PURCHASE AND SALE AGREEMENT
By and Between
FOREST OIL CORPORATION
and
THE ANSCHUTZ CORPORATION
April 6, 1998
TABLE OF CONTENTS
ARTICLE I DEFINITIONS
1.01 Defined Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Other Definitional Provisions; Construction. . . . . . . . . . . . 1
ARTICLE II PURCHASE AND SALE; CLOSING; RECEIPTS AND CREDITS
2.01 Purchase and Sale Transactions . . . . . . . . . . . . . . . . . . 2
2.02 Adjustments to Cash Amount . . . . . . . . . . . . . . . . . . . . 3
2.03 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.04 Actions To Be Taken At Closing . . . . . . . . . . . . . . . . . . 4
2.05 Intent of Parties Regarding Certain Receipts and Credits . . . . . 5
ARTICLE III REPRESENTATIONS AND WARRANTIES OF FOREST
3.01 Corporate Existence and Power. . . . . . . . . . . . . . . . . . . 6
3.02 Authorization; Contravention . . . . . . . . . . . . . . . . . . . 6
3.03 Approvals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.04 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.05 Financial Information. . . . . . . . . . . . . . . . . . . . . . . 7
3.06 Absence of Certain Changes or Events . . . . . . . . . . . . . . . 7
3.07 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.08 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.09 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . 8
3.10 Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.11 Labor Disputes and Acts of God . . . . . . . . . . . . . . . . . . 10
3.12 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.13 Books and Records. . . . . . . . . . . . . . . . . . . . . . . . . 11
3.14 SEC Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.15 Brokers and Finders. . . . . . . . . . . . . . . . . . . . . . . . 12
3.16 Investment Intent. . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF ANSCHUTZ
4.01 Corporate Existence and Power. . . . . . . . . . . . . . . . . . . 12
4.02 Authorization; Contravention . . . . . . . . . . . . . . . . . . . 13
4.03 Approvals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.04 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.05 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 13
4.06 Absence of Certain Changes or Events . . . . . . . . . . . . . . . 13
4.07 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.08 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.09 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . 15
4.10 Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.11 Labor Disputes and Acts of God . . . . . . . . . . . . . . . . . . 16
4.12 Anschutz Subsidiaries; Capitalization. . . . . . . . . . . . . . . 16
4.13 Books and Records. . . . . . . . . . . . . . . . . . . . . . . . . 17
4.14 Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.15 Brokers and Finders. . . . . . . . . . . . . . . . . . . . . . . . 19
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4.16 Investment Intent. . . . . . . . . . . . . . . . . . . . . . . . . 19
4.17 Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.18 Oil and Gas Properties . . . . . . . . . . . . . . . . . . . . . . 20
4.19 Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.20 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . 23
4.21 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.22 Affiliate Matters. . . . . . . . . . . . . . . . . . . . . . . . . 26
4.23 Special Purpose Company. . . . . . . . . . . . . . . . . . . . . . 26
4.24 Misstatements. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.25 Non-Foreign Representation . . . . . . . . . . . . . . . . . . . . 26
ARTICLE V PRE-CLOSING COVENANTS OF ANSCHUTZ
5.01 Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.02 Affirmative Covenants. . . . . . . . . . . . . . . . . . . . . . . 27
5.03 Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . 28
5.04 No Shop. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.05 Notice of Breach . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.06 Representations and Warranties True. . . . . . . . . . . . . . . . 30
5.07 Xxxx-Xxxxx-Xxxxxx Act. . . . . . . . . . . . . . . . . . . . . . . 30
5.08 Conditions to Closing. . . . . . . . . . . . . . . . . . . . . . . 30
5.09 Operatorship . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.10 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . 30
5.11 Canadian Merger. . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.12 Waiver of AREC Creditors . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE VI PRE-CLOSING COVENANTS OF FOREST
6.01 Notice of Breach . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.02 Representations and Warranties True. . . . . . . . . . . . . . . . 31
6.03 Xxxx-Xxxxx-Xxxxxx Act. . . . . . . . . . . . . . . . . . . . . . . 31
6.04 Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.05 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . 31
6.06 Board Action . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.07 Conduct of Business. . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE VII TITLE MATTERS AND CASUALTY LOSSES
7.01 Defect Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.02 Curing Defects . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.03 Determination of Designated Value and Defect Value . . . . . . . . 33
7.04 Casualty Defect. . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE VIII CONDITIONS TO CLOSING
8.01 Conditions to Obligations of Forest. . . . . . . . . . . . . . . . 35
8.02 Conditions to Obligations of Anschutz. . . . . . . . . . . . . . . 36
ARTICLE IX OTHER AGREEMENTS
9.01 Grounds for Termination. . . . . . . . . . . . . . . . . . . . . . 37
9.02 Effect of Termination. . . . . . . . . . . . . . . . . . . . . . . 37
9.03 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
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9.04 Cross Indemnity for Certain Fees and Expenses. . . . . . . . . . . 38
9.05 Indemnification of Forest. . . . . . . . . . . . . . . . . . . . . 38
9.06 Indemnification of Anschutz. . . . . . . . . . . . . . . . . . . . 39
9.07 Limitations on Indemnification . . . . . . . . . . . . . . . . . . 39
9.08 Indemnification Procedure. . . . . . . . . . . . . . . . . . . . . 39
9.09 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . 40
9.10 Area of Mutual Interest. . . . . . . . . . . . . . . . . . . . . . 40
9.11 Tax Basis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
9.12 Transition Period. . . . . . . . . . . . . . . . . . . . . . . . . 41
9.13 Disclaimers. . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
9.14 Release of Certain Guaranties and Indemnities. . . . . . . . . . . 42
9.15 Books, Records, Files and Data . . . . . . . . . . . . . . . . . . 43
9.16 Special Agreement Regarding AREC Balance Sheet . . . . . . . . . . 43
9.17 Agreement Regarding Royalty Plan . . . . . . . . . . . . . . . . . 43
ARTICLE X TAXES
10.01 Preparation and Filing of Tax Returns. . . . . . . . . . . . . . . 44
10.02 368(a) Reorganization. . . . . . . . . . . . . . . . . . . . . . . 44
10.03 Access to Information. . . . . . . . . . . . . . . . . . . . . . . 44
10.04 Anschutz Tax Indemnifications. . . . . . . . . . . . . . . . . . . 45
10.05 Forest Tax Indemnifications. . . . . . . . . . . . . . . . . . . . 45
10.06 Tax Indemnification Procedures.. . . . . . . . . . . . . . . . . . 45
10.07 Survival of Tax Provisions . . . . . . . . . . . . . . . . . . . . 46
10.08 Audits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE XI MISCELLANEOUS
11.01 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
11.02 Governing Law and Construction . . . . . . . . . . . . . . . . . . 47
11.03 Entire Agreement; Amendments and Waivers . . . . . . . . . . . . . 47
11.04 Successors; Third Party Beneficiaries. . . . . . . . . . . . . . . 48
11.05 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
11.06 Multiple Counterparts. . . . . . . . . . . . . . . . . . . . . . . 48
11.07 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . 48
11.08 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
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LIST OF EXHIBITS
Exhibit 2.04(i) Form of Second Amendment to Shareholders Agreement
2.04(j) Form of Amendment No. 2 to Registration Rights Agreement
2.04(k) Form of Amendment No. 2 to Rights Agreement
LIST OF SCHEDULES
Schedule 1.01 Defined Terms
3.03 Consents and Approvals (Forest)
3.08(a) Litigation (Forest)
3.10(c) Employee Matters (Forest)
4.03 Approvals (Anschutz)
4.06 Absence of Certain Changes or Events (Anschutz)
4.07 Tax Claims (Anschutz)
4.12 Anschutz Subsidiaries; Capitalization
4.14 Contracts
4.17 Property (Anschutz)
4.18(d) Xxxxx
4.18(e) Overbalance
4.20 Environmental Matters
4.23 Special Purpose Company
5.03 Negative Covenants
9.12 Transition Period Obligations
9.14 Anschutz Support Arrangements
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PURCHASE AND SALE AGREEMENT
This Purchase and Sale Agreement (this "AGREEMENT") is made and entered
into on this 6 day of April, 1998, by and between Forest Oil Corporation, a
New York corporation ("FOREST"), and The Anschutz Corporation, a Kansas
corporation ("ANSCHUTZ"). Forest and Anschutz are sometimes referred to herein
collectively as the "PARTIES" and individually as a "PARTY."
RECITALS
Anschutz, directly or indirectly through one or more Affiliates, owns (or
will own prior to the closing of the transactions contemplated hereby) various
oil and gas properties and interests located in the United States, Canada and
elsewhere.
Subject to the terms and conditions set forth herein, Forest and Anschutz
desire to consummate a series of transactions pursuant to which Forest will
acquire control of, or a direct interest in, certain of such oil and gas
properties and interests from Anschutz.
NOW, THEREFORE, for and in consideration of the premises and of the mutual
agreements, provisions and covenants herein contained, and the mutual benefits
to be derived therefrom, the Parties do hereby covenant and agree as follows:
ARTICLE I
DEFINITIONS
1.01 DEFINED TERMS. Each capitalized term used herein shall have the
meaning given such term in Schedule 1.01.
1.02 OTHER DEFINITIONAL PROVISIONS; CONSTRUCTION. As used herein and in
any certificate or document made or delivered pursuant hereto, accounting terms
not wholly defined in this Agreement shall have the respective meanings given to
them under GAAP as in effect on the Closing Date. The meanings given to terms
defined herein shall be equally applicable to both the singular and plural forms
of such terms. Unless the context requires otherwise: (a) the gender (or lack
of gender) of all words used in this Agreement includes the masculine, feminine
and neuter; (b) references to Articles and Sections refer to Articles and
Sections of this Agreement; (c) references to Schedules or Exhibits refer to the
Schedules and Exhibits attached to this Agreement, each of which is made a part
hereof for all purposes; (d) references to Legal Requirements refer to such
Legal Requirements as in effect from time to time prior to the Closing Date;
(e) references to money refer to legal currency of the United States of America;
and (f) the word "including" means "including, without limitation."
ARTICLE II
PURCHASE AND SALE; CLOSING; RECEIPTS AND CREDITS
2.01 PURCHASE AND SALE TRANSACTIONS. Subject to the terms and conditions
set forth in this Agreement, the following transactions shall take place at
Closing (or, to the extent provided in clause (a) below, prior to Closing):
(a) prior to Closing, Anschutz shall contribute to AREC through
its corporate parent, AREC Holding, Inc., cash in the amount of
US$55,000,000 (such amount, as adjusted pursuant to Section 2.02, being
herein referred to as the "CASH AMOUNT");
(b) Forest and Anschutz shall take such actions and execute such
documents and instruments as may be necessary to cause each of the Anschutz
Subsidiaries designated below to be merged with a wholly-owned subsidiary
of Forest to be designated by Forest, such that (i) the applicable Anschutz
Subsidiary is the surviving corporation in such merger, (ii) the issued and
outstanding shares of common stock of such Anschutz Subsidiary are
converted into the number of shares of Forest Common Stock indicated below,
(iii) the name of the surviving Anschutz Subsidiary is changed to remove
the word "Anschutz" from such entity's name, and (iv) such merger qualifies
as a reorganization pursuant to sections 368(a) and 368(a)(2)(E) of the
Code:
NAME OF ANSCHUTZ SUBSIDIARY NUMBER OF SHARES OF
FOREST COMMON STOCK
AREC Holding, Inc. 5,022,152
Anschutz South Africa Corporation 73,639
Anschutz Romania Corporation 92,048
Anschutz Albania Corporation 73,639
Anschutz Switzerland Corporation 18,410
Anschutz Tunisia Corporation 36,819
Anschutz Spain Corporation 14,728
Anschutz Austria Corporation 18,410
----------
Total 5,349,845
(c) Anschutz shall convey, or cause its applicable subsidiary to convey,
the Italian Assets to Forest or its designee in exchange for the issuance by
Forest to Anschutz of 25,774 shares of Forest Common Stock; and
(d) subject to the terms of Section 5.11 (and except with respect to
such capital stock listed in Schedule 4.12 as being owned by a Person other than
Anschutz, its Affiliates or the Anschutz Subsidiaries), Forest and Anschutz
shall take such actions and execute such documents and instruments as may be
necessary to cause all of the issued and outstanding capital stock of each of
the Anschutz Subsidiaries designated below to be conveyed to Forest or one or
more of its designees in exchange for the number of shares of Forest Common
Stock indicated below such that such exchange qualifies as a reorganization
pursuant to section 368(a)(1)(B) of the Code:
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NUMBER OF SHARES OF
NAME OF ANSCHUTZ SUBSIDIARY FOREST COMMON STOCK
Anschutz Canada 441,832
Anschutz Germany GmbH 29,455
Anschutz (Thailand) Company Limited 103,094
--------
Total 574,381
2.02 ADJUSTMENTS TO CASH AMOUNT. (a) The Cash Amount shall be adjusted
as follows:
(i) the Cash Amount shall be adjusted downward by the sum of the
following amounts:
(A) an amount equal to the sum of all capital
contributions, loans and payments on the Thailand Note made by
Anschutz or one of its Affiliates to any of the Anschutz
Subsidiaries (other than AREC), or to AIP in connection with the
Italian Assets, in each case during the period beginning on
January 1, 1998, and ending on the Closing Date in order to permit
such Anschutz Subsidiaries or AIP to satisfy capital or operating
expenses attributable to the ownership or operation of the Oil and
Gas Properties from and after January 1, 1998; provided, however,
that such amount shall not include any capital contributions, loans
or payments to the Anschutz Subsidiaries or AIP to the extent the
proceeds thereof are or were used to (1) pay any general corporate
overhead and administrative expenses of Anschutz or any of its
Affiliates, (2) pay capital or other expenses incurred or paid in
violation of the covenants of Anschutz set forth in Section 5.02 or
5.03 or (3) pay capital or other expenses attributable to the
period of time prior to January 1, 1998;
(B) the amount of all monies, proceeds, receipts, credits
and income received by the Anschutz Subsidiaries (other than AREC)
after December 31, 1997, that are attributable to the ownership or
operation of Anschutz Assets other than the Anschutz Assets owned
by AREC (collectively, the "NON-AREC ANSCHUTZ ASSETS") for all
periods of time on or before December 31, 1997; and
(C) if the indebtedness referenced in clause (b) of the
definition of "AREC Credit Facilities" is prepaid prior to Closing
by AREC with funds contributed to it by Anschutz or one of
Anschutz's Affiliates, an amount equal to the amount paid by AREC
with such funds in satisfaction thereof; and
(ii) the Cash Amount shall be adjusted upward by the sum of the
following amounts:
(A) the sum of all amounts, if any, distributed, loaned or
paid by any of the Anschutz Subsidiaries to Anschutz or any of its
Affiliates after December 31, 1997;
(B) an amount equal to the sum of all Defect Values
attributable to any Title Defects that have not been cured by
Anschutz or waived by Forest;
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(C) an amount equal to the Defect Value attributable to any
Casualty Defects with respect to which Forest has made the election
provided for in Section 7.04(a); and
(D) the amount of all capital or operating expenses paid by
the Anschutz Subsidiaries (other than AREC) after December 31,
1997, that are attributable to the ownership or operation of the
Non-AREC Anschutz Assets on or before December 31, 1997.
