<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) October 11, 1995
FOREST OIL CORPORATION
(Exact name of registrant as specified in charter)
New York 0-4597 25-0484900
(State of other juris- (Commission (IRS Employer
diction of incorporation file number) identification No.)
2200 Colorado State Bank Building, 1600 Broadway, Denver, CO 80202
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303)812-1400
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<PAGE>
ITEM 5. OTHER EVENTS
For information concerning this item, please refer to Exhibits 99.1,
99.2 and 99.3 hereto, which is incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
99.1 Forest Oil Corporation press release announcing the
acquisition of a majority interest in Saxon Petroleum Inc.
99.2 Forest Oil Corporation press release announcing the first
closing of the acquisition of a majority interest in Saxon Petroleum
Inc.
99.3 Purchase Agreement dated as of October 6, 1995 between
Forest Oil Corporation and Saxon Petroleum Inc.
99.4 Second Amendment dated as of July 27, 1995 to the Loan
Agreement between Forest Oil Corporation and Joint Energy Development
Investments Limited Partnership dated as of December 28, 1993.
99.5 Amendment No. 1 dated as of July 27, 1995 to Rights
Agreement dated as of October 14, 1993 between Forest Oil
Corporation and Mellon Securities Trust Company.
99.6 Tranche A Warrants to Purchase 19,444,444 Shares of Common
Stock issued to the Anschutz Corporation dated July 27, 1995.
99.7 Shareholders Agreement dated as of July 27, 1995 between
Forest Oil Corporation and The Anschutz Corporation.
99.8 Tranche B Warrants to Purchase 11,250,000 Shares of Common
Stock issued to Joint Energy Development Investments Limited
Partnership dated July 27, 1995.
99.9 Second Amendment effective as of July 27, 1995 to Deed of
Trust, Assignment of Production, Security Agreement and Financing
Statement between Forest Oil Corporation and Joint Energy Development
Investments Limited Partnership.
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: October 31, 1995 By /s/Daniel L. McNamara
----------------------
Daniel L. McNamara
Secretary
<PAGE>
EXHIBIT INDEX
99.1 Forest Oil Corporation press release announcing the acquisition of a
majority interest in Saxon Petroleum Inc.
99.2 Forest Oil Corporation press release announcing the first closing of the
acquisition of a majority interest in Saxon Petroleum Inc.
99.3 Purchase Agreement dated as of October 6, 1995 between Forest Oil
Corporation and Saxon Petroleum Inc.
99.4 Second Amendment dated as of July 27, 1995 to the Loan Agreement between
Forest Oil Corporation and Joint Energy Development Investments Limited
Partnership dated as of December 28, 1993.
99.5 Amendment No. 1 dated as of July 27, 1995 to Rights Agreement dated as of
October 14, 1993 between Forest Oil Corporation and Mellon Securities Trust
Company.
99.6 Tranche A Warrants to Purchase 19,444,444 Shares of Common Stock issued to
the Anschutz Corporation dated July 27, 1995.
99.7 Shareholders Agreement dated as of July 27, 1995 between Forest Oil
Corporation and the Anschutz Corporation.
99.8 Tranche B Warrants to Purchase 11,250,000 Shares of Common Stock issued to
Joint Energy Development Investments Limited Partnership dated July 27,
1995.
99.9 Second Amendment effective as of July 27 ,1995 to Deed of Trust, Assignment
of Production, Security Agreement and Financing Statement between Forest
Oil Corporation and Joint Energy Development Investments Limited
Partnership.
<PAGE>
FOR FURTHER INFORMATION CONTACT
ZACK HAGER, JR.
INVESTOR RELATIONS
303-812-1610
EXHIBIT 99.1
FOREST OIL CORPORATION
1600 BROADWAY, DENVER, COLORADO 80202
FOR IMMEDIATE RELEASE
FOREST OIL TO ACQUIRE MAJORITY INTEREST IN
SAXON PETROLEUM, INC.
DENVER, COLORADO - October 11, 1995 - Forest Oil Corporation
("Forest") and Saxon Petroleum, Inc. ("Saxon") of Calgary,
Alberta announced today that the companies have reached agreement
for Forest to contribute capital to Saxon in exchange for a
majority interest in Saxon. The agreement is subject to
satisfaction of several contingencies including final due
diligence, regulatory approval and approval of Saxon's
shareholders.
Under the terms of the agreement, Forest would receive from
Saxon, in two closings, an aggregate of 53.1 million common
shares, 5.3 million warrants and C$15.5 million of convertible
preferred shares due November 15, 1998. Saxon would receive
C$1.5 million cash, 5.3 million common shares of Forest (subject
to possible adjustment for changes in the market value of Forest
stock) and all of the preferred shares owned by Forest in Archean
Energy, Ltd., a privately held oil and gas company based in
Calgary.
At the completion of the transaction, Forest would own
approximately 56% of the outstanding common shares of Saxon,
including slightly less than 50% of the voting shares, and would
hold warrants and conversion rights for shares which, if fully
exercised, would constitute approximately 63% of Saxon's
outstanding common stock. Pursuant to the terms of the
agreement, Forest would have the right to name four of seven
directors to a newly-constituted board. In addition, Forest
would have the right to participate in any future equity issues
undertaken by Saxon.
Forest's president, Robert S. Boswell, stated, "Saxon will be
Forest's investment platform in Canada to acquire Canadian oil
and gas reserves as well as to conduct exploration, exploitation
and development activities. It is Forest's intention that Saxon
will operate as a separate entity under Canadian management.
Forest's involvement will be at the board level. Saxon will
continue as a public company which will afford Saxon the
judicious use of its equity securities and the contributed Forest
equity securities in transactions to fuel its growth."
<PAGE>
Page 2 of 3
Mr. Boswell went on to say, "We believe that Canada is an
attractive area for investment and believe Saxon's assets and its
management team provide the right ingredients to pursue
significant investments in Canada. It is Forest's plan to create
a substantial oil and gas asset base in Canada."
Mr. Boswell added, "Forest recently sold a 40% ownership in its
common stock to The Anschutz Corporation. At that time we stated
that our primary, near-term objective was to grow Forest Oil by
issuing equity securities in mergers or business combinations
which fit our strategic plan. This transaction with Saxon is
consistent with that objective."
Saxon's chairman, Hugh Davis, said, "We are excited to establish
this association with Forest Oil. We believe Forest will provide
financial and investment expertise to further Saxon's business
plan for significant growth. We intend to use equity securities
to participate actively in the consolidation of the Canadian oil
and gas industry. We believe that the economics and
opportunities resulting from this strategy will yield significant
benefits for all of our shareholders."
At December 31, 1994, Saxon reported proved reserves of 24.4 BCF
of natural gas (18.7 BCF net of royalties) and 4.9 million
barrels of oil (4.2 million barrels net of royalties). During
the first six months of 1995, Saxon reported production of 1.9
BCF of natural gas (1.6 BCF net of royalties) and 228,000 barrels
of oil (195,000 barrels net of royalties). Forest currently
estimates that it would record a purchase price attributable to
developed and undeveloped oil and gas properties of Saxon
equivalent to approximately C$38 million (US$28 million) at June
30, 1995.
SAXON SECURITIES TO BE ISSUED
Upon consummation of the transactions Saxon would issue 53.1
million common shares to Forest. Forest would own slightly less
than 50% of the voting shares of Saxon after all transactions are
closed. Common shares owned by Forest in excess of the voting
shares would be non-voting common shares convertible to voting
shares at any time at Forest's option.
Saxon would issue 5.3 million warrants to Forest which would
expire 36 months from the date of the second closing and would be
exercisable at C$0.55 per share.
Saxon would also issue C$15.5 million of convertible preferred
shares which would have a dividend rate of 4% and would be
convertible into common shares at C$0.57 per share. If the Saxon
common stock trades at or above C$0.70 per share for 30
consecutive trading days with certain trading volumes, such
preferred shares would be subject to mandatory conversion.
(Saxon's common stock closed at C$0.43 per share on October 6,
1995.) The preferred shares would be due November 15, 1998 and
would be redeemable in cash or in Saxon common stock at 85% of
the then market price, as defined.
<PAGE>
Page 3 of 3
ANTICIPATED CLOSINGS
Pursuant to the agreement, Forest would receive 8.8 million Saxon
common shares in exchange for 790,000 Forest common shares at the
first closing which is expected to occur later in October 1995.
At that time, Forest would also pay to Saxon C$3.0 million for a
newly-issued Saxon preferred stock. The preferred stock would
pay a 10% dividend in Saxon common stock and would be due at the
earlier of six months from the first closing or at the second
closing.
The second closing would occur approximately 60 days after the
first closing subject to the approval of Saxon's shareholders.
At the second closing the following transactions would take
place: 1) the preferred stock of Saxon issued at the first
closing would be redeemed for C$1.5 million of cash and 4.0
million common shares of Saxon; 2) Saxon would issue, subject to
adjustment, 40.3 million common shares and 5.3 million warrants
to Forest in exchange for 4.51 million common shares of Forest;
and 3) Saxon would issue C$15.5 million of new convertible
preferred stock to Forest in exchange for the Archean Energy Ltd.
preferred stock owned by Forest.
Forest Oil Corporation and Saxon Petroleum, Inc. are engaged in
the exploitation and acquisition of, exploration for and
development and production of natural gas and crude oil.
Forest's principal reserves and producing properties are located
in the Gulf of Mexico and Texas, Oklahoma and Wyoming. Saxon's
principal reserves are located in western and northwestern
Alberta. Forest's common and preferred stocks are traded on the
Nasdaq National Market under the FOIL and FOILO symbols,
respectively. Saxon's common stock is traded on the Alberta
Stock Exchange under the SXN symbol.
October 11, 1995
###
<PAGE>
NEWS FOR FURTHER INFORMATION CONTACT
ZACK HAGER, JR.
INVESTOR RELATIONS
303-812-1610
EXHIBIT 99.2
FOREST OIL CORPORATION
1600 BROADWAY, DENVER, COLORADO 80202
FOR IMMEDIATE RELEASE
FOREST OIL AND SAXON COMPLETE FIRST CLOSING
DENVER, COLORADO - OCTOBER 26, 1995 - Forest Oil Corporation
("Forest") announced today that Forest and Saxon Petroleum, Inc.
("Saxon") of Calgary, Alberta, Canada, have closed the first
phase of the companies' previously announced agreement for Forest
to acquire a majority interest in Saxon.
Forest has acquired 8.8 million shares of Saxon common stock in
exchange for 790,000 shares of Forest common stock. Forest has
also paid to Saxon C$3.0 million for a newly-issued Saxon
preferred stock, which will pay a 10% dividend in Saxon common
stock and will be due at the earlier of April 25, 1996, or at the
second closing, which is expected to occur within 60 days.
The second closing is subject to the approval of Saxon's
shareholders. A special meeting of Saxon's shareholders has been
scheduled for December 18, 1995. At the second closing the
following transactions would take place: 1) the preferred stock
of Saxon issued at the first closing would be redeemed for C$1.5
million of cash and C$1.5 million of common shares of Saxon; 2)
Saxon would issue 44.3 million common shares, less amounts issued
in 1) above, and 5.3 million warrants to Forest in exchange for,
subject to adjustment, 4.51 million common shares of Forest; and
3) Saxon would issue C$15.5 million of new convertible preferred
stock to Forest in exchange for the Archean Energy Ltd. preferred
stock owned by Forest.
Forest Oil Corporation and Saxon Petroleum, Inc. are engaged in
the exploitation and acquisition of, exploration for and
development and production of natural gas and crude oil.
Forest's principal reserves and producing properties are located
in the Gulf of Mexico and Texas, Oklahoma and Wyoming. Saxon's
principal reserves are located in western and northwestern
Alberta. Forest's common and preferred stocks are traded on the
Nasdaq National Market System under the FOIL and FOILO symbols,
respectively. Saxon's common stock is traded on the Alberta
Stock Exchange under the SXN symbol.
October 26, 1995
###
<PAGE>
PURCHASE AGREEMENT
dated as of
October 6, 1995
between
FOREST OIL CORPORATION
and
SAXON PETROLEUM INC.
<PAGE>
TABLE OF CONTENTS
<TABLE>
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ARTICLE I TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 First Closing Transactions . . . . . . . . . . . . . . . . 1
1.2 Second Closing Transactions. . . . . . . . . . . . . . . . 2
1.3 Closing Adjustments. . . . . . . . . . . . . . . . . . . . 2
1.4 Additional Adjustments . . . . . . . . . . . . . . . . . . 3
ARTICLE II CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 First Closing. . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Second Closing . . . . . . . . . . . . . . . . . . . . . . 3
2.3 Location of Closing. . . . . . . . . . . . . . . . . . . . 3
ARTICLE III CONDITIONS OF CLOSINGS . . . . . . . . . . . . . . . . . . 4
3.1 Conditions Precedent to Both Closings. . . . . . . . . . . 4
3.2 Additional Conditions Precedent to First Closing . . . . . 6
3.3 Additional Conditions Precedent to Second Closing. . . . . 7
3.4 Legends. . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF
THE COMPANY. . . . . . . . . . . . . . . . . . . . . . . . 10
4.1 Corporate Existence and Power. . . . . . . . . . . . . . . 10
4.2 Authorization; Contravention . . . . . . . . . . . . . . . 11
4.3 Approvals. . . . . . . . . . . . . . . . . . . . . . . . . 11
4.4 Binding Effect . . . . . . . . . . . . . . . . . . . . . . 11
4.5 Financial Information. . . . . . . . . . . . . . . . . . . 12
4.6 Absence of Certain Changes or Events . . . . . . . . . . . 12
4.7 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.8 Litigation . . . . . . . . . . . . . . . . . . . . . . . . 14
4.9 Compliance with Laws . . . . . . . . . . . . . . . . . . . 15
4.10 Licenses . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.11 Employee Matters . . . . . . . . . . . . . . . . . . . . . 16
4.12 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . 17
4.13 Property . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.14 Oil and Gas Interests. . . . . . . . . . . . . . . . . . . 17
4.15 Equipment. . . . . . . . . . . . . . . . . . . . . . . . . 20
4.16 Leases . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.17 Securities . . . . . . . . . . . . . . . . . . . . . . . . 21
4.18 Proprietary Rights . . . . . . . . . . . . . . . . . . . . 21
4.19 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . 21
4.20 Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.21 No Default . . . . . . . . . . . . . . . . . . . . . . . . 22
4.22 Capitalization . . . . . . . . . . . . . . . . . . . . . . 23
4.23 Environmental Matters. . . . . . . . . . . . . . . . . . . 24
</TABLE>
<PAGE>
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<TABLE>
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<S> <C> <C>
4.24 Books and Records. . . . . . . . . . . . . . . . . . . . . 27
4.25 Material Contracts . . . . . . . . . . . . . . . . . . . . 27
4.26 Misstatements. . . . . . . . . . . . . . . . . . . . . . . 28
4.27 Securities Filings . . . . . . . . . . . . . . . . . . . . 28
4.28 Required Vote. . . . . . . . . . . . . . . . . . . . . . . 28
4.29 No Merger Agreements . . . . . . . . . . . . . . . . . . . 28
4.30 Aggregate Material Adverse Effect. . . . . . . . . . . . . 29
4.31 Continuing Representations and Warranties. . . . . . . . . 29
4.32 Restricted Securities. . . . . . . . . . . . . . . . . . . 29
ARTICLE V REPRESENTATIONS AND WARRANTIES
OF THE PURCHASER . . . . . . . . . . . . . . . . . . . . . 30
5.1 Corporate Existence and Power. . . . . . . . . . . . . . . 30
5.2 Authorization; Contravention . . . . . . . . . . . . . . . 30
5.3 Approvals. . . . . . . . . . . . . . . . . . . . . . . . . 30
5.4 Binding Effect . . . . . . . . . . . . . . . . . . . . . . 31
5.5 Financial Information. . . . . . . . . . . . . . . . . . . 31
5.6 Absence of Certain Changes or Events . . . . . . . . . . . 31
5.7 Litigation . . . . . . . . . . . . . . . . . . . . . . . . 31
5.8 Compliance with Laws . . . . . . . . . . . . . . . . . . . 32
5.9 Capitalization . . . . . . . . . . . . . . . . . . . . . . 32
5.10 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . 34
5.11 Misstatements. . . . . . . . . . . . . . . . . . . . . . . 34
5.12 SEC Documents. . . . . . . . . . . . . . . . . . . . . . . 35
5.13 Reporting Issuer . . . . . . . . . . . . . . . . . . . . . 35
5.14 Fees for Brokers and Finders . . . . . . . . . . . . . . . 35
5.15 Books and Records. . . . . . . . . . . . . . . . . . . . . 35
5.16 Representations Relating to Number Company . . . . . . . . 36
5.17 Representations Relating to Archean Shares . . . . . . . . 37
5.18 Continuing Representations and Warranties. . . . . . . . . 37
5.19 Restricted Securities. . . . . . . . . . . . . . . . . . . 38
ARTICLE VI COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . 38
6.1 Affirmative Covenants of the Company . . . . . . . . . . . 38
6.2 Negative Covenants of the Company. . . . . . . . . . . . . 44
6.3 Covenants of the Purchaser . . . . . . . . . . . . . . . . 47
ARTICLE VII ADDITIONAL COVENANTS OF THE PARTIES. . . . . . . . . . . . 48
7.1 Mutual Covenants of the Parties. . . . . . . . . . . . . . 48
ARTICLE VIII TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . 50
8.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . 50
8.2 Expenses and Fees. . . . . . . . . . . . . . . . . . . . . 52
</TABLE>
<PAGE>
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<TABLE>
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ARTICLE IX INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . 53
9.1 Indemnification. . . . . . . . . . . . . . . . . . . . . . 53
9.2 Security for Indemnification Obligation. . . . . . . . . . 56
9.3 No Limitation on Other Rights of Recovery. . . . . . . . . 56
ARTICLE X MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . 57
10.1 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . 57
10.2 No Waivers; Remedies; Specific Performance . . . . . . . . 57
10.3 Amendments, Etc. . . . . . . . . . . . . . . . . . . . . . 57
10.4 Successors and Assigns . . . . . . . . . . . . . . . . . . 58
10.5 Accounting Terms and Determinations. . . . . . . . . . . . 58
10.6 Governing Law. . . . . . . . . . . . . . . . . . . . . . . 58
10.7 Counterparts; Effectiveness. . . . . . . . . . . . . . . . 58
10.8 Severability of Provisions . . . . . . . . . . . . . . . . 58
10.9 Headings and References. . . . . . . . . . . . . . . . . . 58
10.10 Entire Agreement . . . . . . . . . . . . . . . . . . . . . 59
10.11 Survival . . . . . . . . . . . . . . . . . . . . . . . . . 59
10.12 Exclusive Jurisdiction . . . . . . . . . . . . . . . . . . 59
10.13 Non-Recourse . . . . . . . . . . . . . . . . . . . . . . . 59
</TABLE>
<TABLE>
ANNEX
<S> <C> <C>
Annex A - Definitions
EXHIBITS
Exhibit A - Terms of Series A and Series B Preferred Shares and
Common Shares and Non-Voting Shares
Exhibit B - Form of Prospectus Agreement
Exhibit C - Form of Company Registration Rights Agreement
Exhibit D - Form of Warrant
Exhibit E - Form of Equity Participation Agreement
Exhibit F - Form of Voting Agreement
Exhibit G - Form of Escrow Agreement
</TABLE>
<PAGE>
PURCHASE AGREEMENT
PURCHASE AGREEMENT dated as of October 6, 1995 between FOREST OIL
CORPORATION, a New York corporation (the "PURCHASER"), and SAXON PETROLEUM
INC., an Alberta corporation (the "COMPANY").
Terms not otherwise defined in this Agreement have the meanings
stated in Annex A.
The parties agree as follows:
ARTICLE I
TRANSACTIONS
1.1 FIRST CLOSING TRANSACTIONS
Subject to the terms and conditions set forth in this Agreement, at
the First Closing,
(a) the Company shall issue, sell and deliver to the Purchaser 8,800,000
Common Shares of the Company (the "COMMON SHARES") in exchange for
790,000 shares of common stock of the Purchaser (the "FOREST
SHARES") to be issued, sold and delivered by the Purchaser to the
Company;
(b) the Company shall issue, sell and deliver to the Purchaser 3,000,000
Redeemable Preferred Shares, Series B (the "SERIES B PREFERRED
SHARES"), having (i) the rights, privileges, restrictions and
conditions set out in Exhibit A attached hereto, and (ii) the
collateral security set out in Exhibit "G" hereto and the Purchaser
shall deliver a certified cheque or bank draft for $3,000,000 as
payment for the Series B Preferred Shares;
(c) the Company and the Purchaser shall execute and deliver the
Prospectus Agreement substantially in the form of Exhibit B attached
hereto; (the "PROSPECTUS AGREEMENT").
(d) the Company and the Purchaser shall execute and deliver the Company
Registration Rights Agreement substantially in the form of Exhibit C
attached hereto (the "COMPANY REGISTRATION RIGHTS AGREEMENT").
<PAGE>
1.2 SECOND CLOSING TRANSACTIONS
Subject to the terms and conditions set forth in this Agreement, at
the Second Closing:
(a) the Company will redeem the Series B Preferred Shares by making a
cash payment to the Purchaser in the sum of $1,500,000, issuing and
delivering to the Purchaser the number of Common Shares issuable
upon such redemption and issuing to the Purchaser Non-Voting Shares
in satisfaction of accrued but unpaid dividends to the Second
Closing Date;
(b) the Company shall issue, sell and deliver to the Purchaser
32,000,000 Common Shares less the number of Common Shares issued
under paragraph (a) as payment of the redemption price of the Series
B Preferred Shares, 12,300,000 Non-Voting Shares and
5,300,000 Warrants substantially in the form of Exhibit D (the
"WARRANTS"), in exchange for 4,510,000 Forest Shares (subject to
adjustment under Section 1.3) to be issued, sold and delivered by
the Purchaser to the Company;
(c) the Company shall issue, sell, assign and deliver to the Purchaser
15,500,000 Non-Voting Series A Preferred Shares (the "SERIES A
PREFERRED SHARES") having the rights, privileges, restrictions and
conditions set out in Exhibit A attached hereto in exchange for the
Number Company Shares which the Purchaser shall sell, assign and
deliver to the Company; and
(d) the Company and the Purchaser shall execute and deliver the Equity
Participation Agreement substantially in the form of Exhibit E
attached hereto (the "EQUITY PARTICIPATION AGREEMENT")
1.3 CLOSING ADJUSTMENTS
At the Second Closing the following adjustments shall be made if the
Forest Reference Price is below U.S. $2.50 or above U.S. $3.50:
(a) if the Forest Reference Price is less than U.S. $2.50 the aggregate
number of Forest Shares shall be increased by a number of Forest
Shares determined as follows:
(U.S. $2.50 - Forest Reference Price to a minimum of U.S. $2.00) X 5,300,000
- ----------------------------------------------------------------------------
Forest Reference Price
or the Purchaser may, at its option in lieu of issuing additional
Forest Shares, make a cash payment to the Company in an amount equal
to the numerator of such fraction;
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<PAGE>
(b) if the Forest Reference Price is greater than U.S. $3.50 the
aggregate number of Forest Shares shall be decreased as follows:
(Forest Reference Price to a maximum of U.S. $4.00 - U.S. $3.50) X 5,300,000
- ----------------------------------------------------------------------------
Forest Reference Price
or the Company may, at its option, in lieu of accepting such
reduction, make a cash payment to the Purchaser in an amount equal
to the numerator of such fraction.
1.4 ADDITIONAL ADJUSTMENTS
In the event that prior to the Second Closing Date any change is
made in the Forest Shares (by reason of stock dividends (other than stock
dividends on the $.75 Convertible Preferred Stock), non-cash dividends,
extraordinary cash dividends, stock splits, consolidations, recapitalizations,
subdivisions, mergers, conversions or the like) an adjustment shall be made to
the number of Forest Shares issuable under Section 1.2 such that the number of
Forest Shares issued is the number that would have been received by the Company
had the Second Closing Date occurred immediately prior to such event or the
record date therefor as applicable. In the event of any such change appropriate
adjustments to the formula in Section 1.3 shall be made.
ARTICLE II
CLOSING
2.1 FIRST CLOSING
The closing of the transactions set forth in Section 1.1 (the "FIRST
CLOSING TRANSACTIONS") shall take place (the "FIRST CLOSING") on October 13,
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 October 31, 1995.
2.2 SECOND CLOSING
The closing of the transactions set forth in Section 1.2 (the
"SECOND CLOSING TRANSACTIONS") shall take place (the "SECOND CLOSING") on
December 20, 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 December 31, 1995.
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2.3 LOCATION OF CLOSING
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
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 for whose benefit they are
intended, at or before the related Closing:
(a) each of the Company 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, 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 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 the Company or
the Purchaser or any of its material Subsidiaries, threatened
against either 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) neither the Company nor 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
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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 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 the Transaction Documents 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;
(2) a certificate of the President or a Vice President of such
other party 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;
(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;
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(5) a certificate of the applicable corporate authorities as to
the valid existence, or where available good standing of the
party;
(6) with respect to the Company, a favourable opinion of counsel
for the Company as to such matters reasonably requested by the
receiving party; and
(7) with respect to the Purchaser, a favourable opinion of one or
more counsel for the Purchaser as to such matters reasonably
requested by the receiving party.
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 unless waived by the party for whose benefit
they are intended, at or before the First Closing;
(a) each of the Company and the Purchaser shall have conducted
satisfactory due diligence reviews with respect to the other by
24 hours before the First Closing;
(b) the board of directors of Forest, at a meeting duly called and held,
shall have duly approved the Transactions;
(c) the board of directors of the Company, at a meeting duly called and
held, shall have 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 Common
Shares approve the Transactions (collectively, the
"RECOMMENDATIONS") and (3) approved the Transaction Documents and
the Transactions;
(d) Sayer Securities Limited shall have delivered to the board of
directors of the Company an opinion, satisfactory to the Company and
the Purchaser, to the effect that the terms of the Transactions
taken as a whole, are fair to the shareholders of the Company from a
financial point of view;
(e) the Company and the Purchaser shall have executed and delivered the
Prospectus Agreement substantially in the form of Exhibit B attached
hereto, with such changes therein as shall have been approved by the
Company and the Purchaser;
(f) the Company and the Purchaser shall have executed and delivered the
Company Registration Rights Agreement substantially in the form of
Exhibit C attached hereto, with such changes therein as shall have
been approved by the Company and the Purchaser;
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(g) the Company shall have duly executed and delivered to the Purchaser
one or more certificates representing 8,800,000 Common Shares;
(h) a certificate of amendment shall have been issued under the BUSINESS
CORPORATIONS ACT (Alberta) creating the Series B Preferred Shares
and the Company shall have duly executed and delivered to the
Purchaser a certified copy of such certificate of amendment together
with one or more certificates representing 3,000,000 Series B
Preferred Shares;
(i) the Purchaser shall have delivered to the Company $3,000,000 in
immediately available funds as payment for the purchase price for
the Series B Preferred Shares;
(j) the Purchaser shall have delivered to the Company one or more
certificates representing 790,000 Forest Shares;
(k) the Management Shareholders shall have executed and delivered a
Voting Agreement substantially in the form of Exhibit F hereto with
such amendments as may be approved by the Purchaser;
(l) the Company shall have provided the Purchaser with evidence of the
repayment of the indebtedness held by Enron Capital and Trade
Resources Canada Corp. (other than certain obligations previously
disclosed to the Purchaser in writing, which writing makes reference
to this Agreement);
(m) the written approval of lenders to the Company and the Purchaser
shall have been obtained on terms satisfactory to the Company in the
case of the Company's lenders and satisfactory to the Purchaser in
the case of the Company's and the Purchaser's lenders; and
(n) the approval of The Alberta Stock Exchange to the First Closing
Transactions and the approval of the Ontario Securities Commission
to the issue of Series B Preferred Shares shall have been obtained
on terms acceptable to the Company and the Purchaser.
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 unless waived by the party for whose benefit
they are intended, at or before the Second Closing:
(a) the Company shall have duly executed and delivered to the Purchaser
certificates representing the Common Shares, the Non-Voting Shares
and the Warrants required pursuant to Sections 1.2, 1.3 and 1.4;
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(b) the Company shall have duly redeemed the Series B Preferred Shares
by paying to the Purchaser $1,500,000 in immediately available funds
and duly executing and delivering to the Purchaser a certificate
representing 4,000,000 Non-Voting Shares and a certificate
representing Non-Voting Shares issued in payment of accrued but
unpaid dividends to the Second Closing Date and the Purchaser shall
submit to the Company a cheque payable to Revenue Canada for the
withholding tax due in respect of such dividend;
(c) a certificate of amendment shall have been issued under the BUSINESS
CORPORATIONS ACT (Alberta) creating the Series A Preferred Shares,
and the Company shall have delivered a certified copy of such
certificate of amendment to the Purchaser;
(d) the Purchaser shall have duly transferred to the Company the Number
Company Shares and provided the Company with a clearance certificate
under Section 116 of the INCOME TAX ACT (Canada) in respect of such
disposition and the Company shall have duly executed and delivered
to the Purchaser a certificate representing 15,500,000 Series A
Preferred Shares;
(e) the Shareholders Meeting shall have been duly held and all approvals
of the shareholders of the Company required in order to consummate
the Transactions shall have been duly obtained and evidence thereof
provided to the Purchaser;
(f) the Company shall have received the resignations, effective as of
the Second Closing Date, of 4 directors identified by the Company
and agreed to by the Purchaser;
(g) 4 persons selected by the Purchaser shall have been elected or
appointed 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 (if one is then
established), the Compensation Committee and the Audit Committee of
the Board of Directors of the Company;
(h) the Company and the Purchaser shall have entered into the Equity
Participation Agreement substantially in the form of Exhibit F; and
(i) the Company shall have been novated into the Archean Shareholders
Agreement in place of the Purchaser or the Purchaser shall have
entered into an agreement with the Company pursuant to which the
Purchaser will exercise its rights under the Archean Shareholder
Agreement in the manner directed by the Company.
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3.4 LEGENDS
(a) Each certificate for Forest Shares, and any certificate issued in
exchange therefor or upon transfer, except certificates issued in
connection with a sale registered under the Securities Act of 1933
(the "SECURITIES ACT") and except as provided below, shall bear
legends to the following effect:
(1) "The shares represented hereby and any interest herein or
therein have not been registered under the United States
Securities Act of 1933, as amended, or the securities laws of
any state of the United States, and may not be re-offered,
re-sold, pledged, hypothecated or otherwise transferred or
disposed of except pursuant to an effective registration
statement or in a transaction which, in the opinion of counsel
to the Company, is exempt from such registration."
(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
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 3.4(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.
(c) The legend stated in Section 3.4(a)(2) shall be removed at such time
as the related securities are no longer subject to the Registration
Rights Agreement referenced therein.
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(d) Each certificate for the Common Shares, the Non-Voting Shares and
the Series A and Series B Preferred Shares, and any certificate
issued in exchange therefor or upon the transfer thereof, except
certificates issued in connection with a sale pursuant to a
prospectus, and except as provided below, shall bear legends to the
following effect:
(1) "This certificate is not transferable until [one year or 18
months, as applicable] after issuance except pursuant to an
exemption from the prospectus requirements contained in the
applicable securities legislation."
