwithstanding anything to the contrary contained in this
Section 5, Bank is permitted to invest any amounts in the Cash Collateral
Account in the Vista U.S. Government Money Market Fund - Institutional Shares.
(d) Subject to Purchaser's rights under Section 12, any interest
earned on deposits of cash in the Cash Collateral Account in accordance with
Section 5(b) and 5(c) shall be deposited directly in, and held in the Cash
Collateral Account.
3
<PAGE>
SECTION 6. REPRESENTATIONS AND WARRANTIES. The Company represents
and warrants as follows:
(a) OWNERSHIP OF CASH COLLATERAL. The Company is (or at the
time of transfer thereof to Purchaser will be) the legal and beneficial owner of
the Cash Collateral from time to time transferred by the Company to Purchaser,
free and clear of any Lien except for the security interest created by this
Agreement.
(b) GOVERNMENTAL AUTHORIZATIONS. No authorization, approval or
other action by, and no notice to or filing with, any governmental authority or
regulatory body is required for either (i) the grant by the Company of the
security interest granted hereby, (ii) the execution, delivery or performance of
this Agreement by the Company, or (iii) the perfection of or the exercise by
Purchaser of its rights and remedies hereunder (except as may have been taken by
or at the direction of the Company).
(c) PERFECTION. The pledge and assignment of the Cash
Collateral pursuant to this Agreement creates a valid and perfected first
priority security interest in the Cash Collateral, securing the payment of the
Obligations.
(d) OTHER INFORMATION. All information heretofore, herein or
hereafter supplied to Purchaser by or on behalf of the Company with respect to
the Cash Collateral is accurate and complete in all material respects.
SECTION 7. FURTHER ASSURANCES. The Company agrees that from time to
time, at the expense of the Company, the Company will promptly execute and
deliver all further instruments and documents, and take all further action, that
may be necessary or desirable, or that Purchaser may request, in order to
perfect and protect any security interest granted or purported to be granted
hereby or to enable Purchaser to exercise and enforce its rights and remedies
hereunder with respect to any Cash Collateral. Without limiting the generality
of the foregoing, the Company will: (a) execute and file such financing or
continuation statements, or amendments thereto, and such other instruments or
notices, as may be necessary or desirable, or as Purchaser may request, in order
to perfect and preserve the security interests granted or purported to be
granted hereby and (b) at Purchaser's request, appear in and defend any action
or proceeding that may affect the Company's title to or Purchaser's security
interest in all or any part of the Cash Collateral.
SECTION 8. TRANSFERS AND OTHER LIENS. The Company agrees that it
will not (a) sell, assign (by operation of law or otherwise) or otherwise
dispose of any of the Cash Collateral or (b) create or suffer to exist any Lien
upon or with respect to any of the Cash Collateral, except for the security
interest under this Agreement.
SECTION 9. PURCHASER APPOINTED ATTORNEY-IN-FACT. The Company hereby
irrevocably appoints Purchaser as the Company's attorney-in-fact, with full
authority in the place and stead of the Company and in the name of the Company,
Purchaser or otherwise,
4
<PAGE>
from time to time in Purchaser's discretion to take any action and to execute
any instrument that Purchaser may deem necessary or advisable to accomplish the
purposes of this Agreement, including without limitation to file one or more
financing or continuation statements, or amendments thereto, relative to all or
any part of the Cash Collateral without the signature of Pledgor.
SECTION 10. PURCHASER MAY PERFORM. If the Company fails to perform
any agreement contained herein, Purchaser may itself perform, or cause
performance of, such agreement, and the expenses of Purchaser incurred in
connection therewith shall be payable by the Company under Section 14.
SECTION 11. STANDARD OF CARE. The powers conferred on Purchaser
hereunder are solely to protect its interest in the Cash Collateral and shall
not impose any duty upon it to exercise any such powers. Except for the
exercise of reasonable care in the custody of any Cash Collateral in its
possession and the accounting for moneys actually received by it hereunder,
Purchaser shall have no duty as to any Cash Collateral, it being understood that
Purchaser shall have no responsibility for (a) taking any necessary steps (other
than steps taken in accordance with the standard of care set forth above to
maintain possession of the Cash Collateral) to preserve rights against any
parties with respect to any Cash Collateral or (b) taking any necessary steps to
collect or realize upon the Obligations or any guarantee therefor, or any part
thereof, or any of the Cash Collateral. Purchaser shall be deemed to have
exercised reasonable care in the custody and preservation of Cash Collateral in
its possession if such Cash Collateral is accorded treatment substantially equal
to that which Purchaser accords its own property of like kind.
SECTION 12. REMEDIES.
(a) In the event of a default by the Company in the payment of
the Obligations, which default is not cured prior to the expiration of any
applicable grace period (an "EVENT OF DEFAULT"), Purchaser may (i) transfer any
or all of the Cash Collateral to an account established in Purchaser's name
(whether at Purchaser or otherwise) or (ii) otherwise register title to any Cash
Collateral in the name of Purchaser or one of its nominees or agents, without
reference to any interest of the Company.
(b) If any Event of Default shall have occurred and be
continuing, Purchaser may exercise in respect of the Cash Collateral, in
addition to all other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party on default under
the Uniform Commercial Code as in effect in any relevant jurisdiction (the
"CODE") (whether or not the Code applies to the affected Cash Collateral).
SECTION 13. APPLICATION OF PROCEEDS. If any Event of Default shall
have occurred and be continuing, all cash held by or for the benefit of
Purchaser as Cash Collateral may, in the discretion of Purchaser, be held by or
for the benefit of Purchaser as
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<PAGE>
Cash Collateral for, and/or then, or at any other time thereafter, applied in
full or in part by or at the direction of Purchaser against, the Obligations in
the following order of priority:
FIRST: To the payment of all costs and expenses of such sale,
collection or other realization, including reasonable compensation to
Purchaser and its agents and counsel, and all other expenses, liabilities
and advances made or incurred by Purchaser in connection therewith, and all
amounts for which Purchaser is entitled to indemnification hereunder and
all advances made by Purchaser hereunder for the account of the Company,
and to the payment of all costs and expenses paid or incurred by Purchaser
in connection with the exercise of any right or remedy hereunder, all in
accordance with Section 14;
SECOND: To the payment of all other Obligations (for the ratable
benefit of the holders thereof) in such order as Purchaser shall elect; and
THIRD: To the payment to or upon the order of the Company, or to
whomsoever may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct, of any surplus then remaining from such
proceeds.
SECTION 14. INDEMNITY AND EXPENSES.
(a) The Company shall indemnify Purchaser and its Related
Persons (collectively, the "INDEMNIFIED PERSONS") against all losses, costs,
expenses (including attorneys' fees and expenses), judgments, fines, amounts
paid in settlement and other liabilities incurred, suffered or paid by the
Indemnified Person (collectively, "INDEMNIFIED EXPENSES") in connection with any
threatened, pending or completed claim, action, suit, complaint, investigation,
inquiry or other proceeding, whether civil, criminal, administrative or
investigative, which is or was brought or threatened against any Indemnified
Person by reason of or in connection with actions taken or omitted to be taken
by one or more Indemnified Persons in the performance of the exercise of the
rights and powers or performance of the obligations of Purchaser under this
Agreement or otherwise in connection with this Agreement, except that the
Company shall have no liability under this Section 14 with respect to any
Indemnified Expense to the extent the liability results from the gross
negligence, fraud, willful misconduct or bad faith of the Indemnified Person, as
determined by a final judgment or final adjudication. For purposes of this
Agreement, the term "RELATED PERSONS" means, with respect to any person, any
other person that directly or indirectly controls or is controlled by or is
under common control with the specified person and the direct or indirect
controlling persons, principals, partners, trustees, stockholders, officers,
directors, employees, independent contractors and agents for or of any of the
foregoing.
(b) To the fullest extent permitted by law, the Company shall,
from time to time, advance Indemnified Expenses to an Indemnified Person prior
to the final disposition of the Action upon receipt by the Company of an
undertaking by or on behalf of
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<PAGE>
the Indemnified Person to repay such amount if it shall be determined that the
Indemnified Person is not entitled to be indemnified as authorized in this
Section 14.
(c) The Company shall pay to Purchaser upon demand the amount of
any and all costs and expenses, including the reasonable fees and expenses of
its counsel and of any experts and agents, that Purchaser may incur in
connection with (i) the administration of this Agreement, (ii) the custody or
preservation of, or the sale of, collection from, or other realization upon, any
of the Cash Collateral, (iii) the exercise or enforcement of any of the rights
of Purchaser hereunder, or (iv) the failure by the Company to perform or observe
any of the provisions hereof.
SECTION 15. RELEASE OF EXCESS CASH COLLATERAL.
(a) CONDITIONS TO RELEASE OF EXCESS CASH COLLATERAL. At any time and
from time to time after the date of this Agreement, the Company may obtain a
Release of the Lien in respect of Excess Cash Collateral upon compliance with
the following terms and conditions on the applicable Release Date:
(1) the Company shall have delivered written notice to the
Purchaser prior to the proposed Release Date specifying the proposed
Release Date with respect to the Excess Cash Collateral;
(2) no default in the payment of the Obligations shall have
occurred and be continuing, as of the date of the delivery of the
notice pursuant to clause (1) above or as of the Release Date or would
exist after giving effect to such Release; and
(3) the Company shall have delivered to the Purchaser an
officer's certificate dated the Release Date, certifying as to the
matters referred to in clause (2) above.
(b) EFFECT OF RELEASE. Upon any Release of Excess Cash Collateral in
accordance with this Section, then the security interest in such Excess Cash
Collateral shall be released and the Company may direct Purchaser in writing to
transfer such Excess Cash Collateral to any account specified in such direction.
SECTION 16. NONRECOURSE. Notwithstanding anything herein or in any
other Transaction Document to the contrary, except as otherwise set forth in
this Section to the contrary, the Purchaser agrees (a) to look solely to the
Cash Collateral and other Collateral for payment of the principal amount of and
interest on the Purchaser Note and for the payment of the Enforcement Expenses,
(b) that its sole recourse for the repayment of the principal amount of and
interest on the Purchaser Note and the Enforcement Expenses shall be to the Cash
Collateral and other Collateral, and (c) that it shall not seek repayment of the
principal amount of or interest on the Purchaser Note or the Enforcement
Expenses or to
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<PAGE>
enforce the Purchaser Note or the payment of such amounts by any action or
proceeding wherein a money judgment shall be sought against the Company, or any
stockholder, officer, director, agent or employee of the Company, except that
the Purchaser may bring an action for declaratory judgment, action for
injunction or an action for specific performance solely for the purpose of
enabling the Purchaser to realize upon the Cash Collateral and other Collateral.
The Purchaser may also bring a foreclosure action, action for specific
performance, or other appropriate action or proceeding (including to obtain a
deficiency judgment) solely for the purpose of enabling the Purchaser to realize
upon (i) the Company's interest in the Cash Collateral and other Collateral and
(ii) the income arising from the Cash Collateral and the other Collateral to the
extent received, directly or indirectly, by the Company after the occurrence of
an Event of Default (the "RECOURSE DISTRIBUTIONS") (collectively, the "DEFAULT
COLLATERAL"); PROVIDED, HOWEVER, that any judgment in any such action or
proceeding shall be enforceable against the Company only to the extent of any
such Default Collateral; PROVIDED FURTHER, HOWEVER, that the provisions of this
Section shall not (A) impair the validity of the Obligations or in any way
affect or impair the Lien of any Security Document or the right of the Purchaser
to foreclose any Security Document following the occurrence and during the
continuation of an Event of Default; (B) impair the right of the Purchaser to
name the Company as a party defendant in any action or suit for judicial
foreclosure and sale under any Security Document; (C) affect the validity or
enforceability of the Purchaser Note or the other Transaction Documents; (D)
impair the right of the Purchaser to obtain the appointment of a receiver with
respect to the Cash Collateral and the other Collateral; (E) impair the right of
the Purchaser to bring suit for recovery of a money judgment against the Company
for recovery of damages attributable to fraud or intentional misrepresentation
by the Company or any other person in connection with the Purchase Agreement,
the Purchaser Note or any other Transaction Documents; (F) impair the right of
the Purchaser to obtain a money judgment against the Company or any stockholder,
officer, director or employee of the Company for the Recourse Distributions
received by such person; (G) impair the right of the Purchaser to bring suit for
recovery of a money judgment against the Company or any stockholder, officer,
director or employee of the Company with respect to the Company's
misappropriation of escrows or income collected in advance with respect to the
Cash Collateral; (H) impair the right of the Purchaser to obtain insurance
proceeds or condemnation proceeds due to the Purchaser pursuant to any Security
Document; (I) impair the right of the Purchaser to obtain a money judgment or
otherwise enforce the provisions of Section 4.4 or Article X of the Purchase
Agreement or this Agreement even after repayment in full by the Company of the
Obligations; (J) prevent or in any way hinder the Purchaser from exercising, or
constitute a defense, counterclaim, or other basis for relief in respect of the
exercise of, any other remedy against any or all of the Collateral for the
Purchaser Note as provided in the Security Documents; or (K) impair the right of
the Purchaser to bring suit for recovery of a money judgment against the Company
or any stockholder, officer, director or employee of the Company with respect to
any misapplication of insurance proceeds or condemnation proceeds approved or
received by any such person with respect to the Collateral. The parties agree
that this Section 16 shall be subject to 11 U.S.C. 1111(b) of the Bankruptcy
Code.
8
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SECTION 17. CONTINUING SECURITY INTEREST; TRANSFER OF OBLIGATIONS.
(a) This Agreement shall create a continuing security interest
in the Cash Collateral and shall (i) remain in full force and effect until the
indefeasible payment in full of the Obligations, (ii) be binding upon the
Company, its successors and assigns, and (iii) inure, together with the rights
and remedies of Purchaser hereunder, to the benefit of Purchaser and its
successors, transferees and assigns. Without limiting the generality of the
foregoing clause (iii), Purchaser may assign or otherwise transfer to any other
person all or any part of Purchaser's right, title and interest in and to an
Underlying Obligation, and such other person shall thereupon become vested with
all the benefits in respect thereof granted to Purchaser herein or otherwise.
(b) Upon the indefeasible payment in full of all Obligations,
the security interest granted hereby shall terminate and all rights to the Cash
Collateral shall revert to the Company. Upon any such termination, Purchaser
shall, at the Company's expense, execute and deliver to the Company such
documents as the Company shall reasonably request to evidence such termination.
SECTION 18. RESPONSIBILITIES AND RIGHTS OF BANK.
(a) Bank undertakes to perform only such duties as are expressly
set forth herein. Without limiting the generality of the foregoing, Bank shall
have no duty or responsibility as regards any: (i) security, including the
Obligations, as to which a default in the payment of principal or interest has
occurred, to give notice of default, make demand for payment or take any other
action with respect to such default; and (ii) loss occasioned by delay in the
actual receipt of notice of any payment, redemption or other transaction
regarding any item in the Cash Collateral Account as to which it is authorized
to take action hereunder. Bank may consult with counsel and shall be fully
protected with respect to any action taken in good faith in accordance with such
advice.
(b) Subject to Subsection 18(c), Bank does not make any
representation or warranty with regard to the creation of perfection, hereunder
or otherwise, of a security interest in the Cash Collateral Account or regarding
the negotiability or transferability of, or existence of other interest in the
Cash Collateral Account. Bank shall have no responsibility at any time to
ascertain whether or not any security interest exists in the Cash Collateral
Account or any part thereof or to file any financing statement under the Code of
any state with respect to the Cash Collateral Account or any part thereof.
(c) Notwithstanding anything in this Agreement to the contrary,
Bank hereby (i) acknowledges that all right, title and interest of the Company
in and with respect to the Cash Collateral and the Cash Collateral Account has
been assigned and pledged to Purchaser pursuant to this Agreement as security
for the payment and performance of the Obligations, (ii) represents to Purchaser
that Purchaser's interest in the Cash Collateral and Cash Collateral Account has
been appropriately registered and recorded on the books of Bank
9
<PAGE>
as described in Section 2(a) and (iii) agrees that any right of setoff, banker's
lien, security interest or similar interest, that Bank may have in or with
respect to the Cash Collateral and the Cash Collateral Account is hereby waived.
Bank shall hold the Cash Collateral as bailee of Purchaser.
(d) Bank shall have no duty or responsibility with regard to any
loss resulting from the investment, reinvestment, sale or liquidation of the
Cash Collateral in accordance with the terms of this Agreement. Bank need not
maintain any insurance with respect to the Cash Collateral.
(e) Except as otherwise expressly provided herein, Bank is
authorized to execute instructions and take other actions pursuant to this
Agreement in accordance with its customary processing practices for similar
customers and, in accordance with such practices Bank may retain agents,
including its own subsidiaries or affiliates, to perform certain of such
functions. Bank shall have no liability under this Agreement for any loss or
expense other than those occasioned by Bank's gross negligence or willful
misconduct and in any event its liability shall be limited to direct damages and
shall not include any special or consequential damages. All collection and
receipt of funds or securities and all payment and delivery of funds or
securities under this Agreement shall be made by Bank as agent, at the risk of
the other parties hereto with respect to their actions or omissions and those of
any person other than the Bank. In no event shall Bank be responsible or liable
for any loss due to forces beyond its control, including, but not limited to,
acts of God, flood, fire, nuclear fusion, fission or radiation, war (declared or
undeclared), terrorism, insurrection, revolution, riot, strikes or work
stoppages for any reason, embargo, government action, including any laws,
ordinances, regulations or the like which restrict or prohibit the providing of
the services contemplated by this Agreement, inability to obtain equipment or
communications facilities, or the failure of equipment or interruption of
communications facilities, and other causes whether or not of the same class or
kind as specifically named above. In the event that Bank is unable
substantially to perform for any of the reasons described in the immediately
preceding sentence, it shall so notify the other parties hereto as soon as
reasonably practicable.
(f) Notwithstanding any provision of this Agreement to the
contrary, Bank shall not be bound by, or have any responsibility with respect
to, any other agreement or contract between the parties hereto (whether or not
Bank has knowledge thereof).
(g) It is understood and agreed that should any dispute arise
with respect to the payment and/or ownership or right of possession of the Cash
Collateral, Bank is authorized and directed to retain in its possession, without
liability to anyone, all or any part of the Cash Collateral until such dispute
shall have been settled either by mutual agreement by the parties concerned or
by the final order, decree or judgment of any court or other tribunal of
competent jurisdiction in the United States of America and time for appeal has
expired and no appeal has been perfected but Bank shall be under no duty
whatsoever to institute or defend any such proceedings.
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(h) The Company shall hold Bank and its agents harmless from,
and indemnify and reimburse Bank and them for, all fees, claims, liability, loss
and expense (including reasonable out-of-pocket and incidental expenses and
legal fees) incurred by Bank or them in connection with Bank or their acting
under this Agreement, provided that Bank or they, as the case may be, have not
acted with gross negligence or willful misconduct with respect to the events
resulting in such claims, liability, loss and expense.
(i) The Company and Purchaser acknowledge and agree that Bank
shall not be responsible for taking any steps, including without limitation, the
filing of forms or reports, or withholding of any amounts in connection with any
tax obligations of the Company, Purchaser or any other party in connection with
the Cash Collateral; provided, however, that Bank shall be entitled to take any
action such as withholding, that it deems appropriate to ensure compliance with
its obligations under any applicable tax laws.
SECTION 19. COMPENSATION OF BANK. Bank shall look solely to, and
shall be reimbursed solely by, the Company for all fees, expenses, disbursements
and advances charged, incurred or made by Bank in the preparation,
administration and enforcement of this Agreement, including but not limited to
reasonable legal fees and expenses. Bank shall not have any right to pay itself
from the Cash Collateral Account.
SECTION 20. INSTRUCTIONS; FUND TRANSFERS.
(a) Bank is authorized to rely and act upon all instructions
given or purported to be given by any two of Douglas L. Polson, Craig D. Slater
and Thomas G. Kundert (the "DESIGNEES") authorized by or in accordance with a
corporate resolution of the Company delivered to Bank. (The term "instructions"
includes, without limitation, instructions to sell, assign, transfer, deliver,
receive for the Cash Collateral Account any or transfer all or any portion of
the Cash Collateral. Bank may also rely and act upon instructions when bearing
or purporting to bear the signature or facsimile signature of any two of the
Designees regardless of by whom or by what means the actual or purported
facsimile signature or signatures thereon may have been affixed thereto if such
facsimile signature or signatures resemble the facsimile specimen or specimens
from time to time furnished to Bank. In addition, and subject to Subsection
20(b) hereof, Bank may rely and act upon instructions received by telephone,
telex, TWX, facsimile transmission, bank wire or other teleprocess acceptable to
it which Bank believes in good faith to have been given by any two Designees
which are transmitted with proper testing or authentication pursuant to terms
and conditions which Bank may specify. Bank shall incur no liability to the
Purchaser and/or Company or otherwise for having acted in accordance with
instructions on which it is authorized to rely pursuant to the provisions
hereof. Any instruction delivered to Bank by telephone shall promptly
thereafter be confirmed in writing by a Designee but Bank shall incur no
liability for failure to send such confirmation in writing, the failure of any
such written confirmation to conform to the telephone instruction which it
received, the failure of any such written confirmation to be signed or properly
signed, or its failure to produce such confirmation at any subsequent time.
Bank shall incur no liability for refraining from acting
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upon any instructions which for any reason it, in good faith, is unable to
verify to its own satisfaction. Unless otherwise expressly provided, all
authorizations and instructions shall continue in full force and effect until
canceled or superseded by subsequent authorizations or instructions received by
the Bank's safekeeping account administrator. Bank's authorization to rely and
act upon instructions pursuant to this paragraph shall be in addition to, and
shall not limit, any other authorization which Purchaser may give to it
hereunder.
(b) With respect to written or telephonic instructions or
instructions sent by facsimile transmission to transfer funds from the Cash
Collateral Account in accordance herewith (such instructions hereinafter
referred to as "TRANSFER INSTRUCTIONS"), the security procedure agreed upon for
verifying the authenticity of Transfer Instructions is a callback by Bank to any
of the persons designated below, whether or not any such person has issued such
Transfer Instruction (the "CONFIRMING PERSONS"). (It is recommended that the
persons designated below not be persons who generally issue Transfer
Instructions; whenever possible, Bank will endeavor to call someone other than
the issuer of the Transfer Instructions). With respect to Transfer Instructions
given by Purchaser pursuant to its authority under this Agreement the Confirming
Persons of the Purchaser are:
Name/Title Telephone No.
---------- -------------
Richard M. Jones, Vice President 303-299-1255
Wayne Barnes, Controller 303-299-1280
Alternatively, at Bank's option, the callback may be made to any
person designated in the certified resolutions or other certificates or
documentation furnished to it by Purchaser in connection with the Cash
Collateral Account as authorized to issue Transfer Instructions or otherwise
transact business with respect to the Cash Collateral Account for that party.
Purchaser shall implement any other authentication method or procedure or
security device required by Bank at any time or from time to time.
SECTION 21. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.
No failure or delay on the part of Purchaser or Bank in the exercise of any
power, right or privilege hereunder shall impair such power, right or privilege
or be construed to be a waiver of any default or acquiescence therein, nor shall
any single or partial exercise of any such power, right or privilege preclude
any other or further exercise thereof or of any other power, right or privilege.
All rights and remedies existing under this Agreement are cumulative to, and not
exclusive of, any rights or remedies otherwise available.
SECTION 22. COSTS AND EXPENSES. Subject to Section 16, the Company
shall pay all costs and expenses, including reasonable attorneys' fees and
expenses, incurred by or on behalf of Purchaser in the enforcement of this
Agreement.
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SECTION 23. NOTICES. All notices, requests and other communications
to any party or under this Agreement shall be in writing. Communications may be
made by telecopy or similar writing. Each communication shall be given to the
party at its address stated on the signature pages of this Agreement or at any
other address as the party may specify for this purpose by notice to the other
party. Each communication shall be effective (1) if given by telecopy, when the
telecopy is transmitted to the proper address and the receipt of the
transmission is confirmed, (2) if given by mail, with respect to Bank, upon
receipt thereof, or with respect to the other parties, 72 hours after the
communication is deposited in the mails properly addressed with first class
postage prepaid or (3) if given by any other means, when delivered to the proper
address and a written acknowledgement of delivery is received.
SECTION 24. NO WAIVERS; REMEDIES; SPECIFIC PERFORMANCE.
(a) No failure or delay by any party in exercising any right,
power or privilege under this Agreement shall operate as a waiver of the right,
power or privilege. A single or partial exercise of any right, power or
privilege shall not preclude any other or further exercise of the right, power
or privilege or the exercise of any other right, power or privilege. The rights
and remedies provided in this Agreement shall be cumulative and not exclusive of
any rights or remedies provided by law.
(b) In view of the uniqueness of the transactions contemplated
hereby, neither the Company nor Purchaser would have an adequate remedy at law
for money damages in the event that this Agreement is not performed in
accordance with its terms, and therefore each of the Company and the Purchaser
agree that the Company and the Purchaser shall be entitled to specific
enforcement of the terms of this Agreement against each other in addition to any
other remedy to which it may be entitled, at law or in equity.
SECTION 25. AMENDMENTS, ETC. No amendment, modification,
termination, or waiver of any provision of this Agreement, and no consent to any
departure by a party to this Agreement from any provision of this Agreement,
shall be effective unless it shall be in writing and signed and delivered by the
other parties to this Agreement, and then it shall be effective only in the
specific instance and for the specific purpose for which it is given.
SECTION 26. SUCCESSORS AND ASSIGNS.
(a) Purchaser may assign its rights and delegate its obligations
under this Agreement; such assignee shall accept those rights and assume those
obligations for the benefit of the other parties in writing in form reasonably
satisfactory to the other parties. Thereafter, without any further action by
any person, all references in this Agreement to "Purchaser", and all comparable
references, shall be deemed to be references to the transferee, but Purchaser
shall not be released from any obligation or liability under this Agreement.
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(b) Except as provided in Section 26(a), no party may assign its
rights under this Agreement. Any delegation in contravention of this Section
shall be void AB INITIO and shall not relieve the delegating party of any
obligation under this Agreement.
(c) The provisions of this Agreement shall be binding upon and
inure to the benefit of the parties to this Agreement and their respective
successors and permitted assigns.
SECTION 27. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York. All
rights and obligations of the parties shall be in addition to and not in
limitation of those provided by applicable law.
SECTION 28. COUNTERPARTS; EFFECTIVENESS. This Agreement may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as if all signatures were on the same instrument.
SECTION 29. SEVERABILITY OF PROVISIONS. Any provision of this
Agreement, that is prohibited or unenforceable in any jurisdiction shall, as to
that jurisdiction, be ineffective to the extent of the prohibition or
unenforceability without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of the provision in any other
jurisdiction.
SECTION 30. HEADINGS AND REFERENCES. Section headings in this
Agreement are included in this Agreement for the convenience of reference only
and do not constitute a part of this Agreement for any other purpose.
References to parties and sections in this Agreement are references to the
parties to or the sections of this Agreement, as the case may be, unless the
context shall require otherwise.
SECTION 31. ENTIRE AGREEMENT. Except as otherwise specifically
provided in this Section, the Transaction Documents embody the entire agreement
and understanding of the respective parties and supersedes all prior agreements
or understandings with respect to the subject matters of those documents.
Purchaser shall remain subject to paragraphs (1) through (3), inclusive, of the
letter agreement dated March 6, 1995 between the Company and the Purchaser in
accordance with the terms thereof.
SECTION 32. SURVIVAL. Except as otherwise specifically provided in
this Agreement, each representation, warranty or covenant of each party this
Agreement contained in or made pursuant to this Agreement shall survive the
Closing and remain in full force and effect, notwithstanding any investigation
or notice to the contrary or any waiver by any other party of a related
condition precedent to the performance by the other party of an obligation under
this Agreement.
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SECTION 33. EXCLUSIVE JURISDICTION. Each of the Company, Bank and
Purchaser (1) agrees that any Action with respect to this Agreement shall be
brought exclusively in the courts of the State of New York or of the United
States of America for the Southern District of New York, (2) accepts for itself
and in respect of its property, generally and unconditionally, the jurisdiction
of those courts and (3) irrevocably waives any objection, including, without
limitation, any objection to the laying of venue or based on the grounds of
FORUM NON CONVENIENS, which it may now or hereafter have to the bringing of any
Action in those jurisdictions; PROVIDED, HOWEVER, that each of the Company, Bank
and Purchaser may assert in an Action in any other jurisdiction or venue each
mandatory defense, third-party claim, or similar claim that, if not so asserted
in such Action, may not be asserted in an original Action in the courts referred
to in clause (1) above.
SECTION 34. WAIVER OF JURY TRIAL. Each party waives any right to a
trial by jury in any Action to enforce or defend any right under this Agreement
or any amendment, instrument, document or agreement delivered, or which in the
future may be delivered, in connection with this Agreement and agrees that any
Action shall be tried before a court and not before a jury.
-----------------------------------
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IN WITNESS WHEREOF, the Company, Purchaser and Bank have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above in New York, New
York.
THE COMPANY:
FOREST OIL CORPORATION
By:
---------------------------------
Name:
Title:
Address: 1500 Colorado National
Building
950 - 17th Street
Denver, Colorado 80202
Telecopy: (303) 592-2602
PURCHASER:
THE ANSCHUTZ CORPORATION
By:
---------------------------------
Name:
Title:
Address: 2400 Anaconda Tower
555 - 17th Street
Denver, Colorado 80202
Telecopy: (303) 298-8881
S-16
<PAGE>
BANK:
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
By:
---------------------------------
Carole Mendelson
Vice President
Address: Escrow Division
4 Chase MetroTech Center, 3rd Floor
Brooklyn, New York 11245
Telecopy: (718) 242-3529
S-17
<PAGE>
EXHIBIT D
FORM OF
GUARANTY AGREEMENT
GUARANTY AGREEMENT (this "AGREEMENT") dated as of April____, 1995
between __________, a __________ corporation (the "GUARANTOR"), and The Anschutz
Corporation, a Kansas corporation ("PURCHASER").
Terms not otherwise defined herein have the meaning stated in the
Purchase Agreement (as defined below).
RECITALS
A. Contemporaneously with the execution and delivery of this
Agreement, Forest Oil Corporation, a New York corporation (the "COMPANY"), and
Purchaser are entering into a Purchase Agreement dated as of the date hereof (as
amended or modified from time to time, the "PURCHASE AGREEMENT") pursuant to
which, among other things, the Company shall sell, issue and deliver to
Purchaser, and Purchaser shall purchase, accept and acquire from the Company, a
nonrecourse secured convertible promissory note in the principal amount of
$9,900,000 (as amended or modified from time to time, the "PURCHASER NOTE").
B. The execution and delivery of this Agreement is a condition
precedent to the purchase of the Purchaser Note by Purchaser.
<PAGE>
AGREEMENT
The parties agree as follows:
ARTICLE I
GUARANTY
SECTION 1.1 UNCONDITIONAL GUARANTY.
(a) The Guarantor hereby unconditionally guarantees to Purchaser
the due and punctual payment of all Obligations when and as the Obligations or
any part thereof shall become due, whether at maturity, by acceleration or
otherwise. The obligations of the Guarantor under this Agreement constitute an
absolute, unconditional, present and continuing irrevocable guaranty of payment
and not of collection. If the Company shall fail to pay any amount of the
Obligations when due, the Guarantor shall immediately upon demand in writing
from Purchaser pay such amount to Purchaser.
(b) The Guarantor guarantees that the Obligations will be paid
to the Purchaser strictly in accordance with the terms of the Purchaser Note and
the Purchase Agreement, as the case may be, regardless of any regulation, writ,
judgment, injunction, order, decree or award (collectively, the "REGULATIONS")
now or hereafter in effect which might in any way affect any of those terms or
the rights of Purchaser against the Company or the Guarantor, or which might
cause or permit to be invoked any alteration of the time, amount or manner of
payment by the Company or the Guarantor under those terms.
(c) To the full extent permitted by law, the obligations of the
Guarantor under this Agreement shall not be subject to any counterclaim, set-
off, deduction, diminution, abatement, recoupment, suspension, deferment,
reduction or defense (other than the full and strict compliance by the Guarantor
with those obligations) based on any claim that the Guarantor or any other
person may have against the Company, Purchaser or any other person.
(d) The obligations of the Guarantor under this Agreement shall
remain in full force and effect and shall not be released, discharged or in any
way affected by any circumstance or condition of any nature (whether or not the
Guarantor, the Company or Purchaser shall have any notice or knowledge of the
circumstance or condition), including, but not limited to:
(i) the invalidity, illegality, unenforceability,
discharge, termination, cancellation or frustration, in whole or in part,
of any Obligation, the Purchaser Note, the Purchase Agreement, the other
Transaction Documents or any other documents;
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(ii) the exercise or enforcement, or failure to exercise or
enforce, by any person of any right, remedy, privilege or power under the
Purchaser Note, the Purchase Agreement, the other Transaction Documents or
any other documents;
(iii) any demand or attempt to collect from, or failure to
demand or attempt to collect from, the Company, the Guarantor or any other
person under the Purchaser Note, the Purchase Agreement, the other
Transaction Documents or any other documents;
(iv) the giving, acceptance, existence, non-existence,
validity, invalidity or value of any security or collateral securing the
Obligations or any guarantee of the Obligations or any attempt or failure
to attempt to realize upon that security, collateral or guarantee;
(v) the exchange, substitution, renewal, extension,
modification, compromise, release, discharge or failure to perfect for any
reason of that security, collateral or guarantee;
(vi) any change in the time, place or manner of payment or
other performance or the waiver, consent, extension, renewal, indulgence,
compromise, release, settlement, refunding, funding, or any other
forbearance or other action taken, delayed or omitted by Purchaser, the
Company, the Guarantor or any other person under or in respect of any term
or provision of any Obligation, the Purchaser Note, the Purchase Agreement,
the other Transaction Documents or any other documents;
(vii) the termination, modification, alteration, amendment,
waiver, addition, deletion or other change to any Obligation, the Purchaser
Note, the Purchase Agreement, the other Transaction Documents or any other
documents or any provision thereof;
(viii) the liquidation, dissolution, merger or consolidation
of the Company, the Guarantor, Purchaser or any other person, or the
transfer by the Company, the Guarantor, Purchaser or any other person of
all or any part of its property or assets;
(ix) the voluntary or involuntary bankruptcy, receivership,
liquidation, insolvency, reorganization, arrangement, assignment for the
benefit of creditors or similar proceedings involving or affecting the
Company, the Guarantor, Purchaser or any other person or any of its
property or assets;
(x) the change in the ownership of any shares of capital
stock of the Company or the Guarantor or the change in or termination of
the corporate relationship between the Company and the Guarantor;
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(xi) the release or discharge, by operation of law or
otherwise, of the Company, the Guarantor or any other person from any
Obligation or any provision of the Purchaser Note, the Purchase Agreement,
the other Transaction Documents or any other documents; and
(xii) any other circumstance whatsoever, foreseen or
unforeseen, which may or might in any manner or to any extent vary the
risks of the Guarantor or might otherwise constitute a defense available to
or a legal or equitable discharge of a surety or a guarantor or limit
recourse against the Guarantor or otherwise.
IT IS THE PURPOSE AND INTENT OF THIS GUARANTY AGREEMENT THAT THE OBLIGATIONS OF
THE GUARANTOR UNDER THIS AGREEMENT ARE ABSOLUTE AND UNCONDITIONAL, PRESENT AND
CONTINUING UNDER ANY AND ALL CIRCUMSTANCES.
SECTION 1.2 NONRECOURSE. Notwithstanding anything herein or in any
other Transaction Document to the contrary, except as otherwise set forth in
this Section to the contrary, the Purchaser agrees (a) to look solely to the
Guarantor Collateral (as defined in Section 4.1) and other Collateral for
payment of the principal amount of and interest on the Purchaser Note and for
the payment of the Enforcement Expenses, (b) that its sole recourse for the
repayment of the principal amount of and interest on the Purchaser Note and the
Enforcement Expenses shall be to the Guarantor Collateral and other Collateral,
and (c) that it shall not seek repayment of the principal amount of or interest
on the Purchaser Note or the Enforcement Expenses or to enforce the Purchaser
Note or the payment of such amounts by any action or proceeding wherein a money
judgment shall be sought against the Guarantor, or any stockholder, officer,
director, agent or employee of the Guarantor, except that the Purchaser may
bring an action for declaratory judgment, action for injunction or an action for
specific performance solely for the purpose of enabling the Purchaser to realize
upon the Guarantor Collateral and other Collateral. The Purchaser may also
bring a foreclosure action, action for specific performance, or other
appropriate action or proceeding (including to obtain a deficiency judgment)
solely for the purpose of enabling the Purchaser to realize upon (i) the
Guarantor's interest in the Guarantor Collateral and (ii) the income arising
from the Guarantor Collateral to the extent received, directly or indirectly, by
the Guarantor after the occurrence of an Event of Default (the "RECOURSE
DISTRIBUTIONS") (collectively, the "DEFAULT COLLATERAL"); PROVIDED, HOWEVER,
that any judgment in any such action or proceeding shall be enforceable against
the Guarantor only to the extent of any such Default Collateral; PROVIDED
FURTHER, HOWEVER, that the provisions of this Section shall not (A) impair the
validity of the Obligations or in any way affect or impair the Lien of any
Security Document or the right of the Purchaser to foreclose any Security
Document following the occurrence and during the continuation of an Event of
Default; (B) impair the right of the Purchaser to name the Guarantor as a party
defendant in any action or suit for judicial foreclosure and sale under any
Security Document; (C) affect the validity or enforceability of the Purchaser
Note or the other Transaction Documents; (D) impair the right
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of the Purchaser to obtain the appointment of a receiver with respect to the
Guarantor Collateral and the other Collateral; (E) impair the right of the
Purchaser to bring suit for recovery of a money judgment against the Guarantor
for recovery of damages attributable to fraud or intentional misrepresentation
by the Guarantor or any other person in connection with this Agreement, the
Security Documents to which the Guarantor is a party or any other Transaction
Documents; (F) impair the right of the Purchaser to obtain a money judgment
against the Guarantor or any stockholder, officer, director or employee of the
Guarantor for the Recourse Distributions received by such person; (G) impair the
right of the Purchaser to bring suit for recovery of a money judgment against
the Guarantor or any stockholder, officer, director or employee of the Guarantor
with respect to the Guarantor's misappropriation of escrows or income collected
in advance with respect to the Guarantor Collateral; (H) impair the right of the
Purchaser to obtain insurance proceeds or condemnation proceeds due to the
Purchaser pursuant to any Security Document; (I) impair the right of the
Purchaser to obtain a money judgment or otherwise enforce the provisions of this
Agreement even after repayment in full by the Company of the Obligations; (J)
prevent or in any way hinder the Purchaser from exercising, or constitute a
defense, counterclaim, or other basis for relief in respect of the exercise of,
any other remedy against any or all of the Guarantor Collateral for the
Purchaser Note as provided in the Security Documents; or (K) impair the right of
the Purchaser to bring suit for recovery of a money judgment against the
Guarantor or any stockholder, officer, director or employee of the Guarantor
with respect to any misapplication of insurance proceeds or condemnation
proceeds approved or received by any such person with respect to the Guarantor
Collateral. The parties agree that this Section shall be subject to 11 U.S.C.
1111(b) of the Bankruptcy Code.
ARTICLE II
TERMINATION, WAIVERS AND SUBROGATION, EXPENSES
SECTION 2.1 CONTINUING GUARANTY. This Agreement shall continue to
be effective and shall remain in full force and effect until the Obligations
shall be paid in full. For the purposes of this Agreement, the Obligations
shall not be deemed to have been paid in full until Purchaser shall have
indefeasibly received payment of the Obligations in full in cash. Thereafter,
this Agreement shall be reinstated if at any time any payment of any of the
Obligations is rescinded or must otherwise be returned upon the insolvency,
bankruptcy or reorganization of the Company or any other person or otherwise,
all as though the payment had not been made.
SECTION 2.2 WAIVERS BY THE GUARANTOR. The Guarantor
unconditionally waives, to the full extent permitted by law:
(a) any defense (other than the payment in full in cash of the
Obligations), set-off or counterclaim which the Guarantor may otherwise assert
against the Company, Purchaser or any other person;
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(b) presentment, protest, demand for payment, promptness,
diligence, notice of protest, notice of any other action at any time taken or
omitted by Purchaser and, generally, all demands and notices of every kind in
connection with the Purchase Agreement, the other Transaction Documents or the
Obligations, including, but not limited to:
(i) notice of any of the matters referred to in Section
1.1(d) hereof; and
(ii) all notices which may be required by Regulations now or
hereafter in effect to preserve intact any rights against the Company or
the Guarantor under the Purchaser Note, the Purchase Agreement or the other
Transaction Documents or as a requirement to the enforcement, assertion or
exercise against the Company or the Guarantor of any right, power,
privilege or remedy conferred under the Purchaser Note, the Purchase
Agreement or the other Transaction Documents;
(c) any requirement to exhaust any rights or remedies or to
mitigate the damages resulting from any default under the Purchaser Note, the
Purchase Agreement, the other Transaction Documents or any other documents or
any requirement to protect, secure, perfect or insure any lien or any property
subject to the lien or take any other action against any person or any
collateral or other property;
(d) all claims that the sale price of any collateral or other
property was inadequate or unreasonable for any reason and all other claims to
damages and demands of any nature against Purchaser or any other person;
(e) all equities and rights of appraisal, stay and redemption
(whether now or hereafter existing), in each case arising out of Purchaser
enforcing any of its rights and remedies under the Purchaser Note, the Purchase
Agreement or the other Transaction Documents;
(f) any exoneration or release from the Obligations resulting
from any loss by the Guarantor of its rights, if any, of subrogation or
contribution; and
(g) any other circumstance whatsoever, including, but not
limited to, those stated in Section 1.1(d) hereof, which might otherwise
constitute a defense to or a legal or equitable discharge or release of a
guarantor or surety or a party granting security or which might otherwise limit
recourse against the Guarantor with respect to the Obligations.
SECTION 2.3 SUBROGATION; SUBORDINATION.
(a) The Guarantor shall not be subrogated, in whole or in part,
to the rights of Purchaser against the Company under the Purchaser Note, the
Purchase Agreement or the other Transaction Documents until the payment in full
of the Obligations.
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(b) Any claim of the Guarantor against the Company arising from
payments made by the Guarantor under this Agreement shall be in all respects
subordinate to the payment in full and discharge of the Obligations.
(c) No payment under this Agreement by the Guarantor shall give
rise to any claim of the Guarantor against Purchaser.
(d) Unless and until all Obligations shall have been paid in
full, the Guarantor shall not assign or otherwise transfer any claim against the
Company to any other person.
SECTION 2.4 COSTS AND EXPENSES. Subject to Section 1.2, the
Guarantor shall pay all costs and expenses, including reasonable attorneys' fees
and expenses, incurred by or on behalf of the Purchaser in the enforcement of
this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE GUARANTOR
The Guarantor represents and warrants as follows:
SECTION 3.1 CORPORATE EXISTENCE AND POWER. It (1) is a corporation
duly incorporated, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, (2) has all necessary corporate power and
authority and all material licenses, authorizations, consents and approvals
required to own, lease, license or use its properties now owned, leased,
licensed or used and proposed to be owned, leased, licensed or used and to carry
on its business as now conducted and proposed to be conducted, (3) is duly
qualified as a foreign corporation under the laws of each jurisdiction in which
both (A) qualification is required either (i) to own, lease, license or use its
properties now owned, leased, licensed and used and proposed to be owned,
leased, licensed or used or (ii) to carry on its business as now conducted and
proposed to be conducted and (B) the failure to be so qualified could materially
and adversely affect either or both of (i) the business, properties, operations,
prospects or condition (financial or otherwise) of the Guarantor and its
Consolidated Subsidiaries, taken as a whole, and (ii) the ability of the
Guarantor or the Consolidated Subsidiary, as the case may be, to perform its
obligations under any Security Document to which it is or may become a party and
(4) has all necessary corporate power and authority to execute and deliver each
Security Document to which it is or may become a party.
SECTION 3.2 AUTHORIZATION; CONTRAVENTION. The execution and delivery
by the Guarantor of each Security Document to which it is or may become a party
and the performance by it of its obligations under each of those Security
Documents have been duly authorized by all necessary corporate action and do not
and will not (1) contravene, violate, result in a breach of or constitute a
default under, (A) its [** articles of incorporation or **] certificate of
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incorporation or bylaws, (B) any Regulation of any Governmental Body or any
decision, ruling, order or award of any arbitrator by which the Guarantor or any
Consolidated Subsidiary or any of their properties may be bound or affected,
including, but not limited to, the Hart-Scott-Rodino Act, or (C) any agreement,
indenture or other instrument to which the Guarantor or any Consolidated
Subsidiary is a party or by which the Guarantor or any Consolidated Subsidiary
or their properties may be bound or affected or (2) except as contemplated by
the Security Documents, result in or require the creation or imposition of any
Lien on any of the properties now owned or hereafter acquired by the Guarantor
or any Consolidated Subsidiary.
SECTION 3.3 APPROVALS. No Approval of any Governmental Body or other
person is required or advisable on the part of the Guarantor or any Consolidated
Subsidiary for (1) the due execution and delivery by the Guarantor, as the case
may be, of any Security Document to which it is or may become a party, (2) the
conclusion of the First Closing Transactions, (3) the performance by the
Guarantor of its obligations under each Security Document to which it is or may
become a party with respect to the First Closing Transactions and (4) the
exercise by Purchaser of its rights and remedies under each Security Document
with respect to the First Closing Transactions.
SECTION 3.4 BINDING EFFECT. Each Security Document to which the
Guarantor is or may become a party is, or when executed and delivered in
accordance with this Agreement will be, the legally valid and binding obligation
of the Guarantor, enforceable against it in accordance with its terms, except as
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting creditors' rights generally and general
principles of equity, including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing and the possible unavailability of
specific performance or injunctive relief, regardless of whether considered in a
proceeding in equity or at law.
SECTION 3.5 PRINCIPAL OFFICE. The chief executive office and the
chief place of business of the Guarantor, and the place where the books and
records of the Guarantor are maintained, is located at [** the address of the
Guarantor shown on the signature page hereof **].
ARTICLE IV
RELEASE OF COLLATERAL
SECTION 4.1 DEFINITIONS. The following terms used in this Article
shall have the following meanings:
"GUARANTOR COLLATERAL" means [**FOR NUMBER CORPORATION GUARANTY**]
[**the Pledged Share Collateral (as defined in the Share Pledge Agreement
between the Guarantor and the Purchaser, dated as of the date hereof**] [**FOR
FOREST CANADA GUARANTY**] [**the
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Mortgaged Property (as defined in the Mortgage Debenture) executed and delivered
by the Guarantor to the Purchaser, dated as of the date hereof**].
"NET RELEASE PROCEEDS" means the gross proceeds paid in connection
with the transfer of any Guarantor Collateral with respect to which a Release is
requested LESS the actual, reasonable and customary fees and expenses paid in
cash to third-parties which are not Affiliates of the Guarantor in connection
with the transfer of the Guarantor Collateral.
"RELEASE" means any satisfaction, release, assignment instrument, deed
of reconveyance or similar instrument or instruments (each in recordable form or
otherwise in form reasonably satisfactory to the Guarantor but without any
representation or warranty of the Purchaser (other than a warranty as to the
Purchaser's own acts)) necessary to release any Guarantor Collateral from the
Lien of all applicable Security Documents.
SECTION 4.2 RELEASE OF CERTAIN COLLATERAL.
(a) CONDITIONS TO RELEASE OF COLLATERAL. At any time and from time to
time after the date of this Agreement, the Guarantor may obtain a Release of the
Lien of the Security Documents to which it is a party in respect of all, but not
a portion of, any Guarantor Collateral upon compliance with the following terms
and conditions on the applicable Release Date:
(1) the Guarantor shall have delivered written notice to the
Purchaser not less than 15 days prior to the proposed Release Date
specifying the proposed Release Date and the applicable Guarantor
Collateral.
(2) no default in the payment of the Obligations shall have
occurred and be continuing, as of the date of the delivery of the
notice pursuant to clause (1) above or as of the Release Date or would
exist after giving effect to such Release;
(3) any of the following shall obtain:
(A) there shall have been deposited in the Cash Collateral
Account (as defined in the Collateral Account Agreement) on or before
the Release Date cash in an amount equal to the Release Price of the
Guarantor Collateral for the purpose of effecting such Release; or
(B) if Purchaser shall have requested such Release in
connection with the transfer of the Guarantor Collateral, Purchaser
shall have consented to the Release, which consent may be granted or
withheld in the discretion of Purchaser (except that if Purchaser
determines that the fair market value of the Net Release Proceeds is
equal to or greater than the Release Price of the Guarantor
Collateral, the consent may not be unreasonably withheld), and the
non-cash portion of the Net Release Proceeds shall be transferred to
the Purchaser
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together with such instruments, agreements and other documents as are
necessary to grant Purchaser a perfected first priority security
interest in the non-cash portion of the Net Release Proceeds on
substantially the same terms as contained in the Security Document
under which the Lien is granted on such Guarantor Collateral; or
(C) the aggregate amount of the Cash Collateral is equal to
or greater than the then outstanding principal amount of the Purchaser
Note;
(4) the Guarantor shall have delivered to the Purchaser an
officer's certificate dated the Release Date, certifying as to the
matters referred to in clause (2) above; and
(5) all other proceedings taken or to be taken in connection
with such Release and all documents incidental thereto shall be
satisfactory, in form and substance, to the Purchaser and the
Purchaser's counsel, the Purchaser and such counsel shall have
received all such counterpart originals or certified copies of such
documents as the Purchaser may reasonably request and counsel for the
Purchaser shall have received such documents and evidence that such
counsel shall require in order to establish compliance with the
conditions set forth in this subsection.
(b) EFFECT OF RELEASE. Upon any Release of the Guarantor Collateral
in accordance with this Section, then the security interest in the Guarantor
Collateral shall be released and the Guarantor shall be released from any
further liability with respect to the Guaranty and the Security Documents [**FOR
FOREST CANADA GUARANTY**] [**other than arising under the Environmental
Indemnity.**]
ARTICLE V
MISCELLANEOUS
SECTION 5.1 NOTICES. All notices, requests and other
communications to any party or under this Agreement shall be in writing.
Communications may be made by telecopy or similar writing. Each communication
shall be given to the party at its address stated on the signature pages of this
Agreement or at any other address as the party may specify for this purpose by
notice to the other party. Each communication shall be effective (1) if given
by telecopy, when the telecopy is transmitted to the proper address and the
receipt of the transmission is confirmed, (2) if given by mail, 72 hours after
the communication is deposited in the mails properly addressed with first class
postage prepaid or (3) if given by any other means, when delivered to the proper
address and a written acknowledgement of delivery is received.
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SECTION 5.2 NO WAIVERS; REMEDIES; SPECIFIC PERFORMANCE.
(a) No failure or delay by any party in exercising any right,
power or privilege under this Agreement shall operate as a waiver of the right,
power or privilege. A single or partial exercise of any right, power or
privilege shall not preclude any other or further exercise of the right, power
or privilege or the exercise of any other right, power or privilege. The rights
and remedies provided in this Agreement shall be cumulative and not exclusive of
any rights or remedies provided by law.
(b) In view of the uniqueness of the transactions contemplated
hereby, neither of the parties would have an adequate remedy at law for money
damages in the event that this Agreement is not performed in accordance with its
terms, and therefore each of the parties agree that the other party shall be
entitled to specific enforcement of the terms of this Agreement in addition to
any other remedy to which it may be entitled, at law or in equity.
SECTION 5.3 AMENDMENTS, ETC. No amendment, modification,
termination, or waiver of any provision of this Agreement, and no consent to any
departure by a party to this Agreement from any provision of this Agreement,
shall be effective unless it shall be in writing and signed and delivered by the
other party to this Agreement, and then it shall be effective only in the
specific instance and for the specific purpose for which it is given.
SECTION 5.4 SUCCESSORS AND ASSIGNS.
(a) Purchaser may assign its rights and delegate its obligations
under this Agreement; such assignee shall accept those rights and assume those
obligations for the benefit of the other party in writing in form reasonably
satisfactory to the other party. Thereafter, without any further action by any
person, all references in this Agreement to "Purchaser", and all comparable
references, shall be deemed to be references to the transferee, but Purchaser
shall not be released from any obligation or liability under this Agreement.
(b) Except as provided in Section 5.4(a), no party may assign
its rights under this Agreement. Any delegation in contravention of this
Section shall be void AB INITIO and shall not relieve the delegating party of
any obligation under this Agreement.
(c) The provisions of this Agreement shall be binding upon and
inure to the benefit of the parties to this Agreement and their respective
successors and permitted assigns.
SECTION 5.5 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York. All
rights and obligations of the parties shall be in addition to and not in
limitation of those provided by applicable law.
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SECTION 5.6 COUNTERPARTS; EFFECTIVENESS. This Agreement may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as if all signatures were on the same instrument.
SECTION 5.7 SEVERABILITY OF PROVISIONS. Any provision of this
Agreement that is prohibited or unenforceable in any jurisdiction shall, as to
that jurisdiction, be ineffective to the extent of the prohibition or
unenforceability without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of the provision in any other
jurisdiction.
SECTION 5.8 HEADINGS AND REFERENCES. Articles and section headings
in this Agreement are included in this Agreement for the convenience of
reference only and do not constitute a part of this Agreement for any other
purpose. References to parties, articles and sections in this Agreement are
references to the parties, articles or sections of this Agreement, as the case
may be, unless the context shall require otherwise.
SECTION 5.9 ENTIRE AGREEMENT. Except as otherwise specifically
provided in this Section, this Agreement and the other Security Documents to
which the Guarantor is a party embodies the entire agreement and understanding
of the parties and supersede all prior agreements or understandings with respect
to the subject matters of those documents. Purchaser shall remain subject to
the other Transaction Documents and paragraphs (1) through (3), inclusive, of
the letter agreement dated March 6, 1995 between the Company and Purchaser in
accordance with the terms thereof.
SECTION 5.10 SURVIVAL. Except as otherwise specifically provided in
this Agreement, each representation, warranty or covenant of each party this
Agreement contained in or made pursuant to this Agreement shall survive each
Closing and remain in full force and effect, notwithstanding any investigation
or notice to the contrary or any waiver by any other party of a related
condition precedent to the performance by the other party of an obligation under
this Agreement.
SECTION 5.11 EXCLUSIVE JURISDICTION. Each of the Guarantor and
Purchaser (1) agrees that any legal action with respect to this Agreement shall
be brought exclusively in the courts of the State of New York or of the United
States of America for the Southern District of New York, (2) accepts for itself
and in respect of its property, generally and unconditionally, the jurisdiction
of those courts and (3) irrevocably waives any objection, including, without
limitation, any objection to the laying of venue or based on the grounds of
FORUM NON CONVENIENS, which it may now or hereafter have to the bringing of any
legal action in those jurisdictions; PROVIDED, HOWEVER, that each of the
Guarantor and the Purchaser may assert in an Action in any other jurisdiction or
venue each mandatory defense, third-party claim or similar claim that, if not so
asserted in such Action, may not be asserted in an original legal action in the
courts referred to in clause (1) above.
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SECTION 5.12 WAIVER OF JURY TRIAL. Each party waives any right to a
trial by jury in any Action to enforce or defend any right under this Agreement
or any amendment, instrument, document or agreement delivered, or which in the
future may be delivered, in connection with this Agreement and agrees that any
Action shall be tried before a court and not before a jury.
SECTION 5.13 AFFILIATE. Nothing contained in this Agreement shall
constitute Purchaser an "AFFILIATE" of any of the Company and its Subsidiaries
within the meaning of Rule 13e-3 under the Exchange Act.
SECTION 5.14 NON-RECOURSE. No recourse under this Agreement shall
be had against any "controlling person" (within the meaning of Section 20 of the
Exchange Act) of Purchaser or the shareholders, directors, officers, employees,
agents and Affiliates of Purchaser or such controlling persons, whether by the
enforcement of any assessment or by any legal or equitable proceeding, or by
virtue of any Regulation, it being expressly agreed and acknowledged that no
personal liability whatsoever shall attach to, be imposed on or otherwise be
incurred by such controlling person, shareholder, director, officer, employee,
agent or Affiliate, as such, for any obligations of Purchaser under this
Agreement or any other Transaction Document or for any claim based on, in
respect of or by reason of such obligations or their creation.
-----------------------
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IN WITNESS WHEREOF, the Purchaser and Guarantor have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first above written in New York, New
York.
THE ANSCHUTZ CORPORATION
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
Address: 2400 Anaconda Tower
555 - 17th Street
Denver, Colorado 80202
Telecopy: (303) 298-8881
[GUARANTOR]
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
Address:
------------------------------
------------------------------
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Telecopy:
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EXHIBIT E
FORM OF
MORTGAGE DEBENTURE
THIS MORTGAGE DEBENTURE is issued as of May ___, 1995 by [** FOR
COMPANY MORTGAGE DEBENTURE **] [** Forest Oil Corporation **] [** FOR FOREST
CANADA MORTGAGE DEBENTURE **] [** Forest Oil of Canada, Ltd. **], a corporation
under the laws of [** FOR COMPANY MORTGAGE DEBENTURE **] [** the State of New
York **] [** FOR FOREST CANADA MORTGAGE DEBENTURE **] [** Alberta **] (the
"CORPORATION").
ARTICLE I
PROMISE TO PAY: PRINCIPAL AND INTEREST
SECTION 1.1 PRINCIPAL. The Corporation, for value received, hereby
acknowledges itself indebted and promises to pay to or to the order of The
Anschutz Corporation (who and whose successors and assigns as holders of this
Debenture are herein called the "HOLDER"), ON DEMAND the principal amount of
FOURTEEN MILLION FIVE HUNDRED THOUSAND DOLLARS in lawful money of the United
States ($14,500,000.00) at the office of the Holder at 2400 Anaconda Tower,
555 - 17th Street, Denver, Colorado, 80202, telecopy (303) 298-8881, or at such
other place as the Holder may designate from time to time by notice in writing
to the Corporation.
SECTION 1.2 INTEREST. The Corporation also promises to pay interest to
the Holder on the Principal Amount, from the date hereof until paid in full,
(a) at the same place at the rate of 8.0% per annum from the date hereof to and
including __________, 1995(1) and (b) at the rate of 12.5% per annum thereafter.
Such interest shall be payable in arrears on and to the last calendar day of
each month. The Corporation further agrees to pay interest on all overdue
interest calculated at the rate and manner set forth above both before and after
judgement which over-due interest shall be payable on demand. If payment of the
Principal Amount is demanded pursuant to the terms hereof, all accrued and
unpaid interest shall also be payable on the date for payment of the Principal
Amount.
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(1) The date that is 16 weeks after the First Closing Date.
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ARTICLE II
DEFINITIONS AND INTERPRETATION
SECTION 2.1 DEFINITIONS. In this Debenture, unless there is something in
the subject matter or context inconsistent therewith:
"ACCOUNT DEBTOR" means any person producing, purchasing, taking,
processing or receiving any hydrocarbons produced from or allocable to
the interest of the Corporation in the Mortgaged Property, or having
in its possession any such hydrocarbons or proceeds therefrom, or
otherwise obligated to pay any account receivable or other debt due,
owing or accruing due to the Corporation in respect of the Mortgaged
Property;
"ACTION" against a person means an action, suit, investigation,
complaint or other proceeding pending or, to the knowledge of the
person, threatened against or affecting the person or its property,
whether civil or criminal, in law or equity or before any arbitrator
or Governmental Body;
"AFFILIATE" of a person means any other person (1) that directly or
indirectly controls, is controlled by or is under common control with,
the person or any of its Subsidiaries, (2) that directly or indirectly
beneficially owns or holds 5% or more of any class of voting stock of
the person or any of its Subsidiaries or (3) 5% or more of the voting
stock of which is directly or indirectly beneficially owned or held by
the person or any of its Subsidiaries. The term "CONTROL" means the
possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a person, whether
through the ownership of voting securities, by contract or otherwise;
"APPLICABLE LAWS" means, in relation to any person, transaction or
event:
1. all applicable provisions of laws, statutes, rules and
regulations from time to time in effect of any Governmental
Body; and
2. all judgments, orders, awards, decrees, official directives,
writs and injunctions from time to time in effect of any
Governmental Body in an action, proceeding or matter in which
the person is a party or by which it or its property is bound
or having application to the transaction or event;
"APPROVAL" means an authorization, consent, approval or waiver of,
clearance by, notice to or registration or filing with, or any other
similar action by or with respect to a Governmental Body or any other
person and the expiration or termination of all prescribed waiting,
review or appeal periods with respect to any of the foregoing;
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"BUSINESS DAY" means any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of the Province of Alberta or
the State of Colorado or is a day on which banking institutions
located in such province or state are authorized or required by law or
other governmental action to close;
"CAPITALIZED LEASE" means any lease that is or should be capitalized
and appear on the balance sheet of the lessee;
"COLLATERAL" means all property, whether real, personal or mixed,
tangible or intangible, owned or to be owned or leased or to be leased
or otherwise held or to be held by the Corporation, any of the
Corporation and its Subsidiaries or in which any of the Corporation
and its Subsidiaries has or shall acquire an interest, to the extent
of the interest therein of the Corporation or the Subsidiary, as the
case may be, now or hereafter granted, assigned, transferred,
mortgaged or pledged to the Holder, or in which a security interest is
granted to the Holder to secure all or any part of the Obligations or
any guarantee thereof pursuant to this Debenture;
"CONTRACTS" means all oil and gas purchase, sale and other agreements
and contracts, processing agreements, operating, pooling, unitization
or communitization and related agreements and all other agreements or
contracts relating to the operation or ownership of the Mortgaged
Property;
"ENVIRONMENTAL CLAIM" means, with respect to any person, (a) any
written or oral notice, claim, demand or other communication
(collectively, a "claim") by any other person alleging or asserting
such person's liability for investigatory costs, cleanup costs,
governmental response costs, damages to natural resources or other
Property, personal injuries, fines or penalties arising out of, based
on or resulting from (i) the presence, or release into the
environment, of any Hazardous Material at any location, whether or not
owned by such person, or (ii) circumstances forming the basis of any
violation, or alleged violation, of any Environmental Law. The term
"ENVIRONMENTAL CLAIM" shall include, without limitation, any claim by
any governmental authority for enforcement, cleanup, removal,
response, remedial or other actions or damages pursuant to any
applicable Environmental Law, and any claim by any third party seeking
damages, contribution, indemnification, costs recovery, compensation
or injunctive relief resulting from the presence of Hazardous
Materials or arising from alleged injury or threat of injury to
health, safety or the environment;
"ENVIRONMENTAL LAWS" means any and all presently existing federal,
provincial, state, local and foreign laws, rules or regulations, and
any orders or decrees in each case as now or hereafter in effect,
relating to the regulation or protection of human health, safety or
the environment or to emissions, discharges, releases or threatened
releases of pollutants, contaminants, chemicals or toxic or hazardous
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substances or wastes into the indoor or outdoor environment,
including, without limitation, ambient air, soil, surface water,
ground water, wetlands, land or subsurface strata, or otherwise
relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of pollutants, contaminants,
chemicals or toxic or hazardous substances or wastes;
"EVENT OF DEFAULT" means any event or circumstance enumerated in
Section 10.2;
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the related rules and regulations thereunder;
"GAAP" means generally accepted accounting principles as in effect in
the United States of America from time to time;
"GOOD TITLE" means, with respect to the Mortgaged Property, good and
defensible title that (1) entitles the Corporation or a Subsidiary to
receive not less than the Net Revenue Interests of all oil and gas
produced, saved and sold from the Mortgaged Property without
reduction, suspension or termination throughout the productive life of
such property, (2) obligates the Corporation or a Subsidiary to bear a
portion of the costs and expenses of operation and development of such
property in an amount not greater than the working interests set forth
in Schedule "A" without increase throughout the productive life or
such property and (3) is free and clear of all Liens, encumbrances and
defects, other than Permitted Encumbrances and Liens that a reasonably
prudent purchaser of oil and gas properties in an arm's length
transaction would accept in light of the value of the property
affected, the improbability of assertion of the defect or irregularity
and the degree of difficulty or the cost of performing curative work;
"GOVERNMENTAL BODY" means any agency, bureau, commission, court,
department, official, political subdivision, tribunal or other
instrumentality of any government, whether federal, state, provincial,
county or local, domestic or foreign;
"GUARANTY AGREEMENT" means the Guaranty Agreement dated May ___, 1995
between Forest Oil of Canada, Ltd. and The Anschutz Corporation;
"HAZARDOUS MATERIAL" means, collectively, (a) any petroleum or
petroleum products, geothermal products, natural gas, flammable
explosives, radioactive materials, asbestos in any form that is or
could become friable, urea formaldehyde foam insulation, and
transformers or other equipment that contain dielectric fluid
containing polychlorinated biphenyls (PCB's), (b) any chemicals or
other materials or substances which are now or hereafter become
defined as or included in the definition of "hazardous substances",
"hazardous wastes", "hazardous materials", "extremely hazardous
wastes", "restricted hazardous
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wastes", "toxic substances", "toxic pollutants",
"contaminants", "pollutants" or words of similar import under any
Environmental Law and (c) any other chemical or other material or
substance, exposure to which is now or hereafter prohibited, limited
or regulated under any Environmental Law;
"HOLDER" has the meaning set forth in the preamble to this Debenture;
"LANDS" means the Lands described and set forth in Schedule "A" hereto
including Petroleum Substances within, upon or under such lands and
any other lands with which the same may from time to time be pooled or
unitized, together with the right to explore for and recover same,
insofar as such rights are granted by the Leases;
"LEASE" includes sublease and any other agreements in the nature of a
lease;
"LEASES" means the leases described in Schedule "A" and all renewals,
replacements and extensions thereof;
"LIEN" means any mortgage, deed of trust, lien (statutory or
otherwise), pledge, hypothecation, charge, deposit arrangement,
preference, priority, security interest or encumbrance of any kind
(including, but not limited to, any conditional sale agreement or
other title retention agreement, any Capitalized Lease or financing
lease having substantially the same economic effect as the foregoing
and the filing of or agreement to give any financing statement under
the PPSA or comparable law of any jurisdiction to evidence any of the
foregoing);
"LIEN HEREOF" means the Security Interests created or expressed to be
created or required to be created by the Corporation pursuant to this
Debenture or any indenture supplementary hereto;
"MATERIAL ADVERSE EFFECT" means, with respect to a circumstance or
event subject to a representation, warranty, covenant or other
agreement of the Corporation or any of its Subsidiaries in the
Debenture that includes a reference therein to the possible occurrence
of a Material Adverse Effect, whether considered individually or
together in the aggregate with all other circumstances or events that
are the subject of the same or other such representations, warranties,
covenants and other agreements that include therein a reference to the
possible occurrence of a Material Adverse Effect, a material adverse
effect on the business, properties, operations, prospects, condition
(financial or otherwise) or capitalization of the Corporation and its
Subsidiaries, taken as a whole, or the ability of the Corporation or a
Subsidiary to perform its obligations under this Debenture;
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"MISCELLANEOUS INTERESTS" means the Corporation's interest in and to
all property, assets and rights (other than the Petroleum and Natural
Gas Rights or the Tangibles) whether now owned or hereafter acquired
that relate to the Petroleum and Natural Gas Rights or Tangibles,
including without limitation:
(a) All contracts, agreements and documents (including, without
limitation, production sales contracts, pooling agreements,
unit agreements, unit operating agreements, agreements for
construction, ownership and operation of facilities and
agreements and arrangements for the transportation of
Petroleum Substances) relating to the Petroleum and Natural
Gas Rights or Tangibles or any rights in relation thereto;
(b) All rights to enter upon, use and occupy the surface of any of
the Lands, or any lands upon which any of the Tangibles are
now or hereafter situated;
(c) All rights to carry out operations on the Lands and Leases,
including well licences and easements and pipeline and other
permits;
(d) Petroleum Substances from time to time produced from any of
the Lands and allocable to the Petroleum and Natural Gas
Rights;
(e) Books, records, reports and data that relate directly to the
Petroleum and Natural Gas Rights; and
(f) All extensions, renewals, replacements or amendments of or to
the foregoing items described in paragraphs (a) to (e) above.
