EXHIBIT 1
PURCHASE AGREEMENT
dated as of
October 6, 1995
between
FOREST OIL CORPORATION
and
SAXON PETROLEUM INC.
TABLE OF CONTENTS
Page
ARTICLE I TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . 1
1.1 First Closing Transactions . . . . . . . . . . . . . . . 1
1.2 Second Closing Transactions . . . . . . . . . . . . . . 1
1.3 Closing Adjustments . . . . . . . . . . . . . . . . . . 2
1.4 Additional Adjustments . . . . . . . . . . . . . . . . . 2
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 . . . . . . . . . . . . . . . . 3
3.1 Conditions Precedent to Both Closings . . . . . . . . . 3
3.2 Additional Conditions Precedent to First Closing . . . . 6
3.3 Additional Conditions Precedent to Second Closing . . . 7
3.4 Legends . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . 10
4.1 Corporate Existence and Power . . . . . . . . . . . . . 10
4.2 Authorization; Contravention . . . . . . . . . . . . . . 10
4.3 Approvals . . . . . . . . . . . . . . . . . . . . . . . 11
4.4 Binding Effect . . . . . . . . . . . . . . . . . . . . . 11
4.5 Financial Information . . . . . . . . . . . . . . . . . 11
4.6 Absence of Certain Changes or Events . . . . . . . . . . 12
4.7 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.8 Litigation . . . . . . . . . . . . . . . . . . . . . . . 14
4.9 Compliance with Laws . . . . . . . . . . . . . . . . . . 14
4.10 Licenses . . . . . . . . . . . . . . . . . . . . . . . . 15
4.11 Employee Matters . . . . . . . . . . . . . . . . . . . . 15
4.12 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . 16
4.13 Property . . . . . . . . . . . . . . . . . . . . . . . . 16
4.14 Oil and Gas Interests . . . . . . . . . . . . . . . . . 17
4.15 Equipment . . . . . . . . . . . . . . . . . . . . . . . 20
4.16 Leases . . . . . . . . . . . . . . . . . . . . . . . . . 20
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 . . . . . . . . . . . . . . . . . . . . . 22
4.23 Environmental Matters . . . . . . . . . . . . . . . . . 24
4.24 Books and Records . . . . . . . . . . . . . . . . . . . 27
4.25 Material Contracts . . . . . . . . . . . . . . . . . . . 27
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Page
4.26 Misstatements . . . . . . . . . . . . . . . . . . . . . 27
4.27 Securities Filings . . . . . . . . . . . . . . . . . . . 28
4.28 Required Vote . . . . . . . . . . . . . . . . . . . . . 28
4.29 No Merger Agreements . . . . . . . . . . . . . . . . . . 28
4.30 Aggregate Material Adverse Effect . . . . . . . . . . . 28
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
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Page
ARTICLE IX INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . 52
9.1 Indemnification . . . . . . . . . . . . . . . . . . . . 52
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 . . . . . . . . . . . . . . . . . 57
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
ANNEX
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 - Escrow Agreement as executed
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").
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, divided by 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;
(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, divided by 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,
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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.
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:
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(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 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
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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;
(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.
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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) ▇▇▇▇▇ 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;
(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;
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(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;
(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;
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(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.
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."
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(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.
(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
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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 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,
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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.
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 ▇▇▇▇▇▇
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
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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 ▇▇▇▇▇▇ 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
(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
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(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
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
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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 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
- 14 -
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 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
- 15 -
(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.
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).
- 16 -
(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 ▇▇▇▇▇▇ 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 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
- 17 -
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;
(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 ▇▇▇▇▇) 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
- 18 -
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 ▇▇▇▇▇ 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 ▇▇▇▇▇ 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.
(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
- 19 -
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.
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
- 20 -
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 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.
- 21 -
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 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
- 22 -
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 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
- 23 -
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, 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,
- 24 -
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.
(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;
- 25 -
(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
(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.
- 26 -
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.
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
- 27 -
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 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
- 28 -
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 Forest Shares
apart form a distribution or disposition pursuant to the Registration
Rights Agreement.