(2) "The shares represented hereby and any interest herein or
therein have not been registered under the United States
Securities Act of 1933, as amended, or the securities laws of
any state of the United States, and may not be re-offered,
re-sold, pledged, hypothecated or otherwise transferred or
disposed of except pursuant to an effective registration
statement or in a transaction which, in the opinion of counsel
to the Company, is exempt from such registration."
(3) "The shares represented by this certificate are subject to the
restrictions contained in the Prospectus Agreement dated as of
_______________, 1995, a copy of which is on file with the
Secretary of the Company."
(e) The legend stated in Section 3.4(d)(1) shall be removed after the
date referred to in the legend.
(f) The legend stated in Section 3.4(d)(2) shall be removed at such time
as the related securities are no longer subject to the Prospectus
Agreement referenced therein.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants as follows:
4.1 CORPORATE EXISTENCE AND POWER
The Company (1) is a corporation duly amalgamated, validly existing
and in good standing under the laws of Alberta, (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 an extra-provincial 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
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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 (ii) the ability of the Company 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.
4.2 AUTHORIZATION; CONTRAVENTION
Subject to obtaining the Approvals referred to in Section 4.3, the
execution and delivery by the Company 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 amalgamation or
certificate of amalgamation 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 of its properties may be bound or affected, or (C) any agreement,
indenture or other instrument to which the Company is a party or by which the
Company or its 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.
4.3 APPROVALS
Except with respect to the approvals referenced in Sections 3.2(c)
and 3.2(m), the approval of The Alberta Stock Exchange, the approval of the
shareholders of the Company referenced to in Section 3.3(e) and the approval of
the Director of the Ontario Securities Commission under Section 20.9 of the
Ontario Securities Commission Policy 5.2, no Approval of any Governmental Body
or other person is required or advisable on the part of the Company for (1) the
due execution and delivery by the Company of any Transaction Document to which
it is or may become a party, (2) the conclusion of the Transactions, (3) the
performance by the Company of its obligations under each Transaction Document to
which it is or may become a party with respect to the Transactions and (4) the
exercise by the Purchaser of its rights and remedies under each Transaction
Document with respect to the Transactions.
4.4 BINDING EFFECT
Each Transaction Document to which the Company is or may become a
party is, or when executed and delivered in accordance with this Agreement will
be, a legally valid and binding obligation of the Company, 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.
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4.5 FINANCIAL INFORMATION
(a) The consolidated balance sheet of the Company and its Subsidiaries
as of December 31, 1994 and the related consolidated statements of
income and retained earnings and cash flows for the fiscal year then
ended, reported on by KPMG Peat Marwick Thorne and contained in the
Company's 1994 Annual Report and the consolidated balance sheet of
the Company as of June 30, 1995 and the related consolidated
statements of income and retained earnings and cash flow, a true and
complete copy of each of which has been delivered to the Purchaser,
present fairly in all material respects the consolidated financial
position of the Company as of their respective dates and their
consolidated results of operations and cash flows for the periods
then ended, in accordance with GAAP applied on a consistent basis
except as described in the footnotes to the financial statements
included in such financial statements or as disclosed in writing to
the Purchaser, which writing makes reference to this Agreement.
(b) The Company has made available to the Purchaser copies of each
management letter delivered to the Company or any Subsidiary by KPMG
Peat Marwick Thorne 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 Subsidiaries during the
three years ended December 31, 1994 or thereafter, and to the
knowledge of the Company, has made available for inspection all
reports and all 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 for Taxes has not
been finally determined or barred by applicable statutes of
limitation.
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 June 30, 1995, there has been no
material adverse change in the business, properties, operations,
prospects or condition (financial or otherwise) of the Company,
except 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 June 30, 1995, the Company has not 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 and except
as previously disclosed to the Purchaser in writing, which writing
makes reference to this Agreement:
(1) transferred any of its assets except in each case for fair
consideration and in the ordinary course of business; or
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(2) 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) 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) 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 $50,000 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 $50,000
individually or in the aggregate by condemnation or eminent
domain; or
(6) made any loan to or entered into any transaction with any of
its shareholders having beneficial ownership of 5% or more of
the common shares of the Company then issued and outstanding,
or any of its 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 the Company except with respect to Permitted
Issuances; or
(9) 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 to any Company Employee Plan; or
(10) 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 in preparing the
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financial statements of the Company that would materially
impact the financial disclosure.
4.7 TAXES
(a) The Company 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) Income tax returns of the Company and its Subsidiaries filed
pursuant to the INCOME TAX ACT (Canada) have been assessed through
the year ended December 31, 1994. The Company knows of no basis
for 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. The Company is not a
party to any Action by any Governmental Body and no claim has been
asserted, threatened or proposed against it for assessment or
collection of any Taxes. The Company has not executed or filed with
Revenue Canada or any other taxing authority any agreement extending
the period of assessment or collection of any Taxes other than a
waiver granted to Alberta Treasury in respect of the year ended
December 31, 1990 which matter has been settled and will be
withdrawn.
(c) All Taxes that the Company 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
the Company 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 is subject to any special assessment,
the liability with respect to which, individually or in the
aggregate, could have a Material Adverse Effect. The Company has
no knowledge or reason to know of any proposal for any such
assessment.
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 the Company, threatened against the
Company that (1) involves any of the
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Transactions or (2) individually or in the aggregate, if determined
adversely to it, could result in a liability to it 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 the Company,
threatened against the Company, or any other person that involves
any of the Transactions or any property owned, leased, licensed or
used by the Company that, individually or in the aggregate, if
determined adversely to it, could have a Material Adverse Effect.
4.9 COMPLIANCE WITH LAWS
The Company is not in, and has not 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.
4.10 LICENSES
(a) To the knowledge of the Company, the Company is the registered
holder of each License that is required to be held by the Company 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. There is no Action pending or,
to the knowledge of the Company, threatened against the Company that
could result in the revocation, termination, suspension or material
and adverse modification of any such License. The Company has no
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 under any such License.
(c) To the knowledge of the Company, the Company 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) To the knowledge of the Company, the Company 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
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of all operating agreements relating to its business,
non-compliance with which could have a Material Adverse Effect.
4.11 EMPLOYEE MATTERS
(a) EMPLOYEES AND EMPLOYEE PLANS
(1) The Company has previously disclosed to the Purchaser in
writing, which writing references this Agreement, a correct
and complete list of:
(A) all employees of the Company and all consultants
retained by the Company including in each case the terms
of their employment or retainer and details of all
written or oral agreements with such employees or
consultants. No employees of the Company are subject to
any union or collective bargaining agreements; and
(B) all Employee Plans. The Company has made available to
the Purchaser true and complete copies of its Employee
Plans and all related summary descriptions, including,
without limitation, copies of any employee handbooks
listing or describing any of its Employee Plans and
summary descriptions of any of its Employee Plans not
otherwise in writing.
(2) Except for any failure or default that could not have a
Material Adverse Effect, the Company has fulfilled or has
taken all actions necessary to enable it to fulfil when due
all of its obligations under each of its Employee Plans 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 Employee
Plan.
(b) EMPLOYMENT AND LABOUR RELATIONS. To the knowledge of the Company,
(1) the Company has substantially complied with its obligations
related to, and is not in default under, any material written
or oral employment agreements and any written personnel
policies to which the Company is a party or by which the
Company is bound;
(2) the Company is in compliance with all applicable laws
respecting employment and employment practices, terms and
conditions of employment and wages and hours, and is not
engaged in any unfair labour practices and there are no
outstanding or threatened claims by or on behalf of any
employees or former employees relating to their employment or
length of employment.
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4.12 SUBSIDIARIES
The Company has no Subsidiaries or, except as contemplated herein,
any agreements to acquire any Subsidiaries.
4.13 PROPERTY
(a) The Company 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 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 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. The
right, title and interest of the Company in and to each of those
properties is free and clear of all Liens other than Permitted
Liens.
(c) To the knowledge of the Company, the Company has Good Title to such
portion of the Oil and Gas Interests included or reflected in the
engineering reports described in Section 4.14(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).
4.14 OIL AND GAS INTERESTS
(a) The Company has furnished or made available to the Purchaser a copy
of the reports prepared by Fekete Associates Inc. (the "INDEPENDENT
ENGINEERS"), dated as of December 31, 1994 and June 30, 1995 setting
forth the estimated future reserves and income attributable to the
Oil and Gas Interests of the Company.
(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 to the
Independent Engineers in preparing the reports referred to in
Section 4.14(a), were consistent in all material respects with, or
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were provided without adjustment in the form available on the
internal records of the Company.
(c) Since the acquisition of each Oil and Gas Interest by the Company,
(i) with respect to each Oil and Gas Interest operated by the
Company, 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, the Company 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 are in full force and effect and, with respect to
all Oil and Gas Interests of the Company, the Company 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, 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) the Company is not 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;
(3) except for amounts held in suspense in accordance with prudent
industry practice, the Company 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 of the Company;
(4) the Company is being paid, in all material respects, its
percentage of the working or royalty interests included in its
Oil and Gas Interests, without suspense and without indemnity
other than those customarily found in the oil and gas
industry;
(5) the Company 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 Contracts and is fully qualified to
own and hold its Oil and Gas Interests;
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(6) no other party to a material Contract to which the Company 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.
(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, the
Company:
(1) 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 its
Oil and Gas Interests at some future time without then or
thereafter receiving full payment therefor; or
(2) has not 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) To the knowledge of the Company:
(1) all of the producing wells located on lands included in any
Oil and Gas Interests of the Company 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 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 4.14(a), no well located on lands included in
any Oil and Gas Interests of the Company 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.
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(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 any federal or provincial Governmental Body in Canada, in
each case with respect the assignments by the Company of an
interest in any such federal or provincial leases to any
party; and
(2) the Company 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
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
more production of gas than the amount to which such person is
entitled and the Company is not subject to any material "make up"
deliveries of gas out of its proportionate share of production.
4.15 EQUIPMENT
(a) Except with respect to Equipment in which the Company has an
interest by virtue of the ownership of a non-operating interest in
an Oil and Gas Interest, the Company has control of Equipment in
which the Company has an interest, the failure to have control of
which, individually or in the aggregate, could have a Material
Adverse Effect.
(b) To the knowledge of the Company, the Equipment and other personal
property of the Company, 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 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, 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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4.16 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 has
an interest (other than month to month leases), 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 has an interest has, to the
knowledge of the Company with respect to parties other than the
Company, been duly authorized, executed and delivered by all parties
to such Lease, is in full force and effect and constitutes a legal,
valid and binding obligation 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 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 modify any rights of, or accelerate
or increase any obligation of, the Company under any such Lease.
4.17 SECURITIES
Except for the agreement to acquire Forest Shares and the Number
Company Shares under this Agreement, the Company does not hold any Investment in
any other person.
4.18 PROPRIETARY RIGHTS
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 has an
interest. 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 under any such Proprietary Right. The Company
has not 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.
4.19 INSURANCE
The Company 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 are in full force and effect. The Company
maintains insurance with reputable insurance companies in such
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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 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 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 and none of the Company is in default in any material respect under
any of the policies. The Company has no 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
which might result in a material increase in those contributions.
4.20 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 $250,000 in respect of which the Company
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; and
(d) all pre-paid production contracts, including details of the amount
of money or hydrocarbons recoverable thereunder.
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
with respect to any such Debt or pre-paid production contract.
4.21 NO DEFAULT
Except as previously disclosed to the Purchaser in writing, which
writing makes reference to this Agreement, the Company is not in default in
respect of any obligation under any agreement, indenture, purchase agreement,
Guarantee, Capitalized Lease, Investment or pre-paid production contract
referred to in Section 4.20(d), which default either alone or together
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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 thereunder.
4.22 CAPITALIZATION
(a) The authorized capital stock of the Company consists of an unlimited
number of Common Shares and unlimited number of preferred shares.
(b) As of September 28, 1995, there were (1) 41,575,581 Common Shares
and no preferred shares issued and outstanding, (2) 3,717,000 Common
Shares reserved for issuance upon exercise of outstanding stock
options issued by the Company to current and former employees of the
Company and its Subsidiaries (the "EMPLOYEE OPTIONS") (of which
1,350,000 shares with an exercise price of $0.15 per share and of
which 150,000 shares with an exercise price of $0.34 per share,
150,000 shares with an exercise price of $0.35 per share,
960,000 shares with an exercise price of $0.40 per share, 300,000
shares with an exercise price of $0.38 per share, 150,000 shares
with an exercise price of $0.50 per share, and 657,000 shares with
an exercise price of $0.48 per share, are exercisable),
(3) 3,900,000 Common Shares (the "Syndicated Loan Options") reserved
for issuance upon exercise of options granted pursuant to the terms
of a Syndicated Loan Agreement referred to in Note 6 to the
financial statements of the Company for the year ended December 31,
1994, referred to in Section 4.5, (4) 562,000 Common Shares (the
"Term Loan Options") reserved for issuance upon exercise of options
granted pursuant to the Term Loan Agreement referred to in Note 6 to
the financial statements of the Company for the year ended
December 31, 1994 referred to in Section 4.5, exercisable at $0.75
per share; (5) 500,000 Common Shares reserved for issuance pursuant
to Warrants granted to Enron Capital & Trade Resources Canada Corp.
exercisable at a price of $0.65 per share, (6) 500,000 Common Shares
reserved for issuance to each of National Bank of Canada and NBD
Bancorp Inc. exercisable at $0.50 per share.
(c) Except as set forth in Section 4.22(b) and except as provided in the
Transaction Documents, no Equity Securities of the Company are
issued, reserved for issuance or outstanding.
(d) All outstanding Common Shares of the Company are, and all Common
Shares which may be issued pursuant to the exercise of the options
referred to in Section 4.22(b) or pursuant to the terms of this
Agreement, as the case may be, will be, when issued, duly
authorized, validly issued, fully paid and non-assessable and,
except as provided in the Transaction Documents, are not subject to
preemptive rights.
(e) Except as set out in Section 4.22(b) with respect to the outstanding
Common Shares, there are no outstanding bonds, debentures, notes or
other indebtedness
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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.
(f) Except for statutory hold provisions under Applicable Securities
Laws and as contemplated herein, there is no agreement or
arrangement restricting the voting or transfer of the Equity
Securities of the Company;
(g) Except as set out in Section 4.22(b) 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 is a party or by which it is bound
obligating the Company to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares or other Equity
Securities of the Company or obligating the Company to issue, grant,
extend or enter into any such security, option, warrant, call,
right, commitment, agreement, arrangement or undertaking except for
an obligation to issue 25,000 options to two employees at a price of
$0.40 per share on receipt of regulatory approval.
(h) Except in respect of the Transactions, there are no outstanding
contractual obligations, commitments, understandings or arrangements
of the Company to repurchase, redeem or otherwise acquire, require
or make any payment in respect of any shares of Equity Securities of
the Company.
(i) Except with respect to statutory restrictions of general application
and restrictions contained in documents referred to in Section 4.20,
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.
(j) Except as contemplated by the Prospectus Agreement, there are no
agreements or arrangements to which the Company is a party pursuant
to which the Company is or could be required to file a prospectus in
any jurisdiction to qualify shares of any person for distribution.
4.23 ENVIRONMENTAL MATTERS
(a) To the knowledge of the Company, the Company and 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, to the knowledge of the Company,
the Company 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,
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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 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
with respect to any generation, treatment, storage, recycling,
transportation, discharge or disposal, or any Environmental
Release of any Hazardous Materials generated by the Company
(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;
(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 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 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 except such as are or were (at the
time owned, operated or leased by the Company) 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 in violation of any
Environmental Laws.
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(2) there has not been any Environmental Release, recycling,
treatment, storage or disposal of Hazardous Material generated
by the Company 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;
(3) 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 Company or, to the knowledge
of the Company, by any operator of Oil and Gas Interests;
(4) no Liens have arisen under or pursuant to any Environmental
Laws on any site or facility owned, operated or leased by the
Company, 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, the Company is not
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;
(5) there have been no environmental investigations, studies,
audits, tests, reviews or other analyses conducted by or that
are in the possession of the Company in relation to any site
or facility now or previously owned, operated or leased by the
Company which have not been made available to the Purchaser;
(6) any Hazardous Material handled or dealt with in any way in
connection with the business, properties or operations of the
Company during the period the same have been under the control
of the Company 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;
(7) 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, 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;
(8) 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 based on alleged damage to health caused
by any Hazardous Material or by any sewage, waste or by-
product; and
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(9) during the five years ending on the date of this Agreement,
the Company has not 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 permitting any pollution of any ground water
aquifer, surface waters or other lakes, streams, rivers or
bodies of water in violation of Environmental Laws.
4.24 BOOKS AND RECORDS
(a) The records and books of account of the Company 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. The Company
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 the Company 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.
(c) The stock books and ledgers of the Company correctly record all
transfer and issuances of all capital stock of the Company and
contain all cancelled and unused stock certificates of the Company.
4.25 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"):
(a) agreements with investment bankers, brokers, finders, consultants
and advisers engaged by the Company with respect to the Transactions
or other transactions contemplating the recapitalization of the
Company, the purchase or sale by the Company of assets not in the
ordinary course of business or the issuance and sale by the Company
of any Equity Securities or Debt of the Company;
(b) agreements with any shareholder having beneficial ownership of 5% or
more of Common Shares then issued and outstanding, director or
officer of the Company and all shareholders' agreements and voting
trusts; and
(c) agreements not made in the ordinary course of business and which are
materially adverse to the business of the Company.
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4.26 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 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.
4.27 SECURITIES FILINGS
The Company is a reporting issuer under the laws of the provinces of
Alberta, Ontario and British Columbia, its shares are listed on The Alberta
Stock Exchange, and the Company has filed with The Alberta Stock Exchange and
the applicable Canadian securities authorities all reports, schedules, forms,
statements and other documents required by the Alberta Stock Exchange and the
securities laws of the provinces of Alberta, Ontario and British Columbia (the
"APPLICABLE SECURITIES LAWS") 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 "SECURITIES DOCUMENTS"). The
Company has delivered or made available to the Purchaser all Securities
Documents. As of their respective dates, except to the extent revised or
superseded by a subsequent filing with The Alberta Stock Exchange or pursuant to
the Applicable Securities Laws, the Securities Documents complied in all
material respects with the requirements of The Alberta Stock Exchange and the
Applicable Securities Laws, as the case may be, and none of the Securities
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.
4.28 REQUIRED VOTE
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 is the affirmative vote of a majority of the Common Shares voted
(other than those who are restricted from voting under policies or approvals of
The Alberta Stock Exchange or Applicable Securities Law) in respect of the
issuance of shares and other securities by the Company and the other affirmative
vote of 66 2/3% of the Common Shares voted in respect of the amendment to the
articles to create the Non-Voting Shares.
4.29 NO MERGER AGREEMENTS
The Company has not 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 the Company with respect to a merger or
consolidation with the Company, an
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acquisition of any Equity Securities of the Company or any other acquisition
of a substantial amount of the assets of the Company.
4.30 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 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, 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.
4.31 CONTINUING REPRESENTATIONS AND WARRANTIES
Each of the representations and warranties made with respect to the
Company 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 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.
4.32 RESTRICTED SECURITIES
The Company agrees that it will not re-offer, resell, pledge,
hypothecate or otherwise transfer or dispose of any Forest Shares issuable
pursuant to this Agreement, or securities that may be received in replacement
thereof or in exchange therefor, except pursuant to an effective registration
statement under the United States Securities Act of 1933, as amended (the "1933
Act"), or in a transaction which, in the opinion of counsel to the Purchaser, is
exempt from such registration. The Company acknowledges that the Forest Shares
issuable pursuant to this Agreement will be "restricted securities" within the
meaning of Rule 144(a)(3) under the 1933 Act, and represents that it is
acquiring the Forest Shares for its own account and not with a view to, or for
resale in connection with, any distribution or other disposition of the
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Forest Shares apart form a distribution or disposition pursuant to the
Registration Rights Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF THE PURCHASER
The Purchaser represents and warrants as follows:
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 New York, (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.
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, 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.
5.3 APPROVALS
Except with respect to the approvals referenced in Sections 3.2(b)
and 3.2(m), 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
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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.
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.
5.5 FINANCIAL INFORMATION
The consolidated balance sheet of the Purchaser and its Subsidiaries
as of December 31, 1994 and the related consolidated statements of income and
retained earnings and cash flows for the fiscal year then ended, reported on by
KPMG Peat Marwick LLP and contained in the Company's Annual Report on Form 10-K
for the year ended December 31, 1994 and the consolidated balance sheet of the
Purchaser as of June 30, 1995 and the related consolidated statements of income
and retained earnings and cash flow, a true and complete copy of each of which
has been delivered to the Company, present fairly in all material respects the
consolidated financial position of the Purchaser as of their respective dates
and their consolidated results of operations and cash flows for the periods then
ended, in accordance with GAAP applied on a consistent basis except as described
in the footnotes to the financial statements included in such financial
statements or as disclosed in writing to the Company, which writing makes
reference to this Agreement.
5.6 ABSENCE OF CERTAIN CHANGES OR EVENTS
Except as disclosed in writing to the Company, which writing makes
reference to this Agreement, since June 30, 1995, there has been no material
adverse change in the business, properties, operations, prospects or condition
(financial or otherwise) of the Purchaser, except 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.
5.7 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
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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.
5.8 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.
5.9 CAPITALIZATION
(a) The authorized capital stock of the Purchaser consists of
(1) 200,000,000 shares of Common Stock, par value U.S. $.10 per
share ("COMMON STOCK"), and (2) 10,000,000 shares of preferred
stock, par value U.S. $.01 per share, consisting of (A) a class of
7,350,000 shares of preferred stock (the "SENIOR PREFERRED STOCK"),
of which up to (x) 5,444,425 shares may be issued in a series
designated as "$.75 Convertible Preferred Stock" (the "$.75
CONVERTIBLE PREFERRED STOCK") and (y) 620,000 are 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 September 8, 1995, there were (1) 47,735,086 shares of Common
Stock issued and outstanding, (2) 2,880,173 shares of $.75
Convertible Preferred Stock issued and outstanding, (3) 620,000
shares of Second Series Convertible Preferred Stock (as defined in
the Anschutz Agreement) issued and outstanding, (4) 1,244,715
warrants issued and outstanding, which warrants were issued under
the Warrant Agreement dated as of December 31, 1991, between the
Purchaser and Chemical Mellon Shareholder Services, as Warrant
Agent, successor to The Chase Manhattan Bank (National Association),
each of which, upon exercise, entitles the holder thereof to
purchase one share of Common Shock at a price of U.S. $3.00 per
share (the "EXISTING WARRANTS"), (5) 19,444,444 Tranche A Warrants
(as defined in the Anschutz Agreement) issued and outstanding, each
of which, upon exercise, entitles the holder thereof to purchase one
share of Common Stock at an exercise price of U.S. $2.10 per share
(the "TRANCHE A WARRANTS"), and (6) 11,250,000 Tranche B Warrants
(as defined in the Anschutz Agreement) issued and outstanding, each
of which, upon exercise, entitles the holder thereof to purchase one
share of Common Stock at a price of U.S. $2.00 per share (the
"TRANCHE B WARRANTS").
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(c) As of September 8, 1995, there were (1) 3,059,000 shares of Common
Stock reserved for issuance upon exercise of outstanding stock
options granted by the Purchaser to current and former employees of
the Purchaser and its Subsidiaries (the "PURCHASER EMPLOYEE OPTIONS"
(of which 1,374,000 options with an exercise price of U.S. $3.00 per
share and of which 1,685,000 options with an exercise price of
U.S. $5.00 per share, are exercisable), (2) 10,080,606 shares of
Common Stock reserved for issuance upon conversion of the $.75
Convertible Preferred Stock, (3) 1,244,715 shares of Common Stock
reserved for issuance upon exercise of the Existing Warrants,
(4) 19,444,444 shares of Common Stock reserved for issuance upon
exercise of the Tranche A Warrants, (5) 11,250,000 shares of Common
Stock reserved for issuance upon exercise of the Tranche B Warrants,
(6) 6,200,000 shares of Common Stock reserved for issuance as
Purchaser Preferred Conversion Shares (as defined in the Anschutz
Agreement), (7) 569,117 shares of Common Stock reserved for issuance
as monthly contributions to the Purchaser's Retirement Savings Plan,
and (8) 477,351 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 Purchaser and
Mellon Securities Trust Company, as Rights Agent (the "RIGHTS
AGREEMENT"), none of which are issued or outstanding.
(d) Except as set forth above and except as contemplated by the Anschutz
Transaction Documents and the Transaction Documents, no Equity
Securities of the Purchaser are issued, reserved for issuance or
outstanding.
(e) All outstanding shares of capital stock of the Purchaser are, and
all shares which may be issued pursuant to the exercise of the
Purchaser Employee Options or the Existing Warrants, the conversion
of the $.75 Convertible Preferred Stock, exercise of the Rights or
the Purchaser Preferred Shares or pursuant to the terms of this
Agreement, the Tranche A Warrants or the Tranche B Warrants, as the
case may be, will be, when issued, duly authorized, validly issued,
fully paid and non-assessable and, except as provided in the
Anschutz Transaction Documents and the Transaction Documents, are
not subject to preemptive rights.
(f) Except with respect to the outstanding shares of Common Stock, the
Purchaser Employee Options, the Existing Warrants, the $.75
Convertible Preferred Stock, the Rights, the Anschutz Transaction
Documents and the Transaction Documents, there are no outstanding
bonds, debentures, notes or other indebtedness or other securities
of the Purchaser 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 Purchaser may vote.
(g) Except with respect to the Purchaser Employee Options, the Existing
Warrants, the $.75 Convertible Preferred Stock, the Rights, the
Anschutz Transaction
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Documents and the Transaction Documents, there is no agreement
or arrangement restricting the voting or transfer of the Equity
Securities of the Purchaser;
(h) Except with respect to the Purchaser Employee Options, the Existing
Warrants, the $.75 Convertible Preferred Stock, the Rights, the
Anschutz Transaction Documents and this Agreement, there are no
outstanding securities, options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind to
which the Purchaser is a party or by which it is bound obligating
the Purchaser to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock or other
Equity Securities of the Purchaser or obligating the Purchaser 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
Purchaser under this Agreement, there are no outstanding contractual
obligations, commitments, understandings or arrangements of the
Purchaser to repurchase, redeem or otherwise acquire, require or
make any payment in respect of any shares of Equity Securities of
the Purchaser.
(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 (all as defined in the Anschutz
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 Purchaser.
(k) Except as contemplated by the Registration Rights Agreements (as
defined in the Anschutz Agreement), and as contemplated by this
Agreement there are no agreements or arrangements to which the
Purchaser is a party pursuant to which the Purchaser is or could be
required to register shares of Common Stock or other securities
under the Securities Act.
5.10 SUBSIDIARIES
Except as disclosed in writing to the Company, which writing
references this Agreement, the Purchaser has no Subsidiaries.
5.11 MISSTATEMENTS
Except to the extent revised or superseded by a subsequent
certificate, schedule or report furnished to the Company, no information,
certificate, schedule or report furnished by the Purchaser to the Company with
respect to the Purchaser 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
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state a material fact necessary to make the statement contained therein, in
the light of the circumstances under which it was made, not misleading.
5.12 SEC DOCUMENTS
The Purchaser has filed with the Securities and Exchange Commission
all reports, schedules, forms, statements and other documents required by the
Securities Exchange Act of 1934, as amended, (the "EXCHANGE ACT") to be filed by
the Purchaser 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 Purchaser has delivered or made available to
the Company all SEC Documents. As of their respective dates, except to the
extent revised or superseded by a subsequent filing with the Securities or
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 Purchaser and the 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.
5.13 REPORTING ISSUER
The Purchaser is a reporting issuer under the SECURITIES ACT
(Alberta) and its common shares are listed on Nasdaq National Market and The
Alberta Stock Exchange and the Purchaser has filed with The Alberta Stock
Exchange, the Nasdaq National Market and the Alberta Securities Commission all
reports, schedules, forms, statements and other documents required by The
Alberta Stock Exchange, the Nasdaq National Market and the SECURITIES ACT
(Alberta) to be filed by the Purchaser since January 1, 1993.
5.14 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.
5.15 BOOKS AND RECORDS
(a) The records and books of account of the Purchaser 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 5.5. The
Purchaser has accounting controls sufficient to insure that its
transactions are (1) executed in accordance with management's
general or specific
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authorization and (2) recorded in conformity with GAAP so as to
maintain accountability for assets.
(b) The minute books of the Purchaser contain accurate records of all
meetings and accurately reflect all corporate action of the
shareholders and the board of directors (including committees) of
the Purchaser.
(c) The stock books and ledgers of the Purchaser correctly record all
transfer and issuances of all capital stock of the Purchaser and
contain all cancelled and unused stock certificates of the
Purchaser.
5.16 REPRESENTATIONS RELATING TO NUMBER COMPANY
(a) The Purchaser is the legal, record and beneficial owner of the
Number Company Shares free and clear of any Lien, except for the
Liens created by this Agreement;
(b) The Number Company Shares are duly authorized, validly issued, fully
paid and non-assessable and are owned beneficially and of record by
the Purchaser. The Number Company Shares constitute all of the
issued and outstanding capital stock of the Number Company. The
Number Company does not have outstanding shares of its capital 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;
(c) There is no agreement or arrangement restricting the voting or
transfer of the Number Company Shares except as provided in this
Agreement;
(d) There is no agreement or arrangements providing for the issuance of
any shares of capital stock or other securities of the Number
Company;
(e) There are no legal, contractual or other restrictions on the payment
of dividends on any shares of the capital stock or securities of the
Number Company except for restrictions imposed by statutory
restrictions of general application;
(f) 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 Number Company Shares;
(g) There is no Action against the Purchaser that involves or affects or
may involve or affect any of the Number Company Shares;
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(h) The Number Company has no assets other than the Archean Shares and
promissory notes of Archean (which will be removed prior to the
Second Closing) and will at the Second Closing Date have no
liabilities.
5.17 REPRESENTATIONS RELATING TO ARCHEAN SHARES
(a) The Archean Shares are to the knowledge of the Purchaser duly
authorized, validly issued, fully paid and non-assessable and are
owned beneficially and of record by the Number Company free and
clear of any Lien. The Archean Shares constitute all of the issued
and outstanding Class A Preferred Shares and Class B Preferred
Shares of Archean;
(b) To the knowledge of the Purchaser, there is no agreement or
arrangement restricting the voting or transfer of the Archean Shares
except as provided in the Archean Shareholders Agreement;
(c) To the knowledge of the Purchaser, there are no legal, contractual
or other restrictions on the payment of dividends on any shares of
the capital stock or securities of Archean, except for restrictions
imposed by statutory restrictions of general application and the
Articles of Incorporation of Archean as amended through June 22,
1994;
(d) To the knowledge of the Purchaser, 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 Archean
Shares except as set forth in the Articles of Incorporation of
Archean, as amended through June 22, 1994; and
(e) There is no Action against the Purchaser or the Number Company that
involves or affects or may involve or affect any of the Archean
Shares.