(b) Anschutz shall prepare and deliver to Forest, at least 30 days
prior to the Closing Date, Anschutz's estimate of the adjustments to the Cash
Amount provided for in Section 2.02(a) above, together with a statement setting
forth Anschutz's estimate of the final Cash Amount. Such estimate shall include
such backup or supporting information as may be necessary to permit Forest to
understand how Anschutz determined such estimates. Forest and Anschutz shall
negotiate in good faith and attempt to agree on such estimated adjustments prior
to Closing. In the event any estimated adjustment amounts are not agreed upon
prior to Closing, the estimate of the Cash Amount for purposes of Closing shall
be calculated based on the estimated adjustments that Forest and Anschutz have
agreed upon and the arithmetic average of Forest's and Anschutz's good faith
estimation of any disputed adjustments.
(c) Within 60 days after Closing, Anschutz shall prepare and deliver to
Forest a statement setting forth each adjustment to the Cash Amount required
pursuant to Section 2.02(a) and showing the calculation of each such adjustment.
From and after Closing and until the final Cash Amount has been determined
pursuant to this Section 2.02(c), Anschutz shall make available to Forest at any
reasonable time such books and records as may be reasonably necessary for Forest
to verify the accuracy of the adjustments set forth on such statement. Within
30 days after receipt of such statement from Anschutz, Forest shall deliver to
Anschutz a written report containing all changes that Forest proposes to be made
to such statement, in each case together with a reasonably detailed explanation
therefor. Forest and Anschutz shall then undertake to agree on the items in
dispute and the final Cash Amount no later than 30 days of receipt by Anschutz
of Forest's statement of proposed changes. At any time after the end of such
30-day period, any adjustments remaining in dispute or not finally determined
and agreed upon (except for any adjustments in respect of Title Defects and
Casualty Defects, which shall be resolved as provided in Section 7.03) may, at
the request of either Anschutz or Forest, be submitted to KPMG Peat Marwick for
determination. Such firm shall be instructed to make such determination within
30 days following such submission and such determination shall be final and
binding upon Forest and Anschutz, with the fees and expenses of such firm to be
shared equally by both Parties. Within five days following the final
determination of the Cash Amount pursuant to this Section 2.02(c) (which final
determination, however determined, shall be final and binding upon Forest and
Anschutz) (i) if the final Cash Amount is greater than the estimated Cash Amount
used for purposes of Closing, Anschutz shall pay an amount equal to such
difference to Forest and (ii) if the final Cash Amount is less than the
estimated Cash Amount used for purposes of Closing, Forest shall pay an amount
equal to such difference to Anschutz.
2.03 CLOSING. Subject to the terms of Section 5.11, the closing of the
transactions contemplated by this Agreement ("CLOSING") shall take place at the
offices of Forest, 0000 Xxxxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxx 00000, at 10:00
a.m., local time, on the later to occur of (a) May 13, 1998, and (b) the second
business day following the date on which all of the conditions set forth in
Article VIII have been satisfied or waived. The date on which Closing actually
occurs shall be referred to herein as the "CLOSING DATE."
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2.04 ACTIONS TO BE TAKEN AT CLOSING. At Closing, the following shall
occur:
(a) Forest and Anschutz shall execute, deliver and file with the
appropriate Governmental Entities such documents and instruments, and shall
take such other actions, as may be necessary to effect the merger
transactions contemplated by Section 2.01(b);
(b) Anschutz shall deliver to Forest or its applicable designee
one or more certificates evidencing its ownership of the Purchased Equity
Interests, together with stock powers duly executed in blank or duly
executed instruments of transfer;
(c) Forest shall deliver to Anschutz or its applicable
subsidiary one or more certificates issued in the name of Anschutz or such
subsidiary, as applicable, evidencing the ownership by such entity of the
shares of Forest Common Stock to be issued by Forest to Anschutz pursuant
to Sections 2.01 (b)-(d) (collectively, the "FOREST SHARES");
(d) Anschutz and the applicable subsidiaries of Anschutz shall
execute and deliver to Forest or its applicable designee an Assignment and
Xxxx of Sale conveying the Italian Assets and the Thailand Note to Forest,
which Assignment and Xxxx of Sale shall be in a form that is mutually
satisfactory to Forest and Anschutz;
(e) Anschutz shall deliver to Forest the resignations of the
members of the Boards of Directors and all officers of the Anschutz
Subsidiaries;
(f) Anschutz shall deliver to Forest the certificate required by
Section 8.01(c);
(g) Forest shall deliver to Anschutz the certificate required by
Section 8.02(c);
(h) Anschutz shall execute and deliver to Forest such
instruments, dated the Closing Date, as are necessary to (i) release the
Anschutz Subsidiaries from any and all Claims of Anschutz and its
Affiliates and (ii) evidence the repayment or other satisfaction of all
Intercompany Indebtedness other than the Thailand Note;
(i) the Parties shall execute and deliver that certain Second
Amendment to Shareholders Agreement substantially in the form of
Exhibit 2.04(i);
(j) the Parties shall execute and deliver that certain Amendment
No. 2 to Registration Rights Agreement substantially in the form of
Exhibit 2.04(j);
(k) Forest shall execute and deliver that certain Amendment
No. 2 to Rights Agreement substantially in the form of Exhibit 2.04(k);
(l) Anschutz shall deliver to Forest a complete and accurate
list showing, as of the Closing Date, (i) the name of each bank in which
the Anschutz Subsidiaries have accounts or safe deposit boxes, (ii) the
names in which such accounts or boxes are held and (iii) the name of each
Person authorized to draw thereon or have access thereto;
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(m) each Party shall execute and deliver such documents as are
required pursuant to Section 9.14; and
(n) each Party shall execute and deliver such other documents
and take such other action at Closing as may be required pursuant to the
terms of this Agreement.
2.05 INTENT OF PARTIES REGARDING CERTAIN RECEIPTS AND CREDITS.
(a) Subject to the terms hereof and except to the extent same have already been
taken into account as an adjustment to the Cash Amount, Forest and Anschutz
agree to take such actions as may be necessary to ensure that (i) Forest, either
directly or through the applicable Anschutz Subsidiary, receives the benefit of
or credit for all monies, proceeds, receipts, credits and income attributable to
the ownership or operation of the Non-AREC Anschutz Assets for all periods of
time subsequent to December 31, 1997, and (ii) Anschutz, either directly or
through one of its Affiliates, receives the benefit of or credit for all monies,
proceeds, receipts, credits and income attributable to the ownership or
operation of the Non-AREC Anschutz Assets for all periods of time on or prior to
December 31, 1997.
(b) Subject to the terms hereof (including the proviso clause set forth
in Section 2.02(a)(i)(A) and the indemnity provisions contained herein) and
except to the extent same have already been taken into account as an adjustment
to the Cash Amount, Forest and Anschutz agree to take such actions as may be
necessary to ensure that (i) Forest, either directly or through the applicable
Anschutz Subsidiary, bears the burden of all costs and expenses attributable to
the ownership or operation of the Non-AREC Anschutz Assets for all periods of
time subsequent to December 31, 1997, and (ii) Anschutz, either directly or
through one of its Affiliates, bears the burden of all costs and expenses
attributable to the ownership or operation of the Non-AREC Anschutz Assets for
all periods of time on or before December 31, 1997.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF FOREST
Forest represents and warrants to Anschutz as of the date hereof and as of
the Closing Date, as follows:
3.01 CORPORATE EXISTENCE AND POWER. Each of Forest and its Consolidated
Subsidiaries (a) is a corporation duly incorporated, validly existing and in
good standing under the laws of the jurisdiction of its incorporation, (b) has
all necessary corporate power and authority and all material Licenses and
Approvals required to own, lease, license or use its properties now owned,
leased, licensed or used and to carry on its business as now conducted, (c) is
duly qualified as a foreign corporation under the laws of each jurisdiction in
which both (i) qualification is required either (A) to own, lease, license or
use its properties now owned, leased, licensed and used or (B) to carry on its
business as now conducted and (ii) 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 Forest and its
Consolidated Subsidiaries, taken as a whole, and (B) the ability of Forest or
any of its Consolidated Subsidiaries, as the case may be, to perform its
obligations under this Agreement or any agreement contemplated hereunder to
which it is or may become a party and (d) subject to obtaining the Approvals
identified in Schedule 3.03, has all necessary corporate power and authority to
execute and deliver this Agreement and each document to be executed and
delivered in connection with the consummation of the transactions contemplated
by this
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Agreement (this Agreement and such other documents being herein collectively
referred to as the "TRANSACTION DOCUMENTS") to which it is or may become a
party.
3.02 AUTHORIZATION; CONTRAVENTION. Subject to obtaining the Approvals
identified in Schedule 3.03, the execution and delivery by each of Forest and
its Consolidated Subsidiaries of each Transaction Document to which it is or may
become a party and the performance by it of its obligations under each of those
Transaction Documents have been duly authorized by all necessary corporate
action and do not and will not (a) contravene, violate, result in a breach of or
constitute a default under, (i) its articles of incorporation or certificate of
incorporation, as the case may be, or bylaws, (ii) any Legal Requirement by
which Forest or any of its Consolidated Subsidiaries or any of their properties
may be bound or affected, including, but not limited to, the Xxxx-Xxxxx-Xxxxxx
Act, or (iii) any Contract to which Forest or any of its Consolidated
Subsidiaries is a party or by which Forest or any of its Consolidated
Subsidiaries or their properties may be bound or affected or (b) except as
contemplated by the Transaction Documents, result in or require the creation or
imposition of any Encumbrance on any of the properties now owned or hereafter
acquired by Forest or any of its Consolidated Subsidiaries.
3.03 APPROVALS. Except as described in Schedule 3.03, no Approval of
any Governmental Entity or other Person is required or advisable on the part of
Forest or its Consolidated Subsidiaries for (a) the due execution and delivery
by Forest or such Consolidated Subsidiary, as the case may be, of any
Transaction Document to which it is or may become a party, (b) its consummation
of the transactions contemplated by this Agreement, (c) the performance by
Forest or such Consolidated Subsidiary, as the case may be, of its obligations
under each Transaction Document to which it is or may become a party and (d) the
exercise by Anschutz of its rights and remedies under each Transaction Document.
3.04 BINDING EFFECT. Each Transaction Document to which Forest or any
of its Consolidated Subsidiaries 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 Forest or such Consolidated Subsidiary, as the case may
be, enforceable against it in accordance with its terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting creditors' rights generally and general principles
of equity, including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing and the possible unavailability of
specific performance or injunctive relief, regardless of whether considered in a
proceeding in equity or at law.
3.05 FINANCIAL INFORMATION. Forest has delivered to Anschutz true and
complete copies of (a) the audited consolidated balance sheet of Forest and its
Consolidated Subsidiaries as of December 31, 1996, and the related audited
consolidated statements of income, changes in shareholders' equity and cash
flows for such entities for the calendar year then ended, and (b) the unaudited
consolidated balance sheet of Forest and its Consolidated Subsidiaries and the
related unaudited consolidated statements of income, changes in shareholders'
equity and cash flows for such entities for the nine-month period ended on
September 30, 1997 (collectively, the "FOREST FINANCIAL STATEMENTS"). The
Forest Financial Statements fairly present the consolidated financial position,
results of operations, shareholders' equity and cash flows of Forest and its
Consolidated Subsidiaries as of the dates and for the periods covered thereby,
in each case in accordance with GAAP applied on a consistent basis, except as
described in the footnotes to such Forest Financial Statements, and in the case
of the unaudited Financial Statements, subject to normal audit or year end
adjustments.
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3.06 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since September 30, 1997,
there has been no material adverse change in the business, properties,
operations, prospects or condition (financial or otherwise) of Forest and its
Consolidated Subsidiaries, taken as a whole, in each case except with respect to
circumstances or events that have affected the oil and gas industry generally,
including warm or wet weather in markets for the consumption of oil and gas
products.
3.07 TAXES. (a) Each of Forest and its Consolidated Subsidiaries has
filed all Tax Returns that are required to be filed with any Governmental Entity
and has paid all Taxes due pursuant to such Tax Returns or any assessment
received by it or otherwise required to be paid, except Taxes being contested in
good faith by appropriate proceedings or for which adequate reserves or other
provisions are maintained, and except for the filing of Tax Returns as to which
the failure to file has not had, and could not reasonably be expected to have, a
Material Adverse Effect on Forest and its Consolidated Subsidiaries.
(b) Federal income tax returns of Forest and its Consolidated
Subsidiaries have been closed through the year ended December 31, 1993, except
for net operating losses, which remained open from the year ended December 31,
1985. Forest knows of no basis for the assessment of any material amount of
Taxes for any period covered by the Tax Returns that are referred to in
Section 3.07(a) that is not reflected on those Tax Returns other than those
Taxes being contested in good faith by appropriate proceedings or for which
adequate reserves or other provisions are maintained. None of Forest and its
Consolidated Subsidiaries is a party to any Claim by any Governmental Entity and
no Claim has been asserted or threatened against it for assessment or collection
of any Taxes. None of Forest and its Consolidated Subsidiaries has executed or
filed with the Internal Revenue Service or any other taxing authority any
agreement extending the period of assessment or collection of any Taxes or any
consent to have the provisions of section 341(f) of the Code applied to it
except as required by the dual consolidated loss rules under Treasury Regulation
Section 1.1503-2T(c)(3). No power of attorney granted by Forest or any of its
Consolidated Subsidiaries with respect to tax matters is currently in force.
(c) All Taxes that Forest or any of its Consolidated Subsidiaries is
required to withhold or collect have been withheld or collected and, to the
extent required, have been paid to the proper Governmental Entity on a timely
basis, and each of Forest and its Consolidated Subsidiaries has withheld proper
amounts from its employees for all periods in full compliance with tax
withholding provisions of applicable Legal Requirements, except for withholdings
or collections as to which the failure to withhold or collect has not had, and
could not reasonably be expected to have a Material Adverse Effect on Forest and
its Consolidated Subsidiaries.