- 29 -
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 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ 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 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
- 30 -
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 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
- 31 -
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").
(c) As of September 8, 1995, there were (1) 3,059,000 shares of
Common Stock reserved for issuance upon exercise of outstanding
- 32 -
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 Documents and the Transaction
- 33 -
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 state a material fact necessary to make
- 34 -
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
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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 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
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Purchaser made in the Transaction Documents (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,
the "Shareholders Meeting") for the purpose, among
other things, of considering and taking action upon the
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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 of the Transactions is not likely
to be obtained at the Shareholders Meeting, the
Shareholders Meeting shall, at the request of the
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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.
- 41 -
(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
- 42 -
detail and stating in comparative form the respective
consolidated figures for the corresponding date and
period in the previous fiscal year and certified by the
chief financial officer of the Company (subject to
year-end adjustments);
(D) 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;
(2) leases existing on the date of this Agreement and any
extensions or renewals of those leases; and
- 44 -
(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 ▇▇▇▇ ▇▇▇▇▇▇▇ to ▇▇▇▇▇ ▇▇▇▇▇.
(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 ▇▇▇▇▇▇▇▇ 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 favourable to it than it would
obtain in a comparable arm's length transaction with a person not
an Affiliate.
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(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.
(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
- 46 -
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 comparative form
the respective consolidated figures for the corresponding date
and period in the previous fiscal year.
- 47 -
(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 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.
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(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, 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
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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 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
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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 ▇▇▇▇▇
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 ▇▇▇▇▇ 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.
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
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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 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
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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.
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
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of any Action, whether the defense shall have been assumed by the
indemnifying person or by the indemnified person, and shall
indemnify the indemnified person against, and hold the
indemnified person harmless from, all Losses in any way relating
to or allegedly arising in connection with the matter or matters
that shall be the basis of the Action or otherwise connected to
the Action, except that the indemnifying person shall not be
liable for the payment of the amount of money damages provided in
a settlement of an indemnifiable Action defended by the
indemnified person pursuant to the second or third conditions
stated above that shall have been effected without the written
consent of the indemnifying person, which consent shall not be
unreasonably withheld.
(c) Notwithstanding anything in this Section to the contrary, if, in
connection with an Action indemnifiable under this Section, a
Governmental Body or other person having authority or
jurisdiction over a matter or matters related to the Action shall
have rendered, entered or granted a binding judgment, decision,
ruling, order or award with respect to the matter or matters
providing for the payment of money damages or the claimant and
the indemnifying party shall have agreed to settle the Action for
an amount of money damages without reservation of any rights or
defenses against the indemnified person, and if the indemnified
person elects to appeal the judgment, decision, ruling, order or
award or declines to agree to the proposed settlement, as the
case may be, then the indemnified person may continue to defend
the Action, free of any participation by the indemnifying person,
but the amount of any ultimate liability of the indemnifying
party under this Section with respect to Losses related to or
allegedly arising in connection with the matter or matters that
shall have been comprehended by the judgment, decision, ruling,
order or award or by the proposed settlement, as the case may be,
shall then be limited to the amount of the judgment, decision,
ruling, order or award or the amount of the proposed settlement,
as the case may be, plus the other indemnified Losses of the
indemnified person relating to the matter or matters through the
date of its election to appeal or its rejection of the proposed
settlement, as the case may be.
(d) If the indemnification provided for in this Section is
unavailable to an indemnified person (other than by reason of
exceptions provided in this Section), or is insufficient to hold
harmless an indemnified person in respect of any Loss then the
indemnifying person, in lieu of indemnifying the indemnified
person, shall contribute to the amount paid or payable by the
indemnified person as a result of the Loss in the proportion that
is appropriate to reflect the relative fault of the indemnifying
person on the one part and of the indemnified person on the other
part in connection with the events or circumstances which
resulted in the Loss as well as any other relevant equitable
considerations. The relative fault of the indemnifying person on
the one part and of the indemnified person on the other part
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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.