5.18 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 and except that the Purchaser will
prepare and deliver to the Company such updates or other revisions of the
written disclosures referred to in this Article V as have been delivered by the
Purchaser to the Company 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 Company of
information pursuant to Section 6.3 or otherwise on or before a Closing Date,
shall not limit the right of the Company 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 Purchaser made in the Transaction Documents
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(without regard to such updates or other revisions) and to receive an
unqualified certificate with respect to the same.
5.19 RESTRICTED SECURITIES
The Purchaser agrees that it will not re-offer, resell, pledge,
hypothecate or otherwise transfer or dispose of any Common Shares, Non-Voting
common Shares, Series A Preferred Shares Series B Preferred Shares or Warrants
issuable pursuant to this Agreement (collectively the "Saxon Securities"), or
securities that may be received in replacement thereof or in exchange therefor,
except pursuant to an effective registration statement under the United States
Securities Act of 1933, as amended (the "1933 Act"), or in a transaction which,
in the opinion of counsel to the Company, is exempt from such registration. The
Purchaser acknowledges that the Saxon Securities will be "restricted securities"
within the meaning of Rule 144(a)(3) under the 1933 Act, and represents that it
is acquiring the Saxon Securities for investment, for its own account and not
with a view to, or for resale in connection with, any distribution or other
disposition of the Saxon Securities.
ARTICLE VI
COVENANTS
6.1 AFFIRMATIVE COVENANTS OF THE COMPANY
(a) PRIOR TO THE SECOND CLOSING DATE
The Company agrees that prior to the SECOND Closing Date, the
Company shall do the following:
(1) CONSENT OF CERTAIN EMPLOYEES. The Company shall obtain from
each employee with whom the Company has entered into a
severance agreement a waiver of the obligation of the Company
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 Second Closing Date,
of beneficial ownership or the right to acquire beneficial
ownership of Equity Securities of the Company.
(2) SHAREHOLDERS MEETING; PREPARATION OF PROXY CIRCULAR.
(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(a)(2)(D), hold a meeting of its
shareholders (including any adjournments thereof,
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the "SHAREHOLDERS MEETING") for the purpose, among
other things, of considering and taking action upon the
Transaction Documents and the Transactions, and prepare
a proxy circular (such proxy circular including the form
of proxy and all such other materials distributed in
connection therewith, as amended or supplemented from
time to time, the "PROXY CIRCULAR"), and cause the Proxy
Circular to be mailed to its shareholders at the
earliest practicable time following the execution and
delivery of this Agreement and (ii) to solicit proxies
in favour of the Transactions and otherwise obtain the
approval by its shareholders of the Transactions and
(iii) cause the Proxy Circular and the distribution
thereof to comply in all material respects with policies
of The Alberta Stock Exchange and Applicable Securities
Laws and ensure that the Proxy Circular will not, at the
date the Proxy Circular (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. The Company shall
also seek approval to the consolidation of the Common
Shares of the Company on a basis agreed between the
Company and the Purchaser, provided however, that
failure to obtain approval to such matter shall not be a
condition precedent to the Second Closing.
(B) Subject to the Company's right pursuant to clause (z) of
the proviso to Section 6.1(a)(3) to withdraw or modify
the Recommendations, the Company shall include in the
Proxy Statement the recommendation of its Board of
Directors that holders of Common Shares vote in favour
of the approval of the Transaction Documents and the
Transactions.
(C) Notwithstanding the other provisions of this
Section 6.1(a), the Company agrees that its obligations
pursuant to Section 6.1(a)(2)(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 favour
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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
Circular 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.
(3) NO SOLICITATION. The Company shall not, nor shall the Company
authorize or permit any of its officers, directors or
employees or any financial advisor, legal advisers, 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
the Company (other than the Transactions), (ii) any
acquisition of a substantial amount of assets of the
Company, (iii) a merger or amalgamation of the Company
or (iv) any take over bid or issuer bid or tender offer
or recapitalization, liquidation, dissolution or similar
transaction involving the Company (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
business, properties, operations, prospects or
conditions (financial or otherwise) of the Company 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;
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PROVIDED, HOWEVER, that the foregoing clauses (i), (ii) and
(iii) of Section 6.1(a)(3)(A) and 6.1(a)(3)(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 which includes a
standstill clause approved by the Purchaser) concerning the
Company and the business, properties, operations, prospects or
conditions (financial or otherwise) of the Company,
(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 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(a)(3)
with respect to the Transaction Proposal.
(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 to
preserve the goodwill of customers, suppliers and others
having business relations with the Company.
(7) MAINTENANCE OF INSURANCE. Maintain insurance such that the
representations and warranties stated in Section 4.19 shall at
all times remain true.
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(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, 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, or the ability of the Company 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:
(A) ADVERSE EVENTS. Promptly after the occurrence, or
failure to occur, of any such event, information with
respect to any event (i) which could have a Material
Adverse Effect, (ii) which, if known as of the date of
this Agreement, would have been required to be disclosed
to the Purchaser or (iii) which would be likely to cause
any representation or warranty contained in any
Transaction Document with respect to the Company to be
untrue or inaccurate in any material respect at any time
from the date of this Agreement to the Closing Date;
(B) MONTHLY FINANCIAL STATEMENTS. As soon as available, and
in any event within 60 days after the end of each month,
the consolidated balance sheet of the Company as of the
end of the month and the related consolidated statements
of income and retained earnings and cash flows for the
portion of the fiscal year of the Company ended with the
last day of the month, all in reasonable detail;
(C) QUARTERLY FINANCIAL STATEMENTS. As soon as available
and in any event within 60 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
as of the end of the quarter and the related
consolidated statements of income, shareholders' equity
and cash flows 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
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and period in the previous fiscal year and certified by
the chief financial officer of the Company (subject to
year-end adjustments);
(D) NOTICE OF LITIGATION. Promptly after the commencement
of each such matter, notice of all Actions affecting the
Company that, if adversely determined, could materially
and adversely affect the business, properties,
operations, prospects or condition (financial or
otherwise) of the Company, or the ability of the Company
to perform its obligations under any Transaction
Document to which it is or may become a party;
(E) ACCESS TO INFORMATION. Afford to the Purchaser, and to
the officers, employees, financial advisors, legal
advisers, 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 Purchaser and its representatives
such information with respect to the business,
properties, operations, prospects or conditions
(financial or otherwise) of the Company as they may from
time to time reasonably request; and to the extent
reasonably requested by the Purchaser, cause its
employees, auditors 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;
(F) PROXY CIRCULARS, ETC. Promptly after the sending or
filing of each such document, copies of all proxy
circulars, financial statements and reports which the
Company sends to its shareholders, and copies of all
regular, periodic and special reports and all statements
that the Company files with The Alberta Stock Exchange
or under Applicable Securities Laws;
(G) GENERAL INFORMATION. Such other information respecting
the condition or operations, financial or otherwise, of
the Company as the Purchaser may from time to time
reasonably request; and
(H) LISTING OF SHARES. Take all action required, if any, to
cause the Common Shares issuable under this Agreement or
any Transaction Document to be listed and posted for
trading on The Alberta Stock Exchange.
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6.2 NEGATIVE COVENANTS OF THE COMPANY
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 do any of the following or 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
except as contemplated by the Transaction Documents.
(b) CAPITALIZATION. Issue or enter into any agreement to issue any
shares of capital stock or other Equity Securities other than
Permitted Issuances.
(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
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 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 that
secure such Debt.
(e) PRE-PAID PRODUCTION CONTRACTS. Enter into any new arrangements for
pre-paid production contracts or amend or modify any existing
agreements relating to pre-paid production contracts.
(f) RESTRICTED PAYMENTS. Declare or make any Restricted Payment.
(g) INVESTMENTS. Make or acquire any Investment in any person.
(h) MERGERS, ETC. Merge or amalgamate 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.
(i) 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;
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(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.
(j) SALE AND LEASEBACK. Transfer any real or personal property to any
person and thereafter directly or indirectly lease back the same or
similar property.
(k) CAPITAL EXPENDITURES. Incur any Capital Expenditures other than
those disclosed in writing to the Purchaser by letter dated October
5, 1995 from Glen Tarrant to David Keyte.
(l) SALE OF ASSETS. Transfer any of its assets now owned or hereafter
acquired 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 (including for greater
certainty the sale of Swalwell assets for $2.2 million
(subject to usual adjustments) with an effective date of
October 1, 1995);
(3) assets transferred that are no longer used or useful in the
conduct of its business.
(m) CONFIDENTIAL INFORMATION. Except as otherwise expressly permitted
by the proviso to the first sentence of Section 6.1(a)(3) with
respect to a Transaction Proposal or pursuant to confidentiality
agreements with respect to the business, properties and operations
of the Company 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.
(n) 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
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favourable to it than it would obtain in a comparable arm's length
transaction with a person not an Affiliate.
(o) 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.
(p) COMPENSATION. Except as previously disclosed to the Purchaser in
writing, which writing makes reference to this Agreement, permit an
increase in the amount of accrued cash compensation of any executive
officer of the Company (including base salaries and bonuses of all
types, whether paid or accrued) in excess of that accruing as of
June 30, 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 the
Company 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 the Company;
(q) RECOMMENDATIONS. Subject to clause (z) of the proviso to
Section 6.1(a)(3), withdraw or modify the Recommendations.
(r) TAXES. Make any tax election or settle or compromise any income tax
liability.
(s) 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 the Company), individually in an amount in excess of
$50,000 and in the aggregate in an amount in excess of $100,000,
other than in consultation and cooperation with Purchaser, and, with
respect to any such settlement, with the prior written consent of
Purchaser.
(t) DELISTING. Take any action which would cause any securities of the
Company currently listed on The Alberta Stock Exchange to no longer
be listed on such exchange.
(u) 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.
(v) OTHER MATERIAL CONTRACTS. Enter into any other contract that is
material to the Company including without limitation hedge contracts
and gas contracts with a term of more than six months.
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(w) PRICE LIMITATION ON SALE OF FOREST SHARES. Prior to the date of the
Shareholders Meeting, dispose of any Forest Shares purchased at the
First Closing at a price which is less than the greater of U.S.
$2.50 or U.S. $.125 below the closing price of Forest Shares on the
Nasdaq National Market on the trading day immediately preceding the
date of disposition.
6.3 COVENANTS OF THE PURCHASER
The Purchaser agrees that prior to the Second Closing Date the
Purchaser shall do the following:
(a) PROVIDE INFORMATION. The Purchaser shall furnish to the Company
promptly after the sending or filing of each such document, copies
of all proxy statements, financial statements and reports which the
Purchaser sends to its shareholders, and copies of all regular,
periodic and special reports and all registration statements that
the Purchaser files with the Securities and Exchange Commission or
any Governmental Body which may be substituted in its place or with
the Nasdaq National Market.
(b) ACCESS TO INFORMATION. The Purchaser shall afford to the Company,
and to the officers, employees, financial advisors, legal advisers,
accountants and other representatives of the Company, reasonable
access during normal business hours to all its properties, books,
contracts, commitments, personnel and records; furnish as promptly
as practicable to the Company and its representatives such
information with respect to the business, properties, operations,
prospects or conditions (financial or otherwise) of the Purchaser as
they may from time to time reasonably request; and to the extent
reasonably requested by the Company, cause its employees, auditors
and other representatives to, provide information regarding the
Purchaser to, and otherwise cooperate with, the Company so as to
enable the Company to account for its investment in the Purchaser
and prepare financial statements in accordance with GAAP;
(c) COMPLIANCE WITH LAWS. The Purchaser shall 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, operations, prospects or conditions (financial
or otherwise) of the Purchaser, or the ability of the Purchaser to
perform its obligations under any Transaction Document to which it
is or may become a party.
(d) QUARTERLY FINANCIAL STATEMENTS. The Purchaser shall furnish to the
Company, as soon as available and in any event within 60 days after
the end of each of the first three quarters of each fiscal year of
the Purchaser, the consolidated balance sheet of the Purchaser as of
the quarter and the related consolidated statements of income,
shareholders' equity and cash flows for the portion of the fiscal
year ended with the last day of the quarter, all in reasonable
detail and stating in
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comparative form the respective consolidated figures for the
corresponding date and period in the previous fiscal year.
(e) LISTING OF FOREST SHARES. The Purchaser shall take all action
required, if any, to cause the Forest Shares issuable under this
Agreement to be qualified for inclusion in the Nasdaq National
Market and shall give notice as required, in any, to the Nasdaq
National Market with respect to the Transaction Documents and the
Transactions.
(f) DELISTING. The Purchaser shall not take any action which would
cause any securities of the Purchaser listed on the Nasdaq National
Market to no longer be listed on such exchange.
ARTICLE VII
ADDITIONAL COVENANTS OF THE PARTIES
7.1 MUTUAL COVENANTS OF THE PARTIES
Each party shall do the following until the Closing and, with
respect to Section 7.1(g), indefinitely after the 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 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, 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 Purchaser
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 the other party hereto in doing all things necessary, proper or
advisable under applicable Regulations to ensure that the
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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) 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 First or 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.
(e) 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 applicable stock exchanges 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.
(f) CONFIDENTIALITY. The obligations of the Purchaser under
Confidentiality Agreements dated June 7 and June 9, 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,
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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.
(g) 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.
(h) SECTION 85 ELECTION. The Company and the Purchaser shall file an
election within the prescribed time and on the prescribed form under
Section 85 of the INCOME TAX ACT (Canada) with respect to the sale
of the Number Company Shares hereunder with an elected amount equal
to the adjusted cost base to the Purchaser of the Number Company
Shares.
ARTICLE VIII
TERMINATION
8.1 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 Section 1.2 and Articles VI and VII with respect to
the Second Closing Transactions 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 October 31,
1995 or with respect to the Second Closing by December 31,
1995 and (B) the Company shall have paid to
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the Purchaser all amounts then owed to the Purchaser pursuant
to Section 8.2, 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 with respect to the First Closing by October 31, 1995
or with respect to the Second Closing by December 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(a)(3) 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;
(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 8.2;
(8) the Purchaser, if there shall have occurred a Subsequent
Event; or
(9) the Purchaser, if the shareholders of the Company shall not
have approved the Transaction Documents and the Transactions
on or before December 31, 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 party.
(c) The termination of the obligations of the parties under this
Section 8.1 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.
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8.2 EXPENSES AND FEES
(a) EXPENSES. If (i) the First Closing has been completed or (ii) a
Subsequent Event shall occur after the date of this Agreement and on
or before the First Closing Date, then in either such event, all
Expenses incurred by the Purchaser in connection with the
Transaction Documents and the Transactions shall be paid by the
Company to a maximum of $300,000. Except as contemplated in clause
(ii), if the First Closing is not completed, each party will bear
its own Expenses. "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 but for greater certainty shall not
include listing fees payable by the Purchaser, costs of performing
the Purchaser's obligations under the Company Registration Rights
Agreement or any charges for the time of employees of the Purchaser
or The Anschutz Corporation.
(b) SUBSEQUENT EVENT FEE. If a Subsequent Event shall occur after the
date of this Agreement and on or before the date that is six months
after the First Closing Date, the Company shall pay $2.5 million to
the Purchaser promptly following the public announcement of such
Subsequent Event. If the Second Closing is completed no fees shall
be payable under this subsection.
(c) FEES FOR BROKERS AND FINDERS. Except with respect to Sayer
Securities Limited as contemplated by Section 3.2(d) and with
respect to Ernst & Young pursuant to an engagement letter dated May
30, 1995 as modified by a letter dated September 27, 1995, copies of
which have been provided to the Purchaser, the Company 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 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
Ernst & Young and Sayer Securities Limited the entire amount of the
fee, commission, expense reimbursement or other payment to which it
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 IX
INDEMNIFICATION
9.1 INDEMNIFICATION
(a) Subject to, and without limiting the effect of, any term or
provision of any Transaction Document that limits the Purchaser's or
the Company's recourse against the other in the event of a failure
by the other to perform a certain covenant or agreement specified
therein, and whether or not the Closing shall occur, each of the
Company and the Purchaser shall indemnify the other and its
controlling persons 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 or the Purchaser, as the case may
be, 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 VIII or otherwise;
(2) the Company shall indemnify the Purchaser for any untrue
statement of a material fact contained in the Proxy Circular,
other notification, or any materials filed by the Company with
The Alberta Stock Exchange or under Applicable Securities Laws
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 by the Purchaser or any other
Indemnified Person expressly for inclusion in the material in
question;
(3) the Purchaser shall indemnify the Company for any untrue
statement of a material fact contained in information
furnished in writing by the Purchaser to the Company or any
other Indemnified Person expressly for inclusion in the Proxy
Circular or failure to state a material fact required to make
any statement contained therein not misleading; or
(4) any other matter as to which the Company or the Purchaser in
other provisions of this Agreement or any other Transaction
Document has agreed to indemnify any of those persons.
Neither the Company nor the Purchaser shall have any obligation
under this Section to the other or any other person indemnified
under this Section with
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respect to any of the foregoing arising primarily out of the gross
negligence or wilful misconduct of the other 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 unfavourable 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.
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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 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
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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.
9.2 SECURITY FOR INDEMNIFICATION OBLIGATION
If any matter as to which the Purchaser or the Company, as the case
may be, or any other indemnified person shall have asserted a claim under this
Article or otherwise against an indemnifying person on or before either Closing
Date is pending or unresolved at the time any payment is due from the Purchaser
or the Company, as the case may be, under any Transaction Document, the
Purchaser or the Company, as the case may be, 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 or the Company, as the
case may be, 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.
9.3 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.
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ARTICLE X
MISCELLANEOUS
10.1 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, or (2) if given by any other means, when delivered to
the proper address and a written acknowledgement of delivery is received.
10.2 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, 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.
10.3 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.
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10.4 SUCCESSORS AND ASSIGNS
(a) Except for assignments by the Purchaser of its rights under this
agreement to one or more of its Subsidiaries or Affiliates, no party
to this Agreement may assign its rights under the Transaction
Documents. No such assignment by the Purchaser shall release the
Purchaser from its obligations 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.
(b) 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.
10.5 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 or 5.5.
10.6 GOVERNING LAW
Each Transaction Document shall be governed by and construed in
accordance with the internal laws of Alberta. 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.
10.7 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.
10.8 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.
10.9 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
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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.
10.10 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.
10.11 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 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 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.
10.12 EXCLUSIVE JURISDICTION
Each party (1) agrees that any Action with respect to any
Transaction Document shall be brought exclusively in the courts of the Province
of Alberta, (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.
10.13 NON-RECOURSE
No recourse under any of the Transaction Documents shall be had
against any controlling person 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
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Transaction Document or for any claim based on, in respect of or by reason of
such obligations or their creation.
IN WITNESS WHEREOF, the parties have executed and delivered this
Purchase Agreement as of the date first written above in Calgary, Alberta.
FOREST OIL CORPORATION
By: David H. Keyte
Address: Forest Oil Corporation
1600 Broadway, Suite 2200
Denver, Colorado 80202
Attention: Corporate Secretary
Telecopy: (303) 812-1602
SAXON PETROLEUM INC.
By: G A Tarrant
Richard A. Wilson
Address: Saxon Petroleum Inc.
1700, The Tower
736 - 6th Avenue S.W.
Calgary, Alberta
T2P 3T7
Attention: President
Telecopy: (403) 264-1517
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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 and includes an assessment or reassessment of Taxes.
"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 (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.
"ANSCHUTZ AGREEMENT" means the Purchase Agreement dated as of
May 17, 1995 between the Purchaser and The Anschutz Corporation.
"ANSCHUTZ TRANSACTION DOCUMENTS" has the meaning stated in the
Anschutz Agreement.
"APPLICABLE SECURITIES LAWS" has the meaning stated in Section 4.27
of this Agreement.
"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" means Archean Energy Ltd., a corporation organized under
the laws of Alberta.
"ARCHEAN SHARES" means the 15,737,956 Class A Preferred Shares and
1,430,723 Class B Preferred Shares of Archean.
"ARCHEAN SHAREHOLDERS AGREEMENT" means the Agreement dated June 24,
1994 among the Purchaser, the Number Company, the Erin Mills Development
Corporation, CanEagle Resources, Ltd. and Archean Energy Ltd.
"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.
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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 is a day
on which banking institutions located in such province 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, 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 instalment 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.
"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.
"COMPANY" means Saxon Petroleum Inc., an Alberta corporation, and
its successors.
"COMMON SHARES" means common shares in the capital of the Company as
constituted on the date of this agreement.
"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.
"CONTROLLING PERSONS" has the meaning stated in Section 20 of the
SECURITIES EXCHANGE ACT of 1934 (as amended), provided however that the
Purchaser shall not be considered a controlling person of the Company for
purposes of Section 9.1 or 10.13.
"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.
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"DOLLARS" AND "$" unless otherwise indicated refer to Canadian
dollars and other lawful currency of Canada from time to time in effect.
"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 profit-sharing,
deferred compensation, bonus, stock option, stock purchase, pension, retainer,
consulting, retirement, severance, welfare or incentive plan, contract,
commitment, program, policy, arrangement or practice and (2) 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.
"ENVIRONMENTAL LAWS" means any and all presently existing federal,
provincial, 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, 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 4.23(b)(1).
"ENVIRONMENTAL RELEASE" means any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching or
migration into the indoor or outdoor environment, including, without limitation,
the movement of Hazardous Materials through ambient air, soil, surface water,
ground water, wetlands, land or subsurface strata;
"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.
"EXPENSES" has the meaning stated in Section 8.2(a) of this
Agreement.
"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;
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"FIRST CLOSING TRANSACTIONS" has the meaning stated in Section 2.1
of this Agreement;
"FOREST REFERENCE PRICE" means the weighted average price at which
Forest Shares traded on the Nasdaq National Market for the 60 days prior to the
date of the Shareholders' Meeting. The weighted average price of common shares
for such period shall be determined by dividing the aggregate sales price of all
Forest Shares sold during the period by the total number of Forest Shares so
sold during such period;
"FOREST SHARES" has the meaning stated in Section 1.1 of this
Agreement.
"GAAP" means generally accepted accounting principles as in effect
in Canada or the United States, as the case may be, from time to time.
"GOOD TITLE" means, with respect to the Oil and Gas Interests, good
and defensible title that (1) entitles the Company to receive not less than the
net revenue interests set forth in the engineering reports described in
Section 4.14(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 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, provincial, 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 collection or deposit in the ordinary course of business. The
term "GUARANTEE" used as a verb has a correlative meaning.
"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
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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.
"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.
"KNOWLEDGE OF THE COMPANY" or "KNOWLEDGE OF THE PURCHASER" with
respect to a representation or warranty of the Company or the Purchaser, as the
case may be, contained in any Transaction Document means, after due inquiry by
the Company or the Purchaser, as the case may be, of each of the following
persons, the actual knowledge of any of the officers or other employees of the
Company or the Purchaser, as the case may be, having managerial responsibility
for the portion of the operations, assets or liabilities of the Company or the
Purchaser, as the case may be, with respect to which such knowledge of the
Company or the Purchaser, as the case may be, 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.
"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 Personal Property Security Act (Alberta) 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
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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.
"MANAGEMENT SHAREHOLDERS" means Hugh J. Davis, Glen A. Tarrant, E.
Diane Johnson, Martha G. Billes, Gene Vennard, Daryl Birnie, William Brebber,
William J. Wylie and Richard A. Wilson in respect of the number of Common Shares
disclosed to the Purchaser in writing, which writing references this Agreement.
"MATERIAL ADVERSE EFFECT" means, with respect to a circumstance or
event subject to a representation, warranty, covenant or other agreement of the
Company 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
or the ability of the Company to perform its obligations under any Transaction
Document to which it is or may become a party.
"MATERIAL CONTRACT" means an agreement referred to in Section 4.25.
"NON-VOTING SHARES" means non-voting shares of the Company having
the right, privileges and restrictions set out in Exhibit A hereto.
"NUMBER COMPANY" means 604228 Alberta Ltd., a corporation organized
under the laws of the Province of Alberta.
"NUMBER COMPANY SHARES" means the all of the issued shares of 604228
Alberta Ltd.
"OIL AND GAS INTERESTS" means all right, title and interest of the
Company 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 is entitled to rights in
respect of oil, gas and other minerals and hydrocarbons or revenues therefrom.
"PERMITTED ISSUANCES" means the issuance of Common Shares of the
Company pursuant to the options and warrants referred to in Section 4.22 of this
Agreement.
"PERMITTED LIENS" means, collectively, (1) "Permitted Liens" within
the meaning of the Debenture dated September 7, 1995 granted by the Company to
National Bank of Canada, (2) 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 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 that secure such Debt.
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"PERSON" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
Governmental Body.
"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 CIRCULAR" has the meaning stated in Section 6.1(a)(2) of this
Agreement.
"PURCHASER" means Forest Oil Corporation, a New York corporation,
and its successors.
"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 3.2(a) of
this Agreement.
"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.
"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; and
(2) any payments in cash or otherwise, on account of the purchase,
redemption, retirement or acquisition of any Equity Securities of the
person.
"SECOND CLOSING" has the meaning stated in Section 2.2 of the
Agreement.
"SECOND CLOSING DATE" has the meaning stated in Section 2.2 of the
Agreement.
"SECOND CLOSING TRANSACTIONS" has the meaning stated in Section 2.2
of the Agreement.
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"SERIES A PREFERRED SHARES" has the meaning set forth in Section 1.2
of the Agreement.
"SERIES B PREFERRED SHARES" has the meaning set forth in Section 1.1
of the Agreement.
"SHAREHOLDERS MEETING" has the meaning stated in Section 6.1(a)(2)
of this Agreement.
"SUBSEQUENT EVENT" means any of the following, in each case whether
or not the Company and the Purchaser shall have exercised and delivered, or
exercised any rights or performed any obligations under, any of the Transaction
Documents:
(1) the Company, 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) the Company, 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 Shares 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 favourable 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.
"SUBSEQUENT EVENT FEE" means the fee referred to in Section 8.2(b)
of this Agreement.
"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 is, at the date of determination, a general or
limited partner of such partnership, but only if the person or its
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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.
"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, goods and services, use, gross receipts, value
added, capital and franchise taxes, license recording, documentation and
registration fees and custom duties imposed by any Governmental Body, and in
particular, and without limiting the generality of the foregoing, all amounts
payable under the INCOME TAX ACT (Canada) and the EXCISE TAX ACT (Canada).
"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.
"TRANSACTION DOCUMENTS" means, collectively, this Agreement, the
documents referred to in Section 1.1 and 1.2 and all other documents and
instruments executed and delivered by any person in connection with the
transactions contemplated hereby.
"TRANSACTION PROPOSALS" has the meaning stated in
Section 6.1(a)(3)(A) of this Agreement.
"TRANSACTIONS" means, collectively, the transactions undertaken
pursuant to or otherwise contemplated by, the Transaction Documents.
"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.
"WARRANTS" has the meaning stated in Section 1.2.
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EXHIBIT A
CONVERTIBLE PREFERRED SHARES SERIES A
The second series of Preferred Shares shall consist of 15,500,000
shares designated as Convertible Preferred Shares Series A and having
attached thereto the following rights, privileges, restrictions and
conditions:
1. DIVIDENDS
1.1 PAYMENT OF DIVIDENDS - The holders of Convertible Preferred Shares
Series A shall be entitled to receive, and the Corporation shall pay thereon,
as and when declared by the board of directors out of monies of the
Corporation properly applicable to the payment of dividends, fixed cumulative
preferential dividends at the rate of $0.04 per share per annum (increasing
to $0.05 per share per annum upon any failure by the Corporation to pay any
dividend at the time and in the manner set out) payable in equal quarterly
instalments on the first day of January, April, July and October in each year
("dividend payment dates") in respect of the 3 month periods ("quarters")
ending on such days, respectively, the first of such dividends to be payable
on the first such day occurring after the issue of the Convertible Preferred
Shares Series A in respect of the period then ending and to be in an amount
per share determined in accordance with section 1.2 hereof. Dividends on the
Convertible Preferred Shares Series A shall accrue from the date of original
issue thereof. Dividends on the Convertible Preferred Shares Series A shall
except as provided below be paid in the form of a stock dividend. The
Corporation shall on each dividend payment date issue to each holder of
Convertible Preferred Shares Series A a number of common shares (or at the
holder's election Non-Voting Common Shares) determined by dividing the amount
of dividend which such holder is entitled to receive by the weighted average
price at which common shares of the Corporation traded on The Alberta Stock
Exchange, or if the common shares are not then listed on The Alberta Stock
Exchange, on such stock exchange on which such shares are listed as may be
selected by the board of directors of the Corporation, during the period
commencing on the first day of the applicable dividend period and ending five
days before the dividend payment date. If the common shares are not listed
on a stock exchange on the dividend payment date, the dividend shall be paid
in cash. Certificates representing the shares to which the holder of
Convertible Preferred Shares Series A is entitled shall be mailed to the
holders of such shares on the dividend payment date, provided that the holder
has provided to the Corporation a cheque payable to Revenue Canada for any
withholding tax payable in respect of such dividend. In the event of:
(a) subdivisions, consolidations or reclassifications of common
shares,
(b) distributions to all or substantially all the holders of common
shares of:
(i) shares (other than shares distributed in lieu of dividends
paid in the ordinary course),
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(ii) rights, options or warrants,
(iii) evidences of indebtedness or
(iv) assets (other than dividends paid in the ordinary course) or
(c) other similar changes in the share capital of the Corporation
which in the opinion of the board of directors shall have or shall have had
an effect on the trading price of common shares on any date during a dividend
period, the board of directors, acting reasonably and in good faith, shall,
on or prior to the dividend payment date, prescribe adjustments to be made to
the number of common shares to be issued on the date in order to make the
number of common shares to be issued on such date fully comparable with the
number of common shares which would otherwise have been issuable had any of
the foregoing capital changes not occurred. Fractional common shares shall
not be issued on any dividend payment date but in lieu thereof the
Corporation shall make payments in an amount per fractional common share
otherwise issuable equal to the product of the fraction of the common share
otherwise issuable and the weighted average price as determined above.
1.2 DIVIDEND FOR OTHER THAN A FULL QUARTER - The amount per share of the
dividend accrued for any dividend period which is less than the full quarter
in which the dividend period occurs with respect to any Convertible Preferred
Share Series A:
(a) which is issued or redeemed; or
(b) where the assets of the Corporation are distributed to the holders
of the Convertible Preferred Shares Series A pursuant to section 3
hereof;
shall be equal to the amount (rounded to the nearest 1-100th of 1 cent)
calculated by multiplying one quarter of the applicable annual dividend per
share by a fraction of which the numerator is the number of days in such
quarter such share has been outstanding (excluding the date of issue or the
dividend payment date at the beginning of such period and including the
dividend payment date or date of redemption or distribution of assets at the
end of such period) and the denominator is the number of days in such quarter
(excluding the dividend payment date at the beginning thereof and including
the dividend payment date at the end thereof).
2. REDEMPTION
2.1 GENERAL - Subject to Clause 5 and the provisions of the BUSINESS
CORPORATIONS ACT (ALBERTA) (the "Act"), the Convertible Preferred Shares
Series A shall be redeemed by the Corporation on November 15, 1998 (the
"redemption date"), but not otherwise.