"MORTGAGED PROPERTY" means all right, title, estate and interest of
the Corporation, whether freehold, leasehold or other, in, to, under
and in respect of the Petroleum and Natural Gas Rights, the Tangibles
and the Miscellaneous Interests and all proceeds of the foregoing,
which are from time to time subject to the lien hereof; such term
shall be deemed to refer to such property, assets and undertakings or
any part thereof;
"NET REVENUE INTEREST" means, with respect to any particular Lands,
the applicable working interest of the Corporation (as set forth in
Schedule "A") LESS the corresponding encumbrances (as set forth in
Schedule "A");
"OBLIGATIONS" means all of the indebtedness, liabilities and
obligations, present and future, matured or not of the Corporation
under this Debenture, including payment of the Principal Amount,
interest thereon and interest on overdue interest, payment of all
other amounts required to be paid hereunder, and
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observance and performance of all other covenants, indemnities, terms,
conditions, agreements and other requirements herein contained, both
monetary and non-monetary;
"PERMITTED DISPOSITIONS" and "PERMITTED ENCUMBRANCES" each has the
meaning ascribed thereto in Schedule "B";
"PERSON" means an individual, corporation, partnership, joint venture,
association, trust, unincorporated organization, government or any
agency or instrumentality thereof, or any other entity;
"PETROLEUM AND NATURAL GAS RIGHTS" means the entire interest of the
Corporation in and relating to the Petroleum Substances within, upon
or under the Lands granted pursuant to the Leases as set forth and
described in Schedule "A" hereto;
"PETROLEUM SUBSTANCES" means petroleum, natural gas, and related
hydrocarbons and other substances, including sulphur, produced in
association with such petroleum, natural gas or related hydrocarbons,
the rights to which are granted by the Leases;
"PPSA" means the PERSONAL PROPERTY SECURITY ACT (Alberta);
"PRINCIPAL AMOUNT" means the principal amount payable pursuant to
Section 1.1 (or, subject to Section 3.2, so much thereof as remains
from time to time unpaid);
"PROPERTY" means any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or
intangible;
"PURCHASE AGREEMENT" means the Purchase Agreement dated May ___, 1995
between the Corporation and The Anschutz Corporation;
"RECEIVER" means any receiver or receivers of the Mortgaged Property
appointed by the Holder pursuant to this Debenture or by a court
having jurisdiction; such term shall be deemed to refer to a receiver
or receiver-manager;
"REGULATION" means (1) any applicable law, rule, regulation, judgment,
decree, ruling, order, award, injunction, recommendation or other
official action of any Governmental Body, and (2) any official change
in the interpretation or administration of any of the foregoing by the
Governmental Body or by any other Governmental Body or other person
responsible for the interpretation or administration of any of the
foregoing;
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"SECURITY INTERESTS" means a mortgage, pledge, deposit by way of
security, charge, hypothec, assignment by way of security, security
interest, lien (whether statutory, equitable or at common law), title
retention agreement, lease with option to purchase, a right of off-set
(if created for the purpose of directly or indirectly securing the
repayment of borrowed money), and any other interest in property or
assets, howsoever created or arising, that secures payment or
performance of an obligation;
"SUBSIDIARY" of a person means (i) any corporation or other entity of
which securities or other ownership interests having ordinary voting
power to elect a majority of the board of directors or other persons
performing similar functions are at the time directly or indirectly
owned by the person or (ii) a partnership in which the person or a
Subsidiary of the person is, at the date of determination, a general
or limited partner of such partnership, but only if the person or its
Subsidiary is entitled to receive more than fifty percent of the
assets of such partnership upon its dissolution. For purposes of the
foregoing definition, an arrangement by which a person who owns any
Mortgaged Property is subject to a joint operating agreement,
processing agreement, net profits interest, overriding royalty
interest, farmout agreement, development agreement, area of mutual
interest agreement, joint bidding agreement, unitization agreement
pooling arrangement or other similar agreement or arrangement shall
not, by reason of such agreement or arrangement alone, be considered a
Subsidiary. Unless the context otherwise requires, references to one
or more Subsidiaries shall be references to Subsidiaries of the
Corporation; and
"TANGIBLES" means the entire interest of Corporation in all tangible
depreciable property and assets used or useful solely in connection
with production, gathering, treatment, storage, compression,
processing, transportation, injection, removal or other operations
relating to the Petroleum and Natural Gas Rights, whether they are
situate within or upon the Lands or appurtenant thereto or used in
connection with wells located on the Lands.
Derivations of any of the foregoing defined terms shall have a corresponding
meaning. Terms not otherwise defined herein have the meaning ascribed thereto
in the Purchase Agreement.
SECTION 2.2 PER ANNUM CALCULATIONS; CURRENCY; TIME; "INCLUDING".
A. Unless otherwise stated, interest specified as a rate "per annum"
shall be computed on the basis of a calendar year of twelve 30-day
months.
B. Unless otherwise stated, references herein to dollar amounts or $
shall be deemed to be references to United States dollars.
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C. Unless otherwise stated, references herein to time shall mean local
time in Alberta.
D. The word "including" shall not be construed to limit or restrict the
generality of the matter that precedes it.
E. Whenever interest is to be calculated on the basis of a year of 360
days, the yearly rate of interest to which the rate determined
pursuant to such calculation is equivalent is the rate so determined
multiplied by the actual number of days in the 12-month period
commencing on the first day of the period for which such calculation
is made and divided by 360.
SECTION 2.3 STATUTE REFERENCES. References herein to a statute include,
unless otherwise stated, regulations passed or in force pursuant thereto and any
amendments to such statute or to such regulations from time to time, and any
legislation or regulations substantially replacing the same or substantially
replacing any specific provision to which such reference is made.
ARTICLE III
DEPOSIT OF DEBENTURE
SECTION 3.1 DEPOSIT OF DEBENTURE AS COLLATERAL SECURITY. This Debenture
may be issued, pledged, hypothecated or deposited by the Corporation as
collateral security for any indebtedness, liabilities or obligations (direct or
indirect, present or future, absolute or contingent, matured or not, extended or
renewed), and may only be cancelled by the Corporation when physically
redelivered by the Holder to the Corporation upon satisfaction of all such
liabilities, indebtedness or obligations. While this Debenture is so issued,
pledged, hypothecated or deposited it shall not be redeemed by reason of the
account of the Corporation having ceased to be in debit, or by reason of the
liabilities, indebtedness or obligations in respect of which this Debenture is
issued, pledged, hypothecated or deposited being repaid or satisfied from time
to time.
SECTION 3.2 DEBENTURE IS OUTSTANDING FOR FULL FACE AMOUNT.
Notwithstanding anything in Section 3.1 or elsewhere contained, this Debenture
shall constitute a secured promise of the Corporation to pay the full face
Principal Amount referred to in Section 1.1 irrespective of whether any
liabilities, indebtedness or obligations in respect of which this Debenture may
have been issued, pledged, hypothecated or deposited as collateral security are
less than such amount. The Corporation agrees and confirms that no payment by
the Corporation to the Holder on account of any such liabilities, indebtedness
or obligations shall reduce the Principal Amount owing under this Debenture
unless such payment is specifically and expressly in writing appropriated by the
Corporation to this Debenture and recorded as such in writing by the Holder on
this Debenture.
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SECTION 3.3 NONRECOURSE. Notwithstanding anything in Section 3.2 or
elsewhere contained, except as otherwise set forth in this Section 3.3 to the
contrary, and except as otherwise set forth in the Mortgage Debenture Deposit
Agreement dated as of the date hereof between the Corporation and the Holder to
the contrary, for purposes of securing the Obligations under this Debenture, the
Holder shall (1) look solely to the Mortgaged Property for payment of the
Obligations, (2) only have recourse for the repayment of the Obligations to the
Mortgaged Property, and (3) not seek repayment of the Obligations or enforce
this Debenture by any action or proceeding wherein a money judgment shall be
sought against the Corporation, or any stockholder, officer, director, agent or
employee of the Corporation, except that the Holder may bring an action for
declaratory judgment, action for injunction or an action for specific
performance solely for the purpose of enabling the Holder to realize upon the
Mortgaged Property. The Holder may also bring a foreclosure action, action for
specific performance, or other appropriate action or proceeding solely for the
purpose of enabling the Holder to realize upon the income arising from the
Mortgaged Property to the extent received, directly or indirectly, by the
Corporation after the occurrence of an Event of Default (the "DEFAULT
COLLATERAL"); PROVIDED, HOWEVER, that any judgment in any such action or
proceeding shall be enforceable against the Corporation only to the extent of
any such Default Collateral; PROVIDED FURTHER, HOWEVER, that the provisions of
this Section 3.3 shall not (a) impair the validity of the Obligations or in any
way affect or impair the Lien hereof or the right of the Holder to foreclose any
Security Document following the occurrence and during the continuation of an
Event of Default, (b) impair the right of the Holder to name the Corporation as
a party defendant in any action or suit for judicial foreclosure and sale under
any Security Document, (c) affect the validity or enforceability of the
Purchaser Note or the other Transaction Documents, (d) impair the right of the
Holder to obtain the appointment of a receiver with respect to the Mortgaged
Property, (e) impair the right of the Holder to bring suit for recovery of a
money judgment against the Corporation for recovery of damages attributable to
fraud or intentional misrepresentation by the Corporation or any other person in
connection with this Debenture, the Security Documents to which the Corporation
is a party or any other Transaction Documents to which the Corporation is a
party, (f) impair the right of the Holder to obtain a money judgment against the
Corporation or any stockholder, officer, director or employee of the Corporation
for the Default Collateral received by such person, (g) impair the right of the
Holder to bring suit for recovery of a money judgment against the Corporation or
any stockholder, officer, director or employee of the Corporation with respect
to the Corporation's appropriation of escrows or income collected in advance
with respect to the Mortgaged Property and other Collateral, (h) impair the
right of the Holder to obtain insurance proceeds or condemnation proceeds due to
the Holder pursuant to any Security Documents, (i) impair the right of the
Holder to obtain a money judgment or otherwise enforce the provisions of this
Debenture, (j) prevent or in any way hinder the Holder from exercising, or
constitute a defense, counterclaim, or other basis for relief in respect of the
exercise of, any other remedy against any or all of the Mortgaged Property, or
(k) impair the right of the Holder to bring suit for recovery of a money
judgment against the Corporation or any stockholder, officer, director or
employee of the Corporation with respect to any misapplication of insurance
proceeds or condemnation proceeds approved or received by any such person with
respect to the Mortgaged
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Property. The parties agree that this Section 3.3 shall be subject to 11 U.S.C.
1111(b) of the Bankruptcy Code.
ARTICLE IV
SECURITY
SECTION 4.1 SECURITY FOR OBLIGATIONS. As continuing security for the due
payment, observance and performance of all Obligations of the Corporation, but
subject to the exception as to leaseholds hereinafter contained, the Corporation
hereby grants, conveys, assigns, mortgages and charges to the Holder, its
successors and assigns as and by way of a first fixed and specific mortgage,
charge and security interest, all right, title, estate and interest, whether
freehold, leasehold or other, in, to, under and in respect of the Petroleum and
Natural Gas Rights, the Tangibles and the Miscellaneous Interests and all
proceeds of any of the foregoing.
SECTION 4.2 HABENDUM. The Holder shall have and hold the Mortgaged
Property and the rights hereby conferred on the Holder for the use and purpose
and with the powers and authorities herein expressed.
SECTION 4.3 HOLDER NOT LIABLE ON CORPORATION'S AGREEMENTS. Nothing
contained in this Debenture shall be construed as rendering the Holder liable,
directly or indirectly, for any obligations of the Corporation under any
agreement, instrument, permit, lease, license or other document subject to the
lien hereof, or any judgment, decree or order of any governmental or judicial
body.
SECTION 4.4 CHARGE VALID IRRESPECTIVE OF ADVANCE OF MONEYS. The liens
hereof shall be and be deemed to be effective whether or not the moneys hereby
secured or any part thereof shall be advanced before or after or upon the date
of execution and issuance of this Debenture.
ARTICLE V
PROVISIONS APPLICABLE TO ASSIGNED ACCOUNTS
SECTION 5.1 ASSIGNED ACCOUNTS.
(a) The Corporation will, at the request of the Holder, furnish the Holder
with the names of all Account Debtors. Upon notification by the
Holder of any or all Account Debtors, the Holder may direct such
parties to make all payments to the Holder. The Corporation
acknowledges that any such payments on or other proceeds of the
Mortgaged Property received by the Corporation from such parties after
notification of the lien hereof to such parties shall be received and
held by the Corporation in trust for the Holder and shall be turned
over to the Holder upon request. Nothing contained in this
Section 5.1(a) shall or shall be deemed to have the effect of making
the Holder responsible to ascertain the
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Account Debtors or for the collection of any such accounts or amounts
nor shall the Holder, by reason of this Section 5.1(a) or by reason of
any steps, actions, notices or other proceedings taken or given to
enforce such rights be or be deemed to be a mortgagee in possession of
the Mortgaged Property or any part thereof nor be liable or
accountable for any moneys except those actually received.
(b) The following provisions shall apply to all debts, accounts, claims,
moneys, receivables and other similar items of personal property
subject to the lien hereof (in this Section called the "assigned
accounts") following the occurrence and during the continuance of an
Event of Default:
(i) COLLECTION: the Holder may collect, realize, sell or
otherwise deal with the assigned accounts or any part thereof
in such manner, upon such terms and conditions and at such
time or times as may seem to it advisable and without notice
to the Corporation (except as otherwise required by applicable
law);
(ii) NOT BOUND TO COLLECT: the Holder shall not be liable or
accountable for any failure to collect, realize, sell or
otherwise deal with or obtain payment of the assigned accounts
or any part thereof and shall not be bound to institute
proceedings for the purpose of collecting, realizing, selling
or otherwise dealing with or obtaining payment of the same or
for the purpose of preserving any rights of the Holder, the
Corporation or any other person in respect of the same;
(iii) APPLICATION: all moneys collected or received by the Holder
in respect of the assigned accounts may be applied on account
of such parts of the Obligations as the Holder in its
discretion determines or, in the discretion of the Holder, may
be held in a separate collateral account for such time as the
Holder sees fit, or released to the Corporation; and
(iv) CONTROL OF PROCEEDS: the Holder may take control of any
proceeds of the assigned accounts.
ARTICLE VI
POSSESSION AND USE UNTIL DEFAULT
SECTION 6.1 POSSESSION. Unless and until an Event of Default shall have
occurred and is continuing, the Corporation may, subject to the express terms
hereof and without obtaining the consent of the Holder,
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possess, manage, develop, operate and enjoy the Mortgaged Property in the
ordinary course of business and in accordance with prudent industry standards,
and freely control the conduct of its business and to take and use and dispose
of any income, rents, issues and profits thereof in the same manner, to the same
extent and with the same effect, except as provided herein, as if this Debenture
had not been made.
ARTICLE VII
LEASES; RESTRICTIONS ON ASSIGNMENT
SECTION 7.1 LAST DAY OF TERM EXCLUDED. The last day of the term of any
lease, oral or written, or any agreement therefor, now held or hereafter
acquired by the Corporation shall be excepted from the lien hereof and shall not
form part of the Mortgaged Property, but the Corporation shall stand possessed
of such one day remaining upon trust to assign and dispose of the same as the
Holder or any assignee from the Holder of such lease or agreement shall direct.
The Holder may at any time after the occurrence and during the continuance of an
Event of Default remove the Corporation as trustee and appoint another in its
place.
SECTION 7.2 PROHIBITIONS ON ASSIGNMENT. If any lease, agreement, license
or permit contains a clause which provides in legal effect that it cannot be
encumbered in the manner herein provided without the consent or approval of the
other party thereto or the issuer thereof, then the effectiveness of the lien
hereof (vis-a-vis such party or issuer only and in respect to such lease,
agreement, license or permit only) shall be conditional upon such consent or
approval having been obtained. The Corporation shall use its best efforts to
obtain such consent or approval forthwith, and the lien hereof, while effective
as against the Corporation and all other persons immediately, shall be effective
against such other party as soon as the required consent or approval is given,
or deemed or required to be given, whichever shall first occur.
SECTION 7.3 REALIZATION ON AGREEMENTS. Nothing in Section 7.2 or
elsewhere in this Debenture shall be construed as limiting the rights of the
Holder or any Receiver to rely upon provisions in any agreement or instrument
subject to the lien hereof where such provisions are more favourable to the
Holder or a Receiver than those contained herein (notwithstanding any
inconsistency herewith), nor as requiring the Holder or any Receiver to comply
with any restrictions of the nature referred to in Section 7.2 in connection
with any realization on the Mortgaged Property where such compliance is not
otherwise required by the law relating to realization of security.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
SECTION 8.1 GENERAL REPRESENTATIONS AND WARRANTIES. The Corporation
represents and warrants to the Holder that:
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(a) CORPORATE EXISTENCE AND POWER: it (1) is a corporation duly
incorporated, validly existing and in good standing under the laws of
the jurisdiction of its incorporation, (2) has all necessary corporate
power and authority and all material licenses, authorizations,
consents and approvals required to own, lease, license or use its
properties now owned, leased, licensed or used and proposed to be
owned, leased, licensed or used and to carry on its business as now
conducted and proposed to be conducted, (3) is duly qualified as a
foreign corporation under the laws of each jurisdiction in which both
(A) qualification is required either (i) to own, lease, license or use
its properties now owned, leased, licensed and used or (ii) to carry
on its business as now conducted and (B) the failure to be so
qualified could materially and adversely affect either or both of
(i) its business, properties, operations, prospects or condition
(financial or otherwise) and (ii) its ability to perform its
obligations under this Debenture and (4) has all necessary corporate
power and authority to execute and deliver this Debenture;
(b) AUTHORIZATION; CONTRAVENTION: subject to the filing for recordation
of security notices with the Department of Energy, Forest Lands and
Wildlife for the Province of Alberta and of financing statements with
the Personal Property Registry for the Province of Alberta, the
execution and delivery by the Corporation and the performance by it of
its obligations under this Debenture has been duly authorized by all
necessary corporate action and does not and will not (1) contravene,
violate, result in a breach of or constitute a default under, (A) its
articles of incorporation or bylaws, (B) any Regulation of any
Governmental Body or any decision, ruling, order or award of any
arbitrator by which it or any of its properties may be bound or
affected, or (C) any agreement, indenture or other instrument to which
it is a party or by which it or its properties may be bound or
affected or (2) except as contemplated by this Debenture, result in or
require the creation or imposition of any Lien on any of the
properties now owned or hereafter acquired by it; and
(c) BINDING EFFECT: when executed and delivered in accordance with its
terms, this Debenture will be a legally valid and binding obligation
of the Corporation enforceable against it in accordance with its
terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally and general principles of
equity, including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing and the possible
unavailability of specific performance or injunctive relief,
regardless of whether considered in a proceeding in equity or at law.
SECTION 8.2 REPRESENTATIONS AND WARRANTIES REGARDING PROPERTY. The
Corporation represents and warrants to the Holder that:
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(a) TITLE TO ASSETS: it or a Subsidiary has Good Title to such portion of
the Mortgaged Property included or reflected in the engineering report
described in Section 8.2(b)(i) and reflected in the financial
statements referred to in Section 4.5 of the Purchase Agreement (other
than any Mortgaged Property disposed of since the respective dates
thereof in the ordinary course of business consistent with past
practices);
(b) MORTGAGED PROPERTY:
(i) the report entitled "Estimated Future Reserves and Income
Attributable to Certain Leasehold and Royalty Interests"
prepared by Ryder, Scott & Company (the "INDEPENDENT
ENGINEERS"), dated as of December 31, 1994, setting forth the
estimated future reserves and income attributable to the
Mortgaged Property, reflects the working interests set forth
in Schedule "A" and the Net Revenue Interests of the
Corporation and the working interests and the net revenue
interests of Forest Oil of Canada, Ltd. in the Mortgaged
Property, EXCEPT for the Overriding Royalty Assignment as
described in Schedule "A";
(ii) all logs, reservoir reports, production reports, cost and
expense data, tax information, pricing data, engineering and
technical data, geological and geophysical data, and all other
data and information, in each case to the extent furnished by
the Corporation and Forest Oil of Canada, Ltd. to the
Independent Engineers in preparing the report referred to in
Section 8.2(b)(i), were consistent in all material respects
with, or were provided without adjustment in the form
available on the internal records of the Corporation and
Forest Oil of Canada, Ltd.;
(iii) since the acquisition of the Mortgaged Property by the
Corporation, the Corporation or a Subsidiary has maintained
records with respect to the Mortgaged Property in a reasonable
manner and in accordance with generally prevailing standards
of the oil and gas industry applicable to non-operated
interests in oil and gas properties;
(iv) except as previously disclosed to the Holder in writing, which
writing makes reference to this Debenture:
(A) the Leases in respect of the Mortgaged Property are in
full force and effect and the Corporation has not been
advised by any lessor or any other party of any default
under any such oil and gas leases or other Contract,
which default has not heretofore been cured in all
respects;
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(B) the Corporation is not currently in breach of or in
default under any obligations under any oil and gas
lease or other Contract in respect of the Mortgaged
Property;
(C) except for amounts held in suspense in accordance with
prudent industry practice, the Corporation has made or
has caused to be made proper and timely payments
(including but not limited to royalties, delay rentals
and shut-in royalties), due under the oil and gas
leases and other Contracts in respect of the Mortgaged
Property;
(D) the Corporation is being paid, in a timely manner, the
Net Revenue Interests;
(E) the Corporation has fulfilled all material requirements
for filings, certificates, disclosures of parties in
interest and other similar matters contained in (or
otherwise applicable thereto by Regulation) its
respective Contracts and is fully qualified to own and
hold the Mortgaged Property;
(F) no other party to a material Contract to which the
Corporation is a party has given or threatened to give
notice of any Action to terminate, cancel, rescind or
procure a judicial reformation of any such Contract or
any provision thereof; and
(G) there are no express obligations to engage in
continuous development operations (i.e., drilling
additional wells) in order to maintain any Contract in
respect of the Mortgaged Property;
(v) except as reflected in the financial statements referred to in
Section 4.5 of the Purchase Agreement or as otherwise
previously disclosed to the Holder in writing, which writing
makes reference to this Debenture, the Corporation:
(A) is not obligated by virtue of a prepayment arrangement
under any gas contract containing a "take or pay" or
similar provision, a production payment or any other
arrangement to deliver a material amount of gas or oil
attributable to the Mortgaged Property at some future
time without then or thereafter receiving full payment
therefor; or
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(B) has not received any funds or payments from purchasers
of production of gas under gas contracts which are
subject to a potential refund;
(vi) except as previously disclosed to the Holder in writing, which
writing makes reference to this Debenture:
(A) all of the producing wells located on the Lands
included in the Mortgaged Property have been drilled
and completed within the boundaries of such Lands or
within the limits otherwise permitted by contract,
pooling or unit agreement, lease instrument and by
Regulation;
(B) to the knowledge of the Corporation, all drilling and
completion of the wells included in the Mortgaged
Property and all development and operations on such
Mortgaged Property have been conducted in compliance
with all applicable Regulations and licenses; and
(C) except as may be reflected in the engineering report
referred to in Section 8.2(b)(i), no well located on
the Lands included in the Mortgaged Property is subject
to penalties on allowables because of any
overproduction (legal or illegal) which would prevent
the full legal and regular allowable (including maximum
permissible tolerance) as prescribed by any
Governmental Body to be assigned to any such well;
(vii) except as previously disclosed to the Holder in writing, which
writing makes reference to this Debenture:
(A) there exist no material impairments to any Approvals
granted by any federal or provincial Governmental Body
in Canada, in each case with respect to the assignments
by the Corporation of an interest in any such federal
or provincial leases in relation to the Mortgaged
Property to any party; and
(B) the Corporation has complied in all material respects
with all Regulations applicable to such federal or
provincial leases;
(viii) except as previously disclosed to the Holder in writing, which
writing makes reference to this Debenture, as of the most
recent date or dates
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before the date hereof for which information is available, with
respect to the Mortgaged Property which are subject to a gas
contract and a balancing agreement with respect to the
production of petroleum or other similar agreement, there has
not been delivered to or for the account of the Corporation
more production of gas than the amount to which it is entitled
and the Corporation is not subject to any material "make up"
deliveries of gas out of its proportionate share of production.
(ix) there are no claims, proceedings, actions or lawsuits in
existence, and, to the knowledge of the Corporation, none are
contemplated or threatened pertaining to the Mortgaged
Property;
(x) it is in good standing under Applicable Law, and has not
received any notice of any violation of any Applicable Law
from any Governmental Body in relation to the Mortgaged
Property;
(xi) it is not aware of and has not received any notice of any
offset obligations (including obligations to drill wells,
surrender rights, or pay compensatory royalty) affecting any
of the Leases which have not been satisfied;
(xii) the interest of the Corporation in the Petroleum and Natural
Gas Rights as set forth in Schedule "A" is not subject to
reduction by reference to payout of a well; and
(xiii) to the knowledge of the Corporation, there are no gas
balancing agreements or similar arrangements pertaining to the
Mortgaged Property.
SECTION 8.3 REPRESENTATIONS AND WARRANTIES REGARDING TANGIBLES. The
Corporation represents and warrants to the Holder that, to the knowledge of the
Corporation, the Tangibles are in good condition and repair, except for ordinary
wear and tear, which does not materially and adversely affect the business,
properties, operations (including the operation of the Mortgaged Property),
prospects or condition (financial or otherwise) of the Corporation, are suitable
and adequate for the uses for which they are used and intended and to carry on
the business of the Corporation as now conducted and as proposed to be
conducted, comply in all material respects with the terms and conditions of all
agreements relating to the Tangibles, and are in conformity in all material
respects with all Regulations and all decisions, rulings, orders and awards of
any arbitrator applicable to its or its business, properties or operations of
any Governmental Body currently in effect, scheduled to come into effect or
proposed to be adopted, entered or issued, as the case may be.
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SECTION 8.4 REPRESENTATIONS AND WARRANTIES REGARDING ENVIRONMENTAL
MATTERS. The Corporation represents and warrants to the Holder that:
(a) each of the Corporation and its Subsidiaries and, to the knowledge of
the Corporation, each operator of any Mortgaged Property has obtained
all environmental, health and safety permits, licenses and other
authorizations required under all Environmental Laws to carry on its
business as now being or as proposed to be conducted, except to the
extent failure to have any such permit, license or authorization would
not have a Material Adverse Effect. Each of such permits, licenses
and authorizations is in full force and effect and each of the
Corporation and its Subsidiaries and each operator of any Mortgaged
Property is in compliance with the terms and conditions thereof, and
is also in compliance with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in any applicable Environmental Law
or in any regulation, code, plan, order, decree, judgment, injunction,
notice or demand letter issued, entered, promulgated or approved
thereunder, except to the extent failure to comply therewith would not
have a Material Adverse Effect; and
(b) except as previously disclosed to the Holder in writing, which writing
makes reference to this Debenture:
(i) no written notice, notification, demand, request for
information, citation, summons or order has been issued, no
complaint has been filed, no penalty has been assessed and, to
the knowledge of the Corporation, no investigation or review
is pending or threatened by any Governmental Body or other
entity with respect to any alleged failure by the Corporation
or any of its Subsidiaries to have any environmental, health
or safety permit, license or other authorization required
under any Environmental Law in connection with the conduct of
the business of the Corporation or any of its Subsidiaries or
with respect to any generation, treatment, storage, recycling,
transportation, discharge or disposal, or any Environmental
Release of any Hazardous Materials generated by the
Corporation or any of its Subsidiaries (collectively, an
"ENVIRONMENTAL NOTICE"), and, to the knowledge of the
Corporation, there is no Environmental Notice against any
operator of any Mortgaged Property;
(ii) none of the Corporation, its Subsidiaries or, to the knowledge
of the Corporation, any operator of any Mortgaged Property
owns, operates or leases a treatment, storage or disposal
facility requiring a permit under the Resource Conservation
and Recovery Act of 1976, as amended, or under any comparable
state, provincial or local statute; and
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(A) to the knowledge of the Corporation, no polychlorinated
biphenyls (PCB's) are or have been present at any site
or facility now or previously owned, operated or leased
by the Corporation or any of its Subsidiaries in excess
of concentrations allowed by Environmental Laws;
(B) to the knowledge of the Corporation, no friable
asbestos or asbestos containing materials are present
at any site or facility now or previously owned,
operated or leased by the Corporation or any of its
Subsidiaries in excess of concentrations allowed by the
Environmental Laws;
(C) to the knowledge of the Corporation after due inquiry,
there are no underground storage tanks or surface
impoundments for Hazardous Materials, active or
abandoned, at any site or facility now or previously
owned, operated or leased by the Corporation or any of
its Subsidiaries except such as are or were (at the
time owned, operated or leased by the Corporation or
any of its Subsidiaries) in compliance with
Environmental Laws; and
(D) to the knowledge of the Corporation, there has not been
any Environmental Release of Hazardous Materials at, on
or under any site or facility now or previously owned,
operated or leased by the Corporation or any of its
Subsidiaries in violation of any Environmental Laws.
(iii) to the knowledge of the Corporation, neither the Corporation
nor any of its Subsidiaries has transported or arranged for
the transportation of any Hazardous Material to any location
that is listed on the National Priorities List ("NPL") under
the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), listed for
possible inclusion on the NPL by the Environmental Protection
Agency in the Comprehensive Environmental Response and
Liability Information System, as provided for by 40 C.F.R.
300.5 ("CERCLIS"), or on any similar state, provincial or
local list or that is the subject of federal, state,
provincial or local enforcement actions or other
investigations that may lead to Environmental Claims against
the Corporation or any of its Subsidiaries;
(iv) there has not been any Environmental Release, recycling,
treatment, storage or disposal of Hazardous Material generated
by the Corporation or any of its Subsidiaries or by any
operator of
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Mortgaged Property in violation of Environmental Laws at any
location other than those previously disclosed to the Holder
in writing, which writing makes reference to this Debenture;
(v) no oral or written notification of an Environmental Release of
a Hazardous Material in violation of an Environmental Law has
been filed by or on behalf of the Corporation or any of its
Subsidiaries or, to the knowledge of the Corporation, by any
operator of Mortgaged Property, and no site or facility now or
previously owned, operated or leased by the Corporation or any
of its Subsidiaries is listed or proposed for listing on the
NPL, CERCLIS or any similar state or provincial list of sites
requiring investigation or clean-up;
(vi) no Liens have arisen under or pursuant to any Environmental
Laws on any site or facility owned, operated or leased by the
Corporation or any of its Subsidiaries, and no government
action has been taken or is in process that could subject any
such site or facility to such Liens and, to the knowledge of
the Corporation, neither the Corporation nor any of its
Subsidiaries is required to place any notice or restriction
relating to the presence of Hazardous Materials at any site or
facility owned by it in any deed to the real property on which
such site or facility is located;
(vii) there have been no environmental investigations, studies,
audits, tests, reviews or other analyses conducted by or that
are in the possession of the Corporation or any of its
Subsidiaries in relation to any site or facility now or
previously owned, operated or leased by the Corporation or any
of its Subsidiaries which have not been made available to the
Holder;
(viii) any Hazardous Material handled or dealt with in any way in
connection with the business, properties or operations of the
Corporation or a Subsidiary, whether before or during the
period the same have been under the control of the Corporation
or the Subsidiary, as the case may be, has been and is being
handled or dealt with in all respects in substantial
compliance with applicable Regulations and otherwise in a
manner that could not have a Material Adverse Effect;
(ix) no sewage, waste or by-product is being or has been
discharged, spilled on or stored, processed or treated at, any
real property or other facilities now or previously owned,
leased, licensed or used by the Corporation or a Subsidiary,
including, but not limited to, the
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Mortgaged Property, which discharge, spill, storage,
processing or treatment could have a Material Adverse Effect;
(x) during the five years ending on the date of this Debenture, no
employee or other person has made a written claim or demand
or, to the knowledge of the Corporation, an oral claim or
demand against the Corporation or a Subsidiary based on
alleged damage to health caused by any Hazardous Material or
by any sewage, waste or by-product; and
(xi) during the five years ending on the date of this Debenture,
none of the Corporation and its Subsidiaries has been charged
in writing by any Governmental Body or, to the knowledge of
the Corporation, any other person with improperly using,
handling, storing, discharging or disposing of any Hazardous
Material or with causing or permitting any pollution of any
ground water aquifer, surface waters or other lakes, streams,
rivers or bodies of water in violation of Environmental Laws.
SECTION 8.5 ADDITIONAL REPRESENTATIONS AND WARRANTIES. The Corporation
represents and warrants to the Holder that:
(a) LITIGATION: except as previously disclosed to the Holder in writing,
which writing makes reference to this Debenture, there is no Action
pending or, to the knowledge of each of the Corporation and its
Subsidiaries, threatened against the Corporation or a Subsidiary that
(1) involves any of the Transactions or (2) individually or in the
aggregate, if determined adversely to any of them, could result in a
liability to any of them in an amount that exceeds U.S. $50,000
individually or U.S. $100,000 in the aggregate; and
(b) COMPLIANCE WITH LAWS: none of the Corporation and its Subsidiaries is
in, and none of them has received notice of, a violation of or default
with respect to, any Regulation of any Governmental Body or any
decision, ruling, order or award or any arbitrator applicable to it or
its business, properties or operations, including individual products
or services sold or provided but it, except for violations or defaults
that, individually or in the aggregate, could not have a Material
Adverse Effect.
ARTICLE IX
COVENANTS OF THE CORPORATION
SECTION 9.1 GENERAL COVENANTS. The Corporation covenants and agrees with
the Holder:
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(a) that the Mortgaged Property, the subject of the fixed charge of this
Debenture, is free and clear of all Liens, other than (i) the mortgage
and charge created under and secured by this Debenture, and (ii) any
Lien which is specifically permitted by the Holder pursuant to an
instrument in writing executed by the Holder and addressed to the
Corporation, which instrument shall refer to this Debenture and
describe any such Lien so permitted by the Holder;
(b) that the Corporation will comply in all respects with each Regulation
of all Governmental Bodies and each decision, ruling, order or award
of all arbitrators applicable to it or its business, properties or
operations, if a failure to comply with any of the foregoing,
individually or in the aggregate, could materially and adversely
affect its business, properties, operations, prospects or condition
(financial or otherwise) of the Corporation and its Subsidiaries,
taken as a whole, or the ability of the Corporation or the Subsidiary,
as the case may be, to perform its obligations under this Debenture;
(c) that the Corporation will furnish to the Holder, promptly after the
commencement of each such matter, notice of all Actions affecting the
Corporation or a Subsidiary that, if adversely determined, could
materially and adversely affect the business, properties, operations,
prospects or condition (financial or otherwise) of the Corporation and
its Subsidiaries, taken as a whole, or the ability of the Corporation
or the Subsidiary, as the case may be, to perform its obligations
under this Debenture;
(d) that the Corporation will defend title to the Mortgaged Property
against claims and demands of all persons whomsoever;
(e) to carry on and continuously conduct its business in a lawful,
efficient, diligent and businesslike manner solely in a business of
the same general type as conducted by it on the date of this Debenture
in the ordinary course, consistent with past practices;
(f) to keep and maintain proper books of account and records accurately
covering all aspects of the business and affairs of the Corporation
and to permit authorized officers, employees or agents of the Holder
to inspect the same during regular business hours;
(g) that the Corporation will, or cause the operator of any Mortgaged
Property (in accordance with the applicable operator contract then in
effect) to, repair and keep in repair and in good working order and
condition all buildings, structures, plant, machinery, apparatus,
equipment and vehicles that from time to time comprise and form a part
of the Mortgaged Property;
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(h) to promptly pay when due all business, income and/or profits taxes
properly levied or assessed against the Corporation, its business,
operations, revenues, incomes or profits, save and except when and so
long as the validity of any such tax is in good faith contested by the
Corporation;
(i) that the Corporation will, or cause the operator of any Mortgaged
Property (in accordance with the applicable operator contract then in
effect) to, fully pay and discharge as and when the same become due
and payable all taxes (including local improvement rates), rates,
duties and assessments that may be levied, rated, charged or assessed
against the Mortgaged Property, or any part thereof, and if the
Corporation fails to pay any of such taxes, rates, duties or
assessments and if it is not in good faith contesting the same, the
Holder may, but shall not be obligated to, pay the same and any
amounts so paid by the Holder shall become and form part of the
principal sum secured hereby and shall bear interest at the rate
aforesaid until paid; and
(j) that the Corporation will at all times do, execute, acknowledge and
deliver or cause to be done, executed, acknowledged and delivered all
and every such further acts, deeds, mortgages, transfers and
assurances in law as the Holder shall reasonably require for better
assuring, mortgaging, assigning and confirming unto the Holder as
continuing security for the present and future obligations of the
Corporation to the Holder all and singular the undertaking and all of
the property and assets of the Corporation hereby mortgaged or charged
or intended so to be or which the Corporation may hereafter become
bound to mortgage or charge to and in favour of the Holder and for the
better accomplishing and effectuating of the intentions of this
Debenture; and, without limiting the generality of the foregoing, the
Corporation covenants and agrees that it will from time to time if
required by the Holder execute and deliver to the Holder assignments
in such form as the Holder may require assigning to the Holder as
continuing security for the present and future obligations of the
Corporation to the Holder all book debts, accounts receivable, rents,
incomes and other monies due or accruing due from time to time to the
Corporation.
SECTION 9.2 NEGATIVE COVENANTS. The Corporation shall not and covenants
that it will not, except as provided in this Debenture:
(a) sell, exchange, encumber, mortgage, charge, pledge, transfer, assign
or dispose of all or any part of the Mortgaged Property (other than
Permitted Dispositions);
(b) create or suffer to be created any Lien upon its undertaking or any of
its property and assets the subject of the fixed charge created and
secured hereby save and except for:
(i) Permitted Encumbrances;
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(ii) any other security granted from time to time by the
Corporation to the Holder for or in respect of any present or
future indebtedness of the Corporation to the Holder; and
(iii) any security granted to the Holder on the accounts receivable
or inventory of the Corporation to secure current loans
required for the usual purposes of the Corporation; and
(c) guarantee to anyone other than to the Holder, the debts, liabilities
or obligations of any person, firm or corporation whomsoever or become
the endorser on any note or other obligation otherwise than in the
ordinary course of the business of the Corporation.
ARTICLE X
DEMAND
SECTION 10.1 OBLIGATIONS PAYABLE ON DEMAND. The Corporation agrees and
acknowledges that the Obligations for the payment of money hereunder (including
the Principal Amount, interest thereon and interest on overdue interest) are
payable by the Corporation on demand by the Holder and the Corporation covenants
and agrees with the Holder to pay the Principal Amount, interest thereon and
other moneys hereby secured, together with other appurtenant charges thereon on
demand by the Holder.
SECTION 10.2 EVENTS OF DEFAULTS. The happening of any of the following
events or circumstances shall be an "EVENT OF DEFAULT":
(a) NON-PAYMENT ON DEMAND: the Corporation shall fail to pay the
Principal Amount or interest thereon when demanded by the Holder;
(b) INSOLVENCY (VOLUNTARY PROCEEDINGS): the Corporation shall:
(i) become insolvent, or generally not pay its debts or meet its
liabilities as the same become due, or admit in writing its
inability to pay its debts generally, or declare any general
moratorium on its indebtedness, or propose a compromise or
arrangement between it and any class of its creditors,
(ii) make an assignment of its property for the general benefit of
its creditors under the BANKRUPTCY AND INSOLVENCY ACT,
(Canada), or make a proposal (or file a notice of its
intention to do so) under such Act,
(iii) institute any proceeding seeking to adjudicate it an
insolvent, or seeking liquidation, dissolution, winding-up,
reorganization,
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compromise, arrangement, adjustment, protection, moratorium,
relief, stay of proceedings of creditors generally (or any
class of creditors), or composition of it or its debts under
any other statute, rule or regulation relating to bankruptcy,
winding-up, insolvency, reorganization, plans of arrangement,
relief or protection of debtors (including the BANKRUPTCY AND
INSOLVENCY ACT (Canada), the COMPANIES' CREDITORS ARRANGEMENT
ACT (Canada) and any applicable Business Corporations Act or
Company Act), or at common law or in equity,
(iv) apply for the appointment of, or the taking of possession by,
a receiver, interim receiver, receiver/manager, custodian,
administrator, trustee, liquidator or other similar official
for it or its property, or
(v) threaten to do any of the foregoing, or take any action,
corporate or otherwise, to approve, consent to or authorize
any of the actions described in this paragraph (b) or in
paragraph (c), or otherwise act in furtherance thereof or fail
to act in defense thereof;
(c) INSOLVENCY (INVOLUNTARY PROCEEDINGS): any petition shall be filed,
application made or other proceeding instituted against or in respect
of the Corporation:
(i) seeking to adjudicate it an insolvent,
(ii) seeking a receiving order against it under the BANKRUPTCY AND
INSOLVENCY ACT (Canada),
(iii) seeking liquidation, dissolution, winding-up, reorganization,
compromise, arrangement, adjustment, protection, moratorium,
relief, stay of proceedings of creditors generally (or any
class of creditors), or composition of it or its debts under
any statute, rule or regulation relating to bankruptcy,
winding-up, insolvency, reorganization, plans of arrangement,
relief or protection of debtors (including BANKRUPTCY AND
INSOLVENCY ACT (Canada), the COMPANIES' CREDITORS ARRANGEMENT
ACT (Canada) and any applicable Business Corporations Act or
Company Act), or at common law or in equity, or
(iv) seeking the entry of an order for relief or the appointment of
a receiver, interim receiver, receiver/manager, custodian,
administrator, trustee, liquidator or other similar official
for it or its property,
and such petition, application or proceeding shall continue
undismissed, or unstayed and in effect, for a period of 5 Business
Days after the institution thereof, PROVIDED that if an order, decree
or judgment has been granted (whether
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or not entered or subject to appeal) against the Corporation
thereunder in the interim, such grace period shall cease to apply;
(d) ATTACHMENT OR SEIZURE (SECURED OR UNSECURED): the Mortgaged Property
shall be seized (including by way of execution, attachment,
garnishment or distraint) or any Security Interest thereon shall be
enforced, or such property shall become subject to any charging order
or equitable execution of a governmental/judicial body, or any writ of
execution or distress warrant shall exist in respect of the
Corporation or such property, or any sheriff or other person shall
become lawfully entitled to seize or distrain upon such property under
the EXECUTION CREDITORS ACT (Alberta), SEIZURES ACT (Alberta), the
WORKERS' COMPENSATION ACT (Alberta), the PPSA or any other applicable
laws whereunder similar remedies are provided, and in any case such
seizure, execution, attachment, garnishment, distraint, charging order
or equitable execution, or other seizure or right, shall continue in
effect and not released or discharged for more than 5 Business Days;
(e) EXTRA-TERRITORIAL PROCEEDINGS: any other event shall occur which,
under the laws of any applicable jurisdiction, has an effect
equivalent to any of the events referred to in paragraphs (b), (c)
or (d);
(f) FAILURE TO COMPLY WITH OBLIGATIONS: the Corporation, Forest Oil of
Canada, Ltd. or 604228 Alberta Ltd. shall commit any breach of or omit
to observe any of their respective obligations or undertakings under
this Debenture, the Purchase Agreement (including any Obligations (as
such term is defined in the Purchase Agreement) pursuant to the
Purchase Agreement) or the Purchase Note (other than any breach or
omission specifically dealt with in another paragraph of this
Section 10.2), or any Event of Default (as such phrase is defined in
the Purchase Note) occurs under the Purchase Note, and (i) such breach
or omission is not capable of being remedied by the Corporation, or
(ii) if such breach or omission is capable of being remedied by the
Corporation, shall continue unremedied for more than 30 days after the
Corporation becomes aware of the same or could reasonably have been
expected to become aware of the same; or
(g) INCORRECT REPRESENTATIONS OR WARRANTIES: any representation or
warranty made or deemed to be made by the Corporation in this
Debenture is, or shall prove to be, incorrect, untrue or misleading in
any material respect when made or deemed to be made, and (i) the
matter is not capable of being remedied by the Corporation, or (ii) if
the matter is capable of being remedied by the Corporation, the same
shall continue unremedied for more than 30 days after the Corporation
becomes aware of the same or could reasonably have been expected to
become aware of the same.
SECTION 10.3 AUTOMATIC ACCELERATION. Upon the occurrence of an Event of
Default in paragraphs (b), (c), (d) or (e) of Section 10.2, all of the
Obligations for the payment of any
27
<PAGE>
money hereunder (including the Principal Amount and interest thereon) shall
automatically be and become immediately due and payable without presentment,
demand or notice of any kind, all of which are hereby waived by the Corporation.
SECTION 10.4 NO WAIVER. No delay or omission of the Holder in exercising
any right or power accruing upon any Event of Default shall impair any such
right or power or shall be construed to be a waiver of any such default or
acquiescence therein, and no act or omission of the Holder in the premises shall
extend to or be taken in any manner whatsoever to affect any subsequent default
hereunder or the rights resulting therefrom.
SECTION 10.5 OTHER RIGHTS ON DEFAULT. Nothing in this Article shall
be construed as limiting any other rights or remedies that the Holder may have
against the Corporation for breach of any covenant, representation or warranty
contained in this Debenture.
ARTICLE XI
REMEDIES
SECTION 11.1 REMEDIES. If an Event of Default occurs and is continuing
and the Holder has determined to enforce the lien hereof, the Holder may itself
(or through an agent) to the fullest extent permitted by law, and a Receiver
appointed by the Holder pursuant to Section 11.2 hereof may:
(a) POSSESSION OF MORTGAGED PROPERTY AND POWER OF ENTRY: take possession
of the Mortgaged Property to the exclusion of the Corporation and to
that end the Corporation agrees that the Holder or Receiver may at any
time enter upon lands and premises comprising the Mortgaged Property
or where the Mortgaged Property may be found for the purpose of taking
possession of and/or removing the Mortgaged Property. In the event
that the Holder or Receiver takes possession of the Mortgaged
Property, it shall have the right to seize, repossess and maintain the
same upon the premises on which the Mortgaged Property may then be
situate without removal to other premises, and may dispose of the same
from such premises;
(b) POWER OF DISPOSITION: sell, lease or otherwise dispose of the
Mortgaged Property either as a whole or in separate parcels, units or
parts, by public sale (including public auction) or private or closed
tender or by private contract, with only those notices, if any, as are
required by law, and with or without advertising and without any other
formality (except as otherwise required by applicable law), and such
sale, lease or disposition shall be on such terms and conditions as to
title, credit and otherwise and as to upset or reserve bid or price as
may seem advantageous to the Holder or Receiver, and the Holder or
Receiver shall not be required to accept the highest or any bid or
tender at any public sale. If such sale, lease or disposition is made
in whole or in part on credit or deferred
28
<PAGE>
payment, there need only be applied against the Obligations the actual
cash received from time to time. The Holder may itself purchase or
lease the Mortgaged Property, unless prohibited from doing so by law.
The Holder or Receiver may rescind or vary any contract for the sale,
lease or other disposition of the Mortgaged Property and may resell or
re-lease without being answerable for any loss occasioned thereby, and
may delay any disposition of the Mortgaged Property in whole or in
part;
(c) PAY ENCUMBRANCES: pay all or any part of any indebtedness of the
Corporation secured by a Security Interest against the Mortgaged
Property, whether prior to or subordinate to the lien hereof;
(d) FORECLOSURE: foreclose upon the Mortgaged Property pursuant to
applicable law;
(e) DEAL WITH MORTGAGED PROPERTY: obtain, hold, maintain, release to
third parties, repair, replace, substitute, protect, preserve,
process, prepare, or otherwise deal with the Mortgaged Property in
such manner, upon such terms and conditions and at such time or times
as may seem advisable to the Holder or Receiver without notice to the
Corporation (except as otherwise required by applicable law);
(f) FILE PROOFS OF CLAIM: file such proofs of claim and other documents
as may be necessary or advisable in order to prove the claim of the
Holder in any bankruptcy, proposal, winding-up or other proceeding
relating to the Corporation or its property;
(g) COMMENCE ACTIONS: commence and proceed with any actions or judicial
proceedings seeking such legal and/or equitable remedies as the Holder
or Receiver deems advisable to protect and enforce its rights
hereunder;
(h) EXPENSES OF REALIZATION: charge on its own behalf and pay to others
amounts incurred (including legal fees on a solicitor and his own
client basis, and Receivers' and accounting fees) in or in connection
with any dealing with the Mortgaged Property or acts in respect
thereof referred to in the preceding paragraphs, and in connection
with the protection and enforcement of its rights hereunder (including
in connection with advice with regard to any of the foregoing); the
Holder or Receiver may deduct such amounts from the proceeds of
realization or may add such amounts to the Obligations, whereupon the
same shall be payable by the Corporation to the Holder on demand and
shall bear interest at the rate set forth herein in respect of the
Principal Amount calculated from the date incurred by the Holder or
Receiver to the date paid by the Corporation and such amounts and such
interest shall be secured by the lien hereof; and
(i) ENFORCEMENT: otherwise enforce this Debenture by any method permitted
by law.
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<PAGE>
SECTION 11.2 RECEIVER.
(a) PRIVATE APPOINTMENT: The Holder may, at any time after an Event of
Default has occurred and is subsisting, and whether or not the Holder
shall itself or through its agents have taken possession of the
Mortgaged Property or taken any other actions or steps with regard
thereto, appoint by instrument in writing a Receiver of the Mortgaged
Property. Any such Receiver shall have all of the powers, remedies
and rights set forth in Section 11.1, and the powers, remedies and
rights of the Holder hereunder, in addition to those possessed by a
receiver or receiver-manager, as applicable, at law or in equity,
unless any of such powers, remedies and rights are expressly limited
in the instrument appointing the Receiver or in amendments thereto.
The Holder may appoint one or more Receivers hereunder and may remove
any such Receiver or Receivers and appoint another or others in his or
their stead from time to time. Any Receiver so appointed may be an
officer or employee of the Holder. Any Receiver appointed by the
Holder need not be appointed or supervised in any way by a court, and
may be appointed with or without bond or security. The Holder may
from time to time fix the remuneration of every such Receiver, and
direct the payment thereof out of the Mortgaged Property or the
proceeds thereof in priority to payment of the amount secured hereby.
(b) RECEIVER'S CERTIFICATES: A Receiver appointed pursuant to
paragraph (a) may, with the consent in writing of the Holder, borrow
money for the maintenance, protection or preservation of the Mortgaged
Property, and any Receiver may issue certificates (in this paragraph
called "Receiver's Certificates"), for such amounts as will in the
opinion of the Holder be sufficient for obtaining upon the security of
the Mortgaged Property the amounts from time to time required, and
such Receiver's Certificates may be payable either to order or bearer
and may be payable at such time or times as the Holder may consider
expedient, and shall bear such interest as shall therein be provided
and the Receiver may sell, deposit, pledge or otherwise dispose of the
same in such manner as the Holder may consider advisable and may pay
such commission on the sale thereof as he may consider reasonable, and
the amounts from time to time payable by virtue of such Receiver's
Certificates shall at the option of the Holder be entitled to the
security of the lien hereof in priority to the Obligations.
(c) INDEMNITY: Any Receiver appointed pursuant to paragraph (a) shall so
far as concerns responsibility for its acts be deemed the agent of the
Corporation, and the Holder shall not be responsible for any
misconduct or negligence on the part of any such Receiver. The
Corporation shall indemnify and save harmless the Holder from and
against any and all costs, charges, demands, damages, liabilities,
claims and actions whatsoever and howsoever suffered or incurred by
the Holder as a result of the acts of any such Receiver.
30
<PAGE>
(d) POWER OF ATTORNEY: To enable the Holder to exercise the powers
granted to it hereunder, the Corporation hereby irrevocably appoints
the Holder as its attorney and on its behalf to effect any sale, lease
or other disposition of the Mortgaged Property (including any real
property subject to the lien hereof), and to execute all instruments
and deeds, and do all acts, matters and things that may be necessary
or advisable in the name of or on behalf of the Corporation or
otherwise. The power of attorney hereby granted shall be effective
upon the occurrence of an Event of Default and shall continue
throughout the subsistence of any Event of Default. Any deed, lease,
agreement or other instrument required to be signed under seal and
signed by the Holder under its seal pursuant hereto shall have the
same effect as if it were signed under the corporate seal of the
Corporation. The Holder shall have full power of substitution, and
may provide the Receiver with the power to exercise such rights as
attorney hereunder, and may at any time revoke any such substitution.
(e) COURT APPOINTMENT: The Holder may, in its sole discretion, either
before or after the private appointment of a Receiver hereunder,
institute proceedings in any court of competent jurisdiction for the
appointment of a Receiver of the Mortgaged Property, and in such case
the Receiver shall have the powers expressed in the order appointing
it, as such order may be varied from time to time, including all or
any of the powers set forth in Sections 11.1 and 11.2.
(f) POWER OF DIRECTORS: Upon the appointment of any Receiver, all powers,
functions, rights and privileges of the directors of the Corporation
with respect to the Mortgaged Property shall cease unless specifically
continued by the written consent of the Holder.
SECTION 11.3 DEALING WITH SECURITY.
(a) The Holder may grant renewals, extensions of time and other
indulgences, take, release and give up securities, accept
compositions, grant releases and discharges, perfect or fail to
perfect any securities, release the Mortgaged Property to third
parties and otherwise deal or fail to deal with the Corporation,
debtors of the Corporation, guarantors, sureties and others and with
the Mortgaged Property and other securities as the Holder may see fit,
all without prejudice to the liability of the Corporation to the
Holder or the Holder's rights and powers under this Debenture.
(b) Nothing in this Debenture shall be construed as requiring the Holder
to exercise all or any of its possession or realization rights
hereunder in respect of all or any particular part of the
Corporation's property as the Holder may determine in its sole
discretion, and the Holder may specifically elect not to take
possession or control over, or appoint a Receiver in respect of, any
such assets while exercising all remedies available to it in respect
of any other Mortgaged Property. The
31
<PAGE>
Holder may also, of its own volition, release or discharge from the
lien hereof any Mortgaged Property that it desires to release to the
Corporation, and the Corporation covenants to accept such release and
execute any acknowledgments as the Holder may require in respect
thereof.
SECTION 11.4 CASH COLLATERAL ACCOUNT. The Holder shall be entitled, when
in its sole discretion it considers doing so advantageous to it at any time
during the term hereof (including in the course of realizing on the lien
hereof), to retain any money in a cash collateral account maintained by it, such
cash collateral account to be subject to the lien hereof, and amounts so
retained ultimately to be applied (with any accrued interest) to the
Obligations.
SECTION 11.5 VALIDITY OF SALE. No person dealing with the Holder or any
Receiver shall be concerned to inquire whether the lien hereof has become
enforceable or whether the powers which the Holder or any Receiver is purporting
to exercise have become exercisable or whether any money remains due on the
security of the Mortgaged Property or as to the necessity or expedience of the
stipulations and conditions subject to which any sale, lease or other
disposition shall be made or otherwise as to the propriety or regularity of any
sale or any other dealing by the Holder with the Mortgaged Property or to see to
the application of any moneys paid to the Holder or Receiver.
SECTION 11.6 RIGHTS AND REMEDIES IN ADDITION. Each and every right,
remedy and power conferred by this Article is in supplement of and in addition
to and not in substitution for any other right, remedy or power the Holder or
any Receiver may have from time to time under this Article or elsewhere in this
Debenture, or in any other agreement or under the law in force at the time of
the exercise of such right, remedy or power. The Holder or Receiver may proceed
by way of any action, suit, remedy or other proceeding at law or in equity
(including specific performance of any covenant and injunctions against
violations of any covenant) and no such remedy for the enforcement of the rights
of the Holder or Receiver shall be exclusive of or dependent on any other such
remedy. Any one or more of such remedies may from time to time be exercised
separately or in combination and in particular the power of sale and other
realization remedies contained herein may be exercised without the Holder
entering into possession of or exercising control over the Mortgaged Property.
Notwithstanding the foregoing, the Holder shall not be bound to deal with the
Mortgaged Property, to exercise any right or remedy as aforesaid, or to preserve
rights against other persons.
ARTICLE XII
LIMITATION OF LIABILITY
SECTION 12.1 LIMITATION OF LIABILITY.
(a) Subject to paragraph (c), the Holder and any Receiver shall not be
liable, accountable or responsible for any loss or damage suffered or
incurred by the Corporation as a result of:
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(i) the failure by the Holder or a Receiver to exercise any rights
or remedies provided for herein, or to exercise any right or
remedy in lieu of any other right or remedy; or
(ii) the taking and maintaining of possession by the Holder or a
Receiver of the Mortgaged Property pursuant to the terms of
this Debenture, or the carrying on of the business of the
Corporation as herein provided.
(b) Subject to paragraph (c), the Holder and any Receiver shall not be
liable, accountable or responsible:
(i) to account as mortgagee in possession or otherwise upon entry
into possession hereunder, other than for actual receipts;
(ii) to observe or perform, or to see to the observance or
performance by the Corporation of any agreements or
obligations to which the Corporation is a party or by which it
is bound, whether before or during any period when the Holder
or a Receiver has entered into possession hereunder;
(iii) for loss or damage to the Mortgaged Property while in the
possession of the Holder or a Receiver, the risk of which is
hereby expressly agreed to be on the Corporation;
(iv) to keep the Mortgaged Property identifiable or separate from
other property which it owns or holds, whether fungible or
not, while in the possession of the Holder or a Receiver; or
(v) in the case of chattel paper, a security or an instrument in
the possession of the Holder or Receiver, to take any steps
to preserve rights against other persons.
(c) Notwithstanding any exclusion or limitation herein contained, to the
extent that the provisions of any statute or rule of law impose a duty
or onus upon a person or restrict his rights or remedies in relation
hereto, and such provisions are under applicable law incapable of
waiver or variance by the Corporation, the provisions of such
applicable law shall govern and the affected provisions hereof shall
be deemed to be amended to the extent necessary to give effect to such
Applicable Law without in any way affecting any other provision
herein.
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ARTICLE XIII
EXPENSES AND INDEMNITY
SECTION 13.1 EXPENSES. Subject to Section 3.3, the Corporation shall pay
to the Holder all reasonable out-of-pocket costs and expenses, including all
legal fees (on a solicitor and his own client basis) and consultants' fees and
other expenses incurred by the Holder from time to time in the enforcement,
realization and collection of or in respect of this Debenture (including all
charges incurred in respect of the Mortgaged Property and obtaining any reports
or evaluations in respect thereof and all costs and expenses associated with
considering the provision of consents, waivers or other acknowledgements
hereunder). All such amounts shall become part of the Obligations, shall be
payable by the Corporation on demand, shall bear interest at the rate set forth
herein in respect of the Principal Amount calculated from the date incurred by
the Holder to the date paid by the Corporation, and such amounts and interest
shall be secured by the lien hereof. This provision shall not be construed to
limit any other provisions of this Debenture dealing with the charge-back to the
Corporation of expenses incurred by the Holder.
ARTICLE XIV
INTEREST ON OVERDUE AMOUNTS; CALCULATION OF INTEREST
SECTION 14.1 INTEREST.
(a) The Corporation shall pay interest on all unpaid amounts hereunder
(including interest on overdue interest, indemnities and expenses), on
demand, from the date such unpaid amount is due until such unpaid
amount is paid in full, calculated at the same rate per annum provided
herein in respect of the Principal Amount.
(b) In no event shall any interest or fee to be paid hereunder exceed the
maximum rate permitted by applicable law. In the event any such
interest rate or fee exceeds such maximum rate, such rate shall be
adjusted downward to the highest rate (expressed as a percentage per
annum) or fee that the parties could validly have agreed to by
contract on the date hereof under applicable law. It is further
agreed that any excess actually received by the Holder shall be
credited against the Principal Amount (or, if the Principal Amount
shall have been or would thereby be paid in full, the remaining amount
shall be credited to the Corporation).
(c) All interest (including interest on overdue interest) payable by the
Corporation to the Holder hereunder shall accrue from day to day,
computed as provided herein, and shall be payable after as well as
before maturity, demand, default and judgment.
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ARTICLE XV
MISCELLANEOUS
SECTION 15.1 NOTICES. All notices, requests and other communications to
the Corporation or to the Holder pursuant to this Debenture shall be in writing.
Communications may be made by telecopy or similar writing. Each communication
shall be given, as the case may be, to the Corporation at its address stated on
the signature page of this Debenture, to the Holder at its address stated on the
first page of this Debenture or at any other address as the Corporation or the
Holder, as the case may be, may specify for this purpose by notice to the Holder
or the Corporation, respectively. Each communication shall be effective (1) if
given by telecopy, when the telecopy is transmitted to the proper address and
the receipt of the transmission is confirmed, (2) if given by mail, 72 hours
after the communication is deposited in the mails properly addressed with first
class postage prepaid or (3) if given by any other means, when delivered to the
proper address and a written acknowledgement of delivery is received.
SECTION 15.2 AMENDMENTS, ETC.. No amendment, modification, termination,
or waiver of any provision of this Debenture, and no consent to any departure by
a party to this Debenture from any provision of this Debenture, shall be
effective unless it shall be in writing and signed and delivered by the other
party to this Debenture, and then it shall be effective only in the specific
instance and for the specific purpose for which it is given.
SECTION 15.3 SUCCESSORS AND ASSIGNS. The Corporation shall not and
cannot assign its Obligations under this Debenture, or take any steps or enter
into any transaction of any nature which would have that effect, without the
prior written consent of the Holder, which may be arbitrarily withheld. The
provisions of this Debenture shall be binding upon inure to the benefit of the
parties to this Debenture and their respective successors and permitted assigns.
SECTION 15.4 ACCOUNTING TERMS AND DETERMINATIONS. Unless otherwise
specified, all accounting terms shall be interpreted, all accounting
determinations shall be made, all records and books of account shall be kept and
all financial statements required to be prepared or delivered shall be prepared
in accordance with GAAP, applied on a basis consistent (except for changes
approved by the Corporation's independent public accountants) with the
Corporation's previous audited financial statements.
SECTION 15.5 GOVERNING LAW. This Debenture shall be governed by and
interpreted in accordance with the laws of Alberta and the laws of Canada
applicable therein and shall be treated as an Alberta contract, except to the
extent otherwise required by the laws of a jurisdiction in which any of the
Mortgaged Property may be situate.
SECTION 15.6 COUNTERPARTS; EFFECTIVENESS. This Debenture may be signed
in any number of counterparts, each of which shall be an original, with the same
effect as if all signatures were on the same instrument.
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SECTION 15.7 SEVERABILITY OF PROVISIONS. Any provision of this Debenture
that is prohibited or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of the prohibition or
unenforceability without invalidating the remaining provisions of this Debenture
or affecting the validity or enforceability of the provision in any other
jurisdiction.
SECTION 15.8 HEADINGS AND REFERENCES. The division of this Debenture
into Articles and Sections and the insertion of headings is for convenience of
reference only and shall not affect the construction or interpretation of this
Debenture. The term "this Debenture", "hereof", "hereunder" and similar
expressions refer to this Debenture and not to any particular Article, Section
or other portion hereof and include any amendments or supplements hereto.
Unless otherwise stated, references herein to Articles, Sections and Schedules
are to Articles, Sections and Schedules of this Debenture.
SECTION 15.9 SCHEDULES. The Schedules to this Debenture constitute part
of this Debenture.
SECTION 15.10 NUMBER AND GENDER. Words importing the singular number
shall include the plural and vice versa, and words importing gender shall
include the masculine, feminine and neuter genders.
SECTION 15.11 ENTIRE AGREEMENT. Except as otherwise specifically provided
in this Section, this Debenture embodies the entire agreement and understanding
of the parties hereto and supersedes all prior agreements or understandings with
respect to the subject matter hereof.
SECTION 15.12 SURVIVAL. Except as otherwise specifically provided in this
Debenture and notwithstanding any investigation or notice to the contrary or any
waiver by any other party of a related condition precedent to the performance by
the other party of an obligation under this Debenture, (1) each representation
and warranty of the Corporation contained in or made pursuant to this Debenture
shall survive each Closing and remain in full force and effect until the date
that is the first anniversary of the Second Closing Date or, if the Second
Closing Date shall then not have occurred, the date that is the second
anniversary of the First Closing Date and (2) the other party may assert or
commence an Action against the party with respect to the breach of any such
representation or warranty of the party on or before such date and may maintain
any such Action thereafter. Each covenant or agreement of the Corporation is
required to be performed on or after a Closing shall remain in full force and
effect thereafter in accordance with its terms.
SECTION 15.13 JURISDICTION. The Corporation agrees that the courts of
Alberta shall have jurisdiction to hear and determine any suit, action or
proceeding and to settle any disputes which may arise out of or in connection
with this Debenture and it irrevocably submits to the non-exclusive jurisdiction
of such courts, without prejudice to the rights of the Holder to take
proceedings in any other jurisdictions, whether concurrently or not.
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SECTION 15.14 WAIVER OF JURY TRIAL. Each party waives any right to a
trial by jury in any Action to enforce or defend any right under this Debenture
or any amendment, instrument, document or agreement delivered, or which in the
future may be delivered, in connection with this Debenture and agrees that any
Action shall be tried before a court and not before a jury.
SECTION 15.15 AFFILIATE. Nothing contained in this Debenture shall
constitute the Holder an "affiliate" of any of the Corporation and its
Subsidiaries within the meaning of Rule 13e-3 under the Exchange Act.
SECTION 15.16 NON-RECOURSE. No recourse under this Debenture shall be had
against any "controlling person" (within the meaning of Section 20 of the
Exchange Act) of any party or the shareholders, directors, officers, employees,
agents and Affiliates of the party or such controlling persons, whether by the
enforcement of any assessment or by any legal or equitable proceeding, or by
virtue of any Regulation, it being expressly agreed and acknowledged that no
personal liability whatsoever shall attach to, be imposed on or otherwise be
incurred by such controlling person, shareholder, director, officer, employee,
agent or Affiliate, as such, for any obligations of the party under this
Debenture or for any claim based on, in respect of or by reason of such
obligations or their creation.