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
- 57 -
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 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.
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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 Transaction
Document or for any claim based on, in respect of or by reason of such
obligations or their creation.
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IN WITNESS WHEREOF, the parties have executed and delivered this
Purchase Agreement as of the date first written above in Calgary, Alberta.
FOREST OIL CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
Address:Forest Oil Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Secretary
Telecopy:(▇▇▇) ▇▇▇-▇▇▇▇
SAXON PETROLEUM INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Address:Saxon Petroleum Inc.
▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: President
Telecopy:(▇▇▇) ▇▇▇-▇▇▇▇
- 60 -
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 in-
directly, 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 ▇▇▇▇ ▇▇▇▇▇
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.
"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
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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.
"Dollars" and "$" unless otherwise indicated refer to Canadian
dollars and other lawful currency of Canada from time to time in effect.
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"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;
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"First Closing Date" has the meaning stated in Section 2.1 of
this Agreement;
"First Closing Transactions" has the meaning stated in
Section 2.1 of this Agreement;
"Forest 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.
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"Hazardous Material" means, collectively, (a) any petroleum or
petroleum products, geothermal products, natural gas, flammable explosives,
radioactive materials, asbestos in any form that is or could become
friable, urea formaldehyde foam insulation, and transformers or other
equipment that contain dielectric fluid containing polychlorinated
biphenyls (PCB's), (b) any chemicals or other materials or substances which
are now or hereafter become defined as or included in the definition of
"hazardous substances", "hazardous wastes", "hazardous materials",
"extremely hazardous wastes", "restricted hazardous wastes", "toxic
substances", "toxic pollutants", "contaminants", "pollutants" or words of
similar import under any Environmental Law and (c) any other chemical or
other material or substance, exposure to which is now or hereafter
prohibited, limited or regulated under any Environmental Law and which are
present in concentrations or at locations that present a threat to human
health or the environment.
"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 im-
provements 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
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(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 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 ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
E. ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇
Brebber, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 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.
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"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.
"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.
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"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 pur-
chase, 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.
"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
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(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 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.
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"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
TO PURCHASE AGREEMENT
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),
(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 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.
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 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 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.
(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 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 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 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.
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.
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.
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.
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.
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
(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 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 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.
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 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, subject to
compliance with all applicable securities laws, 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.
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.
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.
EXHIBIT B
TO PURCHASE AGREEMENT
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 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 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:
(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
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.
(2) 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.
(3) The Company shall use its best efforts to cause 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 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.
(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 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.
(c) If any action or proceeding (including any governmental
investigation or inquiry) shall be brought or asserted against
any person indemnified under this Section 3, the indemnified
person shall promptly notify the indemnifying party in writing,
and the indemnifying party shall assume the defense of the action
or proceeding, including the employment of counsel satisfactory
to the indemnified person and the payment of all expenses. The
indemnified person shall have the right to employ separate
counsel in any action or proceeding and to participate in the
defense of the action or proceeding, but the fees and expenses of
that counsel shall be at the expense of the indemnified person
unless
(1) the indemnifying party shall have agreed to pay those fees
and expenses; or
(2) the indemnifying party shall have failed to assume the
defense of the action or proceeding or shall have failed to
employ counsel reasonably satisfactory to the indemnified
person in the action or proceeding; or
(3) the named parties to the action or proceeding (including any
impleaded parties) include both the indemnified person and
the indemnifying party, and the indemnified person shall
have been advised by counsel that there may be one or more
legal defenses available to the indemnified person that are
different from or additional to those available to the
indemnifying party (in which case, if the indemnified person
notifies the indemnifying party in writing that it elects to
employ separate counsel at the expense of the indemnifying
party, the indemnifying party shall not have the right to
assume the defense of such action or proceeding on behalf of
the indemnified person; it being understood, however, that
the indemnifying party shall not, in connection with any one
action or proceeding or separate but substantially similar
or related actions or proceedings in the same jurisdiction
arising out of the same general allegations or
circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys at any
time for the indemnified person, which firm shall be
designated in writing by the indemnified person).