2.2 REDEMPTION PRICE - The redemption price at which the Convertible
Preferred Shares Series A are redeemable (the "redemption price") shall, if
such redemption is made on or within five business days after the redemption
date, be the sum of $1.00 per share and if made thereafter
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shall be $1.3333 per share. At the option of the Corporation the redemption
price may be paid in cash or, subject to the approval of The Alberta Stock
Exchange and such other stock exchanges on which such shares are listed, in
fully paid and non-assessable common shares of the Corporation provided that
if the redemption price is payable in common shares, the holder may elect to
receive Non-Voting Shares in lieu thereof on the basis of one Non-Voting
Share for each common share issuable as payment for the redemption price.
The number of fully paid and non-assessable common shares which each holder
is entitled to receive shall be determined by dividing the total redemption
price payable to such holder in respect of all Convertible Preferred Shares
Series A held by such holder by 85% of the weighted average price at which
common shares of the Corporation traded on The Alberta Stock Exchange, or if
the common shares are not then listed on The Alberta Stock Exchange, on such
stock exchange on which such shares are listed as may be selected by the
board of directors of the Corporation, during the 60 day (30 days if payment
is made later than five business days after the redemption date) period
ending 5 days prior to the redemption date or, if the common shares are not
listed on any stock exchange, the common shares shall be valued on a basis
determined by an independent financial adviser acceptable to the Corporation
and the holders or failing agreement appointed by a justice of the Court of
Queen's Bench of Alberta, and any such determination shall be binding on the
holder and the Corporation. The final two sentences of section 1.1 shall
apply MUTATIS MUTANDIS to any such issuance of shares on redemption. At the
time of redemption the Corporation shall pay all accrued but unpaid dividends
to the date of redemption, provided the holder has provided to the
Corporation a cheque payable to Revenue Canada for any withholding tax
payable in respect of any stock dividend and the redemption.
2.3 REDEMPTION PROCEDURE
(a) Notice of redemption of Convertible Preferred Shares Series A shall
be given by the Corporation not less than two days prior to the
redemption date to each holder of Convertible Preferred Shares
Series A. Accidental failure or omission to give such notice to one
or more of such holders shall not affect the validity of such
redemption. Such notice shall set out the redemption price, the
redemption date, the place of redemption and shall contain a brief
statement of the conditions on which the Convertible Preferred
Shares Series A may be converted into common shares of the
Corporation as provided in Clause 4. The notice shall state whether
the Corporation elects to make payment in common shares, which
election is irrevocable.
(b) On the date fixed for redemption, the Corporation shall pay or cause
to be paid the redemption price to or to the order of the holders of
the Convertible Preferred Shares Series A redeemed on presentation
and surrender at the place of redemption of the respective
certificates representing such shares, and the holders of the
Convertible Preferred Shares Series A shall cease to be entitled to
dividends or to exercise any of the rights of holders in respect
thereof unless payment of the redemption price shall not be made in
accordance with the foregoing provisions, in which case the rights
of the holders shall remain unimpaired.
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2.4 REDEEMED CONVERTIBLE PREFERRED SHARES SERIES A - Subject to the Act,
Convertible Preferred Shares Series A redeemed by the Corporation shall be
restored to the status of authorized but unissued Preferred Shares as a class
but not as Convertible Preferred Shares Series A as a series and shall be
available for division and issuance pursuant to the conditions attaching to
the Preferred Shares as a class.
3. LIQUIDATION
3.1 LIQUIDATION - In the event of the liquidation, dissolution or
winding-up of the Corporation or other distribution of assets of the
Corporation among shareholders for the purpose of winding-up its affairs, the
holders of the Convertible Preferred Shares Series A shall be entitled to an
amount equal to the redemption price per share together with an amount equal
to all accrued and unpaid cumulative preferential dividends to the date of
such liquidation, dissolution, winding-up or other distribution before any
amount shall be paid or any property or assets of the Corporation shall be
distributed to the holders of any common shares, Non-Voting Shares or shares
ranking junior to the Convertible Preferred Shares Series A.
3.2 FURTHER PARTICIPATION - After payment to the holders of the Convertible
Preferred Shares Series A as aforesaid, such holders shall not have the right
to any further participation in the distribution of the property or assets of
the Corporation.
4. CONVERSION PRIVILEGE
4.1 DEFINITIONS - For the purposes of this Clause 4:
(a) "common shares" means the common shares in the capital of the
Corporation as constituted on the date of issue of the Convertible
Preferred Shares Series A or as subsequently consolidated,
subdivided, reclassified or otherwise changed, or any shares or
other securities that holders of such shares are entitled to receive
as a result of a Capital Reorganization as provided in
section 4.3(d) hereof.
(b) "close of business" means with respect to the conversion of any
Convertible Preferred Shares Series A the normal closing time of the
office of the Corporation or the transfer agent, if any, for the
Convertible Preferred Shares Series A at which the holder of such
share elects to have such share converted.
(c) "conversion price" means as at any particular time the price per
share at which at such time the Convertible Preferred Shares
Series A are convertible into common shares in accordance with this
Clause 4.
(d) "conversion privilege" means the right to convert the Convertible
Preferred Shares Series A provided for in this Clause 4.
(e) "Current Market Price" of the common shares at any date means the
price per share equal to the weighted average price at which the
common shares have traded
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on The Alberta Stock Exchange, or if the common shares are not then
listed on The Alberta Stock Exchange, on such stock exchange on
which such shares are listed as may be selected for such purpose by
the board of directors of the Corporation, during any period of 30
consecutive trading days (selected by the Corporation) commencing
not more than 45 trading days before such date.
(f) "trading day" means a day on which the relevant stock exchange
referred to in paragraph (e) hereof is open for business.
4.2 (a) RIGHT OF CONVERSION BY HOLDER - The holder of one or more
Convertible Preferred Shares Series A shall have the right, at his
option at any time to convert such Convertible Preferred Shares
Series A into fully paid and non-assessable common shares at a
conversion price of $0.57 per common share, such conversion price
being subject to adjustment as provided in section 4.3. The number
of common shares issuable on conversion of any Convertible Preferred
Shares Series A shall, subject to the exception as to fractions
contained in section 4.6, be computed by multiplying the number of
Convertible Preferred Shares Series A to be converted by $1.00 and
dividing the product by the conversion price.
(b) MANDATORY CONVERSION - If the price at which common shares of the
Corporation trade on The Alberta Stock Exchange (or, if such shares
are not listed on such stock exchange, on such stock exchange on
which such shares are listed as may be selected by the board of
directors) at all times exceeds 122.8% of the conversion price for a
period exceeding 30 consecutive trading days on which an average
daily volume of at least .005% of the outstanding common shares has
traded, the Corporation may convert all of the Convertible Preferred
Shares Series A into common shares of the Corporation at a
conversion price of $0.57 per common share, such conversion price
being subject to adjustment as provided in section 4.3.
4.3 ADJUSTMENT OF CONVERSION PRIVILEGE - The conversion privilege shall be
subject to adjustment from time to time as follows:
(a) If the Corporation shall (i) issue to all or substantially all the
holders of the common shares, common shares pursuant to a stock
dividend or (ii) make a distribution on its outstanding common
shares payable in common shares or securities exchangeable for or
convertible into common shares or (iii) subdivide its outstanding
common shares or (iv) consolidate its outstanding common shares into
a smaller number of shares (any of such events being called a
"Common Share Reorganization"), the conversion price shall be
adjusted effective immediately after the record date at which the
holders of common shares are determined for the purposes of the
Common Share Reorganization by multiplying the conversion price in
effect on such record date by a fraction, the numerator of which
shall be the number of common shares outstanding on such record
date, and the denominator of which shall be the number of common
shares outstanding after
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the completion of such Common Share Reorganization, including in the
case where securities exchangeable for or convertible into common
shares are distributed, the number of common shares that would have
been outstanding had such securities been exchanged for or converted
into common shares on such record date.
(b) If the Corporation shall issue rights, options or warrants to all or
substantially all of the holders of the common shares under which
such holders are entitled, during a period expiring not more than 45
days after the record date for such issue, to subscribe for or
purchase common shares (or securities exchangeable for or
convertible into common shares) at a price per share (or at an
exchange or conversion price per share in the case of securities
exchangeable for or convertible into common shares) less than 95% of
the Current Market Price of the common shares on such record date
(any of such events being called a "Rights Offering"), the
conversion price shall be adjusted effective immediately after the
record date at which holders of common shares are determined for the
purposes of the Rights Offering to a price determined by multiplying
(i) the conversion price in effect on such record date by (ii) a
fraction:
(A) the numerator of which shall be the aggregate of:
(Y) the number of common shares outstanding on such record
date; and
(Z) a number determined by dividing (1) either the product
of (a) the number of common shares so offered and
(b) the price at which such shares are offered, or the
product of (c) the exchange or conversion price thereof
and (d) the maximum number of common shares for or into
which the securities so offered pursuant to the Rights
Offering may be exchanged or converted, by (2) the
Current Market Price of the common shares on the record
date, and
(B) the denominator of which shall be the aggregate of (Y) the
number of common shares outstanding on such record date and
(Z) the number of common shares offered pursuant to the Rights
Offering (or the maximum number of common shares for or into
which the securities so offered pursuant to the Rights
Offering may be exchanged or converted).
To the extent that such options, rights or warrants are not
exercised prior to the expiry date thereof, the conversion price
shall be re-adjusted effective immediately after such expiry date to
the conversion price which would then have been in effect based upon
the number of common shares (or securities exchangeable for or
convertible into common shares) actually delivered on the exercise
of such options, rights or warrants.
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(c) If the Corporation shall distribute to all or substantially all the
holders of common shares, (i) shares of any class other than common
shares, or (ii) rights, options or warrants (other than rights,
options or warrants to acquire common shares within a period of 45
days), or (iii) evidences of indebtedness, or (iv) any other assets
(excluding cash dividends) and such issuance or distribution does
not constitute a Common Share Reorganization or a Rights Offering
(any of such events being herein called a "Special Distribution"),
the conversion price shall be adjusted effective immediately after
the record date at which the holders of common shares are determined
for purposes of the Special Distribution to a price determined by
multiplying (1) the conversion price in effect on the record date of
the Special Distribution by (2) a fraction:
(A) the numerator of which shall be the difference between:
(Y) the product of (a) the number of common shares
outstanding on such record date and (b) the Current
Market Price of the common shares on such date; and
(Z) the fair value, as determined by the board of directors
of the Corporation (whose determination shall be
conclusive), to the holders of the common shares of the
shares, rights, options, warrants, evidences of
indebtedness or other assets issued or distributed in
the Special Distribution, and
(B) the denominator of which shall be the number of common shares
outstanding on such record date multiplied by the Current
Market Price of the common shares on such date.
To the extent that such rights, options or warrants are not
exercised prior to the expiry date thereof, the conversion price
shall be re-adjusted effective immediately after such expiry date to
the conversion price which would then be in effect based only upon
such rights, options or warrants actually exercised.
(d) If and whenever there is a capital reorganization of the Corporation
not otherwise provided for in this section 4.3 or a consolidation,
merger or amalgamation of the Corporation with or into another
corporation or body corporate, or any sale of all or substantially
all of the property and assets of the Corporation to another person
or corporation (any such event being called a "Capital
Reorganization"), any holder of Convertible Preferred Shares
Series A who has not exercised his right of conversion prior to the
effective date of such Capital Reorganization shall be entitled to
receive and shall accept, upon the exercise of such right at any
time after the effective date of such Capital Reorganization, in
lieu of the number of common shares to which he was theretofore
entitled on conversion, the aggregate number of shares or other
securities of the Corporation or of the continuing, successor or
purchasing body corporate or person resulting from the Capital
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Reorganization that such holder would have been entitled to receive
as a result of such Capital Reorganization if, on the effective date
thereof, he had been the registered holder of the number of common
shares to which he was theretofore entitled upon conversion, subject
to adjustment thereafter in accordance with provisions the same, as
nearly as may be possible, as those contained in sections 4.3 and
4.4; provided that no such Capital Reorganization shall be carried
into effect unless all necessary steps shall have been taken so that
the holders of Convertible Preferred Shares Series A shall
thereafter be entitled to receive such number of shares or other
securities of the Corporation or of the continuing, successor or
purchasing body corporate or person resulting from the Capital
Reorganization.
(e) If the Corporation shall reclassify the outstanding common shares,
the conversion privilege shall be adjusted effective immediately
after the record date of such reclassification so that holders of
Convertible Preferred Shares Series A surrendered for conversion
after such date shall be entitled to receive such shares as they
would have received had such Convertible Preferred Shares Series A
been converted immediately prior to such record date, subject to
adjustment thereafter in accordance with provisions the same, as
nearly as may be possible, as those contained in sections 4.3 and
4.4.
(f) For purposes of calculating the number of common shares outstanding
under the foregoing paragraphs all outstanding Non-Voting Shares
shall be considered to be common shares.
4.4 PRICE ADJUSTMENT RULES - The following rules and procedures shall be
applicable to adjustments of the conversion privilege made pursuant to
section 4.3 hereof:
(a) No adjustment in the conversion price shall be required unless such
adjustment would result in a change of at least 1% in the conversion
price then in effect, provided, however, that any adjustments which,
except for the provisions of this section 4.4 (a) would otherwise
have been required to be made, shall be carried forward and taken
into account in any subsequent adjustment.
(b) No adjustment in the conversion price shall be made in respect of
any event described in section 4.3 hereof, other than the events
referred to in subparagraphs 4.3(a)(iii) and (iv) and
paragraphs 4.3(d) and (e), if the holders of the Convertible
Preferred Shares Series A are entitled to participate in such event
on the same terms mutatis mutandis as if they had converted their
Convertible Preferred Shares Series A prior to or on the effective
date or record date of such event.
(c) No adjustment in the conversion price shall be made pursuant to
section 4.3 hereof in respect of the issue from time to time of
common shares to holders of common shares who exercise an option to
receive or reinvest substantially equivalent
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dividends in common shares in lieu of receiving cash dividends, and
any such issue shall be deemed not to be a Common Share
Reorganization.
(d) Subject to section 4.3(c), if a dispute shall at any time arise with
respect to adjustments of the conversion privilege, such disputes
shall be conclusively determined by an independent financial adviser
acceptable to the Corporation and the holder, or failing agreement
appointed by a justice of the Court of Queen's Bench of Alberta and
any such determination shall be binding upon the Corporation and all
transfer agents and all shareholders of the Corporation.
(e) Forthwith after any adjustment in the conversion privilege pursuant
to section 4.3, the Corporation shall file with the transfer agent,
if any, for the Convertible Preferred Shares Series A a certificate
certifying as to the particulars of such adjustment and, in
reasonable detail, the event requiring and the manner of determining
such adjustment; the Corporation shall also at such time give
written notice to the registered holders of Convertible Preferred
Shares Series A of the conversion privilege following such
adjustment and the provisions of section 8.1 with respect to the
giving of notice shall apply MUTATIS MUTANDIS.
4.5 CONVERSION PROCEDURE
(a) The conversion right herein provided for in section 4.2(a) may be
exercised by notice in writing given to the Corporation at its head
office or to the transfer agent, if any, for the Convertible
Preferred Shares Series A at any authorized office of such transfer
agent accompanied by the certificate or certificates representing
the Convertible Preferred Shares Series A in respect of which the
holder thereof desires to exercise such right of conversion. The
notice shall be signed by such holder or his agent and shall specify
the number of Convertible Preferred Shares Series A which the holder
desires to have converted. If less than all of the Convertible
Preferred Shares Series A represented by any certificate or
certificates accompanying any such notice are to be converted the
holder shall be entitled to receive, at the expense of the
Corporation, a new certificate representing the Convertible
Preferred Shares Series A comprised in the certificate or
certificates surrendered as aforesaid which are not to be converted.
(b) the conversion right provided for in section 4.2(b) may be exercised
by notice in writing given by the Corporation to each holder of
Convertible Preferred Shares Series A together with a certificate of
the Corporation as to the trading prices during the period referred
to in section 4.2(b). The notice shall be signed by the Corporation
and shall specify the date for conversion, which shall not be
greater than 15 days after the date of the notice.
(c) Upon the conversion of any Convertible Preferred Shares Series A
there shall be no payment or adjustment by the Corporation or by any
holder of Convertible
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Preferred Shares Series A on account of any dividends either on the
Convertible Preferred Shares Series A so converted or on the common
shares resulting from such conversion. On any conversion of the
Convertible Preferred Shares Series A the share certificates
representing the common shares resulting therefrom shall be issued
in the name of the registered holder of the Convertible Preferred
Shares Series A converted or, subject to payment by the registered
holder of any stock transfer or other applicable taxes, in such name
or names as such registered holder may direct in writing (either in
the notice above referred to, by completion of a form of stock
transfer or otherwise).
The right of a holder of Convertible Preferred Shares Series A to
convert the same into common shares shall be deemed to have been
exercised, and the holder of Convertible Preferred Shares Series A
to be converted (or any person or persons in whose name or names
such holder of Convertible Preferred Shares Series A shall have
directed certificates representing the common shares to be issued)
shall be deemed to have become a holder of common shares of record
for all purposes on the date of surrender of the certificate or
certificates representing the Convertible Preferred Shares Series A
to be converted, accompanied by notice in writing as referred to
above, notwithstanding any delay in the delivery of the certificate
or certificates representing the common shares into which such
Convertible Preferred Shares Series A have been converted.
4.6 AVOIDANCE OF FRACTIONAL SHARES - In any case where a fraction of a
common share would otherwise be issuable on conversion of one or more
Convertible Preferred Shares Series A, the Corporation shall adjust such
fractional interest by the payment by cheque in an amount equal to the then
market price of such fractional interest computed on the basis of the last
board lot price for the common shares on The Alberta Stock Exchange (or, if
such shares are not listed on such stock exchange, on such stock exchange on
which such shares are listed as may be selected by the board of directors) on
the previous trading day.
4.7 POSTPONEMENT OF CONVERSION - In any case where the application of
section 4.3 results in a decrease of the conversion price taking effect
immediately after the record date for a specific event, if any Convertible
Preferred Shares Series A are converted after that record date and prior to
completion of the event, the Corporation may postpone the issuance to the
holder of the Convertible Preferred Shares Series A of the common shares to
which he is entitled by reason of the decrease of the conversion price but
such common shares shall be so issued and delivered to that holder upon
completion of that event, with the number of such common shares calculated on
the basis of the conversion price adjusted upon completion of that event, and
the Corporation shall at the time of conversion deliver to the holder an
appropriate instrument evidencing his right to receive such common shares.
4.8 CREATION AND ISSUANCE OF COMMON SHARES - Nothing herein contained shall
affect or restrict the right of the Corporation to issue additional common
shares from time to time.
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4.9 NOTICE OF CERTAIN EVENTS - If the Corporation intends to fix the record
date for:
(a) any Common Share Reorganization (other than the subdivision of
outstanding common shares or the consolidation of outstanding common
shares into a smaller number of shares), or
(b) any Rights Offering, or
(c) any Special Distribution, or
(d) any Capital Reorganization,
the Corporation shall, not less than 14 days prior to such record date, or if no
record date is fixed, prior to the effective date of such event, give notice to
the holders of the Convertible Preferred Shares Series A in the manner provided
in section 8.1 of the particulars of the proposed event to the extent that such
particulars have been determined at the time of giving the notice.
4.10 ELECTION TO RECEIVE NON-VOTING SHARES - Any holder of Convertible
Preferred Shares Series A shall be entitled to elect, by notice in writing to
the Corporation, to receive Non-Voting Shares in lieu of common shares upon
conversion on the basis of one Non-Voting Share for each common share issuable.
5. RESTRICTIONS ON DIVIDENDS AND RETIREMENT OF SHARES
5.1 Except with the prior approval of the holders of the Convertible Preferred
Shares Series A, so long as any of the Convertible Preferred Shares Series A are
outstanding:
(a) the Corporation shall not declare, pay or set apart for payment any
dividends (other than stock dividends in shares of the Corporation
ranking junior to the Convertible Preferred Shares Series A) on any
shares of the Corporation ranking junior to or pari passu with the
Convertible Preferred Shares Series A;
(b) the Corporation shall not call for redemption, redeem, purchase or
otherwise retire for value any shares ranking pari passu with, or
junior to the Convertible Preferred Shares Series A; and
(c) the Corporation shall not issue any additional Preferred Shares.
6. VOTING
6.1 The holders of the Convertible Preferred Shares Series A shall be entitled
to receive notice of and to attend but shall not, except as otherwise provided
in the Act or Sections 6.2 or 6.3, be entitled to vote at meetings of
shareholders of the Corporation.
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6.2 If the Corporation shall have failed to pay any dividend when due on the
Convertible Preferred Shares Series A on the dates on which the same should be
paid, the holders of the Convertible Preferred Shares Series A shall so long as
any dividends on the Convertible Preferred Shares Series A remain in arrears be
entitled, voting separately as a class, to elect one director if one quarterly
dividend is in arrears and two directors if two or more quarterly dividends are
in arrears.
6.3 If the Corporation shall have failed to redeem the Convertible Preferred
Shares Series A or within five business days after the redemption date, the
holders of the Redeemable Preferred Shares Series A shall, so long as any such
shares remain outstanding, be entitled, voting separately as a class, to elect a
majority of the board of directors (including any elected under Section 6.2).
6.4 A meeting of the holders of Convertible Preferred Shares for the purpose
of electing directors shall be held within 21 days of the accrual of the right
to elect directors and if required a meeting of the holders of Common Shares
shall be called immediately thereafter to elect directors.
6.5 Any vacancy occurring among the directors elected to represent the holders
of Convertible Preferred Shares Series A in accordance with the foregoing
provisions of this section may be filled by the board of directors of the
Corporation with the consent and approval of the remaining director or directors
elected to represent the holders of Convertible Preferred Shares Series A.
Whether or not such vacancies are so filled by the board of directors of the
Corporation, when there is no director in office who has been elected to
represent the holders of Convertible Preferred Shares Series A, the holders of
record of at least one-tenth of the outstanding Convertible Preferred Shares
Series A shall have the right to require the Secretary of the Corporation to
call a meeting of the holders of Convertible Preferred Shares Series A for the
purpose of filling the vacancies or replacing all or any of the persons filling
such vacancies who have been appointed by the board of directors of the
Corporation.
6.6 Notwithstanding anything contained in the articles or by-laws of the
Corporation, upon any termination of the right of the holders of the Convertible
Preferred Shares Series A to elect directors as provided in this section 6, the
term of office of the directors elected to represent the holders of Convertible
Preferred Shares Series A shall terminate upon the election of new directors at
the next annual meeting of shareholders or at a special meeting of shareholders
which may be held for the purpose of electing directors after such termination.
7. TRANSFER
The holders of Convertible Preferred Shares Series A may, subject to
compliance with applicable securities laws sell, assign, mortgage, charge and
encumber the Convertible Preferred Shares Series A.
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8. NOTICES AND INTERPRETATION
8.1 NOTICES
(a) Any notice, cheque or other communication from the Corporation
herein provided for shall be sufficiently given if delivered or if
sent by registered mail, postage prepaid, to the holders of the
Convertible Preferred Shares Series A at their respective addresses
appearing on the books of the Corporation or, in the event of the
address of any of such holders not so appearing, then at the last
address of such holder known to the Corporation.
(b) If any notice, cheque or other communication from the Corporation
given to a holder of Convertible Preferred Shares Series A pursuant
to paragraph (a) is returned on 3 consecutive occasions because he
cannot be found, the Corporation shall not be required to give or
mail any further notices, cheques or other communications to such
shareholder until he informs the Corporation in writing of his new
address.
8.2 INTERPRETATION
(a) If any day on which any dividend on the Convertible Preferred Shares
Series A is payable or on or by which any other action is required
to be taken hereunder is not a business day, then such dividend
shall be payable or such other action shall be required to be taken
on or before the next succeeding day that is a business day.
Business day means a day other than a Saturday, a Sunday or any
other day that is a statutory or civic holiday in the place where
the Corporation has its head office.
(b) All references herein to a holder of Convertible Preferred Shares
Series A shall be interpreted as referring to a registered holder of
the Convertible Preferred Shares Series A.
(c) The weighted average price of common shares for any period shall be
determined by dividing the aggregate sales price of all common
shares sold during the period by the total number of common shares
so sold during such period.
9. MODIFICATION
9.1 The provisions attaching to the Convertible Preferred Shares Series A may
be deleted, varied, modified, amended or amplified with the prior approval of
the holders of Convertible Preferred Shares Series A given in accordance with
Clause 10.
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10. APPROVAL OF CONVERTIBLE PREFERRED SHARES SERIES A
10.1 Any consent or approval to be given by the holders of Convertible
Preferred Shares Series A shall be deemed to have been sufficiently given if it
shall have been given in writing by the holders of at least 66 2/3% of the
outstanding Convertible Preferred Shares Series A or by a resolution passed at a
meeting of holders of Convertible Preferred Shares Series A duly called and held
upon not less than 21 days notice to the holders at which the holders of at
least a majority of the outstanding Convertible Preferred Shares Series A are
present or are represented by proxy and carried by the affirmative vote of not
less than 66 2/3% of the votes cast at such meeting. If at any such meeting the
holders of a majority of the outstanding Convertible Preferred Shares Series A
are not present or represented by proxy within one-half hour after the time
appointed for such meeting then the meeting shall be adjourned to such date not
less than 15 days thereafter and at such time and place as may be designated by
the chairman, and not less than 10 days written notice shall be given of such
adjourned meeting. At such adjourned meeting the holders of Convertible
Preferred Shares Series A present or represented by proxy may transact the
business for which the meeting was originally convened and a resolution passed
thereat by the affirmative vote of not less than 66 2/3% of the votes cast at
such meeting shall constitute the consent and approval of the holders of the
Convertible Preferred Shares Series A. On every poll taken at every meeting
every holder of Convertible Preferred Shares Series A shall be entitled to one
vote in respect of each Convertible Preferred Shares Series A held. Subject to
the foregoing, the formalities to be observed in respect of the given or waiving
of notice of any such meeting and the conduct thereof shall be those from time
to time prescribed in the Act and the bylaws of the Corporation.
<PAGE>
EXHIBIT B
FORM OF
PROSPECTUS AGREEMENT
PROSPECTUS AGREEMENT dated as of __________, 1995 between SAXON
PETROLEUM INC., an Alberta corporation (the "COMPANY"), and Forest Oil
Corporation, a New York corporation (the "SHAREHOLDER").
RECITALS
(A) The Shareholder and the Company are parties to the Purchase Agreement
(the "PURCHASE AGREEMENT") dated as of October 6, 1995, pursuant to which, among
other things, on the First Closing Date and on the Second Closing Date the
Shareholder may purchase Common Shares and other securities convertible into or
entitling the Shareholder to acquire Common Shares of the Company, all of which
Common Shares are collectively referred to as the "REGISTRABLE SHARES". Terms
not otherwise defined herein shall have the meanings stated in the Purchase
Agreement.
(B) The Company and the Shareholder desire to enter into this Agreement
providing for the Company to file a prospectus under the securities acts of
Alberta, British Columbia and Ontario (the "SECURITIES ACTS") to permit the
distribution of the Registrable Shares.
AGREEMENT
The parties agree as follows:
1. (a) From and after the date (the "EFFECTIVE DATE") that is three months
after the First Closing Date and to and including the third
anniversary of the Effective Date, subject to extension pursuant to
Section 1(e), 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
5,000,000 Registrable Shares in the aggregate (as such number of
shares may be adjusted in the event of any change in the Registrable
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, (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 file
a prospectus under the Securities Acts with respect to the
distribution by the Registering Shareholder of not less than 5,000,000
Registrable Shares (as such number may be adjusted). If the requested
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prospectus pursuant to this Section 1(a) shall involve an underwritten
offering, the Registering Shareholder initiating a request for filing
of the prospectus pursuant to this Section 1(a) shall select (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,
the Company shall not be required to prepare and file pursuant to this
Section 1 more than one prospectus if the Second Closing shall not
occur and not more than two prospectuses if the Second Closing shall
occur.
(b) The Company shall prior to the date of the final prospectus provide
each Registering Shareholder and its representatives and the
underwriter and its representative reasonable opportunity for
reasonable due diligence in connection with each registration of
Registrable Shares of the Registering Shareholder pursuant to this
Section 1.
(c) At the request of one or more of the Registering Shareholders or the
Company in connection with any prospectus 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 hereof and provisions with respect to
indemnification and contribution substantially the same as those set
forth in Section 3 hereof and the Company shall co-operate on the
timely preparation and delivery of certificates to be registered in
such names as the Underwriters may require.
(d) Notwithstanding anything herein to the contrary, the Company shall not
be required to include in any prospectus 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 the prospectus requirement
under the Securities Acts 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.
(e) Upon written notice to each Registering Shareholder, the Company may
postpone filing a prospectus pursuant to this Section 1 on two
occasions during any period of nine consecutive months, if (1) an
investment banking firm of recognized national standing shall advise
the Company and the Registering Shareholders in writing that effecting
the distribution or disposition would materially and
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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
third anniversary of the Effective Date for each day that pursuant to
this Section 1(e), the Company postpones filing a prospectus.
(f) In the event the filing of a prospectus with respect to any
Registrable Shares shall be required by this Section 1:
(a) Each Registering Shareholder shall furnish, and shall cause each
underwriter of the Registrable Shares of the Registering
Shareholder to be distributed pursuant to the distribution 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
applicable securities laws of the provinces in which 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 prospectus. The
failure of a Registering Shareholder to furnish information shall
not affect the Company's obligation to the other Registering
Shareholders.
(b) The Company shall prepare and file under the Securities Acts
designated by the Registering Shareholder the Prospectus (as
defined in Section 1(g)), on the form that is then required or
available for use by the Company to permit each Registering
Shareholder, upon the issuance of a receipt for the final
prospectus, to use the Prospectus in connection with the
contemplated distribution by the Registering Shareholder of the
Registrable Shares qualified by such Prospectus. The Company
shall use its best efforts to cause a receipt for the final
prospectus to be issued as soon as practicable and, as soon as
practicable after the issue thereof, shall deliver to each
Registering Shareholder evidence of the receipt and a reasonable
supply of copies of the Prospectus. The Company shall promptly
provide the Registering Shareholder with copies of all
correspondence to and from the securities commissions, The
Alberta Stock Exchange and other regulators having jurisdiction.
(c) The Company shall use its best efforts to cause the Prospectus to
remain current, including the filing of necessary amendments and
supplements,
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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 date of receipt for the final prospectus;
PROVIDED that the period shall be increased by the number of
days that any Registering Shareholder shall have been
required by Section 1(e) 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 withdraw the Prospectus 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 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 file a new prospectus with respect to
the Registrable Shares formerly covered by the prospectus that
was withdrawn. The Company will use all reasonable efforts to
obtain a withdrawal of any cease trade order with respect to the
distribution under the Prospectus.
(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 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 distribution
pursuant to this Section 1, acknowledges that the remedies of the
Company at law for failure by the Registering Shareholder to
comply with the undertakings contained in this Section 1(f) 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(f) 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
prospectus, the certificates, opinions of counsel and comfort
letters that are customarily delivered in connection with
underwritten public offerings.