(d) No portion of the Real Property or plant, structures, fixtures or
improvements of Forest or any of its Consolidated Subsidiaries is subject to any
special assessment, the liability with respect to which, individually or in the
aggregate has had, or could reasonably be expected to have, a Material Adverse
Effect on Forest and its Consolidated Subsidiaries. Forest has no Knowledge of
any proposal for any such assessment.
3.08 LITIGATION. (a) Except as disclosed in Schedule 3.08(a), there is
no Claim pending or, to the Knowledge of Forest, threatened against Forest or
any of its Consolidated Subsidiaries that (i) involves any of the transactions
contemplated hereby or (ii) individually or in the aggregate, if determined
adversely to any of them, could result in liability to any of them in an amount
that exceeds $50,000 individually or $100,000 in the aggregate.
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(b) There is no Claim pending or, to the knowledge of each of Forest
and its Consolidated Subsidiaries, threatened against Forest or any of its
Consolidated Subsidiaries that involves any of the transactions contemplated
hereby or any property owned, leased, licensed or used by Forest or any of its
Consolidated Subsidiaries that, individually or in the aggregate, if determined
adversely to any of them, has had, or could reasonably be expected to have, a
Material Adverse Effect on Forest and its Consolidated Subsidiaries.
3.09 COMPLIANCE WITH LAWS. (a) Forest and its Consolidated Subsidiaries
have not violated (without a subsequent timely and complete cure thereof) and
are in compliance with all Legal Requirements, except for any such failure to
comply that, individually or in the aggregate, has not had, and could not
reasonably be expected to have, a Material Adverse Effect on Forest and its
Consolidated Subsidiaries.
(b) Neither Forest nor any of its Consolidated Subsidiaries has
received any notice of a violation of or default with respect to any Legal
Requirement or any decision, ruling, order or award of any Governmental Entity
or arbitrator applicable to them or their business, properties or operations,
including individual products or services sold or provided by them, except for
violations or defaults that, individually or in the aggregate, have not had and
could not reasonably be expected to have a Material Adverse Effect on Forest and
its Consolidated Subsidiaries.
3.10 EMPLOYEE MATTERS. To the Knowledge of Forest:
(a) each of Forest and its Consolidated Subsidiaries has
substantially complied with its obligations related to, and is not in
default under, any material written or oral employment agreements, material
collective bargaining agreements and any written personnel policies to
which any of Forest and its Consolidated Subsidiaries is a party or by
which any of Forest and its Consolidated Subsidiaries is bound;
(b) each of Forest and its Consolidated Subsidiaries 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 labor practices, except for any failure or unfair
practice that has not had, and could not reasonably be expected to have, a
Material Adverse Effect on Forest and its Consolidated Subsidiaries; and
(c) except as disclosed in Schedule 3.10(c):
(i) there is no unfair labor practice charge or
complaint against any of Forest and its Consolidated Subsidiaries
pending or threatened before the National Labor Relations Board;
(ii) there has not occurred nor has there been
threatened, a labor strike, request for representation, work
stoppage or lockout with respect to Forest or its Consolidated
Subsidiaries;
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(iii) there is no representation claim or petition pending
before the National Labor Relations Board respecting the employees
of any of Forest and its Consolidated Subsidiaries;
(iv) no grievance nor any arbitration proceeding arising
out of any collective bargaining agreement to which any of Forest
and its Consolidated Subsidiaries is a party is pending;
(v) no charges with respect to or relating to any of
Forest and its Consolidated Subsidiaries are pending before the
Equal Employment Opportunity Commission or any state, local or
foreign agency responsible for the prevention of unlawful
employment practices;
(vi) no claims relating to employment or loss of
employment with any of Forest and its Consolidated Subsidiaries are
pending in any federal, state or local court or in any other
adjudicatory body and no such claims against any of Forest and its
Consolidated Subsidiaries have been threatened; and
(vii) none of Forest and its Consolidated Subsidiaries has
received notice of the intent of any federal, state, local or
foreign agency responsible for the enforcement of labor or
employment regulations to conduct an investigation of or relating
to any of Forest and its Consolidated Subsidiaries, and no such
investigation is in progress.
3.11 LABOR DISPUTES AND ACTS OF GOD. The business, properties,
operations, prospects and conditions (financial and otherwise) of Forest and its
Consolidated Subsidiaries, taken as a whole, and the ability of each of Forest
and its Consolidated Subsidiaries to perform its obligations under any
Transaction Document to which it is or may become a party, has not been affected
by any fire, explosion, accident, strike, lockout, or other labor dispute,
drought, storm, hail, earthquake, embargo, act of God or of the public enemy, or
other casualty (whether or not covered by insurance) having, individually or in
the aggregate, a Material Adverse Effect on Forest and its Consolidated
Subsidiaries, except in each case with respect to each circumstance or event
that shall have affected the oil and gas industry generally, including warm
weather in markets for the consumption of oil and gas products.
3.12 CAPITALIZATION. (a) The authorized capital stock of Forest
consists of (i) 200,000,000 shares of common stock and (ii) 10,000,000 shares of
preferred stock, par value $.01 per share, consisting of (A) a class of
7,350,000 shares of senior preferred stock and (B) a class of 2,650,000 shares
of 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 January 30, 1998, there were (i) 36,320,234 shares of common
stock issued and outstanding, (ii) 77,349 shares of common stock reserved for
issuance to Forest's Retirement Savings Plan, (iii) 1,889,360 shares of common
stock reserved for issuance upon exercise of outstanding stock options issued by
Forest to current and former employees of Forest and its Consolidated
Subsidiaries (the "EMPLOYEE OPTIONS") and (iv) 363,202 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
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Rights Agreement dated as of October 14, 1993, between Forest and Mellon
Securities Trust Company, as Rights Agent (the "RIGHTS AGREEMENT"), none of
which are issued or outstanding.
(c) Except as set forth above and except as provided in the Transaction
Documents, no Equity Securities of Forest are issued, reserved for issuance or
outstanding.
(d) All outstanding shares of capital stock of Forest are, and all
shares that may be issued pursuant to the exercise of the Employee Options, as
the case may be, will be, when issued, duly authorized, validly issued, fully
paid and nonassessable and are not subject to preemptive rights.
(e) Except with respect to the outstanding shares of common stock, the
Employee Options, the Rights and the Transaction Documents, there is no
outstanding Debt or Equity Securities of Forest having the right to vote (or
convertible into, or exchangeable for, securities having the right to vote) on
any matters on which shareholders of Forest may vote.
(f) Except with respect to the Employee Options, the Rights, the
Shareholders Agreement and the Transaction Documents, there is no agreement or
arrangement restricting the voting or transfer of the Equity Securities of
Forest.
(g) Except with respect to the Employee Options, the Rights and the
Transaction Documents, there are no outstanding securities, options, warrants,
calls, rights, commitments, agreements, arrangements or undertakings of any kind
to which Forest or any of its Consolidated Subsidiaries is a party or by which
any of them is bound obligating Forest or any of its Consolidated Subsidiaries
to issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock or other Equity Securities of Forest or of any of its
Consolidated Subsidiaries or obligating Forest or any of its Consolidated
Subsidiaries to issue, grant, extend or enter into any such security, option,
warrant, call, right, commitment, agreement, arrangement or undertaking.
(h) Except with respect to the Rights and the obligations of Forest
under this Agreement, there are no outstanding contractual obligations,
commitments, understandings or arrangements of Forest or any of its Consolidated
Subsidiaries to repurchase, redeem or otherwise acquire, re-acquire or make any
payment in respect of any shares of Equity Securities of Forest or any of its
Consolidated Subsidiaries.
(i) Except with respect to statutory restrictions of general
application and the provisions of the Debt Instruments, 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
Forest.
(j) Except as contemplated by the Registration Rights Agreement, there
are no agreements or arrangements to which Forest or any of its Consolidated
Subsidiaries is a party pursuant to which Forest is or could be required to
register shares of common stock or other securities under the Securities Act.
(k) Equity Securities of Forest that were issued and reacquired by
Forest were so reacquired (and, if reissued, so reissued) in compliance with all
applicable Legal Requirements, and Forest has no liability with respect to the
reacquisition or reissuance of its Equity Securities.
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3.13 BOOKS AND RECORDS. (a) The records and books of account of each of
Forest and its Consolidated Subsidiaries are correct and complete in all
material respects, have been maintained in accordance with good business
practices and are reflected accurately in the Forest Financial Statements. Each
of Forest and its Consolidated Subsidiaries has accounting controls sufficient
to ensure that its transactions are (i) executed in accordance with management's
general or specific authorization and (ii) recorded in conformity with GAAP so
as to maintain accountability for assets.
(b) The minute books of each of Forest and its Consolidated
Subsidiaries contain accurate records of all meetings and accurately reflect all
corporate action of the shareholders and the board of directors (including
committees) of Forest or such Consolidated Subsidiary, as the case may be.
(c) The stock books and ledgers of each of Forest and its Consolidated
Subsidiaries correctly record all transfers and issuances of all capital stock
of Forest or the Consolidated Subsidiary, as the case may be, and contain all
canceled and unused stock certificates of Forest or the Consolidated Subsidiary,
as the case may be.
3.14 SEC DOCUMENTS. Forest has filed with the Securities and Exchange
Commission all reports, schedules, forms, statements and other documents
required by the Exchange Act to be filed by Forest since September 30, 1997
(collectively, and in each case including all exhibits and schedules thereto and
documents incorporated by reference therein, the "SEC DOCUMENTS"). Forest has
delivered or made available to Anschutz all SEC Documents. As of their
respective dates, except to the extent revised or superseded by a subsequent
filing with the Securities and Exchange Commission, the SEC Documents complied
in all material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and none of the SEC Documents (including any
and all financial statements included therein) as of such dates contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
consolidated financial statements of Forest and its Consolidated Subsidiaries
included in all SEC Documents, including any amendments thereto, 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.
3.15 BROKERS AND FINDERS. None of Forest or any of its respective
officers, directors or employees has employed any broker or finder or incurred
any liability for any brokerage fees, commissions or finders' fees in connection
with the transactions contemplated by this Agreement for which Anschutz will
become directly or indirectly liable.
3.16 INVESTMENT INTENT. The Purchased Equity Interests are being
acquired by Forest for investment, for its own account and not with a view to
the resale thereof or any other transaction that would constitute a
"distribution" under the Securities Act. Forest acknowledges that the Purchased
Equity Interests have not been and will not be, upon Closing, registered under
the Securities Act or any applicable state securities laws. Forest has the
knowledge and experience in financial and business matters such that it is
capable of evaluating the merits and risks of the investment by Forest in the
Purchased Equity Interests. Forest shall not resell or otherwise dispose of the
Purchased Equity Interests except pursuant to an effective registration
statement or an exemption from the registration requirements of the Securities
Act and all other applicable state securities and blue sky laws. Forest shall
not resell or otherwise dispose of the Purchased Equity Interests in any manner
or transaction that will make Anschutz unable to rely on the
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exemption from the Securities Act and all applicable state securities laws on
which Anschutz has relied in making the offer and sale of the Purchased Equity
Interests to Forest.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ANSCHUTZ
Anschutz represents and warrants to Forest as of the date hereof and as of
the Closing Date, as follows:
4.01 CORPORATE EXISTENCE AND POWER. Except as described in Schedule
4.17, each of Anschutz and the Anschutz Subsidiaries:
(a) is a corporation duly incorporated, validly existing and in
good standing under the laws of the jurisdiction of its incorporation,
(b) has all necessary corporate power and authority and all
material Licenses and Approvals required to own, lease, license or use its
properties now owned, leased, licensed or used and to carry on its business
as now conducted,
(c) is duly qualified as a foreign corporation under the laws of
each jurisdiction in which both (i) qualification is required either (A) to
own, lease, license or use its properties now owned, leased, licensed and
used or (B) to carry on its business as now conducted, and (ii) 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 any Anschutz Subsidiaries and (B) the ability of Anschutz
or any of the Anschutz Subsidiaries, as the case may be, to perform its
obligations under this Agreement or any agreement contemplated hereunder to
which it is or may become a party, and
(d) subject to obtaining the Approvals identified in
Schedule 4.03, has all necessary corporate power and authority to execute
and deliver each Transaction Document to which it is or may become a party.
4.02 AUTHORIZATION; CONTRAVENTION. Subject to obtaining the Approvals
identified in Schedule 4.03, the execution and delivery by each of Anschutz and
the Anschutz Subsidiaries of each Transaction Document to which it is or may
become a party and the performance by it of its obligations under each of those
Transaction Documents have been duly authorized by all necessary corporate
action and do not and will not (a) contravene, violate, result in a breach of or
constitute a default under, (i) its organizational documents, including, as the
case may be, its articles or certificate of incorporation and bylaws, (ii) any
Legal Requirement by which Anschutz or any Anschutz Subsidiary or any of their
properties may be bound or affected, including, but not limited to, the
Xxxx-Xxxxx-Xxxxxx Act, or (iii) any Contract to which Anschutz or any Anschutz
Subsidiary is a party or by which Anschutz or any Anschutz Subsidiary or their
properties may be bound or affected or (b) except as contemplated by the
Transaction Documents, result in or require the creation or imposition of any
Encumbrance on any of the properties now owned or hereafter acquired by Anschutz
or any Anschutz Subsidiary.
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4.03 APPROVALS. Except as described in Schedule 4.03, no Approval of
any Governmental Entity or other Person is required or advisable on the part of
Anschutz or the Anschutz Subsidiaries for (a) the due execution and delivery by
Anschutz or such Anschutz Subsidiary, as the case may be, of any Transaction
Document to which it is or may become a party, (b) its consummation of the
transactions contemplated by this Agreement, (c) the performance by Anschutz or
any Anschutz Subsidiary, as the case may be, of its obligations under each
Transaction Document to which it is or may become a party and (d) the exercise
by Forest of its rights and remedies under each Transaction Document. The
aggregate fair market value of all Anschutz Assets (x) that do not constitute
Exempt Assets does not exceed $15,000,000; and (y) that do constitute Exempt
Assets does not exceed $500,000,000.
4.04 BINDING EFFECT. Each Transaction Document to which Anschutz or any
Anschutz Subsidiary is or may become a party is, or when executed and delivered
in accordance with this Agreement will be, the legally valid and binding
obligation of Anschutz or such Anschutz Subsidiary, as the case may be,
enforceable against it in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting creditors' rights generally and general principles of
equity, including, without limitation, concepts of materiality, reasonableness,
good faith and fair dealing and the possible unavailability of specific
performance or injunctive relief, regardless of whether considered in a
proceeding in equity or at law.