SECTION 15.17 NO MERGER. Neither the taking of any judgment nor the
exercise of any power of seizure or sale shall operate to extinguish the
liability of the Corporation to make payment of, or to satisfy the Obligations,
nor shall the acceptance of any payment or alternate security constitute or
create any novation, and the taking of a judgment or judgments under any of the
covenants herein contained shall not operate as a merger of such covenants.
SECTION 15.18 NO DISCHARGES UNLESS SPECIFICALLY PROVIDED. No postponement
or partial release or discharge of the lien hereof in respect of the Mortgaged
Property shall in any way operate or be construed to release or discharge the
security hereby constituted in respect of the Mortgaged Property except as
therein specifically provided, or to release or discharge the Corporation from
its liability to the Holder to fully pay and satisfy the Obligations.
SECTION 15.19 TIME OF ESSENCE. Time is of the essence of this Debenture.
SECTION 15.20 COPY RECEIVED. The Corporation acknowledges having received
and retained a copy of this Debenture and waives its right to receive a copy of
any financing statement or financing change statement registered in respect
thereof.
SECTION 15.21 WAIVER OF PRESENTMENT. Except as provided herein, the
Corporation waives presentment of this Debenture for payment, diligence, notice
of non-payment, protest and notice of protest.
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SECTION 15.22 FURTHER ASSURANCES.
(a) Each party shall promptly cure any defect by it in the execution and
delivery of this Debenture.
(b) The Corporation, at its expense, shall promptly deliver to the Holder,
upon request by the Holder in writing, all such other and further
documents, agreements, opinions, certificates and instruments
(executed, as necessary) in order to give effect to the covenants and
agreements of the Corporation in this Debenture, and shall make any
recording, file any notice or obtain any consent in connection
therewith, all as may be reasonably necessary or appropriate in
connection therewith.
SECTION 15.23 HOLDER EXCLUSIVELY ENTITLED. The Holder of this Debenture
from time to time will be regarded as exclusively entitled to the benefit of
this Debenture, and all persons may act accordingly.
SECTION 15.24 ATTACHMENT. The mortgages, charges and security interests
created by this Debenture are intended to attach to the existing Mortgaged
Property when this Debenture is signed by the Corporation, and, with respect to
after-acquired property, when the Corporation acquires an interest in such
Mortgaged Property.
SECTION 15.25 DISCHARGE. Once the Corporation has permanently satisfied
all of the Obligations, the Holder shall, at the written request and expense of
the Corporation, discharge the lien hereof and execute and deliver to the
Corporation such deeds or other instruments as shall be required to give effect
to such discharge, other than to those Obligations which by the terms hereof
survive such discharge and any termination.
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IN WITNESS WHEREOF the Corporation has executed this Debenture.
FOREST OIL CORPORATION
By:
-----------------------------------
Name:
Title:
By:
-----------------------------------
Name:
Title:
Address: Forest Oil Corporation
1500 Colorado National
Building
950 - 17th Street
Denver, Colorado 80202
Telecopy: (303) 592-2510
S-1
<PAGE>
SCHEDULE "A" TO DEBENTURE
OF FOREST OIL CORPORATION
<TABLE>
<CAPTION>
Interest of
Lease No. Lands, Zones and Substances Forest Oil Corporation* Wells
- --------- ---------------------------- ----------------------- -----
<S> <C> <C> <C>
Alberta Crown P&NG TWP 38, RGE 10, W5M 21.256924% w.i.
Lease No. 30190 W 1/2 of Section 31 (18.6% w.i.)
issued February 6, 1973 All P&NG to base of Viking
TWP 38, RGE 11, W5M 21.256924% w.i.
E 1/2 of Section 36 (18.6% w.i.)
All P&NG to base of Viking
Alberta Crown P&NG TWP 38, RGE 11, W5M 21.256924% w.i.
Lease No. 0682040194 Section 32 (18.6% w.i.)
issued July 2, 1982 All P&NG to base of Mannville
TWP 38, RGE 11, W5M 21.256924% w.i.
S 1/2 and NW 1/4 of Section 33 (18.6% w.i.)
All P&NG to base of Mannville
TWP 38, RGE 11, W5M 21.256924% w.i. 6A-36-38-11-W5M
W 1/2 of Section 36 (18.6% w.i.)
All P&NG to base of Viking
TWP 39, RGE 11, W5M 8.585858% w.i. 5-4-39-11-W5M
Sections 4 and 5 (7.44% w.i.)
All P&NG to base of Mannville
TWP 38, RGE 11, W5M 9.3% w.i.
Section 35 (9.3% w.i.)
All P&NG to base of Viking
TWP 39, RGE 11, W5M 9.3% w.i.
Section 1 (9.3% w.i.)
All P&NG to base of Viking
TWP 39, RGE 11, W5M 9.3% w.i.
Section 2 (9.3% w.i.)
All P&NG to base of Viking
<FN>
* The entire working interest of Forest Oil Corporation in respect of each of
the Lands described is subject to Crown Royalty, and the working interest of
Forest Oil Corporation set forth in parentheses is subject to that certain
Overriding Royalty Assignment dated September 15, 1978 to W.J. Stark and Lester
A. Wade, Trustees for the benefit of certain employees and executives of Forest
Oil Corporation, in the amount of 5%.
</TABLE>
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<PAGE>
NOTES
-----
The following abbreviations are used in this Schedule "A":
P Petroleum
NG Natural Gas
SW 1/4 Southwest Quarter
SE 1/4 Southeast Quarter
NE 1/4 Northeast Quarter
NW 1/4 Northwest Quarter
N 1/2 North Half
S 1/2 South Half
W 1/2 West Half
E 1/2 East Half
LSD(S) Legal Subdivision(s)
PTN Portion
TWP Township
RGE Range
W5M West of the Fifth Meridian, with corresponding
meanings for other numbered meridians
w.i. working interest
GORR Gross overriding royalty interest
BPO Before payout
APO After payout
SS Sliding scale
2
<PAGE>
SCHEDULE "B" TO DEBENTURE
OF FOREST OIL CORPORATION
PERMITTED ENCUMBRANCES AND PERMITTED DISPOSITIONS
PART A - PERMITTED DISPOSITIONS
"PERMITTED DISPOSITIONS" means, in respect of any particular asset of the
Corporation, the following dispositions at a time when no Event of Default shall
have occurred and be continuing may be made by the Corporation free from the
lien hereof:
(a) dispositions of inventory for fair market value in the ordinary course
of its business;
(b) dispositions of tangible equipment which has become worn out,
unserviceable, obsolete, unsuitable or unnecessary in the conduct of
its business; provided, however, that:
(i) if replacement or substitution of such property is necessary or
desirable in connection with the operations of the Corporation,
it shall contemporaneously acquire other property suitable for
use in its operations, which other property shall without further
action become subject to the lien hereof in the same manner as
the property as disposed of, and the Corporation agrees to give
the Holder a description of such replacement or substituted
property if the acquisition cost thereof in any fiscal year
together with the acquisition cost of replacement or substitution
property in such year by [**FOR COMPANY MORTGAGE DEBENTURE**]
[**Forest Oil of Canada Ltd.**] [**FOR FOREST CANADA MORTGAGE
DEBENTURE**] [**Forest Oil Corporation**] exceeds $100,000 in the
aggregate, and to execute any supplemental debentures or other
security documents required to subject the asset to the lien
hereof;
(ii) if replacement or substitution of such property is not necessary
or desirable in connection with operations of the Corporation:
(A) any proceeds of disposition which do not exceed, when
combined with the proceeds from the disposition of such
property by [**FOR COMPANY MORTGAGE DEBENTURE**] [**Forest
Oil of Canada Ltd.**] [**FOR FOREST CANADA MORTGAGE
DEBENTURE**] [**Forest Oil Corporation**], an aggregate
maximum of $200,000 in any
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<PAGE>
fiscal year shall be applied for general corporate purposes
of the Corporation; and
(B) any proceeds of disposition in excess of the aggregate
amount referred to in clause (A) above in any fiscal year
shall be delivered to the Holder on account of the
Obligations;
(c) dispositions constituting easements, licenses, rights-of-way and other
rights and privileges in the nature of easements where the same do not
materially adversely affect the use to which the subject property is
put, or any such dispositions required by Applicable Law in favor of a
public utility, carrier, pipeline company or federal, provincial or
municipal government, agency or authority where provision for
compensation is required to be made;
(d) any lease granted by it in the ordinary course of its business as
presently conducted and on terms customary in the industry for arms'
length commercial transactions provided that in accordance with good
industry practice, any such lease does not materially adversely affect
its enjoyment of its property taken as a whole, and if it relates to a
property subject to a fixed registered charge to or for the benefit of
the Holder, it shall notify the Holder in advance of the details of
such lease or sublease;
(e) dispositions which are Permitted Encumbrances;
(f) dispositions made with the prior consent in writing of the Holder;
(g) dispositions made in accordance with the Purchaser - Release of
Collateral provisions contained in Section 7.3 of the Purchase
Agreement;
(h) any abandonment, surrender or similar disposition where desirable in
accordance with good oil and gas industry practice in the ordinary
course of its business;
(i) dispositions made in connection with pooling or unitization
arrangements entered into in accordance with good industry practice in
the ordinary course of its business and on terms customary in the
industry for arms' length commercial transactions, provided that if
such disposition involves a cross-conveyance of title to a property
subject to a fixed registered charge hereunder, it shall notify the
Holder in advance of the details of such conveyance;
(j) any right of first refusal granted by it in accordance with good
industry practice in the ordinary course of its business and on arms'
length commercial terms, provided that the exercise of such right
would not materially adversely affect its enjoyment of its property
taken as a whole, and dispositions in accordance with the terms of
such rights of first refusal, provided that if it relates to a
property
2
<PAGE>
subject to a fixed registered charge hereunder, it shall notify the
Holder in advance of such disposition, whereupon the Holder may
require that in exchange for a release of such security, all or part
of the proceeds of disposition be paid to it on account of the
Obligations, or that alternate security be substituted therefor; and
(k) dispositions made in connection with a farmout, participation,
operating agreement or similar agreement affecting any part of its
assets (other than proved and producing reserves) entered into on
terms customary in the industry for arms' length commercial
transactions, and in accordance with good industry practice; provided
that if such disposition involves the conveyance of a working interest
in a property subject to a fixed registered charge hereunder, it shall
notify the Holder in advance of the details of such conveyance.
PART B - PERMITTED ENCUMBRANCES
"PERMITTED ENCUMBRANCES" means, in respect of any particular asset of the
Corporation, any of the following Liens, PROVIDED that in no circumstance do
they secure indebtedness for borrowed money:
(a) undetermined or inchoate liens incidental to construction, maintenance
or operations carried on in the ordinary course of its business
provided that such liens have not been filed or otherwise become the
subject of enforcement proceedings under Applicable Law;
(b) liens referred to in paragraph (a) which, although filed, secure
obligations not overdue (or if overdue are being contested by it
diligently and in good faith by appropriate proceedings);
(c) liens securing taxes and assessments not at the time overdue (or if
overdue are being contested by it diligently and in good faith by
appropriate proceedings);
(d) liens securing the excess of the amount of any taxes, rates,
assessments or governmental charges or levies against it for which
final assessments have not been received by it over and above the
amount of such taxes, rates, assessments or governmental charges or
levies as estimated by it, acting reasonably;
(e) liens securing assessments under workers' compensation laws,
unemployment insurance or similar social security legislation which
are not at the time overdue (or if overdue are being contested by it
diligently and in good faith by appropriate proceedings);
3
<PAGE>
(f) inchoate liens or any rights of distress reserved in or exercisable
under any lease or sublease to which it is a lessee which secure the
payment of rent or compliance with the terms of such lease or
sublease, provided that such rent is not then overdue and it is then
in compliance in all material respects with such terms;
(g) liens in favor of a public utility or any governmental or public
authority when required by such utility, government or public
authority in connection with its ordinary course business operations,
provided that the obligations secured thereby are not overdue (or if
overdue are being contested by it diligently and in good faith by
appropriate proceedings);
(h) liens created or resulting from any litigation or legal proceeding
against it which is being contested by it diligently and in good faith
by appropriate proceedings, provided that (i) execution thereon is
stayed pending such proceedings, and (ii) the liens do not secure an
amount in excess of $250,000 in the aggregate when combined with liens
created or resulting from litigation or legal proceeding against
[**FOR COMPANY MORTGAGE DEBENTURE**] [**Forest Oil of Canada Ltd.**]
[**FOR FOREST CANADA MORTGAGE DEBENTURE**] [**Forest Oil
Corporation**];
(i) liens in favor of a third party under any pooling, unit, development,
farmout, participation, operating agreement or similar agreement
affecting the property which is the subject of such agreement,
provided that (i) such agreement is entered into in the ordinary
course of its business, on arms' length commercial terms and in
accordance with sound industry practice, (ii) the liens have not been
filed or otherwise become the subject of enforcement proceedings under
Applicable Law, and (iii) the obligations secured thereby are not
overdue (or if overdue are being contested by it diligently and in
good faith by appropriate proceedings);
(j) any liens (i) created other than by it, or (ii) existing without its
act or default (including liens securing indebtedness, taxes,
assessments or other charges), which are liens upon land with respect
to which any easement, right-of-way, permit, license or grant for
pipeline purposes is held by it and on which it does not customarily
pay interest charges, provided that the foreclosure or other
enforcement of any such lien will not materially impair the use of the
pipeline in question;
(k) liens on Petroleum Substances or the proceeds of sale of Petroleum
Substances pursuant to a processing or transmission arrangement
entered into or assumed by it in the ordinary course of its business,
securing the payment of its obligations in respect of the fees, costs
and expenses attributable to the processing or transmission (as the
case may be) of any such Petroleum Substances under any such
processing or transmission arrangement, provided that the obligations
4
<PAGE>
secured thereby are not overdue (or if overdue are being contested by
it diligently and in good faith by appropriate proceedings); and
(l) liens arising in respect of any penalty under non-participation or
independent operations provisions of an operating agreement in respect
of any property of the Corporation as a result of an election made by
the Corporation not to participate in a drilling or other operation,
where the election not to participate has been made in accordance with
the terms of such operating agreement and sound industry practices;
PROVIDED that in each case where it is contesting any obligations, taxes or
assessments as contemplated herein, (A) it shall have made on its books
provision adequate therefor in accordance with generally accepted accounting
principles, and (B) such Liens shall only be a Permitted Encumbrance for so long
as such contestation effectively postpones the enforcement of the rights of the
holder thereof.
5
<PAGE>
EXHIBIT F
FORM OF
SHARE PLEDGE AGREEMENT
SHARE PLEDGE AGREEMENT dated as of __________, 1995 (as amended,
modified or supplemented from time to time, the "AGREEMENT") [**FOR NUMBER
CORPORATION SHARE PLEDGE AGREEMENT**] [**between**] [**FOR COMPANY SHARE PLEDGE
AGREEMENT**] [**among**] THE ANSCHUTZ CORPORATION, a Kansas corporation
("PURCHASER"), and the party identified on the signature page hereto as the
Grantor (the "GRANTOR") [**FOR NUMBER CORPORATION SHARE PLEDGE AGREEMENT**]
[**and Forest Oil Corporation, a New York corporation ("FOREST")**].
Terms not otherwise defined herein have the meaning stated in the
Purchase Agreement (as defined below).
RECITALS:
A. Contemporaneously with the execution and delivery of this
Agreement, [**FOR COMPANY SHARE PLEDGE AGREEMENT**] [**Grantor**] [**FOR NUMBER
CORPORATION SHARE PLEDGE AGREEMENT**] [**Forest**] and Purchaser are entering
into a Purchase Agreement dated as of the date hereof (as amended or modified
from time to time, the "PURCHASE AGREEMENT") pursuant to which, among other
things, Forest shall sell, issue and deliver to Purchaser, and Purchaser shall
purchase, accept and acquire from Forest, a nonrecourse secured convertible
promissory note in the principal amount of $9,900,000 (as amended or modified
from time to time, the "PURCHASER NOTE")[**FOLLOWING CLAUSE NOT INCLUDED IN
COMPANY SHARE PLEDGE AGREEMENT**], and the Grantor is executing and delivering a
Guaranty Agreement dated as the date hereof in favor of Purchaser (as amended or
modified from time to time, the "GUARANTY AGREEMENT").
B. Pursuant to the terms of the Purchase Agreement, [**FOR COMPANY
SHARE PLEDGE AGREEMENT**] [**Grantor**] [**FOR NUMBER CORPORATION SHARE PLEDGE
AGREEMENT**] [**Forest**] has agreed to pay to Purchaser the Obligations.
C. Grantor owns, beneficially and of record the Pledged Shares (as
defined in Section 1(a)(i)).
<PAGE>
D. To secure the payment of the Obligations, Grantor is, among other
things, pledging to Purchaser (in such capacity, together with its successors
and assigns, the "SECURED PARTY") and granting to the Secured Party a security
interest in, the Pledged Shares.
E. The execution and delivery of this Agreement is a condition
precedent to the purchase of the Purchaser Note by Purchaser.
AGREEMENT
Each of the parties agrees as follows:
SECTION 1. GRANT OF SECURITY.
(a) Grantor hereby pledges to Secured Party, and hereby grants
to Secured Party a security interest in, all of Grantor's right, title and
interest in and to the following (the "PLEDGED SHARE COLLATERAL"):
(i) [**FOR COMPANY SHARE PLEDGE AGREEMENT**] [**_____
shares of __________ stock, $._____ par value per share, of Forest Oil of
Canada Ltd.**] [**FOR NUMBER CORPORATION SHARE PLEDGE AGREEMENT**]
[**15,737,956 Class A Preferred Shares and 1,430,723 Class B Preferred
Shares of Archean Energy Ltd.**], a corporation organized under the laws of
the Province of Alberta, Canada (the "ISSUER"), and all rights and powers
of a shareholder arising in connection therewith, together with
certificates representing all of such shares or other interests (the
"PLEDGED SHARES"), and any interest of such Grantor in the entries on the
books of any financial intermediary pertaining to the Pledged Shares and
all dividends, cash, options, warrants, rights, instruments and other
property, or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any and all of the Pledged
Shares;
(ii) all books, records, ledger cards, files,
correspondence, computer programs, tapes, disks and related data processing
software that at any time evidence or contain information relating to any
of the Pledged Share Collateral or are otherwise necessary or helpful in
the collection thereof or realization thereupon; and
(iii) all proceeds, products, rents and profits of or from
any and all of the foregoing Pledged Share Collateral and, to the extent
not otherwise included, all payments under insurance (whether or not
Secured Party is the loss payee thereof), or any indemnity, warranty or
guaranty, payable by reason of loss with respect to any of the foregoing
Pledged Share Collateral.
2
<PAGE>
For purposes of this Agreement, the term "PROCEEDS" shall have the meaning
assigned that term under the Uniform Commercial Code ("CODE") or under other
relevant law and, in any event, shall include, but not be limited to, any and
all (i) proceeds of any insurance, indemnity, warranty or guaranty payable to
Grantor from time to time with respect to any of the Pledged Share Collateral,
(ii) payments (in any form whatsoever) made or due and payable to Grantor from
time to time in connection with any requisition, confiscation, condemnation,
seizure, forfeiture or other disposition of all or any part of the Pledged Share
Collateral, whether voluntary or involuntary, and (iii) other amounts from time
to time paid or payable under or in connection with any of the Pledged Share
Collateral.
(b) At the expense of Grantor, Grantor shall promptly execute
and deliver all further instruments and documents, and take all further action,
that the Secured Party in its sole discretion may determine to be reasonably
necessary or convenient from time to time in order to perfect and protect any
security interest granted or purported to be granted hereby or to enable Secured
Party to exercise and enforce its rights and remedies hereunder with respect to
any Pledged Share Collateral. Without limiting the generality of the foregoing,
at the request of Secured Party, Grantor shall:
(i) execute and file such financing or continuation
statements, or amendments thereto, and such other instruments or notices,
as may be necessary or desirable, or as Secured Party may request, in order
to perfect and preserve the security interests granted or purported to be
granted hereby; and
(ii) appear in and defend any action or proceeding that may
affect Grantor's title to or Secured Party's security interest in all or
any part of the Pledged Share Collateral.
(c) Grantor hereby authorizes Secured Party to file one or more
financing or continuation statements, and amendments thereto, relative to all or
any part of the Pledged Share Collateral without the signature of Grantor.
Grantor agrees that a carbon, photographic or other reproduction of this
Agreement or of a financing statement signed by Grantor shall be sufficient as a
financing statement and may be filed as a financing statement in any and all
jurisdictions.
(d) Grantor shall furnish to Secured Party from time to time
statements and schedules further identifying and describing the Pledged Share
Collateral and such other reports in connection with the Pledged Share
Collateral as Secured Party may reasonably request, all in reasonable detail.
(e) The security interest granted hereby and the rights of
Secured Party with respect to the Pledged Share Collateral are subject to the
terms of Grantor's right, title and interest in the other Pledged Share
Collateral.
3
<PAGE>
SECTION 2. SECURITY FOR OBLIGATIONS. This Agreement secures, and
the Pledged Share Collateral is collateral security for, the prompt payment or
performance in full when due (including, without limitation, the payment of
amounts that would become due but for the operation of the automatic stay under
Section 362(a) of the Bankruptcy Code, 11 U.S.C. Section 362(a)), of all
Obligations.
SECTION 3. NO ASSUMPTION. Notwithstanding any of the foregoing,
this Agreement shall not in any way be deemed to obligate Secured Party, any
purchaser at a foreclosure sale under this Agreement or any other person to
assume any of Grantor's obligations or other liabilities under the [** FOR
NUMBER CORPORATION SHARE PLEDGE AGREEMENT **] [** Guaranty **] [** FOR COMPANY
SHARE PLEDGE AGREEMENT **] [** Purchaser Note or the Purchase Agreement or under
any and all other agreements now existing or hereafter drafted or executed in
connection with the Purchaser Note or the Purchase Agreement **] (collectively,
the "GRANTOR OBLIGATIONS") unless Secured Party, such purchaser or such other
person otherwise expressly agrees to assume any or all of said Grantor
Obligations in writing. In the event of foreclosure by Secured Party, Grantor
shall remain bound and obligated to perform the Grantor Obligations and neither
Secured Party nor any other person shall be deemed to have assumed any of such
Grantor Obligations except as provided in the preceding sentence.
SECTION 4. DELIVERY OF PLEDGED SHARES. The certificates
representing the Pledged Shares (the "CERTIFICATES") shall be delivered to and
held by or on behalf of Secured Party pursuant hereto and shall be in suitable
form for transfer by delivery or shall be accompanied by duly executed
instruments of transfer or assignment in blank, all in form and substance
satisfactory to Secured Party.
SECTION 5. VOTING OF PLEDGED SHARES. Unless an Event of Default
(as defined in Section 12) has occurred and is continuing:
(a) The Grantor shall be entitled to exercise any and all voting
and other consensual rights pertaining to all or any part of the Pledged Shares
for any purpose not inconsistent with the terms of this Agreement. However, the
Grantor shall not exercise or refrain from exercising any right if, in the
judgment of the Secured Party, the action could materially and adversely affect
the value of all or any part of the Pledged Shares or the validity or priority
of the security interest of the Secured Party in any of the Pledged Shares. The
Grantor shall give the Secured Party at least five days' prior written notice of
the manner in which it intends to exercise, or the reasons for refraining from
exercising, any right; and
(b) The Secured Party shall execute and deliver, or cause to be
executed and delivered, to the Grantor all proxies and other instruments
reasonably requested by the Grantor for the purpose of enabling the Grantor to
exercise the voting and other rights that it is entitled to exercise pursuant to
Section 5.
SECTION 6. REPRESENTATIONS AND WARRANTIES. Grantor represents and
warrants that [**FOR COMPANY SHARE PLEDGE AGREEMENT, CLAUSES (A) THROUGH (F) ARE
DELETED**]:
4
<PAGE>
(a) The Grantor (1) is a corporation duly incorporated, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, (2) has all necessary corporate power and authority and all
material licenses, authorizations, consents and approvals required to own,
lease, license or use its properties now owned, leased, licensed or used and
proposed to be owned, leased, licensed or used and to carry on its business as
now conducted and proposed to be conducted, (3) is duly qualified as a foreign
corporation under the laws of each jurisdiction in which both (A) qualification
is required either (i) to own, lease, license or use its properties now owned,
leased, licensed and used and proposed to be owned, leased, licensed or used or
(ii) to carry on its business as now conducted and proposed to be conducted and
(B) the failure to be so qualified could materially and adversely affect either
or both of (i) the business, properties, operations, prospects or condition
(financial or otherwise) of the Grantor and its Subsidiaries, taken as a whole,
and (ii) the ability of the Grantor to perform its obligations under this
Agreement and the Guaranty and (4) has all necessary corporate power and
authority to execute and deliver this Agreement and the Guaranty.
(b) The execution and delivery by the Grantor of this Agreement
and the Guaranty and the performance by it of its obligations under this
Agreement and the Guaranty have been duly authorized by all necessary corporate
action and do not and will not (1) contravene, violate, result in a breach of or
constitute a default under, (A) its [**articles of incorporation or**]
certificate of incorporation or bylaws, (B) any Regulation of any Governmental
Body or any decision, ruling, order or award of any arbitrator by which the
Grantor or any Subsidiary of the Grantor or any of their properties may be bound
or affected, or (C) any agreement, indenture or other instrument to which the
Grantor or any Subsidiary of the Grantor is a party or by which the Grantor or
any Subsidiary of the Grantor or their properties may be bound or affected or
(2) result in or require the creation or imposition of any Lien on any of the
properties now owned or hereafter acquired by the Grantor or any Subsidiary of
the Grantor.
(c) Each of this Agreement and the Guaranty has been duly
authorized, executed and delivered by Grantor and constitutes the legally valid
and binding obligation of the Grantor, enforceable against the Grantor in
accordance with its terms except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally and general principles of equity, including, without
limitation, concepts of materiality, reasonableness, good faith and fair dealing
and the possible unavailability of specific performance or injunctive relief,
regardless of whether considered in a proceeding in equity or at law.
(d) Other than such as have been obtained or made, no Approval
is required or advisable on the part of the Grantor or any Subsidiary of the
Grantor for (1) the due execution and delivery by the Grantor of this Agreement
or the Guaranty, (2) the performance by the Grantor of its obligations under
this Agreement or the Guaranty and (3) the exercise by the Secured Party of its
rights and remedies under this Agreement or the Guaranty.
5
<PAGE>
(e) There is no claim, action, suit, complaint, investigation,
inquiry or other proceeding pending, or to its knowledge, threatened against, or
involving the business or properties of, Grantor or any other person that
involves any of the transactions contemplated by this Agreement or the Guaranty
or that, individually or in the aggregate, if determined adversely to the
Grantor or the other person, could have a Material Adverse Effect.
(f) Grantor is not in violation of, nor has it received notice
of violation of, any Regulation under which it operates or by which it is bound
or to which its properties are subject or is in breach or default under, or
knows of any event or circumstance which with the giving of notice or the lapse
of time or both would constitute a breach or default under, any bond, debenture,
note or any other evidence of indebtedness, any indenture or any other
instrument or agreement by which it is bound or to which its properties are
subject, which violation, breach or default, as the case may be, has had or
could have a Material Adverse Effect; and the execution and delivery of each of
this Agreement and the Guaranty by Grantor and the performance by Grantor of its
obligations hereunder and thereunder have not resulted and will not result in
any Material Adverse Effect.
(g) The Grantor is the legal, record and beneficial owner of the
Pledged Shares and, with respect to Pledged Share Collateral to be acquired,
will be the legal, record and beneficial owner of the Pledged Share Collateral,
in each case free and clear of any Lien, except for the Liens created by this
Agreement. No effective financing statement or other instrument similar in
effect covering all or any part of the Pledged Share Collateral is on file in
any recording office, except such as may have been filed in favor of the Secured
Party relating to this Agreement.
(h) This Agreement and the delivery of the Certificates under
Section 4 create a valid and perfected first priority lien on and security
interest in the Pledged Share Collateral, enforceable against all third parties
and securing the payment of the Obligations, and all filings and other actions
necessary or desirable to perfect and protect such liens and security interests
have been duly made or taken.
(i) All of the Certificates, instruments and other documents
constituting, evidencing or representing Pledged Share Collateral have been duly
delivered to the Secured Party.
(j) The Pledged Shares are [**FOR NUMBER CORPORATION SHARE
PLEDGE AGREEMENT**] [**to the knowledge of Grantor,**] duly authorized, validly
issued, fully paid and non-assessable and are owned beneficially and of record
by the Grantor. The Pledged Shares constitute [**FOR COMPANY SHARE PLEDGE
AGREEMENT**] [**all of the issued and outstanding capital stock of the Issuer
[**FOR NUMBER CORPORATION SHARE PLEDGE AGREEMENT**] [**all of the issued and
outstanding Class A Preferred Shares and Class B Preferred Shares of the Issuer
and, in the aggregate, represent _____% of the issued and outstanding shares of
capital stock of the Issuer. Except for the Class A Preferred Shares, the Class
B Preferred Shares and the First Preferred Shares of the Issuer,**] the Issuer
does not have outstanding shares of its capital
6
<PAGE>
stock or other securities convertible or exchangeable into or exercisable for
any shares of its capital stock, rights to subscribe for or to purchase, options
for the purchase of, calls, commitments or claims of any character relating to,
any shares of its capital stock or any securities convertible into or
exchangeable or exercisable for any of the foregoing.
(k) There is no agreement or arrangement restricting the voting
or transfer of the Pledged Shares or the transfer of the other Pledged Share
Collateral except as provided in this Agreement [**FOR NUMBER CORPORATION SHARE
PLEDGE AGREEMENT**] [**and as provided in the Archean Energy Ltd. Shareholders
Agreement dated June 24, 1994 among the Company, the Number Corporation, the
Erin Mills Development Corporation, CanEagle Resources, Ltd., and Archean Energy
Ltd**].
(l) There is no agreement or arrangements providing for the
issuance of any shares of capital stock or other securities of the Issuer.
(m) There are no legal, contractual or other restrictions on the
payment of dividends on any shares of the capital stock or securities of the
Issuer, except for restrictions imposed by statutory restrictions of general
application [**FOR NUMBER CORPORATION SHARE PLEDGE AGREEMENT**] [**and the
Articles of Incorporation of the Issuer, as amended through June 22, 1994**].
(n) No person is subject to any obligation or has any right,
contingent or otherwise, to purchase, repurchase, redeem or otherwise acquire or
retire any of the Pledged Shares [**FOR NUMBER CORPORATION SHARE PLEDGE
AGREEMENT**] [**except as set forth in the Articles of Incorporation of the
Issuer, as amended through June 22, 1994 **].
(o) There is no Action against [**FOR NUMBER CORPORATION SHARE
PLEDGE AGREEMENT**] [**Forest or**] the Grantor that involves or affects or may
involve or affect any of the Pledged Share Collateral.
(p) The chief place of business, the chief executive office and
the office where Grantor keeps its records regarding the Pledged Share
Collateral is, and has been for the four month period preceding the date hereof,
located at the address specified therefor on the signature page hereof. Grantor
has not in the past done, and does not now do, business under any other name
(including any trade-name or fictitious business name).
(q) All information heretofore, herein or hereafter supplied to
Secured Party by or on behalf of Grantor with respect to the Pledged Share
Collateral is accurate and complete in all material respects.
SECTION 7. COVENANTS OF GRANTOR.
(a) AFFIRMATIVE COVENANTS. So long as any Secured Obligation
shall remain unpaid or unperformed, the Grantor shall do the following at its
own expense:
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(i) mark conspicuously each certificate evidencing or
representing any of the Pledged Share Collateral, and at the request of the
Secured Party, each of its records pertaining to the Pledged Share
Collateral with a legend, in form and substance satisfactory to the Secured
Party, indicating that the note, certificate, instrument or other document
is subject to the security interests granted by this Agreement;
(ii) deliver to the Secured Party promptly upon receipt all
notes, certificates, instruments and other documents constituting,
evidencing or representing any of the Pledged Share Collateral duly
endorsed or accompanied by instruments of transfer or assignment duly
executed in blank, in each case with signatures guaranteed and otherwise in
form and substance satisfactory to the Secured Party;
(iii) execute and file such financing or continuation
statements, and such amendments to those statements, and such other
instruments or notices, as may be necessary or desirable, or as the Secured
Party may request, in order to perfect and preserve the pledges, liens and
security interests granted or purported to be granted by this Agreement;
(iv) promptly notify the Secured Party of any Lien or claim
made or asserted against any of the Pledged Share Collateral and take all
steps necessary or in the judgment of the Secured Party advisable to
preserve rights against prior parties with respect to the Pledged Share
Collateral;
(v) furnish to the Secured Party from time to time
statements and schedules further identifying and describing the Pledged
Share Collateral and other reports in connection with the Pledged Share
Collateral requested by the Secured Party, all in reasonable detail;
(vi) advise the Secured Party promptly, in sufficient
detail, of any substantial change in the Pledged Share Collateral, and of
the occurrence of any event that could materially and adversely affect the
value of the Pledged Share Collateral or the validity or priority of the
security interest of the Secured Party in the Pledged Share Collateral;
(vii) comply with all Regulations of each Governmental Body
and all decisions, rulings, orders and awards of each arbitrator applicable
to the Pledged Share Collateral or any part of the Pledged Share Collateral
or to the Grantor;
(viii) promptly pay and discharge before they become
delinquent, all Taxes assessed, levied or imposed upon or relating to, and
all claims against the Pledged Share Collateral or the Grantor if the
failure to so pay could adversely affect the value of the Pledged Share
Collateral or the validity or priority of the security interest of the
Secured Party in the Pledged Share Collateral except those contested in
good faith
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and for which adequate reserves are maintained;
(ix) permit representatives of the Secured Party at any time
during the normal business hours to inspect and make abstracts from its
records relating to the Pledged Share Collateral;
(x) perform and observe all of the terms and provisions of
the Pledged Share Collateral to be performed or observed by it, except as
otherwise provided by law, and maintain the Pledged Share Collateral in
full force and effect;
(xi) subject to Section 11, collect all amounts due or to
become due to the Grantor under the Pledged Share Collateral and otherwise
enforce its rights under and in respect of the Pledged Share Collateral;
and
(xii) furnish to the Secured Party promptly upon receipt
copies of all notices, requests and other documents received by the Grantor
under or in respect of the Pledged Share Collateral and from time to time
(A) furnish to the Secured Party the information and reports regarding
those obligations requested by the Secured Party and (B) at the request of
the Secured Party, make the demands and requests for information or action
that the Grantor is entitled to make under the Pledged Share Collateral.
(xiii) notify Secured Party of any change in Grantor's name,
identity or organizational structure within 15 days of such change;
(xiv) give Secured Party 30 days' prior written notice of any
change in Grantor's chief place of business, chief executive office or
residence or the office where Grantor keeps its records regarding the
Pledged Share Collateral; and
(b) NEGATIVE COVENANTS. So long as any Secured Obligation shall
remain unpaid or unperformed, the Grantor shall not do any of the following
without the prior written approval of the Secured Party:
(i) transfer any of the Pledged Share Collateral, whether
by operation of law or otherwise;
(ii) create, incur, assume or suffer to exist any Lien on or
in respect of any of the Pledged Share Collateral except pursuant to this
Agreement and the Purchaser Note;
(iii) use, store or keep any Pledged Share Collateral or
records relating to Pledged Share Collateral in any location other than
those expressly permitted by this Agreement; or
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(iv) take any action in connection with any Pledged Share
Collateral that could materially and adversely affect the value of the
Pledged Share Collateral or the validity or priority of the security
interest of the Secured Party in the Pledged Share Collateral.
SECTION 8. PAYMENTS HELD IN TRUST. All payments, funds, instruments
and other items received by the Grantor under or in respect of any Pledged Share
Collateral shall be received in trust for the Secured Party, segregated from
other funds of the Grantor and shall be promptly delivered to the Secured Party
in the form received, together with all necessary endorsements.
SECTION 9. GRANT OF POWER OF AUTHORITY. Grantor, and its
successors and assigns, hereby irrevocably constitutes and appoints Secured
Party as its true and beneficial attorney, in its name, place and stead of
Grantor, with full power of substitution, after the occurrence and during the
continuation of an Event of Default, to take any action and to make, execute,
convert to, swear to, acknowledge, record and file any financing statements,
certificates, instruments or other documents of any character that Secured Party
may deem necessary or desirable fully to carry out the provisions of this
Agreement, including, without limitation:
(i) to ask, demand, collect, sue for, recover, compound,
receive and give acquittance and receipts for moneys due and to become due
under or in respect of any of the Pledged Share Collateral;
(ii) to receive, endorse and collect all instruments made
payable to Grantor representing any payment of profits, dividends or any
other distribution in respect of any of the Pledged Share Collateral;
(iii) to file any claims or take any action or institute any
proceedings that Secured Party may deem reasonably necessary or desirable
for the collection of any of the Pledged Share Collateral or otherwise to
enforce the rights of Secured Party with respect to any of the Pledged
Share Collateral; and
(iv) to do, at Secured Party's option and Grantor's expense,
at any time or from time to time, all acts and things that Secured Party
deems reasonably necessary or convenient to protect, preserve or realize
upon the Pledged Share Collateral and Secured Party's security interest
therein in order to effect the intent of this Agreement, all as fully and
effectively as Grantor might do.
SECTION 10. SECURED PARTY MAY PERFORM. If Grantor fails to perform
any agreement contained herein, Secured Party may itself perform, or cause
performance of, such agreement, and the reasonable and customary expenses of
Secured Party incurred in connection therewith shall be payable by Grantor under
Section 13.
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SECTION 11. STANDARD OF CARE.
(a) The powers conferred on Secured Party hereunder are solely
to protect its interest in the Pledged Share Collateral and shall not impose any
duty upon it to exercise any such powers. Except for the exercise of reasonable
care in the custody of any Pledged Share Collateral in its possession and the
accounting for monies actually received by it hereunder, Secured Party shall
have no duty as to any Pledged Share Collateral or as to the taking of any
necessary steps to preserve rights against prior parties or any other rights
pertaining to any Pledged Share Collateral. Secured Party shall be deemed to
have exercised reasonable care in the custody and preservation of any Pledged
Share Collateral in its possession if such Pledged Share Collateral is accorded
treatment substantially equal to that which Secured Party accords its own
property of a similar nature.
(b) Whenever this Agreement or any other agreement contemplated
hereby provides that Secured Party is permitted or required to make a decision
in the "discretion" or the "sole discretion" of Secured Party, Secured Party
shall be entitled to consider only such interests and factors as it desires and
Secured Party shall have no duty or obligation to give any consideration to any
interest of or factors affecting the Purchaser, Grantor or any other person.
SECTION 12. REMEDIES.
(a) In the event of default in the payment of any of the
Obligations (each an "EVENT OF DEFAULT"), Secured Party in its sole discretion
may exercise in respect of the Pledged Share Collateral, in addition to all
other rights and remedies provided for herein or otherwise available to it, all
the rights and remedies of a secured party on default under the Code as in
effect in any relevant jurisdiction (the "UCC") (whether or not the UCC applies
to the affected Pledged Share Collateral), and Secured Party may also in its
sole discretion, without notice except as specified below or as required by
applicable law, sell the Pledged Share Collateral or any part thereof in one or
more parcels at public or private sale, at any exchange or broker's board or at
any of Secured Party's offices or elsewhere, for cash, on credit or for future
delivery, at such time or times and at such price or prices and upon such other
terms as Secured Party may deem commercially reasonable, irrespective of the
impact of any such sales on the market price of the Pledged Share Collateral.
Secured Party or any other person may be the purchaser of any or all of the
Pledged Share Collateral at any such sale and Secured Party, for itself or on
behalf of any other person, shall be entitled, for the purpose of bidding and
making settlement or payment of the purchase price for all or any portion of the
Pledged Share Collateral sold at any such public sale, to use and apply any of
the Obligations as a credit on account of the purchase price for any Pledged
Share Collateral payable by Secured Party at such sale. Each purchaser at any
such sale shall hold the property sold absolutely free from any claim or right
on the part of Grantor, and Grantor hereby waives (to the extent permitted by
applicable law) all rights of redemption, stay and appraisal which it now has or
may at any time in the future have under any rule of law or statute now existing
or hereafter enacted. Grantor agrees that, to the extent notice of sale shall
be required by law, at least ten days' notice to
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Grantor of the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification. Secured
Party shall not be obligated to make any sale of Pledged Share Collateral
regardless of whether notice of sale has been given. Secured Party may adjourn
any public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made at the
time and place to which it was so adjourned. Grantor hereby waives any claims
against Secured Party arising by reason of the fact that the price at which any
Pledged Share Collateral may have been sold at such a private sale was less than
the price which might have been obtained at a public sale, even if Secured Party
accepts the first offer received and does not offer such Pledged Share
Collateral to more than one offeree.
(b) Grantor recognizes that, by reason of certain prohibitions
contained in the Securities Act of 1933, as amended (the "SECURITIES ACT"), and
applicable state securities laws, Secured Party may be compelled, with respect
to any sale of all or any part of the Pledged Share Collateral conducted without
prior registration or qualification of such Pledged Share Collateral under the
Securities Act and such state securities laws, to limit purchasers to those who
will agree, among other things, to acquire the Pledged Share Collateral for
their own account, for investment and not with a view to the distribution or
resale thereof. Grantor acknowledges that any such private sales may be at
prices and on terms less favorable than those obtainable through a public sale
without such restrictions (including, without limitation, a public offering made
pursuant to a registration statement under the Securities Act) and,
notwithstanding such circumstances, Grantor agrees that any such private sale
shall be deemed to have been made in a commercially reasonable manner and that
Secured Party shall have no obligation to engage in public sales and no
obligation to delay the sale of any Pledged Share Collateral for the period of
time necessary to permit the Purchaser to register it for a form of public sale
requiring registration under the Securities Act or under applicable state
securities laws, even if the Purchaser would, or should, agree to so register
it.
SECTION 13. APPLICATION OF PROCEEDS. Except as expressly provided
elsewhere in this Agreement, all proceeds received by Secured Party in respect
of any sale of, collection from, or other realization upon all or any part of
the Pledged Share Collateral may, in the discretion of Secured Party, be held by
Secured Party as Pledged Share Collateral for, or then, or at any other time
thereafter, applied in full or in part by Secured Party against, the Obligations
in the following order of priority:
(i) to pay or reimburse in full the costs and expenses of
such sale, collection or other realization, including reasonable
compensation to Secured Party and its agents and counsel, and all other
costs, expenses, obligations and other liabilities incurred or paid by
Secured Party in connection therewith, and all amounts for which Secured
Party is entitled to indemnification hereunder and all advances made by
Secured Party hereunder for the account of Grantor, and to the payment of
all costs and expenses paid or incurred by Secured Party in connection with
the exercise of any right or remedy hereunder, all in accordance with
Section 13;
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(ii) to pay all other Obligations (for the ratable benefit
of the holders thereof) and thereafter in such order as Secured Party shall
elect; and
(iii) to pay to or upon the order of Grantor, or to
whomsoever may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct, the balance of the proceeds.
SECTION 14. INDEMNITY AND EXPENSES.
(a) Grantor shall indemnify Secured Party and its Related
Persons (collectively, the "INDEMNIFIED PERSONS") against all losses, costs,
expenses (including attorneys' fees and expenses), judgments, fines, amounts
paid in settlement and other liabilities incurred, suffered or paid by the
Indemnified Person (collectively, "INDEMNIFIED EXPENSES") in connection with any
threatened, pending or completed claim, action, suit, complaint, investigation,
inquiry or other proceeding, whether civil, criminal, administrative or
investigative, which is or was brought or threatened against any Indemnified
Person by reason of or in connection with actions taken or omitted to be taken
by one or more Indemnified Persons in the performance of the exercise of the
rights and powers or performance of the obligations of Secured Party under this
Agreement or otherwise in connection with this Agreement, except that Grantor
shall have no liability under this Section 14 with respect to any Indemnified
Expense to the extent the liability results from the fraud, gross negligence,
willful misconduct or bad faith of the Indemnified Person, as determined by a
final judgment or final adjudication. For purposes of this Agreement, the term
"Related Persons" means, with respect to any person, any other person that
directly or indirectly controls or is controlled by or is under common control
with the specified person and the direct or indirect controlling persons,
principals, partners, trustees, stockholders, officers, directors, employees,
independent contractors and agents for or of any of the foregoing.
(b) To the fullest extent permitted by law, Grantor shall, from
time to time, advance Indemnified Expenses to an Indemnified Person prior to the
final disposition of the Action upon receipt by Grantor of an undertaking by or
on behalf of the Indemnified Person to repay such amount if it shall be
determined that the Indemnified Person is not entitled to be indemnified as
authorized in this Section 14.
(c) Grantor shall pay to Secured Party upon demand the amount of
any and all costs and expenses, including the reasonable fees and expenses of
its counsel and of any experts and agents, that Secured Party may incur in
connection with (i) the administration of this Agreement, (ii) the custody or
preservation of, or the sale of, collection from, or other realization upon, any
of the Pledged Share Collateral, (iii) the exercise or enforcement of any of the
rights of Secured Party hereunder, or (iv) the failure by Grantor to perform or
observe any of the provisions hereof.
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SECTION 15. SURETYSHIP WAIVERS BY GRANTOR, ETC.
(a) Grantor agrees that its obligations hereunder are
irrevocable, absolute, independent and unconditional and shall not be affected
by any circumstance which constitutes a legal or equitable discharge of a
guarantor or surety other than indefeasible payment in full of the Obligation.
In furtherance of the foregoing and without limiting the generality thereof,
Grantor agrees as follows:
(i) Secured Party, for itself or on behalf of any other
person, may from time to time, without notice or demand and without
affecting the validity or enforceability of this Agreement or giving rise
to any limitation, impairment or discharge of Grantor's liability
hereunder, (A) create, increase, renew, extend, accelerate or otherwise
change the time, place, manner or terms of payment of an Obligation,
(B) settle, compromise, release or discharge, or accept or refuse any offer
of performance with respect to, or substitutions for, an Obligation or any
agreement relating thereto and/or subordinate the payment of the same to
the payment of any other obligations, (C) request and accept guaranties of
an Obligation and take and hold other security for the payment of an
Obligation, (D) release, exchange, compromise, subordinate or modify, with
or without consideration, any other security for payment of an Obligation,
any guaranties of an Obligation, or any other obligation of any person with
respect to an Obligation, (E) enforce and apply any other security now or
hereafter held by or for the benefit of Secured Party or any other person
in respect of an Obligation and direct the order or manner of sale thereof,
or exercise any other right or remedy that Secured Party or any other
person, may have against any such security, as Secured Party in its
discretion may determine consistent with the terms of any applicable
security agreement, including, without limitation, foreclosure on any such
security pursuant to one or more judicial or nonjudicial sales, whether or
not every aspect of any such sale is commercially reasonable, and even
though such action operates to impair or extinguish any right of
reimbursement or subrogation or other right or remedy of Grantor against
Forest or any other security for an Obligation (and Grantor expressly
acknowledges that such exercise of a right or remedy that impairs or
extinguishes Grantor's right of reimbursement or subrogation would create a
possible defense by Grantor against any liability hereunder, but Grantor
expressly and knowingly waives any such defense), and (F) exercise any
other rights available to Secured Party or any other person under the
Purchaser Note, at law or in equity; and
(ii) this Agreement and the obligations of Grantor hereunder
shall be valid and enforceable and shall not be subject to any limitation,
impairment or discharge for any reason (other than indefeasible payment in
full of an Obligation), including, without limitation the occurrence of any
of the following, whether or not Grantor shall have had notice or knowledge
of any of them: (A) any failure to assert or enforce or agreement not to
assert or enforce, or the stay or enjoining, by order of court, by
operation of law or otherwise, of the exercise or enforcement of, any claim
or demand or any right, power or remedy with respect to an Obligation or
any agreement
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relating thereto, or with respect to any guaranty of or other security for
the payment of an Underlying Obligation, (B) any waiver, amendment or
modification of, or any consent to departure from, any of the terms or
provisions (including without limitation provisions relating to events of
default) of the Purchaser Note or the Purchase Agreement or any agreement
or instrument executed pursuant thereto, or of any guaranty or other
security for an Underlying Obligation, (C) an Underlying Obligation, or any
agreement relating thereto, at any time being found to be illegal, invalid
or unenforceable in any respect, (D) the application of payments received
from any source to the payment of indebtedness other than an Underlying
Obligation, even though Secured Party or any other person might have
elected to apply such payment to any part or all of an Underlying
Obligation, (E) any failure to perfect or continue perfection of a security
interest in any other collateral which secures any of an Underlying
Obligation, (F) any defenses, set-offs or counterclaims which the related
Obligor may allege or assert against Secured Party in respect of an
Underlying Obligation, including, without limitation, failure of
consideration, breach of warranty, payment, statute of frauds, statute of
limitations, accord and satisfaction and usury, and (G) any other act or
thing or omission, or delay to do any other act or thing, which may or
might in any manner or to any extent vary the risk of Grantor as an obligor
in respect of an Underlying Obligation.
(b) Grantor hereby waives, for the benefit of Secured Party:
(i) any right to require Secured Party, as a condition of
payment or performance by Grantor, to (A) proceed against [**FOR NUMBER
CORPORATION SHARE PLEDGE AGREEMENT**] [**Forest,**] any guarantor of the
related Underlying Obligation or any other person, (B) proceed against or
exhaust any other security held from [**FOR NUMBER CORPORATION SHARE PLEDGE
AGREEMENT**] [**Forest,**] any guarantor of the related Underlying
Obligation or any other person, (C) proceed against or have resort to any
balance of any deposit account or credit on the books of Secured Party or
any other person in favor [**FOR NUMBER CORPORATION SHARE PLEDGE
AGREEMENT**] of [**Forest, or**] any other person, or (D) pursue any other
remedy in the power of Secured Party or any other person whatsoever;
(ii) any defense arising by reason of the incapacity, lack
of authority or any disability or other defense [**FOR NUMBER CORPORATION
SHARE PLEDGE AGREEMENT**] [**of Forest**] including, without limitation,
any defense based on or arising out of the lack of validity or the
unenforceability of the related Underlying Obligation or any agreement or
instrument relating thereto or by reason of the cessation of the liability
[**FOR NUMBER CORPORATION SHARE PLEDGE AGREEMENT**] [**of Forest**] from
any cause other than indefeasible payment in full of the related Underlying
Obligation;
(iii) any defense based upon any statute or rule of law which
provides that the obligation of a surety must be neither larger in amount
nor in other respects more burdensome than that of the principal;
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(iv) any defense based upon the errors or omissions of
Secured Party or any other person in the administration of an Underlying
Obligation, except behavior which amounts to gross negligence, wilful
misconduct or bad faith;
(v) (A) any principles or provisions of law, statutory or
otherwise, which are or might be in conflict with the terms of this
Agreement and any legal or equitable discharge of Grantor's obligations
hereunder, (B) the benefit of any statute of limitations affecting
Grantor's liability hereunder or the enforcement hereof, (C) any rights to
set-offs, recoupments and counterclaims, and (D) promptness, diligence and
any requirement that Secured Party or any other person protect, secure,
perfect or insure any other security interest or lien or any property
subject thereto;
(vi) notices, demands, presentments, protests, notices of
protest, notices of dishonor and notices of any action or inaction, notices
of default under the Purchaser Note or the Purchase Agreement or any
agreement or instrument related thereto, notices of any renewal, extension
or modification of the related Underlying Obligation or any agreement
related thereto, notices of any extension of credit to Forest and notices
of any of the matters referred to in the preceding paragraph and any right
to consent to any thereof; and
(vii) to the fullest extent permitted by law, any defenses or
benefits that may be derived from or afforded by law which limit the
liability of or exonerate guarantors or sureties, or which may conflict
with the terms of this Agreement.
(c) [**FOR NUMBER CORPORATION SHARE PLEDGE AGREEMENT**] [**Until
each Underlying Obligation shall have been indefeasibly paid in full, Grantor
shall withhold exercise of (i) any claim, right or remedy, direct or indirect,
that Grantor now has or may hereafter have against Forest or any of its assets
in connection with this Agreement or the Purchase Agreement the performance by
Grantor of its obligations hereunder or thereunder, in each case whether such
claim, right or remedy arises in equity, under contract, by statute, under
common law or otherwise and including without limitation (A) any right of
subrogation, reimbursement or indemnification that Grantor now has or may
hereafter have against Forest, (B) any right to enforce, or to participate in,
any claim, right or remedy that Secured Party now has or may hereafter have
against Forest, and (C) any benefit of, and any right to participate in, any
other collateral or security now or hereafter held by Secured Party, and
(ii) any right of contribution Grantor may have against any guarantor of an
Underlying Obligation. Grantor further agrees that, to the extent the waiver of
its rights of subrogation, reimbursement, indemnification and contribution as
set forth herein is found by a court of competent jurisdiction to be void or
voidable for any reason, any rights of subrogation, reimbursement or
indemnification Grantor may have against Forest or against any other collateral
or security, and any rights of contribution Grantor may have against any such
guarantor, shall be junior and subordinate to any rights Secured Party may have
against Forest, to all right, title and interest Secured Party may have in any
such other collateral or security, and to any right Secured Party may have
against any such guarantor.**]
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(d) [**FOR NUMBER CORPORATION SHARE PLEDGE AGREEMENT**]
[**Neither Secured Party nor any other person shall have any obligation to
disclose or discuss with Grantor their assessment, or Grantor's assessment, of
the financial condition of Forest. Grantor has adequate means to obtain
information about Forest on a continuing basis concerning the financial
condition of Forest and its ability to perform its obligations under the
Purchaser Note and the Purchase Agreement, and Grantor assumes the
responsibility for being and keeping informed of the financial condition of each
of Forest and of all circumstances bearing upon the risk of nonpayment of an
Underlying Obligation. Grantor hereby waives and relinquishes any duty on the
part of Secured Party and any other person to disclose any matter, fact or thing
relating to the business, operations or condition of Forest now known or
hereafter known by Secured Party as such person.**]
SECTION 16. NONRECOURSE. Notwithstanding anything herein or in any
other Transaction Document to the contrary, except as otherwise set forth in
this Section to the contrary, the Purchaser agrees (a) to look solely to the
Pledged Share Collateral and other Collateral for payment of the principal
amount of and interest on the Purchaser Note and for the payment of the
Enforcement Expenses, (b) that its sole recourse for the repayment of the
principal amount of and interest on the Purchaser Note and the Enforcement
Expenses shall be to the Pledged Share Collateral and other Collateral, and (c)
that it shall not seek repayment of the principal amount of or interest on the
Purchaser Note or the Enforcement Expenses or to enforce the Purchaser Note or
the payment of such amounts by any action or proceeding wherein a money judgment
shall be sought against the Grantor, or any stockholder, officer, director,
agent or employee of the Grantor, except that the Purchaser may bring an action
for declaratory judgment, action for injunction or an action for specific
performance solely for the purpose of enabling the Purchaser to realize upon the
Pledged Share Collateral and other Collateral. The Purchaser may also bring a
foreclosure action, action for specific performance, or other appropriate action
or proceeding (including to obtain a deficiency judgment) solely for the purpose
of enabling the Purchaser to realize upon (i) the Grantor's interest in the
Pledged Share Collateral and other Collateral and (ii) the income arising from
the Pledged Share Collateral and the other Collateral to the extent received,
directly or indirectly, by the Grantor after the occurrence of an Event of
Default (the "RECOURSE DISTRIBUTIONS") (collectively, the "DEFAULT COLLATERAL");
PROVIDED, HOWEVER, that any judgment in any such action or proceeding shall be
enforceable against the Grantor only to the extent of any such Default
Collateral; PROVIDED FURTHER, HOWEVER, that the provisions of this Section shall
not (A) impair the validity of the Obligations or in any way affect or impair
the Lien of any Security Document or the right of the Purchaser to foreclose any
Security Document following the occurrence and during the continuation of an
Event of Default; (B) impair the right of the Purchaser to name the Grantor as a
party defendant in any action or suit for judicial foreclosure and sale under
any Security Document; (C) affect the validity or enforceability of the
Purchaser Note or the other Transaction Documents; (D) impair the right of the
Purchaser to obtain the appointment of a receiver with respect to the Pledged
Share Collateral and the other Collateral; (E) impair the right of the Purchaser
to bring suit for recovery of a money judgment against the Grantor for recovery
of damages attributable to fraud or intentional misrepresentation by the Grantor
or any other person in connection with the Purchase Agreement, the Purchaser
Note or any other
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Transaction Documents; (F) impair the right of the Purchaser to obtain a money
judgment against the Grantor or any stockholder, officer, director or employee
of the Grantor for the Recourse Distributions received by such person; (G)
impair the right of the Purchaser to bring suit for recovery of a money judgment
against the Grantor or any stockholder, officer, director or employee of the
Grantor with respect to the Grantor's misappropriation of escrows or income
collected in advance with respect to the Pledged Share Collateral; (H) impair
the right of the Purchaser to obtain insurance proceeds or condemnation proceeds
due to the Purchaser pursuant to any Security Document; (I) impair the right of
the Purchaser to obtain a money judgment or otherwise enforce the provisions of
Section 4.4 or Article X of the Purchase Agreement or this Agreement even after
repayment in full by the Company of the Obligations; (J) prevent or in any way
hinder the Purchaser from exercising, or constitute a defense, counterclaim, or
other basis for relief in respect of the exercise of, any other remedy against
any or all of the Pledged Share Collateral for the Purchaser Note as provided in
the Security Documents; or (K) impair the right of the Purchaser to bring suit
for recovery of a money judgment against the Grantor or any stockholder,
officer, director or employee of the Grantor with respect to any misapplication
of insurance proceeds or condemnation proceeds approved or received by any such
person with respect to the Pledged Share Collateral. The parties agree that
this Section shall be subject to 11 U.S.C. 1111(b) of the Bankruptcy Code.
SECTION 17. CONTINUING SECURITY INTEREST; TRANSFER OF OBLIGATIONS.
(a) This Agreement shall create a continuing security interest
in the Pledged Share Collateral and shall (i) remain in full force and effect
until the indefeasible payment in full of the Obligations, (ii) be binding upon
Grantor, its successors and assigns, and (iii) inure, together with the rights
and remedies of Secured Party hereunder, to the benefit of Secured Party and its
successors, transferees and assigns. Without limiting the generality of the
foregoing clause (iii), Secured Party may assign or otherwise transfer to any
other person all or any part of Secured Party's right, title and interest in and
to an Underlying Obligation, and such other person shall thereupon become vested
with all the benefits in respect thereof granted to Secured Party herein or
otherwise.
(b) Upon the indefeasible payment in full of all Obligations,
the security interest granted hereby shall terminate and all rights to the
Pledged Share Collateral shall revert to Grantor. Upon any such termination,
Secured Party shall, at Grantor's expense, execute and deliver to Grantor such
documents as Grantor shall reasonably request to evidence such termination.
SECTION 18. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.
No failure or delay on the part of Secured Party in the exercise of any power,
right or privilege hereunder shall impair such power, right or privilege or be
construed to be a waiver of any default or acquiescence therein, nor shall any
single or partial exercise of any such power, right or privilege preclude any
other or further exercise thereof or of any other power, right or privilege.
All rights and remedies existing under this Agreement are cumulative to, and not
exclusive of, any rights or remedies otherwise available.
18
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[**FOR NUMBER CORPORATION SHARE PLEDGE AGREEMENT**]
[**SECTION 19. POWER OF ATTORNEY.
(a) Forest hereby irrevocably appoints the Purchaser (acting in
its capacity as attorney-in-fact pursuant hereto, the "ATTORNEY-IN-FACT") as the
true and lawful attorney-in-fact and agent of Forest, with power of substitution
and resubstitution, to act in the name, place and stead of Forest,
(1) to exercise and receive the full benefit of the rights of Forest
under the Shareholders Agreement of Archean Energy Ltd. (``ARCHEAN'') dated
June 24, 1994 among Forest, 604228 Alberta Ltd., The Erin Mills Development
Corporation, Eagle Resources Corporation and Archean, including without
limitation the right to designate a director of Archean; and
(2) to make, execute, acknowledge and deliver all such other
contracts, orders, receipts, notices, requests, instructions, certificates,
consents, letters and other writings and, in general, to do all things and
to take all action which the Attorney-in-Fact in its sole discretion may
consider necessary or proper in connection with or to carry out the
transactions contemplated by this Section 19, as fully as could Forest if
personally present and acting.
(b) The Power of Attorney granted pursuant to this Section 19 is
coupled with an interest and, therefore, shall be irrevocable and shall not be
terminated by any act of Forest or by operation of law, whether by the
liquidation or dissolution of Forest or by the occurrence of any other event or
events, and if, after the execution hereof, Forest is liquidated or dissolved,
or if any other such event or events shall occur before the completion of the
transactions contemplated by this Section 19, the Attorney-in-Fact shall
nevertheless be authorized and directed to complete all such transactions as if
such liquidation or other event or events had not occurred and regardless of
notice thereof.
(c) The power and authority of the Attorney-in-Fact granted
hereunder may be exercised by Purchaser and its assigns only during such time as
Forest is in default in the payment of the Obligations.**]
SECTION 20. COSTS AND EXPENSES. Subject to Section 16 the Grantor
shall pay all costs and expenses, including reasonable attorneys' fees and
expenses, incurred by or on behalf of Secured Party in the enforcement of this
Agreement.
SECTION 21. NOTICES. All notices, requests and other communications
to any party or under this Agreement shall be in writing. Communications may be
made by telecopy or similar writing. Each communication shall be given to the
party at its address stated on the signature pages of this Agreement or at any
other address as the party may specify for this purpose by notice to the other
party. Each communication shall be effective (1) if given by
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telecopy, when the telecopy is transmitted to the proper address and the receipt
of the transmission is confirmed, (2) if given by mail, 72 hours after the
communication is deposited in the mails properly addressed with first class
postage prepaid or (3) if given by any other means, when delivered to the proper
address and a written acknowledgement of delivery is received.
SECTION 22. NO WAIVERS; REMEDIES; SPECIFIC PERFORMANCE.
(a) No failure or delay by any party in exercising any right,
power or privilege under this Agreement shall operate as a waiver of the right,
power or privilege. A single or partial exercise of any right, power or
privilege shall not preclude any other or further exercise of the right, power
or privilege or the exercise of any other right, power or privilege. The rights
and remedies provided in this Agreement shall be cumulative and not exclusive of
any rights or remedies provided by law.
(b) In view of the uniqueness of the transactions contemplated
hereby, neither of the parties would have an adequate remedy at law for money
damages in the event that this Agreement is not performed in accordance with its
terms, and therefore each of the parties agree that the other party shall be
entitled to specific enforcement of the terms of this Agreement in addition to
any other remedy to which it may be entitled, at law or in equity.
SECTION 23. AMENDMENTS, ETC. No amendment, modification,
termination, or waiver of any provision of this Agreement, and no consent to any
departure by a party to this Agreement from any provision of this Agreement,
shall be effective unless it shall be in writing and signed and delivered by the
other party to this Agreement, and then it shall be effective only in the
specific instance and for the specific purpose for which it is given.
SECTION 24. SUCCESSORS AND ASSIGNS.
(a) Purchaser may assign its rights and delegate its obligations
under this Agreement; such assignee shall accept those rights and assume those
obligations for the benefit of the other party in writing in form reasonably
satisfactory to the other party. Thereafter, without any further action by any
person, all references in this Agreement to "Purchaser", and all comparable
references, shall be deemed to be references to the transferee, but Purchaser
shall not be released from any obligation or liability under this Agreement.
(b) Except as provided in Section [**FOR COMPANY SHARE PLEDGE
AGREEMENT**] [**23(a)**] [**FOR NUMBER CORPORATION SHARE PLEDGE AGREEMENT**]
[**24(a)**], no party may assign its rights under this Agreement. Any
delegation in contravention of this Section shall be void AB INITIO and shall
not relieve the delegating party of any obligation under this Agreement.
20
<PAGE>
(c) The provisions of this Agreement shall be binding upon and
inure to the benefit of the parties to this Agreement and their respective
successors and permitted assigns.
SECTION 25. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York. All
rights and obligations of the parties shall be in addition to and not in
limitation of those provided by applicable law.
SECTION 26. COUNTERPARTS; EFFECTIVENESS. This Agreement may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as if all signatures were on the same instrument.
SECTION 27. SEVERABILITY OF PROVISIONS. Any provision of this
Agreement, that is prohibited or unenforceable in any jurisdiction shall, as to
that jurisdiction, be ineffective to the extent of the prohibition or
unenforceability without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of the provision in any other
jurisdiction.
SECTION 28. HEADINGS AND REFERENCES. Section headings in this
Agreement are included in this Agreement for the convenience of reference only
and do not constitute a part of this Agreement for any other purpose.
References to parties and sections in this Agreement are references to the
parties to or the sections of this Agreement, as the case may be, unless the
context shall require otherwise.
SECTION 29. ENTIRE AGREEMENT. Except as otherwise specifically
provided in this Section, this Agreement embodies the entire agreement and
understanding of the respective parties and supersede all prior agreements or
understandings with respect to the subject matters of those documents. [**FOR
THE COMPANY SHARE PLEDGE AGREEMENT**] [**The Grantor and the Secured Party shall
remain subject to the other Transaction Documents and paragraphs (1) through
(3), inclusive, of the letter agreement dated March 6, 1995 between the Grantor
and the Secured Party in accordance with the terms thereof.**] [**FOR THE NUMBER
CORPORATION SHARE PLEDGE AGREEMENT**] [**The Grantor and the Secured Party shall
each remain subject to the other Transaction Documents to which it is a
party.**]
SECTION 30. SURVIVAL. Except as otherwise specifically provided in
this Agreement, each representation, warranty or covenant of each party this
Agreement contained in or made pursuant to this Agreement shall survive each
Closing and remain in full force and effect, notwithstanding any investigation
or notice to the contrary or any waiver by any other party of a related
condition precedent to the performance by the other party of an obligation under
this Agreement.
SECTION 31. EXCLUSIVE JURISDICTION. Each of the Grantor and
Purchaser (1) agrees that any legal action with respect to this Agreement shall
be brought exclusively in the
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courts of the State of New York or of the United States of America for the
Southern District of New York, (2) accepts for itself and in respect of its
property, generally and unconditionally, the jurisdiction of those courts and
(3) irrevocably waives any objection, including, without limitation, any
objection to the laying of venue or based on the grounds of FORUM NON
CONVENIENS, which it may now or hereafter have to the bringing of any legal
action in those jurisdictions; PROVIDED, HOWEVER, that each of the Grantor and
Purchaser may assert in any other jurisdiction or venue each mandatory defense,
third-party claim or similar claim that, if not so asserted in such Action, may
not be asserted in an original legal action in the courts referred to in clause
(1) above.