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(g) For the purposes of this Section 1, "Prospectus" means the prospectus
relating to the Registrable Shares owned by the Registering
Shareholders at the time of issuance of a receipt by the applicable
regulatory authorities and, in the event of any amendment or
supplement to the Prospectus after the date of the Prospectus, also
means (from and after date of the filing with the applicable
authorities under the Securities Acts of the supplement) the
Prospectus as so amended or supplemented.
(h) The Company shall use all reasonable efforts to list or maintain the
listing of the Registered Shares on The Alberta Stock Exchange or such
other exchanges on which its Common Shares are listed.
2. EXPENSES
(a) Subject to any applicable regulatory restrictions, the Company shall
bear all expenses of the following:
(1) preparing, printing and filing each Prospectus;
(2) furnishing to each Registering Shareholder one executed copy of
the Prospectus and the number of copies of the Prospectus that
may be required by Sections 1(f)(2) and 1(f)(3) to be so
furnished, together with a like number of copies of each
amendment or supplement;
(3) performing its obligations under Section 1(f)(5);
(4) printing and issuing share certificates, including the transfer
agent's fees, in connection with each distribution;
(5) preparing audited financial statements required by the Securities
Acts and the rules and regulations thereunder to be included in
the Prospectus;
(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 including fees and
disbursements in connection with the listing and compliance with
the requirements of the applicable listing authorities; and
(8) fees and expenses of any special experts retained by the Company
in connection with the distribution.
(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 distribution pursuant to
Section 1, including without
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limitation the selling expenses of the Registering Shareholders,
commissions, underwriting discounts, insurance, fees of counsel
for the Registering Shareholders and their underwriters.
3. INDEMNIFICATION
(a) The Company shall indemnify and hold harmless each Registering
Shareholder participating in a distribution pursuant to Section 1,
each underwriter of any of the Registrable Shares owned by the
Registering Shareholder to be so distributed, 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 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 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
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
Prospectus.
(b) Each Registering Shareholder, by participating in a distribution
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 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 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 Prospectus.
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(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
(a) the indemnifying party shall have agreed to pay those fees and
expenses; or
(b) 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
(c) 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
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
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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. Nothing herein requires contribution to a person guilty
of fraudulent misrepresentation from a person not guilty of
fraudulent misrepresentation.
(e) Each Registering Shareholder participating in a distribution 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 prospectus 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 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 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 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
Prospectus.
4. MERGER, AMALGAMATION, EXCHANGE, ETC.
In the event, directly or indirectly, the Company shall merge with and
into, or amalgamate with any other person, and the Company shall be the
surviving corporation of such merger or amalgamation and, in connection with
such merger or amalgamation, all or part of the Registrable Shares shall be
changed into or exchanged for stock or other securities of any
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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.
5. OTHER AGREEMENTS
(a) 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
qualified for distribution 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 date of the final prospectus; (2) 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 5(a); PROVIDED, the provisions of this Section 5(a) shall not
prevent the conversion or exchange of any securities pursuant to their
terms into or for other securities.
(b) If and to the extent requested by the Company in the case of a non-
underwritten public offering of securities of the Company and if and
to the extent requested by the managing underwriter in the case of an
underwritten public offering of the securities of the Company, the
Registering Shareholder agrees not to effect any public sale or
distribution of any securities similar to the securities being
qualified by a prospectus 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 date of a
final prospectus.
6. 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 overnight delivery, the next day or (3) if given by
any other means, when delivered to the proper address and a written
acknowledgement of delivery is received.
7. 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
<PAGE>
-10-
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.
8. 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.
9. SUCCESSORS AND ASSIGNS
(a) The Shareholder may assign to any transferee of Registrable Shares its
rights and delegate its obligations under this Agreement; provided
that no such transferee shall have any rights hereunder unless it
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 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 9(a).
10. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the internal laws of Alberta. All rights and obligations of the Company and the
Shareholder hereunder shall be in addition to and not in limitation of those
provided by applicable law.
11. 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.
12. 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.
<PAGE>
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13. 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.
14. 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 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.
15. EXCLUSIVE JURISDICTION
Each party (1) agrees that any Action with respect to this Agreement
shall be brought exclusively in the courts of the Province of Alberta, (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.
<PAGE>
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IN WITNESS WHEREOF, the parties have executed and delivered this
Prospectus Agreement as of the date first written above in
__________________________.
SAXON PETROLEUM INC.
By:_________________________________
Name:
Title:
Address: 1700, 736 Sixth Avenue S.W.
Calgary, Alberta
T2P 3T7
Telecopy: (403) 264-1517
FOREST OIL CORPORATION
By:_________________________________
Name:
Title:
Address: Suite 2200
1600 Broadway
Denver, Colorado
80202
Telecopy: (303) 812-1602
<PAGE>
EXHIBIT C
FORM OF
[UNITED STATES] REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT dated as of __________, 1995 between
FOREST OIL CORPORATION, a New York corporation (the "COMPANY"), and Saxon
Petroleum Inc., a corporation amalgamated under the laws of the Province of
Alberta (the "SHAREHOLDER").
Terms not otherwise defined herein have the meanings stated in the
Purchase Agreement (as defined below).
RECITALS
(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, on the First Closing Date, and on the Second Closing
Date, the Shareholder may purchase an aggregate of __________ shares of Common
Stock of the Company which are collectively referred to as the "REGISTRABLE
SHARES".
(B) The Company and the Shareholder desire to enter into this Agreement
providing for the registration under the SECURITIES ACT of 1933, as amended (the
"SECURITIES ACT") of the disposition of the Registrable Shares.
AGREEMENT
The parties agree as follows:
1. REGISTRATION RIGHTS
Subject to the provisions set forth in Section 7(d)):
(a) From and after the First Closing Date (the "EFFECTIVE DATE") and to
and including the third 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
and/or holders of record of at least 500,000 Registrable Shares in
the aggregate (as such number of shares may be adjusted in the event
of any change in the Registrable 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
<PAGE>
-2-
a Rule 144 Transaction (as defined in Section 1(h)) (each such
person, when requesting registration under this Section 1 (whether
pursuant to Section 1(a) or (b)) 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 500,000 Registrable Shares (as
such number may be adjusted) specified by one or more Registering
Shareholders 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
Shareholders initiating a request for registration of Registrable
Shares pursuant to this Section 1(a) shall select (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) the Company shall not be required to prepare and file pursuant
to this Section 1 more than one Registration Statements if the
Second Closing shall not occur and not more than two
Registration Statements if the Second Closing shall occur;
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 pursuant to paragraph (2) of Section 1(a) there
shall be provided one additional registration under
Section 1(a);
(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, any shares of Common Stock requested to be
included in such registration pursuant to (a) the
Registration Rights Agreement between the Company and
The Anschutz Corporation dated May 19, 1995 (the
"ANSCHUTZ AGREEMENT") or (b) the Registration Rights
Agreement between the Company and Joint Energy
Development Investments Limited Partnership dated July
27, 1995 (the "JEDI AGREEMENT");
(B) SECOND, all Registrable Shares owned by Registering
Shareholders and requested to be included in such
registration (if necessary,
<PAGE>
-3-
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);
(C) THIRD, any other securities proposed to be included in
the registration.
(b) From and after the Effective Date to and including the third
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 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 (collectively, the
"TRANSACTION REGISTRABLE SHARES"), as the Registering Shareholders
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 Form 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 the registration (other than a registration pursuant to
Section 1(a)) 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, any shares of Common Stock requested to be
included in such registration pursuant to (a) the
Anschutz Agreement, or (b) the JEDI Agreement;
<PAGE>
-4-
(C) THIRD, all Transaction Registrable Shares requested to
be included in the registration under Section 1(b) of
this Agreement; and
(D) FOURTH, any other securities proposed to be registered
by the Company other than for its own account;
(c) The Company shall prior to the effective date of the Registration
Statement provide each Registering Shareholder and its
representatives reasonable opportunity for reasonable 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 hereof and provisions with respect
to indemnification and contribution substantially the same as those
set forth in Section 3 hereof and the Company shall cooperate in the
timely preparation and delivery of certificates to be registered in
such names as the underwriters may require.
(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
Security Act 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 pursuant
to paragraph 1(g)(1).
(f) Upon written notice to each Registering Shareholder, the Company may
postpone effecting a registration pursuant to this Section 1 on two
occasions during any period of nine consecutive months, may require
other holders of Registrable Shares 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
<PAGE>
-5-
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 concerning the Company 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 third-
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),
Section 1(g)(4) or Section 7(a).
(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 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. The failure of a
Registering Shareholder to furnish information shall not
affect the Company's obligations to other Registering
Shareholders.
(2) The Company shall prepare and file as soon as practicable 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 any 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,
<PAGE>
-6-
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 the case of a Registration Statement filed
pursuant to Section 1(a), the Company shall use its best
efforts to cause the Registration Statement to become
effective as soon as practicable 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. The Company shall
promptly provide the Registering Shareholder with copies of
all correspondence to and from the Securities Exchange
Commission, the NASDAQ National Market and other regulatory
authorities having jurisdiction.
(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), Section 1(g)(4) or Section 7(d)
to refrain from disposing of the Registrable Shares owned by
the Registering Shareholder in the distribution. The Company
will use all reasonable efforts to obtain a withdrawal of any
order of suspension of effectiveness of the registration.
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 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
<PAGE>
-7-
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:
(1) "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;
(2) "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.
(3) "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
<PAGE>
-8-
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
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
the U.S. 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 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;
(5) preparing audited financial statements required by the
Regulation S-X 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 Regulation S-X 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, including fees and
disbursements in connection with the listing and compliance
with the requirements of the applicable listing authorities;
and
(8) fees and expenses of any counsel or 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.
<PAGE>
-9-
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, the officers and directors of the Registering
Shareholder and the underwriter and each person, if any, who
controls the 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 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 pursuant to Section 1(g)(1).
(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 pursuant to
Section 1(g)(1).
(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
<PAGE>
-10-
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 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
<PAGE>
-11-
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. Nothing herein requires contribution to a person guilty
of fraudulent misrepresentation from a person not guilty of
fraudulent misrepresentation.
(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 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.
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 Regulation S under the SECURITIES ACT
("Regulation S"). The Shareholder represents that (1) it is not a
"U.S. Person" within the meaning of Rule 902 of Regulation S; (2) it
has acquired the Registrable Shares 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
<PAGE>
-12-
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
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.
5. FILINGS
The Company shall timely make all filings with the Securities and
Exchange Commission required in order to make available to the holders of
Registrable Shares the exemption
<PAGE>
-13-
from the registration requirements provided by Rule 144 (or any successor
regulation) under the Securities Act.
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.
7. OTHER AGREEMENTS
(a) 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 Statement (as
extended pursuant to the provisions of Sections 1(f),
Section 1(g)(3), Section 1(g)(4) or Section 7(d) of this Agreement)
(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 in Section 1(a)(2) and
Section 1(b)(2) or any other provision of this Agreement; and
(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 a Registration Statement
for such public sale or distribution, 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.
(b) If and to the extent requested by the Company in the case of a non-
underwritten public offering by the Company and if and to the extent
requested by the managing underwriter in the case of an underwritten
public offering by the Company, the Shareholder agrees (except
pursuant to Section 1(b)) not to effect any public sale or
distribution of the Registrable Shares during the 14 days prior to,
and during the
<PAGE>
-14-
90-day period beginning on, the effective date of a registration
statement for such public offering.
(c) The Company shall use all reasonable efforts to have the Registered
Shares listed on the NASDAQ National Market or such other exchanges
on which its Common Stock is listed.
(d) The Shareholder agrees that (except pursuant to Section 1(b)) it
will not effect any public sale or distribution of the Registrable
Shares during the 14 days prior to, and during the 90-day period
beginning on, the effective date of a registration statement, or the
commencement of a public distribution of securities registered,
pursuant to either the Anschutz Agreement or the JEDI Agreement.
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 medium. 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 overnight delivery, the next day or (3) if given by
any other means, when delivered to the proper address and a written
acknowledgement of delivery is received.
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.
10. 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.
11. SUCCESSORS AND ASSIGNS
(a) The Shareholder may assign to any transferee of 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
<PAGE>
-15
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 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).
12. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the internal laws 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.
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.
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.
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.
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.
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
<PAGE>
-16-
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.
18. EXCLUSIVE JURISDICTION
Each party (1) agrees that any Action with respect to this Agreement
shall be brought exclusively in the courts of the Province of Alberta,
(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.
19. 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.
<PAGE>
-17-
20. 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 405 under the Securities Act.
IN WITNESS WHEREOF, the parties have executed and delivered this
Registration Rights Agreement as of the date first written above in
__________________________.
FOREST OIL CORPORATION
By:
Name:
Title:
Address: 1600 Broadway
Denver, Colorado 80202
Telecopy: (303) 812-1602
SAXON PETROLEUM INC.
By:
Name:
Title:
Address:_________________________
_________________________
Telecopy:________________________
<PAGE>
EXHIBIT D
FORM OF
WARRANT
WARRANT TO PURCHASE COMMON SHARES
Certificate Number Certificate for
__________________
Warrants
This certificate is transferable
in Calgary, Alberta
SAXON PETROLEUM INC.
Incorporated under the laws of the Province of Alberta
THIS CERTIFIES THAT, for value received, FOREST OIL CORPORATION, a New
York corporation, or registered assigns, is entitled to purchase from Saxon
Petroleum Inc., an Alberta corporation (the "Company"), at any time after the
date of this Warrant and prior to 5:00 p.m., Calgary time, on the Expiration
Date, at the purchase price of $0.55 Cdn. per share (as such price may be
adjusted pursuant to Section 7, the "Warrant Price") the number of Common Shares
(or at the option of the Holder Non-voting Shares), 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
<PAGE>
-2-
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 Canada 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 only transfer this Warrant in accordance with
applicable securities laws.
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
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., Calgary
time, on ______________, 1998(1) (the "Expiration Date") to purchase from the
Company the number of fully paid and non-assessable 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.
_______________
(1) The date that is 36 months after the Second Closing Date.
<PAGE>
-3-
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 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 resale qualified for distribution
pursuant to a prospectus, and except as provided below,
<PAGE>
-4-
shall bear such legend as may be required by the SECURITIES ACT (Alberta),
the bylaws of the Alberta Stock Exchange or other applicable regulatory
authorities.
(b) The legends referred to in Section 4.2(a) 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 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
(Alberta), the bylaws of the Alberta Stock Exchange or other applicable
regulatory authorities.
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 Common Shares, the number of shares of Common Shares 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 Shares is hereby irrevocably authorized to cause to be
issued from time to time the stock certificates required to honour 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 thereof. 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 Common Shares 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 non-assessable and free from all taxes, liens, charges and security
interests created by the Company with respect to the issuance thereof.
<PAGE>
-5-
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:
(a) If the Company shall at any time pay a dividend on its
Common Shares in its Common Shares, subdivide its outstanding shares of Common
Shares into a larger number of shares or combine its outstanding Common Shares
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 Common Shares 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 Common Shares 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
Common Shares 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 Shares 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 Common Shares outstanding
on such declaration date and the number of additional Common Shares 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 Common Shares outstanding
on such declaration date and the number of Common Shares 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 Common Shares offered for
subscription or purchase are not delivered upon the exercise of such rights or
warrants, upon
<PAGE>
-6-
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 Common Shares actually delivered upon the exercise
of such rights or warrants rather than upon the number of Common Shares
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.
(c) If the Company shall distribute to all the holders of Common
Shares (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
Shares), 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 Shares 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 Common Share. 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
Common Shares outstanding on such declaration date by the average market price
per share (determined as provided in paragraph (e) below) of the Common Shares
on such declaration date.
(d) In case of any capital reorganization or any
reclassification of the capital stock of the Company, or of any exchange or
conversion of the Common Shares for or into securities of another corporation,
or in case of the amalgamation or merger of the Company with or into any other
person (other than an amalgamation or merger which does not result in any
reclassification, conversion, exchange or cancellation of outstanding Common
Shares) or in case of any sale or conveyance of all or substantially all of the
assets of the Company, the person formed by such amalgamation 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, amalgamation, merger, sale or conveyance, as
the case may be, by a holder of the shares of Common Shares 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, amalgamation, merger, sale or conveyance, assuming (i) such holder of
Common Shares of the Company is not a person with which the
<PAGE>
-7-
Company amalgamated 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, amalgamation, 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 Shares on any date shall be the
weighted average trading price at which Common Shares traded on The Alberta
Stock Exchange, or if the Common Shares are not then listed on The Alberta Stock
Exchange, on such stock exchange on which such shares are listed as may be
selected by the board of directors of the Company, 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 weighted average price of Common Shares for any
period shall be determined by dividing the aggregate sales price of all Common
Shares sold during the period by the total number of Common Shares so sold
during such period or, if no such prices are available, the fair market value of
the Common Shares 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 Common Share.
(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 amalgamation 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 amalgamation,
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
<PAGE>
-8-
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 success, 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
amalgamations, mergers, sales or conveyances.
(i) For the purpose of this Section 7, the term "Common Shares"
shall mean the class of shares designated as the Common Shares of the Company at
the date of this Warrant and for purposes of determining the number of Common
Shares outstanding at any time all Non-voting Shares shall be deemed to have
been converted into Common Shares. 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 Shares, 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 Common Shares so issued were the Common Shares, if any, actually issued or
sold upon the exercise of such rights, options, warrants, exchange privileges or
exercise rights and (2) Common Shares, 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 chartered 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
<PAGE>
-9-
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
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 stock exchange on which the Common Shares is listed or admitted
to trading, or, if not listed or admitted to trading on any national securities
exchange, the fair market value of the Common Shares 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 Shares, other than a cash dividend or shall declare or
authorize repurchase of in excess of 10% of the then outstanding shares of
Common Shares; or
(b) the Company shall authorize the granting to all Holders of
Common Shares 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 Shares (other than a
subdivision or
<PAGE>
-10-
combination of the outstanding Common Shares or Shares, 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 Calgary,
Alberta, 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, or (2) 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.
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
<PAGE>
-11-
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 Province of Alberta. 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 Province of Alberta,
(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. MERGER OR AMALGAMATION OF THE COMPANY. The Company will not
merge or amalgamate with or into any other corporation unless the corporation
resulting from such merger or amalgamation (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.
THIS WARRANT is executed by the Company on the date set forth below in
Calgary, Alberta.
Dated: __________, 1995 SAXON PETROLEUM INC.
Attest: ______________________________ By: ___________________________
Name: Name:
Title: Title:
<PAGE>
SAXON PETROLEUM INC.
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,
_________________ [common, Non-voting] shares 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 E
EQUITY PARTICIPATION AGREEMENT
THIS AGREEMENT made as of the _______ day of ____________, 1995.
BETWEEN:
SAXON PETROLEUM INC., a corporation amalgamated under the
laws of the Province of Alberta (herein "SAXON")
- and -
FOREST OIL CORPORATION, a corporation incorporated under the
laws of the State of New York (herein "FOREST")
WHEREAS Saxon intends to issue to Forest Common Shares, Non-Voting
Shares and Convertible Preferred Shares and Warrants pursuant to a Purchase
Agreement (the "PURCHASE AGREEMENT") dated October 6, 1995;
AND WHEREAS Forest and Saxon wish to provide terms upon which Forest
would be able to acquire Equity Securities (as that term is defined herein)
from time to time and upon the happening of certain events.
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the
sum of $1.00 and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, it is hereby agreed by and
between the parties hereto as follows:
1. DEFINITIONS
In this Agreement, the following terms shall have the following
meanings:
<PAGE>
-2-
(a) "COMMON SHARES" means common shares of Saxon as constituted from time
to time during the term of this Agreement;
(b) "EQUITY SECURITIES" means a security entitled to vote at meetings of
shareholders of Saxon generally and includes any securities
convertible into or exchangeable for securities entitled to vote at
meetings of shareholders of Saxon generally and as the context may
allow, includes Equivalent Equity Securities;
(c) "EQUIVALENT EQUITY SECURITIES" means Equity Securities of the same
class and entitling the holder thereof to the same rights as the
applicable Equity Securities and includes securities convertible into
or exchangeable for Equity Securities;
(d) "ISSUANCE" means any issuance by Saxon of any Equity Securities at
any time or from time to time whether out of treasury, by contract,
operation of law conversion, exchange or otherwise, and an Issuance
shall be deemed to have occurred upon the amendment of the terms of
any securities previously issued and then currently outstanding, the
effect of which amendment is that a security becomes an Equity
Security or the voting rights attaching thereto are thereby created
or enhanced;
(e) "PROPORTIONATE NUMBER" or, sometimes herein "ITS PROPORTIONATE NUMBER"
or "FOREST'S PROPORTIONATE NUMBER" means that number of Equivalent
Equity Securities which when purchased by Forest would result in
Forest owning the applicable percentage determined below of the total
of the number of shares subject to an Issuance and the number
available for purchase by Forest:
<PAGE>
-3-
<TABLE>
<CAPTION>
Percentage of total issued
Common Shares and Non-Voting
Shares owned by Forest immediately
before the time of Issuance Forest's Proportionate Number
---------------------------------- -----------------------------
<S> <C>
45% or more 60%
more than 30% but less than 45% 45%
more than 20% but less than 30% 30%
</TABLE>
2. GRANT OF OPTION
2.1 Saxon hereby grants to Forest on the terms and conditions hereinafter
set forth an irrevocable option (the "OPTION") to acquire at any time or from
time to time during the period described in Section 2.2 all or any of the
Equivalent Equity Securities which become subject to the Option from time to
time, it being understood that the Option is to acquire (following the Issuance
and in addition to any Equity Securities, options, rights or warrants or other
securities that are being issued to Forest in connection with the Issuance)
(i) Equity Securities which are the subject of public offerings as referred to
in Section 3.1, (ii) Equity Securities which are the subject of the Issuances
referred to in Section 4.1, (iii) Equity Securities which are issued upon the
exercise of the options, rights or warrants which are referred to in
Section 4.2, (iv) the underlying Equity Securities issued upon the exercise of
employee stock options or other benefits pursuant to the Issuances referred to
in Section 4.3, and (v) Equity Securities which are subject to Issuances
referred to in Section 4.5. The Option hereby granted is subject to acceptance
for filing of notice of the grant of the Option by The Alberta Stock Exchange,
subject to official notice of issuance, in each case pursuant to its rules and
by-laws and Saxon covenants to use its best efforts to obtain such acceptances
from time to time as may be applicable.
2.2 Forest shall have the right to exercise the Option at any time and
from time to time during the term commencing on the date hereof and expiring, at
5:00 p.m. (Calgary time) on the 5th anniversary of the date hereof (the "EXPIRY
TIME").
<PAGE>
-4-
3. CONCERNING ISSUANCES BY WAY OF A PUBLIC OFFERING
3.1 Upon any Issuance constituting a public offering of Equity Securities
by Saxon, Forest shall have the right to purchase at the price per Equity
Security at which Equity Securities are being offered to the public, which price
is payable in the manner provided in Section 5.5, all or any part of its
Proportionate Number of such Equity Securities.
4. CONCERNING ISSUANCES IN OTHER CIRCUMSTANCES
4.1 Other than as contemplated by Sections 4.2 or 4.3, upon any Issuance
which does not constitute a public offering by Saxon or upon the issuance by
Saxon to any other party or parties of any Equity Securities in any
circumstances in which Forest is not provided the opportunity to acquire its
Proportionate Number of Equity Securities at the same time and on the same basis
as the Equity Securities issued to the other party or parties, Forest shall have
the Option to acquire all or any part of its Proportionate Number of Equivalent
Equity Securities and shall pay therefor in the manner provided in Section 5.5
(i) the same consideration per Equivalent Equity Security as was or is to be
received by Saxon per Equity Security from such other party or parties, or
(ii) the fair equivalent of such non-cash consideration per Equivalent Equity
Security as was or is to be received by Saxon per Equity Security from the other
party or parties, as determined by the Board of Directors of Saxon. By way of
illustration only, such Issuances may include an issuance of Equity Securities
pursuant to a private placement, an amalgamation, a securities exchange
take-over bid or an asset acquisition which includes all or partial
consideration in the form of Equity Securities.
4.2 Upon the Issuance by Saxon to any other party or parties of any Equity
Securities pursuant to the exercise of an option to such third party or parties
(other than employee stock options) or the Issuance of Equity Securities
pursuant to the exercise of rights (including conversion or exchange rights) or
warrants to acquire Equity Securities (including for greater certainty those
referred to in Sections 4.22(b)(3), (4), (5) and (6) of the Purchase Agreement),
Forest shall have the Option to acquire its Proportionate Number of Equivalent
Equity Securities on the same terms, including exercise price, as such options,
rights or warrants were exercised
<PAGE>
-5-
and to pay therefor in the manner provided in Section 5.5 (i) the same
consideration for such Equity Securities received by Saxon from such other
party or parties or (ii) the fair equivalent of such non-cash consideration
for such Equity Securities received by Saxon from the other party or parties,
as determined by the Board of Directors of Saxon. By way of illustration
only, if Equity Securities are issued upon the conversion or exchange of
Saxon's securities, the fair equivalent price would be the conversion or
exchange price of such securities.
4.3 In connection with the Issuance by Saxon of Equity Securities upon the
exercise of employee stock options (other than an Issuance pursuant to employee
stock options outstanding on October 6, 1995) or other forms of employee
benefits relating to Equity Securities to the directors, officers or employees
of Saxon, Forest shall be entitled to acquire, as and when the holder of such
option or benefit acquires his or her Equity Securities upon his or her
exercising such option or benefit from time to time, its Proportionate Number of
Equivalent Equity Securities at such time, and to pay therefor in the manner
provided in Section 5.5 the same consideration as was received by Saxon from
such director, officer or employee.
4.4 In the event of an Issuance of the nature set out in this Clause 4,
Saxon shall obtain the prior approval to the listing of the equity security to
be listed as a result of the issue, inclusive of such prospective number as may
be issued upon the exercise of the Option by Forest, from the applicable stock
exchange or exchanges and in addition Saxon shall obtain the prior approval in
respect of such Issuance from other regulatory authorities, as applicable.
Forest shall file such documentation as may reasonably be required of it in
connection with any such Issuance.
4.5 In the event that prior to the Second Closing Date (as defined in the
Purchase Agreement) Saxon issues any Common Shares, Forest shall have the right
at the Second Closing to purchase all or any part of that number of Common
Shares which when purchased by Forest would result in Forest owning 60% of the
total number of shares so issued (including for greater certainty those
purchased by Forest) and shall pay therefore the same consideration per Common
<PAGE>
-6-
Share Saxon received from such third party, which consideration shall be paid in
cash on the Second Closing Date.
5. NOTICE OF ISSUANCES AND METHOD OF EXERCISE
5.1 Immediately following the closing of an Issuance of Equity Securities,
Saxon shall furnish to Forest a notice (the "NOTICE") setting out the terms of
such Issuance including purpose, pricing, size and closing date of such
Issuance.
5.2 Forest shall, within 30 calendar days of receipt of the Notice,
respond in writing to Saxon (the "RESPONSE") indicating whether it intends to
exercise its Option with respect to such Issuance and if so whether it intends
to acquire any or all of its Proportionate Number of Equity Securities (the
"FOREST ISSUANCE"), the manner in which payment shall be made under Section 5.5,
the closing date of the Forest Issuance which shall not be later than 15 days
after the date of the Response and particulars of the number of Common Shares
and Non-Voting Shares held by Forest.
5.3 In the event that pursuant to the foregoing provisions Forest becomes
entitled to purchase Common Shares of Saxon, Forest may elect in the Response to
acquire Non-Voting Shares in lieu thereof on the same terms on the basis of one
Non-Voting Share for each common share which it is entitled to acquire.
5.4 Payment by or on behalf of Forest in the manner provided in
Section 5.5 to Saxon at its principal office in the City of Calgary in respect
of so many of the Equivalent Equity Securities as Forest shall exercise its
option shall be made at the time of closing of the Forest Issuance. Upon
receipt of such payment and upon compliance with applicable laws and regulations
relating thereto, Saxon shall forthwith cause its registrar and transfer agent
to deliver to Forest at its principal office in Denver, Colorado a definitive
certificate or certificates registered in the name of Forest, or as Forest may
otherwise lawfully direct in writing, representing in the aggregate such number
of Equivalent Equity Securities as Forest shall have then paid for and acquired.
<PAGE>
-7-
5.5 Forest may make payment for any Equivalent Equity Securities which it
elects to acquire hereunder at its option as follows:
(a) by certified cheque or bank draft payable to Saxon; or
(b) subject to Section 5.6 by issuance to Saxon of shares of Common Stock
of Forest par value $0.10 per share ("COMMON STOCK") valued on the
basis of the weighted average price per share of that class of shares
for the 60 consecutive trading days ending on the trading day
immediately prior to the Response on the Nasdaq National Market (the
"FOREST SHARE PRICE").
5.6 Forest may only exercise its option to make payment in Common Stock of
Forest if:
(a) Saxon would not after such issuance hold more than 10% of the
outstanding Common Stock of Forest;
(b) such issuance of Forest Common Stock is not prohibited by or contrary
to applicable stock exchange policies or applicable securities laws or
regulations;
(c) Forest does not at the time own securities of Saxon to which are
attached more than 50% of the votes that may be cast to elect
directors of Saxon; and
(d) all required regulatory approvals to such issuance have been obtained;
If Forest issues Common Stock pursuant to this Agreement, the Company
shall be granted one additional registration privilege under the Company
Registration Rights Agreement for each 5,000,000 shares of Common Stock acquired
by the Company hereunder and in the event that less than 5,000,000 shares of
Common Stock is issued by Forest to the Company hereunder in any two year
period, the Company shall have one additional registration privilege in respect
of such shares of Common Stock.
<PAGE>
-8-
6. MARKET PURCHASES
6.1 The provisions hereof shall not prevent Forest from acquiring Equity
Securities from time to time in the open market or by private contract or
otherwise.
7. REFERRAL
7.1 Saxon and Forest acknowledge that in the event that any question
arises as to the Proportionate Number, a determination of the Forest Share
Price or any other term or provision hereof of a fiscal nature (other than the
determination by the Board of Directors of Saxon of the fair equivalent in
money, referred to in Section 4 above), such question or matter shall be
referred to an independent firm of chartered accountants agreed upon by Saxon
and Forest, whose determination upon such fiscal matters shall be conclusive
and binding upon Saxon and Forest. Any questions as to any other terms or
provisions hereof, not of a fiscal nature and other than the determination by
the Board of Directors of Saxon of the fair equivalent in money, referred to in
Section 4 above, shall be referred to arbitration under the ARBITRATION ACT of
Alberta.
8. NOTICES
8.1 Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be sufficiently given if it is delivered
or telecopied to the parties at their respective addresses as follows:
If to Saxon, at: Saxon Petroleum Inc.
1700, The Tower
736 - 6th Avenue S.W.
Calgary, Alberta
T2P 3T7
ATTENTION: PRESIDENT
Telecopy: (403) 264-1517
<PAGE>
-9-
If to Forest, at: Forest Oil Corporation
Suite 2200, 1600 Broadway
Denver, Colorado
80202
ATTENTION: CORPORATE SECRETARY
Telecopy: (303) 812-1602
Any notice so given shall be conclusively deemed to have been given and received
when personally delivered or telecopied. Either party may change its address
for notice hereunder by notice given in the foregoing manner.