4.05 FINANCIAL STATEMENTS. Anschutz has delivered to Forest correct and
complete copies of the audited balance sheet, as of May 31, 1997, of AREC and
the unaudited balance sheets, as of the later of the date of incorporation and
December 31, 1997 (the "BALANCE SHEET DATE"), of each of the Anschutz
Subsidiaries (collectively, the "ANSCHUTZ FINANCIAL STATEMENTS"). The Anschutz
Financial Statements fairly present the consolidated financial position of each
of the Anschutz Subsidiaries and their respective Consolidated Subsidiaries as
of the dates indicated thereon, in each case in accordance with GAAP applied on
a consistent basis, except as described in the footnotes to such Anschutz
Financial Statements, and in the case of the unaudited Anschutz Financial
Statements, subject to normal audit or year end adjustments.
4.06 ABSENCE OF CERTAIN CHANGES OR EVENTS. (a) Except as described in
Schedule 4.06, since the applicable Balance Sheet Date, none of the Anschutz
Subsidiaries or the Anschutz Assets has suffered a Material Adverse Effect,
except in each case with respect to circumstances or events that have affected
the oil and gas industry generally, including warm or wet weather in markets for
the consumption of oil and gas products.
(b) Except as described in Schedule 4.06, since the applicable Balance
Sheet Date, none of the Anschutz Subsidiaries have:
(i) transferred any of its assets, including any right under any
lease, License or Contract or any Proprietary Right or other intangible
asset, in each case except for fair consideration and in the ordinary
course of business;
(ii) waived, released, canceled, settled or compromised any Debt,
Claim or right of any material value, in each case except in the ordinary
course of business;
(iii) suffered (A) any damage, destruction or Casualty Defect
(whether or not covered by insurance) of property having a historical cost
or fair market value that exceeds $100,000
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individually or in the aggregate or (B) any taking by condemnation or
eminent domain of any of its property or assets having a historical cost or
fair market value that exceeds $100,000 individually or in the aggregate;
(iv) made any loan to or entered into any transaction with 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;
(v) entered into any material Contract, amended or terminated
any such Contract or otherwise conducted any of its affairs, in any case in
a manner that is outside the ordinary course of business and inconsistent
with its past practices;
(vi) except as disclosed in the footnotes to the Anschutz
Financial Statements, changed any accounting methods or principles used in
recording transactions on the books of any Anschutz Subsidiary or in
preparing the financial statements of any Anschutz Subsidiary;
(vii) declared or paid any dividend or made any distribution of
any kind or character;
(viii) incurred any Debt; or
(ix) entered into any Contract committing itself with respect to
any of the foregoing.
4.07 TAXES. (a) Except for such matters as have not had, and could not
reasonably be expected to have, a Material Adverse Effect on any Anschutz
Subsidiary, (i) all Tax Returns of or with respect to any Tax which is required
to be filed on or before the Closing Date by or with respect to any Anschutz
Subsidiary or the Anschutz Assets have been or will be duly and timely filed,
(ii) all items of income, gain, loss, deduction and credit or other items
required to be included in each such Tax Return have been or will be so included
and all information provided in each such Tax Return is true, correct and
complete, (iii) all Taxes that have become or will become due, as reflected in
each such Tax Return, with respect to the period covered by each such Tax Return
have been or will be timely paid in full, (iv) all withholding Tax requirements
imposed on or with respect to any Anschutz Subsidiary or the Anschutz Assets
have been or will be satisfied in full in all respects, and (v) no penalty,
interest or other charge is or will become due with respect to the late filing
of any such Tax Return or late payment of any such Tax.
(b) Except as set forth on Schedule 4.07, there is not in force any
extension of time with respect to the due date for the filing of any Tax Return
of or with respect to any Anschutz Subsidiary or the Anschutz Assets or any
waiver or agreement for any extension of time for the assessment or payment of
any Tax of or with respect to any Anschutz Subsidiary or the Anschutz Assets.
(c) Except as described on Schedule 4.07, there is no Claim against any
Anschutz Subsidiary or the Anschutz Assets for any Taxes, and no assessment,
deficiency or adjustment has been asserted or proposed with respect to any Tax
Return of or with respect to any Anschutz Subsidiary or the Anschutz Assets
other than those that have not had, and could not reasonably be expected to
have, a Material Adverse Effect on any Anschutz Subsidiary.
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(d) On the Closing Date, none of the Anschutz Subsidiaries will be
subject to, or have any liability under, any Tax allocation or sharing
agreement.
(e) Except for statutory liens for current Taxes not yet due, no liens
for Taxes exist upon the Anschutz Assets.
(f) None of the Anschutz Subsidiaries will be required to include any
amount in income for any taxable period ending after the Closing Date as a
result of a change in accounting method or pursuant to any agreement with any
Government Entity occurring prior to the Closing Date.
(g) None of the Anschutz Subsidiaries has made an election under
section 341(f) of the Code.
4.08 LITIGATION. (a) There is no Claim pending or, to the Knowledge of
Anschutz, threatened against Anschutz or any of the Anschutz Subsidiaries that
(i) involves any of the transactions contemplated by this Agreement, or
(ii) individually or in the aggregate, if determined adversely to any of them,
could result in a liability to any of the Anschutz Subsidiaries in an amount
that exceeds $50,000 individually or $100,000 in the aggregate.
(b) There is no Claim pending or, to the Knowledge of Anschutz,
threatened against any of the Anschutz Subsidiaries or that involves any of the
transactions contemplated by this Agreement or any of the Anschutz Assets or any
other property owned, leased, licensed or used by any of the Anschutz
Subsidiaries that, individually or in the aggregate, has had, or if determined
adversely to any of them, could reasonably be expected to have, a Material
Adverse Effect on any of the Anschutz Subsidiaries.
4.09 COMPLIANCE WITH LAWS. (a) Anschutz (with respect to the Anschutz
Assets and the Anschutz Subsidiaries) and the Anschutz Subsidiaries have not
violated (without a subsequent timely and complete cure thereof) and are in
compliance with all Legal Requirements, except for any such failure to comply
that, individually or in the aggregate, has not had and could not reasonably be
expected to have, a Material Adverse Effect on the Italian Assets or any of the
Anschutz Subsidiaries.
(b) Neither Anschutz nor any of the Anschutz Subsidiaries has received
any notice of a violation of or default with respect to any Legal Requirement or
any decision, ruling, order or award of any Governmental Entity or arbitrator
applicable to the Anschutz Assets, the Anschutz Subsidiaries or their business,
properties or operations, including individual products or services sold or
provided by them, except for violations or defaults that, individually or in the
aggregate, have not had and could not reasonably be expected to have a Material
Adverse Effect on the Italian Assets or any of the Anschutz Subsidiaries.
4.10 EMPLOYEE MATTERS. (a) EMPLOYEES. None of the Anschutz
Subsidiaries currently has, nor has any of the Anschutz Subsidiaries ever had,
any employees. To the Knowledge of Anschutz, none of the Anschutz Subsidiaries
has committed any unfair labor practice.
(b) BENEFIT PLANS. None of the Anschutz Subsidiaries is a party to or
currently maintains, sponsors, participates in, contributes to or has an
obligation to contribute to, or has any liability with respect to, any Employee
Plan; nor has any of the Anschutz Subsidiaries ever been a party to, maintained,
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sponsored, participated in, contributed to or assumed an obligation to
contribute to, or incurred or assumed any liabilities with respect to, any
Employee Plan.
4.11 LABOR DISPUTES AND ACTS OF GOD. The Anschutz Assets, the business,
properties, operations, prospects and conditions (financial and otherwise) of
each of the Anschutz Subsidiaries and the ability of each of the Anschutz
Subsidiaries to perform its obligations under any Contract to which it is or is
proposed to become a party, have not been affected by any fire, explosion,
accident, strike, lockout, or other labor dispute, drought, storm, hail,
earthquake, embargo, act of God or of the public enemy, or other casualty
(whether or not covered by insurance) having a Material Adverse Effect on any
such Anschutz Subsidiary, except in each case with respect to circumstances or
events that have affected the oil and gas industry generally, including warm
weather in markets for the consumption of oil and gas products.
4.12 ANSCHUTZ SUBSIDIARIES; CAPITALIZATION. (a) With respect to each
Anschutz Subsidiary, Schedule 4.12 sets forth the following information:
(i) the jurisdiction of formation of such Anschutz Subsidiary,
(ii) the identity of each other jurisdiction wherein such
Anschutz Subsidiary is qualified to do business,
(iii) the identity of each class of authorized capital stock of
such Anschutz Subsidiary,
(iv) the amount of such capital stock that is issued and
outstanding, and
(v) the identity of each Person that owns any of such issued and
outstanding capital stock and the amount of stock owned by each such
Person.
All of such issued and outstanding capital stock has been duly authorized and
validly issued and is fully paid and nonassessable. None of such capital stock
has been issued in violation of any shareholders' preemptive rights. Except as
set forth on Schedule 4.12, upon the purchase by Forest or its applicable
designee(s) of the Purchased Equity Interests and the consummation of the
transactions contemplated by Section 2.01, Forest or its designee(s) will own
100% of all of the issued and outstanding shares of each class of capital stock
of each of the Anschutz Subsidiaries, free and clear of all Encumbrances.
(b) There are no subscriptions, options, convertible securities, calls,
puts, rights, warrants or other Contracts, Claims or commitments of any nature
whatsoever obligating any Anschutz Subsidiary to purchase, redeem, issue,
transfer, deliver or sell, or cause to be purchased, redeemed, issued,
transferred, delivered or sold, additional shares of the capital stock or other
Equity Securities of such Anschutz Subsidiary or obligating such Anschutz
Subsidiary to grant, extend or enter into any such agreement or commitment.
(c) No prior offer, issue, redemption, call, purchase, sale, transfer,
negotiation or other transaction of any nature with respect to the capital stock
or equity interests of any Anschutz Subsidiary, or any corporation or
organization that has been merged into such Anschutz Subsidiary, has given or
may give rise to any valid Claim by any Person that is enforceable against any
of the Anschutz Subsidiaries and, to
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the Knowledge of Anschutz, no fact or circumstance exists that could give rise
to any such Claim on behalf of any Person.
(d) Except as set forth on Schedule 4.12, there are no voting trusts,
proxies, or other agreements with respect to the voting of the capital stock of
any of the Anschutz Subsidiaries.
(e) Except as set forth on Schedule 4.12, none of the Anschutz
Subsidiaries owns, directly or indirectly, or holds rights to acquire, any
outstanding Equity Securities or other ownership or equity interest of any
Person.
(f) There is no outstanding Debt of any of the Anschutz Subsidiaries
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 Anschutz
Subsidiaries may vote.
(g) Except with respect to statutory restrictions of general
application and as described in Schedule 4.12, there are no legal, contractual
or other restrictions on the payment of dividends or other distributions of
amounts on or in respect of any of the Equity Securities of any of the Anschutz
Subsidiaries.
(h) There are no Contracts or arrangements to which any of the Anschutz
Subsidiaries is a party pursuant to which such Anschutz Subsidiary is or could
be required to register shares of common stock or other securities under the
Securities Act.
(i) Any Equity Securities of the Anschutz Subsidiaries that were issued
and reacquired by such Anschutz Subsidiary were so reacquired (and, if reissued,
so reissued) in compliance with all applicable Legal Requirements, and the
Anschutz Subsidiaries have no liability with respect to the reacquisition or
reissuance of any Equity Securities.
4.13 BOOKS AND RECORDS. (a) The records and books of account of each of
the Anschutz Subsidiaries are correct and complete in all material respects,
have been maintained in accordance with good business practices and are
reflected accurately in the Anschutz Financial Statements. Each of the Anschutz
Subsidiaries has accounting controls sufficient to insure that its transactions
are (i) executed in accordance with management's general or specific
authorization and (ii) recorded in conformity with GAAP so as to maintain
accountability for assets.
(b) The minute books of each of the Anschutz Subsidiaries contain
accurate records of all meetings and accurately reflect all corporate action of
the shareholders and the board of directors (including committees) of the
Anschutz Subsidiaries.
(c) The stock books and ledgers of each of the Anschutz Subsidiaries
correctly record all transfers and issuances of capital stock of the Anschutz
Subsidiaries and contain all canceled and unused stock certificates of the
Anschutz Subsidiaries.
4.14 CONTRACTS. (a) Schedules 4.14 and 4.17 are a complete and accurate
list of all material Contracts included in or affecting the Anschutz Assets, or
to which any of the Anschutz Subsidiaries is a party. Anschutz has delivered or
made available to Forest a copy of each Contract (as amended to date) set
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forth on Schedules 4.14 and 4.17. Schedules 4.14 and 4.17 include a list of all
of the following types of Contracts to which any Anschutz Subsidiary is a party
or by which any Anschutz Subsidiary or any of the Anschutz Assets are bound
under which there is any continuing obligation or liability of any Anschutz
Subsidiary or affecting any Anschutz Assets:
(i) any Contract with Anschutz or any Affiliate of Anschutz,
including any Contract pursuant to which an Anschutz Subsidiary has agreed
to loan money to or borrow money from Anschutz or any Affiliate of
Anschutz;
(ii) any Contract that restricts the right of any Anschutz
Subsidiary to engage in any type of business or compete in any geographic
area;
(iii) any tax sharing Contract;
(iv) any Contract creating a partnership, joint venture, limited
liability company or other entity;
(v) any Contract under which such Anschutz Subsidiary has
(A) created, incurred, assumed or guaranteed any Debt, (B) posted a letter
of credit, bond or other form of surety device ensuring or guaranteeing any
of its payment or performance obligations, (C) guaranteed the performance
by another Person of any obligation of such Person, whether by posting of a
letter of credit, a bond or other form of surety device, or (D) imposed,
created or granted an Encumbrance on any of the Anschutz Assets;
(vi) any Contract requiring that an Anschutz Subsidiary maintain
the confidentiality of any information received by it;
(vii) any stock purchase Contract or any Contract to merge;
(viii) any Contract pursuant to which any Anschutz Subsidiary (or
its predecessors in interest by merger) disposed of, or acquired, any Real
Property, fixed assets or Proprietary Rights;
(ix) any Contract under which any Anschutz Subsidiary has
advanced or loaned money to any of the directors, officers or employees of
Anschutz or any of its Affiliates (including the Anschutz Subsidiaries),
with respect to which any of the amounts loaned or advanced remain
outstanding as of the date hereof; or
(x) any Contract pursuant to which any Anschutz Subsidiary has
pledged to make a charitable contribution involving more than $5,000, any
portion of which pledge remains outstanding as of the date hereof.
(b) All Contracts included in the Anschutz Assets or to which any of
the Anschutz Subsidiaries is a party are in full force and effect, except where
failure to be in full force and effect has not had, and could not reasonably be
expected to have, a Material Adverse Effect on any of the Anschutz Subsidiaries.