SECTION 32. WAIVER OF JURY TRIAL. Each party waives any right to a
trial by jury in any Action to enforce or defend any right under this Agreement
or any amendment, instrument, document or agreement delivered, or which in the
future may be delivered, in connection with this Agreement and agrees that any
Action shall be tried before a court and not before a jury.
SECTION 33. AFFILIATE. Nothing contained in this Agreement shall
constitute Purchaser an "AFFILIATE" of any of the Company and its Subsidiaries
within the meaning of Rule 13e-3 under the Exchange Act.
SECTION 34. NON-RECOURSE. No recourse under this Agreement shall be
had against any "controlling person" (within the meaning of Section 20 of the
Exchange Act) of Purchaser or the shareholders, directors, officers, employees,
agents and Affiliates of Purchaser or such controlling persons, whether by the
enforcement of any assessment or by any legal or equitable proceeding, or by
virtue of any Regulation, it being expressly agreed and acknowledged that no
personal liability whatsoever shall attach to, be imposed on or otherwise be
incurred by such controlling person, shareholder, director, officer, employee,
agent or Affiliate, as such, for any obligations of Purchaser under this
Agreement or any other Transaction Document or for any claim based on, in
respect of or by reason of such obligations or their creation.
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<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Share Pledge
Agreement as of the date first above written in New York, New York.
SECURED PARTY:
THE ANSCHUTZ CORPORATION
By:
----------------------------------------------------
Name:
Title:
Address: 2400 Anaconda Tower
555 - 17th Street
Denver, Colorado 80202
Telecopy: (303) 298-8881
GRANTOR:
[**FOR NUMBER CORPORATION SHARE PURCHASE AGREEMENT**]
604228 ALBERTA LTD.
By:
----------------------------------------------------
Name:
Title:
Address:
------------------------------------------
------------------------------------------
------------------------------------------
Telecopy:
------------------------------------------
S-23
<PAGE>
[** FOR COMPANY SHARE PLEDGE AGREEMENT **]
FOREST OIL CORPORATION
By:
----------------------------------------------------
Name:
Title:
Address: 1500 Colorado National Building
950 - 17th Street
Denver, Colorado 80202
Telecopy: (303) 592-2602
S-24
<PAGE>
EXHIBIT G
FORM OF
MORTGAGE DEBENTURE DEPOSIT AGREEMENT
This MORTGAGE DEBENTURE DEPOSIT AGREEMENT (this "AGREEMENT") is dated
as of __________, 1995, by __________, a corporation under the laws of ________
(the "MORTGAGOR") in favor of The Anschutz Corporation (who and whose successors
and assigns are herein called the "PURCHASER").
Terms not otherwise defined herein have the meaning stated in the
Purchase Agreement (as defined below).
R E C I T A L S
A. [**FOR FOREST CANADA MORTGAGE DEBENTURE DEPOSIT AGREEMENT**]
[**Forest Oil Corporation (the "COMPANY")**] [**FOR COMPANY MORTGAGE DEBENTURE
DEPOSIT AGREEMENT**] [**Mortgagor**] and the Purchaser have entered into a
Purchase Agreement dated as of the date hereof (such agreement as amended,
modified, restated or supplemented from time to time is herein called the
"PURCHASE AGREEMENT");
B. [**FOR FOREST CANADA MORTGAGE DEBENTURE DEPOSIT AGREEMENT**]
[**Mortgagor has entered into a Guaranty Agreement dated as of the date hereof
(the "GUARANTY AGREEMENT") pursuant to which Mortgagor has guaranteed the
Obligations**];
C. Mortgagor has issued its Mortgage Debenture dated as of the date
hereof in the amount of $14,500,000 (such debenture as amended, supplemented or
reissued is herein called the "Mortgage DEBENTURE"); and
D. Mortgagor has agreed to deposit the Mortgage Debenture with the
Purchaser as general and continuing collateral security for the payment of the
Obligations.
NOW THEREFORE in consideration of the premises and of the sum of
$10.00 now paid by the Purchaser to Mortgagor, the receipt and sufficiency of
which are hereby acknowledged, Mortgagor agrees with the Purchaser as follows:
<PAGE>
SECTION 1. DEPOSIT OF MORTGAGE DEBENTURE.
(a) The Mortgage Debenture is hereby delivered to and deposited with
the Purchaser to be held by the Purchaser as continuing collateral security for
the payment, observance and performance by Mortgagor of all obligations,
indebtedness and liabilities, present or future, direct or indirect, absolute or
contingent, matured or not, extended or renewed, pursuant to the Purchase
Agreement (including all Obligations (as defined in the Purchase Agreement)) and
the Purchaser Note, wheresoever and howsoever incurred and any ultimate unpaid
balance thereof (collectively, the "LIABILITIES").
(b) Notwithstanding anything herein or in any other Transaction
Document to the contrary, except as otherwise set forth in this subsection 1(b)
to the contrary, the Purchaser agrees (1) to look solely to the Mortgaged
Property (as defined in the Mortgage Debenture) and other Collateral for payment
of the principal amount of and interest on the Purchaser Note and for the
payment of the Enforcement Expenses, (2) that its sole recourse for the
repayment of the principal amount of and interest on the Purchaser Note and the
Enforcement Expenses shall be to the Mortgaged Property and other Collateral,
and (3) that it shall not seek repayment of the principal amount of or interest
on the Purchaser Note or the Enforcement Expenses or to enforce the Purchaser
Note or payment of such amounts by any action or proceeding wherein a money
judgment shall be sought against the Mortgagor, or any stockholder, officer,
director, agent or employee of the Mortgagor, except that the Purchaser may
bring an action for declaratory judgment, action for injunction or an action for
specific performance solely for the purpose of enabling the Purchaser to realize
upon the Mortgaged Property and other Collateral. The Purchaser may also bring
a foreclosure action, action for specific performance, or other appropriate
action or proceeding solely for the purpose of enabling the Purchaser to realize
upon (i) the Mortgagor's interest in the Collateral and (ii) the income arising
from the Mortgaged Property to the extent received, directly or indirectly, by
the Mortgagor after the occurrence of an Event of Default (the "RECOURSE
DISTRIBUTIONS") (collectively, the "DEFAULT COLLATERAL"); PROVIDED, HOWEVER,
that any judgment in any such action or proceeding shall be enforceable against
the Mortgagor only to the extent of any such Default Collateral; PROVIDED
FURTHER, HOWEVER, that the provisions of this subsection 1(b) shall not (A)
impair the validity of the Obligations or in any way affect or impair the Lien
of any Security Document or the right of the Purchaser to foreclose any Security
Document following the occurrence and during the continuation of an Event of
Default; (B) impair the right of the Purchaser to name the Mortgagor as a party
defendant in any action or suit for judicial foreclosure and sale under any
Security Document; (C) affect the validity or enforceability of the Purchaser
Note or the other Transaction Documents; (D) impair the right of the Purchaser
to obtain the appointment of a receiver with respect to the Mortgaged Property
and other Collateral; (E) impair the right of the Purchaser to bring suit for
recovery of a money judgment against the Mortgagor for recovery of damages
attributable to fraud or intentional misrepresentation by the Mortgagor or any
other person in connection with this Agreement, the Security Documents to which
the Mortgagor is a party or any other Transaction Documents to which the
Mortgagor is a party; (F) impair the right of the Purchaser to obtain a money
judgment against the Mortgagor or any stockholder, officer, director or employee
of the Mortgagor for the Recourse Distributions received by such
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person; (G) impair the right of the Purchaser to bring suit for recovery of a
money judgment against the Mortgagor or any stockholder, officer, director or
employee of the Mortgagor with respect to the Mortgagor's misappropriation of
escrows or income collected in advance with respect to the Mortgaged Property
and other Collateral; (H) impair the right of the Purchaser to obtain insurance
proceeds or condemnation proceeds due to the Purchaser pursuant to any Security
Document; (I) impair the right of the Purchaser to obtain a money judgment or
otherwise enforce the provisions of this Agreement; (J) prevent or in any way
hinder the Purchaser from exercising, or constitute a defense, counterclaim, or
other basis for relief in respect of the exercise of, any other remedy against
any or all of the Collateral for the Purchaser Note as provided in the Security
Documents; or (K) impair the right of the Purchaser to bring suit for recovery
of a money judgment against the Mortgagor or any stockholder, officer, director
or employee of the Mortgagor with respect to any misapplication of insurance
proceeds or condemnation proceeds approved or received by any such person with
respect to the Collateral. The parties agree that this Section 1(b) shall be
subject to 11 U.S.C. 1111(b) of the Bankruptcy Code.
SECTION 2. RIGHTS TO ENFORCE MORTGAGE DEBENTURE. Subject to
Section 1(b), the Purchaser is hereby authorized as the holder of the Mortgage
Debenture, and without selling or purchasing the Mortgage Debenture, to exercise
any and all rights of a holder of the Mortgage Debenture after demand by the
Purchaser and any default by Mortgagor in payment, observance or performance of
the Liabilities (herein called an "EVENT OF DEFAULT") and after an Event of
Default has occurred and is continuing, to enforce the security thereby
constituted and to exercise or cause to be exercised for its benefit all or any
of the remedies therein provided for the benefit of the holder of the Mortgage
Debenture. Except as provided in Section 6 hereof, nothing herein shall be
deemed to suspend or otherwise modify or affect the obligations of Mortgagor or
the rights of a holder of the Mortgage Debenture, all as provided therein.
SECTION 3. REALIZATION BY SALE. In addition to the foregoing
rights and remedies, the Purchaser shall be entitled, upon an Event of Default
occurring, to sell or otherwise dispose of the Mortgage Debenture by public sale
(including public auction) or private or closed tender or by private contract,
with only those notices, if any, as are required by applicable law, and with or
without advertising and without any other formality (except as otherwise
required by applicable law), and such sale or disposition shall be on such terms
and conditions as to title, credit and otherwise and as to upset or reserve bid
or price as may seem advantageous to the Purchaser, and the Purchaser shall not
be required to accept the highest or any bid or tender at any public sale. The
Purchaser may itself purchase the Mortgage Debenture unless prohibited from
doing so by applicable law. The Purchaser may rescind or vary any contract for
the sale or other disposition of the Mortgage Debenture and may resell the
Mortgage Debenture without being answerable for any loss occasioned thereby, and
may delay any sale or disposition of the Mortgage Debenture in whole or in part.
SECTION 4. POWER OF ATTORNEY. To give full effect hereto, the
Purchaser or any officer of the Purchaser is hereby appointed attorney
irrevocably of Mortgagor, with full
3
<PAGE>
power of substitution, for and in the name of Mortgagor to sign and seal all
documents and to fill in all blanks in signed powers of attorney and transfers
necessary in order to complete the transfer of the Mortgage Debenture to the
Purchaser or its officers or to any purchaser.
SECTION 5. RECORDS OF HOLDER. The records of the Purchaser as to
payment of any Liabilities being in default or of any demand for payment having
been made will be PRIMA FACIE evidence of such default or demand, absent
manifest error.
SECTION 6. SATISFACTION OF INTEREST. Full payment of interest
under the Purchaser Note for any period shall be deemed to satisfy the interest
payable for that same period under the Mortgage Debenture.
SECTION 7. CHARGES AND EXPENSES. Subject to Section 1(b),
Mortgagor shall pay to the Purchaser all reasonable out-of-pocket costs and
expenses, including all legal fees (on a solicitor and his own client basis) and
other expenses incurred by the Purchaser from time to time in the realization
and collection of or in respect of this Agreement. All such amounts shall
become part of the Liabilities, shall be payable by Mortgagor on demand, shall
bear interest at the rate set forth in the Mortgage Debenture in respect of the
principal amount thereof calculated from the date incurred by the Purchaser to
the date paid by Mortgagor, and such amounts and interest shall be secured by
the Mortgage Debenture. This provision shall not be construed to limit any
other provisions of the Transaction Documents dealing with the charge-back to
Mortgagor of expenses incurred by the Purchaser.
SECTION 8. EXTENSIONS. The Purchaser may grant renewals,
extensions of time and other indulgences, take, release and give up securities,
accept compositions, grant releases and discharges, perfect or fail to perfect
any securities, and otherwise deal or fail to deal with Mortgagor, guarantors,
sureties and others and with the Mortgage Debenture and other securities as the
Purchaser may see fit, all without prejudice to the liability of Mortgagor to
the Purchaser or the Purchaser's rights and powers under this Agreement or the
Mortgage Debenture.
SECTION 9. AMENDMENTS OR SUPPLEMENTAL MORTGAGE DEBENTURES. Any
amendments or supplemental mortgage debentures to the Mortgage Debenture shall,
upon execution by Mortgagor and delivery to the Purchaser, be deemed to be
deposited hereunder and included in the term "Mortgage Debenture" for the
purposes hereof, unless expressly provided otherwise.
SECTION 10. SECURITY IN ADDITION. The rights hereby constituted
are not in substitution for any other security for the Liabilities, or for any
other agreement between the parties whether or not creating any security
interest in all or part of the property of Mortgagor whether heretofore or
hereafter made, and such security and such agreement shall be deemed to be
continued and not affected hereby unless expressly provided to the contrary in a
writing signed by Mortgagor and the Purchaser. The taking of any action or
proceedings or refraining from so doing, or any other dealing with any other
security for the Liabilities or any part thereof shall not release or affect
this Agreement and neither the taking of any proceeding hereunder or
4
<PAGE>
under the Mortgage Debenture for the realization of any security shall release
or affect any other security held by the Purchaser for the payment, observance
or performance of the Liabilities.
SECTION 11. NOTICES. All notices, requests and other communications
to any party or under this Agreement shall be in writing. Communications may be
made by telecopy or similar writing. Each communication shall be given to the
party at its address stated on the signature pages of this Agreement or at any
other address as the party may specify for this purpose by notice to the other
party. Each communication shall be effective (1) if given by telecopy, when the
telecopy is transmitted to the proper address and the receipt of the
transmission is confirmed, (2) if given by mail, 72 hours after the
communication is deposited in the mails properly addressed with first class
postage prepaid or (3) if given by any other means, when delivered to the proper
address and a written acknowledgement of delivery is received.
SECTION 12. NO WAIVERS; REMEDIES; SPECIFIC PERFORMANCE.
(a) No failure or delay by any party in exercising any right,
power or privilege under this Agreement shall operate as a waiver of the right,
power or privilege. A single or partial exercise of any right, power or
privilege shall not preclude any other or further exercise of the right, power
or privilege or the exercise of any other right, power or privilege. The rights
and remedies provided in this Agreement shall be cumulative and not exclusive of
any rights or remedies provided by law.
(b) In view of the uniqueness of the transactions contemplated
hereby, neither of the parties would have an adequate remedy at law for money
damages in the event that this Agreement is not performed in accordance with its
terms, and therefore each of the parties agree that the other party shall be
entitled to specific enforcement of the terms of this Agreement in addition to
any other remedy to which it may be entitled, at law or in equity.
SECTION 13. AMENDMENTS, ETC. No amendment, modification,
termination, or waiver of any provision of this Agreement, and no consent to any
departure by a party to this Agreement from any provision of this Agreement,
shall be effective unless it shall be in writing and signed and delivered by the
other party to this Agreement, and then it shall be effective only in the
specific instance and for the specific purpose for which it is given.
SECTION 14. SUCCESSORS AND ASSIGNS.
(a) The Purchaser may assign its rights and delegate its
obligations under this Agreement; such assignee shall accept those rights and
assume those obligations for the benefit of the other party in writing in form
reasonably satisfactory to the other party. Thereafter, without any further
action by any person, all references in this Agreement to the "Purchaser", and
all comparable references, shall be deemed to be references to the transferee,
but the Purchaser shall not be released from any obligation or liability under
this Agreement.
5
<PAGE>
(b) Except as provided in Section 14(a), no party may assign its
rights under this Agreement. Any delegation in contravention of this Section
shall be void AB INITIO and shall not relieve the delegating party of any
obligation under this Agreement.
(c) The provisions of this Agreement shall be binding upon and
inure to the benefit of the parties to this Agreement and their respective
successors and assigns.
SECTION 15. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the Province of Alberta and
the laws of Canada. All rights and obligations of the parties shall be in
addition to and not in limitation of those provided by applicable law.
SECTION 16. COUNTERPARTS; EFFECTIVENESS. This Agreement may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as if all signatures were on the same instrument.
SECTION 17. SEVERABILITY OF PROVISIONS. Any provision of this
Agreement, that is prohibited or unenforceable in any jurisdiction shall, as to
that jurisdiction, be ineffective to the extent of the prohibition or
unenforceability without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of the provision in any other
jurisdiction.
SECTION 18. HEADINGS AND REFERENCES. Section headings in this
Agreement are included in this Agreement for the convenience of reference only
and do not constitute a part of this Agreement for any other purpose.
References to parties and sections in this Agreement are references to the
parties to or the sections of this Agreement, as the case may be, unless the
context shall require otherwise.
SECTION 19. ENTIRE AGREEMENT. Except as otherwise specifically
provided in this Section, this Agreement embodies the entire agreement and
understanding of the parties and supersede all prior agreements or
understandings with respect to the subject matters of those documents. [**FOR
FOREST CANADA MORTGAGE DEBENTURE DEPOSIT AGREEMENT**] [**The Mortgagor and the
Purchaser shall remain subject to the Guaranty Agreement dated as of the date
hereof.**] [**FOR COMPANY MORTGAGE DEBENTURE DEPOSIT AGREEMENT**] [**The
Mortgagor and the Purchaser shall remain subject to the other Transaction
Agreements and the Purchaser shall remain subject to clauses (1) through (3),
inclusive, of the letter agreement dated March 6, 1995 between the Mortgagor and
the Purchaser in accordance with the terms thereof.**]
SECTION 20. SURVIVAL. Except as otherwise specifically provided in
this Agreement, each representation, warranty or covenant of each party this
Agreement contained in or made pursuant to this Agreement shall survive each
Closing and remain in full force and effect, notwithstanding any investigation
or notice to the contrary or any waiver by any other
6
<PAGE>
party of a related condition precedent to the performance by the other party of
an obligation under this Agreement.
SECTION 21. EXCLUSIVE JURISDICTION. Each of the Mortgagor and the
Purchaser (1) agrees that any legal action with respect to this Agreement shall
be brought exclusively in the courts of New York (2) accepts for itself and in
respect of its property, generally and unconditionally, the jurisdiction of
those courts and (3) irrevocably waives any objection, including, without
limitation, any objection to the laying of venue or based on the grounds of
FORUM NON CONVENIENS, which it may now or hereafter have to the bringing of any
legal action in those jurisdictions; PROVIDED, HOWEVER, that each party may
assert in a legal action in any other jurisdiction or venue each mandatory
defense, third-party claim or similar claim that, if not so asserted in such
legal action, may not be asserted in an original legal action in the courts
referred to in clause (i) above.
SECTION 22. WAIVER OF JURY TRIAL. Each party waives any right to a
trial by jury in any Action to enforce or defend any right under this Agreement
or any amendment, instrument, document or agreement delivered, or which in the
future may be delivered, in connection with this Agreement and agrees that any
Action shall be tried before a court and not before a jury.
SECTION 23. AFFILIATE. Nothing contained in this Agreement shall
constitute the Purchaser an "AFFILIATE" of any of the Company and its
Subsidiaries within the meaning of Rule 13e-3 under the Exchange Act.
SECTION 24. NON-RECOURSE. No recourse under this Agreement shall be
had against any "controlling person" (within the meaning of Section 20 of the
Exchange Act) of the Purchaser or the shareholders, directors, officers,
employees, agents and Affiliates of the Purchaser or such controlling persons,
whether by the enforcement of any assessment or by any legal or equitable
proceeding, or by virtue of any Regulation, it being expressly agreed and
acknowledged that no personal liability whatsoever shall attach to, be imposed
on or otherwise be incurred by such controlling person, shareholder, director,
officer, employee, agent or Affiliate, as such, for any obligations of Purchaser
under this Agreement or any other Transaction Document or for any claim based
on, in respect of or by reason of such obligations or their creation.
7
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Mortgage
Debenture Agreement Deposit as of the date first above written in Edmonton,
Alberta, Canada.
PURCHASER:
THE ANSCHUTZ CORPORATION
By:
-------------------------------------------------------
Name:
Title:
Address: 2400 Anaconda Tower
555 Seventeenth Street
Denver, Colorado 80202
Telecopy: (303) 298-8881
MORTGAGOR:
[NAME]
By:
------------------------------------------------------
Name:
Title:
Address:
--------------------------------------------
--------------------------------------------
--------------------------------------------
Telecopy: ( )
--------------------------
S-8
<PAGE>
EXHIBIT H
FORM OF
CERTIFICATE OF AMENDMENT OF THE CERTIFICATE
OF INCORPORATION OF FOREST OIL CORPORATION
UNDER SECTION 805 OF THE BUSINESS CORPORATION LAW
The undersigned, being the President and the Secretary of Forest Oil
Corporation, do hereby certify and set forth:
1. The name of the Corporation is Forest Oil Corporation.
2. The Certificate of Incorporation of said Corporation was filed by the
Department of State on the 13th day of March, 1924, and restated Certificates of
Incorporation were filed by the Department of State on the 12th day of May,
1978, the 19th day of May, 1992, and the 14th day of October 1993.
3. The Certificate of Incorporation is hereby amended by the addition of
a new subparagraph F to Paragraph 3.II containing the following provisions
fixing the number, designation, relative rights, preferences, and limitations of
the Second Series Convertible Preferred Stock, par value $.01 per share, as
fixed by the Board pursuant to authority vested in it by the Certificate of
Incorporation:
F. SECOND SERIES CONVERTIBLE PREFERRED STOCK. The Corporation shall
have authority to issue up to 620,000 shares of Senior Preferred Stock to
be designated as "THE SECOND SERIES CONVERTIBLE PREFERRED STOCK," which
series shall have the following designations, relative rights, preferences
and limitations, in addition to those set forth in Paragraph 3 of the
Certificate of Incorporation of the Corporation (the shares of the Second
Series Senior Convertible Preferred Stock being hereinafter called the
"SECOND SERIES"):
(1) DIVIDENDS. As and when dividends are declared or paid on the
Common Stock, whether in cash, property or securities of the Corporation
(other than Common Stock or a right or Warrant referred to in Section 5(b)
or (c) below), the holders of the Second Series will be entitled to share
in such dividends in an amount equal to ten times the amount of the
dividend declared or paid on a share of Common Stock for each share of the
Second Series. The rights of the holders to receive dividends
<PAGE>
in the Second Series are junior and subordinate to the rights of the
holders of $.75 Convertible Preferred Stock to receive dividends to the
same extent that the rights of the holders of Common Stock are subordinate
in right to receive dividends to the rights of the holders of $.75
Convertible Preferred Stock to receive dividends.
(2) LIQUIDATION, DISSOLUTION OR WINDING UP. Upon any
liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary, the holders of shares of the Second Series shall
be entitled, before any distribution is made to any Common Stock or other
junior stock, to be paid the sum of $18.00 per share plus an amount equal
to any declared but unpaid dividends. The Second Series shall rank pari
passu with the $.75 Convertible Preferred Stock of the Corporation with
respect to distribution of assets upon any liquidation, dissolution or
winding up of the Corporation. In case the net assets of the Corporation
are insufficient to pay the holders of all outstanding shares of the Second
Series and any outstanding shares of parity stock the amount to which they
are respectively entitled, then the entire net assets of the Corporation
shall be distributed ratably among the holders of all outstanding shares of
the Second Series and any outstanding shares of parity stock in proportion
to the respective amounts that would be payable per share if such assets
were sufficient to permit payment of the amount to which they were entitled
in full. Following the completion of the distribution of the stated
liquidation preference to be paid to the holders of the Second Series and
any outstanding shares of parity stock, the holders of the Second Series
shall, after there shall have been paid $1.80 (as such amount per share may
be adjusted pursuant to Section 5(g), the "COMMON SHARE EQUALIZER AMOUNT")
in respect of each share of Common Stock, rank on a parity with the holders
of the Common Stock with respect to distributions on liquidation,
dissolution or winding up the Corporation and shall be entitled to receive
with respect to each share of the Second Series ten times the amount
received by each share of Common Stock of any and all assets remaining to
be paid or distributed.
Neither the merger or consolidation of the Corporation into or
with another corporation nor the merger of any other corporation into the
Corporation shall be deemed to be a liquidation, dissolution or winding up
of the Corporation within the meaning of this provision, but the sale,
lease or conveyance of all or substantially all of the Corporation's assets
will be deemed a liquidation, dissolution or winding up of the Corporation
within the meaning of this provision.
(3) VOTING RIGHTS. Except as otherwise provided by law, the
holders of the Second Series shall not be entitled to vote on any matter.
(4) AMENDMENT OF CERTIFICATE OF INCORPORATION. So long as any
shares of the Second Series are outstanding, the Corporation shall not
amend, alter or repeal any of the provisions of the Certificate of
Incorporation (which term includes each and all amendments for the purpose
of creating other series of Preferred Stock) so as to affect adversely the
rights, powers or preferences of the shares of the Second Series or of the
2
<PAGE>
holders thereof, without the consent of the holders of at least a majority
of the total number of outstanding shares of the Second Series, given in
person, by proxy or by vote at a meeting called for that purpose. An
amendment which increases the number of authorized shares of Preferred
Stock, or which creates another series of Preferred Stock, or which
authorizes the issuance of additional shares of the Second Series, in each
case ranking pari passu with the Second Series as to dividends and the
distribution of assets, or the issuance of such shares shall not require
the approval of the holders of the Second Series. However, in the
application of these provisions, any amendment which would authorize or
create any shares of stock ranking prior to the Second Series as to
dividends or as to distribution of assets upon liquidation, dissolution or
winding up of the Corporation shall be considered as affecting adversely
the rights of all outstanding shares of the Second Series.
(5) CONVERSION. The shares of the Second Series shall be
convertible, (x) at the option of the holders thereof (an "OPTIONAL
CONVERSION"), at any time before the fifth anniversary of the first
issuance of the Second Series (the "CONVERSION DATE") at the offices of
such duly appointed transfer agent for the shares of the Second Series, and
(y) automatically, without further action by the holder of the shares of
the Second Series as otherwise required by the next paragraph of this
Section 5, on the Conversion Date (the "MANDATORY CONVERSION"), in each
case into fully paid and nonassessable shares (calculated to the nearest
1/1,000 of a share) of Common Stock of the Corporation, at the rate of ten
shares of Common Stock for each share of the Second Series. The rate at
which shares of Common Stock shall be deliverable in exchange for shares of
the Second Series upon conversion thereof is hereinafter referred to as the
"Conversion Rate" for shares of the Second Series. The Conversion Rate
shall be subject to further adjustment from time to time in certain
instances as hereinafter provided. In no event, however, shall the
Conversion Rate be adjusted such that Common Stock would be issued at a
Conversion Rate such that for the liquidation preference, plus accumulated
and unpaid dividends, of a converted share of the Second Series would be
less than $.10 per share of Common Stock (the par value thereof). Upon
conversion, the Corporation shall make no payment or adjustment on account
of dividends accrued but unpaid on the shares of the Second Series
surrendered for conversion; however a holder of shares of the Second Series
who converts such shares after the record date for a dividend and on or
before the dividend payment date will receive the dividend payable on such
shares of the Second Series on such dividend payment date. As used herein,
the term "business day" shall mean any Monday, Tuesday, Wednesday, Thursday
or Friday on which banks in The City of New York are not authorized to
close.
Before any holder of shares of the Second Series shall be
entitled to convert the same into Common Stock in connection with an
Optional Conversion, such holder shall surrender the certificate or
certificates for such shares of the Second Series at the office of the
transfer agent which certificate or certificates, if the Corporation shall
so request, shall be duly endorsed to the Corporation or in blank, and
shall give written
3
<PAGE>
notice to the Corporation at said office that such holder elects so to
convert said shares of the Second Series and shall state in writing therein
the name or names and respective amounts in which such holder wishes the
certificate or certificates for Common Stock to be issued.
As of and after the Conversion Date, the shares of the Second
Series shall be deemed to have been converted into shares of Common Stock
as provided herein on the transfer books of the Common Stock of the
Corporation.
The Corporation will, as soon as practicable after (x) the
surrender of certificates for shares of the Second Series in connection
with an Optional Conversion, accompanied by the written notice and the
statement above prescribed, and (b) the surrender of certificates for
shares of the Second Series after the Conversion Date, issue and deliver at
the office of the transfer agent, to the person for whose account such
shares were so surrendered, or to his nominee or nominees, certificates for
the number of full shares of Common Stock to which he shall be entitled as
aforesaid, together with a cash adjustment for any fraction of a share as
hereinafter stated, if not evenly convertible. Subject to the following
provisions of this paragraph with respect to an Optional Conversion, such
conversion shall be deemed to have been made as of the date of such
surrender of the shares of the Second Series to be converted; and the
person or persons entitled to receive the Common Stock issuable upon an
Optional Conversion of such shares of the Second Series shall be treated
for all purposes as the record holder or holders of such Common Stock on
such date. The Corporation shall not be required to convert, and no
surrender of shares of the Second Series shall be effective for that
purpose with respect to an Optional Conversion, while the stock transfer
books of the Corporation are closed for any purpose; but the surrender of
shares of the Second Series for conversion with respect to an Optional
Conversion, during any period while such books are closed shall become
effective for conversion immediately upon the reopening of such books, as
if the conversion had been made on the date such shares were surrendered,
and at the Conversion Rate in effect at the date of such surrender.
The Conversion Rate for shares of the Second Series and the
Common Share Equalizer Amount shall be subject to further adjustment from
time to time as follows:
(a) If the Corporation shall at any time pay a dividend on
its Common Stock (including, if applicable, shares of such stock held
by the Corporation in treasury) in shares of its Common Stock,
subdivide its outstanding shares of Common Stock into a larger number
of shares or combine its outstanding shares of Common Stock into a
smaller number of shares, the Conversion Rate in effect immediately
prior thereto shall be adjusted so that each share of the Second
Series shall thereafter be convertible into the number of shares of
Common Stock which the holder of a share of the Second Series would
have been entitled to receive after
4
<PAGE>
the happening of any of the events described above had such share been
converted immediately prior to the happening of such event. An
adjustment made pursuant to this paragraph (a) shall become effective
retroactively to the record date in the case of a dividend and shall
become effective on the effective date in the case of a subdivision or
combination.
(b) If the Corporation shall issue rights or warrants to
all holders of shares of Common Stock for the purpose of entitling
them (for a period not exceeding forty-five (45) days from the date of
issuance) to subscribe for or purchase shares of Common Stock at a
price per share (taking into account any consideration received by the
Corporation for such rights or warrants the value of such
consideration, if other than cash, to be determined in good faith by
the Board of Directors) less than the average market price per share
(determined as provided below) of the Common Stock on the declaration
date for such issuance, then in each such case the number of shares of
Common Stock into which each share of the Second Series shall after
such record date be convertible shall be determined by multiplying the
number of shares of Common Stock into which each share of the Second
Series was convertible on the date immediately preceding such
declaration date by a fraction the numerator of which shall be the sum
of the number of shares of Common Stock outstanding on such
declaration date and the number of additional shares of Common Stock
so offered for subscription or purchase in connection with such rights
or warrants, and the denominator of which shall be the sum of the
number of shares of Common Stock outstanding on such declaration date
and the number of shares of Common Stock which the aggregate offering
price of the total number of shares so offered would purchase at such
average market price; provided, however, if all the shares of Common
Stock offered for subscription or purchase are not delivered upon the
exercise of such rights or warrants, upon the exercise of such rights
or warrants the number of shares of Common Stock into which each share
of the Second Series shall thereafter be convertible shall be
readjusted to the number of shares which would have been in effect had
the numerator and the denominator of the foregoing fraction and the
resulting adjustment been made based upon the number of shares of
Common Stock actually delivered upon the exercise of such rights or
warrants rather than upon the number of shares of Common Stock offered
for subscription or purchase. Such adjustment shall be made whenever
any such rights or warrants are issued, and shall become effective on
the date of issuance retroactive to the record date for determination
of shareholders entitled to receive such rights or warrants. For the
purposes of this paragraph (b), the number of shares of Common Stock
at any time outstanding shall not include shares held in the treasury
of the Corporation.
5
<PAGE>
(c) If the Corporation shall distribute to all the holders
of Common Stock (i) any rights or warrants to subscribe for or
purchase any security of the Corporation (other than those referred to
in paragraph (b) above) or any evidence of indebtedness or other
securities of the Corporation (other than Common Stock), or (ii)
assets (other than cash) having a fair market value (as determined in
a resolution adopted by the Board of Directors of the Corporation,
which shall be conclusive evidence of such fair market value) in an
amount during any 12-month period equal to more than 10% of the market
capitalization (as defined below) of the Corporation, then in each
such case the number of shares of Common Stock into which each share
of the Second Series shall be convertible after the record date for
determination of the shareholders entitled to receive such
distribution shall be determined by multiplying the number of shares
of Common Stock into which each share of the Second Series was
theretofore convertible on the day immediately preceding the date of
declaration or authorization by the Board of Directors of the
Corporation of such distribution by a fraction the numerator of which
shall be the average market price per share (determined as provided in
paragraph (b) above) of the Common Stock on such declaration date and
the denominator of which shall be such average market price per share
less the then fair market value (as determined by the Board of
Directors of the Corporation as provided above) of the portion of the
assets, rights, warrants, evidences of indebtedness or other
securities so distributed applicable to one (1) share of Common Stock.
Such adjustment shall become effective retroactively immediately after
the declaration date. The term "market capitalization" shall mean an
amount determined by multiplying the number of shares of Common Stock
outstanding on such declaration date by the average market price per
share (determined as provided in paragraph (e) below) of the Common
stock on such declaration date.
(d) In case of any capital reorganization or any
reclassification (other than a change in par value) of the capital
stock of the Corporation or of any conversion of the Common Stock into
securities of another corporation or in case of the consolidation or
merger of the Corporation with or into any other person (other than a
merger which does not result in any reclassification, conversion,
exchange or cancellation of outstanding shares of Common Stock) or in
case of any sale or conveyance of all or substantially all of the
assets of the Corporation, the person formed by such consolidation or
resulting from such capital reorganization, reclassification or merger
or which acquires such assets, as the case may be, shall make
provision in the articles or certificate of incorporation of such
person such that each share of the Second Series then outstanding
shall thereafter be convertible into the kind
6
<PAGE>
and amount of shares of stock, other securities, cash and other
property receivable upon such capital reorganization, reclassification
of capital stock, consolidation, merger, sale or conveyance, as the
case may be, by a holder of the number of shares of Common Stock into
which such share of the Second Series was convertible immediately
prior to the effective date of such capital reorganization,
reclassification of capital stock, consolidation, merger, sale or
conveyance, assuming (i) such holder of Common Stock of the
Corporation is not a person with which the Corporation consolidated or
into which the Corporation merged or which merged into the Corporation
or to which such sale or transfer was made as the case may be
("constituent entity"), or an affiliate of a constituent entity, and
(ii) such person failed to exercise his rights of election, if any, as
to the kind or amount of securities, cash and other property
receivable upon such capital reorganization, reclassification of
capital stock, consolidation, merger, sale or conveyance and, in any
case appropriate adjustment (as determined by the Board of Directors)
shall be made in the application of the provisions herein set forth
with respect to rights and interests thereafter of the holder of the
shares of the Second Series, to the end that the provisions set forth
herein (including the specified changes in and other adjustments of
the Conversion Rate) shall thereafter be applicable, as near as
reasonably may be, in relation to any shares of stock or other
securities or other property thereafter deliverable upon the
conversion of the shares of the Second Series.
(e) For the purpose of any computation under this
Section 5, the average market price per share of Common Stock on any
date shall be the average of the daily closing prices for the fifteen
(15) consecutive trading days commencing twenty (20) trading days
before the date of declaration or authorization by the Board of
Directors of the Corporation of such issuance or distribution. The
closing price for each day shall be the last reported sales price
regular way or, in case no such sale takes place on such day, the
average of the closing bid and asked prices regular way, in either
case on the principal national securities exchange on which the Common
Stock is listed or admitted to trading, or, if not listed or admitted
to trading on any national securities exchange, on NASDAQ National
Market System or, if the Common Stock is not listed or admitted to
trading on any national securities exchange or quoted on NASDAQ
National Market System, the average of the closing bid and asked
prices as furnished by any New York Stock Exchange member firm
selected from time to time by the Board of Directors of the
Corporation for such purpose or if no such prices are available, the
fair market value of the Common Stock as determined by good faith
action of the Board of Directors of the Corporation.
7
<PAGE>
(f) All calculations under this Section 5 shall be made to
the nearest one-thousandth of a share of Common Stock.
(g) Whenever the Conversion Rate is adjusted as herein
provided, the Common Share Equalizer Amount shall be adjusted by
multiplying the Common Share Equalizer Amount immediately prior to
such adjustment by a fraction, the numerator of which shall be the
number of shares of Common Stock into which each share of the Second
Series is so convertible immediately prior to such adjustment, and the
denominator of which shall be the number of shares of Common Stock
into which each share of the Second Series is so convertible
immediately thereafter.
(h) For the purpose of this Section 5, the term "shares of
Common Stock" shall mean (i) the class of stock designated as the
Common Stock of the Corporation at the date of this Certificate of
Amendment or (ii) any other class of stock resulting from successive
changes or reclassification of such shares consisting solely of
changes in par value, or from par value to no par value, or from no
par value to par value. In the event that at any time, as a result of
an adjustment made pursuant to paragraph (a) through (d) above, the
holder of the shares of the Second Series shall become entitled to
receive any shares of the Corporation other than shares of Common
Stock, thereafter the number of such other shares so receivable upon
conversion of any share of Second Series and the Common Share
Equalizer Amount shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the
provisions with respect to shares of Common Stock contained in
paragraphs (a) through (g), inclusive, above, with respect to the
shares of Common Stock.
(i) Upon the expiration of any rights, options, warrants or
conversion or exchange privileges, if any thereof shall not have been
exercised, the number of shares of Common Stock into which each share
of Second Series shall thereafter be convertible and the Common Share
Equalizer Amount shall, upon such expiration, be readjusted and shall
thereafter be such as it would have been had it been originally
adjusted (or had the original adjustment not been required, as the
case may be) as if (1) the only shares of Common Stock so issued were
the shares of Common Stock, if any, actually issued or sold upon the
exercise of such rights, options, warrants, exchange privileges or
conversion rights and (2) such shares of Common Stock, if any, were
issued or sold for the consideration actually received by the
Corporation upon such exercise plus the consideration, if any,
actually received by the Corporation for the issuance, sale or grant
of all of such rights, options, warrants or
8
<PAGE>
conversion rights whether or not exercised; PROVIDED that no such
readjustment shall have the effect of decreasing the number of shares
of Common Stock issuable upon the conversion of shares of the Second
Series or the Common Share Equalizer Amount by an amount in excess of
the amount of the adjustment initially made in respect to the
issuance, sale or grant of such rights, options, warrants or
conversion rights.
Whenever the Conversion Rate is adjusted as provided in this
paragraph 5, the Corporation shall forthwith file with the transfer agent
for the shares of the Second Series a certificate signed by the President
or one of the Vice Presidents of the Corporation and by its Treasurer or an
Assistant Treasurer, stating the adjusted Conversion Rate and the adjusted
Common Share Equalizer Amount determined as provided in this paragraph 5.
Such certificate shall show in detail the facts requiring such adjustment.
Whenever the Conversion Rate or the Common Share Equalizer Amount is
adjusted, the Corporation will forthwith cause a notice stating the
adjustment and the Conversion Rate to be mailed to the respective holders
of record of the shares of the Second Series. The transfer agent shall be
under no duty to make any inquiry or investigation as to the statements
contained in any such certificate or as to the manner in which any
computation was made, but may accept such certificate as conclusive
evidence of the statements therein contained, and each transfer agent shall
be fully protected with respect to any and all acts done or action taken or
suffered by it in reliance thereon. The transfer agent in its capacity as
transfer agent shall not be deemed to have any knowledge with respect to
any change of capital structure of the Corporation unless and until it
receives a notice thereof pursuant to the provisions of this paragraph and
in the absence of any such notice each transfer agent may conclusively
assume that there has been no such change.
The Corporation shall at all times reserve and keep available,
out of its authorized and unissued Common Stock, solely for the purpose of
effecting the conversion of the shares of the Second Series, such number of
shares as shall from time to time be sufficient to effect the conversion of
all shares of the Second Series from time to time outstanding. The
Corporation shall from time to time in accordance with the laws of New
York, increase the authorized amount of its Common Stock if at any time the
number of shares of Common Stock remaining unissued shall not be sufficient
to permit the conversion of all the then outstanding shares of the Second
Series.
No fractions of shares of Common Stock are to be issued upon
conversion, but in lieu thereof the Corporation will pay therefor in cash
based on the closing price (determined as provided in the last sentence of
paragraph (e) above) of the Common Stock on the business day immediately
preceding the day of conversion. If more than one certificate representing
shares of the Second Series shall be surrendered for conversion at one time
by the same holder, the number of full shares issuable upon conversion
thereof shall be computed on the basis of the aggregate number of shares of
the Second Series so surrendered.
9
<PAGE>
The Corporation will pay any and all issue and other taxes that
may be payable in respect of any issue or delivery of shares of Common
Stock on conversion of shares of the Second Series pursuant hereto. The
Corporation shall not, however, be required to pay any tax which may be
payable in respect of any transfer involved in the issue and delivery of
Common Stock in a name other than in which the shares of the Second Series
so converted was registered, and no such issue or delivery shall be made
unless and until the person requesting such issue has paid to the
Corporation the amount of any such tax, or has established, to the
satisfaction of the Corporation, that such tax has been paid.
In the event (i) that the Corporation shall pay any dividend or
make any distribution to the holders of shares of Common Stock otherwise
than in cash charged against capital surplus, consolidated net earnings or
retained earnings of the Corporation and its Consolidated Subsidiaries; or
(ii) that the Corporation shall offer for subscription or purchase, pro
rata, to the holders of shares of Common Stock any additional shares of
stock of any class or any securities convertible into or exchangeable for
stock of any class; or (iii) of any reclassification or change of
outstanding shares of the class of Common Stock issuable upon the
conversion of the shares of the Second Series (other than a change in par
value, or from par value to no par value, or from no par value to par
value, or as a result of a subdivision or combination), or of any merger or
consolidation of the Corporation with, or merger of the Corporation into,
another corporation (other than a merger or consolidation in which the
Corporation is the continuing corporation and which does not result in any
reclassification or change of outstanding shares of Common Stock issuable
upon conversion of the shares of the Second Series) or of any sale or
conveyance to another corporation of the property of the Corporation as an
entirety or substantially as an entirety, or (iv) of any dissolution,
liquidation or winding up of the Corporation, then in any such event the
Corporation shall cause to be filed with the transfer agent for the Second
Series, and shall cause to be mailed to the holders of record of the Second
Series, at their last address as they shall appear upon the stock transfer
books of the Corporation, at least 15 days prior to any applicable record
date hereinafter specified, a notice stating (x) the date on which a record
is to be taken for the purpose of any of the events specified in clauses
(i) and (ii) of this paragraph, or (y) the effective dates of any of the
events specified in clauses (iii) and (iv) of this paragraph. No failure
to give such notice or any defect therein or in the mailing thereof shall
affect the validity of the corporate action required to be specified in
such notice.
Upon conversion of the Second Series the stated capital of the
Common Stock issued upon such conversion shall be the aggregate par value
thereof, and the stated capital and capital surplus (capital in excess of
par value) of the Corporation shall be correspondingly increased or reduced
to reflect the difference between the stated capital of the Second Series
so converted and the par or stated value of the Common Stock issued upon
conversion.
10
<PAGE>
4. The foregoing amendment to the Certificate of Corporation of Forest
Oil Corporation was authorized by the majority vote by of the Board of the
Corporation at a meeting of the Board of Directors on the __ day of __________,
1995 in accordance with Section 805 the Business Corporation Law.
11
<PAGE>
IN WITNESS WHEREOF, this certificate has been executed on behalf of
the Corporation by its President and its Secretary on this __ day of __________,
1995 and the undersigned hereby affirm the truth of the statements contained
herein under the penalties of perjury.
____________________________________
Robert S. Boswell
President
____________________________________
Daniel L. McNamara
Secretary
S-12
<PAGE>
EXHIBIT I
FORM OF
TRANCHE A WARRANT
WARRANT TO PURCHASE COMMON STOCK
THE WARRANT REPRESENTED BY THIS CERTIFICATE AND THE SHARES OF COMMON STOCK
ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF EXCEPT IN COMPLIANCE WITH SAID ACT. THIS WARRANT AND SUCH SHARES
ARE ALSO SUBJECT TO THE RESTRICTIONS CONTAINED IN A REGISTRATION RIGHTS
AGREEMENT DATED AS OF __________, 1995 AND THE RESTRICTIONS CONTAINED IN A
SHAREHOLDERS AGREEMENT DATED AS OF __________, 1995, COPIES OF WHICH ARE ON FILE
AT THE OFFICE OF THE SECRETARY OF THE COMPANY.
Certificate Number Certificate for
______________________ 19,444,444
Warrants
This certificate is transferable
in Denver, Colorado
FOREST OIL CORPORATION
Incorporated under the laws of the State of New York
THIS CERTIFIES THAT, for value received, THE ANSCHUTZ CORPORATION, a
Kansas corporation, or registered assigns, is entitled to purchase from Forest
Oil Corporation, a New York corporation (the "COMPANY"), at any time after the
date of this Warrant and prior to 5:00 P.M., Denver time, on the Expiration
Date, at the purchase price of $2.10 per share (as such price may be adjusted
pursuant to Section 7, the "WARRANT PRICE") the number of shares of common
stock, $.10 par value per share, together with the associated rights distributed
to the
<PAGE>
holders of shares of Company common stock pursuant to the Rights Agreement
dated as of October 14, 1993 between the Company and Securities Trust
Corporation, as Rights Agent, as amended (the "COMMON STOCK"), which is equal
to the number of Warrants set forth above (as such number of shares may be
adjusted pursuant to Section 7, the "WARRANT SHARES").
SECTION 1. TRANSFERABILITY OF WARRANTS.
1.1 THE WARRANT REGISTER AND REGISTRATION. The Secretary of the
Company shall keep or cause to be kept at the office of the Company books for
the registration and transfer (the "WARRANT REGISTER") of this Warrant
certificate and any other Warrant certificate issued hereunder (collectively
including the initial Warrant, the "WARRANTS"). The Warrants shall be numbered
and shall be registered in the Warrant Register as they are issued. The Company
and the Secretary of the Company shall be entitled to treat a person as the
owner in fact for all purposes of each Warrant registered in such person's name
(each registered owner is herein referred to as a "HOLDER") and shall not be
bound to recognize any equitable or other claim to or interest in such Warrant
on the part of any other person, and shall not be liable for any registration of
transfer of Warrants that are registered or to be registered in the name of a
fiduciary or the nominee of a fiduciary unless made with the actual knowledge
that a fiduciary or nominee is committing a breach of trust in requesting such
registration of transfer, or with such knowledge of such facts that its
participation therein amounts to bad faith.
1.2 TRANSFER. The Warrants shall be transferable only on the Warrant
Register upon delivery thereof duly endorsed by the Holder or by his duly
authorized attorney or representative, which endorsement shall be guaranteed by
a bank or trust company located in the United States of America or by a broker
or dealer that is a member of a registered national securities exchange, or
accompanied by proper evidence of succession, assignment or authority to
transfer. In all cases of transfer by an attorney, the original power of
attorney, duly approved, or an official copy thereof, duly certified, shall be
deposited and remain with the Secretary of the Company. In case of transfer by
executors, administrators, guardians or other legal representatives, duly
authenticated evidence of their authority shall be produced, and may be required
to be deposited and remain with the Secretary of the Company in its discretion.
Upon any registration of transfer, the Company shall deliver a new Warrant or
Warrants to the persons entitled thereto. The Holder may transfer the Warrants
and the Warrant Shares without registration under the Securities Act of 1933
only if the Holder shall deliver to the Company an opinion of counsel reasonably
satisfactory to the Company that such registration is unnecessary.
1.3 FORM OF WARRANT. The Warrants shall be executed on behalf of the
Company by its Chairman of the Board, President or one of its Vice Presidents
and attested to by the Secretary of the Company or an Assistant Secretary. The
signature of any of such officers on the Warrants may be manual or facsimile.
SECTION 2. EXCHANGE OF WARRANT. Each Warrant may be exchanged at the
option of the Holder thereof for another Warrant or Warrants entitling the
Holder thereof to purchase a like aggregate number of Warrant Shares as the
Warrant or Warrants surrendered then entitle such
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Holder to purchase. Any Holder desiring to exchange a Warrant or Warrants
shall make such request in writing delivered to the Secretary of the Company,
and shall surrender, properly endorsed, which endorsement shall be guaranteed
as provided in Section 1.2 hereof if the new Warrant or Warrants are to be
issued other than in the name of the Holder, the Warrant or Warrants to be so
exchanged at the office of the Secretary of the Company. Thereupon, a new
Warrant or Warrants, as the case may be, as so requested, shall be delivered
to the person entitled thereto.
SECTION 3. TERM OF WARRANTS; EXERCISE OF WARRANTS.
3.1 TERM OF WARRANTS.
(a) Each Holder shall have the right until 5:00 P.M., Denver time,
on __________, 1996(1) (the "INITIAL EXPIRATION DATE" and, as extended pursuant
to Section 3.1(b), if applicable, the "EXPIRATION DATE"), to purchase from the
Company the number of fully paid and nonassessable Warrant Shares that the
Holder may at the time be entitled to purchase on exercise of such Warrants at
the Warrant Price. After the Expiration Date, any previously unexercised
Warrants shall be void, have no value and be of no further effect.
(b) The Initial Expiration Date shall be extended to
__________, 199_(2) if, on the Initial Expiration Date, either (1) pursuant
to Section 3.3(a) of the Shareholders Agreement dated as of _________, 1995(3)
between the Company and The Anschutz Corporation, the Holder may not exercise
all Warrants then held by the Holder and other persons subject to such
provisions, assuming for this purpose that there are no exceptions to the
restriction stated in Section 3.3(a), and/or (2) during a period of 12
consecutive months beginning on or after ___________, 1995(3) and ending on
or before the Initial Expiration Date, the Company shall have issued or sold
any Equity Securities (as defined below) as consideration, in whole or part,
for the acquisition directly or indirectly by the Company or any other person
of any business or property (whether effected by the purchase thereof, the
merger or consolidation of two or more persons, the organization by two or
more persons of a partnership, joint venture or other joint investment
vehicle or by any other means) in one or more transactions in which the value
of all Equity Securities transferred as consideration for such businesses and
properties was in excess of $60,000,000 in the aggregate, PROVIDED that, with
respect to the condition stated in this clause (2), the Holder shall have
agreed in writing for the benefit of the Company that, during the period of
nine consecutive months beginning on the date on which the condition stated
in this clause (2) shall have been satisfied, the Holder shall not transfer
to any person the beneficial ownership of any shares of Common Stock except
in one or more transactions referred to in one or more of clauses (d), (e),
(f), (g) (h), (i) and (j) of Section 3.2 of the Shareholders Agreement.
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(1) The date that is 18 months after the Second Closing Date.
(2) The date that is 36 months after the Second Closing Date.
(3) The date that is the Second Closing Date.
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For the purposes of this Section 3.1(b), the term "EQUITY SECURITIES" means
any shares of the capital stock of the Company or any other securities
convertible into or exchangeable or exercisable for any shares of its capital
stock, any rights to subscribe for or to purchase, any options for the
purchase of, or any calls, commitments or claims of any character relating
to, any shares of its capital stock or any securities convertible into or
exchangeable or exercisable for any of the foregoing. If shares of Common
Stock were included in any such consideration in respect of any such
acquisition, the Company shall promptly determine the value of such shares as
of the respective dates of issuance or sale in a manner consistent with the
valuation procedure specified in Section 7.1(e) and shall disclose such
information to the Holder in writing. The Board of Directors of the Company
shall promptly determine in good faith the value of any other such
consideration, other than cash (the "NONCASH CONSIDERATION"), and shall also
disclose such information to the Holder in writing. If the Holder shall by
written notice to the Company dispute the value of any Noncash Consideration
so determined by the Board of Directors of the Company, the value of such
Noncash Consideration shall be determined by an appraisal of the Noncash
Consideration. The appraisal shall be undertaken by two qualified appraisers
with experience in the oil and gas business, of whom one shall be selected by
the Company and the other shall be selected by the Holder, each within seven
days after delivery of such written notice to the Company by the Holder. If
either the Company or the Holder fails to appoint an appraiser within seven
days, then the Holder or the Company, as the case may be, shall be entitled
to appoint the second appraiser. The value of such Noncash Consideration
shall be the value determined by those appraisers, who shall consider such
information as may be provided to them by the Company and the Holder and such
other information as they may deem relevant to the valuation of the
interests. If the two appraisers cannot agree on such value within 14 days
after the appointment of the second appraiser, then within seven days they
shall select a third qualified appraiser with experience in the oil and gas
business. The third appraiser shall consider such information as may be
provided to its by the Company, the Holder and the other two appraisers and
such other information as it may deem relevant to the valuation of such
Noncash Consideration and within 14 days after its appointment independently
calculate the value of such Noncash Consideration. The value of such Noncash
Consideration shall be the average of the two values determined by the
appraisers which are closest to each other in amount. The Company and the
Holder shall make available to the appraisers all of the books and records of
the Company and such other information as the appraisers shall reasonably
request in order to ascertain the value of such Noncash Consideration. The
fees and disbursements of the appraisers shall be paid by the Company.
3.2 EXERCISE OF WARRANTS. A Warrant may be exercised upon surrender
to the Company in care of the Secretary of the Company, of the Warrant to be
exercised, together with the duly completed and signed form of Election to
Purchase attached hereto, and upon payment to the Company of the Warrant Price
for the number of Warrant Shares in respect of which such Warrant is then
exercised. Payment of the aggregate Warrant Price shall be made by wire
transfer of immediately available funds in accordance with written wire transfer
instructions to be provided by the Company. Subject to Section 8, upon such
surrender of the Warrant and payment of the Warrant Price as aforesaid, the
Company shall issue and cause to be delivered with all reasonable dispatch to or
upon the written order of the Holder and in such name or
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names as the Holder may designate, a certificate or certificates for the
number of full Warrant Shares so purchased upon the exercise of such
Warrants, together with cash, as provided in Section 8, in respect of any
fractional Warrant Share otherwise issuable upon such surrender. Such
certificates 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 Warrant Shares as of the date of the surrender of
such Warrants and payment of the Warrant Price; PROVIDED, HOWEVER, that if,
at the date of surrender of such Warrant and payment of such Warrant Price,
the transfer books for the Warrant Shares or other class of stock purchasable
upon the exercise of such Warrant shall be closed, the certificates for the
Warrant Shares in respect of which such Warrant is then exercised shall be
issuable as of the date on which such books shall next be opened (whether
before or after the Expiration Date) and until such date the Company shall be
under no duty to deliver any certificate for such Warrant Shares; PROVIDED,
FURTHER that the transfer books, unless otherwise required by law, shall not
be closed at any one time for a period longer than 20 days. The rights of
purchase represented by the Warrant shall be exercisable, at the election of
the Holders thereof, either in full or from time to time in part. If a
Warrant is exercised in respect of less than all of the Warrant Shares
purchasable on such exercise at any time prior to the Expiration Date, a new
Warrant evidencing the remaining Warrant Shares will be issued, and the
Company shall deliver the new Warrant pursuant to the provisions of this
Section.
SECTION 4. PAYMENT OF TAXES, LEGEND.
4.1 PAYMENT OF TAXES. The Company will pay all documentary stamp
taxes, if any, attributable to the initial issuance of Warrant Shares upon the
exercise of the Warrant; PROVIDED, HOWEVER, that the Company shall not be
required to pay any tax or taxes that may be payable in respect of any transfer
involved in the issue or delivery of any Warrant or certificates for Warrant
Shares in a name other than that of the registered Holder of such Warrant in
respect of which such Warrant Shares are initially issued, and the Company shall
not be required to issue or deliver such certificates unless or until the person
or persons requesting the issuance thereof shall have paid to the Company the
amount of such tax or shall have established to the satisfaction of the Company
that such tax has been paid.
4.2 LEGENDS.
(a) Each certificate for Warrant Shares and any certificate issued
in exchange therefor or on conversion or upon transfer, except certificates
issued in connection with a sale registered under the Securities Act of 1933, as
amended, and except as provided below, shall bear the legends to the following
effect:
1. "The shares represented by this certificate have not been
registered under the Securities Act of 1933 and may not be offered, sold,
transferred or otherwise disposed of except in compliance with said Act."
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2. "The shares represented by this certificate are subject to
restrictions set forth in the Registration Rights Agreement dated as of
__________, 1995, a copy of which is on file in the office of the Secretary
of the Company."
3. "The shares represented by this certificate are subject to the
restrictions contained in a Shareholders Agreement dated as of __________,
1995, a copy of which is on file in the office of the Secretary of the
Company."
4. "This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement between Forest Oil
Corporation and Mellon Securities Trust Company, dated as of October 14,
1993 (the "Rights Agreement"), the terms of which are hereby incorporated
herein by reference and a copy of which is on file at the principal
executive offices of Forest Oil Corporation. Under certain circumstances,
as set forth in the Rights Agreement, those Rights will be evidenced by
separate certificates and will no longer be evidenced by this certificate.
Forest Oil Corporation will mail to the holder of this certificate a copy of
the Rights Agreement without charge after receipt of a written request
therefor. As described in the Rights Agreement, Rights issued to or
acquired by any Acquiring Person (as defined in the Rights Agreement) shall,
under certain circumstances, become null and void."
(b) The legend stated in Section 4.2(a)(1) shall be removed by
delivery of one or more substitute certificates without such legend if the
holder thereof shall have delivered to the Company a copy of a letter from the
staff of the Securities and Exchange Commission or an opinion of counsel, in
form and substance reasonably satisfactory to the Company, to the effect that
the legend is not required for purposes of the Securities Act of 1933, as
amended.
(c) The legend stated in Section 4.2(a)(2) shall be removed at such
time as the Warrant Shares are no longer subject to the Registration Rights
Agreement referenced therein.
(d) The legend stated in Section 4.2(a)(3) shall be removed in
accordance with the terms of the Shareholders Agreement.
SECTION 5. MUTILATED OR MISSING WARRANTS. If any Warrant shall be
mutilated, lost, stolen or destroyed, the Company shall issue and deliver in
exchange and substitution for and upon cancellation of the mutilated Warrant, or
in lieu of and substitution for the Warrant lost, stolen or destroyed, a new
Warrant of like tenor and representing an equivalent right or interest; but only
upon receipt of evidence reasonably satisfactory to it. An applicant for such a
substitute Warrant shall also comply with such other reasonable requirements and
pay such other reasonable charges as the Company may prescribe.
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SECTION 6. RESERVATION OF WARRANT SHARES; PURCHASE OF WARRANTS.
6.1 RESERVATION OF WARRANT SHARES. There have been reserved, and the
Company shall at all times keep reserved, free from preemptive rights, out of
its authorized Common Stock, the number of shares of Common Stock sufficient to
provide for the exercise of the rights of purchase represented by the
outstanding Warrants. The transfer agent and every subsequent transfer agent
for any shares of the Company's capital stock issuable upon the exercise of any
of the rights of purchase will be irrevocably authorized and directed at all
times to reserve such number of authorized shares as shall be required for such
purpose. The Company will keep a copy of each Warrant on file with every
transfer agent for any shares of the Company's capital stock issuable upon the
exercise of the rights of purchase represented by the Warrants. Each transfer
agent for the Common Stock is hereby irrevocably authorized to cause to be
issued from time to time the stock certificates required to honor outstanding
Warrants upon exercise thereof in accordance with the terms hereof. The Company
will supply such transfer agent with duly executed stock certificates for such
purpose and will provide or otherwise make available any cash which may be
payable as provided in Section 8 hereof. All Warrants surrendered in the
exercise of the rights thereby evidenced shall be cancelled by the Company and
retired. Promptly after the Expiration Date, the Secretary of the Company shall
certify to the Company the aggregate number of Warrants then outstanding, and
thereafter no shares of Common Stock shall be subject to reservation in respect
of such Warrants.
The Company covenants that all shares issued upon exercise of the
Warrants will, upon issuance in accordance with the terms hereof, be fully paid
and nonassessable and free from all taxes, liens, charges and security interests
created by the Company with respect to the issuance thereof.
6.2 PURCHASE OF WARRANTS BY THE COMPANY. The Company shall have the
right, except as limited by law, other agreements or herein, to purchase or
otherwise acquire Warrants at such times, in such manner and for such
consideration as it may deem appropriate.
6.3 CANCELLATION OF WARRANTS. If the Company shall purchase or
otherwise acquire Warrants, the same shall thereupon be cancelled by the Company
and retired. The Company shall cancel any Warrant surrendered for exchange,
substitution, transfer or exercise in whole or in part.
SECTION 7. ADJUSTMENT OF WARRANT PRICE AND NUMBER OF WARRANT SHARES. The
number and kind of securities purchasable upon the exercise of each Warrant and
the Warrant Price shall be subject to adjustment from time to time upon the
happening of certain events, as hereinafter described.
7.1 MECHANICAL ADJUSTMENTS. The number of Warrant Shares purchasable
upon the exercise of each Warrant and the Warrant Price payable in connection
therewith shall be subject to adjustment from time to time as follows:
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(a) If the Company shall at any time pay a dividend on its Common
Stock (including, if applicable, shares of such stock held by the Company in
treasury) in shares of its Common Stock, subdivide its outstanding shares of
Common Stock into a larger number of shares or combine its outstanding shares of
Common Stock into a smaller number of shares, the number of Warrant Shares
issuable upon exercise of this Warrant immediately prior thereto shall be
adjusted so that this Warrant shall thereafter be exercisable for the number of
Warrant Shares equal to the number of shares of Common Stock which the Holder
would have held after the happening of any of the events described above had
this Warrant been exercised in full immediately prior to the happening of such
event. An adjustment made pursuant to this paragraph (a) shall become effective
retroactively to the record date in the case of a dividend and shall become
effective on the effective date in the case of a subdivision or combination.
(b) If the Company shall issue rights or warrants to all holders of
shares of Common Stock for the purpose of entitling them (for a period not
exceeding forty-five (45) days from the date of issuance) to subscribe for or
purchase shares of Common Stock at a price per share (taking into account any
consideration received by the Company for such rights or warrants, the value of
such consideration, if other than cash, to be determined in good faith by the
Board of Directors) less than the average market price per share (determined as
provided below) of the Common Stock on the declaration date for such issuance,
then in each such case, the number of Warrant Shares thereafter issuable upon
exercise of this Warrant after such record date shall be determined by
multiplying the number of Warrant Shares issuable upon exercise of this Warrant
on the date immediately preceding such declaration date by a fraction, the
numerator of which shall be the sum of the number of shares of Common Stock
outstanding on such declaration date and the number of additional shares of
Common Stock so offered for subscription or purchase in connection with such
rights or warrants, and the denominator of which shall be the sum of the number
of shares of Common Stock outstanding on such declaration date and the number of
shares of Common Stock which the aggregate offering price of the total number of
shares so offered would purchase at such average market price; PROVIDED,
HOWEVER, if all the shares of Common Stock offered for subscription or purchase
are not delivered upon the exercise of such rights or warrants, upon the
exercise of such rights or warrants the number of Warrant Shares issuable upon
exercise of this Warrant shall thereafter be readjusted to the number of Warrant
Shares which would have been in effect had the numerator and the denominator of
the foregoing fraction and the resulting adjustment been made based upon the
number of shares of Common Stock actually delivered upon the exercise of such
rights or warrants rather than upon the number of shares of Common Stock offered
for subscription or purchase. Such adjustment shall be made whenever any such
rights or warrants are issued, and shall become effective on the date of
issuance retroactive to the record date for determination of shareholders
entitled to receive such rights or warrants. For the purposes of this paragraph
(b), the number of shares of Common Stock at any time outstanding shall not
include shares held in the treasury of the Company.
(c) If the Company shall distribute to all the holders of Common
Stock (i) any rights or warrants to subscribe for or purchase any security of
the Company (other than those referred to in paragraph (b) above) or any
evidence of indebtedness or other securities of
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the Company (other than Common Stock), or (ii) assets (other than cash)
having a fair market value (as determined in a resolution adopted by the
Board of Directors of the Company, which shall be conclusive evidence of such
fair market value) in an amount during any 12-month period equal to more than
10% of the market capitalization (as defined below) of the Company, then in
each such case the number of Warrant Shares issuable upon exercise of this
Warrant shall be, after the record date for determination of the shareholders
entitled to receive such distribution, determined by multiplying the number
of Warrant Shares issuable upon exercise of this Warrant on the day
immediately preceding the date of declaration or authorization by the Board
of Directors of the Company of such distribution by a fraction, the numerator
of which shall be the average market price per share (determined as provided
in paragraph (e) below) of the Common Stock on such declaration date, and the
denominator of which shall be such average market price per share less the
then fair market value (as determined by the Board of Directors of the
Company as provided above) of the portion of the assets, rights, warrants,
evidences of indebtedness or other securities so distributed applicable to
one share of Common Stock. Such adjustment shall become effective
retroactively immediately after the declaration date. The term "MARKET
CAPITALIZATION" shall mean an amount determined by multiplying the number of
shares of Common Stock outstanding on such declaration date by the average
market price per share (determined as provided in paragraph (e) below) of the
Common Stock on such declaration date.
(d) In case of any capital reorganization or any reclassification
(other than a change in par value) of the capital stock of the Company, or of
any exchange or conversion of the Common Stock for or into securities of another
corporation, or in case of the consolidation or merger of the Company with or
into any other person (other than a merger which does not result in any
reclassification, conversion, exchange or cancellation of outstanding shares of
Common Stock) or in case of any sale or conveyance of all or substantially all
of the assets of the Company, the person formed by such consolidation or
resulting from such capital reorganization, reclassification or merger or which
acquires such assets, as the case may be, shall make provision such that this
Warrant shall thereafter be exercisable for the kind and amount of shares of
stock, other securities, cash and other property receivable upon such capital
reorganization, reclassification of capital stock, consolidation, merger, sale
or conveyance, as the case may be, by a holder of the shares of Common Stock
equal to the number of Warrant Shares issuable upon exercise of this Warrant
immediately prior to the effective date of such capital reorganization,
reclassification of capital stock, consolidation, merger, sale or conveyance,
assuming (i) such holder of Common Stock of the Company is not a person with
which the Company consolidated or into which the Company merged or which merged
into the Company or to which such sale or transfer was made as the case may be
("CONSTITUENT ENTITY"), or an affiliate of a constituent entity, and (ii) such
person failed to exercise his rights of election, if any, as to the kind or
amount of securities, cash and other property receivable upon such capital
reorganization, reclassification of capital stock, consolidation, merger, sale
or conveyance and, in any case appropriate adjustment (as determined by the
Board of Directors) shall be made in the application of the provisions herein
set forth with respect to rights and interests thereafter of the Holder, to the
end that the provisions set forth herein (including the specified changes in and
other adjustments of the number of Warrant Shares issuable upon exercise of this
Warrant)
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shall thereafter be applicable, as near as reasonably may be, in relating to
any shares of stock or other securities or other property thereafter
deliverable upon exercise of this Warrant.