9. MISCELLANEOUS
9.1 Each party shall from time to time, and at all times, do all such
further acts and execute and deliver all such further deeds, documents and
assurances as shall reasonably be required in order to fully perform and carry
out the terms of this Agreement.
9.2 The headings of the sections of this Agreement are inserted for
convenience of reference only and shall not affect the meaning or construction
hereof.
9.3 This Agreement may not be assigned by either party hereto; provided,
however, that Forest may assign any of its rights to purchase Equity Securities
or Equivalent Equity Securities hereunder with respect to any particular
issuance of Equity Securities, to one or more affiliates (as that term is
defined in the BUSINESS CORPORATIONS ACT (Alberta)) of Forest, without the
prior consent of Saxon.
9.4 This Agreement shall enure to the benefit of and be binding upon the
successors and permitted assigns of the parties hereto.
9.5 This Agreement shall be subject to applicable securities laws and
other laws and regulations of applicable securities authorities (including
without restricting the generality
<PAGE>
-10-
thereof, the respective by-laws and rules of the stock exchange or exchanges
upon which the Equity Securities are listed) and in the event of any change
in such laws and regulations which affects any provision of this Agreement,
the parties hereto covenant and agree to use their best efforts to amend such
provision and any other provisions hereof which shall require consequential
amendments to the end that this Agreement would be in compliance with such
laws and regulations and would provide for substantially equivalent rights to
Forest and Saxon as each of them had prior to such change in laws and
regulations.
9.6 This Agreement shall be governed by and construed in accordance with
the laws of the Province of Alberta.
9.7 Time is of the essence of this Agreement.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as
of the date first above written.
SAXON PETROLEUM INC.
Per:__________________________________
Per:__________________________________
FOREST OIL CORPORATION
Per:__________________________________
Per:__________________________________
<PAGE>
EXHIBIT F
VOTING AGREEMENT
THIS AGREEMENT is made the ____ day of ______________ 1995,
BETWEEN:
______________________________
(the "Shareholder")
OF THE FIRST PART
- and -
FOREST OIL CORPORATION, a New York Corporation ("Forest")
OF THE SECOND PART
WHEREAS Forest and Saxon Petroleum Inc. (the "Corporation") have
entered into a Purchase Agreement dated October 6, 1995 (the "Purchase
Agreement") pursuant to which Forest has agreed to acquire certain
securities of the Corporation. Terms not otherwise defined herein shall
have the meanings stated in the Purchase Agreement;
AND WHEREAS approval of the Shareholders of the Corporation is
required to certain of the Transactions;
AND WHEREAS, as a condition of the willingness of Forest to enter
into the Purchase Agreement, Purchaser has required that the Shareholder
agree, and in order to induce Purchaser to enter into the Purchase Agreement,
the Shareholder has agreed, to enter into this Agreement with respect to all
Common Shares of the Corporation now owned and which may hereafter be
acquired by the Shareholder;
NOW THEREFORE this Agreement witnesses that in consideration of
the sum of ten dollars ($10.00) now paid by each party to the other, and
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto covenant and agree as follows:
1 . The Shareholder represents and warrants to Forest that:
(a) the Shareholder is the registered and beneficial owner of, or
has direct or indirect voting control over, not less than
______ shares (the "Existing Shares") of the Corporation;
<PAGE>
-2-
(b) the Shareholder has, and will have, the ability to vote or cause
to be voted, all the Existing Shares in accordance with this
Agreement and has not granted or appointed any proxy which is still
effective with respect to such shares;
(c) the execution, delivery and performance of this Agreement by the
Shareholder will not violate, conflict with or result in a breach
of any agreement to which Shareholder is a party; and
(d) this Agreement has been duly executed and delivered by the
Shareholder and assuming due authorization, execution and delivery
by Forest, constitute a legal, valid and binding obligation of the
Shareholder, enforceable against the Shareholder.
2. The Shareholder covenants and agrees that:
(a) during the term of this Agreement, the Shareholder shall vote the
Existing Shares and all other shares of the
Corporation in respect of which it is the owner from time to
time, and all other shares over which Shareholder exercises
control or direction at every annual or special meeting of
Shareholders of the Corporation and at every continuation or
adjournment thereof:
(i) in favour of any resolution with respect to approval of
the Transactions,
(ii) against any (A) challenge to or modification of the
Transactions not consented to by Forest; and (B) proposal
for any reorganization, recapitalization, merger,
consolidation, sale of assets or other business combination
between the Corporation and any person other than Forest; and
(iii) in favour of any other matter relating to consummation of
the Transactions;
(b) during the term of this Agreement, the Shareholder shall not sell,
assign or otherwise transfer any of the Existing Shares or any
other shares of the Corporation which the Shareholder acquires
during the term of this Agreement.
3. The Shareholder acknowledges that remedies at law may be inadequate
to protect Forest against any actual or threatened breach of this Agreement
by the Shareholder and, without prejudice to any other rights and remedies
otherwise available to Forest, the Shareholder agrees to the granting of
injunctive relief in Forest's favour without proof of actual damages. In the
event of litigation relating to this Agreement, if a court of competent
jurisdiction determines in a final nonappealable order that this Agreement
has been breached by the Shareholder, then the Shareholder will reimburse
Forest for its costs and expenses (including, without limitation, reasonable
legal fees and expenses) incurred in connection with all such litigation.
<PAGE>
-3-
4. This Agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective heirs, executors, administrators, legal
personal representatives, successors and permitted assigns. Words importing
the neuter gender shall include the masculine and feminine genders where the
context or person referred to so requires.
5. This Agreement shall be governed by and construed in accordance with
the laws in force in the Province of Alberta and the laws of Canada
applicable therein.
6. This Agreement shall terminate upon the earlier of (i) completion of
the Second Closing; (ii) termination of the Purchase Agreement prior to
completion of the Transactions; (iii) if a Subsequent Event shall occur and
the Corporation shall pay to Forest the Subsequent Event Fee, on the date of
such payment; and (iv) January 31, 1996.
IN WITNESS WHEREOF this agreement has been executed by each of the
parties hereto as of the date first written above.
______________________________
FOREST OIL CORPORATION
By:___________________________
<PAGE>
ESCROW AGREEMENT
THIS AGREEMENT dated as of October 24, 1995.
AMONG:
FOREST OIL CORPORATION, a New York
corporation (the "Purchaser"),
SAXON PETROLEUM INC., an Alberta
corporation (the "Company") and
McCARTHY TETRAULT, Barristers and
Solicitors (the "Escrow Agent")
Terms not defined herein shall have the meanings stated in the
Purchase Agreement made between the Company and the Purchaser and dated as of
the 6th day of October, 1995.
WHEREAS the Company has agreed, pursuant to the aforesaid Purchase
Agreement, to issue and sell 3,000,000 Redeemable Preference Shares, Series
"B", to the Purchaser;
AND WHEREAS the Purchaser requires security as collateral to the
Company's promise to redeem the said shares;
NOW THEREFORE as and for good and valuable consideration, receipt
whereof is acknowledged by all parties hereto, this agreement witnesseth:
1. The Company agrees to lodge with the Escrow Agent the Forest Shares
to be received by it at the First Closing and acknowledges that delivery of
the Forest Shares to the Escrow Agent by the Purchaser is sufficient delivery
to the Company.
2. The Company hereby assigns all its right, title and interest in and
to the following lands and leases, including the wellsites thereon, to the
Escrow Agent:
<PAGE>
2
(a) Lands: Twp 51 Rge 9 W5M: Section 12 (all PNG) BPO 50%, APO 25%
Lease: Cr# 0593110467 dated November 18, 1993
Wellsite: LSD 16 in the aforesaid Section 12
(b) Lands: Twp 60 Rge 17 W5M: Section 22 (to base Bluesky,Bullhead)
Saxon 100%
Lease: Ptn Cr#0178030012 dated March 8, 1978
Wellsite: LSD 10 in the aforesaid Section 22
(collectively the "Lands, Leases and Wells")
3. The Escrow Agent shall take directions solely from the Company with
respect to the sale of the Forest Shares, or any of them, but shall hold the
proceeds (the "Proceeds") in trust as hereinafter set out.
4. Should the Second Closing occur as set out in the Purchase
Agreement, the Escrow Agent shall pay any Proceeds held by it up to
$1,500,000 to the Purchaser in satisfaction of the Company's cash obligation
to the Purchaser set out in Article 1.2(b) of the Purchase Agreement unless
the Company satisfies the Escrow Agent that it has otherwise met such
obligation and the Escrow Agent shall re-assign the Lands, Leases and Wells
to the Company.
5. Should the Second Closing not occur on or before December 31, 1995
and
(a) should the Company and the Purchaser not have agreed upon an
extension (or having so agreed, the extension has passed without Second
Closing occurring), then the Escrow Agent shall deliver the Proceeds to the
Purchaser (or so much thereof as is necessary to meet the Company's
obligations set out in the redemption provisions of Exhibit "A" with respect
to the Series "B" Preferred Shares);
(b) Should the Proceeds be non-existent or insufficient, the Escrow
Agent shall value the Forest Shares or so many thereof as are remaining and,
in an orderly manner, dispose of such number of them as is necessary to meet
the Company's obligation to the Purchaser. The
<PAGE>
3
Escrow Agent shall value the aforesaid shares by reference to the then
current market price of the Purchaser's common shares and revalue same from
day to day during the selling period;
(c) Should the Proceeds and the Forest Shares be insufficient to
satisfy the Company's obligation to the Purchaser under Article 2.1(b) of the
Purchase Agreement, then the Lands, Leases and Wells shall be valued by
Fekete Associates Inc., using the current NYMEX price curve for oil and gas,
Canadian basis quotes and the Canadian forward exchange curve provided by
Enron or AIG and shall value only proved reserves discounted at 15%.
6. The Company and the Purchaser shall then review the Fekete
Associates Inc. valuation and may, at its or their own expense obtain other
engineering valuation report(s). If such report or reports is or are within
10% of the Fekete valuation, then such valuation stands. Otherwise, the
matter shall be referred for determination by arbitration pursuant to the
Alberta Arbitration Act or replacement legislation. Any disputes with
respect to the manner of calculating the carried interest or the terms of the
carried interest shall be settled by arbitration.
7. Once value of the Lands, Leases and Wells is established, the
Purchaser shall be entitled to a carried interest in the Lands, Leases and
Wells at a percentage which will meet the Company's obligations to the
Purchaser within 3 years based on the price curve referred to in 5(c) above.
The Escrow Agent shall use its best efforts to collect all revenues from the
Lands, Leases and Wells and remit to the Purchaser on a monthly basis its
carried interest share of the revenue from the Lands, Leases and Wells. Upon
satisfaction of the Company's obligations to the Purchaser, the Purchaser's
interest shall terminate.
IN WITNESS WHEREOF the parties hereto that are corporations have affixed
their corporate seals duly attested by the hands of their properly authorized
officers in that behalf all
<PAGE>
4
on the day and year first above written. The parties that are not
corporations have duly executed this Agreement and had that execution
witnessed by the witness signing opposite their names.
FOREST OIL CORPORATION
Per: /s/ David H. Keyte
-------------------------
Per: -------------------------
SAXON PETROLEUM INC.
Per: /s/ G. A. Tarrant
------------------------
Per: /s/ Bill Wylie
------------------------
McCARTHY TETRAULT
/s/ Lynda S. McNie Per: /s/ Richard A. Wilson
- ---------------------------- -----------------------
Witness
<PAGE>
COMMON SHARES AS NON-VOTING SHARES
The Corporation is authorized to issue an unlimited number of Common
Shares (the "Common Shares") and an unlimited number of Non-Voting Convertible
Shares (the "Non-Voting Shares") and an unlimited number of Preferred Shares,
issuable in series.
The rights, privileges, restrictions and conditions attaching to the
Common Shares and Non-Voting Shares shall be as follows:
1. DIVIDENDS
1.1 The Common Shares and the Non-Voting Shares shall rank equally as to
dividends and other distributions and, subject to the rights of holders of
Preferred Shares, all dividends declared and distributions made in any fiscal
year shall be declared and paid in equal or equivalent amounts per share on all
the Common Shares and all the Non-Voting Shares at the time outstanding without
preference or distinction.
2. CONVERSION RIGHTS
2.1 Each issued and fully paid Non-Voting Share may at any time, at the
option of the holder, be converted into one Common Share. The conversion
privilege herein provided for may be exercised by notice in writing given to a
transfer agent of the Corporation accompanied by the certificate or certificates
representing the Non-Voting Shares in respect of which the holder thereof
desires to exercise such right of conversion and such notice shall be signed by
the person registered on the books of the Corporation as the holder of Non-
Voting Shares in respect of which such right is being exercised or by the
holder's duly authorized attorney and shall specify the number of Non-Voting
Shares which the holder desires to have converted. The holder shall also pay
any governmental or other tax imposed in respect of such transaction. Upon
receipt of such notice the Corporation shall issue certificates representing
fully paid Common Shares upon the basis above prescribed and in accordance with
the provisions hereof to the holder of the Non-Voting Shares represented by the
certificate or certificates accompanying such notice; if less than all the Non-
Voting Shares represented by any certificate are to be converted, the holder
shall be entitled to receive a new certificate for the Non-Voting Shares
representing the shares comprised in the original certificate which are not to
be converted.
2.2 All shares resulting from any conversion of issued and fully paid Non-
Voting Shares into Common Shares as aforesaid shall be deemed to be fully paid
and non-assessable.
3. VOTING RIGHTS
3.1 Each holder of Common Shares shall be entitled to receive notice of
and to attend all meetings of shareholders of the Corporation, except class or
series meetings of other classes of shareholders, and at all such meetings shall
be entitled to one vote in respect of each Common Share held by such holder.
<PAGE>
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3.2 Subject to the Business Corporations Act (Alberta), holders of Non-
Voting Shares shall not be entitled to receive notice of, attend or vote at any
meetings of shareholders of the Corporation.
4. ANTI-DILUTION PROVISIONS
4.1 If the Common Shares and/or the Non-Voting Shares are at any time
subdivided, consolidated, converted (except for the conversion of Non-Voting
Shares into Common Shares pursuant to paragraph 2 hereof) or exchanged for a
greater or lesser number of shares of the same or another class, appropriate
adjustment shall be made in the rights and conditions attached to the Common
Shares and to the Non-Voting Shares so as to maintain and preserve the relative
rights of the holders of the shares of each of the said classes.
5. LIQUIDATION, DISSOLUTION OR WINDING-UP
5.1 In the event of the voluntary or involuntary liquidation, dissolution
or winding-up of the Corporation or any other distribution of its assets among
its shareholders for the purpose of winding-up its affairs, the holders of the
Common Shares and the holders of the Non-Voting Shares shall be entitled,
subject to the rights of holders of Preferred Shares, to share equally, share
for share, in the remaining property of the Corporation.
The rights, privileges, restrictions and conditions attaching to the
Preferred Shares shall be as follows:
[RICK WILSON TO PROVIDE EXISTING PREFERRED SHARE CONDITIONS]
<PAGE>
NON-VOTING REDEEMABLE PREFERRED SHARES SERIES B
The first series of Preferred Shares shall consist of 3,000,000 shares
designated as Non-Voting Redeemable Preferred Shares Series B ("Series B
Preferred Shares") and having attached thereto the following rights, privileges,
restrictions and conditions:
1. DIVIDENDS
1.1 PAYMENT OF DIVIDENDS - The holders of Series B Preferred Shares shall be
entitled to receive, and the Corporation shall pay thereon, as and when declared
by the board of directors out of monies of the Corporation properly applicable
to the payment of dividends, fixed cumulative preferential dividends at the rate
of $0.10 per share per annum (increasing to $0.125 per share per annum upon any
failure by the Corporation to pay any dividend at the time and in the manner set
out) payable in equal quarterly instalments on the first day of January, April,
July and October in each year ("dividend payment dates") in respect of the
3 month periods ("quarters") ending on such days, respectively, the first of
such dividends to be payable on the first such day occurring after the issue of
the Series B Preferred Shares in respect of the period then ending and to be in
an amount per share determined in accordance with section 1.2 hereof. Dividends
on the Series B Preferred Shares shall accrue from the date of original issue
thereof. Dividends on the Series B Preferred Shares shall, except as provided
below, be paid in the form of a stock dividend. The Corporation shall on each
dividend payment date issue to each holder of Series B Preferred Shares a number
of common shares determined by dividing the amount of dividend which such holder
is entitled to receive by the weighted average price at which common shares of
the Corporation traded on The Alberta Stock Exchange, (or if the common shares
are not then listed on The Alberta Stock Exchange, on such stock exchange on
which such shares are listed as may be selected by the board of directors of the
Corporation,) during the period commencing on the first day of the applicable
dividend period and ending five days before the dividend payment date. If the
common shares are not listed on a stock exchange on the dividend payment date,
the dividend shall be paid in cash. Certificates representing the shares to
which the holder of Series B Preferred Shares is entitled shall be mailed to the
holders of such shares on the dividend payment date provided that the holder has
provided to the Corporation a cheque payable to Revenue Canada for any
withholding tax payable in respect of such stock dividend. In the event of:
(a) subdivisions, consolidations or reclassifications of common shares,
(b) distributions to all or substantially all the holders of common
shares of:
(i) shares (other than shares distributed in lieu of dividends
paid in the ordinary course),
(ii) rights, options or warrants,
(iii) evidences of indebtedness or
<PAGE>
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(iv) assets (other than dividends paid in the ordinary course) or
(c) other similar changes in the share capital of the Corporation
which in the opinion of the board of directors shall have or shall have had an
effect on the trading price of common shares on any date during a dividend
period, the board of directors, acting reasonably and in good faith, shall, on
or prior to the dividend payment date, prescribe adjustments to be made to the
number of common shares to be issued on the date in order to make the number of
common shares to be issued on such date fully comparable with the number of
common shares which would otherwise have been issuable had any of the foregoing
capital changes not occurred. Fractional common shares shall not be issued on
any dividend payment date but in lieu thereof the Corporation shall make
payments in an amount per fractional common share otherwise issuable equal to
the product of the fraction of the common share otherwise issuable and the
weighted average price as determined above.
1.2 DIVIDEND FOR OTHER THAN A FULL QUARTER - The amount per share of the
dividend accrued for any dividend period which is less than the full quarter in
which the dividend period occurs with respect to any Series B Preferred Shares:
(a) which is issued or redeemed; or
(b) where the assets of the Corporation are distributed to the holders
of the Series B Preferred Shares pursuant to section 3 hereof;
shall be equal to the amount (rounded to the nearest 1-100th of 1 cent)
calculated by multiplying one quarter of the applicable annual dividend per
share by a fraction of which the numerator is the number of days in such quarter
such share has been outstanding (excluding the date of issue or the dividend
payment date at the beginning of such period and including the dividend payment
date or date of redemption or distribution of assets at the end of such period)
and the denominator is the number of days in such quarter (excluding the
dividend payment date at the beginning thereof and including the dividend
payment date at the end thereof).
2. REDEMPTION
2.1 GENERAL - Subject to Section 5 and the provisions of the BUSINESS
CORPORATIONS ACT (ALBERTA) (the "Act"), the Series B Preferred Shares shall be
redeemed by the Corporation on the earlier of (i) the Second Closing Date as
defined in the Purchase Agreement dated October 6, 1995 between Forest Oil
Corporation and the Corporation and (ii) six months from the date of original
issue (the earlier of which dates is the "redemption date"), but not otherwise.
2.2 REDEMPTION PRICE
(a) The redemption price at which the Series B Preferred Shares are
redeemable (the "redemption price") shall be $1.00 per share if such
redemption is made on or within five business days after the
applicable redemption date which shall (A) in
<PAGE>
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the case of redemption on the date referred to in paragraph 2.1(i)
be paid as to $0.50 in cash and the issue of fully paid and non-
assessable common shares of the Corporation having a value of $0.50
(determined by dividing $0.50 by the weighted average price at which
common shares traded on The Alberta Stock Exchange during the 30
days ending on the third day prior to the redemption date), provided
that such shares are then listed on The Alberta Stock Exchange and
if not so listed shall be paid in cash and (B) in the case of
redemption on the date referred to in paragraph 2.1(ii) be paid in
cash. The final two sentences of section 1.1 shall apply MUTATIS
MUTANDIS to any such issuance of common shares on such redemption;
(b) If the redemption price is not paid in the manner required by
paragraph 2.2(a) within five business days after the applicable
redemption date, the redemption price shall increase to $1.3333 per
share which shall be paid in cash or at the option of the
Corporation by the issuance of fully paid and non-assessable common
shares of the Corporation valued on the basis of 85% of the weighted
average price at which common shares traded on The Alberta Stock
Exchange or, if the common shares are not then listed on The Alberta
Stock Exchange, on such exchange on which such shares are listed as
may be selected by the Board of Directors of the Corporation, during
the 30 days ending on the third day prior to the date of payment of
the redemption price, or if the common shares are not listed on any
stock exchange, the common shares shall be valued on a basis
determined by an independent financial adviser acceptable to the
Corporation and the holder, or failing agreement appointed by a
Justice of the Court of Queen's Bench of Alberta and any such
determination shall be binding on the Corporation and the Holder;
and
(c) At the time of redemption the Corporation shall pay all accrued but
unpaid dividends to the date of redemption provided that the holder
has provided to the Corporation a cheque payable to Revenue Canada
for any withholding tax payable in respect of any stock dividend or
redemption of the Series B Preferred Shares.
2.3 REDEMPTION PROCEDURE
(a) Notice of redemption of Series B Preferred Shares shall be given by
the Corporation not less than two days prior to the redemption date
to each holder of Series B Preferred Shares. Accidental failure or
omission to give such notice to one or more of such holders shall
not affect the validity of such redemption. Such notice shall set
out the redemption price, the redemption date and the place of
redemption.
(b) On the redemption date the Corporation shall pay or cause to be paid
the redemption price to or to the order of the holders of the
Series B Preferred Shares redeemed on presentation and surrender at
the place of redemption of the respective certificates representing
such shares, and the holders of the Series B
<PAGE>
-4-
Preferred Shares shall cease to be entitled to dividends or to
exercise any of the rights of holders in respect thereof unless
payment of the redemption price shall not be made in accordance
with the foregoing provisions, in which case the rights of the
holders shall remain unimpaired.
2.4 REDEEMED REDEEMABLE PREFERRED SHARES SERIES B - Subject to the Act,
Series B Preferred Shares redeemed by the Corporation shall be restored to the
status of authorized but unissued Preferred Shares as a class but not as
Series B Preferred Shares as a series and shall be available for division and
issuance pursuant to the conditions attaching to the Preferred Shares as a
class.
3. LIQUIDATION
3.1 LIQUIDATION - In the event of the liquidation, dissolution or winding-up
of the Corporation or other distribution of assets of the Corporation among
shareholders for the purpose of winding-up its affairs, the holders of the
Series B Preferred Shares shall be entitled to an amount equal to the redemption
price per share together with an amount equal to all accrued and unpaid
cumulative preferential dividends to the date of such liquidation, dissolution,
winding-up or other distribution before any amount shall be paid or any property
or assets of the Corporation shall be distributed to the holders of any common
shares, Non-Voting Shares or shares ranking junior to the Series B Preferred
Shares.
3.2 FURTHER PARTICIPATION - After payment to the holders of the Series B
Preferred Shares as aforesaid, such holders shall not have the right to any
further participation in the distribution of the property or assets of the
Corporation.
4. RESTRICTIONS ON DIVIDENDS AND RETIREMENT OF SHARES
4.1 Except with the prior approval of the holders of the Series B Preferred
Shares, so long as any of the Series B Preferred Shares are outstanding:
(a) the Corporation shall not declare, pay or set apart for payment any
dividends (other than stock dividends in shares of the Corporation
ranking junior to the Series B Preferred Shares) on any shares of
the Corporation ranking junior to or pari passu with the Series B
Preferred Shares;
(b) the Corporation shall not call for redemption, redeem, purchase or
otherwise retire for value any shares ranking junior to or pari
passu with the Series B Preferred Shares;
(c) the Corporation shall not issue any additional Preferred Shares
except those issuable pursuant to the Agreement referred to in
Section 2.1.
<PAGE>
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5. ISSUE PRICE
5.1 The price or consideration for which each Series B Preferred Shares shall
be issued is $1.00 and upon allotment and payment of such price each such share
shall be issued as fully paid and non-assessable.
6. VOTING
6.1 Subject to the BUSINESS CORPORATION ACT (Alberta), the holders of the
Series B Preferred Shares shall be entitled to receive notice of and to attend
but shall not except as otherwise provided in the Act, be entitled to vote at
meetings of shareholders of the Corporation.
7. ELECTION TO RECEIVE NON-VOTING SHARES
If the Corporation has amended its articles to create Non-Voting Shares
having the rights set out in Exhibit A to the Agreement referred to in
Section 2.1(i), the holder shall be entitled to elect to receive Non-Voting
Shares in lieu of common shares on the basis of one Non-Voting Share for each
common share issuable, as payment of a dividend or on redemption.
8. NOTICES AND INTERPRETATION
8.1 NOTICES
(a) Any notice, cheque or other communication from the Corporation
herein provided for shall be sufficiently given if delivered or if
sent by registered mail, postage prepaid, to the holders of the
Series B Preferred Shares at their respective addresses appearing on
the books of the Corporation or, in the event of the address of any
of such holders not so appearing, then at the last address of such
holder known to the Corporation. A copy of each notice or other
communication shall be sent by telecopy to the holders of Series B
Preferred Shares.
(b) If any notice, cheque or other communication from the Corporation
given to a holder of Series B Preferred Shares pursuant to
paragraph (a) is returned on 3 consecutive occasions because the
holder cannot be found, the Corporation shall not be required to
give or mail any further notices, cheques or other communications to
such shareholder until the holder informs the Corporation in writing
of the holder's new address.
8.2 INTERPRETATION
(a) If any day on which any dividend on the Series B Preferred Shares is
payable or on or by which any other action is required to be taken
hereunder is not a business day, then such dividend shall be payable
or such other action shall be required to be taken on or before the
next succeeding day that is a business day. Business day
<PAGE>
-6-
means a day other than a Saturday, a Sunday or any other day that is
a statutory or civic holiday in the place where the Corporation has
its head office.
(b) All references herein to a holder of Series B Preferred Shares shall
be interpreted as referring to a registered holder of the Series B
Preferred Shares.
(c) The weighted average price of common shares for any period shall be
determined by dividing the aggregate sales price of all common
shares sold during the period by the total number of common shares
so sold during such period.
9. TRANSFER
The holders of Series B Preferred Shares may not sell, assign,
transfer, mortgage, charge or encumber the Series B Preferred Shares.
10. MODIFICATION
10.1 The provisions attaching to the Series B Preferred Shares may be deleted,
varied, modified, amended or amplified with the prior approval of the holders of
Series B Preferred Shares given in accordance with Clause 11.
11. APPROVAL OF SERIES B PREFERRED SHARES
11.1 Any consent or approval to be given by the holders of Series B Preferred
Shares shall be deemed to have been sufficiently given if it shall have been
given in writing by the holders of at least 66 2/3% of the outstanding Series B
Preferred Shares or by a resolution passed at a meeting of holders of Series B
Preferred Shares duly called and held upon not less than 21 days notice to the
holders at which the holders of at least a majority of the outstanding Series B
Preferred Shares are present or are represented by proxy and carried by the
affirmative vote of not less than 66 2/3% of the votes cast at such meeting. If
at any such meeting the holders of a majority of the outstanding Series B
Preferred Shares are not present or represented by proxy within one-half hour
after the time appointed for such meeting then the meeting shall be adjourned to
such date not less than 15 days thereafter and at such time and place as may be
designated by the chairman, and not less than 10 days written notice shall be
given of such adjourned meeting. At such adjourned meeting the holders of
Series B Preferred Shares present or represented by proxy may transact the
business for which the meeting was originally convened and a resolution passed
thereat by the affirmative vote of not less than 66 2/3% of the votes cast at
such meeting shall constitute the consent and approval of the holders of the
Series B Preferred Shares. On every poll taken at every meeting every holder of
Series B Preferred Shares shall be entitled to one vote in respect of each
Series B Preferred Shares held. Subject to the foregoing, the formalities to be
observed in respect of the giving or waiving of notice of any such meeting and
the conduct thereof shall be those from time to time prescribed in the Act and
the bylaws of the Corporation.
<PAGE>
Exhibit 99.4
SECOND AMENDMENT TO LOAN AGREEMENT
This Second Amendment to Loan Agreement (this "Amendment")
is made and entered into as of July 27, 1995 ("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
<PAGE>
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.
"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 17, 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
<PAGE>
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.
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
<PAGE>
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.
"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.
<PAGE>
"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
_______ ___________________
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.
"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
<PAGE>
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 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
<PAGE>
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 August 31, 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.
"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.
<PAGE>
"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
<PAGE>
Lender.
"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 immediately prior to the
effectiveness of this Amendment, had an outstanding
principal balance of $62,155,325.18, together with
accrued but unpaid interest thereon in the amount of
$212,860.70. As of the Amendment Date, all accrued but
unpaid interest under the Loan shall be capitalized as
principal. The Loan is subdivided into two tranches.
As of Amendment Date, the first tranche (the "Tranche A
Loan") has an outstanding principal balance of
$40,000,000. As of the Amendment Date, the second
tranche (the "Tranche B Loan") has an outstanding
principal balance of $22,368,185.88. 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
<PAGE>
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,
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
<PAGE>
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.
(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
<PAGE>
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 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
<PAGE>
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 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
<PAGE>
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 falls. For
example, with respect to the Payment Date occurring on
<PAGE>
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
<PAGE>
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.
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
<PAGE>
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 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
<PAGE>
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.
(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
<PAGE>
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 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
<PAGE>
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
<PAGE>
precedent specified in paragraph (c) below, commencing
on the Option Commencement Date and ending 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);
<PAGE>
(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 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
<PAGE>
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
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:
<PAGE>
(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 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
<PAGE>
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
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.
<PAGE>
(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.
<PAGE>
(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 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
<PAGE>
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.
(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
<PAGE>
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. 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
<PAGE>
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 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
<PAGE>
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
<PAGE>
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 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
<PAGE>
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 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
<PAGE>
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:
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
<PAGE>
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 new Sections:
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.
Section 4.20 Curative Issues. On or before
Decmeber 31, 1995, the Borrower shall (a) (i) obtain, on
terms no less favorable to the Borrower in any material
respects than those contained in the Vela Lease dated April
18, 1988 (as amended, "Vela Lease"), oil and gas leasehold
<PAGE>
interests ("Replacement Leases") covering the acreage and
depths which were previously covered by the Vela Lease and
pledged to the Lender pursuant to the Security Instruments
but that, as of July 27, 1995, are no longer subject to (A)
the Vela Lease or (B) leasehold interests constituting
Mortgaged Properties and (ii) execute and deliver to the
Lender such Security Instruments that are necessary or that
are reasonably requested by the Lender to grant the Lender a
first priority perfected lien in the Replacement Leases,
subject only to the Permitted Encumbrances described in
Exhibit A to the Deed of Trust, Assignment of Production,
Security Agreement and Financing Statement dated as of
December 28, 1993; or (b) prepay the principal amount of the
Loan outstanding hereunder in an amount equal to $100,000.