Neither Anschutz nor any of the Anschutz Subsidiaries is in material default
under any of the Contracts included in the Anschutz Assets, nor has any event
occurred that, upon notice, the passage of
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time or otherwise, would constitute a material default by Anschutz or any of the
Anschutz Subsidiaries under any such Contract. No other party to a material
Contract to which any of the Anschutz Subsidiaries is a party has asserted or,
to the Knowledge of Anschutz, threatened to assert any Claim to terminate,
cancel, rescind or procure a judicial reformation of any such Contract or any
provision thereof or has otherwise failed or refused to perform its obligations
as set out in such Contracts.
(c) The Anschutz Subsidiaries are parties to all material Contracts as
are reasonably necessary to conduct their business as conducted on January 1,
1998, and as currently conducted.
4.15 BROKERS AND FINDERS. None of Anschutz or the Anschutz Subsidiaries
or any of their respective officers, directors or employees has employed any
broker or finder or incurred any liability for any brokerage fees, commissions
or finders' fees in connection with the transactions contemplated by this
Agreement for which Forest or any of the Anschutz Subsidiaries will become
directly or indirectly liable.
4.16 INVESTMENT INTENT. The Forest Shares are being acquired by
Anschutz for investment, for its own account and not with a view to the resale
thereof or any other transaction that would constitute a "distribution" under
the Securities Act. Anschutz acknowledges that the Forest Shares have not been
and will not be, upon Closing, registered under the Securities Act or any
applicable state securities laws. Anschutz has the knowledge and experience in
financial and business matters such that it is capable of evaluating the merits
and risks of the investment by Anschutz in the Forest Shares. Anschutz shall
not resell or otherwise dispose of the Forest Shares except pursuant to an
effective registration statement or an exemption from the registration
requirements of the Securities Act and all other applicable state securities and
blue sky laws. Anschutz shall not resell or otherwise dispose of the Forest
Shares in any manner or transaction that will make Forest unable to rely on the
exemption from the Securities Act and all applicable state securities laws on
which Forest has relied in making the offer and issuance of the Forest Shares to
Anschutz.
4.17 PROPERTY. (a) Schedule 4.17 identifies (i) the Italian Assets,
(ii) all Oil and Gas Interests owned by the Anschutz Subsidiaries and (iii) all
other material assets and properties (other than Contracts that are listed on
Schedule 4.14) constituting a part of the Anschutz Assets.
(b) Anschutz and the Anschutz Subsidiaries own and have:
(i) Good Title in and to the Oil and Gas Properties (other than
the Oil and Gas Properties comprised of Foreign Concessions);
(ii) all rights and interests arising under or accruing out of
all Oil and Gas Properties comprised of Foreign Concessions in favor of the
holders of or grantees under such Foreign Concessions, free and clear of
all Encumbrances other than Encumbrances consisting of (A) the terms of
such Foreign Concessions or (B) matters described in clauses (b) through
(k) of the definition of Permitted Encumbrances; and
(iii) good and defensible title in and to, or a valid leasehold or
license rights in and to, free and clear of all Encumbrances (other than
Encumbrances consisting of matters described in clauses (b) through (k) of
the definition of Permitted Encumbrances), all other assets and properties
constituting a part of the Anschutz Assets;
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which Oil and Gas Properties and other properties, assets and interests
constitute all of the properties, assets and interests that are reasonably
necessary in order to permit the Anschutz Subsidiaries to conduct their business
and operations as conducted on January 1, 1998, and as now conducted. Each of
the properties, tangible or intangible, so owned, leased, licensed or used by
any of the Anschutz Subsidiaries is reflected in the Anschutz Financial
Statements 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).
(c) All of the material Equipment and other material personal property
constituting a part of the Anschutz Assets (i) is in good condition and repair,
except for ordinary wear and tear, (ii) has had reasonable and prudent
maintenance, upkeep and repair and (iii) is suitable and adequate for its
current and intended uses.
4.18 OIL AND GAS PROPERTIES. (a) INDEPENDENT ENGINEER REPORT. Anschutz
has furnished or made available to Forest a copy of a report prepared by Xxxxx
Xxxxx Company (the "INDEPENDENT ENGINEERS"), dated as of December 1, 1997,
setting forth the estimated future reserves and income attributable to the Oil
and Gas Properties owned by AREC. Except with respect to pricing data requested
by Forest to be submitted, all logs, reservoir reports, production reports,
historical cost and expense data, information regarding Taxes, historical
pricing data, engineering and technical data, geological and geophysical data,
and all other factual data and information, in each case to the extent furnished
by Anschutz and the Anschutz Subsidiaries to the Independent Engineers in
preparing such reports were consistent in all material respects with, or were
provided without adjustment in the form available on the internal records of
Anschutz and the Anschutz Subsidiaries.
(b) CONDUCT AND RECORDS OF OPERATOR. Since the acquisition of each Oil
and Gas Property by Anschutz, its Affiliates or the Anschutz Subsidiaries,
(i) with respect to each Oil and Gas Property operated by Anschutz, its
Affiliates or the Anschutz Subsidiaries, such Oil and Gas Property 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 Property operated by a Person other than
Anschutz, its Affiliates or the Anschutz Subsidiaries, Anschutz and the Anschutz
Subsidiaries have maintained records with respect to such Oil and Gas Properties
in a reasonable manner and in accordance with generally prevailing standards of
the oil and gas industry applicable to non-operating interests in oil and gas
properties.
(c) STATUS; OPERATIONS. Except as described in Schedule 4.14 or
Schedule 4.17:
(i) all Oil and Gas Interests constituting or held in connection
with the Oil and Gas Properties are in full force and effect and neither
Anschutz nor any Anschutz Subsidiary is in default of its obligations
under, or has been advised by any lessor or any other Person of any default
under, any such Oil and Gas Interest, 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 has not had, and could not reasonably be expected to have, a
Material Adverse Effect, individually or in the aggregate, on any of the
Anschutz Subsidiaries;
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(ii) other than the Oil and Gas Interests constituting (wholly or
partially) a part of the Oil and Gas Properties, all other Oil and Gas
Interests affecting the lands covered or encumbered by the Oil and Gas
Properties (other than Oil and Gas Interests to the extent affecting zones,
strata, formations or other properties that do not constitute a part of the
Oil and Gas Properties) have expired and are no longer of any force or
effect;
(iii) each of the Anschutz Subsidiaries have held, and are
holding, in suspense, all amounts normally held in suspense in accordance
with prudent industry practice and all applicable Legal Requirements, and
except for such amounts held in suspense in accordance with prudent
industry practice and all applicable Legal Requirements, Anschutz and each
Anschutz Subsidiary have made or have 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 Interests constituting a part of the
Oil and Gas Properties;
(iv) each Anschutz Subsidiary is being paid, in all material
respects, its Net Revenue Interest share of all revenues attributable to
the Oil and Gas Properties, without suspense and without indemnity other
than those customarily found in the oil and gas industry, and all payments
to each Anschutz Subsidiary for production sold pursuant to any production
sales Contracts to which such Anschutz Subsidiary is a party are being paid
on a current basis (subject to adjustments provided for under such
Contract);
(v) the Oil and Gas Properties do not include any Oil and Gas
Interests that obligate Anschutz or any of the Anschutz Subsidiaries to
engage in continuous development operations (e.g., obligations to drill
additional Xxxxx, and minimum obligatory work programs) in order to
maintain such Oil and Gas Interest or to acquire additional Oil and Gas
Interests, other than obligations generally regarding development
operations that are customarily included as part of a domestic Oil and Gas
Interest;
(vi) there are no outstanding authorities for expenditures (AFEs)
that Anschutz or any of the Anschutz Subsidiaries has received from third
party operators of the Oil and Gas Properties and not yet responded to;
(vii) neither Anschutz nor any of the Anschutz Subsidiaries is a
party to or bound by any Contract for the sale of oil, gas or other product
or by-product from the Oil and Gas Properties with a term of more than
60 days;
(viii) none of the Anschutz Subsidiaries (or Anschutz, with respect
to the Anschutz Assets) is obligated by virtue of a prepayment arrangement
under any 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 their respective Oil and Gas Properties at some
future time without then or thereafter receiving full payment therefor;
(ix) none of the Anschutz Subsidiaries (or Anschutz, with respect
to the Anschutz Assets) has received any funds or payments from purchasers
of production that are subject to a refund;
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(x) except to the extent required by applicable Legal
Requirements, there are no royalty provisions (other than those allowing
the lessor or any other payee the right to take in kind) applicable to the
Oil and Gas Interests comprising part of the Oil and Gas Properties
requiring the payment of royalty on any basis other than proceeds actually
received by the lessees; or
(xi) none of the terms and conditions of the Oil and Gas
Interests that comprise the Oil and Gas Properties (A) limit the sales
price or available markets for production attributable to such Oil and Gas
Interests, (B) provide for the dedication of any production attributable to
such Oil and Gas Interests or (C) contain warranties regarding the amount
of production attributable to such Oil and Gas Interests.
(d) XXXXX. Except as described in Schedule 4.18(d):
(i) all Xxxxx currently located on lands included in any Oil and
Gas Properties have been drilled and completed within the boundaries of
such lands or within the limits otherwise permitted by any applicable
Contracts, Licenses or Legal Requirements;
(ii) the drilling and completion of all Xxxxx located on lands
included in any Oil and Gas Properties, and all development and other
operations on such Oil and Gas Properties, have been conducted in
compliance with all applicable Contracts, Licenses and Legal Requirements
in all material respects;
(iii) no Well located on lands included in any Oil and Gas
Properties is overproduced or subject to penalties on allowables because of
any overproduction (legal or illegal) that would prevent the full legal and
regular allowable (including maximum permissible tolerance) as prescribed
by any Governmental Entity to be assigned to any such Well or because of
any other violation of applicable Legal Requirements or Licenses; and
(iv) there are no Xxxxx located on the Oil and Gas Properties
that (A) Anschutz or any of the Anschutz Subsidiaries is obligated by any
Legal Requirement or Contract to currently plug and abandon; (B) Anschutz
or any of the Anschutz Subsidiaries will be obligated by any Legal
Requirement or Contract to plug and abandon with the lapse of time or
notice or both because the Well is not currently capable of producing in
commercial quantities; (C) are subject to exceptions to a requirement to
plug and abandon issued by a Governmental Entity having jurisdiction over
the relevant Oil and Gas Properties; or (D) to the Knowledge of Anschutz,
have been plugged or abandoned, but not in accordance with all applicable
Legal Requirements.
(e) OVERBALANCE. Except as described in Schedule 4.18(e), as of
January 1, 1998, and as of the most recent date or dates before the date hereof
for which such information is available, with respect to the Oil and Gas
Properties that are subject to a gas Contract containing a balancing agreement,
there has not been delivered to or for the account of Anschutz or the Anschutz
Subsidiaries more production of gas than the amount to which Anschutz or such
Anschutz Subsidiary is entitled and none of the Anschutz Subsidiaries is subject
to any "make up" deliveries of gas out of their proportionate share of
production.
4.19 LICENSES. (a) REQUIRED LICENSES. Each Anschutz Subsidiary is the
holder of each License that is required to be held by such Anschutz Subsidiary
in order to own its Anschutz Assets and carry on
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its business as conducted on January 1, 1998, and as now conducted, the failure
to hold which individually or in the aggregate, has had, or could reasonably be
expected to have, a Material Adverse Effect on such Anschutz Subsidiary. AIP is
the holder of each License that is required to be held by AIP in connection with
its ownership of the Italian Assets.
(b) VALIDITY. Each such License is validly issued, in good standing
and in full force and effect, unimpaired by any act or omission by Anschutz or
the Anschutz Subsidiaries, as the case may be. There is no Claim pending or, to
the Knowledge of Anschutz, threatened against Anschutz, its Affiliates or any of
the Anschutz Subsidiaries that could result in the revocation, termination,
suspension or material and adverse modification of any such License. None of
Anschutz or the Anschutz Subsidiaries has any reason to believe that any such
License will not be renewed in the ordinary course. The conclusion of the
transactions contemplated by this Agreement will not (and will not give any
Governmental Entity a right to) terminate or modify any rights of, or accelerate
or increase any obligation of, Anschutz or any of the Anschutz Subsidiaries
under any such License.
(c) FILING. Each of the Anschutz Subsidiaries has filed or caused to
be filed with each applicable Governmental Entity all reports, applications,
documents, instruments and information required to be filed by it pursuant to
all such Licenses or applicable Legal Requirements other than those as to which
the failure to file has not had, and could not reasonably be expected to have, a
Material Adverse Effect on such Anschutz Subsidiary or the Anschutz Assets.
(d) COMPLIANCE. Each of the Anschutz Subsidiaries is in substantial
compliance with each License, noncompliance with which has had, or could
reasonably be expected to have, a Material Adverse Effect on such Anschutz
Subsidiary or the Anschutz Assets.
4.20 ENVIRONMENTAL MATTERS. (a) Anschutz (with respect to the Anschutz
Assets and the Anschutz Subsidiaries), each of the Anschutz Subsidiaries and, to
the Knowledge of Anschutz, each operator of any Oil and Gas Property has
obtained all environmental, health and safety permits, Licenses and other
authorizations (collectively, the "ENVIRONMENTAL PERMITS") required under all
Environmental Laws to carry on its business as now being conducted, except to
the extent failure to have any Environmental Permits has not had, and could not
reasonably be expected to have, a Material Adverse Effect on the Italian Assets
or any of the Anschutz Subsidiaries. Each of such Environmental Permits is in
full force and effect and Anschutz (with respect to the Anschutz Assets and the
Anschutz Subsidiaries), each of the Anschutz Subsidiaries and, to the Knowledge
of Anschutz, each operator of any Oil and Gas Properties 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 has not had, and could not
reasonably be expected to have, a Material Adverse Effect on the Italian Assets
or any of the Anschutz Subsidiaries.