(e) For the purpose of any computation under this Section 7, the
average market price per share of Common Stock on any date shall be the average
of the daily closing prices for the fifteen (15) consecutive trading days
commencing twenty (20) trading days before the date of declaration or
authorization by the Board of Directors of the Company of such issuance or
distribution. The closing price for each day shall be the last reported sales
price regular way or, in case no such sale takes place on such day, the average
of the closing bid and asked prices regular way, in either case on the principal
national securities exchange on which the Common Stock is listed or admitted to
trading, or, if not listed or admitted to trading on any national securities
exchange, on NASDAQ National Market System or, if the Common Stock is not listed
or admitted to trading on any national securities exchange or quoted on NASDAQ
National Market System, the average of the closing bid and asked prices as
furnished by any New York Stock Exchange member firm selected from time to time
by the Board of Directors of the Company for such purpose or if no such prices
are available, the fair market value of the Common Stock as determined by good
faith action of the Board of Directors of the Company.
(f) All calculations under this Section 7 shall be made to the
nearest one-thousandth of a share of Common Stock.
(g) Whenever the number of Warrant Shares purchasable upon the
exercise of this Warrant is adjusted as herein provided, the Warrant Price
payable upon exercise of this Warrant shall be adjusted by multiplying such
Warrant Price immediately prior to such adjustment by a fraction, the numerator
of which shall be the number of Warrant Shares purchasable upon the exercise of
this Warrant immediately prior to such adjustment, and the denominator of which
shall be the number of Warrant Shares so purchasable immediately thereafter.
(h) In case of any consolidation or merger of the Company with or
into another entity (whether or not the Company is the surviving entity) or in
case of any sale, transfer or lease of all or substantially all of the assets of
the Company, the Company or such successor or purchasing entity, as the case may
be, shall execute with the Holder an agreement that the Holder shall have the
right thereafter upon payment of the Warrant Price in effect immediately prior
to such action to purchase upon exercise of this Warrant the kind and amount of
shares and other securities, cash and property that the Holder would have owned
or would have been entitled to receive after the happening of such
consolidation, merger, sale, transfer, lease or conveyance had this Warrant been
exercised in full immediately prior to such action, and if the successor or
purchasing entity is not a corporation, such person shall provide appropriate
tax indemnification with respect to such shares or other securities and property
so that upon exercise of this Warrant, the Holder would have the same benefits
it otherwise would have had if such successor or purchasing person were a
corporation. Such agreement shall provide for adjustments that shall be as
nearly equivalent as may be practicable to the
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adjustments provided for in Sections 7(a) through 7(h), inclusive. The
provisions of this Section 7(h) shall similarly apply to successive
consolidations, mergers, sales or conveyances.
(i) For the purpose of this Section 7, the term "SHARES OF COMMON
STOCK" shall mean (i) the class of stock designated as the Common Stock of the
Company at the date of this Warrant or (ii) any other class of stock resulting
from successive changes or reclassification of such shares consisting solely of
changes in par value, or from par value to no par value, or from no par value
to par value. In the event that at any time, as a result of an adjustment made
pursuant to paragraph (a) through (d) above, the Holder shall become entitled to
receive any shares of the Company other than shares of Common Stock, thereafter
the number of such other shares so receivable upon exercise of this Warrant and
the Warrant Price shall be subject to adjustment from time to time in a manner
and on terms as nearly equivalent as practicable to the provisions with respect
to the Warrant Shares contained in paragraphs (a) through (h), inclusive, above,
and the provisions of Subsections 7.2, 7.3, 7.4 and 7.5, inclusive, with respect
to the Warrant Shares, shall apply on like terms to any such other shares.
(j) Upon the expiration of any rights, options, warrants or
exercise or exchange privileges the issuance of which shall have resulted in an
adjustment of the Warrant Price, if any thereof shall not have been exercised,
the Warrant Price shall, upon such expiration, be readjusted and shall
thereafter be such as it would have been had it been originally adjusted (or had
the original adjustment not been required, as the case may be) as if (1) the
only shares of Common Stock so issued were the shares of Common Stock, if any,
actually issued or sold upon the exercise of such rights, options, warrants,
exchange privileges or exercise rights and (2) such shares of Common Stock, if
any, were issued or sold for the consideration actually received by the Company
upon such exercise plus the consideration, if any, actually received by the
Company for the issuance, sale or grant of all of such rights, options, warrants
or exercise rights whether or not exercised; PROVIDED that no such readjustment
shall have the effect of increasing the Warrant Price or decreasing the number
of Warrant Shares purchasable upon the exercise of this Warrant by an amount in
excess of the amount of the adjustment initially made in respect to the
issuance, sale or grant of such rights, options, warrants or exercise rights.
7.2 TIME OF ADJUSTMENTS. Each adjustment required by Section 7 shall
be effective as and when the event requiring such adjustment occurs.
7.3 NOTICE OF ADJUSTMENT. Whenever the number of Warrant Shares
purchasable upon the exercise of each Warrant or the Warrant Price is adjusted
as herein provided, the Company shall promptly mail by first class mail, postage
prepaid, each Holder certificate of a firm of independent public accountants
selected by the Board of Directors of the Company (who may be the regular
accountants employed by the Company) setting forth the number of Warrant Shares
purchasable upon the exercise of each Warrant and the Warrant Price after such
adjustment, setting forth a brief statement of the facts requiring such
adjustment and setting forth the computation by which such adjustment was made.
Such certificate shall be conclusive evidence of the correctness of such
adjustment.
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7.4 NO ADJUSTMENT FOR DIVIDENDS. Except as provided in subsection
7.1, no adjustment in respect of any dividends shall be made during the term of
a Warrant or upon the exercise of a Warrant.
7.5 STATEMENT ON WARRANTS. Irrespective of any adjustments in the
Warrant Price or the number or kind of shares purchasable upon the exercise of
Warrants, Warrants theretofore or thereafter issued may continue to express the
same price and number and kind of shares as are stated in the initial Warrant.
SECTION 8. FRACTIONAL INTERESTS. The Company shall not be required to
issue fractional Warrant Shares on the exercise of Warrants. If more than one
Warrant shall be presented for exercise in full at the same time by the same
Holder, the number of full Warrant Shares that shall be issuable upon the
exercise thereof shall be computed on the basis of the aggregate number of
Warrant Shares purchasable on exercise of the Warrants so presented. If any
fraction of a Warrant Share would, after giving effect to the provisions of this
Section 8, be issuable on the exercise of any Warrant (or specified portion
thereof), the Company shall, in lieu of issuance of such fraction of a Warrant
Share, calculate and pay an amount in cash equal to the closing price per
Warrant Share on the trading day immediately preceding the date of exercise of
the Warrant multiplied by such fraction. The closing price shall be the last
reported sales price regular way or, in case no such sale takes place on such
day, the average of the closing bid and asked prices regular way, in either case
on the principal national securities exchange on which the Common Stock is
listed or admitted to trading, or, if not listed or admitted to trading on any
national securities exchange, on NASDAQ National Market System or, if the Common
Stock is not listed or admitted to trading on any national securities exchange
or quoted on NASDAQ National Market System, the average of the closing bid and
asked prices as furnished by any New York Stock Exchange member firm selected
from time to time by the Board of Directors of the Company for such purpose or
if no such prices are available, the fair market value of the Common Stock as
determined by good faith action of the Board of Directors of the Company.
SECTION 9. NO RIGHTS AS SHAREHOLDER; NOTICES TO HOLDERS. Nothing contained
in this Warrant or in any of the Warrants shall be construed as conferring upon
the Holders or their transferees the right to vote or to receive dividends or to
consent or to receive notice as shareholders in respect of any meeting of
shareholders for the election of directors of the Company or any other matter,
or any rights whatsoever as shareholders of the Company. If, however, at any
time prior to the expiration of the Warrants and prior to their exercise, any of
the following events shall occur:
(a) the Company shall declare any dividend (or any other
distribution) on Common Stock, other than a cash dividend or shall declare or
authorize repurchase of in excess of 10% of the then outstanding shares of
Common Stock; or
(b) the Company shall authorize the granting to all holders of
Common Stock of rights or warrants to subscribe for or purchase any shares of
stock of any class or any other rights or warrants; or
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(c) The Company shall propose any capital reorganization,
recapitalization, subdivision or reclassification of Common Stock (other than a
subdivision or combination of the outstanding Common Stock or Stock, or a change
in par value, or from par value to no par value or from no par value to par
value), or any consolidation or merger to which the Company is a party for which
approval of any shareholders of the Company shall be required, or the sale,
transfer or lease of all or substantially all of the assets of the Company; or
(d) the voluntary or involuntary dissolution, liquidation or
winding up of the Company (other than in connection with a consolidation,
merger, or sale of all or substantially all of its property, assets and business
as an entirety) shall be proposed;
then in any one or more of said events, the Company shall give notice in writing
of such event to the Holders at least 15 days prior to the date fixed as a
record date or the date of closing the transfer books for the determination of
the shareholders entitled to such dividend, distribution, or subscription
rights, or for the determination of shareholders entitled to vote on such
proposed consolidation, merger, sale, transfer or lease of assets, dissolution,
liquidation or winding up.
SECTION 10. NOTICES. All notices, requests and other communications with
respect to the Warrants shall be in writing. Communications may be made by
telecopy or similar writing. Each communication shall be given to the Holder at
the address in the Warrant Register and the Company at its offices in Denver,
Colorado, or at any other address as the party may specify for this purpose by
notice to the other party. Each communication shall be effective (1) if given
by telecopy, when the telecopy is transmitted to the proper address and the
receipt of the transmission is confirmed, (2) if given by mail, 72 hours after
the communication is deposited in the mails properly addressed with first class
postage prepaid or (3) if given by any other means, when delivered to the proper
address and a written acknowledgement of delivery is received.
SECTION 11. NO WAIVERS; REMEDIES; SPECIFIC PERFORMANCE.
(a) Prior to the Expiration Date, no failure or delay by any party
in exercising any right, power or privilege with respect to the Warrants shall
operate as a waiver of the right, power or privilege. A single or partial
exercise of any right, power or privilege shall not preclude any other or
further exercise of the right, power or privilege or the exercise of any other
right, power or privilege. The rights and remedies provided in the Warrants
shall be cumulative and not exclusive of any rights or remedies provided by law.
(b) In view of the uniqueness of the Warrants, a Holder would not
have an adequate remedy at law for money damages in the event that any of the
obligations arising under the Warrants is not performed in accordance with its
terms, and the Company therefore agrees that the Holders shall be entitled to
specific enforcement of the terms of the Warrants in addition to any other
remedy to which they may be entitled, at law or in equity.
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SECTION 12. AMENDMENTS, ETC. No amendment, modification, termination, or
waiver of any provision of a Warrant, and no consent to any departure from any
provision of the Warrant, shall be effective unless it shall be in writing and
signed and delivered by the Company and the Holder, and then it shall be
effective only in the specific instance and for the specific purpose for which
it is given. The rights of the Holder and the terms and provisions of this
Warrant including, without limitation, the performance of the obligations of the
Company hereunder, shall not be affected in any manner whatsoever by the terms
and provisions of any other agreement, whether entered into prior to or after
the date of this Warrant.
SECTION 13. GOVERNING LAW. The Warrants shall be governed by and construed
in accordance with the internal laws of the State of New York. All rights and
obligations of the Company shall be in addition to and not in limitation of
those provided by applicable law.
SECTION 14. SEVERABILITY OF PROVISIONS. Any provision of the Warrants that
is prohibited or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of the prohibition or
unenforceability without invalidating the remaining provisions of the Warrants
or affecting the validity or enforceability of the provision in any other
jurisdiction.
SECTION 15. HEADINGS AND REFERENCES. Headings in the Warrants are included
for the convenience of reference only and do not constitute a part of the
Warrants for any other purpose. References to parties and sections in the
Warrant are references to the parties or the sections of the Warrant, as the
case may be, unless the context shall require otherwise.
SECTION 16. EXCLUSIVE JURISDICTION. Each of the Company and the Holder, by
acceptance hereof, (1) agrees that any legal action with respect to the Warrant
shall be brought exclusively in the courts of the State of New York or of the
United States of America for the Southern District of New York, (2) accepts for
itself and in respect of its property, generally and unconditionally, the
jurisdiction of those courts and (3) irrevocably waives any objection,
including, without limitation, any objection to the laying of venue or based on
the grounds of FORUM NON CONVENIENS, which it may now or hereafter have to the
bringing of any legal action in those jurisdictions; PROVIDED, HOWEVER, that
each of the Company and the Holder may assert in a legal action in any other
jurisdiction or venue each mandatory defense, third-party claim or similar claim
that, if not so asserted in such action, may not be asserted in an original
legal action in the courts referred to in clause (1) above.
SECTION 17. WAIVER OF JURY TRIAL. Each of the Company and the Holder
waives, by acceptance hereof, any right to a trial by jury in any legal action
to enforce or defend any right under the Warrants or any amendment, instrument,
document or agreement delivered, or which in the future may be delivered, in
connection with the Warrants and agrees that any legal action shall be tried
before a court and not before a jury.
SECTION 18. MERGER OR CONSOLIDATION OF THE COMPANY. The Company will not
merge or consolidate with or into any other corporation unless the corporation
resulting from such merger or consolidation (if not the Company) shall expressly
assume, by supplemental
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agreement, the due and punctual performance and observance of each and every
covenant and condition of this Warrant to be performed and observed by the
Company.
15
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THIS WARRANT is executed by the Company on the date set forth below in
New York, New York.
Dated: __________, 1995 FOREST OIL CORPORATION
Attest: _____________________________ By: __________________________
Name: Name:
Title: Title:
S-16
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FOREST OIL CORPORATION
Election to Purchase
Mail Address
___________________________ __________________________
___________________________ __________________________
___________________________ __________________________
The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the within Warrant for and to purchase thereunder,
shares of the stock provided for herein, and requests that certificates for such
shares be issued in the name of
_____________________________________________________
_____________________________________________________
(Please Print Name, Address and Social Security No.)
_____________________________________________________
and, if said number of shares shall not be all the shares purchasable
thereunder, that a new Warrant Certificate for the balance remaining of the
shares purchasable under the within Warrant Certificate be registered in the
name of the undersigned holder of this Warrant or his Assignee as below
indicated and delivered to the address stated below.
Date:___________________, 19___.
Name of holder of this Warrant or Assignee: ________________________
(Please Print)
Address: ______________________________________
______________________________________
Signature: ______________________________________
Note: The above signature must correspond with the name as written upon the face
of this Warrant Certificate in every particular without alteration or
enlargement or any change whatever unless this Warrant has been assigned.
Signature Guaranteed: ___________________________________
<PAGE>
ASSIGNMENT
(To be signed only upon assignment of Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfer
unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
[__________________________] _______________________________
____________________________________________________________
Attorney to transfer said Warrant on the books of the Company, with full power
of substitution in the premises.
DATED: ____________________, 19___.
Signature of Registered Holder: ___________________________
Note: The above signature must correspond with the name as written upon the
face of this Warrant Certificate in every particular without alteration or
enlargement or any change whatever unless this Warrant has been assigned.
Signature Guaranteed: _________________________________
<PAGE>
EXHIBIT J
FORM OF
SHAREHOLDERS AGREEMENT
SHAREHOLDERS AGREEMENT dated as of __________, 1995
between FOREST OIL CORPORATION, a New York corporation (the
"COMPANY"), and THE ANSCHUTZ CORPORATION, a Kansas corporation
("PURCHASER").
Terms not otherwise defined herein have the meanings
stated in the Purchase Agreement (as defined below).
RECITALS
A. The parties have entered into the Purchase
Agreement (the "PURCHASE AGREEMENT") dated as of _______, 1995.
B. Pursuant to the Purchase Agreement, (i) on the
First Closing Date Purchaser purchased the Purchaser Note which
on the Second Closing Date was by its terms converted into the
Purchaser Note Conversion Shares and (ii) on the Second Closing
Date Purchaser purchased the Purchaser Additional Shares, the
Purchaser Preferred Shares and the Tranche A Warrants and may,
upon the conversion of the Purchaser Preferred Shares and
exercise of the Tranche A Warrants, thereafter acquire the
Purchaser Preferred Conversion Shares and Tranche A Warrant
Shares, respectively.
C. On the Second Closing Date, Joint Energy
Developments Limited Partnership, a Delaware limited partnership
("JEDI"), granted to Purchaser the JEDI/Purchaser Option
providing for an option to purchase the Tranche B Warrants
Shares. The Purchaser Note Conversion Shares, the Purchaser
Additional Shares, the Purchaser Preferred Conversion Shares, the
Tranche A Warrant Shares and the Tranche B Warrant Shares
acquired by Purchaser pursuant to the JEDI/Purchaser Option are
collectively referred to as the "PURCHASER SHARES".
D. Pursuant to the Purchase Agreement, on the First
Closing Date the Company entered into a Registration Rights
Agreements with Purchaser pursuant to which the Company granted
to Purchaser and certain other persons certain rights with
respect to the registration under the Securities Act of the
disposition of the Purchaser Shares.
<PAGE>
AGREEMENT
The parties agree as follows:
ARTICLE I
DEFINITIONS
Terms not otherwise defined herein have the respective
meanings assigned in the Purchase Agreement. The following terms
have the following meanings:
"BENEFICIAL OWNERSHIP" or similar terms, except as
expressly provided to the contrary in this Agreement in the
definitions of "Section 16(b) Liability" and "Section 16(b)
Matter", has the meaning assigned to the term "beneficial
ownership" in Section 13(d) of the Exchange Act or the related
rules and regulations.
"BUSINESS COMBINATION TRANSACTION" means a merger,
consolidation or similar transaction and each transaction that
constitutes a "Change of Control" within the meaning of the
Indenture dated as of September 8, 1993 between the Company and
Shawmut Bank Connecticut, N.A. (giving effect to other terms and
provisions of such indenture that are directly or indirectly
incorporated or referenced by the definition therein of "Change
of Control").
"EXCESS PURCHASER SECURITIES" means, at any time of
determination and with respect to the matter subject to the vote
or consent for which the Excess Purchaser Securities are then
being determined, the Equity Securities of the Company owned by
any of Purchaser and its Affiliates and the Groups in which any
of them may be members that may then be voted or with respect to
which consent may then be given, in each case with respect to
such matter (collectively, the "EFFECTIVE EQUITY SECURITIES");
PROVIDED, however, that "EXCESS PURCHASER SECURITIES", at any
such time of determination and with respect to the matter subject
to such vote or consent, shall not include the Effective Equity
Securities that in the aggregate, have a voting power with
respect to such matter not greater than 19.99% of the aggregate
voting power of all Equity Securities of the Company then issued
and outstanding.
"GROUP" has the meaning given such term in Section
13(d)(3) of the Exchange Act and the related rules and
regulations.
"RELATED TRANSACTION" means, with respect to any
acquisition or disposition, or deemed acquisition or disposition,
of any securities, a transaction that (1) has been disclosed in a
document filed with the Securities and Exchange Commission with
respect to the Company (that is then available for inspection at
the offices of the Securities and Exchange Commission) or has
been otherwise publicly announced and (2) by its terms is
effective upon, or immediately before or after giving effect to,
the occurrence of such acquisition or disposition or deemed
acquisition or disposition.
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"SECTION 16(b) LIABILITY" means liability under Section
16(b) of the Exchange Act with respect to or as a consequence,
directly or indirectly, of Purchaser's or Purchaser's Affiliate's
acquisition (or deemed acquisition) or disposition (or deemed
disposition) of "beneficial ownership" of, or a "pecuniary
interest" or "indirect pecuniary interest" in, any of the
Purchaser Shares or any other "equity security" of the Company or
"derivative security" relating to the Company, whether or not
issued by the Company (such terms having the respective meanings
assigned to them by Section 16 of the Exchange Act and the
related rules and regulations), that shall have been issued or
otherwise created, acquired (or deemed to have been acquired) or
disposed of (or deemed to have been disposed of) by or pursuant
to the Transaction Documents; PROVIDED, HOWEVER, that Section
16(b) Liability shall not include any such liability under
Section 16(b) of the Exchange Act with respect to or as a
consequence of the acquisition of "beneficial ownership" of, or a
"pecuniary interest" or "indirect pecuniary interest" in any
"equity security" of the Company or "derivative security"
relating to the Company that shall not have been issued or
otherwise created or acquired (or deemed to have been acquired)
pursuant to or in accordance with the Transaction Documents.
"SECTION 16(b) MATTER" means each matter or series of
matters (including, without limitation, a proposed transaction or
series of transactions involving any stock or other non-cash
dividend, split-up, reverse split-up, reclassification,
recapitalization, reorganization, combination, subdivision,
conversion, exchange of shares or Business Combination
Transaction) which, directly or indirectly, as a result of the
taking of action with respect thereto by the Company, its Board
of Directors or shareholders or any Governmental Body having
jurisdiction thereover, or the conclusion of any such matter will
or may, directly or indirectly, whether taken alone or together
with other facts or events, result in Section 16(b) Liability;
PROVIDED, HOWEVER, that a Section 16(b) Matter shall not include
any of the foregoing matters that will or may, directly or
indirectly, result in Section 16(b) Liability with respect to or
as a consequence of the transfer by Purchaser or any of its
affiliates of any Purchaser Shares in violation of the provisions
of Section 3.2 or in transfers that would violate the provisions
of Section 3.2 but for clauses (a), (b), (c), (d), (e), (h) and
(i) thereof (collectively, "EXCLUDED TRANSFERS").
"TERMINATION DATE" has the meaning stated in Section
4.1.
ARTICLE II
COMPANY COVENANTS
SECTION 2.1 BOARD OF DIRECTORS.
(a) On the Second Closing Date and from time to
time thereafter until the Termination Date, except as otherwise
approved by the Board of Directors, including a majority of the
Independent Directors, or by the vote of the holders of two-
thirds of the shares
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<PAGE>
of Common Stock then issued and outstanding (in which the
shares of Common Stock owned by Purchaser and its Affiliates
are voted in accordance with the restrictions contained in
Section 3.1, if applicable), the Company shall take all actions
necessary to cause, (1) the number of directors of the Company
to be fixed at ten, (2) the election as directors of the
Company of three persons selected by Purchaser (the "PURCHASER
DESIGNEES"), two persons who are officers of the Company and
five persons none of whom is then or has been at any time
during the preceding two years an officer or employee of the
Company or a director, officer or employee of a beneficial
owner of 5% or more of the shares of Common Stock then issued
and outstanding or any affiliate of such beneficial owner (each
an "INDEPENDENT DIRECTOR"), (3) the appointment of a Purchaser
Designee who is a director chosen by Purchaser as a member of
the Executive Committee, the Compensation Committee and the
Audit Committee (or committees having similar functions) of the
Board of Directors (the "COMMITTEES"), (4) the formation of a
Nominating Committee to be composed of three directors, of whom
one shall be a Purchaser Designee selected by Purchaser, one
shall be an officer of the Company and one shall be an
Independent Director, (5) nominees to the Board of Directors
other than the Purchaser Designees to be selected by a vote of
at least two members of the Nominating Committee, of whom one
shall be an Independent Director, (6) if any such Purchaser
Designee shall cease to be a director for any reason, the
filling of the vacancy resulting thereby with a Purchaser
Designee and (7) the calling of meetings of the Board of
Directors and committees thereof upon the written request of a
Purchaser Designee who is a director.
(b) The obligations of the Company under this
Section 2.1 shall be subject to Section 14(f) of the Exchange Act
and Rule 14f-l promulgated thereunder. The Company shall take
all actions required pursuant to Section 14(f) and Rule 14f-l in
order to fulfill its obligations under this Section 2.1,
including, without limitation, the inclusion in the Proxy
Statement of such information with respect to the Company and its
officers and directors as is required under Section 14(f) and
Rule 14f-l. Purchaser will supply to the Company any information
with respect to Purchaser and its initial designees required by
Section 14(f) and Rule 14f-l.
(c) If at any time (1) one or more Purchaser
Designees shall not be elected to the Board of Directors by the
shareholders of the Company (notwithstanding Purchaser and its
Affiliates having voted all shares of Common Stock owned by them
in favor of such election) and each of such Purchaser Designees
shall not otherwise have been elected to the Board of Directors
before a date that is 10 days after the date of such vote by the
shareholders of the Company and, in any event, before any other
material action or matter is considered and resolved by the Board
of Directors or (2) one or more directors who are Purchaser
Designees shall not be appointed to any of the Committees and the
directors who are Purchaser Designees shall have voted in favor
of each such appointment, in each case as such election or
appointment is required under this Section 2.1, the provisions
set forth in Article III will thereafter be of no further force
or effect.
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<PAGE>
SECTION 2.2 EXCHANGE ACT SECTION 16(b).
(a) Without the prior written consent of
Purchaser, the Company shall take no action with respect to a
Section 16(b) Matter that will or may, directly or indirectly,
whether taken alone or together with other facts or events,
result in Purchaser or an Affiliate of Purchaser having Section
16(b) Liability, PROVIDED that the Company may take any such
action (1) with respect to a Section 16(b) Matter if there shall
have been entered a final judgment to the effect that Purchaser
and its Affiliates do not and will not, directly or indirectly,
have any Section 16(b) Liability, which judgment shall not be
subject to appeal and is RES JUDICATA as to all matters that may
give rise to Section 16(b) Liability in connection therewith, or
(2) that may, directly or indirectly, result in any such
liability with respect to or as a consequence of any Excluded
Transfer.
(b) In all notices, registrations, applications,
statements, pleadings, memoranda, briefs and other documents
submitted to or filed with any Governmental Body (including,
without limitation, in any Action referred to in Section 2.2(c)),
none of the Company, Purchaser and their respective Affiliates
shall assert any position or claim with respect to the
acquisition (or deemed acquisition) or disposition (or deemed
disposition) by Purchaser of "beneficial ownership" of, or a
"pecuniary interest" or "indirect pecuniary interest" in, any of
the Purchaser Shares that is inconsistent with the position or
claim that Purchaser acquired (or shall have been deemed to
acquire) "beneficial ownership" of, or a "pecuniary interest" or
"indirect pecuniary interest" in, all of the Purchaser Shares on
or before the date of this Agreement, except that Purchaser may
assert any such inconsistent position or claim if Purchaser,
based on advice of counsel, determines that there is a reasonable
basis to conclude that as a result of the failure to assert such
inconsistent position or claim, Purchaser, any person who
controls Purchaser within the meaning of any applicable
Regulation or any of their respective shareholders, directors,
officers, employees, agents and Affiliates could be in violation
of any applicable Regulation or could become subject to any
sanction, fine, award or other penalty, whether civil or
criminal.
(c) The Company may seek to determine by an Action
brought against Purchaser in the United States District Court in
the Southern District of New York, or other jurisdiction approved
by the Company and Purchaser, the respective rights and
obligations of the parties under Sections 2.2(a) and 3.1(a).
SECTION 2.3 RESTRICTIONS ON PURCHASER. Without the
prior written consent of Purchaser, the Company shall not take or
recommend to its shareholders any action which would impose
limitations on the legal rights to be enjoyed by Purchaser or
Affiliates of Purchaser as a shareholder of the Company, other
than those imposed by the express terms of this Agreement and the
other Transaction Documents, including, without limitation, any
action which would impose or increase restrictions on Purchaser
or Affiliates of Purchaser (a) based upon the size of its
security holdings, the business in which it is engaged or other
considerations applicable to it and not to security holders
generally, (b) by means of the issuance of or proposal to issue
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<PAGE>
any other class of securities having voting power
disproportionately greater than the equity investment in the
Company represented by such securities or by charter or by-law
amendment or (c) by reducing by any means (including, without
limitation, by split-up, reverse split-up, reclassification,
recapitalization, reorganization, combination, redemption,
repurchase, or cancellation of securities or rights or by a
Business Combination Transaction) the number of shares of Common
Stock that are then issued and outstanding or are then subject to
issuance upon the conversion of or exercise or exchange for any
Equity Securities (including securities exchangeable or
convertible into Equity Securities) of the Company then
outstanding, excepting only the reduction in such number of
shares of Common Stock then issued and outstanding or subject to
issuance resulting from the conversion of or exercise or exchange
for Equity Securities of the Company issued and outstanding on
the Second Closing Date (including, without limitation, the
Purchaser Note, the Warrants and the JEDI Loan Warrants) and
adjustments in the number of shares of Common Stock subject to
issuance under Employee Options that are issued and outstanding
on the Second Closing Date;
SECTION 2.4 ACCESS TO INFORMATION.
(a) The Company shall promptly furnish to
Purchaser all information that is required by GAAP to enable
Purchaser to account for its investment in the Company. To the
extent reasonably requested by Purchaser, the Company shall, and
shall cause its employees, independent public accountants and
other representatives to, provide information regarding the
Company to, and otherwise cooperate with, Purchaser and the
representatives of Purchaser so as to enable Purchaser to prepare
financial statements in accordance with GAAP.
(b) Upon the request of Purchaser from time to
time, the Company shall promptly disclose to Purchaser the number
of shares of Common Stock issued and outstanding on a date not
more than 5 days prior to the date of such request and the number
of shares of Common Stock subject to issuance upon the conversion
of or exercise or exchange for the Equity Securities of the
Company outstanding on such date.
SECTION 2.5 RIGHTS AGREEMENT. If the Company shall
at any time after the First Closing Date amend, modify or waive
the Rights Agreement with respect to any person or any Voting
Securities (as defined in the Rights Agreement) or other
securities "beneficially owned" (as defined in the Rights
Agreement) by such person or otherwise, in any manner, directly
or indirectly, exempt any person or any Voting Securities or any
other securities beneficially owned by such person from the
provisions, limitations or effects of the Rights Agreement, then,
concurrently therewith, the Company shall, with respect to the
Purchaser and its Affiliates and the Voting Securities and other
securities beneficially owned by any of them, take the same
action with respect to the Rights Agreement so that as a result
thereof each of the Purchaser and its Affiliates and the Voting
Securities and other securities beneficially owned by any of them
are subject to the Rights Agreement in the same manner and to the
same extent as such other person and the Voting Securities or
other securities beneficially owned by such other person.
6
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ARTICLE III
PURCHASER RESTRICTIONS
SECTION 3.1 PURCHASER VOTING RESTRICTIONS.
(a) In connection with each vote or written
consent of the holders of Common Stock, Purchaser and its
Affiliates shall vote, or consent with respect to, and cause each
of its Affiliates and each Group of which it is a member, to vote
or consent with respect to, all Excess Purchaser Securities in
respect of the matters subject to such vote or consent in the
same proportion that all other Equity Securities of the Company
(other than Equity Securities of the Company owned by Purchaser,
any of its Affiliates or any such Group) are voted or with
respect to which such consent is given by holders of such Equity
Securities with respect to such matter; PROVIDED, HOWEVER, that
notwithstanding the foregoing, each of Purchaser, its Affiliates
and such Groups at all times may vote, or consent with respect
to, Excess Purchaser Securities (1) for the election of each of
the permitted number of Purchaser Designees, (2) as Purchaser,
such Affiliate or such Group shall determine with respect to each
Section 16(b) Matter with respect to which (A) any of Purchaser
and its Affiliates will have or may, directly or indirectly, have
Section 16(b) Liability and (B) there shall not have been
entered, as of the date such vote or consent shall be required to
be given, a final judgment to the effect that Purchaser and its
Affiliates do not and will not, directly or indirectly, have any
Section 16(b) Liability, which judgment shall not be subject to
appeal and is res judicata as to all matters that may give rise
to Section 16(b) Liability in connection therewith, and (3) as
otherwise approved by the Board of Directors of the Company,
including a majority of Independent Directors, with respect to
the matter subject to such vote or consent.
(b) Notwithstanding anything contained in this
Agreement, Purchaser and its Affiliates and the respective Groups
in which any of them may be members shall not be restricted in
any manner whatsoever from voting, or consenting with respect to,
Equity Securities of the Company owned by any of them that are
not Excess Purchaser Securities with respect to the matter
subject to such vote or consent.
SECTION 3.2 PURCHASER TRANSFER RESTRICTIONS.
Purchaser shall not, and shall not cause or permit its Affiliates
to, transfer the beneficial ownership of the Purchaser Shares
(including, without limitation, the Purchaser Preferred Shares,
the JEDI/Purchaser Option and the Warrants) except in one or more
of the following transactions:
(a) each transfer pursuant to a public offering
of Common Stock pursuant to a registration statement effective
under the Securities Act; and
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(b) each transfer to any person or Group that
represents in writing to Purchaser that, after giving effect to
such transfer and to each Related Transaction, it will
beneficially own less than 9.9% of the sum of the shares of
Common Stock that are then issued and outstanding plus the sum of
the shares of Common Stock that are then subject to acquisition
upon the conversion, exercise or exchange of Equity Securities of
the Company so transferred (whether or not the conversion,
exercise or exchange thereof is subject to any condition or
restriction); and
(c) each transfer to any person or Group that (1)
represents in writing to Purchaser that, after giving effect to
such transfer and to each Related Transaction, it will
beneficially own more than 9.9% and less than 20% of the sum of
the shares of Common Stock that are then issued and outstanding
plus the sum of the shares of Common Stock that are then subject
to acquisition upon the conversion, exercise or exchange of
Equity Securities of the Company so transferred (whether or not
the conversion, exercise or exchange thereof is subject to any
condition or restriction) and (2) assumes by written instrument
satisfactory to each of the Company and Purchaser the obligations
and restrictions contained in this Section 3.2 to which such
Purchaser Shares were subject immediately prior to such transfer;
and
(d) each transfer approved by the Board of
Directors of the Company, including a majority of Independent
Directors, which approval shall not be unreasonably withheld, to
any person or Group that represents in writing to Purchaser that,
after giving effect to such transfer to each Related Transaction,
it will beneficially own more than 9.9% and less than 20% of the
sum of the shares of Common Stock that are then issued and
outstanding plus the sum of the shares of Common Stock that are
then subject to acquisition upon the conversion, exercise or
exchange of Equity Securities of the Company so transferred
(whether or not the conversion, exercise or exchange thereof is
subject to any condition or restriction); and
(e) each transfer approved by the Board of
Directors of the Company, including a majority of Independent
Directors; and
(f) each transfer in a Business Combination
Transaction approved by the Board of Directors of the Company,
including a majority of Independent Directors, or by two-thirds
of the shares of Common Stock voted with respect to the
transaction (in which the Purchaser Shares are voted in
accordance with the restrictions contained in Section 2.1, if
applicable); and
(g) each transfer pursuant to a tender or
exchange offer for outstanding Common Stock by any person other
than Purchaser, any of its Affiliates or any Group including
Purchaser or any of its Affiliates (1) which the Board of
Directors of the Company, including a majority of the Independent
Directors, does not oppose, or (2) which the Board of Directors
of the Company or a majority of Independent Directors opposes if
after completion of such tender or exchange offer securities not
tendered or exchanged may be treated less favorably than
securities tendered, provided that no tender, indication or
arrangement to tender Common Stock
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may be made in the case of the preceding clause (2) until
forty-eight hours prior to the expiration of any time after
which securities tendered may be treated less favorably than
securities tendered prior thereto; and
(h) each bona fide pledge of or the granting of a
security interest or any other Lien in the Purchaser Shares to
secure a bona fide loan, guarantee or other financial support,
the foreclosure of such pledge or security interest or any other
Lien that may be placed involuntarily upon any Purchaser Shares,
or the subsequent sale or other disposition of such Purchaser
Shares by such lender or its agent, provided that such lender is
not a member of a Group with respect to Common Stock which Group
includes Purchaser or Affiliates of Purchaser; and
(i) each transfer of Purchaser Shares to any
Affiliate of Purchaser, or a bona fide pledge of or the granting
of a security interest or any other Lien in such Purchaser Shares
to an Affiliate of Purchaser, provided in each case that such
Affiliate shall expressly assume by written instrument
satisfactory to the Company and Purchaser all of the obligations
and restrictions contained in this Shareholder Agreement to which
such Purchaser Shares were subject immediately before such
transfer; and
(j) a transfer upon the liquidation or
dissolution of the Company or a transfer which is effected by
operation of law.
SECTION 3.3 PURCHASER PURCHASE RESTRICTIONS.
(a) Purchaser shall not, and shall not cause or
permit its Affiliates or any Group including Purchaser or any of
its Affiliates to, acquire shares of Common Stock, which when
combined with shares of Common Stock then owned by Purchaser and
its Affiliates, after giving effect to the acquisition and each
Related Transaction, would result in Purchaser beneficially
owning 40% or more of the shares of Common Stock then issued and
outstanding, PROVIDED that the Purchaser Preferred Conversion
Shares, the Tranche A Warrant Shares and the Tranche B Warrant
Shares that shall not then have been acquired by the Purchaser
and its Affiliates shall not be included in any such
determination of beneficial ownership, except that such
restriction on purchase shall not be applicable to each of the
following acquisitions:
(1) each acquisition following a Business Combination
Transaction that (A) shall have been approved by the Board
of Directors of the Company, including a majority of
Independent Directors, or by two-thirds of the shares of
Common Stock voted with respect to the transaction (in which
the Purchaser Shares are voted in accordance with the
restrictions contained in Section 3.1, if applicable) and
(B) would, if completed on the terms so approved, result in
the beneficial ownership by any person or Group (other than
and not including Purchaser or an Affiliate of, or any
person acting in concert with Purchaser) of 20% or more of
the shares of Common Stock then issued and outstanding or,
if all or any part of the shares of Common Stock shall be
changed
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into or exchanged for shares of any class of capital
stock of any other person (which class has the right to vote
generally for the election of directors), 20% or more of the
shares of such class of capital stock; and
(2) each acquisition following the commencement of a
tender or exchange offer made by any person or Group (other
than and not including Purchaser or an Affiliate of, or any
person acting in concert with, Purchaser) to acquire
beneficial ownership of 40% or more of the shares of Common
Stock then issued and outstanding; and
(3) each acquisition after any person or Group (other
than and not including an Affiliate of Purchaser) shall own
beneficially shares of Common Stock which exceed the sum of
the number of shares of Common Stock that are then owned by
Purchaser and its Affiliates plus the number of shares that
are then subject to acquisition upon the conversion,
exercise or exchange by Purchaser and its Affiliates of
Equity Securities of the Company or other rights then owned
by Purchaser and its Affiliates (including, without
limitation (but without duplication), the Purchaser Note,
the Purchaser Preferred Shares, the JEDI/Purchaser Option,
the Tranche A Warrants and the Tranche B Warrants), whether
or not the conversion, exercise or exchange thereof is then
subject to any condition or restriction; and
(4) each acquisition approved by the Board of
Directors of the Company, including a majority of
Independent Directors.
(b) Purchaser and its Affiliates shall have no
obligation under this Agreement or otherwise to transfer shares
of Common Stock, which, when such shares were acquired, after
giving effect to such transaction and any Related Transaction,
did not, when combined with other shares of Common Stock then
owned by Purchaser and its Affiliates and any Group including
Purchaser or any of its Affiliates, constitute 40% or more of the
shares of Common Stock then issued and outstanding. Without
limiting the generality of the foregoing, Purchaser and its
Affiliates shall not be required to transfer any shares of Common
Stock if the aggregate percentage ownership of Purchaser and its
Affiliates is increased as a result of any action taken by the
Company or its Affiliates including, without limitation, by
reverse split-up, reclassification, recapitalization,
reorganization, combination, redemption, repurchase or
cancellation of shares or Business Combination Transaction.
SECTION 3.4 OTHER PURCHASER RESTRICTIONS. Purchaser
shall not, and shall not cause or permit its Affiliates to, enter
into any transaction (including, without limitation, the
purchase, sale or exchange of property or the rendering of any
service) with any of the Company and its Subsidiaries that shall
not have been approved by the Board of Directors of the Company,
including a majority of Independent Directors.
10
<PAGE>
ARTICLE IV
TERMINATION
SECTION 4.1 TERMINATION. This Agreement shall
terminate on the date (the "TERMINATION DATE") that is the
earlier of (a) the fifth anniversary of the Second Closing Date
and (b) the first day on which (1) the sum of the number of
shares of Common Stock beneficially owned by Purchaser and its
Affiliates that are then issued and outstanding plus the number
of shares of Common Stock that are then subject to acquisition by
Purchaser and its Affiliates upon the conversion, exercise or
exchange of Equity Securities of the Company then owned by
Purchaser and its Affiliates (including, without limitation (but
without duplication), the Purchaser Preferred Shares, the
JEDI/Purchaser Option, the Tranche A Warrants and the Tranche B
Warrants), whether or not the conversion, exercise or exchange
thereof is then subject to any condition or restriction is less
than (2) an amount equal to 20% of the total number of shares of
Common Stock then issued and outstanding and then subject to
issuance upon the conversion of or exercise or exchange for all
Equity Securities (including securities convertible, exercisable
or exchangeable into Common Stock, whether or not the conversion,
exercise or exchange thereof is then subject to any condition or
restriction) of the Company or rights then outstanding.
ARTICLE V
MISCELLANEOUS
SECTION 5.1 LEGENDS. Certificates representing
Purchaser Shares shall bear the legends as required by Section
3.4 of the Purchase Agreement; PROVIDED, HOWEVER, that after the
transfer of Purchaser Shares in accordance with Section 3.2 and
the Termination Date, the legend referred to in Section 3.4(a)(2)
of the Purchase Agreement shall be removed with respect to such
Purchaser Shares and all Purchaser Shares, respectively.
SECTION 5.2 NOTICES. All notices, requests and
other communications to any party or under this Agreement shall
be in writing. Communications may be made by telecopy or similar
writing. Each communication shall be given to such party at its
address stated on the signature pages of this Agreement or at any
other address as such party may from time to time specify in
writing to all other parties. Each communication shall be
effective (a) if given by telecopy, when the telecopy is
transmitted to the proper address and the receipt of the
transmission is confirmed, (b) if given by mail, 72 hours after
the communication is deposited in the mails properly addressed
with first class postage prepaid or (c) if given by any other
means, when delivered to the proper address and a written
acknowledgement of delivery is received.
11
<PAGE>
SECTION 5.3 NO WAIVERS; REMEDIES; SPECIFIC
PERFORMANCE.
(a) No failure or delay by any party in
exercising any right, power or privilege under this Agreement
shall operate as a waiver of such right, power or privilege. A
single or partial exercise of any right, power or privilege shall
not preclude any other or further exercise of such right, power
or privilege or the exercise of any other right, power or
privilege. The rights and remedies provided in this Agreement
shall be cumulative and not exclusive of any rights or remedies
available at law or in equity.
(b) In view of the uniqueness of the agreements
contained in this Agreement and the transactions contemplated
hereby and the fact that each party would not have an adequate
remedy at law for money damages in the event that any obligations
under this Agreement is not performed in accordance with its
terms, each party therefore agrees that the other parties to this
Agreement shall be entitled to specific enforcement of the terms
of this Agreement in addition to any other remedy to which any of
them may be entitled, at law or in equity.
SECTION 5.4 AMENDMENTS, ETC. No amendment,
modification, termination, or waiver of any provision of this
Agreement, and no consent to any departure by a party from any
provision of this Agreement, shall be effective unless it shall
be in writing and signed and delivered by the other parties to
this Agreement, and then it shall be effective only in the
specific instance and for the specific purpose for which it is
given.
SECTION 5.5 SUCCESSORS AND ASSIGNS.
(a) Except as expressly contemplated by this
Agreement, no party may assign its rights or delegate its
obligations under this Agreement without the prior written
consent of the other parties; PROVIDED, that Purchaser may assign
its rights and delegate its responsibilities under this Agreement
pursuant to Sections 3.2(c) or 3.2(h), as the case may be,
without the consent of the Company. Any assignment or delegation
in contravention of this Section 5.5 shall be void AB INITIO and
shall not relieve the delegating party of any of its obligations
under this Agreement.
(b) The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties to this
Agreement and their respective permitted successors and assigns.
(c) Notwithstanding anything herein to the
contrary, each transferee of Purchaser Shares transferred in one
or more of the transactions specified in clauses (a) through (j),
inclusive, of Section 3.2 shall acquire such Purchaser Shares
free and clear of any restrictions or obligations contained in
this Agreement.
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SECTION 5.6 GOVERNING LAW. This Agreement shall be
governed by and construed in accordance with the internal laws of
the State of New York. All rights and obligations of the parties
shall be in addition to and not in limitation of those provided
by applicable law.
SECTION 5.7 COUNTERPARTS; EFFECTIVENESS. This
Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if all
signatures were on the same instrument.
SECTION 5.8 SEVERABILITY OF PROVISIONS. Any
provision of this Agreement that is prohibited or unenforceable
in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of the prohibition or unenforceability
without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of the provision in
any other jurisdiction.
SECTION 5.9 HEADINGS AND REFERENCES. Article and
section headings in this Agreement are included for the
convenience of reference only and do not constitute a part of
this Agreement for any other purpose. References to parties and
articles and sections in this Agreement are references to the
parties to or the articles and sections of this Agreement, as the
case may be, unless the context shall require otherwise.
SECTION 5.10 ENTIRE AGREEMENT. Except as otherwise
specifically provided in the following sentence, this Agreement
embodies the entire agreement and understanding of the parties
and supersedes all prior agreements or understandings with
respect to the subject matters of this Agreement. Purchaser
shall remain subject to paragraphs (1) through (3), inclusive, of
the letter agreement dated March 6, 1995 between the Company and
Purchaser in accordance with the terms thereof and Purchaser and
the Company shall remain subject to the other Transaction
Documents.
SECTION 5.11 SURVIVAL. Except as otherwise
specifically provided in this Agreement, each representation,
warranty or covenant of each party contained in this Agreement
shall remain in full force and effect, notwithstanding any
investigation or notice to the contrary or any waiver by any
other party of a related condition precedent to the performance
by such other party of an obligation under this Agreement.
SECTION 5.12 SUBMISSION TO JURISDICTION. Each party
(1) agrees that any Action with respect to this Agreement or
transactions contemplated by this Agreement shall be brought
exclusively in the courts of the State of New York or of the
United States of America for the Southern District of New York,
(2) accepts for itself and in respect of its property, generally
and unconditionally, the jurisdiction of those courts,
(3) irrevocably waives any objection, including, without
limitation, any objection to the laying of venue or based on the
grounds of FORUM NON CONVENIENS, which it may now or hereafter
have to the bringing of any action in those jurisdictions;
PROVIDED, HOWEVER, that each party may assert in an Action in any
other
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jurisdiction or venue each mandatory defense, third-party claim
or similar claim that, if not so asserted in such Action, may
not be asserted in an original Action in the courts referred to
in clause (i) above.
SECTION 5.13 WAIVER OF JURY TRIAL. Each party waives
any right to a trial by jury in any action to enforce or defend
any right under this Agreement or any amendment, instrument,
document or agreement delivered, or which in the future may be
delivered, in connection with this Agreement and agrees that any
action shall be tried before a court and not before a jury.
SECTION 5.14 AFFILIATE. Nothing contained in this
Agreement shall cause Purchaser or any other party to be or be
deemed an "affiliate" of any of the Company and its Subsidiaries
within the meaning of Rule 13e-3 under the Exchange Act.
14
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed
and delivered this Shareholders Agreement as of the date first
written above in New York, New York.
FOREST OIL CORPORATION
By: _____________________________
Name:
Title:
Address: 1500 Colorado National
Building
950 - 17th Street
Denver, Colorado 80202
Telecopy: (303) 592-2602
THE ANSCHUTZ CORPORATION
By: ______________________________
Name:
Title:
Address: 2400 Anaconda Tower
555 - 17th Street
Denver, Colorado 80202
Telecopy: (303) 298-8881
S-15
<PAGE>
EXHIBIT L
FORM OF
TRANCHE B WARRANT
WARRANT TO PURCHASE COMMON STOCK
THE WARRANT REPRESENTED BY THIS CERTIFICATE AND THE SHARES OF COMMON STOCK
ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED
OR OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH SAID ACT. THIS WARRANT
AND SUCH SHARES ARE ALSO SUBJECT TO THE RESTRICTIONS CONTAINED IN A
REGISTRATION RIGHTS AGREEMENT DATED AS OF __________, 1995, A COPY OF WHICH
IS ON FILE AT THE OFFICE OF THE SECRETARY OF THE COMPANY.
THE EXERCISE OF THIS WARRANT IS SUBJECT TO RESTRICTIONS STATED IN SECTION 3.2
HEREOF. THE TRANSFER OF THIS WARRANT IS SUBJECT TO THE RESTRICTIONS STATED
IN SECTION 1.2(b) HEREOF.
THE NUMBER OF SHARES OF COMMON STOCK THAT MAY BE PURCHASED UPON EXERCISE OF
THIS WARRANT MAY BE LESS THAN THE NUMBER OF WARRANTS SET FORTH BELOW,
PURSUANT TO SECTION 7.1 HEREOF OR OTHER PROVISIONS. REFERENCE SHOULD BE MADE
TO THE SECRETARY OF THE COMPANY FOR A CONFIRMATION OF THE NUMBER OF SHARES OF
COMMON STOCK THAT CAN BE PURCHASED AT ANY TIME UPON EXERCISE OF THIS WARRANT.
Certificate Number Certificate for
11,250,000
--------------------- ----------
Warrants
This certificate is transferable
in Denver, Colorado
<PAGE>
FOREST OIL CORPORATION
Incorporated under the laws of the State of New York
THIS CERTIFIES THAT, for value received, JOINT ENERGY DEVELOPMENT
INVESTMENTS LIMITED PARTNERSHIP, a Delaware limited partnership, or
registered assigns, is entitled to purchase from Forest Oil Corporation, a
New York corporation (the "COMPANY"), at any time after the date of this
Warrant and prior to 5:00 P.M., Denver time, on the Expiration Date, at the
purchase price of $2.00 per share (as such price may be adjusted pursuant to
Section 7, the "WARRANT PRICE") the number of shares of common stock, $.10
par value per share, together with the associated rights distributed to the
holders of shares of Company common stock pursuant to the Rights Agreement
dated as of October 14, 1993 between the Company and Securities Trust
Corporation, as Rights Agent, as amended (the "COMMON STOCK"), which is equal
to the number of Warrants set forth above (as such number of shares may be
adjusted pursuant to Section 7, the "WARRANT SHARES").
SECTION 1. TRANSFERABILITY OF WARRANTS.
1.1 THE WARRANT REGISTER AND REGISTRATION. The Secretary of the
Company shall keep or cause to be kept at the office of the Company books for
the registration and transfer (the "WARRANT REGISTER") of this Warrant
certificate and any other Warrant certificate issued hereunder (collectively
including the initial Warrant, the "WARRANTS"). The Warrants shall be
numbered and shall be registered in the Warrant Register as they are issued.
The Company and the Secretary of the Company shall be entitled to treat a
person as the owner in fact for all purposes of each Warrant registered in
such person's name (each registered owner is herein referred to as a
"HOLDER") and shall not be bound to recognize any equitable or other claim to
or interest in such Warrant on the part of any other person, and shall not be
liable for any registration of transfer of Warrants that are registered or to
be registered in the name of a fiduciary or the nominee of a fiduciary unless
made with the actual knowledge that a fiduciary or nominee is committing a
breach of trust in requesting such registration of transfer, or with such
knowledge of such facts that its participation therein amounts to bad faith.
1.2 TRANSFER.
(a) The Warrants shall be transferable only on the Warrant
Register upon delivery thereof duly endorsed by the Holder or by his duly
authorized attorney or representative, which endorsement shall be guaranteed
by a bank or trust company located in the United States of America or by a
broker or dealer that is a member of a registered national securities
exchange, or accompanied by proper evidence of succession, assignment or
authority to transfer. In all cases of transfer by an attorney, the original
power of attorney, duly approved, or an official copy thereof, duly
certified, shall be deposited and remain with the Secretary of the Company.
In case of transfer by executors, administrators, guardians or other legal
representatives, duly authenticated evidence of their authority shall be
produced, and may
2
<PAGE>
be required to be deposited and remain with the Secretary of the Company in
its discretion. Upon any registration of transfer, the Company shall deliver
a new Warrant or Warrants to the persons entitled thereto. Subject to
Section 1.2(b), the Warrants shall be freely transferable, provided that the
Holder may transfer the Warrants without registration under the Securities
Act of 1933, as amended, only if the Holder shall deliver to the Company an
opinion of counsel reasonably satisfactory to the Company that such
registration is unnecessary.
(b) Until the Termination Date (as defined in the
JEDI/Anschutz Option dated as of the date hereof), (the "JEDI/PURCHASER
OPTION TERMINATION DATE"), the Warrants shall remain attached to the Tranche
B Loan, as defined in the JEDI Loan Agreement dated as of December 28, 1993
between the Company and Joint Energy Development Investments Limited
Partnership, a Delaware limited partnership ("JEDI"), as amended as of
_____________, 1995(1) (the "JEDI LOAN AGREEMENT"), and shall not be
transferable except to any transferee of the Tranche B Loan in accordance
with the terms of Section 8.07 of the JEDI Loan Agreement as in effect on the
date hereof.
1.3 FORM OF WARRANT. The Warrants shall be executed on behalf of
the Company by its Chairman of the Board, President or one of its Vice
Presidents and attested to by the Secretary of the Company or an Assistant
Secretary. The signature of any of such officers on the Warrants may be
manual or facsimile.
SECTION 2. EXCHANGE OF WARRANT. Each Warrant may be exchanged at the
option of the Holder thereof for another Warrant or Warrants entitling the
Holder thereof to purchase a like aggregate number of Warrant Shares as the
Warrant or Warrants surrendered then entitle such Holder to purchase. Any
Holder desiring to exchange a Warrant or Warrants shall make such request in
writing delivered to the Secretary of the Company, and shall surrender,
properly endorsed, which endorsement shall be guaranteed as provided in
Section 1.2(a) if the new Warrant or Warrants are to be issued other than in
the name of the Holder, the Warrant or Warrants to be so exchanged at the
office of the Secretary of the Company. Thereupon, a new Warrant or
Warrants, as the case may be, as so requested, shall be delivered to the
person entitled thereto.
SECTION 3. TERM OF WARRANTS; EXERCISE OF WARRANTS.
3.1 TERM OF WARRANTS. Each Holder shall have the right until 5:00
P.M., Denver time, on the Expiration Date (as defined below) to purchase from
the Company the number of fully paid and nonassessable Warrant Shares that
the Holder may at the time be entitled to purchase on exercise of such
Warrants at the Warrant Price. "EXPIRATION DATE" means the date that is the
earliest of (1) if the Company exercises the Conveyance Option (as defined in
the JEDI Loan Agreement), the date that is the third anniversary of the
Conveyance Date (as defined in the JEDI Loan Agreement), (2) the date that is
thirty (30) days after the receipt by the Holder of the Early Termination
Notice (as defined below), except that if, within five Business Days
- --------------------
(1) The date that is the Second Closing Date.
3
<PAGE>
(as defined below) after receipt of the Early Termination Notice, the Holder
shall duly exercise any demand registration right pursuant to the
Registration Rights Agreement dated as of the date hereof between the Company
and JEDI with respect to any Tranche B Warrant Shares, the Expiration Date
shall be the last day of the period during which the Company shall be
required by Section 1(g)(3) of such Registration Rights Agreement to maintain
the effectiveness of the registration statement covering the sale of such
Warrant Shares, and (3) December 31, 2002. "BUSINESS DAY" means any day
excluding Saturday, Sunday and any day which is a legal holiday for
commercial banks under the laws of the State of Colorado or the State of
Texas. "EARLY TERMINATION NOTICE" means a written notice to the Holder by
the Company advising the Holder of the expiration of the Warrants thirty (30)
days after receipt thereof and certifying to the Holder that the Average
Closing Price (as defined below) of the Common Stock for both the ninety (90)
day and fifteen (15) day periods immediately preceding the date of the Early
Termination Notice was greater than $2.50 per share (as adjusted pursuant to
Section 7, the "TERMINATION MINIMUM PRICE"); PROVIDED, HOWEVER, that the
Company may issue an Early Termination Notice only after __________, 1998(1) and
only if the Conveyance Option has not been exercised. "AVERAGE CLOSING
PRICE" per share of Common Stock for any period shall be the sum of the daily
closing prices divided by the number of trading days in the period. The
closing price for each day shall be the last reported sales price regular way
or, in case no such sale takes place on such day, the average of the closing
bid and asked prices regular way, in either case on the principal national
securities exchange on which the Common Stock is listed or admitted to
trading, or, if not listed or admitted to trading on any national securities
exchange, on NASDAQ National Market System or, if the Common Stock is not
listed or admitted to trading on any national securities exchange or quoted
on NASDAQ National Market System, the average of the closing bid and asked
prices as furnished by any New York Stock Exchange member firm selected from
time to time by the Board of Directors of the Company for such purpose or if
no such prices are available, the fair market value of the Common Stock as
determined by good faith action of the Board of Directors of the Company.
After the Expiration Date, any previously unexercised Warrants shall be void,
have no value and be of no further effect.
3.2 EXERCISE OF WARRANTS.
(a) On or before the JEDI/Purchaser Option Termination Date,
the Warrants may be exercised only pursuant to this Section 3.2(a). The
Warrants may be exercised, without the surrender thereof, upon the delivery
to the Secretary of the Company of (1) a duly completed form of Election to
Purchase attached hereto with respect to a number of Warrant Shares specified
therein, signed by Optionee (as defined in the JEDI/Anschutz Option) pursuant
to an irrevocable power of attorney granted by the Holder in the
JEDI/Anschutz Option, and (2) a certificate of the President or chief
financial officer of Optionee to the effect that (A) Optionee has exercised
the JEDI/Anschutz Option with respect to a number of Tranche B Warrant Shares
(as defined in the JEDI/Anschutz Option) in the aggregate equal to the number
of Warrant Shares specified in the Election to Purchase, (B) Optionee has
delivered to the Holder the
- ---------------------
(1) The date that is 36 months after the Second Closing Date.
4
<PAGE>
Anschutz Notice (as defined in the JEDI Loan Agreement) and (C) Optionee has
paid to the Holder the aggregate Option Price (as defined in the
JEDI/Anschutz Option) for such number of Tranche B Warrant Shares. The
payment of such aggregate Option Price for such number of Tranche B Warrant
Shares shall constitute payment in full of the Warrant Price for such number
of Warrant Shares. Subject to Section 8, upon delivery of the Election to
Purchase and the related certificate referred to in clause (2) above and
payment of the Warrant Price as aforesaid, and without regard to the
surrender of any Warrant in connection therewith, the Company shall issue and
cause to be delivered with all reasonable dispatch to or at the order of
Optionee and in the name of Optionee or at its order, a certificate for the
number of full Warrant Shares so purchased upon the exercise of such
Warrants, together with cash, as provided in Section 8, in respect to any
fractional Warrant Share otherwise issuable upon such surrender. Such
certificate shall be deemed to have been issued to such transferee and such
transferee shall be deemed to have become a holder of record of such Warrant
Shares as of the date of the payment of the Warrant Price; PROVIDED, HOWEVER,
that if, at the date of payment of such Warrant Price, the transfer books for
the Warrant Shares or other class of stock purchasable upon the exercise of
such Warrant shall be closed, the certificates for the Warrant Shares in
respect of which such Warrant is then exercised shall be issuable as of the
date on which such books shall next be opened (whether before or after the
Expiration Date) and until such date the Company shall be under no duty to
deliver any certificate for such Warrant Shares; PROVIDED, FURTHER, that the
transfer books, unless otherwise required by law, shall not be closed at any
one time for a period longer than 20 days. On or before the JEDI/Purchaser
Option Termination Date, the rights of purchase represented by the Warrant
shall be exercisable, at the election of Purchaser, either in full or from
time to time in part. After each such issuance of Warrant Shares pursuant to
this Section 3.2(a), the Company shall notify the Holder that the number of
Warrants evidenced hereby has been reduced by the number of Warrants so
exercised and the Holder shall deliver this Warrant to the Company in care of
the Secretary of the Company. The Company shall issue and cause to be
delivered with all reasonable dispatch to the Holder a new Warrant evidencing
the remaining Warrants that were evidenced by the Warrant.
(b) After the JEDI/Purchaser Option Termination Date, the
Warrants may be exercised only pursuant to this Section 3.2(b). The Warrants
may be exercised upon surrender to the Company in care of the Secretary of
the Company, of the Warrant to be exercised, together with the duly completed
and signed form of Election to Purchase attached hereto, and upon payment to
the Company of the Warrant Price for the number of Warrant Shares in respect
of which such Warrant is then exercised. Payment of the aggregate Warrant
Price in connection with an exercise pursuant to this Section 3.2(b), shall
be made, at the election of the Holder, (1) by wire transfer of immediately
available funds in accordance with written wire transfer instructions to be
provided by the Company, (2) by cancellation of Indebtedness (as defined in
the JEDI Loan Agreement) which is $1,000 or an integral multiple thereof, or
(3) by a combination of (1) and (2). In order to pay the Warrant Price
pursuant to clause (2) or (3) of this paragraph, the Holder shall deliver to
the Company a certificate of an officer or other duly authorized
representative of the Holder substantially to the effect that the Holder is
paying the amount of the Warrant Price therein specified by the cancellation
of an equal amount of Indebtedness and that, effective as of the date of the
certificate, an appropriate
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notation has been made on the ledger forming a part of the Note (as defined
in JEDI Loan Agreement) reflecting the amount of Indebtedness cancelled.
Subject to Section 8, upon such surrender of the Warrant and payment of the
Warrant Price as aforesaid, the Company shall issue and cause to be delivered
with all reasonable dispatch to the Holder and in the name of the Holder, a
certificate for the number of full Warrant Shares so purchased upon the
exercise of such Warrants, together with cash, as provided in Section 8, in
respect of any fractional Warrant Share otherwise issuable upon such
surrender. Such certificate shall be deemed to have been issued to the
Holder and the Holder shall be deemed to have become a holder of record of
such Warrant Shares as of the date of the surrender of such Warrants and
payment of the Warrant Price; PROVIDED, HOWEVER, that if, at the date of
surrender of such Warrant and payment of such Warrant Price, the transfer
books for the Warrant Shares or other class of stock purchasable upon the
exercise of such Warrant shall be closed, the certificates for the Warrant
Shares in respect of which such Warrant is then exercised shall be issuable
as of the date on which such books shall next be opened (whether before or
after the Expiration Date) and until such date the Company shall be under no
duty to deliver any certificate for such Warrant Shares; PROVIDED, FURTHER
that the transfer books, unless otherwise required by law, shall not be
closed at any one time for a period longer than 20 days. The rights of
purchase represented by the Warrant shall be exercisable, at the election of
the Holder, either in full or from time to time in part. If a Warrant is
exercised in respect of less than all of the Warrant Shares purchasable on
such exercise at any time prior to the Expiration Date, a new Warrant
evidencing the right to purchase the remaining Warrant Shares will be issued,
and the Company shall deliver the new Warrant to the Holder pursuant to the
provisions of this Section.
SECTION 4. PAYMENT OF TAXES, LEGEND.
4.1 PAYMENT OF TAXES. The Company will pay all documentary stamp
taxes, if any, attributable to the initial issuance of Warrant Shares upon
the exercise of the Warrant; PROVIDED, HOWEVER, that the Company shall not be
required to pay any tax or taxes that may be payable in respect of any
transfer involved in the issue or delivery of any certificates for Warrant
Shares in a name other than that or the Holder and the Company shall not be
required to issue or deliver such certificates unless of until the Holder
shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid.
4.2 LEGENDS.
(a) Each certificate for Warrant Shares and any certificate
issued in exchange therefor or on conversion or upon transfer, except
certificates issued in connection with a sale registered under the Securities
Act of 1933, as amended, and except as provided below, shall bear the legends
to the following effect:
1. "The shares represented by this certificate have not been
registered under the Securities Act of 1933 and may not be offered, sold,
transferred or otherwise disposed of except in compliance with said Act."
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2. "The shares represented by this certificate are subject to
restrictions set forth in the Registration Rights Agreement dated as of
__________, 1995, a copy of which is on file in the office of the
Secretary of the Company."
3. "This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement between Forest Oil
Corporation and Mellon Securities Trust Company, dated as of October 14,
1993 (the "Rights Agreement"), the terms of which are hereby incorporated
herein by reference and a copy of which is on file at the principal
executive offices of Forest Oil Corporation. Under certain circumstances,
as set forth in the Rights Agreement, those Rights will be evidenced by
separate certificates and will no longer be evidenced by this certificate.
Forest Oil Corporation will mail to the holder of this certificate a copy
of the Rights Agreement without charge after receipt of a written request
therefor. As described in the Rights Agreement, Rights issued to or
acquired by any Acquiring Person (as defined in the Rights Agreement)
shall, under certain circumstances, become null and void."
(b) The legend stated in Section 4.2(a)(1) shall be removed by
delivery of one or more substitute certificates without such legend if the
holder thereof shall have delivered to the Company a copy of a letter from the
staff of the Securities and Exchange Commission or an opinion of counsel, in
form and substance reasonably satisfactory to the Company, to the effect that
the legend is not required for purposes of the Securities Act of 1933, as
amended.
(c) The legend stated in Section 4.2(a)(2) shall be removed at
such time as the Warrant Shares are no longer subject to the Registration Rights
Agreement referenced therein.
SECTION 5. MUTILATED OR MISSING WARRANTS. If any Warrant shall be
mutilated, lost, stolen or destroyed, the Company shall issue and deliver in
exchange and substitution for and upon cancellation of the mutilated Warrant, or
in lieu of and substitution for the Warrant lost, stolen or destroyed, a new
Warrant of like tenor and representing an equivalent right or interest; but only
upon receipt of evidence reasonably satisfactory to it. An applicant for such a
substitute Warrant shall also comply with such other reasonable requirements and
pay such other reasonable charges as the Company may prescribe.
SECTION 6. RESERVATION OF WARRANT SHARES; PURCHASE OF WARRANTS.
6.1 RESERVATION OF WARRANT SHARES. There have been reserved, and the
Company shall at all times keep reserved, free from preemptive rights, out of
its authorized capital stock, the number of shares of Common Stock or other
shares of capital stock sufficient to provide for the exercise of the rights of
purchase represented by the outstanding Warrants. The transfer agent and every
subsequent transfer agent for any shares of the Company's capital stock issuable
upon the exercise of any of the rights of purchase will be irrevocably
authorized and directed at all times to reserve such number of authorized shares
as shall be required for such purpose. The Company will keep a copy of each
Warrant on file with every transfer agent for any shares
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of the Company's capital stock issuable upon the exercise of the rights of
purchase represented by the Warrants. Each transfer agent for the Common
Stock is hereby irrevocably authorized to cause to be issued from time to
time the stock certificates required to honor outstanding Warrants upon
exercise thereof in accordance with the terms hereof. The Company will
supply such transfer agent with duly executed stock certificates for such
purpose and will provide or otherwise make available any cash which may be
payable as provided in Section 8 hereof. All Warrants surrendered in the
exercise of the rights thereby evidenced shall be cancelled by the Company
and retired. Promptly after the Expiration Date, the Secretary of the
Company shall certify to the Company the aggregate number of Warrants then
outstanding, and thereafter no shares of Common Stock shall be subject to
reservation in respect of such Warrants.