Any prepayment made under this Section 4.20 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. In connection with any prepayment made
under this Section 4.20, the Borrower shall also pay the
accrued but unpaid interest on the outstanding principal
amount of each Loan Tranche being prepaid to the date of
prepayment.
9. Section 5.01 of the Agreement is amended in its entirety
to read as follows:
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
<PAGE>
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).
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
<PAGE>
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
<PAGE>
Lenders hereunder with respect to the same issue.
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 (iii) 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 17,
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.
<PAGE>
18. Contemporaneously with the execution of this Amendment,
the Lender shall execute and deliver to Borrower the Overriding
Royalty Reconveyance.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be duly executed as of the date first above
written.
Borrower: FOREST OIL CORPORATION
By: /s/ Kenton M. Scroggs
---------------------------
Kenton M. Scroggs
Vice President
Lender: JOINT ENERGY DEVELOPMENT
INVESTMENTS LIMITED PARTNERSHIP
By: Enron Capital Corp.,
its general partner
By: /s/ Clifford P. Hickey
---------------------------
Clifford P. Hickey
Attorney-in-Fact
<PAGE>
EXHIBIT D
Disclosure Statement
(Amended and Restated)
1. Reference is made to all matters described in Exhibit D (the original
Exhibit) to the Agreement.
2. Reference is made to the items described in the Company's written
disclosure to JEDI provided pursuant to Section 4.1 of the Restructure
Agreement, as updated pursuant to the certificate delivered by the
Company to JEDI pursuant to Section 2.4.15(2) of the Restructure
Agreement.
3. Reference is made to the matters referenced on Exhibit F to the
Restructure Agreement.
<PAGE>
EXHIBIT I
SCHEDULED CAPITAL OPERATIONS
<TABLE>
<CAPTION>
RESERVE NET INVESTMENT
PROPERTY CATEGORY ACTIVITY ($000s)' YEAR COMMENTS
<S> <C> <C> <C> <C> <C>
Loma Vieja Proved L. Lopez #1, install compressor. 7 Jun-95
Loma Vieja Proved FOC Peyote 1 S/T S. Hinnant, dry hole cost. 227 Apr-95 219 spent prior
to 4/1/95
Loma Vieja Proved Salt water disposal. 84 Nov-95
SUBTOTAL: 318
Loma Vieja Proved Recomplete Loma Vieja #1 to add R & S Sands 234 May-96
Loma Vieja Proved Recomplete El Peyote #4 in S Sand. 211 Jan-96
Loma Vieja Proved Upgrade facilities. 88 Jan-96
Verm. 101 Proved Recomplete B1A Well to 10300'. 504 Apr-96
Verm. 255 Proved Wireline selective #6 (H-2) (K-4 Sand). 4 Sep-96
Verm. 255 Proved Wireline selective #5 (H-1) (K-3 Sand). 4 Sep-96
EI 53 Proved Recomplete #8 to Cris K2 and Cris K. 618 May-96*
EI 53 Proved Recomplete #9 to Cris K1 & Tex L. Set up wireline
Cris K 1L, Disc 12.2. 560 Jan-96*
SUBTOTAL: 2223
</TABLE>
* EA has investments for recompletion in subsequent years.
Page 1
<PAGE>
<TABLE>
<CAPTION>
RESERVE NET INVESTMENT
PROPERTY CATEGORY ACTIVITY ($000's) YEAR COMMENTS
<S> <C> <C> <C> <C> <C>
Loma Vieja PUD Drill & comp. well #7 (TX13077) R & S Sand 1135 Jul-97
Loma Vieja Prob. Drill & comp. well #1 (TX13078) T6-T10 Sands. 1024 Apr & Jun 1997
Loma Vieja Prob. Drill & comp. Queen City Unit #10 (QC Prospect). 60 May-97
Loma Vieja Prob. Drill & comp. Queen City Unit #12 (QC Prospect). 60 Aug-97
Loma Vieja Prob. Drill & comp. Queen City #9 (Queen City Prospect). 60 Mar-97
Loma Vieja Prob. Drill & comp. Queen City #11 (QC Prospect). 60 Jun-97
Loma Vieja Prob. Drill & comp. Queen City #13 (QC Prospect). 60 Oct-97
Loma Vieja Prob. Drill & comp. Queen City Unit #2 (QC Prospect). 60 Jan-97
Loma Vieja Prob. Drill & comp. Queen City Unit #3 (QC Prospect). 60 Mar-97
Loma Vieja Prob. Drill & comp. Queen City #5 (QC Prospect). 60 Jul-97
Loma Vieja Prob. Drill & comp. Queen City #8 (QC Prospect). 60 Mar-97
Loma Vieja Prob. Drill & comp. Queen City #6 (QC Prospect). 60 Jan-97
Loma Vieja Prob. Drill & comp. Queen City #4 (QC Prospect). 58 May,Jun 1997
Loma Vieja Prob. Drill & comp. Queen City #7 (QC Prospect). 60 Jan-97
Loma Vieja Proved Recomplete El Peyote #3 - S Sand. 218 Apr-97
Loma Vieja PUD Drill & comp. Well #11 in R&S Sands (TX13078). 1021 Apr-97
VM 101/102 PUD Drill #5 S/T 2 in Block 102, H&J Sands. 1755 Jan-97
VM 101/102 PUD Drill A-2 Well in Block 102 produce E & M1 Sands 2978 Jan,Feb,Mar 97*
(H, J and F behind pipe).
VM 255 Proved Recomplete H-1 to I-1 Sand & I-3 Sand. 172 Nov-97
VM 255 Proved Recomplete H-2( I-2 , H-3, H-2 sands) 228 Nov-97
VM 255 Proved Wireline H-2 K-2 Sand. 4 Jun-97
VM 255 Proved Wireline H-1 K-0 Sand. 4 Apr-97
EI 53 Proved Wireline selective #9 Cris K1L. 17 Sep-97
EI 53 Proved Wireline selective #9 Well to Disc 12.2. 17 Oct-97
SUBTOTAL: 9291
</TABLE>
* EA has investment for recompletion in subsequent years.
Page 2
<PAGE>
<TABLE>
<CAPTION>
RESERVE NET INVESTMENT
PROPERTY CATEGORY ACTIVITY ($000's) YEAR COMMENTS
<S> <C> <C> <C> <C> <C>
Loma Vieja Poss Drill & comp. #10 (Fandango) (1). 1197 Jul-98
Loma Vieja Prob. Drill & comp. well #2 (TX 13079) T6-T10. 1037 Jul-98 Contingent on
successful
#1 well.
Loma Vieja Prob. Drill & comp. #6 (NE Hinnant) (1). 389 Oct-98 Farmout 2/3 for
1/2.
Loma Vieja Poss Drill & comp. #1 (U Sand Prospect) (1). 1470 Oct-98
Loma Vieja Prob. Drill & comp. Queen City Unit #14 (QC Prospect). 62 Feb-98
Loma Vieja Prob. Drill & comp. Queen City Unit #16 (QC Prospect). 62 Jun-98
Loma Vieja Prob. Drill & comp. Queen City Unit #18 (QC Prospect). 62 Oct-98
Loma Vieja Prob. Drill & comp. Queen City Unit #15 (QC Prospect). 62 Apr-98
Loma Vieja Prob. Drill & comp. Queen City Unit #17 (QC Prospect). 62 Aug-98
Loma Vieja Prob. Drill well 5 to R Sand. 1119 Feb-98
VM 101/102 Proved W/O A1A well to F Sand. 523 Jan-98
VM 101/102 Proved Recomplete A-2 well (J Sand). 35 Aug-98
VM 101/102* Proved Abandon VM 102 B platform. 453 Nov-98
VM 101 Prob. Drill & comp. B-2 9300' SD (1). 1598 Mar-98
EI 320 #3* Proved Abandon well. 81 Dec-98
SUBTOTAL: 8212
</TABLE>
*Abandonment timing is based on proved reserves only and may be delayed due to
success in probable and possible activities.
(1) Not withstanding the terms of Section 4.17 and Lender's right to commence
operations with respect to Scheduled Capital Operations,
Borrower will be required to submit to Lender AFE's for such wells as
provided for in Section 2.02(b) even after the occurrence of the
Conveyance Expiration Date.
Page 3
<PAGE>
<TABLE>
<CAPTION>
RESERVE NET INVESTMENT
PROPERTY CATEGORY ACTIVITY ($000's) YEAR COMMENTS
<S> <C> <C> <C> <C> <C>
Loma Vieja Prob. Drill & comp. Queen City Unit #19 (QC Prospect). 64 Feb-99
Loma Vieja Prob. Drill & comp. Queen City Unit #21 (QC Prospect). 64 Jun-99
Loma Vieja Prob. Drill & comp. Queen City Unit #20 (QC Prospect). 64 Apr-99
Loma Vieja Prob. Drill & comp. Queen City Unit #22 (QC Prospect). 64 Aug-99
Loma Vieja Prob. Drill & comp. well #3 (TX13079) T8-T10. 977 Jun-99 Contingent on
successful
#1 well.
Loma Vieja Poss Drill & comp. #2 (U Sand Prospect). 1189 Mar-99 Contingent on
well #1.
Loma Vieja Poss Drill & comp. #3 (U Sand Project). 1189 Nov-99 Contingent on
well #1.
Loma Vieja Poss Drill & comp. #12 (Fandango). 1485 Mar-99 Contingent on
well #10.
VM 101/102 Prob. Recomplete A-2 to H Sand. 36 Feb-99
WC 44* Proved Abandon platform. 402 Nov-99
SUBTOTAL: 5534
VM 102 Prob. Wireline selective A-2 F Sand Seg. B. 37 Apr-00
Loma Vieja Proved Recomplete Loma Vieja #4A to Hinnant. 40 Jan-00
VM 255 Proved Wireline H-3 in #2 well. 4 Mar-00
SUBTOTAL: 81
VM 102* Proved Abandon 102 A platform. 704 Nov-01
VM 101/102* Proved Abandon Verm. 101 B platform. 233 Nov-01
VM 255 Proved Rig workover #5 (H1). Dual H-5, H-4 Sands. 217 Jul-01
SUBTOTAL: 1154
EI 53* Proved Abandon. 138 Nov-02
SUBTOTAL: 138
VM 255* Proved Abandonment. 117 Jul-03
SUBTOTAL: 117
TOTAL: 27068
</TABLE>
*Abandonment timing is based on proved reserves only and may be delayed due to
success in probable and possible activities.
Page 4
<PAGE>
EXHIBIT J
Scheduled Principal Amount and
Required Trailing Twelve Month Cash Flow
<TABLE>
<CAPTION>
Semiannual Scheduled Principal Required Trailing Twelve
Payment Date Amount ($MM) Month Cash Flow ($MM)
----------- ------------------- -------------------------
<S> <C> <C>
Each payment date prior to $70.00
February 29, 1996
February 29, 1996 65.00 4.0
August 31, 1996 64.50 4.0
February 28, 1997 64.00 5.5
August 31, 1997 63.00 5.0
February 28, 1998 62.00 4.5
August 31, 1998 59.00 8.0
February 28, 1999 55.00 10.0
August 31, 1999 51.50 10.5
February 29, 2000 48.00 10.5
August 31, 2000 44.00 11.0
December 31, 2000 22.10 10.5
August 31, 2001 20.00 9.0
February 28, 2002 17.00 6.0
August 31, 2002 15.00 5.0
December 31, 2002 0.00 5.0
</TABLE>
<PAGE>
Attachment 1 to Exhibit J
If pursuant to the provisions of Section 2.17 of the Agreement Borrower and
Lender are unable to agree on an adjustment to either the Required Trailing
Twelve Month Cash Flow or the Scheduled Principal Amount, the disputed item or
items, as the case may be, shall be determined as follows:
A. REQUIRED TRAILING TWELVE MONTH CASH FLOWS - The Required Trailing Twelve
Month Cash Flow set forth on Exhibit J for each future Semiannual Payment Date
shall be reduced by an amount equal to the future net revenue attributable to
the Scheduled Capital Operation that triggered the need for an adjustment
pursuant to Section 2.17 (the "Subject Operation"), as such future net revenue
is set forth on the economic evaluation for such operation included as a part of
this Attachment 1. for the twelve month period ending on the date two months
prior to such Semiannual Payment Date. In addition, with respect to the first
Semiannual Payment Date following the occurrence of the event that triggered the
need for an adjustment pursuant to Section 2.17, the Required Trailing Twelve
Month Cash Flow for such Semiannual Payment Date shall be reduced by the amount
of any capital costs actually incurred by Borrower with respect to the Subject
Operation that were approved by Lender pursuant to the terms of the Agreement
and incurred by Bower prior to the date Borrower elected not to commence, or to
discontinue, such operation. If with respect to any Mandatory Capital Expense,
Borrower allows a Lease to lapse and Borrower does not spend the entire amount
referenced on Exhibit S, then with respect to the first Semiannual Payment Date
following the lapse of such Lease the required Trailing Twelve Month Cash Flow
for such Semiannual Payment Date shall be increased by the amount of the unused
funds. Notwithstanding anything herein to the contrary, with respect to the
Semiannual Payment Date occurring on December 31, 2000, the twelve month period
referenced in the first sentence of this Section A shall be the period ending on
December 31, 2000 and not two months prior to such date.
B. SCHEDULED PRINCIPAL AMOUNTS - The Scheduled Principal Amount set forth on
Exhibit J for each future Semiannual Payment Date shall be increased by an
amount equal to (i) 90% of the cumulative sum of the operating revenues
attributable to the Subject Operation, as such operating revenues are set forth
on the economic evaluation for such operation included as part of this
Attachment 1, through the date which is two months prior to such Semiannual
Payment Date and reduced by an amount equal to (ii) 80% of the net total
investment set forth on the same economic evaluation to be spent prior to the
date which is two months prior to such Semiannual Payment Date. In addition,
with respect to the first Semiannual Payment Date, following the occurrence of
the event that triggered the need for an adjustment pursuant to Section 2.17,
the Scheduled Principal Amount for such Semiannual Payment Date shall be
increased by the Capital Expenses actually incurred by Borrower with respect to
the Subject Operation prior to the date Borrower elected not to commence, or to
discontinue, such operation.
If with respect to any Mandatory Capital Expense, Borrower allows a Lease to
lapse and Borrower does not spend the entire amount referenced on Exhibit S,
then with respect to the first Semiannual Payment Date following the lapse of
such Lease the required Scheduled Principal Amount for such Semiannual Payment
Date shall be reduced by the unspent portion of such Mandatory Capital Expense.
For any Subject Operation originally scheduled on Exhibit I to be performed
prior to December 31, 2000, with respect to each Semiannual Payment Date, the
cumulative adjustment described in the previous three sentences of this Section
B shall be
<PAGE>
increased by an amount equal to the cumulative accrued interest at 12.5% per
annum compounded monthly on the cash flow stream through the date two months
prior to such Semiannual Payment Date. Notwithstanding anything herein to the
contrary, with respect to the Semiannual Payment Date occurring on December 31,
2000, the twelve month period referenced in clauses (i) and (ii) above shall be
the period ending on December 31, 2000 and not two months prior to such date.
<PAGE>
EXHIBIT P
Form of AFE
A two page form of AFE is attached hereto.
<PAGE>
WORK AUTHORIZATION 5/12/95
FOREST OIL CORPORATION TEST
WELL COST ESTIMATE
AFE NUMBER . : 95-7777 - 0
AFE TYPE . . : 20 DEVELOPMENT DRILL & COMPLETE
G/L ACCT.. . : 223
APPROVAL TYPE: Dry Hole Budget Approved
DIVISION: Onshore Division PROPERTY: ONSHORE GENERAL
PROSPECT: COUNTY: ST:
FIELD: PTD:
PROPOSED SPUD DATE: DAYS TO TD:
OBJECTIVE:
- -------------------------------------------------------------------------
DESCRIPTION DRY HOLE COMPLETION TOTAL
- -------------------------------------------------------------------------
O11 ROADS & LOCATION 1 1 1 3
TOTAL INTANGIBLE DRILLING 1 1 1 3
TOTAL COST 1 1 1 3
<PAGE>
EXHIBIT R
ASSIGNMENT AND BILL OF SALE
This Assignment and Bill of Sale ("Assignment"), is executed and delivered
as of the date hereinafter stated, by Forest Oil Corporation, a New York
corporation ("Assignor"), to Joint Energy Development Investments Limited
Partnership, a Delaware limited partnership ("Assignee").
WHEREAS, reference for all purposes is hereby made to that certain Loan
Agreement dated December 28, 1993, between Assignor and Assignee, as amended by
the First Amendment to Loan Agreement dated as of December 28, 1993 and the
Second Amendment to Loan Agreement dated as of (as so amended and as may be
subsequently amended or restated, the "Loan Agreement");
WHEREAS, pursuant to and in compliance with the terms of the Loan Agreement
Assignor has elected to convey its interest in the Properties (as defined below)
to Assignee in satisfaction of the unpaid principal and interest due on the Loan
(as defined in the Loan Agreement);
I. ASSIGNMENT.
NOW, THEREFORE, Assignor, for valuable considerations, the receipt and
sufficiency of which are hereby acknowledged, by these presents GRANTS,
BARGAINS, SELLS, CONVEYS, ASSIGNS, TRANSFERS and DELIVERS unto Assignee
effective as of_______________________________ [insert date of closing], at 7:00
a.m. Houston time ("Effective Time") the following real and personal properties
(the "Properties"):
A. The undivided interests in and to the oil and gas leases and/or oil,
gas and other mineral leases and other interests and estates (such interests
collectively called the "Leases") which are described on Exhibit A [to be
completed and attached at the time of the conveyance based on the description of
Mortgaged Properties less and except those properties not accepted pursuant to
Section 2.16(d) of the Loan Agreement] attached hereto or which Leases are
otherwise referred to herein.
B. All rights, titles, interests and estates now owned or hereafter
acquired by Assignor in and to (i) the properties now or hereafter pooled or
unitized with the Leases; (ii) all presently existing or future unitization,
communitization, pooling agreements and declarations of pooled units and the
units created thereby (including, without limitation, all units created under
orders, regulations, rules or other official acts of any Federal, State or other
governmental body or agency having jurisdiction and any units created solely
among working interest owners pursuant to operating agreements or otherwise)
which may affect all or any portion of the Leases including, without limitation,
those units which may be described or referred to on attached Exhibit A; (iii)
all operating agreements, production sales or other contracts, farmout
agreements, farm-in agreements, area of mutual interest agreements, equipment
leases and other agreements described or referred to in this Assignment or which
relate to any of the Leases or interests in the Leases described or referred to
herein or on attached Exhibit A or to the production, sale, purchase, exchange,
processing, transporting or marketing of
<PAGE>
the Hydrocarbons (hereinafter defined) from or attributable to such Leases or
interests (collectively, the items described in Section B.(iii) are the
"Contracts"); and (iv) in each case to the extent some are assignable without
violating applicable law or contract restrictions as of even date herewith, all
abstracts, title opinions, title reports, title policies, lease and land files,
surveys, analyses, compilations, correspondence, filings with regulatory
agencies, other documents and instruments, geophysical, geological, engineering,
exploration, production and other technical data, books, records, files and
magnetic tapes containing financial, title or other information, in each case
that are in the possession or control of Assignor and relate to the Properties
(collectively, the items described in section B.(iv), are the "Data") (it being
agreed that Assignor shall have the right, at its own cost and expense, to
retain a copy of any of the Data).
C. All rights, titles, interests and estates now owned by Assignor in and
to all oil, gas, casinghead gas, condensate, distillate, liquid hydrocarbons,
gaseous hydrocarbons and all products refined therefrom, in each case to the
extent attributable to production from and after the Effective Time, and all
other minerals (collectively called the "Hydrocarbons") in and under and which
may be produced and saved after the Effective Time from or attributable to the
Leases, the lands covered thereby and Assignor's interests therein, including
all oil in tanks and all rents, issues, profits, proceeds, products, revenues
and other income from or attributable to the Leases, the lands covered thereby
and Assignor's interests therein, in each case to the extent attributable to
production from and after the Effective Time, and including specifically but
without limitation all liens and security interests in such Hydrocarbons
securing payment of proceeds resulting from the sale of Hydrocarbons.
D. All tenements, hereditaments, appurtenances and properties in anywise
appertaining, belonging, affixed or incidental to the rights, titles, interests
and estates described or referred to in paragraphs A, B and C above, now owned
by Assignor, including, without limitation, any and all property, real or
personal situated upon, used, held for use, or useful in connection with the
operating, working or development of any of such Leases (excluding drilling
rigs, trucks, automotive equipment or other personal property which may be taken
to the premises for the purpose of drilling a well or for other similar
temporary uses) and including any and all oil wells, gas wells, injection wells
or other wells, buildings, structures, field separators, liquid extraction
plants, plant compressors, pumps, pumping units, field gathering systems, tanks
and tank batteries, fixtures, valves, fittings, machinery and parts, engines,
boilers, meters, apparatus, equipment, appliances, tools, implements, cables,
wires, towers, casing, tubing and rods, surface leases, rights-of-way, easements
and servitudes and licenses together with all additions, substitutions,
replacements, accessions and attachments to any and all of the foregoing
properties.
E. All of the rights, titles and interests of every nature whatsoever of
Assignor in and to the Leases and every part and parcel thereof, including,
without limitation, all rights, titles, interests or estates in and to the
Leases as the same may be enlarged by the discharge of any payments out of
production or by the removal of any charges or Liens (as defined in the Loan
Agreement) to which any of the Leases are subject, or otherwise, less and except
any overriding royalty interests of Assignor in and to the Leases that were
acquired on or after December 29, 1993.
-2-
<PAGE>
F. All accounts, contract rights, inventory and general intangibles
constituting a part of, relating to or arising out of those portions of the
Properties which are described in paragraphs A through E above and all proceeds
and products of all such portions of the Properties.
G. All right, title and interest to the Option Agreements (Contact Nos.
03938.00, 03939.00, 03940.00, 03941.00 and 03942.00) dated as of December 29,
1993 between Assignor and Enron Risk Management Services Corp., as the same may
have been modified, amended or restated (the "Option Agreements").
TO HAVE AND TO HOLD all and singular the Properties, together with all
rights, titles, interests, estates, remedies, powers and privileges thereunto
appertaining unto Assignee and its successors, legal representatives and assigns
forever. Subject to the Excepted Liens (as defined in the Loan Agreement),
Assignor hereby binds itself, its successors, legal representatives and
assigns, to warrant and forever defend title to the Properties, subject as
aforesaid, unto Assignee, its successors, legal representatives and assigns,
against every person whomsoever lawfully claiming or to claim the same or any
part thereof, by, through or under Assignor, but not otherwise.
II. PROCEEDS, EXPENSES, ACCOUNTING AND TAXES.
A. PROCEEDS, EXPENSES AND TAXES.
1. DIVISION OF PROCEEDS. From and after the date of execution of
this Assignment (the "Closing Date"), all Hydrocarbons produced from the
Properties on or after the Effective Time shall be owned by Assignee. In
addition, subject to and in accordance with the terms and provisions of the Loan
Agreement (and without in any way expanding or affecting the limited recourse of
Assignor for the Indebtedness pursuant to Section 6.03 of the Loan Agreement)
Assignor shall make to Assignee all payments due under the Loan Agreement
through the Effective Time and the amount, if any, by which (i) 90% of the Net
Operating Cash Flow (as defined in Loan Agreement) through the Effective Time
but including all Net Operating Cash Flow resulting from the Hydrocarbons in
tanks on the Effective Time, less (ii) cumulative Capital Expenses (as defined
in the Loan Agreement) through the Effective Time, exceeds (iii) the sum of all
Monthly Payment Amounts (as defined in the Loan Agreement) paid to Assignee
pursuant to the terms of the Loan Agreement for all prior months.
2. RECEIPTS AND CREDITS. All monies, proceeds, receipts, credits
and income attributable to the Properties (a) for all periods of time subsequent
to the Effective Time, shall be the sole property and entitlement of Assignee,
and, to the extent received by Assignor, Assignor shall fully disclose, account
for and transmit same to Assignee promptly and (b) for all periods of time prior
to the Effective Time (including without limitation, proceeds from the sale of
Hydrocarbons produced prior to the Effective Time that are received after the
Effective Time), shall be the sole property and entitlement of Assignor and, to
the extent received by Assignee, Assignee shall fully disclose, account for and
transmit same to Assignor promptly. All costs, expenses, disbursements,
obligations and liabilities attributable to the Properties (i) for periods of
time prior to the Effective Time, regardless of when due or payable, shall be
the sole obligation of Assignor, and Assignor shall promptly pay, or if properly
paid by
-3-
<PAGE>
Assignee, promptly reimburse Assignee for and hold Assignee harmless from and
against same and (ii) for periods of time subsequent to the Effective Time,
regardless of when due or payable, shall be the sole obligation of Assignee, and
Assignee shall promptly pay, or if properly paid by Assignor, promptly reimburse
Assignor for and hold Assignor harmless from and against same. All Operation
Costs and Net Production Revenues attributable to the period prior to the
Effective time shall be taken into account in connection with the determination
of any Monthly Payment Amounts payable under the Loan Agreement through the
Effective Time. Nothing in the foregoing shall limit or modify the payment
obligations provided for in Section II.A.1.
3. APPORTIONMENT OF AD VALOREM AND PROPERTY TAXES. All ad valorem
taxes, real property taxes, personal property taxes and similar obligations
("Property Taxes") attributable to the Properties shall be apportioned as of the
Effective Time between Assignor and Assignee. The owner of record on the
assessment date shall file or cause to be filed all required reports and returns
incident to the Property Taxes and shall pay or cause to be paid to the taxing
authorities all Property Taxes relating to the tax periods during which the
Effective Time occurs. If Assignor is the owner of record on the assessment
date, then Assignee shall pay to Assignor Assignee's pro rata portion, if any,
of such Property Taxes within 15 days from the date such taxes are required to
be paid to the taxing authorities and after receipt of Assignor's invoice
therefor. If Assignee is the owner of record as of the assessment date then
Assignor shall pay to Assignee Assignor's pro rata portion of such Property
Taxes, if any, within 15 days from the date such taxes are required to be paid
to the taxes authorities and after receipt of Assignee's invoice therefor.
B. ACCOUNTING.
As soon as practical and, in any event, no later than ninety calendar
days after the Closing Date, Assignor shall prepare and deliver to Assignee a
statement (the "Final Statement") setting forth a net amount that Assignor or
the Assignee owes to the other as a result of the application of the provisions
of Section 2 above. If Assignor and Assignee cannot agree upon the Final
Statement, the Houston Office of the firm of _____________________________ is
designated to act as an arbitrator and to decide all points of disagreement with
respect to the Final Statement, such decision to be binding on both parties. If
such firm is unwilling or unable to serve in such capacity, Assignor and
Assignee shall attempt to, in good faith, designate another acceptable person as
the sole arbitrator under this Section. If the parties are unable to agree upon
the designation of a person as substitute arbitrator, then Assignor or Assignee,
or both of them, may in writing request the Judge of the United States District
Court for the Southern District of Texas senior in term of service to appoint
the substitute arbitrator. The arbitration shall be conducted under the Texas
General Arbitration Act and the rules of the American Arbitration Association to
the extent such rules do not conflict with the terms of such Act and the terms
hereof. The costs and expenses of the arbitrator, whether the firm designated
above, or a third party appointed pursuant to the preceding sentence shall be
shared equally by Assignor and Assignee.
Within five business days after the agreement of Assignor and Assignee
on the Final Statement or after the decision of the arbitrator, Assignee or
Assignor, as the case may be, shall promptly make a cash payment to the other
equal to the sums as may be found to be due in the Final Statement.
-4-
<PAGE>
III. INDEMNIFICATION.
A. To the extent permitted by law, Assignor shall defend, indemnify and
hold Assignee harmless from and against any and all damage, loss, cost, expense,
obligation, claim or liability, including reasonable counsel fees and reasonable
expenses of investigating, defending and prosecuting litigation (collectively,
"Liabilities"), suffered by Assignee that are attributable to (i) the ownership
or operation by Assignor of the Properties prior to the Effective Time or (ii)
the inaccuracy of any representation or warranty of Assignor set forth in this
Assignment.
B. To the extent permitted by law, Assignee shall defend, indemnify and
hold Assignor harmless from and against any and all Liabilities, suffered by
Assignor that are attributable to (i) the ownership or operation by Assignor of
the Properties after the Effective Time, except to the extent resulting from
Assignor's failure to comply with the terms of this Assignment or the terms of
the Loan Agreement for which the Assignor is liable pursuant to Section 6.03 of
the Loan Agreement or (ii) the inaccuracy of any representation or warranty of
Assignee set forth in this Assignment.
IV. FURTHER ASSURANCES.
After the Closing, Assignor and Assignee shall execute, acknowledge and
deliver or cause to be executed, acknowledged and delivered such instruments and
take such other action as may be necessary or advisable to carry out their
obligations under this Assignment and under any exhibit, document, certificate
or other instrument delivered pursuant hereto. As soon as practicable but in no
event later than 10 days following the Effective Time, Assignor shall deliver to
Assignee the Data at a place to be designated by Assignee.
V. REPRESENTATIONS AND WARRANTIES.
ASSIGNOR REPRESENTATIONS AND WARRANTIES. Assignor represents and warrants
to Assignee as follows, which representations and warranties shall survive the
execution and delivery of this Assignment by Assignor:
1. ORGANIZATION. Assignor is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York and is
qualified to do business in and is in good standing under the laws of each other
state in which the Properties are located.
2. AUTHORITY AND CONFLICTS. Assignor has full power and authority to
carry on its business as presently conducted, to enter into this Assignment and
to perform its obligations under this Assignment. The execution and delivery of
this Assignment by Assignor does not, and the consummation of the transactions
contemplated by this Assignment shall not, (a) violate or be in conflict with,
or require the consent of any person or entity under, any provision of
Assignor's governing documents, (b) conflict with, result in a breach of,
constitute a default (or an event that with the lapse of time or notice, or both
would constitute a default) under, or require any consent, authorization or
approval under any agreement or instrument to which Assignor is a party or to
which any of the Properties or Assignor is bound (other than
-5-
<PAGE>
the Loan Agreement and excluding any such consents, authorizations or approvals
that have been obtained or waived), (c) violate any provision of or require any
consent, authorization or approval under any judgment, decree, judicial or
administrative order, award, writ, injunction, statute, rule or regulation
applicable to Assignor, or (d) result in the creation of any lien, charge or
encumbrance on any of the Properties.
3. AUTHORIZATION. The execution and delivery of this Assignment have
been, and the performance of this Assignment and the transactions contemplated
hereby shall be at the time required to be performed hereunder, duly and validly
authorized by all requisite action on the part of Assignor.