(b) Except as described in Part I of Schedule 4.20:
(i) there are no Claims seeking money damages, injunctive
relief, remedial action or other remedy, pending or, to the Knowledge of
Anschutz, threatened, against any of the Anschutz Assets or against
Anschutz, its Affiliates or the Anschutz Subsidiaries from their ownership
or
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operation of the Anschutz Assets and relating to the violation of, or
noncompliance with, any Environmental Law, the disposal, discharge or
release of any Hazardous Materials, or the exposure of any Person to any
other solid waste, pollutant, chemical substance, noise or vibration with
respect to the Anschutz Subsidiaries or the Anschutz Assets;
(ii) no written notice, notification, demand, request for
information, citation, summons or order has been issued, no complaint has
been filed, no penalty has been assessed and, to the Knowledge of Anschutz,
no investigation or review is pending or threatened by any Governmental
Entity or other Person with respect to any alleged failure by any of
Anschutz, its Affiliates or the Anschutz Subsidiaries to have any
Environmental Permits (with respect to the Anschutz Subsidiaries or the
Anschutz Assets) or with respect to any generation, treatment, storage,
recycling, transportation, discharge or disposal, or any Environmental
Release of any Hazardous Materials generated by Anschutz or its Affiliates
(with respect to the Anschutz Subsidiaries or the Anschutz Assets) or the
Anschutz Subsidiaries (collectively, an "ENVIRONMENTAL NOTICE"), and to the
Knowledge of Anschutz, there is no Environmental Notice against any
operator of any Oil and Gas Property;
(iii) to the Knowledge of Anschutz:
(A) no polychlorinated biphenyls (PCBs) are or have been
present at any site or facility comprising the Anschutz Assets or
now or previously owned, operated or leased by any of the Anschutz
Subsidiaries, in excess of concentrations allowed by Environmental
Laws;
(B) no friable asbestos or asbestos-containing materials
are present at any site or facility comprising the Anschutz Assets
or now or previously owned, operated or leased by any of the
Anschutz Subsidiaries in excess of concentrations allowed by
Environmental Laws; and
(C) there are no underground storage tanks or surface
impoundments for Hazardous Materials, active or abandoned, at any
site or facility comprising the Anschutz Assets or now or
previously owned, operated or leased by any of the Anschutz
Subsidiaries, except such as are or were (at all times owned,
operated or leased by Anschutz, its Affiliates or the Anschutz
Subsidiaries or at all times if comprising the Anschutz Assets) in
compliance with Environmental Laws;
(iv) none of Anschutz or its Affiliates (with respect to the
Anschutz Subsidiaries or the Anschutz Assets) or the Anschutz Subsidiaries
has transported or arranged for the transportation of any Hazardous
Material to any location that is (A) listed or proposed for listing on the
National Priorities List (NPL) under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended (CERCLA) or
(B) the subject of Federal, state or local enforcement actions or other
investigations that may lead to any Claims against any of the Anschutz
Subsidiaries or with respect to the Anschutz Assets;
(v) there has not been any material Environmental Release,
recycling, treatment, storage or disposal of Hazardous Material on or with
respect to the Anschutz Assets, generated by
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any of the Anschutz Subsidiaries, or to the Knowledge of Anschutz,
generated by any operator of Oil and Gas Properties, in violation of
Environmental Laws at any location;
(vi) no oral or written notification of a material Environmental
Release of a Hazardous Material in violation of an Environmental Law has
been filed with respect to any of the Anschutz Assets, by Anschutz, its
Affiliates or any of the Anschutz Subsidiaries or, to the Knowledge of
Anschutz, by any operator of Oil and Gas Properties;
(vii) no Encumbrances have arisen under or pursuant to any
Environmental Laws on any site or facility comprising the Anschutz Assets
or owned, operated or leased by any of the Anschutz Subsidiaries, no action
by any Governmental Entity has been taken or is in process that could
subject any such site or facility to such Encumbrances and, to the
Knowledge of Anschutz, none of Anschutz or its Affiliates (with respect to
the Anschutz Subsidiaries or the Anschutz Assets) or the Anschutz
Subsidiaries is required to place any notice or restriction relating to the
presence of Hazardous Materials at any site or facility owned by it in any
deed to the Real Property on which such site or facility is located;
(viii) Part II of Schedule 4.20 lists all environmental
investigations, studies, audits, tests, reviews or other analyses conducted
by or that are in the possession of Anschutz, its Affiliates or the
Anschutz Subsidiaries in relation to any site or facility comprising the
Anschutz Assets or now or previously owned, operated or leased by any of
the Anschutz Subsidiaries, each of which has been made available to Forest;
(ix) any Hazardous Material handled or dealt with in any way in
connection with the Anschutz Assets or the business, properties or
operations of the Anschutz Subsidiaries, whether before or during the
period the same have been under the control of the Anschutz Subsidiaries
has been and is being handled or dealt with in all respects in substantial
compliance with applicable Legal Requirements and otherwise in a manner
that has not had, and could not reasonably be expected to have, a Material
Adverse Effect;
(x) during the five years ending on the date of this Agreement,
no employee of Anschutz or the Anschutz Subsidiaries or, to the Knowledge
of Anschutz, other Person has asserted any Claim with respect to the
Anschutz Assets or against any of the Anschutz Subsidiaries, based on
alleged damage to health caused by any Hazardous Material or by any sewage,
waste or by-product; and
(xi) during the five years ending on the date of this Agreement,
none of Anschutz or its Affiliates (with respect to the Anschutz
Subsidiaries or the Anschutz Assets) or the Anschutz Subsidiaries has been
charged in writing by any Governmental Entity or, to the Knowledge of
Anschutz, by any other Person, with improperly using, handling, storing,
discharging or disposing of any Hazardous Material or with causing or
permitting any pollution of any ground water aquifer, surface waters or
other lakes, streams, rivers or bodies of water in violation of
Environmental Laws.
4.21 INSURANCE. The Anschutz Subsidiaries hold no policies of insurance
or coverages. The Anschutz Assets and each Anschutz Subsidiary are insured with
reputable insurers against all risks normally insured against in accordance with
generally prevailing practices in the oil and gas industry and
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all of such insurance policies maintained by or for the benefit of each Anschutz
Subsidiary are in full force and effect. Such insurance is with reputable
insurance companies and 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
Anschutz Subsidiaries have 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 Entity of which Anschutz has Knowledge requiring any repairs or
other work to be done to any of the Anschutz Assets or other properties owned,
leased, licensed or used by the Anschutz Subsidiaries or requiring any equipment
or facilities to be installed on or in connection with any of the Anschutz
Assets, the failure to complete which could result in the cancellation of the
policy of insurance. Policies for all such insurance are in full force and
effect and none of Anschutz, its Affiliates or the Anschutz Subsidiaries is in
default in any material respect under any of the policies. Anschutz 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 Anschutz Subsidiaries that might result in a material increase
in those contributions. It is acknowledged and agreed that, without limiting
Anschutz's indemnity obligations hereunder, Anschutz shall have no obligation to
insure the Anschutz Assets or the Anschutz Subsidiaries from and after Closing;
provided, however, that Anschutz's obligation to insure Anschutz Canada and its
Anschutz Assets shall continue until such time as Anschutz Canada is conveyed to
Forest pursuant to Section 5.11.
4.22 AFFILIATE MATTERS. Except as set forth in Schedule 4.14, neither
Anschutz nor any of its Affiliates has any Claim, or the basis for any Claim,
against any of the Anschutz Subsidiaries or with respect to the Anschutz Assets.
Except as set forth in Schedule 4.14 or as a result of the transactions
contemplated by this Agreement, neither Anschutz nor any of its Affiliates:
(a) has entered into any transaction or Contract with, or made
any payment or commitment to pay any commission, fee or other amount to, or
to purchase or obtain or otherwise contract to purchase or obtain any goods
or services from, any other Person, on behalf of any of the Anschutz
Subsidiaries or with respect to the Anschutz Assets;
(b) is a party, to any transaction or Contract (including with
respect to Proprietary Rights), whether written or oral, with any of the
Anschutz Subsidiaries, or with any officer, director or employee of any of
the Anschutz Subsidiaries or with respect to the Anschutz Assets; or
(c) has any right or other basis to receive any payment, whether
due or not, from any of the Anschutz Subsidiaries or out of the Anschutz
Assets.
In addition, Anschutz expressly warrants that, except as expressly indicated in
Schedule 4.14, none of the transactions or Contracts listed in Schedule 4.14
have been amended, supplemented or modified in any material respect.
4.23 SPECIAL PURPOSE COMPANY. Except as set forth on Schedule 4.23, no
Anschutz Subsidiary (a) conducts, or has ever conducted, any business other than
business associated with the acquisition, ownership and operation of the
Anschutz Assets allocated to such Anschutz Subsidiary in Schedules 4.14 and
4.17, (b) owns, or has ever owned, any assets or properties other than the
Anschutz Assets allocated to such Anschutz Subsidiary in Schedules 4.14 and
4.17, or (c) has, or has ever had, any liabilities or
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obligations (whether accrued, contingent, absolute, known, unknown or
otherwise), except for liabilities or obligations (i) that have been incurred in
the normal and ordinary course of the ownership and operation of the Anschutz
Assets allocated to such Anschutz Subsidiary in Schedules 4.14 and 4.17, or
(ii) disclosed in the Anschutz Financial Statements.
4.24 MISSTATEMENTS. Except to the extent revised or superseded by a
subsequent certificate, schedule or report furnished to Forest, to the Knowledge
of Anschutz, no information, certificate, schedule or report furnished by
Anschutz to Forest with respect to the Anschutz Assets, the Anschutz
Subsidiaries or their respective assets or business, in connection with this
Agreement contained as of the date thereof any untrue statement of a material
fact or omitted to state a material fact necessary to make the statement
contained therein, in the light of the circumstances under which it was made,
not misleading.
4.25 NON-FOREIGN REPRESENTATION. Anschutz is not a non-resident alien,
foreign corporation, foreign partnership, foreign trust or foreign estate (as
those terms are defined in the Code and the regulations promulgated thereunder).
ARTICLE V
PRE-CLOSING COVENANTS OF ANSCHUTZ
Between the date of this Agreement and the Closing Date, Anschutz hereby
covenants to and with Forest as follows:
5.01 ACCESS. Anschutz shall, shall cause the Anschutz Subsidiaries to,
and shall use its Best Efforts to cause any third party operator of Oil and Gas
Properties to, afford to the officers and authorized representatives of Forest
such access to the Anschutz Assets and the books, records and employees of
Anschutz and the Anschutz Subsidiaries as is necessary to permit Forest to
conduct a thorough due diligence investigation of the Anschutz Assets, the
operation thereof and the Anschutz Subsidiaries. In connection with such due
diligence investigation, Anschutz will furnish Forest with such financial,
operating and other information regarding the Anschutz Assets and the Anschutz
Subsidiaries as Forest may from time to time reasonably request. In addition,
the access granted to Forest shall include the right to conduct a Phase I
environmental assessment and any additional environmental assessments that
Forest subsequently deems necessary on the basis of environmental conditions
identified in such Phase I environmental assessment.
5.02 AFFIRMATIVE COVENANTS. Anschutz shall, and shall cause the
Anschutz Subsidiaries to:
(a) advise and consult with Forest representatives on all
material matters relating to the Anschutz Assets, including, without
limitation, to the extent same are material, all matters relating to
production, sales and marketing arrangements, all proposed authorizations
for expenditures in excess of $25,000, all farmout or farmin proposals or
agreements, all operations with respect to which any of the Anschutz
Subsidiaries, or to Anschutz's Knowledge, other working interest owners,
are considering electing not to participate (i.e., going non-consent), and
all amendments to any material Contracts;
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(b) promptly notify Forest of any notice, threatened notice or
other event of which Anschutz or any Anschutz Subsidiary becomes aware
(i) relating to any default, inquiry into any possible default, or action
to alter, terminate, rescind or procure a judicial reformation of any
material Contract or any provision thereof, or (ii) except for events
affecting the oil and gas industry as a whole, that has had, or could
reasonably be expected to have, a Material Adverse Effect on the financial
status of any of the Anschutz Subsidiaries or the value of the Anschutz
Assets;
(c) timely pay all costs and expenses incurred in connection
with, and perform all its material obligations under, all Contracts
relating to or affecting the Anschutz Assets, unless the payment of such
costs and expenses and the performance of such obligations is the subject
of a good faith dispute on the part of the Anschutz Subsidiary or the
Anschutz Subsidiary has established an adequate reserve on its books and
records for the payment of the costs and expenses or the performance of the
obligations;
(d) keep in full force and effect all present insurance policies
or other comparable insurance coverage; and
(e) use their Best Efforts to obtain (i) all consents and other
Approvals, and (ii) waivers of all preferential purchase and similar rights
of third parties, in each case that are necessary or advisable for the
consummation of the transactions contemplated by this Agreement.
5.03 NEGATIVE COVENANTS. Except for the matters set forth in
Schedule 5.03, for matters with respect to which Forest has consented (which
consent is not to be unreasonably withheld) in writing (which writing
specifically references this Section 5.03) or for matters required or expressly
permitted pursuant to this Agreement:
(a) Anschutz will not, and will not permit the Anschutz Subsidiaries
to:
(i) make any change in the articles of incorporation or bylaws
or other organizational documents of the Anschutz Subsidiaries or issue any
Equity Securities of the Anschutz Subsidiaries;
(ii) take any action that results in the occurrence of an event
that would result in a breach of the representations and warranties of
Anschutz set forth in Article IV;
(iii) agree to the settlement or resolution of any Claim or
investigation involving any of the Anschutz Subsidiaries or the Anschutz
Assets, unless the aggregate amount to be paid (or value of goods or
services to be provided) by or to any of the Anschutz Subsidiaries with
respect to any individual Claim or investigation does not exceed $25,000;
(iv) encumber any of the Anschutz Assets with any Encumbrances,
except for Permitted Encumbrances;
(v) maintain the books of account of the Anschutz Subsidiaries
other than in the normal and ordinary course of business consistent with
past practices;
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(vi) fail to maintain any insurance policy covering the Anschutz
Subsidiaries or the Anschutz Assets in full force and effect or amend any
such policy; or
(vii) commit themselves to do any of the foregoing;
(b) Anschutz shall not permit any of the Anschutz Subsidiaries to:
(i) merge or consolidate or agree to merge or consolidate with
or into any other corporation or Person or otherwise acquire or agree to
acquire any other business operation;
(ii) purchase, lease or otherwise acquire any property of any
kind whatsoever other than in the normal and ordinary course of business
consistent with past practices;
(iii) enter into any transaction, arrangement or course of
conduct, except in the normal and ordinary course of business consistent
with past practices;
(iv) make any material change in the conduct of their respective
businesses or operations;
(v) except in the ordinary course of business and consistent
with past practices, enter into, assign, terminate or amend in any material
respect any material Contract;
(vi) sell, lease or otherwise dispose of any of their respective
assets or properties other than (A) pursuant to existing material Contracts
or commitments or (B) in the normal and ordinary course of business
consistent with past practices;
(vii) enter into or provide any Guarantee, indemnity, surety,
letter of credit or similar instrument or contractual assurance;
(viii) make any investment of a capital nature in excess of
$25,000, whether by purchase of stock or securities, contributions to
capital, property transfers or otherwise;
(ix) incur any Debt in excess of $10,000;
(x) declare or pay any dividend or make any distribution in
respect of their respective Equity Securities, or purchase, redeem or
otherwise acquire or retire for value any shares of their respective Equity
Securities; or
(xi) commit themselves to do any of the foregoing; and
(c) with respect to the Italian Assets, Anschutz shall not and shall
cause AIP to not:
(i) enter into any transaction, arrangement or course of
conduct, except in the normal and ordinary course of business consistent
with past practices;
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(ii) except in the ordinary course of business and consistent
with past practices, enter into, assign, terminate or amend in any material
respect any material Contract relating thereto;
(iii) sell, lease or otherwise dispose of or encumber all or any
portion of such assets;
(iv) enter into or provide any Guarantee, indemnity, surety,
letter of credit or similar instrument or contractual assurance with
respect thereto; or
(v) commit themselves to do any of the foregoing.