The Company covenants that all shares issued upon exercise of the
Warrants will, upon issuance in accordance with the terms hereof be fully paid
and nonassessable and free from all taxes, liens, charges and security interests
created by the Company.
6.2 PURCHASE OF WARRANTS BY THE COMPANY. The Company shall have the
right, except as limited by law, other agreements or herein, to purchase or
otherwise acquire Warrants at such times, in such manner and for such
consideration as it may deem appropriate.
6.3 CANCELLATION OF WARRANTS. If the Company shall purchase or
otherwise acquire Warrants, the same shall thereupon be cancelled by the Company
and retired. The Company shall cancel any Warrant surrendered for exchange,
substitution, transfer or exercise in whole or in part.
SECTION 7. ADJUSTMENT OF WARRANT PRICE, NUMBER OF WARRANT SHARES AND
TERMINATION MINIMUM PRICE. The number and kind of securities purchasable upon
the exercise of each Warrant, the Warrant Price and the Termination Minimum
Price shall be subject to adjustment from time to time upon the happening of
certain events, as hereinafter described.
7.1 MECHANICAL ADJUSTMENTS. The number of Warrant Shares purchasable
upon the exercise of each Warrant, the Warrant Price payable in connection
therewith and the Termination Minimum Price shall be subject to adjustment from
time to time as follows:
(a) If the Company shall at any time pay a dividend on its
Common Stock (including, if applicable, shares of such stock held by the
Company in treasury) in shares of its Common Stock, subdivide its outstanding
shares of Common Stock into a larger number of shares or combine its
outstanding shares of Common Stock into a smaller number of shares, the
number of Warrant Shares issuable upon exercise of this Warrant immediately
prior thereto shall be adjusted so that this Warrant shall thereafter be
exercisable for the number of Warrant Shares equal to the number of shares of
Common Stock which the Holder would have held after the happening of any of
the events described above had this Warrant been exercised in full
immediately prior to the happening of such event. An adjustment made
pursuant to this paragraph (a) shall become effective retroactively to the
record date in the case of a dividend and shall become effective on the
effective date in the case of a subdivision or combination.
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(b) If the Company shall issue rights or warrants to all
holders of shares of Common Stock for the purpose of entitling them (for a
period not exceeding forty-five (45) days from the date of issuance) to
subscribe for or purchase shares of Common Stock at a price per share (taking
into account any consideration received by the Company for such rights or
warrants, the value of such consideration, if other than cash, to be
determined in good faith by the Board of Directors) less than the average
market price per share (determined as provided below) of the Common Stock on
the declaration date for such issuance, then in each such case, the number of
Warrant Shares thereafter issuable upon exercise of this Warrant after such
record date shall be determined by multiplying the number of Warrant Shares
issuable upon exercise of this Warrant on the date immediately preceding such
declaration date by a fraction, the numerator of which shall be the sum of
the number of shares of Common Stock outstanding on such declaration date and
the number of additional shares of Common Stock so offered for subscription
or purchase in connection with such rights or warrants, and the denominator
of which shall be the sum of the number of shares of Common Stock outstanding
on such declaration date and the number of shares of Common Stock which the
aggregate offering price of the total number of shares so offered would
purchase at such average market price; PROVIDED, HOWEVER, if all the shares
of Common Stock offered for subscription or purchase are not delivered upon
the exercise of such rights or warrants, upon the exercise of such rights or
warrants the number of Warrant Shares issuable upon exercise of this Warrant
shall thereafter be readjusted to the number of Warrant Shares which would
have been in effect had the numerator and the denominator of the foregoing
fraction and the resulting adjustment been made based upon the number of
shares of Common Stock actually delivered upon the exercise of such rights or
warrants rather than upon the number of shares of Common Stock offered for
subscription or purchase. Such adjustment shall be made whenever any such
rights or warrants are issued, and shall become effective on the date of
issuance retroactive to the record date for determination of shareholders
entitled to receive such rights or warrants. For the purposes of this
paragraph (b), the number of shares of Common Stock at any time outstanding
shall not include shares held in the treasury of the Company.
(c) If the Company shall distribute to all the holders of
Common Stock (i) any rights or warrants to subscribe for or purchase any
security of the Company (other than those referred to in paragraph (b) above)
or any evidence of indebtedness or other securities of the Company (other
than Common Stock), or (ii) assets (other than cash) having a fair market
value (as determined in a resolution adopted by the Board of Directors of the
Company, which shall be conclusive evidence of such fair market value) in an
amount during any 12-month period equal to more than 10% of the market
capitalization (as defined below) of the Company, then in each such case the
number of Warrant Shares issuable upon exercise of this Warrant shall be,
after the record date for determination of the shareholders entitled to
receive such distribution, determined by multiplying the number of Warrant
Shares issuable upon exercise of this Warrant on the day immediately
preceding the date of declaration or authorization by the Board of Directors
of the Company of such distribution by a fraction, the numerator of which
shall be the average market price per share (determined as provided in
paragraph (e) below) of the Common Stock on such declaration date, and the
denominator of which shall be such average market price per share less the
then fair market value (as determined by the Board of Directors of the
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Company as provided above) of the portion of the assets, rights, warrants,
evidences of indebtedness or other securities so distributed applicable to
one share of Common Stock. Such adjustment shall become effective
retroactively immediately after the declaration date. The term "MARKET
CAPITALIZATION" shall mean an amount determined by multiplying the number of
shares of Common Stock outstanding on such declaration date by the average
market price per share (determined as provided in paragraph (e) below) of the
Common Stock on such declaration date.
(d) In case of any capital reorganization or any
reclassification (other than a change in par value) of the capital stock of
the Company, or of any exchange or conversion of the Common Stock for or into
securities of another corporation, or in case of the consolidation or merger
of the Company with or into any other person (other than a merger which does
not result in any reclassification, conversion, exchange or cancellation of
outstanding shares of Common Stock) or in case of any sale or conveyance of
all or substantially all of the assets of the Company, the person formed by
such consolidation or resulting from such capital reorganization,
reclassification or merger or which acquires such assets, as the case may be,
shall make provision such that this Warrant shall thereafter be exercisable
for the kind and amount of shares of stock, other securities, cash and other
property receivable upon such capital reorganization, reclassification of
capital stock, consolidation, merger, sale or conveyance, as the case may be,
by a holder of the shares of Common Stock equal to the number of Warrant
Shares issuable upon exercise of this Warrant immediately prior to the
effective date of such capital reorganization, reclassification of capital
stock, consolidation, merger, sale or conveyance, assuming (i) such holder of
Common Stock of the Company is not a person with which the Company
consolidated or into which the Company merged or which merged into the
Company or to which such sale or transfer was made as the case may be
("CONSTITUENT ENTITY"), or an affiliate of a constituent entity, and (ii)
such person failed to exercise his rights of election, if any, as to the kind
or amount of securities, cash and other property receivable upon such capital
reorganization, reclassification of capital stock, consolidation, merger,
sale or conveyance and, in any case appropriate adjustment (as determined by
the Board of Directors) shall be made in the application of the provisions
herein set forth with respect to rights and interests thereafter of the
Holder, to the end that the provisions set forth herein (including the
specified changes in and other adjustments of the number of Warrant Shares
issuable upon exercise of this Warrant) shall thereafter be applicable, as
near as reasonably may be, in relating to any shares of stock or other
securities or other property thereafter deliverable upon exercise of this
Warrant.
(e) For the purpose of any computation under this Section 7,
the average market price per share of Common Stock on any date shall be the
average of the daily closing prices for the fifteen (15) consecutive trading
days commencing twenty (20) trading days before the date of declaration or
authorization by the Board of Directors of the Company of such issuance or
distribution. The closing price for each day shall be the last reported
sales price regular way or, in case no such sale takes place on such day, the
average of the closing bid and asked prices regular way, in either case on
the principal national securities exchange on which the Common Stock is
listed or admitted to trading, or, if not listed or admitted to trading on
any national securities exchange, on NASDAQ National Market System or, if the
Common Stock is not listed or admitted to trading on any national securities
exchange or quoted on NASDAQ
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National Market System, the average of the closing bid and asked prices as
furnished by any New York Stock Exchange member firm selected from time to
time by the Board of Directors of the Company for such purpose or if no such
prices are available, the fair market value of the Common Stock as determined
by good faith action of the Board of Directors of the Company.
(f) All calculations under this Section 7 shall be made to the
nearest one-thousandth of a share of Common Stock.
(g) Whenever the number of Warrant Shares purchasable upon the
exercise of this Warrant is adjusted as provided in paragraphs (a) through
(f), inclusive, above, the Warrant Price payable upon exercise of this
Warrant and the Termination Minimum Price shall be adjusted by multiplying
each of such Warrant Price and the Termination Minimum Price immediately
prior to such adjustment by a fraction, the numerator of which shall be the
number of Warrant Shares purchasable upon the exercise of this Warrant
immediately prior to such adjustment, and the denominator of which shall be
the number of Warrant Shares so purchasable immediately thereafter.
(h) In case of any consolidation or merger of the Company with
or into another entity (whether or not the Company is the surviving entity)
or in case of any sale, transfer or lease of all or substantially all of the
assets of the Company, the Company or such successor or purchasing entity, as
the case may be, shall execute with the Holder an agreement that the Holder
shall have the right thereafter upon payment of the Warrant Price in effect
immediately prior to such action to purchase upon exercise of this Warrant
the kind and amount of shares and other securities, cash and property that
the Holder would have owned or would have been entitled to receive after the
happening of such consolidation, merger, sale, transfer, lease or conveyance
had this Warrant been exercised in full immediately prior to such action, and
if the successor or purchasing entity is not a corporation, such person shall
provide appropriate tax indemnification with respect to such shares or other
securities and property so that upon exercise of this Warrant, the Holder
would have the same benefits it otherwise would have had if such successor or
purchasing person were a corporation. Such agreement shall provide for
adjustments that shall be as nearly equivalent as may be practicable to the
adjustments provided for in Sections 7(a) through 7(h), inclusive. The
provisions of this Section 7(h) shall similarly apply to successive
consolidations, mergers, sales or conveyances.
(i) For the purpose of this Section 7, the term "SHARES OF
COMMON STOCK" shall mean (i) the class of stock designated as the Common
Stock of the Company at the date of this Warrant or (ii) any other class of
stock resulting from successive changes or reclassification of such shares
consisting solely of changes in par value, or from par value to no par
value, or from no par value to par value. In the event that at any time, as
a result of an adjustment made pursuant to paragraph (a) through (d) above,
the Holder shall become entitled to receive any shares of the Company other
than shares of Common Stock, thereafter the number of such other shares so
receivable upon exercise of this Warrant, the Warrant Price and the
Termination Minimum Price shall be subject to adjustment from time to time in
a manner and on terms as nearly equivalent as practicable to the provisions
with respect to the Warrant Shares
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contained in paragraphs (a) through (h), inclusive, above, and the provisions
of Sections 7.2, 7.3, 7.4 and 7.5, inclusive, with respect to the Warrant
Shares, shall apply on like terms to any such other shares.
(j) Upon the expiration of any rights, options, warrants or
exercise or exchange privileges, if any thereof shall not have been exercised,
the Warrant Price and the Termination Minimum Price shall, upon such expiration,
be readjusted and shall thereafter be such as it would have been had it been
originally adjusted (or had the original adjustment not been required, as the
case may be) as if (1) the only shares of Common Stock so issued were the shares
of Common Stock, if any, actually issued or sold upon the exercise of such
rights, options, warrants, exchange privileges or exercise rights and (2) such
shares of Common Stock, if any, were issued or sold for the consideration
actually received by the Company upon such exercise plus the consideration, if
any, actually received by the Company for the issuance, sale or grant of all of
such rights, options, warrants or exercise rights whether or not exercised;
PROVIDED that no such readjustment shall have the effect of increasing the
Warrant Price or the Termination Minimum Price or decreasing the number of
Warrant Shares purchasable upon the exercise of this Warrant by an amount in
excess of the amount of the adjustment initially made in respect to the
issuance, sale or grant of such rights, options, warrants or exercise rights.
7.2 TIME OF ADJUSTMENTS. Each adjustment required by Section 7 shall
be effective as and when the event requiring such adjustment occurs.
7.3 NOTICE OF ADJUSTMENT. Whenever the number of Warrant Shares
purchasable upon the exercise of each Warrant, the Warrant Price or the
Termination Minimum Price is adjusted as herein provided, the Company shall
promptly mail by first class mail, postage prepaid, the Holder a certificate
of a firm of independent public accountants selected by the Board of
Directors of the Company (who may be the regular accountants employed by the
Company) setting forth the number of Warrant Shares purchasable upon the
exercise of each Warrant, the Warrant Price and the Termination Minimum Price
after such adjustment, setting forth a brief statement of the facts requiring
such adjustment and setting forth the computation by which such adjustment
was made. Such certificate shall be conclusive evidence of the correctness of
such adjustment.
7.4 NO ADJUSTMENT FOR DIVIDENDS. Except as provided in Section 7.1,
no adjustment in respect of any dividends shall be made during the term of a
Warrant or upon the exercise of a Warrant.
7.5 STATEMENT ON WARRANTS. Irrespective of any adjustments in the
Warrant Price, the Termination Minimum Price or the number or kind of shares
purchasable upon the exercise of Warrants, Warrants theretofore or thereafter
issued may continue to express the same prices and number and kind of shares as
are stated in the initial Warrant.
SECTION 8. FRACTIONAL INTERESTS. The Company shall not be required to
issue fractional Warrant Shares on the exercise of Warrants. If any fraction of
a Warrant Share would be
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issuable on the exercise of Warrants (or specified portion thereof), the
Company shall, in lieu of issuance of such fraction of a Warrant Share,
calculate and pay an amount in cash equal to the closing price per Warrant
Share on the trading day immediately preceding the date of exercise of the
Warrant multiplied by such fraction. The closing price shall be the last
reported sales price regular way or, in case no such sale takes place on such
day, the average of the closing bid and asked prices regular way, in either
case on the principal national securities exchange on which the Common Stock
is listed or admitted to trading, or, if not listed or admitted to trading on
any national securities exchange, on NASDAQ National Market System or, if the
Common Stock is not listed or admitted to trading on any national securities
exchange or quoted on NASDAQ National Market System, the average of the
closing bid and asked prices as furnished by any New York Stock Exchange
member firm selected from time to time by the Board of Directors of the
Company for such purpose or if no such prices are available, the fair market
value of the Common Stock as determined by good faith action of the Board of
Directors of the Company.
SECTION 9. NO RIGHTS AS SHAREHOLDER; NOTICES TO HOLDERS. Nothing
contained in this Warrant or in any of the Warrants shall be construed as
conferring upon the Holder the right to vote or to receive dividends or to
consent or to receive notice as shareholders in respect of any meeting of
shareholders for the election of directors of the Company or any other matter,
or any rights whatsoever as shareholders of the Company. If, however, at any
time prior to the expiration of the Warrants and prior to their exercise, any of
the following events shall occur:
(a) the Company shall declare any dividend (or any other
distribution) on Common Stock, other than a cash dividend or shall declare or
authorize repurchase of in excess of 10% of the then outstanding shares of
Common Stock; or
(b) the Company shall authorize the granting to all holders of
Common Stock of rights or warrants to subscribe for or purchase any shares of
stock of any class or any other rights or warrants; or
(c) The Company shall propose any capital reorganization,
recapitalization, subdivision or reclassification of Common Stock (other than a
subdivision or combination of the outstanding Common Stock or Stock, or a change
in par value, or from par value to no par value or from no par value to par
value), or any consolidation or merger to which the Company is a party for which
approval of any shareholders of the Company shall be required, or the sale,
transfer or lease of all or substantially all of the assets of the Company; or
(d) the voluntary or involuntary dissolution, liquidation or
winding up of the Company (other than in connection with a consolidation,
merger, or sale of all or substantially all of its property, assets and business
as an entirety) shall be proposed;
then in any one or more of said events, the Company shall give notice in writing
of such event to the Holder at least 15 days prior to the date fixed as a record
date or the date of closing the transfer books for the determination of the
shareholders entitled to such dividend, distribution,
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or subscription rights, or for the determination of shareholders entitled to
vote on such proposed consolidation, merger, sale, transfer or lease of
assets, dissolution, liquidation or winding up.
SECTION 10. NOTICES. All notices, requests and other communications
with respect to the Warrants shall be in writing. Communications may be made
by telecopy or similar writing. Each communication shall be given to the
Holder, in care of Enron Capital Corp., at 1400 Smith Street, Houston, Texas
77002, Attention: Keith Power (telecopy number: (713) 646-3602), with a copy
to Enron Capital & Trade Resources Corp., 1200 17th Street, Suite 2750,
Denver, Colorado 80202, attention: Clifford Hickey (Telecopy No.: (303)
534-2205) and to the Company at 1500 Colorado National Building, 950-17th
Street, Denver, Colorado 80202 (telecopy number: (303) 298-8881), or at any
other address as the party may specify for this purpose by notice to the
other party. Each communication shall be effective (1) if given by telecopy,
when the telecopy is transmitted to the proper address and the receipt of the
transmission is confirmed, (2) if given by mail, 72 hours after the
communication is deposited in the mails properly addressed with first class
postage prepaid or (3) if given by any other means, when delivered to the
proper address and a written acknowledgement of delivery is received.
SECTION 11. NO WAIVERS; REMEDIES; SPECIFIC PERFORMANCE.
(a) Prior to the Expiration Date, no failure or delay by any
party in exercising any right, power or privilege with respect to the
Warrants shall operate as a waiver of the right, power or privilege. A
single or partial exercise of any right, power or privilege shall not
preclude any other or further exercise of the right, power or privilege or
the exercise of any other right, power or privilege. The rights and remedies
provided in the Warrants shall be cumulative and not exclusive of any rights
or remedies provided by law.
(b) In view of the uniqueness of the Warrants, the Holder
would not have an adequate remedy at law for money damages in the event that
any of the obligations arising under the Warrants is not performed in
accordance with its terms, and the Company therefore agrees that the Holder
shall be entitled to specific enforcement of the terms of the Warrants in
addition to any other remedy to which they may be entitled, at law or in
equity.
SECTION 12. AMENDMENTS, ETC. No amendment, modification, termination,
or waiver of any provision of a Warrant, and no consent to any departure from
any provision of the Warrant, shall be effective unless it shall be in
writing and signed and delivered by the Company, the Holder and, until the
JEDI/Purchase Option Termination Date, the Purchaser, and then it shall be
effective only in the specific instance and for the specific purpose for
which it is given. The rights of the Holder and the terms and provisions of
this Warrant including, without limitation, the performance of the
obligations of the Company hereunder, shall not be affected in any manner
whatsoever by the terms and provisions of any other agreement, whether
entered into prior to or after the date of this Warrant, including, without
limitation, the Second Amendment to the JEDI Loan Agreement or of any
instruments, notes or other agreements
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entered into pursuant thereto, or the performance of, or failure to perform,
the obligations of any party thereunder.
SECTION 13. GOVERNING LAW. The Warrants shall be governed by and
construed in accordance with the internal laws of the State of New York. All
rights and obligations of the Company shall be in addition to and not in
limitation of those provided by applicable law.
SECTION 14. SEVERABILITY OF PROVISIONS. Any provision of the Warrants
that is prohibited or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of the prohibition or
unenforceability without invalidating the remaining provisions of the
Warrants or affecting the validity or enforceability of the provision in any
other jurisdiction.
SECTION 15. HEADINGS AND REFERENCES. Headings in the Warrants are
included for the convenience of reference only and do not constitute a part
of the Warrants for any other purpose. References to parties and sections in
the Warrant are references to the parties or the sections of the Warrant, as
the case may be, unless the context shall require otherwise.
SECTION 16. NON-EXCLUSIVE JURISDICTION. Each of the Company and the
Holder, by acceptance hereof, (1) agrees that any legal action with respect
to the Warrant may be brought in the courts of the State of New York or of
the United States of America for the Southern District of New York, (2) each
of the Company and the Holder, by acceptance hereof, accepts for itself and
in respect of its property, generally and unconditionally, the jurisdiction
of those courts and (3) irrevocably waives any objection, including, without
limitation, any objection to the laying of venue or based on the grounds of
FORUM NON CONVENIENS, which it may now or hereafter have to the bringing of
any legal action in those jurisdictions.
SECTION 17. WAIVER OF JURY TRIAL. Each of the Company and the Holder,
by acceptance hereof, waives any right to a trial by jury in any legal action
to enforce or defend any right under the Warrants or any amendment,
instrument, document or agreement delivered, or which in the future may be
delivered, in connection with the Warrants and agrees that any legal action
shall be tried before a court and not before a jury.
SECTION 18. MERGER OR CONSOLIDATION OF THE COMPANY. The Company will
not merge or consolidate with or into any other corporation unless the
corporation resulting from such merger or consolidation (if not the Company)
shall expressly assume, by supplemental agreement, the due and punctual
performance and observance of each and every covenant and condition of this
Warrant to be performed and observed by the Company.
15
<PAGE>
THIS WARRANT is executed by the Company on the date set forth below
in New York, New York.
Dated: __________, 1995 FOREST OIL CORPORATION
Attest: By:
----------------------- -----------------------------
Name: Name:
Title: Title:
16
<PAGE>
FOREST OIL CORPORATION
Election to Purchase
Mail Address
-------------------- -------------------
-------------------- -------------------
-------------------- -------------------
The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the within Warrant for and to purchase thereunder,
shares of the stock provided for herein, and requests that certificates for such
shares be issued in the name of
----------------------------------------------------
----------------------------------------------------
(Please Print Name, Address and Social Security No.)
----------------------------------------------------
and, if said number of shares shall not be all the shares purchasable
thereunder, that a new Warrant Certificate for the balance remaining of the
shares purchasable under the within Warrant Certificate be registered in the
name of the undersigned holder of this Warrant or his Assignee as below
indicated and delivered to the address stated below.
Date: , .
----------------- ------
Name of holder of this Warrant or Assignee: ----------------
(Please Print)
Address:
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
Signature:
--------------------------------------------------
Note: The above signature must correspond with the name as written upon the face
of this Warrant Certificate in every particular without alteration or
enlargement or any change whatever unless this Warrant has been assigned.
Signature Guaranteed:
-------------------------------------
<PAGE>
EXHIBIT M
FORM OF
JEDI/ANSCHUTZ OPTION
THIS JEDI/ANSCHUTZ OPTION HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF EXCEPT IN COMPLIANCE WITH SAID ACT. THIS JEDI/ANSCHUTZ OPTION
AND THE TRANCHE B WARRANT SHARES (AS DEFINED HEREIN) ARE ALSO SUBJECT TO THE
RESTRICTIONS CONTAINED IN A REGISTRATION RIGHTS AGREEMENT DATED AS OF
__________, 1995(1) AND THE RESTRICTIONS CONTAINED IN A SHAREHOLDERS
AGREEMENT DATED AS OF __________, 1995(2), COPIES OF WHICH ARE ON FILE AT THE
OFFICE OF THE SECRETARY OF FOREST OIL CORPORATION.
JEDI/ANSCHUTZ OPTION dated as of __________, 1995 by JOINT ENERGY
DEVELOPMENT INVESTMENTS LIMITED PARTNERSHIP, a Delaware limited partnership
("OPTIONOR"), in favor of THE ANSCHUTZ CORPORATION, a Kansas corporation, and
its successors and assigns ("OPTIONEE").
Optionor agrees as follows:
SECTION 1. DEFINITIONS. The following terms have the following
meanings:
"ACTION" against a person means an action, suit, investigation,
complaint or other proceeding threatened or pending against or affecting the
person or its property, whether civil or criminal, in law or in equity or before
any arbitrator or Governmental Body.
"APPROVAL" means an authorization, consent, approval or waiver of,
clearance by, notice to or registration or filing with, or any other similar
action by or with respect to a Governmental Body or any other person and the
expiration or termination of all prescribed waiting, review or appeal periods
with respect to any of the foregoing.
- ---------------------
(1) The date that is the First Closing Date.
(2) The date that is the Second Closing Date.
<PAGE>
"COMMON STOCK" means the common stock, $.10 par value per share,
together with the associated Rights, of the Company.
"COMPANY" means Forest Oil Corporation, a New York corporation, and
its successors.
"CONVEYANCE ELECTION DATE" means the date on which the Company elects
to exercise the Conveyance Option (as defined in the Loan Agreement) which
Conveyance Option has been approved in writing by the Optionee.
"EXERCISE NOTICE" has the meaning stated in Section 2(b).
"GOVERNMENTAL BODY" means any agency, bureau, commission, court,
department, official, political subdivision, tribunal or other instrumentality
of any government, whether federal, state, county or local, domestic or foreign.
"HART-SCOTT-RODINO ACT" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the related rules, regulations and
published interpretations thereunder.
"LIEN" means any mortgage, deed of trust, lien (statutory or
otherwise), pledge, hypothecation, charge, deposit arrangement, preference,
priority, security interest or encumbrance of any kind (including, but not
limited to, any conditional sale agreement or other title retention agreement,
any capitalized lease or financing lease having substantially the same economic
effect as the foregoing and the filing of or agreement to give any financing
statement under the Uniform Commercial Code or comparable law of any
jurisdiction to evidence any of the foregoing).
"LOAN AGREEMENT" means the Loan Agreement dated as of December 28,
1993 between the Company and the Optionor, as amended through the date hereof.
"OPTION" has the meaning stated in Section 2(a).
"OPTION PRICE" means a dollar amount per Tranche B Warrant Share equal
to the amount set forth on Schedule A hereto with respect to the month in which
the Exercise Notice is received by the Optionor, as such price per share may be
adjusted pursuant to the terms of the Tranche B Warrant.
"REGULATION" means (1) any applicable law, rule, regulation, judgment,
decree, ruling, order, award, injunction, recommendation or other official
action of any Governmental Body and (2) any official change in the
interpretation or administration of any of the foregoing by the Governmental
Body or by any other Governmental Body or other person responsible for the
interpretation or administration of any of the foregoing.
2
<PAGE>
"RIGHTS" means the rights distributed or to be distributed to the
holders of shares of Common Stock pursuant to the Right Agreement dated as of
October 14, 1993 between the Company and Securities Trust Corporation, as Rights
Agent, as amended.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
"TERMINATION DATE" means the earlier of (1) the Conveyance Election
Date and (2) _____________, 1998(3).
"TRANCHE B WARRANT SHARES" means 11,250,000 shares of Common Stock
that may be issued, sold and delivered by the Company to Optionor upon exercise
of the Tranche B Warrants (as such number of shares of Common Stock may be
adjusted pursuant to the terms of the Tranche B Warrants) and the other shares
of capital stock, securities, cash and property receivable upon exercise of the
Tranche B Warrants.
"TRANCHE B WARRANTS" means the warrants to purchase 11,250,000 Tranche
B Warrant Shares from the Company at a purchase price of $2.00 per Tranche B
Warrant Share (as such number of shares and price per share may be adjusted
pursuant to the terms of the Tranche B Warrants).
"TRANSFER" means the offer, transfer, sale, assignment, pledge,
hypothecation or other disposition, whether directly or indirectly, of the
subject of the transaction or any interest therein or to offer, transfer, sell,
assign, pledge, hypothecate or otherwise dispose of the subject of the
transaction, as the context requires.
SECTION 2. TERM OF OPTION; EXERCISE OF OPTION; REDUCTION OF
OPTION.
a. TERM OF OPTION. Subject to the conditions and on the terms
of this JEDI/Anschutz Option, Optionee shall have the right (the "OPTION") until
5:00 P.M., Denver time, on the Termination Date, to purchase from Optionor any
or all of the Tranche B Warrant Shares on exercise of the Option and the payment
of the Option Price for the number of Tranche B Warrant Shares so purchased.
The Option shall be void, have no value and be of no further effect with respect
to any Exercise Notice delivered to Optionor after the Termination Date.
b. EXERCISE OF OPTION. The Option may be exercised in whole or
in part at any time and from time to time by (i) delivery by Optionee to
Optionor (no later than concurrently with delivery to the Company of the
instruments and certificate required under Section 3.2(a) of the Tranche B
Warrant) of the Anschutz Notice (as defined in the Loan Agreement) (the
"EXERCISE NOTICE") stating the Optionee is exercising the Option in respect of
the number of Tranche B Warrant Shares specified therein, (ii) payment to
Optionor of the Option Price with respect to such Tranche B Warrant Shares and
(iii) delivery to the Secretary
- ------------------------
(3) The date that is 36 months after the Second Closing Date.
3
<PAGE>
of the Company of a duly completed copy of the Election to Purchase attached
to the Tranche B Warrant and a certificate of the President or chief
financial officer of Optionee to the effect that Optionee has exercised the
Option with respect to a specified number of Tranche B Warrant Shares and has
paid to the Optionor the aggregate Option Price with respect to such shares,
as required by Section 3.2(a) of the Tranche B Warrants. Payment of the
aggregate Option Price shall be made by wire transfer of immediately
available funds in accordance with written wire instructions to be provided
by Optionor. It is the intention of Optionor and Optionee that in all events
the Optionee shall be entitled to receive upon exercise of the Option only
the capital stock, other securities, cash and other property receivable upon
exercise of the Tranche B Warrants. Except as specifically set forth in the
Tranche B Warrant, Optionor shall have no obligation to take any action upon
exercise of the Option.
c. REDUCTION OF OPTION. The number of Tranche B Warrant Shares
subject to the Option shall be reduced, effective after the issuance of the
Tranche B Warrant Shares specified in the Exercise Notice, by the number of
Tranche B Warrant Shares specified in the Exercise Notice.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF OPTIONOR. Optionor
represents and warrants to Optionee as follows:
a. EXISTENCE AND POWER. Optionor (1) is a Delaware limited
partnership duly formed, validly existing and in good standing under the laws of
Delaware and (2) has all necessary partnership power and authority to execute
and deliver the JEDI/Anschutz Option.
b. AUTHORIZATION; CONTRAVENTION. The execution and delivery of
the JEDI/Anschutz Option by Optionor and, except as noted in Section 3(c), the
performance of Optionor's obligations under the JEDI/Anschutz Option, have been
duly authorized by all necessary partnership action and do not and will not
contravene, violate, result in a breach of or constitute a default under, (1)
the Optionor's agreement of limited partnership, (2) any Regulation of any
Governmental Body or any decision, ruling, order or award of any arbitrator by
which Optionor or any of its properties may be bound or affected, including, but
not limited to, the Hart-Scott-Rodino Act, (3) any agreement, indenture or other
instrument to which it is a party or by which Optionor or its properties may be
bound or affected or (4) result in or require the creation or imposition of any
Lien on any of the properties which it now owns or hereafter acquires.
c. APPROVALS. Except for Approvals, if any, that may be
required under the Hart-Scott-Rodino Act or state securities laws upon exercise
of the Option, all Approvals required to be obtained by Optionor have been
obtained by Optionor for (1) the due execution and delivery by Optionor of the
JEDI/Anschutz Option, and (2) the performance by Optionor of its obligations
under the JEDI/Anschutz Option.
4
<PAGE>
d. BINDING EFFECT. The JEDI/Anschutz Option, when executed and
delivered by Optionor, is a legal, valid and binding obligation, enforceable
against Optionor in accordance with its terms.
e. OWNERSHIP. Optionor owns all the Tranche B Warrants and as
of the date of each Exercise Notice will own all the Tranche B Warrants other
than Tranche B Warrants previously exercised, in each case free and clear of all
Liens.
f. CONTINUING REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties made by Optionor in the JEDI/Anschutz Option as
of any date other than the date on which the Optionor first executes the
JEDI/Anschutz Option shall be true and correct on and as of each date Tranche B
Warrant Shares are transferred to Optionee pursuant to the JEDI/Anschutz Option.
SECTION 4. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF OPTIONEE.
Upon acceptance hereof, Optionee represents and warrants to and covenants and
agrees with Optionor as follows:
a. INVESTMENT INTENT. Optionee is acquiring the JEDI/Anschutz
Option for investment and not with any view toward distribution of the Option or
any portion thereof to any other person in violation of the Securities Act or
any state securities law; Optionee will not transfer the Option or any interest
therein except in compliance with the registration requirements under the
Securities Act and applicable state securities laws or available exemptions
therefrom; and before any transfer of the Option or any interest therein the
Optionee shall deliver to the Optionor the legal opinion referred to in
Section 7(a) hereof.
b. TRANSFER TAXES. Optionee shall pay any documentary stamp
taxes or other taxes, if any, attributable to the initial issuance of Tranche B
Warrant Shares pursuant to the exercise of the Option.
c. TRANSFEREE ASSUMPTION AGREEMENT. Upon receipt of the
Transferee Assumption Agreement in the form of Annex 1 hereto duly executed and
delivered to Optionee, Optionee shall, at the request of the person executing
the Transferee Assumption Agreement deliver the JEDI/Anschutz Option to Optionor
marked "cancelled" upon receipt of a replacement option identical in all
respects to the JEDI/Anschutz Option except for the replacement of the name of
the Optionor to the name of such transferee in the replacement option.
d. FURTHER AGREEMENTS OF OPTIONEE. Without the prior written
approval of the Optionor, which approval may be granted or withheld in the
discretion of the Optionor, the Optionee shall not (1) take any action (other
than the exercise of the Option) that could in any manner whatsoever adversely
affect the right of the Holder (as defined in the Tranche B Warrants) to
exercise any of the Tranche B Warrants or restrict the Company from issuing to
the Holder the securities or other property issuable to the Holder upon the
exercise of the Tranche B Warrants or (2) take any action to amend, supplement,
replace or otherwise
5
<PAGE>
modify the terms of the Tranche A Warrants to permit the exercise of the
Tranche A Warrants on a date occurring after the Expiration Date (as defined
in the Tranche A Warrant as in effect on even date herewith).
SECTION 5. COVENANTS OF OPTIONOR.
a. SURRENDER AND EXERCISE OF TRANCHE B WARRANTS. At all times
before the Termination Date, (1) Optionor shall comply with the requirement to
surrender Tranche B Warrants pursuant to Section 3.2(a) thereof and (2) Optionor
shall not exercise any Tranche B Warrants except in accordance with the terms
hereof.
b. TRANSFER OF TRANCHE B WARRANTS. Optionor shall not transfer
any Tranche B Warrants (or any interest therein) or the Tranche B Loan (as
defined in the Loan Agreement) to which the Tranche B Warrants are attached (or
any interest therein) including, without limitation, in connection with the
liquidation, dissolution or merger of Optionor, on or prior to the Termination
Date except in connection with a permitted transfer of the Tranche B Warrants in
accordance with the terms thereof as in effect on the date hereof and then only
as and when the transferee thereof executes and delivers to Optionee the
Transferee Assumption Agreement attached hereto as Annex 1. Upon transfer of
any Tranche B Warrants in accordance with the provisions of this Section 5(b),
Optionor shall be released from and shall have no further obligation under this
JEDI/Anschutz Option with respect to the Tranche B Warrant Shares issuable upon
exercise of the Tranche B Warrants so transferred.
c. FURTHER AGREEMENTS OF OPTIONOR. Without the prior written
approval of Optionee, which approval may be granted or withheld at the
discretion of the Optionee, Optionor shall not take any action (1) that could in
any manner whatsoever adversely affect the right of the Holder (as defined in
the Tranche A Warrants) to exercise any of the Tranche A Warrants, (2) on or
prior to the Termination Date, that could in any manner whatsoever adversely
affect the right of the Holder (as defined in the Tranche B Warrant) to exercise
any of the Tranche B Warrants, (3) that would prohibit or otherwise restrict the
Company from issuing the securities or other property issuable upon exercise of
the Tranche A Warrants or, on or prior to the Termination Date, the Tranche B
Warrants or (4) on or prior to the Termination Date waive, surrender or
otherwise extinguish any of the Optionor's rights with respect to the Tranche B
Warrants; PROVIDED, HOWEVER, that nothing contained in this Section 5(c) shall
limit in any manner whatsoever the right of Optionor under the Loan Documents
(as defined in the Loan Agreement) to exercise its remedies thereunder in
accordance with the terms thereof.
d. COMPLIANCE WITH LAWS. Optionor shall comply in all respects
with all Regulations of each Governmental Body and all decisions, rulings,
orders and awards of each arbitrator applicable to it or its business,
properties or operations, including, but not limited to, all of the provisions
of the Hart-Scott-Rodino Act, in connection with the JEDI/Anschutz Option.
6
<PAGE>
e. BEST EFFORTS. Optionor shall use its best efforts to take,
or cause to be taken, all action, and to do, or cause to be done, and to assist
and cooperate with Optionee in doing all things necessary, proper or advisable
under applicable Regulations to ensure that the sale of Tranche B Warrant Shares
pursuant to the JEDI/Anschutz Option are concluded, without interference or
delay, in the most expeditious manner practicable.
f. FURTHER ASSURANCES. Promptly upon request by Optionee,
Optionor shall correct any defect or error that may be discovered in the
JEDI/Anschutz Option or in the execution of the JEDI/Anschutz Option and
execute, acknowledge, deliver, file, re-file, register and re-register, any and
all such further acts, certificates, assurances and other instruments as
Optionee may require from time to time in order (1) to carry out more
effectively the purposes of the JEDI/Anschutz Option, (2) to enable Optionee to
exercise and enforce its rights and remedies and collect any payments and
proceeds under the JEDI/Anschutz Option and (3) to better transfer, preserve,
protect and confirm to Optionee the rights granted or now or hereafter intended
to be granted to Optionee under the JEDI/Anschutz Option or under each other
instrument executed in connection with or pursuant to the JEDI/Anschutz Option.
SECTION 6. TRANSFERABILITY OF JEDI/ANSCHUTZ OPTION.
a. TRANSFER. The JEDI/Anschutz Option shall be transferable in
whole or in part. No such transfer shall occur without delivery to the Optionor
of an opinion of that such transfer may be made without registration under the
Securities Act and applicable state securities laws.
b. EXCHANGE. The JEDI/Anschutz Option may be exchanged at the
election of Optionee for one or more JEDI/Anschutz Option(s) entitling
Optionee(s) thereof to purchase a like aggregate number of Tranche B Warrant
Shares as the JEDI/Anschutz Option surrendered then entitles such Optionee to
purchase. Any Optionee desiring to exchange a JEDI/Anschutz Option shall make
such request in writing delivered to the Secretary of Optionor, and shall
surrender, duly endorsed or with separate assignment and stock powers duly
endorsed, the JEDI/Anschutz Option to be so exchanged at the office of the
Secretary of the Optionor. Thereupon, one or more new JEDI/Anschutz Option(s),
as so requested, shall be delivered to the person entitled thereto.
SECTION 7. POWER OF ATTORNEY.
a. Optionor hereby irrevocably appoints the Optionee (acting in
its capacity as attorney-in-fact pursuant hereto, the "ATTORNEY-IN-FACT") as the
true and lawful attorney-in-fact and agent of Optionor, with power of
substitution and resubstitution, to act in the name, place and stead of Optionor
solely with respect to the following:
(1) to exercise the Tranche B Warrants on behalf of Optionor; and
7
<PAGE>
(2) to instruct the Company, on behalf of Optionor, to issue and
deliver the Tranche B Warrant Shares acquired upon exercise of the Tranche
B Warrant pursuant to Section 3.2(a) thereof to the Optionee or its
assigns.
b. Optionor hereby acknowledges and confirms that the Power of
Attorney granted pursuant to this Section 7 is coupled with an interest and,
therefore, shall be irrevocable and shall not be terminated by any act of
Optionor or by operation of law, whether by the liquidation or dissolution of
the Optionor or by the occurrence of any other event or events, and if, after
the execution hereof, Optionor is liquidated or dissolved, or if any other such
event or events shall occur before the completion of the transactions
contemplated by this Section 7 and Section 3.2(a) of the Tranche B Warrant, the
Attorney-in-Fact shall nevertheless be authorized and directed to complete all
such transactions as if such liquidation or other event or events had not
occurred and regardless of notice thereof.
c. The Power of Attorney granted under this Section 7 shall
terminate at 5:00 P.M., Denver time, on the Termination Date.
SECTION 8. MISCELLANEOUS PROVISIONS.
a. NOTICES. All notices, requests and other communications to
Optionor or any Optionee under the JEDI/Anschutz Option shall be in writing.
Communications may be made by telecopy or similar writing. Each communication
to Optionor shall be given to the Optionor at its address stated on the
signature page of the JEDI/Anschutz Option (or at any other address as Optionor
may specify in writing to each Optionee at the time of such notice) for this
purpose by notice to the Optionor. Each communication to the Optionee shall be
given to Optionee at 2400 Anaconda Tower, 555 - 17th Street, Denver, Colorado
80202 (telecopy number: 303-298-8881) or such address as communicated to
Optionor in writing (or, in each case, at any other address as Optionee may
specify to Optionor at the time of such notice). Each communication shall be
effective (1) if given by telecopy, when the telecopy is transmitted to the
proper address and the receipt of the transmission is confirmed, (2) if given by
mail, 72 hours after the communication is deposited in the mails properly
addressed with first class postage prepaid or (3) if given by any other means,
when delivered to the proper address and a written acknowledgement of delivery
is received.
b. NO WAIVERS; REMEDIES; SPECIFIC PERFORMANCE.
(1) Prior to the Termination Date no failure or delay by Optionee in
exercising any right, power or privilege under the JEDI/Anschutz Option
shall operate as a waiver of the right, power or privilege. A single or
partial exercise of any right, power or privilege shall not preclude any
other or further exercise of the right, power or privilege or the exercise
of any other right, power or privilege. The rights and remedies provided
in the JEDI/Anschutz Option shall be cumulative and not exclusive of any
rights or remedies provided by law.
8
<PAGE>
(2) In view of the uniqueness of the agreements contained in the
JEDI/Anschutz Option and the transactions contemplated hereby and the fact
that Optionee would not have an adequate remedy at law for money damages in
the event that any obligation under the JEDI/Anschutz Option is not
performed in accordance with its terms, Optionor therefore agrees that
Optionee shall be entitled to specific enforcement of the terms of the
JEDI/Anschutz Option in addition to any other remedy to which any of them
may be entitled, at law or in equity.
c. AMENDMENTS, ETC. No amendment, modification, termination,
or waiver of any provision of the JEDI/Anschutz Option, and no consent to any
departure by Optionor or Optionee from any provision of the JEDI/Anschutz
Option, shall be effective unless it shall be in writing and signed and
delivered by Optionor and such Optionee, and then it shall be effective only in
the specific instance and for the specific purpose for which it is given.
d. SUCCESSORS AND ASSIGNS.
(1) Optionee may assign any of its rights under the JEDI/Anschutz
Option. Optionor may not assign any of its rights or delegate any of its
obligations under the JEDI/Anschutz Option except pursuant to Section 5(b).
Any assignment or delegation in contravention of this Section shall be void
AB INITIO and shall not relieve the delegating party of any obligation
under the JEDI/Anschutz Option.
(2) The provisions of the JEDI/Anschutz Option shall be binding upon
and inure to the benefit of Optionor and Optionee and their respective
permitted successors and assigns.
e. GOVERNING LAW. The JEDI/Anschutz Option shall be governed
by and construed in accordance with the internal laws of the State of New York.
All rights and obligations of Optionor and Optionee shall be in addition to and
not in limitation of those provided by applicable law.
f. SEVERABILITY OF PROVISIONS. Any provision of the
JEDI/Anschutz Option that is prohibited or unenforceable in any jurisdiction
shall, as to that jurisdiction, be ineffective to the extent of the prohibition
or unenforceability without invalidating the remaining provisions of the
JEDI/Anschutz Option or affecting the validity or enforceability of the
provision in any other jurisdiction.
g. HEADINGS AND REFERENCES. Section headings in the
JEDI/Anschutz Option are included for the convenience of reference only and do
not constitute a part of the JEDI/Anschutz Option for any other purpose.
References to sections in the JEDI/Anschutz Option are references to sections of
the JEDI/Anschutz Option unless the context shall require otherwise.
9
<PAGE>
h. ENTIRE AGREEMENT. The JEDI/Anschutz Option embodies the
entire agreement and understanding of Optionor and Optionee and supersedes all
prior agreements or understandings with respect to the subject matters of the
JEDI/Anschutz Option.
i. SURVIVAL. Except as otherwise specifically provided in the
JEDI/Anschutz Option, each representation, warranty or covenant contained in the
JEDI/Anschutz Option shall remain in full force and effect, notwithstanding any
investigation or notice to the contrary or any waiver by any other party of a
related condition precedent to the performance by the other party of an
obligation under the JEDI/Anschutz Option.
j. NON-EXCLUSIVE JURISDICTION. Each of Optionor and Optionee,
by acceptance hereof, (1) agrees that any legal action with respect to the
JEDI/Anschutz Option or transactions contemplated by the JEDI/Anschutz Option
may be brought in the courts of the State of New York or of the United States of
America for the Southern District of New York, (2) accepts for itself and in
respect of its property, generally and unconditionally, the jurisdiction of
those courts and (3) irrevocably waives any objection, including, without
limitation, any objection to the laying of venue or based on the grounds of
FORUM NON CONVENIENS, which it may now or hereafter have to the bringing of any
legal action in those jurisdictions.
k. WAIVER OF JURY TRIAL. Each of Optionor and Optionee, by
acceptance hereof, waives any right to a trial by jury in any Action to enforce
or defend any right under the JEDI/Anschutz Option or any amendment, instrument,
document or agreement delivered, or which in the future may be delivered, in
connection with the JEDI/Anschutz Option and agrees that any Action shall be
tried before a court and not before a jury.
10
<PAGE>
IN WITNESS WHEREOF, Optionor has executed the JEDI/Anschutz Option as
of the date first written above in New York, New York.
JOINT ENERGY DEVELOPMENT
INVESTMENTS LIMITED PARTNERSHIP
By: Enron Capital Corp.,
its General Partner
By: ______________________________
Title: ___________________________
Address: 1400 Smith Street
Houston, Texas 77002
Attention: Keith Power
Telecopy: (713) 646-3602
with a copy to:
Enron Capital & Trade Resources Corp.
1200 17th Street, Suite 2750
Denver, Colorado 80202
Attention: Mr. Clifford Hickey
Telecopy: (303) 534-2205
S-1
<PAGE>
ANNEX 1 TO JEDI/ANSCHUTZ OPTION
FORM OF TRANSFEREE ASSUMPTION AGREEMENT
[Date]
Name of Optionee
Address of Optionee
Re: JEDI/ANSCHUTZ OPTION
Gentlemen:
This letter is delivered to you pursuant to Section 5(b) of the
JEDI/Anschutz Option dated _______________, 1995 (the "JEDI/ANSCHUTZ OPTION").
Concurrently with the execution and delivery of this letter, the undersigned has
become the holder of Tranche B Warrants entitling the holder thereof to purchase
up to _____ Tranche B Warrant Shares (as each term is defined in the
JEDI/Anschutz Option).
The undersigned hereby agrees that for so long as it holds Tranche B
Warrants it shall be deemed to be an Optionor under the terms of the
JEDI/Anschutz Option and shall be bound by all of the terms and provisions of
the JEDI/Anschutz Option including, without limitation, Section 7 (Power of
Attorney). The undersigned hereby assumes all obligations of _________ under
the JEDI/Anschutz Option with respect to the number of Tranche B Warrant Shares
specified above. The undersigned further agrees that until the Termination Date
(as defined in the JEDI/Anschutz Option) it shall not transfer (as defined in
the JEDI/Anschutz Option) the Tranche B Warrants or any interest therein except
in accordance with the provisions of the Tranche B Warrants and then only as and
when the transferee executes and delivers to the Optionee the Transferee
Assumption Agreement attached as Annex 1 to the JEDI/Anschutz Option.
_____________________________
(Name of Transferee)
By: __________________________
Name:
Title:
A-1
<PAGE>
SCHEDULE A
OPTION PRICE
During
Month
Following Date
of
JEDI/ANSCHUTZ OPTION AMOUNT
0(1) $2.0000
1 $2.0278
2 $2.0559
3 $2.0845
4 $2.1134
5 $2.1428
6 $2.1726
7 $2.2027
8 $2.2333
9 $2.2643
10 $2.2958
11 $2.3277
12 $2.3600
13 $2.3928
14 $2.4260
15 $2.4597
16 $2.4939
17 $2.5285
18 $2.5636
19 $2.5992
20 $2.6353
21 $2.6719
22 $2.7090
23 $2.7467
24 $2.7848
25 $2.8235
26 $2.8627
27 $2.9024
28 $2.9428
29 $2.9836
30 $3.0251
31 $3.0671
32 $3.1000
33 $3.1000
34 $3.1000
35 $3.1000
36 $3.1000
1 Month in which JEDI/Anschutz Option is issued.
A-2
<PAGE>
EXHIBIT N
FORM OF
ENVIRONMENTAL INDEMNITY
THIS ENVIRONMENTAL INDEMNITY (this "INDEMNITY"), dated as of
__________, 1995, by and from FOREST OIL CORPORATION, a New York corporation
(the "COMPANY"), and FOREST OIL OF CANADA LTD., an Alberta, Canada
corporation ("FOREST CANADA"), to and for the benefit of THE ANSCHUTZ
CORPORATION, a Kansas corporation, (the "PURCHASER").
A G R E E M E N T
The parties agree as follows:
SECTION 1. CERTAIN DEFINED TERMS. Terms not otherwise defined
herein have the meanings stated in the Purchase Agreement dated as of
__________, 1995 between the Company and the Purchaser. The following terms
used in this Indemnity shall have the following meaning:
"BANKRUPTCY CODE" means both Title 11 of the United States Code
entitled "Bankruptcy, as now and hereafter in effect, or any successor
statute, and the Canadian BANKRUPTCY AND INSOLVENCY ACT, R.S.C. 1985, c. B-3,
as amended.
"ENVIRONMENTAL PROBLEM" means any of the following:
(i) the presence, suspected presence or alleged presence of
any Hazardous Materials on, in, under, or above all or any portion of the
Mortgaged Property or any surrounding areas; or
(ii) the Release, suspected Release, threatened Release or
alleged Release with respect to the Mortgaged Property or any portion
thereof; or
(iii) the violation, suspected violation, threatened violation
or alleged violation of any Environmental Law with respect to the Mortgaged
Property or any portion thereof; or
<PAGE>
(iv) the failure, suspected failure, threatened failure or
alleged failure to obtain or to abide by the terms or conditions of any
permit or approval required under any Environmental Law with respect to the
Mortgaged Property or any portion thereof.
A condition described above shall be deemed to be an Environmental Problem
regardless of whether or not any Governmental Body has taken any action in
connection with such condition.
"INDEMNITORS" means the Company and Forest Canada.
"MORTGAGED PROPERTY" means any of the property which is subject to
either of the Mortgage Debentures.
"EVENT OF DEFAULT" has the meaning stated in the Mortgage Debentures.
SECTION 2. INDEMNITY.
(a) The Indemnitors, jointly and severally, shall indemnify
the Purchaser and its "CONTROLLING PERSONS" (within the meaning of Section 20
of the Exchange Act) and their respective shareholders, directors, officers,
employees, agents and Affiliates (each of the foregoing, an "INDEMNIFIED
PARTY") against, and hold each Indemnified Party harmless from, any and all
Losses to which any such Indemnified Party may be come subject (i) under any
Environmental Law applicable to the Indemnitor with respect to the Mortgaged
Property, (ii) due to the Mortgaged Property which, though lawful and fully
permissible at the time, could result in present liability, (iii) due to the
presence, use, Release, storage, treatment or disposal of Hazardous Material
on or at the Mortgaged Property, or (iv) due to any other environmental
health or safety condition in connection with the Mortgaged Property
(collectively, the "INDEMNIFIED EXPENSES"). Except as set forth in Section 6
below and subject to Section 2(b), the foregoing indemnity shall survive any
conveyance of the Mortgaged Property, or any portion thereof, by foreclosure
of the Mortgage Debenture, by exercise of power of sale under any Mortgage
Debenture, by deed in lieu of foreclosure, in connection with a plan of
reorganization filed under the Bankruptcy Code, or by reason of any remedy
set forth in the Transaction Documents. The foregoing agreement to indemnify
shall apply regardless of whether or not any Environmental Problem is the
fault of any Indemnitor or any other person, and regardless of whether or not
any Environmental Problem is disclosed in any environmental report,
assessment or audit performed for, or on behalf of, the Purchaser in
connection with the Transactions or whether or not any Indemnified Party has
actual or constructive knowledge of such Environmental Problem from any other
source. However, the foregoing agreement to indemnify shall be subject to
the provisions of Section 6 below. The Indemnitors shall have no obligation
hereunder to defend, indemnify or hold harmless any Indemnified Party from
and against any Indemnified Expenses to the extent such Indemnified Expenses
result directly or indirectly from the fraud, gross negligence, willful
misconduct or bad faith of such Indemnified Party.
(b) Notwithstanding anything herein or in any other
Transaction Document to the contrary, except as otherwise set forth
in this subsection 2(b) to the contrary,
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<PAGE>
the Purchaser agrees (1) to look solely to the Collateral for payment of the
principal amount of and interest on the Purchaser Note, for the payment of
the Enforcement Expenses and for the payment of amounts payable pursuant to
this Agreement (the "ENVIRONMENTAL OBLIGATIONS"), (2) that its sole recourse
for the repayment of the principal amount of and interest on the Purchaser
Note, the payment of the Enforcement Expenses and the payment of the
Environmental Obligations shall be to the Collateral, and (3) that it shall
not seek repayment of the principal amount of or interest on the Purchaser
Note, the Enforcement Expenses or the Environmental Obligations, or to
enforce the Purchaser Note or payment of such amounts by any action or
proceeding wherein a money judgment shall be sought against an Indemnitor, or
any stockholder, officer, director, agent or employee of an Indemnitor,
except that the Purchaser may bring an action for declaratory judgment,
action for injunction or an action for specific performance solely for the
purpose of enabling the Purchaser to realize upon the Collateral. The
Purchaser may also bring a foreclosure action, action for specific
performance, or other appropriate action or proceeding (including to obtain a
deficiency judgment) solely for the purpose of enabling the Purchaser to
realize upon (i) an Indemnitor's interest in the Collateral and (ii) the
income arising from the Collateral to the extent received, directly or
indirectly, by an Indemnitor after the occurrence of an Event of Default (the
"RECOURSE DISTRIBUTIONS") (collectively, the "DEFAULT COLLATERAL"); PROVIDED,
HOWEVER, that any judgment in any such action or proceeding shall be
enforceable against an Indemnitor only to the extent of any such Default
Collateral; PROVIDED FURTHER, HOWEVER, that the provisions of this subsection
2(b) shall not (A) impair the validity of the Obligations or in any way
affect or impair the Lien of any Security Document or the right of the
Purchaser to foreclose any Security Document following the occurrence and
during the continuation of an Event of Default; (B) impair the right of the
Purchaser to name an Indemnitor as a party defendant in any action or suit
for judicial foreclosure and sale under any Security Document; (C) affect the
validity or enforceability of the Purchaser Note or the other Transaction
Documents; (D) impair the right of the Purchaser to obtain the appointment of
a receiver with respect to the Collateral; (E) impair the right of the
Purchaser to bring suit for recovery of a money judgment against an
Indemnitor for recovery of damages attributable to fraud or intentional
misrepresentation by the Indemnitor or any other person in connection with
this Agreement, the Security Documents to which the Indemnitor is a party or
any other Transaction Documents; (F) impair the right of the Purchaser to
obtain a money judgment against an Indemnitor or any stockholder, officer,
director or employee of an Indemnitor for the Recourse Distributions received
by such person; (G) impair the right of the Purchaser to bring suit for recovery
of a money judgment against an Indemnitor or any stockholder, officer, director
or employee of an Indemnitor with respect to the Indemnitor's misappropriation
of escrows or income collected in advance with respect to the Collateral; (H)
impair the right of the Purchaser to obtain insurance proceeds or
condemnation proceeds due to the Purchaser pursuant to any Security Document;
(I) impair the right of the Purchaser to obtain a money judgment or otherwise
enforce the provisions of this Agreement even after repayment in full by the
Company of the Obligations; (J) prevent or in any way hinder the Purchaser
from exercising, or constitute a defense, counterclaim, or other basis for
relief in respect of the exercise of, any other remedy against any or all of
the Collateral for the Purchaser Note as provided in the Security Documents;
or (K) impair the right of the Purchaser to bring suit for recovery of a
money judgment against an Indemnitor or any stockholder, officer, director or
3
<PAGE>
employee of an Indemnitor with respect to any misapplication of insurance
proceeds or condemnation proceeds approved or received by any such person
with respect to the Collateral. The parties agree that this Section 2(b)
shall be subject to 11 U.S.C. 1111(b) of the Bankruptcy Code.
(c) If any Action indemnifiable under this Section shall be
brought, asserted or threatened against any Indemnified Party under this
Section, the Indemnified Party shall promptly notify the Indemnitors. A
failure to notify the Indemnitors of an action in a timely fashion or at all
shall reduce the liabilities and obligations of the Indemnitors under this
Section only to the extent the Indemnitors actually shall be prejudiced by
the failure. The Indemnitors shall assume the defense of the Action,
including the employment of counsel satisfactory to the Indemnified Party and
the payment of all related fees and expenses, but the Indemnified Party may
employ separate counsel in the Action and participate in the defense of the
Action at its own expense. However, the Indemnified Party may by written
notice to the Indemnitors assume the defense of the Action, including the
employment of counsel, at the expense of the Indemnitors (except that the
Indemnitors shall not be liable for the fees and expenses of more than one
such separate counsel with respect to the Action) if:
(1) without a delay that shall be prejudicial to the interests of the
Indemnified Party, the Indemnitors fail to take one or more of the
following actions: (A) acknowledge in writing to the Indemnified Party the
liability of the Indemnitors to the Indemnified Party under this Section
with respect to the Action, (B) assume the defense or (C) employ counsel
reasonably satisfactory to the Indemnified Party; or
(2) the persons against whom the Action shall have been brought,
asserted or threatened (including any impleaded parties) include both the
Indemnified Party and the Indemnitors and the Indemnified Party is advised
by counsel that there may be one or more legal defenses available to the
Indemnified Party that are different from or additional to those available
to the Indemnitors; or
(3) the Indemnified Party reasonably believes that the Action or an
unfavorable resolution of the Action may materially and adversely affect
the business, properties, operations, prospects or condition (financial or
otherwise) of the Indemnified Party and its Affiliates other than as a
result of the payment of money damages.
If the Indemnified Party has assumed the defense of the Action pursuant to
any of the three conditions stated above, then the Indemnitors shall not have
the right to assume the defense of the Action on behalf of the Indemnified
Party and the Indemnified Party shall have the right to control the defense,
compromise or settlement of any indemnifiable Action on behalf of and for the
account and risk of the Indemnitors. The Indemnitors shall be bound by the
result of the defense of any Action, whether the defense shall have been
assumed by the Indemnitors or by the Indemnified Party, and shall indemnify
the Indemnified Party against, and hold the Indemnified Party harmless from,
all Indemnified Expenses in any way relating to or allegedly arising in
connection with the matter or matters that shall be the basis of the Action
or otherwise
4
<PAGE>
connected to the Action, except that the Indemnitors shall not be liable for
the payment of the amount of money damages provided in a settlement of an
indemnifiable Action defended by the Indemnified Party pursuant to the second
or third conditions stated above that shall have been effected without the
written consent of the Indemnitors, which consent shall not be unreasonably
withheld.
(d) Notwithstanding anything in this Section to the contrary,
if, in connection with an Action indemnifiable under this Section, a
Governmental Body or other person having authority or jurisdiction over a
matter or matters related to the Action shall have rendered, entered or
granted a binding judgment, decision, ruling, order or award with respect to
the matter or matters providing for the payment of money damages or the
claimant and the Indemnitors shall have agreed to settle the Action for an
amount of money damages without reservation of any rights or defenses against
the Indemnified Party, and if the Indemnified Party elects to appeal the
judgment, decision, ruling, order or award or declines to agree to the
proposed settlement, as the case may be, then the Indemnified Party may
continue to defend the Action, free of any participation by the Indemnitors,
but the amount of any ultimate liability of the Indemnitors under this
Section with respect to Indemnified Expenses related to or allegedly arising
in connection with the matter or matters that shall have been comprehended by
the judgment, decision, ruling, order or award or by the proposed settlement,
as the case may be, shall then be limited to the amount of the judgment,
decision, ruling, order or award or the amount of the proposed settlement, as
the case may be, plus the other Indemnified Expenses of the Indemnitors
relating to the matter or matters through the date of its election to appeal
or its rejection of the proposed settlement, as the case may be.
(e) If the indemnification provided for in this Section is
unavailable to an indemnified person (other than by reason of exceptions
provided in this Section), or is insufficient to hold harmless an indemnified
person in respect of any Indemnified Expenses then the indemnifying person,
in lieu of indemnifying the indemnified person, shall contribute to the
amount paid or payable by the indemnified person as a result of the Loss in
the proportion that is appropriate to reflect the relative fault of the
indemnifying person on the one part and of the indemnified person on the
other part in connection with the events or circumstances which resulted in
the Indemnified Expenses as well as any other relevant equitable
considerations. The relative fault of the indemnifying person on the one
part and of the indemnified person on the other part shall be determined by
reference to, among other things, those persons' relative intent, knowledge,
access to information and opportunity to correct or prevent the events or
circumstances resulting in the Indemnified Expenses. The amount of any
Indemnified Expenses suffered, incurred or paid any person shall be deemed to
include all expenses incurred or paid by the person in connection with
investigating or defending any Action, including, but not limited to, the
fees and expenses of counsel.
(f) The indemnification set forth in this Section shall be in
addition to any other obligations or liabilities of the Indemnitors to an
Indemnified Party under or the Purchase Agreement, at common law or
otherwise. The provisions of this Section shall not eliminate or otherwise
limit the right of any Indemnified Party or any other person to seek to
5
<PAGE>
recover contribution, damages or otherwise enforce its rights against the
Indemnitors or any other person without regard to the provisions of this
Section. If at any time all or any part of any indemnification payment
hereunder is or must be rescinded or returned to the person making such
indemnity payment for any reason whatsoever (including, without limitation,
the insolvency, bankruptcy or reorganization of any person) the
indemnification obligations of the person making such payment shall be
reinstated with respect to such payment so rescinded or returned as though
such payment had never been made or received.
SECTION 3. ENVIRONMENTAL PROCEDURES. The Indemnitors will each
establish and implement such procedures as may be necessary to reasonably
determine and assure that the Mortgaged Property and the operations conducted
thereon are in compliance with all Environmental Laws. Each Indemnitor will
promptly notify the Purchaser in writing of any existing, pending or
threatened action, investigation or inquiry by an Governmental Body excluding
routine testing and corrective action in connection with any Environmental
Laws that affects the Mortgaged Property.
SECTION 4. ENVIRONMENTAL DISCLOSURE AND INSPECTION. Neither an
Indemnitor nor any Subsidiary thereof will cause or permit the Mortgaged
Property to be in violation of, or do anything or permit anything to be done
which will subject the Mortgaged Property to any remedial obligations under
any Environmental Laws, assuming disclosure to the applicable Governmental
Body of all relevant facts, conditions and circumstances, if any, pertaining
to such Mortgaged Property, where such violation or remedial obligations
would have a Material Adverse Effect. Neither Indemnitor will use or allow
use of any of the Mortgaged Property in a manner which will result in (i)
violation of any order or requirement of any court or Governmental Body or
any Environmental Laws, (ii) the Release of any solid waste on or to any such
Mortgaged Property except in compliance with Environmental Laws, (iii) a
Release of a hazardous substance on or to any such Mortgaged Property in a
quantity equal to or exceeding that quantity which requires reporting
pursuant to Section 103 of CERCLA, and all applicable regulations made
pursuant thereto, the Alberta ENVIRONMENTAL PROTECTION AND ENHANCEMENT ACT,
S.A. 1992, c. E-13.3, as amended, and all applicable regulations made
pursuant thereto, the Alberta PUBLIC HEALTH ACT, S.A. 1984, c. P-27.1, as
amended, and all applicable regulations made pursuant thereto, the CANADIAN
ENVIRONMENTAL PROTECTION ACT, R.S.C. 1985, c. 16 (4th Supp.), as amended and
all applicable regulations made pursuant thereto, or the Canadian
TRANSPORTATION OF DANGEROUS GOODS ACT, R.S.C. 1992, c. 34, as amended, and
all applicable regulations made pursuant thereto or (iv) the Release of any
hazardous substance on or to any such Mortgaged Property so as to pose an
imminent and substantial endangerment to public health or welfare or the
environment.
SECTION 5. REMEDIES. Without limiting any of the obligations
of the or any of the rights of the Purchaser hereunder, if any Environmental
Problem shall occur, the Purchaser shall have the right (but not the
obligation), in the Purchaser's discretion:
(a) by notice to the Indemnitors to direct and require the
Indemnitors to take appropriate action to correct, ameliorate or remediate
the Environmental Problem, in
6
<PAGE>
which event the Indemnitors shall promptly take such action at the sole cost
and expense of the Indemnitors; and/or
(b) if the Indemnitors fail to respond in a timely fashion to
the direction described in clause 5(a) or if an Event of Default has occurred
and is continuing, to itself take appropriate action (in compliance with all
applicable Environmental Laws and applicable directions and orders of
Governmental Bodies) to correct, ameliorate or remediate the Environmental
Problem, in which event the Indemnitors shall cooperate with the Purchaser
and shall reimburse the Purchaser for all costs and expenses incurred in good
faith in Purchaser's reasonable judgment in taking such action in accordance
with the foregoing provisions of this Indemnity; and/or
(c) to exercise any other rights or remedies that the
Purchaser may have under the Transaction Documents, at law, in equity or
otherwise.
The Indemnitors hereby grant the Purchaser and its employees and agents an
irrevocable and non-exclusive license, subject to the rights of any tenants
pursuant to their respective Leases, to enter the Mortgaged Property at its
own risk, subsequent to notice to the Indemnitors, to investigate, inspect,
monitor, study, sample and test the Mortgaged Property and, subject to clause
5(b) above, to correct, ameliorate or remediate any Environmental Problem
(but the Purchaser shall have no obligation to do so and assumes no control
over or responsibility to monitor ongoing activities on the Mortgaged
Property). The Purchaser shall have all of the rights, remedies and options
described herein whether or not action to correct, ameliorate or remediate an
Environmental Problem shall have been ordered by any court, governmental
authority, or other person.