4. ENFORCEABILITY. This Assignment has been duly executed and
delivered on behalf of Assignor and constitutes the legal, valid and binding
obligation of Assignor enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, reorganization or
moratorium statutes, equitable principles or other similar laws affecting the
rights of creditors generally ("Equitable Limitations"). At the Closing all
documents and instruments required hereunder to be executed and delivered by
Assignor shall be duly executed and delivered and shall constitute legal, valid
and binding obligations of Assignor enforceable in accordance with their terms,
except as enforceability may be limited by Equitable Limitations.
5. CONDITION OF THE PROPERTIES. All of the representations and
warranties of Assignor contained in Sections 3.08, 3.09, 3.11, 3.13 and 3.21
through 3.26 of the Loan Agreement are true and correct in all material respects
on and as of the Effective Time. Further, except to the extent same do not have
a material adverse effect on the value of the Property, the Properties are not
subject to any burdensome restriction, restraint or hazard not customary in the
oil and gas industry based on a contract entered into by Assignor after [the
Amendment Date].
6. OPTION AGREEMENTS. Assignor is the legal and beneficial owner of
the Option Agreements free and clear of any adverse claim, lien, security
interest, option or other charge or encumbrance except for the security
interests in favor of Assignee.
VI. REPRESENTATIONS AND WARRANTIES.
ASSIGNEE REPRESENTATIONS AND WARRANTIES. Assignee represents and warrants
to Assignor as follows, which representations and warranties shall survive the
execution and delivery of this Assignment by Assignee:
1. ORGANIZATION. Assignee is a limited partnership duly formed,
validly existing and in good standing under the laws of the State of Delaware.
2. AUTHORITY AND CONFLICTS. Assignee has full power and authority to
carry on its business as presently conducted, to enter into this Assignment and
to perform its obligations under this Assignment. The execution and delivery of
this Assignment by Assignee does not, and the consummation of the transactions
contemplated by this Assignment shall not, (a) violate or be in conflict with,
or require the consent of any person or entity under, any provision of
Assignee's governing documents, (b) conflict with, result in a breach of,
constitute a default (or an event that
-6-
<PAGE>
with the lapse of time or notice, or both would constitute a default) under, or
require any consent, authorization or approval under any agreement or instrument
to which Assignee is a party, or (c) violate any provision of or require any
consent, authorization or approval under any judgment, decree, judicial or
administrative order, award, writ, injunction, statute, rule or regulation
applicable to Assignee.
3. AUTHORIZATION. The execution and delivery of this Assignment have
been, and the performance of this Assignment and the transactions contemplated
hereby shall be at the time required to be performed hereunder, duly and validly
authorized by all requisite action on the part of Assignee.
4. ENFORCEABILITY. This Assignment has been duly executed and
delivered on behalf of Assignee and constitutes the legal, valid and binding
obligation of Assignee enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, reorganization or
moratorium statutes, equitable principles or other similar laws affecting the
rights of creditors generally ("Equitable Limitations"). At the Closing all
documents and instruments required hereunder to be executed and delivered by
Assignee shall be duly executed and delivered and shall constitute legal, valid
and binding obligations of Assignee enforceable in accordance with their terms,
except as enforceability may be limited by Equitable Limitations.
VII. ADDITIONAL OBLIGATIONS.
Assignor acknowledges that notwithstanding anything herein to the
contrary, this Assignment shall not effect the release of Assignor from any
obligations and liabilities for which it is liable pursuant to Section 6.03 of
the Loan Agreement entitled "Limited Recourse".
VIII. GOVERNING LAW.
The validity, effect and construction of this Assignment shall be governed
by the laws of the state of Colorado except to the extent mandatorily governed
by the law of any jurisdiction in which the Properties are located.
IX. MISCELLANEOUS.
This Assignment may be executed in any number of counterparts and each of
such counterparts shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute but one and the same Assignment.
EXCEPT AS PROVIDED IN THE SPECIAL WARRANTY SET FORTH ABOVE, THE
ASSIGNMENTS AND CONVEYANCES MADE BY THIS ASSIGNMENT ARE MADE WITHOUT WARRANTY OF
TITLE, EXPRESS, IMPLIED, OR STATUTORY, AND WITHOUT RECOURSE, EVEN AS TO THE
RETURN OF THE PURCHASE PRICE OR OTHER CONSIDERATION, but with full substitution
and subrogation of Assignee, and all persons claiming by, through and under
Assignee, to the extent assignable, in and to all covenants and warranties of
Assignor's predecessors in title and with full subrogation of all rights
accruing under the applicable statutes of limitation or prescription under the
laws of the state where the Properties are located and all rights of actions or
warranty against all former owners of the Properties. ANY
-7-
<PAGE>
COVENANTS OR WARRANTIES IMPLIED BY STATUTE OR LAW BY THE USE OF THE WORDS
"TRANSFER," "CONVEY," "BARGAIN" OR "ASSIGN" OR OTHER SIMILAR WORDS USED IN THIS
ASSIGNMENT ARE HEREBY EXPRESSLY DISCLAIMED, WAIVED AND NEGATED.
Except as otherwise provided herein and without limiting Assignee's rights
against Assignor pursuant to any separate written agreement between Assignor and
Assignee, the Properties are assigned to Assignee without recourse (even as to
the return of the purchase price or other consideration) covenant or warranty of
any kind, express, implied or statutory. Without limiting the express provisions
hereof, Assignee specifically agrees that Assignor is conveying the Properties
on an "AS-IN, WHERE-IN, WITH ALL FAULTS" BASIS AND WITHOUT REPRESENTATION OR
WARRANTY, EITHER EXPRESS, IMPLIED AT COMMON LAW, BY STATUTE OR OTHERWISE (ALL OF
WHICH ASSIGNEE HEREBY DISCLAIMS), RELATING TO (i) TITLE, (ii) TRANSFERABILITY,
(iii) FITNESS FOR ANY PARTICULAR PURPOSE, MERCHANTABILITY, DESIGN OR QUALITY,
(iv) COMPLIANCE WITH SPECIFICATIONS OR CONDITIONS REGARDING OPERATION, (v)
FREEDOM FROM PATENT OR TRADEMARK INFRINGEMENT, (vi) ABSENCE OF LATENT DEFECTS,
OR (vii) ANY OTHER MATTER WHATSOEVER.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment to be
duly executed as of he date set out in the attached acknowledgments but is
effective as of the Effective Time.
ASSIGNOR:
FOREST OIL CORPORATION
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
ASSIGNEE:
JOINT ENERGY DEVELOPMENT
INVESTMENTS LIMITED
PARTNERSHIP
By: Enron Capital Corp., its general partner
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
-8-
<PAGE>
THE STATE OF______________________Section
Section
COUNTY OF ________________________Section
BE IT REMEMBERED, that the undersigned, a Notary Public, duly qualified,
sworn and acting in and for the State of ______________, hereby certify that on
this ______ day of _______________, there appeared before me, _________________,
___________________ of FOREST OIL CORPORATION.
The foregoing instrument was acknowledged before me on this date by the
aforementioned person as the designated officer of such corporation, on behalf
of such corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal in the
County of________________ and State of _________________, this _________ day of
_________________.
---------------------------------
Notary Public in and for the
State of ________________________
-9-
<PAGE>
THE STATE OF______________________Section
Section
COUNTY OF ________________________Section
BE IT REMEMBERED, that the undersigned, a Notary Public, duly qualified,
sworn and acting in and for the State of ___________________, hereby certify
that on this ______ day of __________________, there appeared before me
_______________, ________________ of Enron Capital Corp., the general partner of
Joint Energy Development Investments Limited Partnership.
The foregoing instrument was acknowledged before me on this date by the
aforementioned person as the designated officer of such corporation, on behalf
of such corporation in its capacity as general partner of Joint Energy
Development Investments Limited Partnership.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal in the
County of _______________ and State of ________________, this ______ day of
______________.
---------------------------------
Notary Public in and for the
State of ________________________
-10-
<PAGE>
EXHIBIT A
Properties
[To be determined at the time of conveyance]
-11-
<PAGE>
EXHIBIT S
MANDATORY CAPITAL EXPENSES
<TABLE>
<CAPTION>
ESTIMATED LEASE EXPIRATION LEASE EXTENSION
AREA BONUS ($000'S) DATE PERIOD(1) COMMENTS
<S> <C> <C> <C> <C>
Guerra 31 Sep-96 2 years U Sand/Fandango; 430.11 acres
@ $200/acre; FOC WI dedicated
to JEDI (35.643%).
Peyote "Deep" 46 May-97 2 years 640/acre @ $200/acre; FOC WI
dedicated to JEDI (35.643%).
Survey 84 & Frost 166 Jan-97 2 years U Sand; U Sand 832 net acres
@ $200/acre; FOC WI dedicated
to JEDI (100%).
NE Hinnant 50 Mar-97 2 years FOC WI dedicated to JEDI (100%).
Guerra 27 Apr-98 2 years FOC WI dedicated to JEDI (35.643%).
TOTAL: 320
</TABLE>
(1) The Lease Extension Period obtained for each particular Lease must be at
least as long as the period specified below.
Page 1
<PAGE>
Exhibit 99.5
AMENDMENT NO. 1
TO
RIGHTS AGREEMENT
AMENDMENT NO. 1 dated as of July __, 1995, to the Rights
Agreement (the "Rights Agreement") dated as of October 14, 1993,
between Forest Oil Corporation, a New York corporation (the
"Company") and Mellon Securities Trust Company, a New York
corporation, as rights agent (the "Rights Agent").
WHEREAS, the Board of Directors of the Company (the
"Board"), in approving that certain Purchase Agreement (the
"Purchase Agreement"), dated as of May 17, 1995, between the
Company and The Anschutz Corporation (the "Purchaser"), also
approved certain amendments to the Rights Agreement; and
NOW, THEREFORE, the parties hereto, intending to be legally
bound, agree as follows (Terms used but not otherwise defined
herein shall have the same meanings as in the Purchase
Agreement):
1. Notwithstanding any other provision of the Rights
Agreement, (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 other 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
<PAGE>
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 purposes of this 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 this amendment
shall not effect any amendment of this 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 (other than Voting Securities acquired pursuant
to or in connection with, or beneficially owned as a result of,
the payment of a dividend on or split-up, merger,
reclassification, recapitalization, reorganization, combination,
subdivision, conversion, exchange of shares or the like with
respect to such Voting Securities).
2. Except as otherwise amended herein, all provisions of
the Rights Agreement shall remain in full force and effect and
shall be binding upon the parties hereto.
3. This Amendment may be executed in any number of
counterparts, each of such shall be deemed an original, but all
of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed by their respective officers, each
of whom is duly authorized, as of this ___ day of July, 1995.
FOREST OIL CORPORATION
By:
-----------------------------
Kenton M. Scroggs
Vice President/Treasurer
MELLON SECURITIES TRUST COMPANY
By:
-----------------------------
<PAGE>
Exhibit 99.6
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 May 19, 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
1 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 holders of
shares of Company common stock pursuant to the Rights Agreement
dated as of October 14, 1993 between the Company and Mellon
<PAGE>
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
<PAGE>
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 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
<PAGE>
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. 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
<PAGE>
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 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
<PAGE>
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:
<PAGE>
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 restrictions set forth in the Registration Rights Agreement
dated as of May 19, 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 as amended (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 ofthe 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
<PAGE>
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.
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
<PAGE>
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:
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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 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
<PAGE>
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 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
<PAGE>
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.
7.4 No Adjustment for Dividends. Except as provided in
<PAGE>
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,
<PAGE>
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 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
<PAGE>
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.
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.
<PAGE>
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 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.
<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: Robert S. Boswell
Title: President
FOOTNOTES:
(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.
S-1
- ----------------------------------------------------------------
FOREST OIL CORPORATION
Election to Purchase
Mail Address
- ------------------- --------------------
<PAGE>
- ------------------- --------------------
- ------------------- --------------------
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 99.7
SHAREHOLDERS AGREEMENT
SHAREHOLDERS AGREEMENT dated as of July 27, 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 May 17, 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
<PAGE>
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.
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
<PAGE>
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.
"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
<PAGE>
"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 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
<PAGE>
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
<PAGE>
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.
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
<PAGE>
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
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 Tranche A Warrants and the Tranche B
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;
<PAGE>
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 reason-
ably requested by Purchaser, the Company shall, and shall cause
its employees, independent public accountants and other represen-
tatives 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.
ARTICLE III
PURCHASER RESTRICTIONS
<PAGE>
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:
<PAGE>
(a) each transfer pursuant to a public offering of Common
Stock pursuant to a registration statement effective under the
Securities Act; and
(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
<PAGE>
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 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
<PAGE>
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 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
<PAGE>
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.
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
<PAGE>
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
<PAGE>
acknowledgement of delivery is received.
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
<PAGE>
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.
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.
<PAGE>
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 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 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.
-------------------------------
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.
<PAGE>
FOREST OIL CORPORATION
By:
-----------------------
Robert S. Boswell
President
Address: 1500 Colorado National
Building
950 - 17th Street
Denver, Colorado 80202
Telecopy: (303) 592-2602
THE ANSCHUTZ CORPORATION
By:
-------------------------
Douglas L. Polson
Vice President and Chief
Financial Officer
Address: 2400 Anaconda Tower
555 - 17th Street
Denver, Colorado 80202
Telecopy: (303) 298-8881
S-1
<PAGE>
Exhibit 99.8
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 July 27, 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
1 11,250,000
Warrants
This certificate is transferable
in Denver, Colorado
-------------------------------------------
FOREST OIL CORPORATION
<PAGE>
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 Mellon 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.
<PAGE>
(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 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 July 27,
1995 (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
<PAGE>
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 (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 July 27, 1998 and only if the
<PAGE>
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 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
<PAGE>
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
<PAGE>
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
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.
<PAGE>
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."
2. "The shares represented by this certificate are subject
to restrictions set forth in the Registration Rights
Agreement dated as of July 27, 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."
<PAGE>
(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 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
<PAGE>
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
purchaseor 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
<PAGE>
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
<PAGE>
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 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
<PAGE>
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 National Market System,
<PAGE>
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.
<PAGE>
(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 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.
<PAGE>
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 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
<PAGE>
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, or subscription rights,
or for the determination of shareholders entitled to vote on such
<PAGE>
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
<PAGE>
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 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
<PAGE>
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.
---------------------------------------------------
THIS WARRANT is executed by the Company on the date set
forth below in New York, New York.
Dated: July 27, 1995 FOREST OIL CORPORATION
Attest: By:
----------------- ----------------------
Name: Name:
Title: Title:
S-1
----------------------------------------------------
<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:
--------------------------------
--------------------------------
<PAGE>
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>
SECOND AMENDMENT TO
DEED OF TRUST, ASSIGNMENT OF PRODUCTION,
SECURITY AGREEMENT AND FINANCING STATEMENT
Effective as of
July 27, 1995
From
FOREST OIL CORPORATION
(Mortgagor)
To
ANDREW S. FASTOW, Trustee
(Trustee)
for the Benefit of
JOINT ENERGY DEVELOPMENT INVESTMENTS LIMITED PARTNERSHIP
(Beneficiary)
The mailing address of both above-named
Trustee and the Beneficiary is 1400
Smith Street, Houston, Texas 77002 and
the mailing address of Mortgagor is 950
17th Street, Colorado National Building,
Denver, Colorado 80202.
* * * * *
This instrument was prepared by Richard C. Rice, Attorney at Law, BRACEWELL
& PATTERSON, L.L.P., South Tower Pennzoil Place, 711 Louisiana, Suite 2900,
Houston, Texas 77002.
THE DEED OF TRUST, ASSIGNMENT OF PRODUCTION, SECURITY AGREEMENT AND FINANCING
STATEMENT AMENDED BY THIS INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY
PROVISIONS AND COVERS FUTURE ADVANCES AND PROCEEDS
ATTENTION OF RECORDING OFFICERS: The Deed of Trust, Assignment of
Production, Security Agreement and Financing Statement amended by this
Instrument covers both real and personal property and is, among other things,
a Security Agreement and a Financing Statement under the Uniform Commercial
Code.
Recorded counterparts should be returned to:
Suzette Deckert
Bracewell & Patterson, L.L.P.
South Tower Pennzoil Place
711 Louisiana, Suite 2900
Houston, Texas 77002
<PAGE>
SECOND AMENDMENT TO
DEED OF TRUST,
ASSIGNMENT OF PRODUCTION,
SECURITY AGREEMENT AND FINANCING STATEMENT
------------------------------------------
THIS SECOND AMENDMENT TO DEED OF TRUST, ASSIGNMENT OF PRODUCTION,
SECURITY AGREEMENT AND FINANCING STATEMENT (this "Second Amendment") entered
into on this 26th day of July, 1995, but made effective as of July 27, 1995
(the "Effective Date") is by and between FOREST OIL CORPORATION, a New York
corporation, whose address for notice hereunder is 950 17th Street, Colorado
National Building, Denver, Colorado 80202 (the "Mortgagor"), and JOINT ENERGY
DEVELOPMENT INVESTMENTS LIMITED PARTNERSHIP, a Delaware limited partnership,
with offices at 1400 Smith Street, Houston, Texas 77002 (the "Beneficiary").
RECITALS
Mortgagor and Beneficiary have entered into that certain Deed of Trust,
Assignment of Production, Security Agreement and Financing Statement dated
December 28, 1993, which was amended by the First Amendment to Deed of Trust,
Assignment of Production, Security Agreement and Financing Statement dated as
of June 15, 1994 (as amended, the "Original Mortgage"). The Original Mortgage
was recorded in the real property records described in SCHEDULE 1 hereto. In
connection with the Second Amendment to Loan Agreement dated as of the
Effective Date, between Mortgagor and Mortgagee, Mortgagor and Beneficiary
have agreed to amend the Original Mortgage. Capitalized terms used in this
Second Amendment but not defined herein have the meaning given thereto in the
Original Mortgage.
AGREEMENTS
ARTICLE I
MORTGAGED PROPERTY
Mortgagor, in consideration of the premises and to secure the
Indebtedness and the performance of the covenants and obligations contained
herein and in the Original Mortgage and in consideration of the sum of One
Thousand Dollars ($1000) and other valuable consideration in hand paid by
Beneficiary to Mortgagor and in consideration of the debts and trusts herein
mentioned, does hereby GRANT, BARGAIN, SELL, CONVEY, MORTGAGE, PLEDGE,
TRANSFER, ASSIGN, SET OVER and CONFIRM unto Andrew S. Fastow of Houston,
Texas, as Trustee, whose address for notice is 1400 Smith Street, Houston,
Texas 77002 ("Trustee") and his successors or substitutes in trust hereunder,
for the use and benefit of Beneficiary, the following described real and
personal property, rights, titles, interests, and estates (collectively
the "Mortgaged Property"), to-wit:
(a) All rights, titles, interests and estates now owned or hereafter
acquired by Mortgagor in and to the undivided interests in and to the oil and
gas leases and/or oil, gas and other mineral leases and other interests and
estates (such interests collectively called the "Leases") which are described
on Exhibit A hereto or which Leases are otherwise referred to herein.
<PAGE>
(b) All rights, titles, interests and estates now owned or hereafter
acquired by Mortgagor in and to (1) the properties now or hereafter pooled or
unitized with the Leases; (2) all presently existing or future unitization,
communitization, pooling agreements and declarations of pooled units and the
units created thereby (including, without limitation, all units created
under orders, regulations, rules or other official acts of any Federal,
State or other governmental body or agency having jurisdiction and any
units created solely among working interest owners pursuant to operating
agreements or otherwise) which may affect all or any portion of the Leases
including, without limitation, those units which may be described or referred
to on attached Exhibit A; and (3) all operating agreements, production sales
or other contracts, farmout agreements, farm-in agreements, area of mutual
interest agreements, equipment leases and other agreements described or
referred to in this Mortgage or which relate to any of the Leases or
interests in the Leases described or referred to herein or on attached
Exhibit A or to the production, sale, purchase, exchange, processing,
transporting or marketing of the Hydrocarbons (hereinafter defined) from or
attributable to such Leases or interests.
(c) All rights, titles, interests and estates now owned or hereafter
acquired by Mortgagor in and to all oil, gas, casinghead gas, condensate,
distillate, liquid hydrocarbons, gaseous hydrocarbons and all products
refined therefrom and all other minerals (collectively called the
"Hydrocarbons") in and under and which may be produced and saved from or
attributable to the Leases, the lands covered thereby and Mortgagor's
interests therein, including all oil in tanks and all rents, issues, profits,
proceeds, products, revenues and other income from or attributable to the
Leases, the lands covered thereby and Mortgagor's interests therein which are
subjected or required to be subjected to the liens and security interests of
this Mortgage and including specifically but without limitation all liens and
security interests in such Hydrocarbons securing payment of proceeds
resulting from the sale of Hydrocarbons.
(d) All tenements, hereditaments, appurtenances and properties in
anywise appertaining, belonging, affixed or incidental to the rights, titles,
interests and estates described or referred to in paragraphs (a), (b) and (c)
above, which are now owned or which may hereafter be acquired by Mortgagor,
including, without limitation, any and all property, real or personal, now
owned or hereafter acquired and situated upon, used, held for use, or useful
in connection with the operating, working or development of any of such
Leases (excluding drilling rigs, trucks, automotive equipment or other
personal property which may be taken to the premises for the purpose of
drilling a well or for other similar temporary uses) and including any and
all oil wells, gas wells, injection wells or other wells, buildings,
structures, field separators, liquid extraction plants, plant compressors,
pumps, pumping units, field gathering systems, tanks and tank batteries,
fixtures, valves, fittings, machinery and parts, engines, boilers, meters,
apparatus, equipment, appliances, tools, implements, cables, wires, towers,
casing, tubing and rods, surface leases, rights-of-way, easements and
servitudes and licenses together with all additions, substitutions,
replacements, accessions and attachments to any and all of the foregoing
properties.
-2-
<PAGE>
(e) Any property that may from time to time hereafter, by delivery or
by writing of any kind, be subjected to the lien and security interest hereof
by Mortgagor or by anyone on Mortgagor's behalf; and the Trustee is hereby
authorized to receive the same at any time as additional security hereunder.
(f) All of the rights, titles and interests of every nature whatsoever
now owned or hereafter acquired by Mortgagor in and to the Leases and every
part and parcel thereof, including, without limitation, all rights, titles,
interests or estates in and to the Leases as the same may be enlarged by the
discharge of any payments out of production or by the removal of any charges
or Encumbrances (as hereinafter defined) to which any of the Leases are
subject, or otherwise; together with any and all renewals and extensions of
any of the Leases; all contracts and agreements supplemental to or
amendatory of or in substitution for the contracts and agreements
described or mentioned above; and any and all additional interests of any
kind hereafter acquired by Mortgagor in and to the Leases, less and except
any overriding royalty interests hereafter acquired by Mortgagor in and to
the Leases.
(g) All accounts, contract rights, inventory and general intangibles
constituting a part of, relating to or arising out of those portions of the
Mortgaged Property which are described in paragraphs (a) through (f) above
and all proceeds and products of all such portions of the Mortgaged Property.
TO HAVE AND TO HOLD the Mortgaged Property unto the Trustee and to his
successors and assigns forever to secure the payment of the Indebtedness and
to secure the performance of the covenants, agreements, and obligations of
the Mortgagor herein contained.
ARTICLE II
AMENDMENTS
A. The Indebtedness secured by the Original Mortgage has been extended
to be payable on or before December 31, 2002, all as is more fully described
in the Loan Agreement. The last sentence of Article II to the Original
Mortgage is hereby amended to refer to such new maturity date.
B. Exhibit A of the Original Mortgage is hereby amended by adding
thereto and incorporating therein, but without otherwise modifying such
Exhibit A, the properties and rights described on Exhibit A hereto.
ARTICLE III
RATIFICATION
Except as expressly amended by this Second Amendment, the Original
Mortgage is in all respects ratified and confirmed, and the terms,
provisions, representations, warranties, covenants and conditions thereof
shall be and remain in full force and effect.
-3-
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this instrument to be
executed by their duly authorized undersigned officers as of the date first
written above.
MORTGAGOR
FOREST OIL CORPORATION
By: Kenton M. Scroggs
----------------------------------
Kenton M. Scroggs
Vice President
BENEFICIARY
JOINT ENERGY DEVELOPMENT
INVESTMENTS LIMITED PARTNERSHIP
By: Enron Capital Corp., its
general partner
By: Clifford P. Hickey
----------------------------------
Clifford P. Hickey
Attorney-in-Fact
-4-
<PAGE>
THE STATE OF COLORADO )
)
COUNTY OF DENVER )
BE IT REMEMBERED, that the undersigned, a Notary Public, duly
qualified, sworn and acting in and for the State of Colorado, hereby
certifies that on this 26th day of July, 1995, there appeared before me
Kenton M. Scroggs of FOREST OIL CORPORATION.
The foregoing instrument was acknowledged before me on this date by the
aforementioned person as the designated officer of such corporation, on
behalf of such corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal in
the County of Denver and State of Colorado, this 26th day of July, 1995.
Michele Miller
Name: Michele Miller
[seal] Notary Public in and for the
State of Colorado
THE STATE OF COLORADO )
)
COUNTY OF DENVER )
BE IT REMEMBERED, that the undersigned, a Notary Public, duly
qualified, sworn and acting in and for the State of Colorado, hereby
certifies that on this 26th day of July, 1995, there appeared before me
Clifford P. Hickey, Attorney-in-Fact of Enron Capital Corp., the general
partner of Joint Energy Development Investments Limited Partnership.
The foregoing instrument was acknowledged before me on this date by the
aforementioned person as the designated officer of such corporation, on
behalf of such corporation in its capacity as general partner of Joint
Energy Development Investments Limited Partnership.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal in
the County of Denver and State of Colorado, this 26th day of July, 1995.
Virginia Moore
Name: Virginia Moore
[seal] Notary Public in and for the
State of Colorado
-5-
<PAGE>
SCHEDULE 1
RECORDING INFORMATION
1. Deed of Trust, Assignment of Production, Security Agreement and Financing
Statement
Jim Hogg County, Texas
- ----------------------
File No. 56822
Volume 101, Page 194
December 30, 1993
Zapata County, Texas
- --------------------
File No. 96635
Volume 490, Page 704
January 3, 1994
2. First Amendment to Deed of Trust, Assignment of Production, Security
Agreement and Financing Statement
Jim Hogg County, Texas
- ----------------------
File No. 57,353
Volume 103, Page 12
June 17, 1994
Zapata County, Texas
- --------------------
File No. 98353
Volume 500, Page 627
June 17, 1994
-6-
MARLWR\27326\005048
BPHOU2/SYS:449683.06
<PAGE>
EXHIBIT A
LEASES
<TABLE>
<CAPTION>
WORKING
OR RECORDING DATA
FOC LEASE OWNERSHIP JIM HOGG COUNTY ZAPATA COUNTY
LEASE NO. LESSOR LESSEE DATE INTEREST NRI VOL. PAGE Vol. Page
- --------------- ------------------ ------ ------ --------- ------- ----- ----- ------ ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
TX-193025-000012 Eulalia Vela et al FOC 4/1/95 1.00000 0.75000 148 58631
TX-193025-000013 Eulalia Vela et al FOC 6/20/95 1.00000 0.75000 BR BR BR BR
BR - Being Recorded
</TABLE>
LAND DESCRIPTIONS
TX-193025-000012 A tract of land comprised of 249.475 acres, being the
Northeast portion of a 2100.725 acre tract as described
in Partition Deed dated September 11, 1951 to Hector Vela
recorded in Volume 32, Page 463-65, Deed Records of Jim
Hogg County, Texas and being the south 9.835 acres out of
Survey 581, E. P. Ashley, Jim Hogg County, Abstract No. 5,
Patent No. 598 dated December 18, 1885, and all of a 735.28
acre tract out of Survey No. 582, S. R. Peebles, Jim Hogg
County, Abstract No. 243, Patent No. 607, dated December 18,
1885, save and except for that portion of said 735.28 acre
tract which is located within the exterior boundary of the
Inexco-Vela No. 1 Gas Unit, described in Unit Declaration
dated October 28, 1981 and recorded in Volume 89, Page 363
of the Oil & Gas Lease Records of Jim Hogg County, Texas
TX-193025-000013 A tract of land comprised of 566.44 acres, being a
quitclaimed portion of the Energy Development Corporation
1,347.25 acre Oil and Gas Lease dated April 18, 1988, by
and between Eulalia Vela, Virginia W. Goodwin, Marcel C.
Notzon, Individually and as, Trustee, and Richard E. Haynes,
Individually and as Trustee, as Lessor, and Energy
Development Corporation, as Lessee, a Memorandum of Oil and
Gas Lease dated August 22, 1988, being recorded in Volume
124, Page 279, of the records of Jim Hogg County, Texas and
recorded in Volume 395, Page 588, of the records of Zapata
County, Texas, as more fully described as follows:
TRACT I - A 448.54 acre parcel, more or less, covering
all of that acreage contained and more fully described in
that Partial Release of Oil, Gas and Mineral Lease
effective June 1, 1994, by and between Energy Development
Corporation and Forest Oil Corporation, as Grantor, and the
Lessor described immediately above, being recorded in Volume
145, Page 256-265, of the Oil and Gas Lease Records of Jim
Hogg County, Texas, and recorded in Volume 501, Page
173-183, of the Official Public Records of Zapata County,
Texas.
TRACT 2 - A 117.9 acre parcel, more or less, being that
portion of the 160 acre tract formerly retained by EDC, et
al, around the Loma Vieja Well No. 2 which does not overlap
with the 320 acre tract currently held by the Loma Vieja
No. 4 Well. The part of said 160 acre tract which
overlapped consists of 42.1 acres which has not been
released from the April 18, 1988 lease.
The 566.44 acre tract covered by this lease is further
described as being all of the 1,347.25 acre tract described
in the April 18, 1988 EDC lease, less and except the 320
acre tract around the Loma Vieja Well No. 1; the 320 acre
tract around the Loma Vieja Well No. 4 and the 160 acre
tract around the Loma Vieja Well No. 3.
PERMITTED ENCUMBRANCES
ALL Subject to that Surface Use Agreement dated March 15, 1988,
between Alan Holbein, as Grantor, and Energy Development
Corporation, as Grantee, as to the H. & G. N. R.R. Survey
No. 3, Abstract A-51, Zapata County, and Abstract A-183,
Jim Hogg County, Texas.
Page 1
<PAGE>
Subject to that Surface Use Agreement dated July 23, 1994,
between Alan Holbein and wife, Florence Holbein, as Grantor,
and Forest Oil Corporation, as Grantee, as to the H. & G. N.
R.R. Survey No. 3, Abstract A-51, Zapata County, and
Abstract A-183, Jim Hogg County, Texas, and portions of the
S. P. Peebles Survey No. 582, Abstract A-243, and the E. P.
Ashley Survey No. 581, Abstract A-5, Jim Hogg County, Texas.
Subject to that Letter Agreement dated November 28, 1994,
between Forest Oil Corporation and Tesoro E & P Company,
L.P., whereby Tesoro agreed to participate in the first well
on the N. E. Hinnant prospect, being the 249.475 acre lease
described above.
Subject to that Joint Seismic Agreement dated April 1, 1992,
between Pennzoil Exploration and Production Company, Energy
Development Corporation and Wagner & Brown (predecessor in
interest to Forest Oil Corporation), covering the Loma Vieja
area and including the leases described above.
Page 2