5.04 NO SHOP. Other than with respect to activities concerning the
Foreign Concessions and carried out in the normal course of business and in
accordance with past practices ("PERMITTED ACTIVITIES"), Anschutz shall not, and
shall cause the Anschutz Subsidiaries and their respective officers, directors,
employees, agents and representatives (including, without limitation, any
investment bankers, attorneys or accountants retained by such Persons) to not
initiate or solicit, directly or indirectly, any inquiries with respect to the
making of any proposal with respect to (a) a merger, consolidation or similar
transaction involving the Anschutz Subsidiaries or (b) any purchase of all or
any significant portion of the Anschutz Assets or any Equity Securities in any
of the Anschutz Subsidiaries (an "ACQUISITION PROPOSAL"). Anschutz shall, and
shall cause the Anschutz Subsidiaries to, immediately cease and cause to be
terminated any existing activities, discussions or negotiations (other than
Permitted Activities) with any Persons conducted heretofore with respect to an
Acquisition Proposal, other than with Forest. Anschutz shall, and shall cause
the Anschutz Subsidiaries to notify Forest immediately if any such inquiries or
proposals are received by, any such information is requested from, or any such
negotiations or discussions are sought to be initiated or continued with,
Anschutz or the Anschutz Subsidiaries and (other than with respect to Permitted
Activities) promptly request each Person who has heretofore executed a
confidentiality agreement, if any, in connection with its consideration of an
Acquisition Proposal (other than Forest and their representatives) to return all
confidential information heretofore furnished to such Person by or behalf of
Anschutz or the Anschutz Subsidiaries. Until the first to occur of the Closing
or the termination of this Agreement, Anschutz shall keep Forest fully apprised
of all Permitted Activities carried out from and after the date of this
Agreement by Anschutz or any of the Anschutz Subsidiaries. Notwithstanding the
foregoing provisions of this Section 5.04, in no event shall Anschutz commit, or
agree to commit, to any Acquisition Proposal without the express written consent
of Forest.
5.05 NOTICE OF BREACH. Anschutz shall promptly notify Forest of any
circumstance or event that results, or with the passage of time or giving of
notice, or both, will result, in a breach of any of the representations and
warranties of Anschutz contained herein, whether or not such breach is or may be
subsequently cured.
5.06 REPRESENTATIONS AND WARRANTIES TRUE. Anschutz shall use its Best
Efforts to cause all of its representations and warranties contained in this
Agreement to be true and correct in all respects at and as of the Closing Date
as if such representations and warranties were made at and as of the Closing
Date. Additionally, Anschutz shall use its Best Efforts to cause all covenants
required to be performed by it hereunder to be performed in all respects in the
manner and at the times herein specified.
5.07 XXXX-XXXXX-XXXXXX ACT. Xxxxxxxx shall, and shall cause the
Anschutz Subsidiaries, as applicable, to (a) file as promptly as practicable
with the Department of Justice and the Federal Trade
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Commission the notification and report form, if any, required for the
transactions contemplated hereunder by the Xxxx-Xxxxx-Xxxxxx Act, requesting
early termination of the waiting period thereunder, and (b) respond promptly to
inquiries, if any, from the Federal Trade Commission or the Department of
Justice in connection with such filings.
5.08 CONDITIONS TO CLOSING. Anschutz shall use its Best Efforts to
obtain the satisfaction of the conditions to Closing set forth in Section 8.01.
5.09 OPERATORSHIP. Anschutz shall use its Best Efforts to, and to cause
the Anschutz Subsidiaries to, maintain operatorship of any Anschutz Assets
operated by Anschutz or such Anschutz Subsidiary prior to the date hereof.
5.10 PUBLIC ANNOUNCEMENTS. Subject to applicable Legal Requirements or
stock exchange requirements, at all times until the Closing Date or, if earlier,
the termination of this Agreement, Anschutz shall (a) advise promptly, and
obtain the consent of Forest before issuing or making, or permitting any of the
directors, officers, employees or agents of Anschutz or the Anschutz
Subsidiaries, to issue any press release or to make any public filings, reports
or other statements (other than filings required to be made pursuant to the
terms hereof) with any Governmental Entity with respect to this Agreement or the
transactions contemplated hereby and (b) except with the written consent of
Forest, not disclose to any Person (other than representatives and advisors of
Anschutz and officers, directors and employees of the Anschutz Subsidiaries on a
"need to know" basis) (i) any of the terms of this Agreement, or (ii) any
non-public information relating to the Anschutz Assets.
5.11 CANADIAN MERGER. Anschutz shall use its Best Efforts to cause the
merger of Xxxxxxxx Xxxxxxx with and into Anschutz Canada (such that Anschutz
Canada is the surviving corporation) to be effected prior to the Closing Date
(such merger being herein referred to as the "CANADIAN MERGER"). If the
Canadian Merger is not effected prior to the Closing Date, Anschutz and Forest
agree that the acquisition by Forest or its designee of Anschutz Canada as
contemplated by Section 2.01(d) shall be delayed until such time as the Canadian
Merger has been effected. Anschutz shall use its Best Efforts to cause the
certificate of amalgamation with respect to the Canadian Merger to be dated as
of the Closing Date, or if the Canadian Merger is not effected on or prior to
the Closing Date, Anschutz shall use its Best Efforts to cause such certificate
of amalgamation to be dated the date of acquisition by Forest of Anschutz
Canada.
5.12 WAIVER OF AREC CREDITORS. Anschutz shall use its Best Efforts to
provide Forest, prior to 5 p.m., Mountain Daylight Time, on April 15, 1998, with
evidence reasonably satisfactory to Forest that the Cash Amount will not be
subject to any liens or security interests in favor of the creditors of AREC and
that Forest will, following Closing, have the unrestricted right to withdraw
such funds from AREC without violating any covenants or obligations owed by AREC
to the creditors of AREC or otherwise under the AREC Credit Facilities.
ARTICLE VI
PRE-CLOSING COVENANTS OF FOREST
Between the date of this Agreement and the Closing Date, Forest hereby
covenants to and with Anschutz as follows:
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6.01 NOTICE OF BREACH. Forest shall promptly notify Anschutz of any
circumstance or event that results, or with the passage of time or giving of
notice, or both, will result, in a breach of any of the representations and
warranties of Forest contained herein, whether or not such breach is or may be
subsequently cured.
6.02 REPRESENTATIONS AND WARRANTIES TRUE. Forest shall use its Best
Efforts to cause all of its representations and warranties contained in this
Agreement to be true and correct in all respects at and as of the Closing Date
as if such representations and warranties were made at and as of the Closing
Date. Forest shall use its Best Efforts to cause all covenants required to be
performed by it hereunder to be performed in all respects in the manner and at
the times herein specified.
6.03 XXXX-XXXXX-XXXXXX ACT. Forest shall (a) file as promptly as
practicable with the Department of Justice and the Federal Trade Commission the
notification and report form required for the transactions contemplated
hereunder by the Xxxx-Xxxxx-Xxxxxx Act, requesting early termination of the
waiting period thereunder, and (b) respond promptly to inquiries from the
Federal Trade Commission or the Department of Justice in connection with such
filings.
6.04 BEST EFFORTS. Forest shall use its Best Efforts to obtain the
satisfaction of the conditions to Closing set forth in Section 8.02.
6.05 PUBLIC ANNOUNCEMENTS. Subject to applicable Legal Requirements or
stock exchange requirements, at all times until the Closing Date or, if earlier,
the termination of this Agreement, Forest shall (a) advise promptly, and obtain
the consent of Anschutz before issuing or making, or permitting any of the
directors, officers, employees or agents of Forest to issue any press release or
to make any public filings, reports or other statements (other than filings
required to be made pursuant to the terms hereof) with any Governmental Entity
with respect to this Agreement or the transactions contemplated hereby and
(b) except with the written consent of Anschutz, not disclose to any Person
(other than representatives and advisors of Forest on a "need to know" basis)
(i) any of the terms of this Agreement or (ii) any non-public information
relating to the Anschutz Assets.
6.06 BOARD ACTION. Forest agrees that, prior to the Closing Date,
Forest shall do the following:
(a) Forest shall, acting through its Board of Directors and in
accordance with applicable law, as soon as practicable following the
execution and delivery of this Agreement, take the following actions:
(i) duly call, give notice of, convene and, subject to
Section 6.06(d), hold the annual meeting of its shareholders
(including any adjournments thereof, the "SHAREHOLDERS MEETING")
for the purpose, among other things, of considering and taking
action upon the Transaction Documents and the transactions
contemplated thereby, and prepare and file with the Securities and
Exchange Commission a proxy statement (such proxy statement
including the form of proxy and all such other materials
distributed in connection therewith, as amended or supplemented
from time to time, being hereinafter referred to as the "PROXY
STATEMENT"),
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(ii) use its Best Efforts (A) to obtain and furnish the
information required to be included by it in the Proxy Statement
and, after consultation with Anschutz respond promptly to any
comments made by the Securities and Exchange Commission with
respect to the Proxy Statement and any preliminary version thereof
and cause the Proxy Statement to be mailed to its shareholders at
the earliest practicable time following the execution and delivery
of this Agreement and (B) to solicit proxies in favor of the
transactions contemplated hereby and otherwise obtain the approval
by its shareholders of such transactions, and
(iii) cause the Proxy Statement and the distribution
thereof to comply in all material respects with the Exchange Act
and ensure that the Proxy Statement will not, at the date the Proxy
Statement (or any amendment thereof or supplement thereto) is first
mailed to shareholders and at the time of the Shareholders Meeting,
be false or misleading with respect to any material fact, or omit
to state any material fact required to be stated therein or
necessary in order to make the statements made therein, in the
light of the circumstances under which they are made, not
misleading or necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the
Shareholders Meeting which has become false or misleading.
(b) Forest shall include in the Proxy Statement the
recommendation of its board of directors that holders of common stock vote
in favor of the approval of the Transaction Documents and the transactions
contemplated thereby.
(c) Forest agrees that its obligations pursuant to
Section 6.06(a) (including, without limitation, the obligation to submit
the transactions contemplated hereby to a vote of its shareholders), shall
not be affected by the withdrawal or modification of the recommendations.
(d) If Forest is advised by its proxy solicitors prior to the
Shareholders Meeting or otherwise determines that a vote in favor of the
Transaction Documents and the transactions contemplated thereby is not
likely to be obtained at the Shareholders Meeting, the Shareholders Meeting
shall, at the request of Anschutz, be adjourned from time to time, provided
that in no event will the Shareholders Meeting be required hereunder to be
held more than 50 days from the date that the Proxy Statement was first
mailed to Forest's shareholders, which 50-day period shall be extended by
the number of days, if any, that Forest 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.
6.07 CONDUCT OF BUSINESS. Except as otherwise contemplated by this
Agreement, Forest shall continue to conduct its business in the normal and
ordinary course, consistent with past practices.
ARTICLE VII
TITLE MATTERS AND CASUALTY LOSSES
7.01 DEFECT NOTICES. No later than April 15, 1998 (the "NOTIFICATION
DEADLINE"), Forest shall notify Anschutz in writing (such notice being herein
referred to as a "DEFECT NOTICE") of any matter (a
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"TITLE DEFECT") that causes the title of Anschutz, its Affiliates or the
applicable Anschutz Subsidiary to any of the Oil and Gas Properties (other than
Oil and Gas Properties comprised of Foreign Concessions) not to be Good Title.
Such Defect Notice shall include:
(a) a description of the Title Defect and the basis for claiming
same;
(b) the Oil and Gas Interests (or portions thereof) affected by
such Title Defect;
(c) the Designated Value of the Oil and Gas Property subject to
such Title Defect; and
(d) the amount that Forest believes to be the Defect Value
attributable to such Title Defect.
Additionally, from the date hereof until the fifth day prior to the Notification
Deadline, Anschutz shall, and shall cause the Anschutz Subsidiaries and their
respective officers and employees to, notify Forest in writing of any Title
Defects discovered by such Person promptly following such discovery.
7.02 CURING DEFECTS. Anschutz shall use its Best Efforts to cure, at
Anschutz's sole cost and expense and not at the expense of the Anschutz
Subsidiaries, all Title Defects of which it becomes aware prior to Closing, and
in each case with respect to any Title Defects that are cured, shall provide
Forest with reasonably satisfactory proof thereof; provided, however, that
Anschutz shall not be required to use such Best Efforts with respect to any
Title Defects for which the Parties have agreed to an upward adjustment of the
Cash Amount pursuant to Section 2.02(a)(ii)(B).
7.03 DETERMINATION OF DESIGNATED VALUE AND DEFECT VALUE. (a) As used
herein, the term "DESIGNATED VALUE" shall mean, with respect to any Oil and Gas
Property or any Unit or Well relating thereto, the amount set forth under the
column entitled "Designated Value" for such Oil and Gas Property, Unit or Well,
as applicable, on Schedule 4.17. In the event that no separate amount is set
forth on Schedule 4.17 for a particular Oil and Gas Property, Unit or Well that
is the subject of a Title Defect or for any asset that is the subject of a
Casualty Defect, the Designated Value for such Oil and Gas Property, Unit, Well
or other asset shall be the amount agreed upon by Forest and Anschutz or
determined pursuant to Sections 7.03(c) and (d).
(b) As used herein, the term "DEFECT VALUE" shall mean (i) with respect
to each Title Defect, the reduction in the Designated Value of the affected Oil
and Gas Property, Unit or Well, as applicable, as a result of the existence of
such Title Defect and (ii) with respect to each Casualty Defect, the reduction
in value of the affected asset or assets as a result of such Casualty Defect.
(c) If Anschutz does not agree with Forest's proposed Defect Value with
respect to a Title Defect or a Casualty Defect or the Parties are unable to
agree upon whether a Title Defect or Casualty Defect exists or the Designated
Value of an Oil and Gas Property, Unit, Well or other asset, in each case for
purposes of this Article VII, then Forest and Anschutz shall enter into
good-faith negotiations and shall attempt to agree upon such matter, and any
values to be agreed upon shall be based on the Designated Value on Schedule 4.17
for the group of properties to which such Oil and Gas Property, Unit, Well or
other asset relates.