SECTION 6. POST-FORECLOSURE MATTERS. If the Mortgaged
Property, or any portion thereof, is conveyed by foreclosure of the Mortgage
Debenture, exercise of power of sale under the Mortgage Debenture, deed in
lieu of foreclosure, in connection with a plan of reorganization filed under
the Bankruptcy Code, or by reason of any other remedy set forth in the
Transaction Documents, then the indemnity provided for under this Indemnity
shall not apply to any Environmental Problem in respect of the Mortgaged
Property or any portion thereof (a) that arises solely after the date of such
conveyance (the "CONVEYANCE DATE"), and (b) that is in no way connected to or
resulting from any state of facts or condition that existed on or before the
Conveyance Date. Notwithstanding the foregoing, the indemnity provided
hereunder shall nonetheless continue to apply (i) to any Environmental
Problem (A) in respect of any portion of the Mortgaged Property not so
conveyed, or (B) that results, in whole or in part, from the acts or
omissions of the Company or Forest Canada, or the acts or omissions prior to
the Conveyance Date by any other person; and (ii) to Indemnified Expenses
incurred after the Conveyance Date that arise from any Environmental Problem
in existence on or before the Conveyance Date. For purposes of this Section
6, a condition in existence, and resulting from the acts or omissions of the
Company or Forest Canada, on or before the Conveyance Date shall be deemed to
be an Environmental Problem on or before such date even if the condition
becomes an Environmental Problem as a result of a change in Environmental
Laws that becomes
7
<PAGE>
effective after such date. Nothing contained in this Agreement shall be
construed in any manner whatsoever to waive or release any rights or claims
the Indemnitors may have against third parties concerning the matters covered
herein.
SECTION 7. INSURANCE COVERAGE. The Indemnitors shall, at the
Purchaser's request from time to time, promptly provide the Purchaser with
copies of any general liability, environmental impairment, and other
insurance policies held by any Indemnitor that may cover any obligations
hereunder. Without limiting in any manner the obligations of the Indemnitors
hereunder or the Purchaser's remedies hereunder, the Indemnitors shall, at
the Purchaser's request, diligently pursue any claims under such policies for
sums payable to the Purchaser hereunder and, at the Purchaser's request, if
permitted under such policies, assign any such claims to the Purchaser.
SECTION 8. INDEMNITORS' RIGHTS OF SUBROGATION, CONTRIBUTION,
ETC. In connection with any Environmental Problem, each Indemnitor shall
withhold exercise of (a) any claim, right or remedy, direct or indirect, that
the Indemnitor now has or may hereafter have against the other Indemnitor or
any of its assets in connection with this Indemnity or the performance by the
Indemnitor of its obligations hereunder, in each case whether such claim,
right or remedy arises in equity, under contract, by statute, under common
law or otherwise and including (i) any right of subrogation, reimbursement or
indemnification that the Indemnitor now has or may hereafter have against
other Indemnitor, (ii) any right to enforce, or to participate in, any claim,
right or remedy that the Purchaser now has or may hereafter have against
other Indemnitor, and (iii) any benefit of, and any right to participate in,
any collateral or security now or hereafter held by the Purchaser, and (b)
any right of contribution that the Indemnitor may have against any other
person (including the other Indemnitor). Each Indemnitor further agrees
that, to the extent the waiver of its rights of subrogation, reimbursement,
indemnification and contribution as set forth herein is found by a court of
competent jurisdiction to be void or voidable for any reason, any rights of
subrogation, reimbursement, indemnification the Indemnitor may have against
the other Indemnitor or against any collateral or security, and any rights of
contribution the Indemnitor may have against any such other person, shall be
junior and subordinate to any rights the Purchaser may have against the other
Indemnitor, to all right, title and interest the Purchaser may have in any
such collateral or security, and to any right the Purchaser may have against
such other person. The Purchaser may use, sell or dispose of any item of
collateral or security as it sees fit without regard to any subrogation
rights the Indemnitor may have, and upon any such disposition or sale, any
rights of subrogation the Indemnitor may have shall terminate. If any amount
shall be paid to the Indemnitor on account of any such subrogation,
reimbursement or indemnification rights at any time, such amount shall be
held in trust for the Purchaser and shall forthwith be paid over to the
Purchaser to be credited and applied against the obligations of the
Indemnitor hereunder, whether matured or unmatured, in such order as the
Purchaser, in its discretion, may determine.
8
<PAGE>
SECTION 9. FURTHER ASSURANCES. Promptly upon request by the
Purchaser, the Indemnitors shall correct any defect or error that may be
discovered in this Indemnity or in the execution or acknowledgement of this
Indemnity and execute, acknowledge, deliver, file, re-file, register and
re-register, any and all such further acts, certificates, assurances and
other instruments as the Purchaser may require from time to time in order (1)
to carry out more effectively the purposes of this Indemnity, (2) to enable
the Purchaser to exercise and enforce its rights and remedies and collect any
payments and proceeds under this Indemnity and (3) to better transfer,
preserve, protect and confirm to the Purchaser the rights granted or now or
hereafter intended to be granted to the Purchaser under this Indemnity or
under each other instrument executed in connection with this Indemnity.
SECTION 10. COSTS AND EXPENSES. Subject to Section 2(b) the
Indemnitors, jointly and severally, shall pay all costs and expenses,
including reasonable attorneys' fees and expenses, incurred by or on behalf
of the Purchaser in the enforcement of this Agreement.
SECTION 11. NOTICES. All notices, requests and other
communications to any party or under this Indemnity shall be in writing.
Communications may be made by telecopy or similar writing. Each
communication shall be given to the party at its address stated on the
signature pages of this Indemnity or at any other address as the party may
specify for this purpose by notice to the other parties. Each communication
shall be effective (1) if given by telecopy, when the telecopy is transmitted
to the proper address and the receipt of the transmission is confirmed, (2)
if given by mail, 72 hours after the communication is deposited in the mails
properly addressed with first class postage prepaid or (3) if given by any
other means, when delivered to the proper address and a written
acknowledgement of delivery is received.
SECTION 12. NO MORTGAGEE-IN-POSSESSION. Nothing herein
contained, no entry by the Purchaser upon the Mortgaged Property (or any
portion thereof) under the terms of this Indemnity and no action caused by
the Purchaser with respect to the obligations of the Indemnitors hereunder
shall make the Purchaser a "mortgagee-in-possession" except insofar as the
Purchaser elects by giving written notice thereof to the Indemnitors.
SECTION 13. NON-WAIVER BY THE PURCHASER. No failure or delay by
any party in exercising any right, power or privilege under this Indemnity
shall operate as a waiver of the right, power or privilege. A single or
partial exercise of any right, power or privilege shall not preclude any
other or further exercise of the right, power or privilege or the exercise of
any other right, power or privilege. The rights and remedies provided in
this Indemnity shall be cumulative and not exclusive of any rights or
remedies provided under the other Transaction Documents, at law or in equity.
SECTION 14. PURCHASER'S DISCRETION. Whenever pursuant to this
Indemnity, the Purchaser exercises any right given to it to approve or
disapprove, or any arrangement or term is to be satisfactory to the
Purchaser, the decision of the Purchaser to approve or disapprove or
9
<PAGE>
to decide whether arrangements or terms are satisfactory or not satisfactory
shall (except as is otherwise specifically herein provided) be in the sole
discretion of the Purchaser.
SECTION 15. WAIVER OF NOTICE. The Indemnitors shall not be
entitled to any notices hereunder of any nature whatsoever from the Purchaser
except with respect to matters for which this Indemnity specifically and
expressly provides for the giving of notice by the Purchaser to the
Indemnitors, and the Indemnitors hereby expressly waive the right to receive
any notice from the Purchaser with respect to any matter for which this
Indemnity does not specifically and expressly provide for the giving of
notice by the Purchaser to the Indemnitors.
SECTION 16. AMENDMENTS, ETC. No amendment, modification,
termination, or waiver of any provision of this Indemnity, and no consent to
any departure by a party to this Indemnity from any provision of this
Indemnity, shall be effective unless it shall be in writing and signed and
delivered by the other parties to this Indemnity, and then it shall be
effective only in the specific instance and for the specific purpose for
which it is given.
SECTION 17. SUCCESSORS AND ASSIGNS.
(a) The Purchaser may assign its rights and delegate its
obligations under this Indemnity; such assignee shall accept those rights and
assume those obligations for the benefit of the Indemnitors in writing in
form reasonably satisfactory to the Indemnitors. Thereafter, without any
further action by any person, all references in this Indemnity to the
"Purchaser", and all comparable references, shall be deemed to be references
to the transferee, but the Purchaser shall not be released from any
obligation or liability under this Indemnity.
(b) Except as provided in Section 17(a), no party to this
Indemnity may assign its rights under the Transaction Document. Any
delegation in contravention of this Section shall be void AB INITIO and shall
not relieve the delegating party of any obligation under the this Indemnity.
(c) The provisions of this Indemnity shall be binding upon
and inure to the benefit of the parties to this Indemnity and their
respective successors and permitted assigns.
SECTION 18. GOVERNING LAW. This Indemnity shall be governed by
and construed in accordance with the internal laws of the State of New York.
All rights and obligations of the Indemnitors and the Purchaser shall be in
addition to and not in limitation of those provided by applicable law.
SECTION 19. COUNTERPARTS; EFFECTIVENESS. This Indemnity may be
signed in any number of counterparts, each of which shall be an original,
with the same effect as if all signatures were on the same instrument.
10
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SECTION 20. SEVERABILITY OF PROVISIONS. Any provision of this
Indemnity that is prohibited or unenforceable in any jurisdiction shall, as
to that jurisdiction, be ineffective to the extent of the prohibition or
unenforceability without invalidating the remaining provisions of this
Indemnity or affecting the validity or enforceability of the provision in any
other jurisdiction.
SECTION 21. HEADINGS AND REFERENCES. Section headings in this
Indemnity are included for the convenience of reference only and do not
constitute a part of this Indemnity for any other purpose. References to
parties and sections in this Indemnity are references to the parties to or
the sections of this Indemnity, as the case may be, unless the context shall
otherwise require.
SECTION 22. ENTIRE AGREEMENT. Except as otherwise specifically
provided in this Section, the Transaction Documents to which each party
hereto is a party embodies the entire agreement and understanding of the
respective parties and supersede all prior agreements or understandings with
respect to the subject matters of this Indemnity.
SECTION 23. EXCLUSIVE JURISDICTION. Each party (1) agrees that
any Action with respect to this Indemnity shall be brought exclusively in the
courts of the State of New York or of the United States of America for the
Southern District of New York, (2) accepts for itself and in respect of its
property, generally and unconditionally, the jurisdiction of those courts and
(3) irrevocably waives any objection, including, without limitation, any
objection to the laying of venue or based on the grounds of FORUM NON
CONVENIENS, which it may now or hereafter have to the bringing of any Action
in those jurisdictions; PROVIDED, HOWEVER, that any party may assert in an
Action in any other jurisdiction or venue an Action consisting of a mandatory
defense, third-party claim that, if not so asserted in such Action, may not
be asserted in an original Action in the courts referred to in clause (1)
above.
SECTION 24. WAIVER OF JURY TRIAL. Each party waives any right
to a trial by jury in any Action to enforce or defend any right under this
Indemnity or any amendment, instrument, document or agreement delivered, or
which in the future may be delivered, in connection with this Indemnity and
agrees that any Action shall be tried before a court and not before a jury.
SECTION 25. AFFILIATE. Nothing contained in this Indemnity
shall constitute the Purchaser an "AFFILIATE" of any of the Company, Forest
Canada and its Subsidiaries within the meaning of Rule 13e-3 under the
Exchange Act.
SECTION 26. NON-RECOURSE. No recourse under this Indemnity
shall be had against any "controlling person" (within the meaning of Section
20 of the Exchange Act) of any party or the shareholders, directors,
officers, employees, agents and Affiliates of the party or such controlling
persons, whether by the enforcement of any assessment or by any legal or
equitable proceeding, or by virtue of any Regulation, it being expressly
agreed and acknowledged that no personal liability whatsoever shall attach
to, be imposed on or otherwise
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be incurred by such controlling person, shareholder, director, officer,
employee, agent or Affiliate, as such, for any obligations of the party under
this Indemnity or for any claim based on, in respect of or by reason of such
obligations or their creation.
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<PAGE>
IN WITNESS WHEREOF, the Company and Forest Canada have caused
this Indemnity to be executed as of the date first above written in New York,
New York.
FOREST OIL CORPORATION
By:___________________________
Name:
Title:
Address: 1500 Colorado National Building
950 - 17th Street
Denver, Colorado 80202
Telecopy: (303) 592-2510
THE ANSCHUTZ CORPORATION
By: ____________________________
Name:
Title:
Address: The Anschutz Corporation
2400 Anaconda Tower
555 Seventeenth Street
Denver, Colorado 80202
Telecopy: (303) 298-8881
S-13
<PAGE>
FOREST OIL OF CANADA LTD.
By: _______________________________
Name:
Title:
Address: _________________________
_________________________
_________________________
Telecopy: _________________________
S-14
<PAGE>
RESTRUCTURE AGREEMENT
BETWEEN
JOINT ENERGY DEVELOPMENT INVESTMENTS LIMITED PARTNERSHIP
AND
FOREST OIL CORPORATION
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
INTRODUCTION AND DEFINITIONS
1.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
RESTRUCTURE TRANSACTION
2.1 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Actions at Closing . . . . . . . . . . . . . . . . . . . . . . . . 3
2.3 Simultaneous Closing.. . . . . . . . . . . . . . . . . . . . . . . 4
2.4 JEDI Conditions to Closing . . . . . . . . . . . . . . . . . . . . 4
2.5 Company Conditions to Closing. . . . . . . . . . . . . . . . . . . 6
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF JEDI
3.1 Organization; Authority. . . . . . . . . . . . . . . . . . . . . . 7
3.2 Execution and Delivery; Enforceability . . . . . . . . . . . . . . 8
3.3 Approvals and Consents . . . . . . . . . . . . . . . . . . . . . . 8
3.4 No Violations. . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.5 No Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.6 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . 8
3.7 Purchase for Investment. . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
4.1 Representations and Warranties Incorporated. . . . . . . . . . . . 9
ARTICLE V
ADDITIONAL COVENANTS OF THE PARTIES
5.1 Notification . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.2 Public Statements. . . . . . . . . . . . . . . . . . . . . . . . . 10
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5.3 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.4 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . 10
5.5 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.6 Compliance with the Hart-Scott-Rodino Act. . . . . . . . . . . . . 11
5.7 Suspension of Non-Compliance . . . . . . . . . . . . . . . . . . . 11
5.8 Operations before Closing. . . . . . . . . . . . . . . . . . . . . 12
5.9 Company/Anschutz Transaction Closing . . . . . . . . . . . . . . . 12
ARTICLE VI
INDEMNIFICATION
6.1 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.2 Indemnification Procedures . . . . . . . . . . . . . . . . . . . . 13
6.3 Appeal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.4 Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.5 No Limitation on Other Rights of Recovery. . . . . . . . . . . . . 15
ARTICLE VII
TERMINATION
7.1 Termination Events . . . . . . . . . . . . . . . . . . . . . . . . 15
7.2 Limitation on Termination. . . . . . . . . . . . . . . . . . . . . 15
ARTICLE VIII
MISCELLANEOUS
8.1 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
8.2 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.3 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
8.4 No Waivers; Rights Cumulative. . . . . . . . . . . . . . . . . . . 17
8.5 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
8.6 Amendments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . 17
8.7 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 17
8.8 Binding Effect and Assignment. . . . . . . . . . . . . . . . . . . 17
8.9 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8.10 Headings; Schedules. . . . . . . . . . . . . . . . . . . . . . . . 18
8.11 Multiple Counterparts. . . . . . . . . . . . . . . . . . . . . . . 18
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EXHIBITS
* Exhibit A Purchase Agreement
Exhibit B Second Amendment
** Exhibit C Tranche B Warrants
*** Exhibit D Legal Opinions from counsel to Forest Oil Corporation
*** Exhibit E Exceptions to Title Opinion Requirement
*** Exhibit F Exceptions to Loan Agreement Representations
*** Exhibit G Certificate of Secretary/Assistant Secretary of Forest Oil
Corporation
*** Exhibit H Certificate of President/Vice President of Forest Oil
Corporation
*** Exhibit I Certificates of JEDI
*** Exhibit J Certificate of Officer of Enron Capital Corporation
*** Exhibit K Noncompliance
* See Exhibit 99.2 to Form 8-K
** See Exhibit L to Exhibit 99.2 to Form 8-K
*** Exhibits not filed with Form 8-K
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RESTRUCTURE AGREEMENT
This Restructure Agreement (the "AGREEMENT") is made and entered into as of
May 17, 1995, between Joint Energy Development Investments Limited Partnership,
a Delaware limited partnership ("JEDI"), and Forest Oil Corporation, a New York
corporation (the "COMPANY"), which agree as follows:
ARTICLE I
INTRODUCTION AND DEFINITIONS
1.1 INTRODUCTION. JEDI and the Company are parties to a Loan Agreement
dated December 28, 1993, as amended by First Amendment to Loan Agreement dated
as of December 28, 1993 (the "JEDI LOAN AGREEMENT"). The Company and JEDI
desire to restructure the indebtedness of the Company under the JEDI Loan
Agreement and to consummate the Restructure Transaction (as defined in Section
1.2 below) on the terms and subject to the conditions specified in this
Agreement.
1.2 DEFINITIONS. Unless otherwise defined herein, initially capitalized
terms used herein shall have the meanings ascribed to them in the Purchase
Agreement (as defined in this Section 1.2). The following terms shall have the
respective meanings set forth below when used in this Agreement:
"ACTION" against a person means any written claim, or any action, suit,
investigation, complaint or other proceeding pending against or affecting the
person or its property, whether civil or criminal, in law or equity or before
any arbitrator or governmental body.
"ACTS" means, collectively, the Securities Act, the Exchange Act and the
securities laws (including any rules and regulations thereunder) of any state.
"AGREEMENT" shall have the meaning ascribed to it in the first paragraph
hereof, and shall include all schedules and exhibits hereto.
"ANSCHUTZ" means The Anschutz Corporation, a Kansas corporation.
"CLOSING" has the meaning ascribed to it in Section 2.1 hereof.
"CLOSING DATE" has the meaning ascribed to it in Section 2.1 hereof.
"COMMISSION" means the United States Securities and Exchange Commission.
"COMPANY" has the meaning ascribed to it in the first paragraph hereof.
<PAGE>
"COMPANY/ANSCHUTZ DOCUMENTS" means the Purchase Agreement and each of the
Purchaser Note, the Security Documents, the Purchaser Registration Rights
Agreement, the Shareholders Agreement, the Tranche A Warrants and all other
documents and instruments executed thereunder.
"COMPANY/ANSCHUTZ TRANSACTION" means the transactions contemplated by
Section 1.1 of the Purchase Agreement.
"DOJ" means the Antitrust Division of the United States Department of
Justice.
"FTC" means the United States Federal Trade Commission.
"INDEMNIFIED PERSON" has the meaning ascribed to it in Section 6.1 hereof.
"JEDI" has the meaning ascribed to it in the first paragraph hereof.
"JEDI/ANSCHUTZ OPTION" means the option to purchase the Tranche B Warrant
Shares, substantially in the form attached as Exhibit M to the Purchase
Agreement, to be executed by JEDI in favor of Anschutz.
"JEDI DOCUMENTS" means the Second Amendment, the Tranche B Warrants, the
JEDI Registration Rights Agreement, the JEDI/Anschutz Option and all other
documents and instruments executed thereunder.
"JEDI LOAN AGREEMENT" has the meaning ascribed to it in Section 1.1 hereof.
"LOSS" means any cost, damage, disbursement, expense, liability, judgment,
loss, deficiency, obligation, penalty or settlement of any kind or nature,
whether foreseeable or unforeseeable, including, but not limited to, interest or
other carrying costs, penalties, legal, accounting and other professional,
expert witness and consultant fees and expenses incurred in the investigation,
collection, prosecution and defense of claims and amounts paid in settlement,
that may be imposed on or otherwise incurred or suffered by the specified
person.
"LOUISIANA MORTGAGE AMENDMENT" means the First Amendment to Act of
Mortgage, Assignment of Production, Security Agreement and Financing Statement
to be executed on the Closing Date, made by the Company in favor of JEDI, which
shall be in a form mutually acceptable to the Company and JEDI.
"MORTGAGED PROPERTIES" has the meaning ascribed to it in the JEDI Loan
Agreement.
"NOTICE" has the meaning ascribed to it in Section 8.2 hereof for the
purposes of that section.
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<PAGE>
"PURCHASE AGREEMENT" means that certain Purchase Agreement dated of even
date herewith between the Company and Anschutz, a copy of which is annexed
hereto as EXHIBIT A, together with any amendments thereto.
"RESTRUCTURE TRANSACTION" means the transaction contemplated by Section 2.2
of this Agreement.
"SECOND AMENDMENT" means the Second Amendment to JEDI Loan Agreement, which
amendment shall be in substantially the form attached hereto as EXHIBIT B.
"TEXAS MORTGAGE AMENDMENT" means the Second Amendment to Deed of Trust,
Assignment of Production, Security Agreement and Financing Statement to be
executed by the Company on the Closing Date in favor of the JEDI, which shall be
in a form mutually acceptable to JEDI and the Company.
"TRANCHE B WARRANT SHARES" means the 11,250,000 shares of Common Stock
deliverable upon the exercise of the Tranche B Warrants (as the number of shares
may be adjusted pursuant to the terms of the Tranche B Warrants).
"TRANCHE B WARRANTS" means the 11,250,000 Tranche B Warrants, which shall
be substantially in the form of EXHIBIT C annexed hereto.
"TRANSACTION" means collectively, the Company/Anschutz Transaction and the
Restructure Transaction.
ARTICLE II
RESTRUCTURE TRANSACTION
2.1 CLOSING. Subject to the satisfaction of the conditions precedent set
forth in Sections 2.4 and 2.5 below, the closing of the Restructure Transaction
(the "CLOSING") shall be held at the offices of O'Melveny & Myers, 153 East 53rd
Street, New York, New York 10022-4611, on July 12, 1995 at 10:00 a.m. New York
City time, or at such other place, date and time as may be mutually agreed in
writing by the Company and JEDI; provided, however, that if all of the
conditions to Closing set forth in Sections 2.4 and 2.5 have not been satisfied
or waived by such date or any mutually agreeable later date for Closing, the
party whose condition has not been satisfied or waived shall have the right to
extend the date of Closing for successive periods of up to five days each, or
for such longer period as the parties may agree upon in writing, but in no event
beyond any date on which this Agreement is terminated pursuant to Section 7.1.
The date on which the Closing occurs shall be referred to herein as the "Closing
Date."
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<PAGE>
2.2 ACTIONS AT CLOSING. The Company and JEDI agree that on the Closing
Date, the following events shall occur:
2.2.1 The Company and JEDI will execute and deliver to each other
the Second Amendment and all other documents or instruments contemplated therein
as being executed on the Closing Date (including exhibits to the Second
Amendment), each of such documents and instruments to be acceptable to the
Company and JEDI in form and substance.
2.2.2 The Company will issue and deliver to JEDI the Tranche B
Warrants.
2.2.3 The Company and JEDI will execute and deliver to each other
the JEDI Registration Rights Agreement with respect to registration of the
Tranche B Warrant Shares.
2.2.4 JEDI will execute and deliver to Anschutz the JEDI/Anschutz
Option, and Anschutz will execute and deliver to JEDI its written agreement to
be bound by the representations, warranties and agreements of Anschutz set forth
in the JEDI/Anschutz Option.
2.3 SIMULTANEOUS CLOSING. All events specified in Section 2.2 shall be
deemed to occur simultaneously and no event shall be deemed to occur unless and
until all such events shall have occurred.
2.4 JEDI CONDITIONS TO CLOSING. The obligation of JEDI to consummate the
transactions contemplated hereunder is subject, at the option of JEDI, to
satisfaction or waiver of the following conditions (each of which is material)
at or before the Closing:
2.4.1 The limited partner of JEDI shall have consented to the
Restructure Transaction.
2.4.2 The Company shall have taken all action required, if any, to
cause the Tranche B Warrant Shares to be qualified for inclusion in the
NASDAQ/NMS, and shall give such notice as required, if any, to the National
Association of Securities Dealers, Inc. with respect to the Transaction.
2.4.3 After giving effect to the waiver or release to be granted
pursuant to Section 5.7 upon occurrence of the Closing, no Event of Default (as
defined in the Loan Agreement) shall have occurred and be continuing nor shall
any Default occur by virtue of the execution and delivery of the Second
Amendment.
2.4.4 JEDI shall have completed a due diligence review sufficient
to satisfy itself that (i) the Mortgaged Properties are not in violation of any
material Environmental Laws (as defined in the JEDI Loan Agreement), (ii) the
Company has good and marketable title to the Mortgaged Properties, free and
clear of all Liens except Liens permitted under the JEDI
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<PAGE>
Loan Agreement or which are not material, and (iii) the Company has complied in
all material respects with the financial and accounting provisions of the JEDI
Loan Agreement.
2.4.5 Except as contemplated by this Agreement, (i) the
representations and warranties of the Company contained herein shall be true and
correct in all material respects as of the Closing Date, with the same force and
effect as though made at such time, and (ii) the Company shall have performed in
all material respects all obligations required of it by the terms of this
Agreement to have been performed as of the Closing Date.
2.4.6 Each of the actions specified in Section 2.2 above shall
have been taken.
2.4.7 JEDI shall have received legal opinions from counsel to the
Company acceptable to JEDI and licensed in Texas, Louisiana, Colorado and New
York, in form and substance satisfactory to JEDI, substantially in the form
annexed hereto as EXHIBIT D (with such changes as may be agreed upon by JEDI and
the Company).
2.4.8 Except with respect to the properties described on EXHIBIT
E, the Company shall have delivered to JEDI title opinions from counsel for the
Company acceptable to JEDI updating the title opinions issued in connection with
the execution of the JEDI Loan Agreement with respect to title to the Mortgaged
Properties (as defined in the JEDI Loan Agreement), in form and substance
satisfactory to JEDI to the effect that the Company has good and marketable
title to the Mortgaged Properties, free and clear of all Liens except Liens that
are permitted under the JEDI Loan Agreement or which are not material.
2.4.9 The Texas Mortgage Amendment and the Louisiana Mortgage
Amendment and any notices related thereto if necessary or appropriate, shall
have been duly delivered to the appropriate offices for filing or recording and
JEDI shall have received confirmations of receipt thereof.
2.4.10 The Company shall have delivered to JEDI any necessary
amendments to the Security Instruments (as defined in the JEDI Loan Agreement).
2.4.11 The Company shall have delivered to JEDI a certificate
satisfactory to JEDI evidencing that all insurance policies required by Section
4.09 of the JEDI Loan Agreement are in full force and effect and showing JEDI as
an additional insured with respect to liability coverage and that loss payable
endorsements in favor of the JEDI have been added thereto with respect to all
insurance policies covering damage or loss to the Collateral (as defined in the
JEDI Loan Agreement).
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<PAGE>
2.4.12 Except as set forth on EXHIBIT F to this Agreement, which
shall be supplied by the Company prior to the Closing and acceptable to JEDI in
its sole discretion, the representations and warranties of the Company contained
in (i) Sections 3.08-3.17 and 3.19-3.27 of the JEDI Loan Agreement, after giving
effect to the terms of the Second Amendment and (ii) paragraph 16 of the Second
Amendment, shall be true and correct in all material respects as of the Closing
Date.
2.4.13 The Company shall have paid to JEDI all amounts payable
pursuant to Section 5.5 of this Agreement.
2.4.14 Except as disclosed in the SEC Documents filed with the
Commission prior to the date hereof, since December 31, 1994, there shall have
occurred no event which could have a Material Adverse Effect (as defined in the
JEDI Loan Agreement) on the Company.
2.4.15 JEDI shall have received from the Company the following
certificates, each dated as of the Closing Date, in form and substance
reasonably satisfactory to JEDI:
(1) A certificate of the Secretary or an Assistant Secretary of
the Company, substantially in the form annexed hereto as EXHIBIT G;
(2) A certificate of the President or Vice President of the
Company, substantially in the form annexed hereto as EXHIBIT H; and
(3) A certificate of the Secretary of State of New York, dated
as of a recent date, as to the good standing of and payment of taxes by the
Company and as to the charter documents of the Company on file in the
office of the Secretary of State.
2.4.16 The First Closing Transactions shall have been consummated
and all of the conditions precedent to the Second Closing Transactions set forth
in the Purchase Agreement (other than those set forth in Section 3.3(i)) shall
have been satisfied or, except for the conditions precedent set forth in Section
3.1(a)-(c) and in Section 3.3(a)-(d), (f), (h) and (j) of the Purchase
Agreement, waived. The Second Closing shall occur contemporaneously with the
Closing hereunder and at the Second Closing, the Company shall issue the Tranche
A Warrants to Anschutz and agree in the Second Amendment that all proceeds
received by the Company on exercise of the Tranche A Warrants and the Tranche B
Warrants will be used to repay Indebtedness (as defined in the JEDI Loan
Agreement). It is hereby expressly acknowledged that the satisfaction of the
foregoing condition constitutes a material inducement to JEDI to consummate the
Restructure Transactions.
2.4.17 The consummation of the Closing shall not violate the Hart-
Scott-Rodino Act.
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<PAGE>
2.4.18 There shall not be in effect any Regulation that makes it
illegal for JEDI to perform at Closing its obligations under this Agreement or
any JEDI Document or that enjoins JEDI from performing such obligations.
2.4.19 As of the Closing Date, no Action shall be pending or
threatened (i) wherein an unfavorable judgment, decree or order could prevent,
make unlawful or materially affect the consummation of the transactions
contemplated by this Agreement or (ii) which if adversely determined would have
a Material Adverse Effect (as defined in the JEDI Loan Agreement) on the
Company.
2.4.20 The Company shall have entered into leases replacing the NE
Hinnant Lease and the Vela Lease referred to on EXHIBIT K to this Agreement,
which leases shall in each case be on terms that are no less favorable to the
Company in any material respect than the terms of the leases being replaced.
2.5 COMPANY CONDITIONS TO CLOSING. The obligation of the Company to
consummate the transactions contemplated hereunder is subject, at the option of
the Company, to satisfaction or waiver of the following conditions (each of
which is material) at or before Closing:
2.5.1 Except as contemplated by this Agreement, (i) the
representations and warranties of JEDI contained herein shall be true and
correct in all material respects as of the Closing Date, with the same force and
effect as though made at such time, and (ii) JEDI shall have performed in all
material respects all obligations required of it by the terms of this Agreement
to have been performed as of the Closing Date.
2.5.2 The Company shall have received from JEDI the following,
each dated as of the Closing Date, in form and substance reasonably satisfactory
to the Company:
(1) Certificates of JEDI, substantially in the forms annexed
hereto as EXHIBIT I;
(2) A certificate of an appropriate officer of Enron
Capital Corp., as the General Partner of JEDI, substantially in the
form executed hereto as EXHIBIT J; and
(3) A certificate of the Secretary of State of Delaware, dated
as of a recent date, as to the good standing of and payment of taxes by
JEDI and as to the certificate of limited partnership of JEDI on file in
the office of the Secretary of State.
2.5.3 JEDI shall have executed and delivered to the Company such
documents and instruments as may be necessary in the opinion of the Company and
JEDI to effect, as of the Closing (i) the reconveyance to the Company or
termination of the Wagner & Brown
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<PAGE>
Overriding Royalty and the Eugene Island Block 326 Overriding Royalty and (ii)
the termination of the Production Agreements related thereto.
2.5.4 The First Closing Transactions shall have been consummated
and all of the conditions precedent to the Second Closing Transactions set forth
in the Purchase Agreement (other than those set forth in Section 3.3(i)) shall
have been satisfied or waived.
2.5.5 The consummation of the Closing shall not violate the Hart-
Scott-Rodino Act.
2.5.6 There shall not be in effect in any Regulation that makes it
illegal for the Company to perform at Closing its obligations under this
Agreement or any JEDI Document or that enjoins the Company from performing such
obligations.
2.5.7 As of the Closing Date, no Action shall be pending or
threatened (i) wherein an unfavorable judgment, decree or order could prevent,
make unlawful or materially affect the consummation of the transactions
contemplated by this Agreement or (ii) which if adversely determined would have
a Material Adverse Effect (as defined in the JEDI Loan Agreement) on the
Company.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF JEDI
JEDI hereby represents and warrants to the Company as follows:
3.1 ORGANIZATION; AUTHORITY. JEDI is a limited partnership duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite power and authority under its Partnership
Agreement and under the laws of the State of Delaware to execute, deliver and
perform its obligations under this Agreement and each of the JEDI Documents to
which it is a party and to execute, deliver and perform its obligations under
all other agreements and instruments executed and delivered by JEDI pursuant to
or in connection with this Agreement or any of the JEDI Documents.
3.2 EXECUTION AND DELIVERY; ENFORCEABILITY. JEDI has taken all action
necessary to authorize the due execution and delivery of this Agreement and the
JEDI Documents and the performance of its obligations hereunder and thereunder.
This Agreement has been, and upon execution and delivery, each other JEDI
Document to which JEDI is a party shall be, duly executed and delivered by JEDI,
and shall constitute the legal, valid and binding obligation of JEDI,
enforceable against JEDI in accordance with its terms, except to the extent that
enforceability may be subject to applicable bankruptcy, insolvency, fraudulent
conveyance, moratorium and other similar laws affecting generally the
enforcement of creditors' rights and by general principles of equity.
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3.3 APPROVALS AND CONSENTS. Except for the Approval referred to in
Section 2.4.1 or as may be required by the Acts or the Hart-Scott-Rodino Act, no
Approval is required in connection with JEDI's execution and delivery of this
Agreement or any of the JEDI Documents and the performance of its obligations
hereunder or thereunder.
3.4 NO VIOLATIONS. The execution and delivery by JEDI of this Agreement
and each of the JEDI Documents to which it is a party and the performance of its
obligations hereunder and thereunder will not cause a breach or violation of, or
a default or event of default under, any provision of (i) the JEDI Partnership
Agreement or any agreement, contract or arrangement, whether written or oral, to
which JEDI is a party or by which JEDI is bound; (ii) any law, rule or
regulation of any Governmental Body applicable to JEDI; or (iii) any decree,
order, injunction or other decision of any court, arbitrator, or Governmental
Body with jurisdiction over JEDI, the violation of which would have an adverse
effect on its ability to perform its obligations hereunder.
3.5 NO LITIGATION. There is no Action pending or, to the knowledge of
JEDI, threatened against JEDI, that involves the Restructure Transaction or the
Company/Anschutz Transaction.
3.6 COMPLIANCE WITH LAWS. JEDI is neither in, nor has it received notice
of a, violation of or default with respect to any Regulation of any Governmental
Body or any decision, ruling, order or award of any arbitrator applicable to it
or its business, properties or operations, which violation or default,
individually or in the aggregate, could materially and adversely affect the
ability of JEDI to perform its obligations hereunder or under any JEDI Document.
3.7 PURCHASE FOR INVESTMENT. JEDI acknowledges that (i) the Tranche B
Warrants will be issued and sold in reliance upon the exemption afforded by
Section 4(2) of the Securities Act; (ii) it is acquiring the Tranche B Warrants
for investment and without any view toward distribution of any of the Tranche B
Warrants (or, upon exercise thereof, the Tranche B Warrant Shares) to any other
person in violation of the Securities Act; (iii) it will not sell or otherwise
dispose of the Tranche B Warrants (or, upon exercise thereof, the Tranche B
Warrant Shares) except in compliance with the registration requirements under
the Securities Act and applicable state securities laws or available exemptions
therefrom; and (iv) before any sale or any disposition of Tranche B Warrants
(or, upon exercise thereof, the Tranche B Warrant Shares) which is not
registered under the Securities Act or effected pursuant to Rule 144 under the
Securities Act (unless the Company shall have been advised by counsel that such
sale does not meet the requirements of Rule 144), it will deliver to the Company
an opinion of counsel reasonably satisfactory to the Company to the effect that
such registration is unnecessary.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
4.1 REPRESENTATIONS AND WARRANTIES INCORPORATED. The Company hereby makes
directly to JEDI each of the representations and warranties set forth in
Sections 4.1, 4.2, 4.3(b)-4.5, 4.8, 4.23 and 4.27-4.32 of the Purchase
Agreement, and each such representation and warranty is expressly incorporated
by reference herein; PROVIDED THAT (a) in each instance in which any such
representation or warranty in the Purchase Agreement refers to (i) the
disclosure of any item to "the Purchaser" or (ii) documents or other information
being "provided," "made available," "furnished" or "delivered" to "the
Purchaser," such reference shall be deemed in each instance to be modified to
substitute "JEDI" for "the Purchaser"; (b) with respect to Section 4.3(b) of the
Purchase Agreement, references to (i) "JEDI Transaction" shall be deemed to be
modified to substitute "Company/Anschutz Transaction" therefor, (ii) "Second
Closing Transactions" shall be deemed in each instance to be modified to
substitute "Restructure Transaction" therefor, and (iii) "Second Closing" and
"Second Closing Date" shall be deemed to be modified to substitute "Closing" and
"Closing Date," respectively, therefor; and (c) with respect to each of Sections
4.3(b) and 4.31, each reference to "the Purchaser" shall be deemed to be
modified to substitute "JEDI" therefor.
ARTICLE V
ADDITIONAL COVENANTS OF THE PARTIES
5.1 NOTIFICATION. Until the Closing, the Company and JEDI shall give
prompt notice to the other party to this Agreement or any JEDI Document, as the
case may be, of (i) the occurrence, or failure to occur of any event that would
be likely to cause any representation or warranty of the party contained herein
or in any JEDI Document to be untrue or inaccurate in any material respect at
any time from the date of this Agreement to the Closing Date and (ii) any
failure of the party to perform or otherwise comply with, in any material
respect, any covenant, condition or agreement to be performed or complied with
by it under this Agreement or any JEDI Document. This covenant of notification
shall not limit the right of the other party under Article II above to require
as a condition precedent to the performance of its obligations under this
Agreement the accuracy on the Closing Date of the representations and warranties
in all material respects, and performance in all material respects of the
covenants of the notifying party made in this Agreement or in any JEDI Document
and to receive an unqualified certificate with respect to the same. JEDI shall
promptly provide to its limited partner all information requested by the limited
partner after the date hereof in connection with its evaluation of the
Restructure Transaction and shall promptly advise the Company and Anschutz in
writing if the condition set forth in Section 2.4.1 is satisfied.
5.2 PUBLIC STATEMENTS. Until the Closing, the Company and JEDI shall
consult with each other and no party shall issue any press release or written
statement with respect to the transactions contemplated hereby without the
consent of the other party, unless the party
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desiring to make such press release or written statement, after seeking such
consent from the other party, obtains advice from legal counsel that a press
release or written statement is required by applicable law.
5.3 CONFIDENTIALITY. Information disclosed by any party or its
representatives to any other party or its representatives, whether before or
after the execution of this Agreement, shall be kept confidential by the other
party and its representatives if the information was or is designated in writing
as confidential and except in each case to the extent that (i) the information
was known by the recipient when received or the information is or hereafter
becomes lawfully obtainable from other sources, (ii) upon the advice of counsel,
the disclosing party determines that disclosure to a Governmental Body having
jurisdiction over such party is necessary or appropriate, (iii) upon the advice
of counsel disclosure is required by applicable laws or regulations (in each of
clause (ii) and (iii), after providing written notice of the proposed disclosure
and the stated reason requiring such disclosure) or (iv) the duty as to
confidentiality is waived in writing by the other party.
5.4 FURTHER ASSURANCES. Until the Closing and indefinitely thereafter,
promptly upon request by any other party, each party shall correct any defect or
error in the execution or acknowledgment of any JEDI Document and execute,
acknowledge and deliver such other documents and instruments as the requesting
party may require from time to time in order (i) to carry out more effectively
the purposes of this Agreement and each JEDI Document, (ii) to enable the
requesting party to exercise and enforce its rights and remedies and collect any
payments and proceeds under this Agreement and any JEDI Document and (iii) to
better transfer, preserve, protect and confirm to the requesting party the
rights granted or now or hereafter intended to be granted to the requesting
party under this Agreement and any JEDI Document or under each other instrument
executed in connection with this Agreement and any JEDI Document.
5.5 EXPENSES. Regardless of whether this Agreement is terminated in
accordance with Article VII or whether the transactions contemplated by this
Agreement are consummated, the Company shall pay all of JEDI's reasonable out-
of-pocket legal and other professional fees (other than fees of independent
accountants) and all other out-of-pocket fees and expenses incurred in
connection with the negotiation and preparation of the letter of intent related
to the Restructure Transaction, this Agreement and the JEDI Documents or which
have been or shall be otherwise incurred in connection with the Restructure
Transaction (including conducting the due diligence investigation contemplated
by this Agreement, excluding, however, any accounting due diligence).
5.6 COMPLIANCE WITH THE HART-SCOTT-RODINO ACT.
5.6.1 COMPLIANCE. Upon exercise of the Tranche B Warrants,
whether initiated by the Holder (as defined therein) or by the holder of the
JEDI/Anschutz Option pursuant to
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the procedures set forth in Section 3.2(a) of the Tranche B Warrant, and if the
Hart-Scott-Rodino Act so requires, the Company agrees promptly to prepare (or
cause to be prepared) and file (or cause to be filed) with the DOJ and the FTC
the Notification and Report Form required by the Hart-Scott-Rodino Act, and will
in good faith and as expeditiously as possible take all other actions necessary
to permit the issuance of the Tranche B Warrant Shares in compliance with the
Hart-Scott-Rodino Act.
5.6.2 COOPERATION. In connection with any filing under the Hart-
Scott-Rodino Act made by the Company pursuant to Section 5.6.1, the Company
agrees to (i) cooperate with any other person required to file in the
preparation of such filing, (ii) promptly report to the other person all
contacts received by the Company from the DOJ or the FTC regarding the
transaction, and (iii) promptly respond to all formal and informal requests for
additional information received from the DOJ or the FTC.
5.7 SUSPENSION OF NON-COMPLIANCE. The parties hereto acknowledge that
EXHIBIT K to this Agreement describes certain events of noncompliance by the
Company with the requirements of the JEDI Loan Agreement. If at any time prior
to Closing, JEDI becomes aware of the existence of any Event of Default (as
defined in the Loan Agreement), which is not set forth on EXHIBIT K, JEDI shall
promptly (but in any event prior to Closing) notify the Company in writing of
same and if Closing occurs, such Event of Default shall be added to EXHIBIT K
hereto. Any such addition to EXHIBIT K shall become effective only upon
Closing. The parties hereto acknowledge that JEDI's decision to proceed with
the Closing may be conditioned upon acceptable written arrangements pursuant to
which the Company shall agree to correct or remedy any such Event of Default or
provide other acceptable assurances with respect to any Losses that JEDI may
suffer as a result of such Event of Default. For purposes of this Section 5.7,
JEDI shall only be deemed to be aware of Events of Default that are within the
actual knowledge of the officers and directors of the general partner of JEDI,
Enron Capital & Trade Resources Corp. ("ECT") or Enron Finance Corp. ("EFC") or
any employee of the general partner, ECT or EFC who has supervisory
responsibility for the aspect of the business and affairs of the Company that
relates to the relevant Event of Default. JEDI agrees that until the earlier of
the Closing Date and the date on which this Agreement is terminated, JEDI will
not enforce any of its rights with respect to any event of noncompliance
specified on EXHIBIT K hereto. If the Second Amendment is not executed pursuant
to the terms of this Agreement, then the suspension provided for herein shall
terminate and JEDI shall have all of its rights set forth in the JEDI Loan
Agreement. Except as expressly provided herein, JEDI does not waive any of its
rights with respect to such noncompliance. If the Closing occurs, JEDI hereby
waives any rights it may have against the Company (including, without
limitation, the right to assert that an Event of Default has occurred and the
right to exercise any remedies as a result thereof) and releases the Company
from any liability with respect to the matters disclosed on EXHIBIT K (as the
same may be amended in accordance with this Section 5.7).
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5.8 OPERATIONS BEFORE CLOSING. Until the Closing Date (unless this
Agreement is terminated pursuant to Section 7.1), the Company shall conduct all
operations with respect to the Mortgaged Properties in compliance with the
procedures and limitations set forth in the Second Amendment.
5.9 COMPANY/ANSCHUTZ TRANSACTION CLOSING. JEDI agrees that at the Second
Closing, JEDI shall execute and deliver, or cause to be executed and delivered,
to the Company and Purchaser the certificates, certified copies and opinion
required to be delivered pursuant to of Section 3.3(i)(6) of the Purchase
Agreement.
5.10 PROXY STATEMENT. The Company shall cause the Proxy Statement and the
distribution thereof to comply in all material respects with the Exchange Act
and ensure that the Proxy Statement will not, at the date the Proxy Statement
(or any amendment thereof or supplement thereto) is first mailed to shareholders
and at the time of the Shareholders Meeting, be false or misleading with respect
to any material fact, or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading or necessary to correct
any statement of a material fact in any earlier communication with respect to
the solicitation of proxies for the Shareholders Meeting which has become false
or misleading.
5.11 AMENDMENTS TO PURCHASE AGREEMENT. The Company shall notify JEDI of
any proposed amendment to the Purchase Agreement and shall provide JEDI with a
copy of such proposed amendment no less than two Business Days prior to the date
such amendment is executed by the Company and shall not enter into any amendment
to the Purchase Agreement which could adversely affect JEDI without JEDI's prior
written approval.
ARTICLE VI
INDEMNIFICATION
6.1 INDEMNIFICATION. The Company shall indemnify and defend (a) JEDI, (b)
each partner of JEDI, (c) each "controlling person" (within the meaning of
Section 20 of the Exchange Act) of JEDI and each of its partners and (d) the
shareholders, directors, officers, employees, agents and affiliates of each of
the foregoing (each referred to herein as an "indemnified person"), and shall
hold each indemnified person harmless from, any and all Losses in any way
relating to or arising out of any of the following:
6.1.1 any breach of the representations, warranties, covenants or
agreements of the Company contained in this Agreement or any JEDI Document; and
6.1.2 any Action brought against such indemnified person to the
extent the Action arises out of or is attributable to the Transaction, excluding
however any Action that is asserted by (a) one or more indemnified persons, (b)
any person having a contractual or
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other relationship with one or more of such indemnified persons, which
contractual or other relationship serves as the basis upon which such person has
standing to bring such Action or (c) any Governmental Body in the exercise of
its regulatory authority over the business and affairs of such indemnified
person.
The Company shall have no obligation under this Section to JEDI or any
other person indemnified under this Section 6.1 with respect to any of the
foregoing arising primarily out of the gross negligence or willful misconduct of
JEDI or the other indemnified person, as the case may be, as determined by a
final judgment of a court of competent jurisdiction. Notwithstanding anything
herein or in any JEDI Document to the contrary, the terms and provisions of such
documents, including the indemnification provisions set forth in this Article
VI, shall not limit or otherwise affect in any way the terms of Section 6.03 of
the JEDI Loan Agreement.
6.2 INDEMNIFICATION PROCEDURES. If any Action indemnifiable under this
Article shall be brought, asserted or threatened against any person indemnified
under this Article, the indemnified person shall promptly notify the
indemnifying person. A failure to notify the indemnifying person timely or at
all shall reduce the liabilities and obligations of the indemnifying person
under this Article only to the extent the indemnifying person actually shall be
prejudiced by the failure. The indemnifying person shall assume the defense of
the Action, including the employment of counsel satisfactory to the indemnified
person and the payment of all related fees and expenses, but the indemnified
person may employ separate counsel in the Action and participate in the defense
of the Action at its own expense. The indemnified person, however, may by
written notice to the indemnifying person assume the defense of the Action,
including the employment of counsel, at the expense of the indemnifying person
(except that the indemnifying person shall not be liable for the fees and
expense of more than one such separate counsel with respect to the Action) if:
(1) the indemnifying person fails to take one or more of the
following acts without a delay that reasonably could be expected to be
prejudicial to the interests of the indemnified person: (A) acknowledge in
writing to the indemnified person the liability of the indemnifying person
to the indemnified person under this Article with respect to the Action,
(B) assume the defense, (C) post an indemnity or similar bond (in form and
substance satisfactory to the indemnified person) in an amount equal to the
full amount for which the indemnified person may be liable as a result of
the Action (including penalties and interest) or provide other evidence
satisfactory to the indemnified person of the ability of the indemnifying
person to pay that amount in full or (D) employ counsel reasonably
satisfactory to the indemnified person; or
(2) the persons against whom the Action shall have been brought,
asserted or threatened (including any impleaded parties) include both the
indemnified
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person and the indemnifying person and the indemnified person is advised by
counsel that there may be one or more legal defenses available to the
indemnified person that are different from or in addition to those
available to the indemnifying person; or
(3) the indemnified person reasonably believes that the Action
or an unfavorable resolution of the Action may materially and adversely
affect the business, properties, operations, prospects or condition
(financial or otherwise) of the indemnified person and its affiliates other
than as a result of the payment of money damages.
If the indemnified person has assumed the defense of the Action pursuant to any
of the conditions stated above, then the indemnifying person shall not have the
right to assume the defense of the Action on behalf of the indemnified person
and the indemnified person shall have the right to control the defense,
compromise or settlement of any Action indemnifiable under this Article on
behalf of and for the account and risk of the indemnifying person. The
indemnifying person shall be bound by the result of the defense of any Action,
whether the defense shall have been assumed by the indemnifying person or by the
indemnified person, and shall indemnify the indemnified person against, and hold
the indemnified person harmless from, any Loss in any way relating to or
allegedly arising in connection with the matter or matters which shall be the
basis of the Action or otherwise connected to the Action, except that the
indemnifying person shall not be liable for the payment of the amount of money
damages provided in a settlement of any Action indemnifiable under this Article
defended by the indemnified person pursuant to the second or third conditions
stated above that shall have been effected without the written consent of the
indemnifying person, which consent shall not be unreasonably withheld.
6.3 APPEAL. Notwithstanding anything in this Article to the contrary, if,
in connection with an Action indemnifiable under this Article, a Governmental
Body or authority of competent jurisdiction or other person having authority or
jurisdiction over a matter or matters related to the Action shall have rendered,
entered or granted a binding judgment, decision, ruling, order or award with
respect to the matter or matters providing for the payment of money damages or
the claimant and the indemnifying party shall have agreed to settle the Action
for an amount of money damages without reservation of any rights or defenses
against the indemnified person, and if the indemnified person elects to appeal
the judgment, decision, ruling, order or award or declines to agree to the
proposed settlement, as the case may be, then the indemnified person may
continue to defend the Action, free of any participation by the indemnifying
person, but the amount of any ultimate liability under this Article VI with
respect to Losses related to or allegedly arising in connection with the matter
or matters that shall have been comprehended by the judgment, decision, ruling,
order or award or by the proposed
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settlement, as the case may be, shall then be limited to the amount of the
judgment, decision, ruling, order or award or the amount of the proposed
settlement, as the case may be, plus the other indemnified Losses of the
indemnified person relating to the matter or matters through the date of its
election to appeal or its rejection of the proposed settlement, as the case may
be.
6.4 CONTRIBUTION. If the indemnification provided for in this Article is
unavailable to an indemnified person (other than by reason of exceptions
provided in this Article), or is insufficient to hold harmless an indemnified
person in respect of any Loss, then the indemnifying person, in lieu of
indemnifying the indemnified person, shall contribute to the amount paid or
payable by the indemnified person as a result of the Loss in the proportion that
is appropriate to reflect the relative fault of the indemnifying person on the
one part and of the indemnified person on the other part in connection with the
events or circumstances which resulted in the Loss as well as any other relevant
equitable considerations. The relative fault of the indemnifying person on the
one part and of the indemnified person on the other part shall be determined by
reference to, among other things, those persons' relative intent, knowledge,
access to information and opportunity to correct or prevent the events or
circumstances resulting in the Loss. The amount of any Loss suffered, incurred
or paid by any person shall be deemed to include all expenses incurred or paid
by the person in connection with investigating or defending any action,
including, but not limited to, the fees and expenses of counsel.
6.5 NO LIMITATION ON OTHER RIGHTS OF RECOVERY. The indemnification set
forth in this Article shall be in addition to any other obligations or
liabilities of any indemnifying person to an indemnified person at common law or
otherwise. The provisions of this Article shall not eliminate or otherwise
limit the right of any indemnified person or any other person to seek to recover
contribution, damages or otherwise enforce its rights against the indemnifying
person or any other person without regard to the provisions of this Article.
JEDI and the Company further agree that if at any time all or any part of any
indemnification payment hereunder is or must be rescinded or returned to the
person making such indemnity payment for any reason whatsoever (including,
without limitation, the insolvency, bankruptcy or reorganization of any person)
the indemnification obligations of the person making such payment shall be
reinstated with respect to such payment so rescinded or returned as though such
payment had never been made or received.
ARTICLE VII
TERMINATION
7.1 TERMINATION EVENTS. This Agreement may be terminated as follows:
7.1.1 Upon the mutual written consent of each of the parties
hereto;
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7.1.2 By either of the parties hereto upon written notice to the
other party if the Restructure Transaction shall not have been consummated by
July 31, 1995; or
7.1.3 By either of the parties hereto upon written notice to the
other party at any time after termination of the Purchase Agreement.
7.2 LIMITATION ON TERMINATION. Except with respect to Section 6.1.2 above
regarding indemnification and Section 5.5 regarding payment of JEDI's expenses,
each of which shall survive in accordance with their terms, upon termination of
this Agreement, the parties hereto shall have no further rights and obligations
hereunder; PROVIDED, HOWEVER, that termination of this Agreement shall not
release, or be construed as releasing, either party hereto from any liability or
damage to the other party hereto arising out of the breaching party's willful
and material breach of the warranties and representations made by it, or willful
and material failure in performance of any its covenants, agreements, duties or
obligations arising hereunder or under any of the JEDI Documents.
ARTICLE VIII
MISCELLANEOUS
8.1 SURVIVAL. Except as otherwise specifically provided herein or in any
JEDI Document, and notwithstanding any investigation or notice to the contrary
or any waiver by any other party of a related condition precedent to the
performance by the other party of an obligation hereunder or under a JEDI
Document, (i) each representation, warranty or covenant of each party made
pursuant to this Agreement or any JEDI Document shall survive the Closing and
remain in full force and effect until the last day of the eighteenth calendar
month following the calendar month in which the Closing occurs and (ii) each
party may assert or commence an Action against the other party with respect to
the breach of any such representation, warranty or covenant on or before such
date (but not thereafter) and may maintain any such action thereafter.
8.2 NOTICES. Any notice, request, instruction, correspondence or other
document to be given under this Agreement by either party hereto (each, a
"NOTICE" for purposes of this Section 8.2) shall be in writing and (i) delivered
in person or by courier service requiring acknowledgment of receipt of delivery;
(ii) mailed by certified mail, postage prepaid and return receipt requested;
(iii) or sent by telecopier, if appropriate. All Notices shall be sent to the
address for each party set forth below, as the same may be amended from time to
time upon proper Notice given by either party hereto:
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If to JEDI: Joint Energy Development Investments
Limited Partnership
c/o Enron Capital Corp.
1400 Smith Street
Houston, Texas 77002
Attention: Mr. Keith Power
Telecopier: (713) 646-3602
with a copy to: Enron Capital & Trade Resources Corp.
1200 17th Street, Suite 2750
Denver, Colorado 80202
Attention: Mr. Clifford Hickey
Telecopier: (303) 534-2205
If to the Company: Forest Oil Corporation
1500 Colorado National Building
950 17th Street
Denver, Colorado 80202
Attention: Mr. Kenton Scroggs
Telecopier: (303) 592-2602
Notice given by personal delivery, courier service or mail shall be
effective upon actual receipt. Notice given by telecopier shall be confirmed by
appropriate answer back and shall be effective upon actual receipt if received
during the recipient's normal business hours, or at the beginning of the
recipient's next business day after receipt if not received during the
recipient's normal business hours. All Notices by telecopier shall be confirmed
promptly after transmission in writing by personal delivery, courier service or
certified mail in the manners provided above. Any procedural modification
pertaining to the delivery of Notice may be made in the same manner as any other
amendment to this Agreement.
8.3 GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Colorado, notwithstanding principles of
conflicts of law.
8.4 NO WAIVERS; RIGHTS CUMULATIVE. Unless expressly provided to the
contrary (i) no failure or delay by any party in exercising any right, power or
privilege hereunder or under any JEDI Document shall operate as a waiver of any
such right, power or privilege; and (ii) a single or partial exercise of any
right, power or privilege shall not preclude any other or further exercise of
the right, power or privilege or the exercise of any other right, power or
privilege. The rights and remedies provided in this Agreement and the JEDI
Documents shall be cumulative and not exclusive of any rights or remedies
provided by law.
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8.5 REMEDIES. With respect to disputes between the parties as to the
validity of a party's refusal to perform its obligations hereunder on the
grounds that a condition to its obligations hereunder has not been satisfied,
and provided that the party asserting the failure of such condition is acting in
good faith, neither party shall be liable to the other for any lost or
prospective profits or any other special, consequential, incidental or indirect
losses or damages in connection therewith. With respect to all other disputes
arising between the parties, each party shall be entitled to seek such remedies,
damages and other relief as may be available under applicable law.
8.6 AMENDMENTS, ETC. No amendment, modification, termination, or waiver
of any provision of this Agreement or any JEDI Document (or any schedule or
exhibit hereto or thereto), and no consent by any party to a departure from any
provision of this Agreement or such JEDI Document, shall be effective unless it
shall be in writing and signed and delivered by the other party(ies) to this
Agreement or the JEDI Document as the case may be, and then it shall be
effective only in the specific instance and for the specific purpose for which
it is given.
8.7 ENTIRE AGREEMENT. This Agreement, together with any schedules and
exhibits attached hereto, and any documents delivered pursuant hereto, including
the JEDI Documents, shall constitute the entire agreement among the parties
hereto pertaining to the subject matter hereof and supersedes all prior
agreements, understandings, negotiations and discussions of the parties, whether
oral or written, including, without limitation, the letter of intent dated
April 27, 1995, between the Company and JEDI.
8.8 BINDING EFFECT AND ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective permitted
successors and assigns. Neither this Agreement nor any of the rights, benefits
or obligations hereunder shall be assigned, conveyed, transferred or otherwise
disposed of, by operation of law or otherwise, by any party hereto without the
prior written consent of the other party; PROVIDED, HOWEVER, that
notwithstanding the foregoing, JEDI may assign, convey or transfer any or all of
its rights, privileges and obligations hereunder (i) to any direct or indirect
affiliate of JEDI organized under the laws of any of the United States, (ii) any
entity managed by Enron Corp. or one of its affiliates or for which Enron Corp.
or one of its affiliates acts as administrative agent, or (iii) to any financial
institution financing or refinancing the transactions contemplated by this
Agreement. Any assignment, conveyance, transfer or other disposition made or
attempted in violation of this Section 8.8 shall be void and of no effect.
8.9 SEVERABILITY. If a minor or immaterial provision of this Agreement
(i.e., one that does not affect the essential nature of, or consideration for,
the arrangement among the parties reflected hereby) is declared by a court of
competent jurisdiction to be invalid, illegal or unenforceable, such declaration
shall not affect the validity or enforceability of the remaining provisions of
this Agreement, which shall continue in full force and effect. In such event,
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however, the parties shall negotiate in good faith to replace such invalid,
illegal or unenforceable provision with a valid, legal and enforceable provision
that places each party in substantially the same position it would have been in
had such original provision been valid, legal and enforceable. If any one or
more of the provisions contained in Article VI of this Agreement shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Agreement, and this Agreement shall be reformed and construed as if such
invalid, illegal or unenforceable provisions had never been contained in this
Agreement and such provisions shall be reformed so that they would be valid,
legal and enforceable to the maximum extent permitted by law.
8.10 HEADINGS; SCHEDULES. The headings of the several Articles and
Sections of this Agreement are inserted for convenience of reference only and
are not intended to be a part of or to affect the meaning or interpretation of
this Agreement. The exhibits and schedules referred to herein and attached
hereto are incorporated in this Agreement by this reference.
8.11 MULTIPLE COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original for all purposes, but
all of which together shall constitute one and the same instrument.
[The remainder of this page is intentionally left blank.]
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<PAGE>
IN WITNESS WHEREOF, the parties execute this Agreement effective as of the
date first set forth above.
JOINT ENERGY DEVELOPMENT INVESTMENTS
LIMITED PARTNERSHIP
By: Enron Capital Corp., its General Partner
By: /s/ Clifford P. Hickey
-----------------------------------------
Clifford P. Hickey
Attorney-in-Fact
FOREST OIL CORPORATION
By: /s/ William L. Dorn
-----------------------------------------------
William L. Dorn
Chairman of the Board and
Chief Executive Officer
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<PAGE>
EXHIBIT B
SECOND AMENDMENT
<PAGE>
SECOND AMENDMENT TO LOAN AGREEMENT
This Second Amendment to Loan Agreement (this "Amendment") is made and
entered into as of [effective date] ("Amendment Date"), by and between FOREST
OIL CORPORATION, a New York corporation, with principal offices at 950 17th
Street, Colorado National Building, Denver, Colorado 80202 (the "Borrower"), and
JOINT ENERGY DEVELOPMENT INVESTMENTS LIMITED PARTNERSHIP, a Delaware limited
partnership, with offices at 1400 Smith Street, Houston, Texas 77002 (the
"Lender").
WHEREAS, reference for all purposes is hereby made to that certain Loan
Agreement dated December 28, 1993, between the Borrower and the Lender, as
amended by the First Amendment to Loan Agreement dated as of December 28, 1993
(as so amended, the "Agreement");
WHEREAS, the Borrower and the Lender desire to amend the Agreement as
hereinafter set forth;
NOW, THEREFORE, for and in consideration of ten dollars ($10.00) and other
good and valuable consideration, the Borrower and the Lender hereby agree as
follows:
1. Section 1.01 of the Agreement is amended by replacing or inserting the
following defined terms, as appropriate:
"ANSCHUTZ" shall mean The Anschutz Corporation, a Kansas
corporation.
"ANSCHUTZ NOTICE" shall mean the written notice delivered from
the holder of the Anschutz Option as provided for in the Anschutz
Option, which notice shall specify (i) the number of shares of Common
Stock the holder of the Anschutz Option is electing to acquire
pursuant to the Anschutz Option, (ii) the Anschutz Option Price, and
(iii) the Gross Warrant Proceeds.
"ANSCHUTZ OPTION" shall mean the JEDI/Anschutz Option dated as of
the Amendment Date made by the Lender in favor of Anschutz granting
Anschutz the right to cause the Lender to exercise the Tranche B
Warrant held by Lender and purchase the resulting shares of Common
Stock substantially in the form of Exhibit M to the Anschutz Purchase
Agreement with such changes as may be approved by the Borrower, the
Lender and Anschutz.
<PAGE>
"ANSCHUTZ OPTION PRICE" shall have the meaning of the term
"Option Price" as defined in the Anschutz Option.
"ANSCHUTZ PURCHASE AGREEMENT" shall mean the Purchase Agreement
dated as of May [__], 1995 by and between Borrower and Anschutz, as
the same may be amended from time to time.
"APPLICABLE INTEREST RATE" shall mean with respect to the Tranche
A Loan 12.5% per annum. The Tranche B Loan shall be a non-interest
bearing loan.
"APPROVED OVERRUN EXPENSES" means with respect to any Overrun
Expenses that are approved by Lender pursuant to Section 2.18, 80% of
Borrower's share of the actual amount of Overrun Expenses, not to
exceed 80% of 110% of Borrower's share of the Overrun Expenses set
forth in the Supplemental AFE.
"ASSIGNMENT" shall mean an Assignment and Bill of Sale in
substantially the form of Exhibit R.
"CAPITAL EXPENSES" means (i) with respect to any Scheduled
Capital Operation proposed by Borrower prior to the Conveyance
Expiration Date that is approved by Lender, 80% of the costs actually
incurred by Borrower to conduct such Scheduled Capital Operation, not
to exceed 80% of 110% of Borrower's share of the amount of the
Scheduled Capital Operation as set forth in the AFE approved by Lender
for such operation and (ii) with respect to any Scheduled Capital
Operation proposed by Borrower after the Conveyance Expiration Date
(a) if Borrower elects not to submit an AFE for such Scheduled Capital
Operation, 80% of the costs actually incurred by Borrower to conduct
such Scheduled Capital Operation, not to exceed 80% of 110% (80% of
115% from and after January 1, 1998) of Borrower's share of the amount
of the Scheduled Capital Operation as set forth on Schedule I or (b)
if Borrower submits an AFE pursuant to Section 2.02(b) and such AFE is
approved by Lender, 80% of the costs actually incurred by Borrower to
conduct such Scheduled Capital Operation, not to exceed 80% of 110% of
Borrower's share of the amount of the Scheduled Capital Operation as
set forth in the AFE approved by Lender for such operation, (iii) with
respect to any Approved Nonscheduled Capital Operation, 80% of the
costs actually incurred by Borrower to conduct such Approved
Nonscheduled Capital Operation, not to exceed 80% of 110% of
Borrower's share of the amount of the Approved AFE, (iv) Approved
Overrun Expenses, and (v) Mandatory Capital Expenses.
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<PAGE>
Notwithstanding anything to the contrary set forth herein, the following
shall apply in determining Capital Expenses:
(a) Capital Expenses shall not include any cost in excess of
$500,000 incurred by Borrower for any Capital Operation unless prior
to the Payment Date on which such Capital Expense would be deducted in
computing the Monthly Payment Amount due on such Payment Date Borrower
has actually paid such Capital Expense;
(b) Capital Expenses shall be determined in accordance with the
applicable Accounting Procedure, and shall not include any general,
administrative or office charges or overhead, except as permitted by
the applicable Accounting Procedure;
(c) If Lender exercises its rights under Section 6.04 to suspend
the deduction of Capital Expenses, none of the costs thereafter
incurred by Borrower to conduct Capital Operations shall be considered
as Capital Expenses, except for such costs as are approved in writing
by Lender; and
(d) Capital Expenses shall not include any costs incurred with
respect to a Capital Operation that (i) has not been properly approved
by Lender (if such approval is required hereunder), or (ii)
constitutes an Excluded Operation pursuant to Section 2.03(d). In
addition, Capital Expenses shall not include Overrun Expenses that do
not constitute Approved Overrun Expenses.
"COMMON STOCK" shall mean the common stock, $.10 par value per
share of the Borrower (including the associated rights).
"CONVEYANCE DATE" shall have the meaning set out in Section
2.16(a) below.
"CONVEYANCE ELECTION DATE" shall mean the date that Borrower
provides Lender with written notice of its election to exercise the
Conveyance Option.
"CONVEYANCE EXPIRATION DATE" shall mean the date occurring thirty
(30) days after the Option Commencement Date.
"CONVEYANCE OPTION" shall have the meaning set out in Section
2.16(a) below.
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<PAGE>
"CUELLAR LEASE" shall mean that certain Oil and Gas Lease dated
September 9, 1993 between Rafael San Miguel, Trustee and Jacob C.