The indemnifying party shall not be liable for any settlement of
any action or proceeding effected without its written consent,
but if settled with its written consent, or if there be a final
judgment for the plaintiff in any such action or proceedings, the
indemnifying party shall indemnify and hold harmless the
indemnified person from and against any loss or liability by
reason of the settlement or judgment.
(d) If the indemnification provided for in this Section 3 is
unavailable to an indemnified person (other than by reason of
exceptions provided in this Section 3) in respect of losses,
claims, damages, liabilities or expenses referred to in this
Section 3, then each applicable indemnifying party, in lieu of
indemnifying the indemnified person, shall contribute to the
amount paid or payable by the indemnified person as a result of
the losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified person
on the other in connection with the statements or omissions which
resulted in the losses, claims, damages, liabilities or expenses
as well as any other relevant equitable considerations. The
relative fault of the indemnifying party on the one hand and of
the indemnified person on the other shall be determined by
reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied
by the indemnifying party or by the indemnified person and by
these persons' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a person as a result of the losses,
claims, damages, liabilities and expenses shall be deemed to
include any legal or other fees or expenses reasonably incurred
by the person in connection with investigating or defending any
action or claim. 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 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 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.
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.
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, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
FOREST OIL CORPORATION
By:
Name:
Title:
Address: ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
NOTE:
Exhibit C to the Purchase Agreement is the form of Registration
Rights Agreement, the definitive version of which is being filed as
Exhibit 2 to this Statement on Schedule 13D. Accordingly, Exhibit C
is being omitted.
EXHIBIT D
TO PURCHASE AGREEMENT
FORM OF
WARRANT
WARRANT TO PURCHASE COMMON SHARES
Certificate Number Certificate for
__________________ *
Warrants
This certificate is transferable
in Calgary, ▇▇▇▇▇▇▇
▇▇▇▇▇ 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 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 (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.
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, 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.
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 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 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
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 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
▇▇▇ The Company shall propose any capital reorganization,
recapitalization, subdivision or reclassification of Common Shares (other
than a subdivision or 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 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:
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: ________________________________
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: ______________________________
EXHIBIT E
TO PURCHASE AGREEMENT
EQUITY PARTICIPATION AGREEMENT
THIS AGREEMENT made as of the 20th day of December, 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:
(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:
Percentage of total issued
Common Shares and Non-Voting
Shares owned by Forest immediately
before the time of Issuance Forest's Proportionate Number
45% or more 60%
more than 30% but less than 45% 45%
more than 20% but less than 30% 30%
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").
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 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 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.
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.
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.
▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: President
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to Forest, at:Forest Oil Corporation
Suite 2200, ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇
Attention: Corporate Secretary
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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 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:
EXHIBIT F
TO PURCHASE AGREEMENT
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;
(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.
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: _________________________
EXHIBIT G
TO PURCHASE AGREEMENT
(in definitive form
as executed)
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 ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, 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:
(a) Lands: ▇▇▇ ▇▇ ▇▇▇ ▇ ▇▇▇: ▇▇▇▇▇▇▇ ▇▇ (▇▇▇ ▇▇▇) BPO 50%, APO 25%
Lease: Cr# 0593110467 dated November 18, 1993
Wellsite: LSD 16 in the aforesaid Section 12
(b) Lands: ▇▇▇ ▇▇ ▇▇▇ ▇▇ ▇▇▇: 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 ▇▇▇▇▇")
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 ▇▇▇▇▇ 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 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 ▇▇▇▇▇ shall be valued by
▇▇▇▇▇▇ 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 ▇▇▇▇▇▇
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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇ is established, the
Purchaser shall be entitled to a carried interest in the Lands, Leases and
▇▇▇▇▇ 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 ▇▇▇▇▇ and remit to the Purchaser on a monthly
basis its carried interest share of the revenue from the Lands, Leases and
▇▇▇▇▇. 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 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/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
SAXON PETROLEUM INC.
Per: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Per: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ Per: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Witness