Rathmell, et. al, as Lessor, and Wagner & Brown, as Lessee, recorded
at Book 489, Page 446 of the Official Records of Zapata County, Texas.
"EXCLUDED OPERATION" shall have the meaning set out in Section
2.03(d).
"EXCLUDED OPERATION COSTS" shall have the meaning set out in
Section 2.03(d).
"EXCLUDED OVERRUN EXPENSES" shall have the meaning set out in
Section 2.18.
"EXCLUDED OVERRUN OPERATION" shall have the meaning set out in
Section 2.18.
"EXTINGUISHED OBLIGATIONS" shall mean all unpaid principal and
interest on the Loan as of the Conveyance Date.
"FAIR MARKET VALUE OF RETAINED PROPERTIES" shall have the meaning
set out in Section 2.16(f).
"FINAL MATURITY DATE" shall mean the following dates with respect
to the Tranche A Loan and the Tranche B Loan:
TRANCHE FINAL MATURITY DATE
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Tranche A Loan December 31, 2000
Tranche B Loan December 31, 2002
"GROSS WARRANT PROCEEDS" shall mean, with respect to the proceeds
from any exercise of the Tranche B Warrant, an amount equal to the
product of the Anschutz Option Price multiplied by the number of
shares of Common Stock to be acquired by the holder of the Anschutz
Option, which number of shares shall be set forth in the Anschutz
Notice.
"LOAN" shall mean the loan made pursuant to Section 2.01, which
is subdivided into the Tranche A Loan and the Tranche B Loan, and any
additions to the principal thereof pursuant to Section 2.04.
"LOAN TRANCHE" shall mean the Tranche A Loan or the Tranche B
Loan.
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<PAGE>
"LOAN DOCUMENTS" shall mean this Agreement, the Note, the
Security Instruments, the Warrants, the Registration Rights Agreement,
any amendment agreements amending the foregoing, and all other
documents, certificates, instruments, and agreements executed and
delivered pursuant to this Agreement or in connection herewith, as the
same may be amended, supplemented, modified, renewed, or extended from
time to time.
"MANDATORY CAPITAL EXPENSES" shall mean 80% of Borrower's share
of the costs actually incurred in connection with the Borrower
obtaining extensions to or new leases replacing the leases identified
on Exhibit S, which costs shall not exceed 80% of 110% of Borrower's
share of such costs as identified on Exhibit S.
"MORTGAGED PROPERTIES" shall mean (i) all Oil and Gas Properties
subject to Liens in favor of the Lender under the Security
Instruments, including, but not limited to, the Development
Properties, the Sandefer Properties, the Wagner & Brown Properties,
and all Hydrocarbon production therefrom, and (ii) any other Oil and
Gas Property and the Hydrocarbon production therefrom that is
hereafter subjected to Liens in favor of the Lender under the Security
Instruments, LESS AND EXCEPT (iii) any portion of said Oil and Gas
Properties which have been released in writing by Lender from such
Liens.
"NET WARRANT PROCEEDS" shall mean, with respect to the proceeds
from any exercise of the Tranche B Warrant, an amount equal to the
product of $2.00 (subject to adjustments comparable to the adjustments
to the Warrant Price as specified in the Tranche B Warrant) multiplied
by the number of shares of Common Stock to be acquired by the holder
of the Anschutz Option, which number of shares shall be set forth in
the Anschutz Notice.
"OPTION COMMENCEMENT DATE" shall mean the first Business Day
occurring after the Initial Expiration Date (as defined in the
Tranche A Warrant as in effect on even date herewith) or if the
Tranche A Warrant is extended pursuant to the terms of Section 3.1(b)
of the Tranche A Warrant, then the first Business Day occurring after
the Expiration Date (as defined in the Tranche A Warrant as in effect
on even date herewith).
"OVERRIDING ROYALTY RECONVEYANCE" shall mean such documents and
instruments as may be satisfactory in form and content to Borrower and
Lender and which effect a termination or reconveyance of (i) the
Eugene Island Block 326 Overriding Royalty, (ii) the Wagner & Brown
Overriding Royalty, (iii) the
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<PAGE>
Production Agreement (Eugene Island Block 326) and (iv) the Production
Agreement (Wagner & Brown).
"OVERRUN EXPENSES" shall mean (i) with respect to any Capital
Operation for which an AFE was previously submitted to and approved by
JEDI prior to the commencement of work on such operation, Borrower's
share of the costs incurred in connection with such operation that are
in excess of 110% of the amount set forth on such AFE and (ii) with
respect to any Scheduled Capital Operation proposed after the
Conveyance Expiration Date and for which no AFE was submitted by
Borrower to Lender prior to the commencement of operations, Borrower's
share of the costs incurred in connection with such operation that are
in excess of 110% (115% from and after January 1, 1998) of Borrower's
share of the amount of such Scheduled Capital Operation as set forth
on Exhibit I.
"PAYMENT DATE" shall mean [_________](1), 1995, and the last
Business Day of each month thereafter continuing through and including
the Final Maturity Date applicable to the last Loan Tranche
outstanding.
"PRIOR CAPITAL OPERATIONS" means the operations described on the
first page of Exhibit I that is attached to the Loan Agreement dated
December 28, 1993, between Borrower and Lender without giving effect
to the terms of this Amendment.
"REGISTRATION RIGHTS AGREEMENT" shall mean the Registration
Rights Agreement dated as of the Amendment Date between the Borrower
and the Lender related to the registration of the shares of Common
Stock which would be issued in connection with the exercise of the
Tranche B Warrant substantially in the form of Exhibit B to the
Anschutz Purchase Agreement, with such changes as may be approved by
the Borrower, the Lender and Anschutz.
"REPLACEMENT INTERESTS" shall have the meaning set out in Section
4.05(b).
"REQUIRED TRAILING TWELVE MONTH CASH FLOW" means as of any
Semiannual Payment Date after December 31, 1995, the applicable amount
set forth on Exhibit J, as the same may be adjusted pursuant to the
terms of Section 2.17 hereof.
- ----------------------
(1) Date to be inserted will be the end of month during which the Amendment
Date falls unless a Payment Date has already occurred during such month, in
which case the end of the next succeeding month.
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<PAGE>
"RETAINED PROPERTIES" shall have the meaning set out in Section
2.16(f).
"SCHEDULED CAPITAL OPERATION" shall mean any operation described
in Exhibit I hereto other than a Prior Capital Operation.
"SCHEDULED PRINCIPAL AMOUNT" shall mean as of any Semiannual
Payment Date after December 31, 1995, the applicable amount set forth
in Exhibit J, as the same may be adjusted pursuant to the terms of
Section 2.17 hereof.
"SUPPLEMENTAL AFE" shall have the meaning given to such term in
Section 2.18.
"TRANCHE A LOAN" shall mean the portion of the Loan which is
designated as the Tranche A Loan pursuant to Section 2.01(a).
"TRANCHE A WARRANT" shall mean the Tranche A Warrant executed on
even date herewith to purchase 19,444,444 shares of the Common Stock
of the Borrower.
"TRANCHE A WARRANT PROCEEDS" shall mean an amount equal to the
greater of (i) the product of $2.10 (subject to any appropriate
adjustment to reflect adjustments pursuant to the anti-dilution
provisions as provided for in Section 1.3 of the Anschutz Purchase
Agreement and Section 7.1 of the Tranche A Warrant) multiplied by the
number of shares of Common Stock to be acquired by the holder of the
Tranche A Warrant pursuant to the terms of the Tranche A Warrant or
(ii) all proceeds payable to Borrower or its designee upon the
exercise of the Tranche A Warrant. In addition to the foregoing, if
the holder of the Tranche A Warrant receives consideration from or on
behalf of the Borrower with respect to either an exchange of the
Tranche A Warrant or an election by the holder of the Tranche A
Warrant not to exercise the rights provided for in the Tranche A
Warrant, then such additional consideration shall be deemed Tranche A
Warrant Proceeds and Borrower shall deliver to Lender an amount equal
to the fair value of such consideration.
"TRANCHE B LOAN" shall mean the portion of the Loan which is
designated as the Tranche B Loan pursuant to Section 2.01(a).
"TRANCHE B WARRANT" shall mean the Tranche B Warrant executed on
even date herewith to purchase up to 11,250,000 shares of Common Stock
issued to the Lender.
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<PAGE>
"WARRANTS" shall mean the Tranche A Warrant and the Tranche B
Warrant.
"WARRANT PREMIUM" shall mean an amount equal to the Gross Warrant
Proceeds reduced by the Net Warrant Proceeds.
"WINDOW PERIOD" shall have the meaning given such term in Section
4.17.
2. Article 2 of the Agreement is amended in its entirety to read as
follows:
ARTICLE 2
AMOUNT AND TERMS OF LOAN
Section 2.01 THE LOAN; PRIORITY OF LOAN TRANCHES IN LIQUIDATION.
(a) The Lender has made a loan to the Borrower (the "Loan"),
which as of the Amendment Date, has an outstanding principal balance
of $[ ], together with accrued but unpaid interest thereon
in the amount of $[ ]. The Loan is subdivided into two
tranches. As of the Amendment Date, the first tranche (the "Tranche A
Loan") has an outstanding principal balance of $40,000,000 and accrued
but unpaid interest in the amount of $[ ].(2) As of the
Amendment Date, the second tranche (the "Tranche B Loan") has an
outstanding principal balance of $[___________________](3). The Loan,
including the Tranche A Loan and the Tranche B Loan, is not revolving
and amounts prepaid or repaid may not be reborrowed. The Lender has
no commitments to make further advances on the Loan. Amounts of
accrued and unpaid interest that are added to the Tranche A Loan
pursuant to Section 2.04(b) shall not constitute further advances on,
or reborrowings under, the Loan. The Loan made by the Lender to the
Borrower pursuant to this Agreement shall be evidenced by the Note.
(b) Notwithstanding any other provisions of the Note or this
Agreement regarding the application of payments against the amounts
due with respect to the Loan, upon any receivership, insolvency
proceeding, bankruptcy proceeding, assignment for the benefit of
creditors, reorganization, arrangement with creditors,
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(2) Amount to equal all accrued but unpaid interest on the Loan as of the
Amendment Date.
(3) Outstanding principal balance of the Loan as of the Amendment Date less
$40,000,000.
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<PAGE>
sale of assets for creditors, dissolution, liquidation, or marshalling of
the assets of the Borrower (each, a "Bankruptcy Event"), other than with
respect to the application of the proceeds of the Warrants under
Section 2.08(c), (d) and (e) hereof, which shall remain controlled by
Section 2.08(c), (d) and (e) hereof, all amounts received for application
against the Loan or any interest, prepayment premiums, and other amounts
due with respect to the Loan, shall be applied first to the amounts due
with respect to the Tranche A Loan, including all principal, interest and
other amounts due with respect to the Tranche A Loan, whether incurred
before or after such Bankruptcy Event, and then to any amounts due with
respect to the Tranche B Loan. This Section shall have no impact on the
application of payments against amounts due with respect to the Loan
prior to the occurrence of any Bankruptcy Event.
Section 2.02 AFE APPROVAL FOR SCHEDULED CAPITAL OPERATIONS.
(a) Prior to the Conveyance Expiration Date, AFE approval for
Scheduled Capital Operations shall be required as provided for in
Section 2.03(a). The rights and obligations of Lender and Borrower in
the event Lender rejects or approves any such Scheduled Capital
Operation are set forth in Section 2.03(a).
(b) If after the Conveyance Expiration Date Borrower determines
that the estimated cost of completing a Scheduled Capital Operation
exceeds the cost set out in Schedule I, then prior to commencing such
operation Borrower may, but shall not be obligated to, submit to
Lender an AFE setting forth Borrower's best estimate of the cost of
such operation. Any AFE submitted by Borrower pursuant to the terms
of this Section 2.02(b) shall contain all of the information as
required pursuant to Section 2.03(a). Upon receipt of any such AFE,
Lender shall comply with the time requirements set out in Section
2.03(c). If Lender approves such AFE, then Borrower shall be
obligated to complete such operation as provided in Section 4.17 and
the cost of such operation shall be accounted for as provided in
clause (ii)(b) of the definition of Capital Expenses. If Lender
rejects or is deemed to have rejected such AFE, then Borrower may
either (i) elect not to commence such operation and Borrower's
obligation to complete such Scheduled Capital Operation under Section
4.17 shall be deemed waived by the Lender or (ii) complete such
operation pursuant to the provisions set out in Section 2.03(d). If
Lender rejects or is deemed to have rejected such AFE and Borrower has
elected not to commence such operation, then Exhibit J to this
Agreement shall be revised as provided for in Section 2.17.
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<PAGE>
(c) Borrower shall have the right to propose commencing an
operation described on Schedule I prior to the applicable Window
Period. If such earlier date and the AFE submitted with respect to
such operation are consented to by Lender, then Borrower shall
commence such operation within 60 days after Borrower's receipt of
such consent and thereafter conduct such operation as a reasonable and
prudent operator. The costs of any such operation shall be accounted
for as provided in clause (i) of the definition of Capital Expenses.
If Lender elects not to consent to the proposed earlier commencement
date, then Borrower shall be prohibited from proceeding with such
operation at the earlier date and shall instead be obligated to comply
with the time requirements set forth in Section 4.17.
Section 2.03 CONDUCTING CAPITAL OPERATIONS.
(a) Prior to the Conveyance Expiration Date Borrower shall not
commence any Capital Operation on the Mortgaged Properties, including
Scheduled Capital Operations and Nonscheduled Capital Operations,
without first obtaining Lender's written consent as provided in
Section 2.03(c). To obtain such consent Borrower shall as to each
operation submit to Lender an AFE setting forth among other things the
estimated commencement date, the proposed depth, the objective zone or
zones to be tested, the surface and bottom hole locations, applicable
details regarding directional drilling, the equipment to be used and
the estimated costs of the operation, and such other information as
Lender reasonably may request. Lender shall respond to such AFE as
provided for in Section 2.03(c) below. If Lender consents to a
Capital Operation pursuant to the terms of this Section 2.03(a), then
Borrower shall commence such operation within 60 days after receipt of
such consent and thereafter conduct such operation as a reasonable and
prudent operator. If Lender elects not to consent to a Scheduled
Capital Operation pursuant to the terms of this Section 2.03(a), then
Borrower's obligation to complete such Scheduled Capital Operation
shall terminate and Exhibit J to this Agreement shall be revised as
provided for in Section 2.17 below. If prior to the Conveyance
Expiration Date Lender elects not to consent to a Capital Operation
pursuant to this Section 2.03(a), Borrower may not perform such
Capital Operation but may re-propose such Capital Operation pursuant
to Sections 2.02(b) or 2.03(b), as applicable, after the Conveyance
Expiration Date.
(b) After the Conveyance Expiration Date Borrower shall not
commence any Nonscheduled Capital Operation on the Mortgaged
Properties without first submitting such Nonscheduled Capital
Operation to Lender for its consent pursuant to this Section 2.03(c).
With respect to each Nonscheduled
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<PAGE>
Capital Operation submitted pursuant to the preceding sentence, Borrower
shall submit to Lender an AFE complying with the requirements set forth in
Section 2.03(a). Lender shall respond to such AFE as provided for in
Section 2.03(c) below. If Lender consents to a Nonscheduled Capital
Operation pursuant to the terms of this Section 2.03(b), then Borrower
shall commence such operation within 60 days after receipt of such consent
and thereafter conduct such operation as a reasonable and prudent operator.
If Lender elects not to consent to such Nonscheduled Capital Operation,
then Borrower shall have the option of either not proceeding with such
operation or completing such operation as provided for in Section 2.03(d)
below.
(c) With respect to any AFEs submitted pursuant to the terms of
Sections 2.02(b), 2.02(c), 2.03(a), 2.03(b), 2.18, and 2.20, Lender
shall have ten (10) Business Days (48 hours if the rig is on location
and Borrower notifies Lender of such circumstance at the time the AFE
or Supplemental AFE is submitted for approval, or sixty (60) Business
Days if the AFE involves the construction of a platform and/or
facilities either as a part of the well proposal or as a separate
proposal) after receipt of such AFE and all other information
requested by Lender within which to approve the proposed AFE and the
related operation. Failure of Lender to notify Borrower in writing
within such period of time of such approval shall be deemed
disapproval of the proposed AFE and the related operation. If,
however, Lender notifies Borrower in writing prior to the expiration
of such period that it consents to Borrower's AFE, Lender shall be
deemed to have consented to the commencement and completion by
Borrower of such operation pursuant to such AFE. In addition, if
within 60 days after Borrower's receipt from Lender of a consent as
provided for pursuant to the terms of this Section 2.03 Borrower has
not commenced the operation covered by such consent, such consent
shall be void and Borrower shall be required to resubmit the
applicable AFE and operation to Lender for its approval as provided
for in this Section 2.03.
(d) If after the Conveyance Expiration Date Lender elects not to
consent or is deemed to have elected not to consent to a Capital
Operation and the related AFE submitted by Borrower pursuant to
Section 2.02(b) or 2.03(b), then Borrower shall have the following
options: (x) Borrower may elect not to perform such Capital
Operation, and if such Capital Operation is a Scheduled Capital
Operation, Borrower's obligation to complete such Scheduled Capital
Operation shall terminate and Exhibit J to this Agreement shall be
revised as provided for in Section 2.17; or (y) Borrower may complete
at its sole cost and expense the operation provided for in such AFE
("Excluded Operation") and the costs and
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revenues attributable to such Excluded Operation shall be accounted for as
follows:
(i) Borrower shall be solely responsible for the payment of
its share of all costs incurred by Borrower to conduct the Excluded
Operation ("Excluded Operation Costs"); provided, however,
notwithstanding anything in this Agreement or the Security Instruments
to the contrary, Borrower shall be entitled to the Net Operating Cash
Flow, if any, that is attributable solely to the Excluded Operation
until such date as the Borrower has received an amount equal to 200%
of the Excluded Operation Costs. For purposes of calculating Net
Operating Cash Flow, Net Production Revenues and Operating Costs with
respect to the Excluded Operation, the commencement date for such
calculations shall be the completion date of the Excluded Operation.
(ii) All Net Operating Cash Flow to which Borrower is
entitled pursuant to Section 2.03(d)(i) shall be excluded from the
calculation of the Monthly Payment Amount. At such time as Borrower
has received Net Operating Cash Flow from the Excluded Operation equal
to 200% of the Excluded Operation Costs, the Net Operating Cash Flow
related to the Excluded Operation shall no longer be excluded from the
calculation of the Monthly Payment Amount and shall instead be
included in such calculations.
(iii) Nothing in this Section 2.03(d) shall in any
manner waive, limit or otherwise affect the Liens granted pursuant to
the Security Instruments against the Mortgaged Properties subject to
the Excluded Operation.
Section 2.04 INTEREST AND ADDITIONS TO PRINCIPAL.
(a) The aggregate outstanding principal amount of the Tranche A
Loan shall bear interest at the Applicable Interest Rate. Past due
interest, principal (including principal on the Tranche B Loan), and
other amounts hereunder shall bear interest at the Past Due Rate from
the date due until paid. All interest accrued hereunder shall be
computed on the per annum basis of a year of 365 or 366 days, as the
case may be, and for the actual number of days (including the first
day but excluding the last day) elapsed.
(b) Accrued but unpaid interest on the Loan shall be paid
monthly on each Payment Date in an amount equal to the lesser of (i)
the accrued but unpaid interest on such Payment Date or (ii) the
Monthly Payment Amount computed as of the end of the second month
preceding the month in which such Payment Date
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falls. For example, with respect to the Payment Date occurring on
September 29, 1995, accrued but unpaid interest shall be paid to the extent
of the Monthly Payment Amount computed as of the end of the month of July,
1995. Any accrued but unpaid interest remaining outstanding on the Tranche
A Loan after application of such payments on each Payment Date shall not be
considered past due at such time, but shall be added to the principal
amount of the Tranche A Loan.
Section 2.05 PRINCIPAL REPAYMENT. All outstanding principal,
including any amounts which have been added to principal, and all
accrued but unpaid interest on each Loan Tranche shall be due and
payable on the Final Maturity Date applicable to such Loan Tranche.
Section 2.06 NOTE. To evidence the Loan made by the Lender
pursuant to this Agreement, the Borrower will issue, execute and
deliver the Note in the principal amount of $100,000,000 dated as of
the date of this Agreement. At the time the Loan is made hereunder or
payment (including, without limitation, prepayments) is made on the
Note, the Lender is hereby irrevocably authorized by the Borrower to
make an appropriate notation on a ledger forming a part of the Note
reflecting the amount of each Loan Tranche loaned or paid and the date
thereof; provided however, the failure of the Lender to do so shall
not relieve the Borrower or any other liable party of its liability
hereunder or under the Note or subject the Borrower or any other
liable party to additional liability under the Note. Furthermore, the
Lender is hereby irrevocably authorized by the Borrower to attach to
and to make a part of the Note a continuation of any such schedule of
payments, as and when required, reflecting the amount of each Loan
Tranche paid (including payments made pursuant to Section 2.08) and
the date of such payment. The aggregate unpaid amount of each Loan
Tranche reflected by the notations by the Lender on its records or a
ledger sheet or sheets affixed to the Note shall be deemed rebuttably
presumptive evidence of the principal amount owing on such Loan
Tranche under the Note. Interest on the Tranche A Loan shall be
calculated on the unpaid sums actually loaned and outstanding pursuant
to the terms of this Agreement (including accrued but unpaid interest
added to principal in accordance with the terms hereof) and interest
shall accrue only for the period from the date or dates advanced (or,
in the case of accrued but unpaid interest added to principal in
accordance with the terms hereof, from the date such interest was
added to principal) until repaid. The liability for payment of
principal evidenced by the Note shall be limited to the principal
amounts actually loaned and outstanding or added to principal pursuant
to this Agreement.
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Section 2.07 VOLUNTARY PREPAYMENTS. The Borrower may at its
option prepay the outstanding principal amount of the Loan, in whole
or from time to time in part (but no partial prepayment shall be less
than $1,000,000), upon giving the Lender at least five Business Days'
prior notice of the aggregate principal amount to be prepaid, and in
the event of any such notice being given, the amount so notified shall
be due and payable on the day so notified, together with accrued but
unpaid interest on the outstanding principal amount of each Loan
Tranche being prepaid to the date of prepayment. All prepayments made
under this paragraph shall be applied first to the outstanding
principal balance of the Tranche A Loan and then to the outstanding
principal balance of the Tranche B Loan.
Section 2.08 MANDATORY PREPAYMENTS.
(a) On each Payment Date, the Borrower shall prepay the
principal amount of the Loan outstanding hereunder in an amount equal
to the amount by which the Monthly Payment Amount computed as of the
end of the second month preceding the month in which such Payment Date
falls exceeds the interest due on the Loan on such Payment Date. In
addition, on any Payment Date on which the outstanding principal
amount of the Loan exceeds, or would pursuant to any of the provisions
hereof exceed, the Maximum Principal Amount, the Borrower will prepay
the outstanding principal amount of the Loan by an amount sufficient
to reduce the outstanding principal amount on such Payment Date to the
Maximum Principal Amount. Borrower will give the Lender at least five
Business Days prior notice of the aggregate principal amount to be
prepaid on each Payment Date pursuant to this paragraph. Prepayments
of principal under this paragraph shall be without premium or penalty.
All prepayments due under this paragraph shall be applied first to the
payment of all accrued but unpaid interest on the Tranche A Loan, then
to the principal due on the Tranche A Loan, then to the principal due
on the Tranche B Loan.
(b) If on any Semiannual Payment Date (i) the aggregate
outstanding principal amount of the Loan exceeds, or would pursuant to
any of the provisions hereof exceed, the Scheduled Principal Amount
for such date and (ii) the corresponding Trailing Twelve Month Cash
Flow for the twelve month period ending at the end of the second
preceding month is less than the Required Trailing Twelve Month Cash
Flow for such Semiannual Payment Date, the Borrower shall on such
Payment Date prepay the outstanding principal amount of the Loan by
the amount necessary to reduce the outstanding principal balance of
the Loan to the Scheduled Principal Amount applicable to such
Semiannual Payment Date. Borrower will give the Lender at least five
Business Days' prior notice of the
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aggregate principal amount to be prepaid on the Loan on each Semiannual
Payment Date pursuant to this paragraph. Prepayments of principal under
this paragraph shall be without premium or penalty, and shall be made
together with payment of all accrued but unpaid interest on the outstanding
principal amount of the Loan to the date of prepayment. All prepayments
due under this paragraph shall be applied first to the payment of all
accrued but unpaid interest on the Tranche A Loan, then to the principal
due on the Tranche A Loan, then to the principal due on the Tranche B Loan.
(c) If any Indebtedness is outstanding, Borrower shall cause
Lender to receive all of the Tranche A Warrant Proceeds. Any Tranche
A Warrant Proceeds received by Lender shall be applied to the
outstanding Indebtedness in the following order: First to the payment
of all accrued but unpaid interest on the Tranche A Loan, then to the
principal due on the Tranche A Loan, then to the principal due on the
Tranche B Loan, and finally to any other fixed, agreed upon or
liquidated amount of the outstanding Indebtedness. Any surplus shall
be paid to the Borrower within 3 Business Days after Lender's receipt
of such proceeds.
(d) If the Anschutz Option is exercised, Lender shall be
entitled to receive from Anschutz the Gross Warrant Proceeds in
accordance with the terms of the Anschutz Option. All Net Warrant
Proceeds received by Lender in connection with the exercise of the
Anschutz Option shall be applied to the outstanding Indebtedness in
the following order: First to the principal due on the Tranche B Loan,
then to the payment of all accrued but unpaid interest on the Tranche
A Loan, then to the principal due on the Tranche A Loan, and finally
to any other fixed, agreed upon or liquidated amount of the
outstanding Indebtedness. Any surplus shall be paid to the Borrower
within 3 Business Days after Lender's receipt of such proceeds.
(e) If after the expiration of the Anschutz Option the Tranche B
Warrant is transferred by Lender and any Indebtedness is outstanding,
any proceeds payable to Borrower as payment of the exercise price of
the Tranche B Warrant shall be paid to Lender and applied to the
outstanding Indebtedness in the following order: First to the
principal due on the Tranche B Loan, then to the payment of all
accrued but unpaid interest on the Tranche A Loan, then to the
principal due on the Tranche A Loan, and finally to any other fixed,
agreed upon or liquidated amount of the outstanding Indebtedness. Any
surplus shall be paid to the Borrower within 3 Business Days after
Lender's receipt of such proceeds.
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(f) If the Lender exercises any of the Tranche B Warrant, the
Lender may offset the exercise price owed by the Lender to the
Borrower in connection with such exercise against the outstanding
principal balance of the Loan, all accrued but unpaid interest
thereon, and any other fixed, agreed upon or liquidated amount of the
Indebtedness and such offset shall be applied in the order set forth
in Paragraph (e) above.
(g) If prior to the satisfaction of the Indebtedness Borrower
issues Common Stock pursuant to the exercise of any of the Warrants
and Lender fails to receive the full payment it is entitled to from
the party exercising such Warrants, then Borrower shall immediately
pay to Lender an amount sufficient to cover the shortfall. If at any
time prior to the satisfaction of the Indebtedness Borrower receives
any proceeds in connection with the exercise of any of the Warrants,
Borrower shall immediately deliver such proceeds to Lender. Any
payment made by Borrower pursuant to the preceding two sentences shall
be applied against the Loan in the order provided for in the
applicable paragraph of this Section 2.08 based on the Warrant that
was exercised.
Section 2.09 PAYMENT PROCEDURE. All payments and prepayments
made by the Borrower under the Note or this Agreement shall be made by
wire transfer in immediately available funds before 1:00 p.m. Mountain
Time on the date such payment is required to be made to the Lender's
Account. Any payment received and accepted by the Lender after such
time shall be considered for all purposes (including the calculation
of interest, to the extent permitted by law) as having been made on
the Lender's next following Business Day. Except as otherwise
expressly required under this Agreement, all payments and prepayments
received by the Lender for application against the Indebtedness shall
be applied to the required principal payments due under the Loan, to
the accrued but unpaid interest on the Loan, and to the other amounts
due which are Indebtedness in the order determined by the Lender.
Section 2.10 BUSINESS DAYS. If the date for any Loan payment or
prepayment falls on a day which is not a Business Day, then for all
purposes of the Note and this Agreement the same shall be deemed to
have fallen on the next following Business Day, and such extension of
time shall in such case be included in the computation of payments of
interest.
Section 2.11 COLLATERAL. To secure full and complete payment
and performance of the Indebtedness, the Borrower, as applicable,
shall execute and deliver or cause to be executed and delivered the
Security Instruments creating
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first and prior liens and security interests in the Collateral. Borrower,
as applicable, shall execute and deliver or cause to be executed and
delivered such further documents and instruments, including, without
limitation, Uniform Commercial Code financing statements, as Lender, in its
sole discretion, deems necessary or desirable to evidence and perfect its
Liens in the Collateral.
Section 2.12 SET OFF. Lender shall have the right to set off
and apply against the Indebtedness in such manner as Lender may
determine at any time and without notice to Borrower, the Borrower's
interest in any and all amounts at any time owing from Lender (or any
Affiliate of Lender), to Borrower in connection with the Mortgaged
Properties, including without limitation, any production proceeds
payable by any Affiliate of Lender to Borrower from any Mortgaged
Property, upon the occurrence and continuance of an Event of Default,
whether or not the Indebtedness is then due. In addition to Lender's
right of set off and as further security for the Indebtedness,
Borrower hereby grants to Lender a security interest in all amounts at
any time credited by or owing from Lender (or any Affiliate of Lender)
to Borrower in connection with the Mortgaged Properties. The rights
and remedies of Lender hereunder are in addition to other rights and
remedies (including, without limitation, other rights of set off)
which Lender may have.
Section 2.13 PRODUCTION PROCEEDS. From and after the occurrence
of a Suspension Event, Borrower at the request of Lender shall direct
and cause all purchasers of Hydrocarbons produced from the Mortgaged
Properties to deposit all payments of any nature whatsoever due and
owing by such Persons to Borrower directly into the Lender's Account.
In this connection the Lender shall be authorized upon the occurrence
of a Suspension Event to complete and deliver to such purchasers the
Transfer Orders. Funds deposited in the Lender's Account in
accordance with the terms hereof shall be credited when collected to
the payment of the Indebtedness in accordance with the other
provisions of this Agreement.
Section 2.14 INTENTIONALLY DELETED.
Section 2.15 INTENTIONALLY DELETED.
Section 2.16 BORROWER'S RIGHT TO CONVEY.
(a) Subject to the satisfaction of the conditions precedent
specified in paragraph (c) below, commencing on the Option
Commencement Date and ending
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on the Conveyance Expiration Date, the Borrower shall have a one-time
option to elect to convey the Mortgaged Properties and the Option Agreement
to the Lender (the "Conveyance Option") in satisfaction of the Extinguished
Obligations by giving the Lender written notice of the Borrower's intent to
exercise the Conveyance Option. Such written notice must be delivered on
or after the Option Commencement Date but prior to the occurrence of the
Conveyance Expiration Date. The Conveyance Option shall expire if Borrower
fails to provide such written notice prior to the occurrence of the
Conveyance Expiration Date. If the Borrower exercises the Conveyance
Option in accordance with this Section 2.16, then within twenty (20) days
after receipt of the Borrower's notification of the Borrower's election to
exercise the Conveyance Option the Lender shall designate in writing to the
Borrower the closing date for the conveyance (the "Conveyance Date"), which
Conveyance Date shall be a Business Day not less than (60) days but not
more than one hundred and twenty (120) days after the date the Lender
provides such designation to the Borrower. Lender's designation of a
Conveyance Date shall not be deemed a waiver of any of its rights under
this Section 2.16 including, without limitation, the right to elect not to
accept the conveyance of any or all of the Mortgaged Properties pursuant to
Section 2.16(d). The closing shall be held at the offices of Lender in
Denver, Colorado.
(b) Borrower and Lender shall each file on their own behalf, if
required, such notifications and reports as are necessary to comply
with the Hart-Scott-Rodino Antitrust Improvements Act of 1976 ("HSR
Act").
(c) The Borrower's right to exercise the Conveyance Option in
accordance with subsection (a) above is subject to Borrower's
satisfaction of the following conditions precedent on the Conveyance
Date:
(i) no Default shall have occurred and be continuing, other
than a Default based on Borrower's failure to comply with the terms of
Section 2.08(b);
(ii) all of the representations and warranties of the
Borrower contained in Sections 3.08, 3.09, 3.11, 3.13 and 3.21 through
3.26 of this Agreement and, to the extent representations and
warranties are in the Assignment, in the Assignment shall be true and
correct in all material respects on and as of the Conveyance Date;
(iii) the Mortgaged Properties shall not be subject to (A)
any Liens other than the Excepted Liens or (B) except to the extent
same do not have a material adverse effect on the value of the
Mortgaged Properties, any burdensome
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restriction, restraint or hazard not customary in the oil and gas industry
pursuant to any contract entered into after the Amendment Date;
(iv) no suit, action, or other proceeding shall be pending
or threatened before any court or governmental agency (A) in which it
is sought to restrain or prohibit the performance of or to obtain
substantial damages or other relief in connection with the
consummation of the transactions contemplated by the Assignment or (B)
against or affecting Borrower or any Subsidiary that involves the
possibility of any judgment or liability not fully covered by
insurance, and which would have a material and adverse effect on the
value of the Mortgaged Properties taken as a whole; and
(v) the Tranche A Warrant shall have expired or been fully
exercised.
(d) Notwithstanding Borrower's right to convey the Mortgaged
Properties pursuant to paragraph (a) above, the Lender shall have the
right, provided that Lender notifies Borrower of its exercise of such
right at least three (3) days prior to the closing as provided for in
Section 2.16(h), to elect not to accept the conveyance of any or all
of the Mortgaged Properties and any election of the Lender to reject
the conveyance of any or all of the Mortgaged Properties shall not
impair the extinguishment of the Extinguished Obligations as provided
below.
(e) Notwithstanding anything in this Agreement to the contrary,
from and after the Conveyance Election Date, Borrower shall comply
with the following:
(i) Borrower shall not be permitted to propose or commence
any additional Capital Operations, and the obligations of Borrower
with respect to Scheduled Capital Operations that would otherwise be
required to be completed during the period from the Conveyance
Election Date through the Conveyance Date, together with any related
breaches of this Agreement resulting from such prohibition, shall be
waived.
(ii) Borrower shall immediately provide or make available to
Lender copies of all AFE's, notices and other information received by
Borrower and relating to the ownership or operation of the Mortgaged
Properties.
(iii) Borrower shall not (A) operate or in any manner
deal with, incur obligations with respect to, or undertake any
transactions relating to, the
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Mortgaged Properties other than transactions (1) in the normal, usual and
customary manner, (2) of a nature and in an amount consistent with prior
practice, and (3) in the ordinary and regular course of business of owning
and operating the Mortgaged Properties; or (B) waive, compromise or settle
any right or claim that would adversely affect the ownership, operation or
value of any of the Mortgaged Properties; and
(iv) Borrower shall make or give all notifications, filings,
consents or approvals, from, to or with all governmental authorities,
and take all other actions reasonably requested by Lender, necessary
for, and cooperate prior to and after the Conveyance Date with Lender
in obtaining, the issuance, assignment or transfer, as the case may
be, by each such authority of such permits as may be necessary for
Lender to own and operate the Mortgaged Properties following the
consummation of the transactions contemplated in this Section 2.16.
(f) If Borrower properly exercises its right to exercise the
Conveyance Option, then prior to the Conveyance Date Borrower shall
cause the following to occur:
(i) all filings and notifications required to be made or
given by Borrower for the conveyance of the Mortgaged Properties to
Lender shall have been made, except for filings and notifications that
are customarily made subsequent to the conveyance of oil and gas
properties such as the Mortgaged Properties;
(ii) the waiting period under the HSR Act applicable to the
transactions contemplated in this Section 2.16 shall have expired or
been terminated; and
(iii) Within 30 days after Borrower's delivery of
written notice of its election to exercise the Conveyance Option,
Borrower shall deliver to Lender a true and correct list of all (i)
operating and other agreements and documents which contain options,
rights of first refusal, preferential purchase rights or similar
rights respecting the Mortgaged Properties ("Preferential Purchase
Rights") and (ii) any consents or approvals that must be obtained from
third parties prior to the assignment to Borrower of any of the
Mortgaged Properties ("Required Consents"). Thereafter, Borrower
shall do the following:
(A) On or before the Conveyance Date, Borrower shall
use reasonable efforts to obtain all Required Consents. At least
three days prior
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to the Conveyance Date Borrower shall provide Lender with written notice
specifying any Mortgaged Properties ("Retained Properties") for which such
Required Consents have not obtained. The Retained Properties shall be
excluded from the Assignment and shall be retained by Borrower.
Contemporaneously with the closing provided for in Section 2.16(h),
Borrower shall deliver to Lender in immediately available funds an amount
equal to the Fair Market Value of the Retained Properties. Notwithstanding
anything herein to the contrary, if the Fair Market Value of the Retained
Properties equals or exceeds 25% of the Extinguished Obligations, then
Lender shall have the right prior to the Conveyance Date to terminate the
Conveyance Option, whereupon Borrower shall retain title to all of the
Mortgaged Properties and the terms and conditions of this Agreement other
than this Section 2.16 shall remain in full force and effect. The value of
the Retained Properties ("Fair Market Value of the Retained Properties")
shall be determined as follows: Within 20 days after receipt of Borrower's
notice delivered pursuant to the terms of Section 2.16(f)(iii) above,
Borrower and Lender shall attempt to agree upon the fair market value of
the Mortgaged Properties subject to Required Consents. The fair market
value of such properties shall take into account the proved producing,
proved non-producing, probable and possible oil and gas reserves
attributable to such properties. If Borrower and Lender are unable to
agree on the fair market value of such properties within such 20-day
period, then Borrower shall engage the engineering firm that prepared the
most recent Reserve Report pursuant to Section 4.01. Such engineering firm
shall determine the fair market value of the proved producing, proved non-
producing, probable and possible oil and gas reserves attributable to such
properties based on such assumptions as such engineering firm may deem
appropriate utilizing customary industry practices.
(B) Promptly after Lender's receipt of Borrower's
notice specifying the Mortgaged Properties that are subject to
Preferential Purchase Rights, Lender shall notify Borrower of the
dollar amount of the Extinguished Obligations that Lender in its
reasonable judgment is attributing to such properties. Thereafter,
Borrower shall use reasonable efforts to obtain prior to the
Conveyance Date the waiver of all Preferential Purchase Rights
affecting any of the Mortgaged Properties. If a third party who has
been offered an interest pursuant to a Preferential Purchase Right
elects prior to the Conveyance Date to purchase the properties subject
to such Preferential Purchase Right ("Preferential Properties"), then
the Preferential Properties will be excluded from the Assignment and
the Preferential Properties shall be conveyed by Borrower to the party
exercising the Preferential Purchase Right. The conveyance of the
Preferential Properties shall be consummated on the Conveyance Date
and the party exercising such
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Preferential Purchase Right shall contemporaneously with the delivery of an
assignment from Borrower deliver the purchase price, which shall be the
value designated by Lender, in immediately available funds directly to the
Lender.
(g) On the Conveyance Date the following shall occur:
(i) Borrower shall deliver the following to the Lender and,
where applicable, such instruments should be dated as of the
Conveyance Date, properly executed by authorized officers and, where
appropriate, acknowledged: (A) counterparts of the Assignment and such
other instruments as are necessary to effectuate the conveyance of the
Mortgaged Properties and the Option Agreement to Lender (it being
agreed that Lender shall be responsible for securing any consents
required to effect an assignment by Borrower of the Option Agreement
to Lender); (B) letters in lieu of division orders addressed to each
purchaser of the Hydrocarbons; (C) all of the Data (as defined in the
Assignment) to Lender's offices and shall deliver to Lender possession
of the Mortgaged Properties; (D) with respect to any wells that
Borrower is designated as the operator under the applicable operating
or other similar agreement, letters to all working interest owners in
which Borrower resigns as the operator and recommends Lender or an
affiliate of Lender as the successor operator; and (E) such other
documents and instruments as may be reasonably necessary to give full
effect to the transactions contemplated by this Section 2.16.
(ii) Lender shall deliver the following to Borrower and,
where applicable, such instruments shall be dated as of the Conveyance
Date, properly executed by authorized parties and, where appropriate,
acknowledged: (A) the Note, marked "cancelled," together with such
other instruments as may be reasonably necessary to evidence the
extinguishment of the Extinguished Obligations; (B) such documents or
instruments as may be necessary to cause the property subject to the
Security Instruments and any related Collateral, to the extent that
such property is either rejected by Lender as provided in clause (d)
above or is a Retained Property, to be released from the Liens created
by the Security Instruments; and (C) counterparts of the Assignment
and such other documents and instruments as may be reasonably
necessary to give full effect to the transactions contemplated by this
Section 2.16.
(h) Provided that the conditions set forth in clauses (c) and
(f) have been satisfied or waived by Lender and provided further that
Borrower has complied in all material respects with the covenants
required to be performed by it prior to the Conveyance Date, then on
the Conveyance Date (and
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contemporaneously with Borrower's and Lender's execution of the Assignment,
if applicable), the Extinguished Obligations shall be deemed fully paid and
extinguished. In addition, on the Conveyance Date all Excluded Operation
Costs and Excluded Overrun Expenses attributable to the Mortgaged
Properties shall be deemed paid in full and Borrower shall not be entitled
to any additional payments of Net Operating Cash Flow. Notwithstanding the
execution of the Assignment and the extinguishment of the Extinguished
Obligations, Borrower shall remain responsible for all other Indebtedness
including, without limitation, the obligations with respect to which
Borrower is fully liable as provided in Section 6.03 below.
(i) As used in this Section 2.16, the term "Mortgaged
Properties" (A) shall not, from and after the date of an election by
Lender pursuant to Section 2.16(d) to exclude properties from the
Assignment, include any Mortgaged Properties with respect to which
Lender has exercised such right and (B) shall not include any Retained
Properties.
(j) Contemporaneously with the closing provided for in Section
2.16(h), Borrower and Lender shall enter into a termination agreement
reasonably acceptable to Borrower and Lender terminating the Swap
Agreement. Such termination agreement shall also provide for a cash
payment to be made by Borrower to Lender or by Lender to Borrower, as
the case may be, which payment shall equal the monthly settlement
amount due under the Swap Agreement prorated through the Conveyance
Date and such payment shall not include an early termination payment.
Section 2.17 MODIFICATION OF EXHIBITS I AND J.
(a) If Lender does not consent to an AFE with respect to a
Scheduled Capital Operation and Borrower either (i) is not permitted
to perform such Scheduled Capital Operation as provided in Section
2.03(a) or (ii) elects not to commence such Scheduled Capital
Operation pursuant to Section 2.03(d), or if an adjustment to Exhibit
J is required pursuant to Sections 2.18 or 2.20, then in any such case
Borrower and Lender shall attempt to mutually agree on an appropriate
adjustment to the Scheduled Principal Amount and the Required Trailing
Twelve Month Cash Flow. If Borrower and Lender are unable to agree on
an appropriate adjustment to such amounts, then the Scheduled
Principal Amount and the Required Trailing Twelve Month Cash Flow
shall instead be adjusted as provided for on Attachment 1 to
Exhibit J.
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(b) Commencing on August 1, 1996 and on each August 1
thereafter, Borrower shall have the right on such date to propose to
Lender revised Exhibits I and J to this Agreement. If Borrower and
Lender mutually agree to the form and substance of such revised
Exhibits, then Borrower and Lender shall enter into an acceptable
amendment to this Agreement incorporating such revised Exhibits.
Nothing herein shall obligate the Lender to agree at any time to any
revision to Exhibits I and/or J.
Section 2.18 COST OVERRUNS.
If Borrower anticipates incurring Overrun Expenses in connection
with any Capital Operation, Borrower shall have the right to submit a
Supplemental AFE ("Supplemental AFE') to Lender, which Supplemental
AFE shall set forth the estimated amount of the Overrun Expenses, a
copy of the original AFE for such operation, the status of the work on
the operation including the depth drilled, any objective zone or zones
that have been tested, the expenses incurred, the work remaining to be
completed, the estimated costs necessary to complete such work and
such other information as Lender may reasonably request. Lender shall
respond to any such Supplemental AFE within the time period provided
for in Section 2.03(c). If Lender approves such Supplemental AFE then
the costs set forth in the Supplemental AFE shall be the only Overrun
Expenses approved with respect to such operation and such costs shall
be used in calculating the Approved Overrun Expenses. If Lender
elects not to consent to the Supplemental AFE or is deemed to have
elected not to consent to the Supplemental AFE, Borrower shall have
the right to either (i) terminate its participation in the operation
covered by the Supplemental AFE or (ii) continue its participation in
such operation. If Borrower elects the option set forth in clause (i)
above, then Borrower's obligation to complete such operation shall
terminate and Exhibit J attached hereto shall be revised as provided
for in Section 2.17. If Borrower elects to continue with its
participation as provided for in clause (ii), then Borrower shall be
solely responsible for its share of the Overrun Expenses ("Excluded
Overrun Expenses") related to the operation subject to the Excluded
Overrun Expenses ("Excluded Overrun Operations"); provided, however,
notwithstanding anything in this Agreement or the Security Instruments
to the contrary, Borrower shall be entitled to the Net Operating Cash
Flow, if any, that is attributable solely to the Excluded Overrun
Operation until such date as the Borrower has received an amount equal
to 200% of the Excluded Overrun Expenses. For purposes of calculating
Net Operating Cash Flow, Net Production Revenues and Operating Costs
with respect to the Excluded Overrun Operation, the commencement date
for such calculations shall be the completion date of the operations
that caused the Overrun Expenses.
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Borrower shall not have the right to propose a Supplemental AFE with
respect to Overrun Expenses incurred in connection with any Scheduled
Capital Operation if Borrower's share of the initial AFE submitted to the
working interest owners prior to the commencement of such Scheduled Capital
Operation was more than 110% (115% after January 1, 1998), of the
Schedule I amount for such operation and such initial AFE was not submitted
to Lender prior to the commencement of such operation pursuant to the terms
of Section 2.02(b).
The Net Operating Cash Flow to which Borrower is entitled
pursuant to the immediately preceding paragraph shall be excluded from
the calculation of the Monthly Payment Amount. At such time as
Borrower has received Net Operating Cash Flow from the Excluded
Overrun Operation equal to 200% of the Excluded Overrun Expenses, the
Net Operating Cash Flow related to the Excluded Overrun Operation
shall no longer be excluded from the calculation of the Monthly
Payment Amount and shall instead be included in such calculations.
Nothing in this Section 2.18 shall in any manner waive, limit or
otherwise affect the Liens granted pursuant to the Security
Instruments against the Mortgaged Properties subject to the Excluded
Overrun Operation.
Section 2.19 USE OF PROCEEDS. The Borrower agrees to use the
proceeds of the Loan made hereunder only for the following purposes:
(a) Up to $5,800,000 to be used to reimburse the Borrower for
80% of the costs of the Prior Capital Operations.
(b) Up to $15,000,000 to be used to fund a portion of the
purchase price of the Sandefer Properties.
(c) Up to $38,000,000 to be used to fund a portion of the
purchase price of the Wagner & Brown Properties.
Section 2.20 MANDATORY CAPITAL EXPENSES. From and after the
Amendment Date and subject to the terms of this Section 2.20, Borrower
shall maintain the leases described on Exhibit S attached hereto in
full force and effect. If Borrower determines at any time that in
order to maintain any lease described on Exhibit S it anticipates
incurring expenses in excess of 110% of the amount set forth on
Exhibit S as the projected cost of extending or renewing such lease
for the time period specified on Exhibit S, then Borrower shall have
the right to submit an request for approval (a "Lease Extension AFE")
to Lender setting forth the amount of such excess. Borrower's Lease
Extension AFE shall include
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information relating to the consideration being requested by the lessor and
such other information as Lender may reasonably request. Lender shall
respond to any such request within the time period provided for in Section
2.03(c) with respect to AFEs. If Lender consents to Borrower's Lease
Extension AFE, then Exhibit S shall be deemed modified to increase the
applicable amount set forth on Exhibit S by the excess amount approved by
Lender. If Lender elects not to consent to Borrower's request or is deemed
to have elected not to consent to such request, Borrower shall have the
right to either (i) allow the lease in question to terminate or (ii) make
the payments provided for in its request. If Borrower elects the option
set forth in clause (i) above, then Borrower's obligation with respect to
any Scheduled Capital Operations attributable to the lease in question
shall terminate and Exhibit J attached hereto shall be revised as provided
for in Section 2.17. If Borrower elects to extend the lease in question as
provided for in clause (ii), then Borrower shall be solely responsible for
its share of all costs ("Excluded Leasehold Expenses") thereafter incurred
to extend the lease in question and develop the leasehold properties
("Excluded Leasehold Properties"); provided, however, notwithstanding
anything in this Agreement or the Security Instruments to the contrary,
Borrower shall be entitled to the Net Operating Cash Flow, if any, that is
attributable solely to the Excluded Leasehold Properties until such date as
the Borrower has received an amount equal to 300% of the Excluded Leasehold
Expenses. For purposes of calculating Net Operating Cash Flow, Net
Production Revenues and Operating Costs with respect to the Excluded
Leasehold Properties, the commencement date for such calculation shall be
the date Borrower makes the lease extension payment that was the subject of
the request that Lender rejected. With respect to any Excluded Leasehold
Properties, Borrower shall not be permitted to commence the drilling of any
well with respect to such property until after the Conveyance Expiration
Date.
3. Section 3.06 of the Agreement is amended in its entirety to read as
follows:
Section 3.06 FINANCIAL CONDITION. The audited consolidated
balance sheet of the Borrower as at December 31, 1994, and the related
consolidated statement of income, changes in shareholders' equity and
cash flow of the Borrower for the period ended as of said date
heretofore furnished to Lender and the unaudited consolidated interim
financial statements of the Borrower dated as of March 31, 1995,
heretofore furnished to Lender have been prepared in accordance with
GAAP and present fairly the financial condition and changes in
financial position of the Borrower as at the date or dates and for the
period or periods stated. Except as disclosed in the SEC Documents
(as defined in the Anschutz Purchase Agreement), since December 31,
1994, no change, either in
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any case or in the aggregate, has since occurred in the condition,
financial or otherwise, of the Borrower which would have a Material Adverse
Effect.
4. Section 4.01 of the Agreement is amended by inserting the following
subsection:
(j) ACCOUNTANT'S COMPLIANCE CERTIFICATE. Contemporaneously with
the delivery of the financial statements required pursuant to
subsection 4.01(a) above, Borrower shall cause its independent public
accountants delivering the financial statements to state that in
making the examination and reporting on the financial statements
described in Section 4.01(a) above, nothing came to their attention to
cause them to believe that Borrower has failed to comply in any
material respect with the financial and accounting provisions of this
Agreement, or if they do conclude that Borrower so failed, specifying
the nature and period of existence of such failure.
5. Section 4.05(b) of this Agreement is amended by inserting the
following at the end of such Section:
Notwithstanding anything herein to the contrary, Lender acknowledges
and agrees that Borrower may allow Hydrocarbon Interests to expire
according to their terms if such Hydrocarbon Interests are no longer
capable of producing Hydrocarbons in economically reasonable amounts.
Lender acknowledges that the Cuellar Lease has been determined not to
be capable of producing Hydrocarbons in economically reasonable
amounts.
If subsequent to the expiration of Hydrocarbon Interests pursuant to
the preceding provision Borrower obtains new Hydrocarbon Interests
(such new Hydrocarbon Interests, to the extent same cover lands and
depths covered by the expired Hydrocarbon Interests, being herein
referred to as "Replacement Interests") covering some or all of the
lands and depths covered by the expired Hydrocarbon Interests,
Borrower shall provide Lender with the opportunity to include the
Replacement Interests as part of the Collateral. On or prior to the
date Borrower obtains the Replacement Interests, Borrower shall
provide Lender with a written notice describing the Replacement
Interests, the consideration paid or to be paid to obtain the
Replacement Interests and such other information as Lender may
reasonably request. If available, a copy of the document creating the
Hydrocarbon Interests shall be attached to such notice. Lender shall
respond to such notice within ten (10) Business Days following receipt
thereof. Failure of Lender to notify Borrower in writing within such
period of time of its election to include such Replacement Interests
as a part of the Collateral shall be deemed to constitute
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<PAGE>
an election by Lender not to do so. If Lender timely elects to include the
Replacement Interests as part of the Collateral, then the acquisition of
the Replacement Interests shall be deemed an Approved Nonscheduled Capital
Operation. Within ten (10) Business Days after Lender's election to
include Replacement Interests as part of the Collateral (or if Borrower has
not executed the document or documents creating such Replacement Interests
by such time, within ten (10) Business Days following such execution),
Borrower shall execute and deliver to the Lender instruments sufficient to
subject the Replacement Interests and the lands covered thereby to Liens
for the benefit of the Lender, which instruments shall include amendments
to the Security Instruments. In addition, with respect to any Replacement
Interests Borrower shall take such further actions as may be required
pursuant to Section 4.06 hereof. Once the Replacement Interests become
subject to the Security Instruments, Borrower may propose operations with
respect to the acreage included within the Replacement Interests in
accordance with the terms of Section 2.03. If Lender elects or is deemed
to have elected not to include the Replacement Interests as part of the
Collateral, then Borrower shall have the right to acquire such Replacement
Interests and thereafter develop the acreage subject to the Replacement
Interests without any further involvement of Lender.
6. Section 4.09 of this Agreement is amended by inserting the following
at the end of such Section:
Notwithstanding the foregoing, the Borrower's right to receive the
proceeds of insurance as payment for the restoration of the Mortgaged
Properties shall, if such proceeds are in an amount greater than
$100,000, be subject to approval as a Nonscheduled Capital Operation
under Section 2.03. Any such proceeds shall be delivered to and
retained by Lender until Borrower proposes a subsequent operation with
respect to such proceeds. If the Lender does not approve the
subsequent operation proposed by Borrower, then (i) the related
proceeds shall be retained by Lender and applied in the order provided
for in Section 2.08(c) above and (ii) Borrower and Lender shall
attempt in good faith to mutually agree on an adjustment to Exhibit J
to this Agreement to reflect an appropriate reduction in the Monthly
Payment Amount resulting from such casualty loss. Any such adjustment
shall be based on the adjustment provisions and principles provided
for in Section 2.17. Neither Borrower nor Lender shall have any
liability if after the exercise of good faith the parties are unable
to agree to an acceptable modification to Exhibit J pursuant to the
terms of this Section 4.09.
7. Section 4.17 of this Agreement is amended in its entirety to read as
follows:
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<PAGE>
Section 4.17 CAPITAL EXPENDITURES. Subject to the terms of
this Section 4.17 and to Lender's approval rights as set forth in
Section 2.02 and 2.03(a), Borrower agrees to make the capital
expenditures involved in and to drill, complete, and equip for
production, or recomplete and rework, as the case may be, each of the
wells and to conduct each of the other Scheduled Capital Operations
and Prior Capital Operations described or referred to on Exhibit I
hereto. Borrower shall commence each Scheduled Capital Operation no
earlier than six (6) months prior to the first day of, and no later
than six (6) months after the last day of, the month specified on
Exhibit I with respect to such Scheduled Capital Operation (such time
period, with respect to a particular Scheduled Operation, being herein
referred to as the "Window Period") and shall thereafter conduct such
operation as a reasonable and prudent operator. For purposes of all
Scheduled Capital Operations providing for the drilling of a well,
such operation shall be deemed to have commenced on the date the well
is spudded. Notwithstanding the foregoing or any other provision
within this Agreement to the contrary, Borrower shall not be required
to commence a Scheduled Capital Operation with respect to which (i)
Borrower submits an AFE pursuant to Section 2.02(b) and Lender rejects
such AFE; (ii) Lender refuses to consent to such operation pursuant to
Section 2.03(a), (iii) Lender elects not to consent to a Supplemental
AFE with respect to such operation pursuant to Section 2.18 and
Borrower elects the option set forth in clause (i) thereof or (iv)
Borrower provides evidence satisfactory to the Lender that such
operation is not reasonably necessary and Lender has consented in
writing to delay or elimination thereof.
8. Article 4 of the Agreement is amended by adding the following Section:
Section 4.19 WARRANT PROCEEDS. Borrower hereby acknowledges
that so long as any Indebtedness is outstanding Lender will be
entitled to receive all proceeds from the exercise of the Warrants.
All proceeds received by Lender as a result of the exercise of the
Warrants shall be applied as provided for in Sections 2.08(c), (d) and
(e), as applicable. Borrower shall from time-to-time issue to the
holders of the Warrants (other than Lender) such notices as are
required to ensure that for so long as any Indebtedness is outstanding
all payments required to be made in connection with the exercise of
the Warrants shall be paid from the holder of the Warrants directly to
the Lender. In addition, Borrower hereby acknowledges that if the
Anschutz Option is exercised, Lender will be entitled to receive the
Warrant Premium, which Warrant Premium shall be retained by Lender and
will not be applied to the Indebtedness.
9. Section 5.01 of the Agreement is amended in its entirety to read as
follows:
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<PAGE>
Section 5.01 LIENS. The Borrower will not create, incur,
assume, or permit to exist any Lien on any of the Mortgaged Properties
except (a) Liens securing the payment of any Indebtedness and (b)
Excepted Liens. Notwithstanding anything in this Agreement to the
contrary, the term "Excepted Liens" shall not include the Chase Lien.
10. Section 5.03 of the Agreement is amended in its entirety to read as
follows:
Section 5.03 SALE OF ASSETS, ETC. The Borrower will not
sell, assign, lease, or otherwise dispose of (whether in one
transaction or in a series of transactions) all or substantially all
of its Properties (exclusive of the Mortgaged Properties), whether now
owned or hereafter acquired, to any Person unless in connection with
any such transaction the assignee (i) acquires the Mortgaged
Properties and (ii) expressly assumes in writing the due and punctual
performance and observance of all of Borrower's obligations under this
Agreement and the Price Protection Agreements. Contemporaneously with
the closing of any such transaction, Borrower shall provide Lender
with an original signed counterpart of the assumption agreement.
11. Section 5.06 of the Agreement is amended in its entirety to read as
follows:
Section 5.06 SALE OF PROPERTIES. Except as permitted
pursuant to Sections 2.16 and 5.03, the Borrower will not sell or
otherwise transfer any Mortgaged Property other than the sale of
Hydrocarbons after they have been produced in the ordinary course of
business.
12. The Agreement is amended by adding the following Sections:
Section 5.13 WARRANTS. The Borrower will not create, incur,
assume, or permit to exist any agreement of the Borrower which could
prohibit the payment of the proceeds from the exercise of any of the
Warrants to the Lender for application in accordance with the
provisions of Sections 2.08(c) and (d). Borrower hereby represents to
Lender that no agreement currently exists which (i) could prohibit the
payment to the Lender of the proceeds from the exercise of any of the
Warrants or (ii) the application of such proceeds in accordance with
the provisions of Sections 2.08(c) and (d). The Borrower will not
amend, supplement, replace or otherwise modify the terms of the
Tranche A Warrant to permit the exercise of the Tranche A Warrant on a
date occurring after the Expiration Date (as defined in the Tranche A
Warrant as in effect on even date herewith).
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<PAGE>
13. Section 6.01(l) of the Agreement is amended in its entirety to read as
follows:
(l) The Borrower shall default in performance of any of its
obligations under the Swap Agreement, Option Agreement, any other
Price Protection Agreement, the Warrants, or the Registration Rights
Agreement; or
14. Section 8.07 of the Agreement is amended in its entirety to read as
follows:
Section 8.07 SUCCESSORS AND ASSIGNS. All covenants and
agreements contained by or on behalf of the Borrower under this
Agreement and any other Loan Document shall bind its successors and
assigns and shall inure to the benefit of the Lender and its
successors and assigns. The Borrower shall not, however, have the
right to assign its rights under this Agreement or any interest
herein, without the prior written consent of the Lender. The Lender
may, without the consent of Borrower, (i) prior to the expiration of
the Anschutz Option, sell, assign, transfer, pledge or grant a
security interest in all, but not less than all, of its interests in
the Tranche B Loan, the Tranche B Warrant and related interests in
this Agreement and the other Loan Documents, (ii) prior to the
expiration of the Anschutz Option, sell, assign, transfer, pledge or
grant a security interest in all or any portion of its interests in
the Tranche A Loan and related interests in this Agreement and the
other Loan Documents, (iii) after the expiration of the Anschutz
Option, sell, assign, transfer, pledge or grant a security interest in
all or any portion of its interests under this Agreement and the other
Loan Documents, or (iv) at any time grant participations in all or a
portion of this Agreement and the other Loan Documents except that in
any case any assignment of Lender's interests under this Agreement to
an entity that is not an Affiliate of Enron Corp. or managed by Enron
Corp. or one of its Affiliates or for which neither Enron Corp. nor
its Affiliates serve as administrative agent shall be subject to
Borrower's prior written consent which shall not be unreasonably
withheld. In the event that the Lender grants participations in the
Note or other Indebtedness of the Borrower incurred or to be incurred
pursuant to this Agreement, to other lenders, each of such other
lenders shall have the rights of set off against such Indebtedness and
similar rights or Liens to the same extent as may be available to the
Lender. In the event Lender's interest hereunder is assigned to more
than one assignee, Borrower shall not be required to pay fees or
expenses of more than one law firm, accounting firm or consultant to
represent the interests of all Lenders hereunder with respect to the
same issue.
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<PAGE>
15. Exhibits D, I, J and P to the Agreement are replaced in their entirety
with the corresponding attached Exhibits to this Amendment. The Agreement is
amended by inserting Exhibits R and S in the form of the corresponding Exhibits
attached to this Agreement.
16. The Borrower represents and warrants to the Lender that as of the date
of this Amendment:
(a) Except as provided in Exhibit D attached hereto, each of the
representations and warranties contained in (i) Section 3.06 and the
first and last sentences of Section 3.07 of the Agreement, as amended
by this Amendment, (ii) the Security Instruments referenced in
Sections 7.01(g)(i) (excluding Article III(a) thereof), 7.01(g)(ii)
(excluding Article III(a) thereof) and 7.01(g)(iii) (excluding
Sections 3.02, 3.04 and 3.06 thereof) and (iv) in the Price Protection
Agreements are true and correct in all material respects;
(b) After giving effect to the amendments hereunder and the
waiver provided in Section 5.7 of that certain Restructure Agreement
dated as of May [___], 1995 by and between Borrower and Lender, there
exists no Default or Event of Default; and
(c) the Agreements described in Sections 3.18(a) and 3.18(b)
(other than the gas purchase agreement referenced in Section 3.18(a))
have not been modified, terminated, assigned or pledged by Borrower,
are in full force and effect and Borrower, and to the best of
Borrower's knowledge, no other party, is in default in the performance
of its obligations thereunder.
17. Except as amended and modified hereby, the Agreement, including,
without limitation, the terms and provisions of Section 6.03 thereof, shall
remain in full force and effect and the Borrower and the Lender hereby ratify,
adopt, and confirm the Agreement as hereby amended. The amendments to the
Agreement effected under this Amendment shall be effective as of the date of
this Amendment. Subject to Section 16(b), the execution of this Amendment shall
not waive, modify, release or limit any of Lender's existing rights, claims or
remedies.
18. Contemporaneously with the execution of this Amendment, the Lender
shall execute and deliver to Borrower the Overriding Royalty Reconveyance.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
duly executed on this ______ day of ________________, 1995 but effective as of
the date first above written.
BORROWER: FOREST OIL CORPORATION
By:
-------------------------------------
Name:
------------------------------
Title:
----------------------------------
LENDER: JOINT ENERGY DEVELOPMENT
INVESTMENTS LIMITED PARTNERSHIP
By: Enron Capital Corp.,
its general partner
By:
-------------------------------------
Name:
------------------------------
Title:
----------------------------------
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<PAGE>
FOR IMMEDIATE RELEASE
FOREST COMPLETES FIRST PHASE OF ANSCHUTZ TRANSACTION
DENVER, COLORADO - MAY 22, 1995 - Forest Oil Corporation ("Forest") announced
that it has closed the first phase of its transaction with The Anschutz
Corporation ("Anschutz") as anticipated by the definitive agreement between
the parties dated May 17, 1995.
Forest's agreement with Anschutz specifies that Anschutz will purchase 18.8
million shares of the company's common stock and shares of a newly-issued
preferred stock that are convertible into 6.2 million additional shares of
common stock for a total consideration of $45 million, or $1.80 per share.
The investment will be made in two closings. In the first closing, which
occurred on May 19, 1995, Anschutz loaned Forest $9.9 million for a term of
nine months. The proceeds of the loan will be used to fund a $2 million
collateral account securing the loan and the remainder will be used to repay
a portion of the indebtedness under the company's revolving credit agreement.
The loan may be converted into 5.5 million shares of Forest's common stock
at Anschutz's election, but the loan must be so converted at the second
closing. At the second closing, expected to occur in July 1995 following
receipt of the approval of Forest's shareholders of the transactions,
Anschutz will purchase 13.3 million shares of common stock and the
convertible preferred stock.
As previously announced, Forest has a definitive agreement with an affiliate
of Enron Corp. ("Enron") to restructure Enron's existing non-recourse secured
loan of approximately $62.1 million. Under the term of the Enron agreement,
the interest rate on the loan will be reduced in exchange for warrants to
purchase common stock of Forest. Forest anticipates that the loan
restructuring will reduce the recorded amount of the liability by
approximately $12 million and will lower its annual interest expense on the
loan by approximately $2.0 million. Enron will receive warrants to purchase
11.25 million shares at $2.00 per share. In addition, Forest will issue to
Anschutz warrants to purchase 19.44 million shares of common stock at $2.10
per share. The $2.00 warrants expire on December 31, 2002, subject to
earlier expiration in certain circumstances. The $2.10 warrants are
exercisable for 18 months, subject to extension in certain circumstances to
36 months. Enron will grant Anschutz a 36-month option to purchase the
shares issuable upon exercise of the $2.00 warrants at an increasing option
price capped at $3.10 per share. The proceeds from the exercise of both the
$2.00 and $2.10 warrants will be used to repay remaining Enron indebtedness.
<PAGE>
PAGE 2 OF 2
The transactions with Anschutz to be consummated at the second closing, the
restructure of the Enron loan and the transactions between Anschutz and Enron
described above are subject to, among other things, the prior approval of
Forest's shareholders and clearance under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976.
The Anschutz Corporation is a member of the privately-held Anschutz group of
companies headquartered in Denver, Colorado. The group's principal
businesses include natural resources, transportation, communications, and
real estate.
Forest Oil Corporation is engaged in the exploitation and acquisition of,
exploration for and development and production of natural gas and crude oil.
Its principal reserves and producing properties are located in the Gulf of
Mexico and Texas, Oklahoma and Wyoming. Forest Oil's common and preferred
stocks are traded on the NASDAQ/NMS system under the FOIL and FOILO symbols,
respectively.
May 22, 1995
###