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(d) If Forest and Anschutz cannot reach agreement on the existence of a
Title Defect or Casualty Defect, the Designated Value of an Oil and Gas
Property, Unit, Well or other asset, or the Defect Value attributable to a Title
Defect or a Casualty Defect, in any case within 10 days after the commencement
of good-faith negotiations pursuant to subparagraph (c) above, at either Party's
option, upon notice to the other Party, such matter shall be determined (i) in
the case of matters involving Title Defects, by the Independent Engineers and
(ii) in the case of Casualty Defects, by a firm of independent consulting
engineers mutually agreeable to Forest and Anschutz. Such consulting firm shall
have the right to hire such additional consultants and experts as it deems
reasonably appropriate. The first consultant chosen for a Title Defect-related
dispute shall handle all subsequent Title Defect-related disputes, and the first
consultant chosen for a Casualty Defect-related dispute shall handle all
subsequent Casualty Defect-related disputes. The cost of any consultant shall
be borne one-half by Forest and one-half by Anschutz. Each Party shall present
its position on the matter in question to the consultant within five days after
the consultant is requested to determine the applicable dispute, and the
consultant shall be instructed to make a determination with respect to such
disputed matter within 10 days after delivery of such presentations, unless
Forest and Anschutz agree on a different time period. The determination by the
consultant shall be conclusive and binding on the Parties, and shall be
enforceable against any Party in any court of competent jurisdiction.
7.04 CASUALTY DEFECT. As used herein, the term "CASUALTY DEFECT" shall
mean, with respect to any portion of an Oil and Gas Property, Unit or Well, or
any related equipment or facilities, any destruction by fire, blowout or other
casualty or any taking, or pending or threatened taking, in condemnation or
under the right of eminent domain of any such asset or portion thereof.
Anschutz shall promptly notify Forest of any Casualty Defects of which Anschutz
becomes aware. If any Casualty Defects exist at Closing, Forest may elect:
(a) to proceed with Closing and increase the Cash Amount by an
amount equal to the Defect Value attributable to such Casualty Defect, in
which case Anschutz shall retain all insurance proceeds relative to the
reduction in value caused by such Casualty Defect;
(b) to purchase such affected asset notwithstanding such
Casualty Defect, in which case, (i) Anschutz shall, at Closing, pay to
Forest all sums paid to Anschutz (or any Affiliate of Anschutz) by reason
of such Casualty Defect; (ii) Anschutz shall assign, or cause to be
assigned, to Forest all sums to which Anschutz (or any Affiliate of
Anschutz) is entitled, as the case may be, by reason of such Casualty
Defect; and (iii) Anschutz shall assign, or cause to be assigned, to Forest
all of the right, title and interest of Anschutz (or any Affiliate of
Anschutz) in and to any unpaid awards or other payments from third parties
arising out of such Casualty Defect.
Prior to Closing and except as permitted pursuant to the terms of
Section 5.03(a)(iii), Anschutz shall not, and shall not permit the Anschutz
Subsidiaries to, voluntarily compromise, settle or adjust any amounts payable by
reason of any Casualty Defect without first obtaining the written consent of
Forest.
ARTICLE VIII
CONDITIONS TO CLOSING
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8.01 CONDITIONS TO OBLIGATIONS OF FOREST The obligations of Forest to
proceed with Closing shall be subject to the satisfaction or waiver, on or prior
to the Closing Date, of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Anschutz contained in this Agreement shall, except for such
changes as are contemplated by this Agreement, be true and correct on and
as of the Closing Date with the same effect as though such representations
and warranties had been made on and as of such date.
(b) COMPLIANCE WITH COVENANTS. Each and all of the covenants
and agreements of Anschutz to be performed on or before the Closing Date
pursuant to the terms hereof shall have been performed and satisfied in all
material respects.
(c) CERTIFICATES. Anschutz shall have delivered to Forest an
officer's certificate dated the Closing Date to the effect set forth in
Sections 8.01(a) and (b).
(d) APPROVALS. The Closing shall be permitted to occur without
violation of the Xxxx-Xxxxx-Xxxxxx Act and, except for Approvals that are
ministerial in nature and of the type that are routinely and customarily
obtained following the closing of transactions that are similar to those
contemplated hereunder, Forest and Anschutz shall each have obtained all
Approvals that are required in connection with (i) the execution and
delivery by such Party of this Agreement and any documents or instruments
contemplated hereunder, (ii) the consummation of the transactions
contemplated hereunder, (iii) the performance by such Party of its
obligations hereunder and (iv) the exercise by such Party of its rights and
remedies hereunder, including the Approvals listed on Schedule 3.03.
(e) NO ACTIONS. No Action shall be pending or, to the Knowledge
of Forest or Anschutz, threatened against either such Party or one or more
of its Affiliates, that restricts in any material respect or prohibits (or,
if successful, would restrict or prohibit) the consummation of the
transactions contemplated hereby.
(f) VIOLATION OF ORDERS. The consummation of the transactions
contemplated hereunder shall not violate any order, decision, ruling or
decree of any Governmental Entity having competent jurisdiction over the
transactions contemplated by this Agreement or require (by any Governmental
Entity) any material action on the part of Forest or any of its Affiliates.
(g) NON-FOREIGN PERSON AFFIDAVIT. Anschutz shall have delivered
to Forest an affidavit, signed under penalty of perjury, that (i) states
that Anschutz is not a "foreign person" within the meaning of section 1445
of the Code and (ii) sets forth Anschutz's taxpayer identification number
and address.
(h) MATERIAL ADVERSE CHANGE. Since the date of this Agreement,
neither the Italian Assets nor any Anschutz Subsidiary shall have suffered
a Material Adverse Effect, and Forest shall not have discovered or
otherwise become aware of any condition, event, fact or circumstance that
could be reasonably expected to have a Material Adverse Effect on the
Italian Assets or any Anschutz Subsidiary.
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(i) DEFECTS. The sum of the aggregate upward adjustments to the
Cash Amount pursuant to Sections 2.02(a)(ii)(B) and (C) (which shall, for
purposes of this condition to Closing, include all such upward adjustments
that have been agreed upon plus the maximum possible amount of all disputed
upward adjustments) shall not exceed $1,000,000.
(j) FAIRNESS OPINION. Forest shall have received from Xxxxxx
Xxxxxxx & Company, Inc. an opinion, the form and content of which must be
reasonably satisfactory to Forest, stating generally that the consideration
to be received by Forest at Closing in exchange for the Forest Shares is
fair to Forest from a financial point of view.
8.02 CONDITIONS TO OBLIGATIONS OF ANSCHUTZ. The obligations of Anschutz
to proceed with Closing shall be subject to the satisfaction or waiver, on or
prior to the Closing Date, of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Forest contained in this Agreement shall, except for such
changes as are contemplated by this Agreement, be true and correct on and
as of the Closing Date with the same effect as though such representations
and warranties had been made on and as of such date.
(b) COMPLIANCE WITH COVENANTS. Each and all of the covenants
and agreements of Forest required to be performed on or before the Closing
Date pursuant to the terms hereof shall have been performed and satisfied
in all material respects.
(c) CERTIFICATES. Forest shall have delivered to Anschutz an
officer's certificate dated the Closing Date to the effect set forth in
Section 8.02(a) and (b).
(d) APPROVALS. The Closing shall be permitted to occur without
violation of the Xxxx-Xxxxx-Xxxxxx Act and, except for Approvals that are
ministerial in nature and of the type that are routinely and customarily
obtained following the closing of transactions that are similar to those
contemplated hereunder, Anschutz and Forest shall each have obtained all
Approvals that are required in connection with (i) the execution and
delivery by such Party of this Agreement and any documents or instruments
contemplated hereunder, (ii) the consummation of the transactions
contemplated hereunder, (iii) the performance by such Party of its
obligations hereunder and (iv) the exercise by such Party of its rights and
remedies hereunder.
(e) NO ACTIONS. No Action shall be pending or, to the Knowledge
of Anschutz or Forest, threatened against either such Party or one or more
of its Affiliates, that restricts in any material respect or prohibits (or,
if successful, would restrict or prohibit) the consummation of the
transactions contemplated hereby.
(f) VIOLATION OF ORDERS. The consummation of the transactions
contemplated hereunder shall not violate any order, decision, ruling or
decree of any Governmental Entity having competent jurisdiction over the
transactions contemplated by this Agreement or require (by any Governmental
Entity) any material action on the part of Anschutz or any of its
Affiliates.
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(g) DEFECTS. The sum of the aggregate upward adjustments to the
Cash Amount pursuant to Sections 2.02(a)(ii)(B) and (C) (which shall, for
purposes of this condition to Closing, include all such upward adjustments
that have been agreed upon plus the maximum possible amount of all disputed
upward adjustments) shall not exceed $10,000,000.
ARTICLE IX
OTHER AGREEMENTS
9.01 GROUNDS FOR TERMINATION. This Agreement and the rights and
obligations of the Parties may be terminated at any time prior to Closing:
(a) by the mutual written agreement of the Parties;
(b) by either Party, by written notice thereof to the other
Party if Closing shall not have occurred on or before 12:00 midnight,
Central Daylight Time, on July 31, 1998;
(c) by either Party, if the consummation of the transactions
contemplated hereby would violate any nonappealable final order, decree or
judgment of any Governmental Entity having competent jurisdiction
enjoining, restraining or otherwise preventing, or awarding substantial
damages to third parties in connection with, Closing; or
(d) by either Party, by written notice thereof to the other
Party, if Forest shall not have received evidence reasonably satisfactory
to it by 5 p.m., Mountain Daylight Time, on April 15, 1998, that the Cash
Amount will not be subject to any Encumbrances in favor of the creditors of
AREC and that Forest will, following Closing, have the unrestricted right
to withdraw such funds from AREC without violating any covenants or
obligations owed by AREC to the creditors of AREC or otherwise arising
under the AREC Credit Facilities; provided, however, that neither Party
shall have the right to terminate this Agreement pursuant to this
Section 9.01(d) after the date on which Forest receives such evidence;
provided, however, that a Party shall not be allowed to exercise any right of
termination pursuant to this Section 9.01 if the event giving rise to such right
shall be due to the failure of such Party to perform or observe in any material
respect any of the covenants or agreements set forth herein to be performed or
observed by such Party.
9.02 EFFECT OF TERMINATION. If this Agreement and the rights and
obligations of the Parties are terminated pursuant to Section 9.01, this
Agreement and the rights and obligations of the Parties shall become void and of
no further force or effect, except as follows:
(a) if any Party is in default of its obligations hereunder at
the time such termination occurs, such defaulting Party shall continue to
be liable for Losses in respect of such default for which it is responsible
pursuant to this Agreement;
(b) the provisions of this Section 9.02 and of Sections 3.15 and
4.15 and Article XI (other than Section 11.07) shall survive any such
termination and continue in full force and effect.
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9.03 SURVIVAL. Subject to the terms of Section 10.07, which shall
govern with respect to the matters covered thereby, the representations,
warranties, covenants and agreements in this Agreement and any document
delivered pursuant hereto shall survive Closing; provided, however, that any
Claim hereunder may be made only if the Party making such Claim shall have
notified the Party against whom such Claim is made on or before (a) in the case
of the representations and warranties of the Parties contained in Sections 3.05,
3.06, 3.08-3.14, 4.05, 4.06, 4.08-4.14, 4.17-4.19, and 4.21-4.25, and the
corresponding indemnity obligations with respect to such representations and
warranties set forth in Sections 9.05(a) and 9.06(a), as applicable, on or
before the second anniversary of the Closing Date, (b) in the case of the
representation and warranty of Anschutz set forth in Section 4.20 as it relates
to the non-Canadian Foreign Concessions included in the Oil and Gas Properties,
the indemnity obligation of Anschutz in Section 9.05(a) that relates thereto and
the indemnity obligation of Anschutz in Section 9.05(b) as it relates to
environmental matters affecting such Foreign Concessions, on or before the close
of business on the first anniversary of the Closing Date, (c) in the case of the
representation and warranty of Anschutz set forth in Section 4.20 with respect
to matters other than as described in clause (b) immediately preceding, the
indemnity obligation of Anschutz in Section 9.05(a) that relates thereto and the
indemnity obligation of Anschutz in Section 9.05(b) as it relates to
environmental matters other than those described in clause (b) immediately
preceding, on or before the close of business on the third anniversary of the
Closing Date, (d) in the case of the indemnity obligation set forth in Section
9.05(d), on or before the sixth anniversary of the Closing Date, and (e) in the
case of all other provisions, at any time. Forest and Anschutz acknowledge and
agree that, effective upon the expiration of the applicable survival period for
a Section (or portion thereof) of this Agreement as provided in this
Section 9.03, the Party having rights under such Section (or portion thereof)
shall be deemed to have released the other Party from and against any Claims it
may have against such other Party, whether in contract or otherwise (and
including those arising under applicable Legal Requirements), with respect to
the subject matter covered by such Section (or portion thereof); provided,
however, that this sentence shall not be construed as limiting the rights of the
Forest Indemnified Parties or the Anschutz Indemnified Parties with respect to
any Claims for which they have notified the other Party prior to the expiration
of the applicable survival period as set forth in this Section 9.03.
9.04 CROSS INDEMNITY FOR CERTAIN FEES AND EXPENSES. Anschutz shall pay
for, and hereby agrees to indemnify the Forest Indemnified Parties with respect
to, any broker's, legal, accounting or similar fees and expenses incurred by
Anschutz or the Anschutz Subsidiaries in connection with the preparation of this
Agreement and the transactions contemplated hereby. Forest shall pay for, and
hereby agrees to indemnify Anschutz with respect to, any broker's, legal,
accounting or similar fees and expenses incurred by Forest in connection with
the preparation of this Agreement and the transactions contemplated hereby.
9.05 INDEMNIFICATION OF FOREST. Except with respect to the Tax matters
covered by Article X, which shall be governed by such Article, Anschutz agrees
to indemnify, defend and hold harmless Forest, its Affiliates (and after
Closing, the Anschutz Subsidiaries) and their respective directors, officers,
employees and agents (collectively, the "FOREST INDEMNIFIED PARTIES") from and
against any and all Losses sustained by or Claims made against any Forest
Indemnified Party arising out of or resulting from the following:
(a) any breach of any of the representations, warranties and
covenants of Anschutz under this Agreement or any document or instrument
contemplated hereunder (except to the extent
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such breaches constitute Title Defects or Casualty Defects for which Forest
has been compensated pursuant to the provisions of Section 2.02 and/or
Article VII);
(b) if Closing occurs, the ownership or operation of the
Anschutz Assets prior to the Closing Date (except to the extent that Forest
has been compensated pursuant to Section 2.02 and except with respect to
any environmental matters that are described with reasonable specificity
and detail on Schedule 4.20);
(c) the withdrawal by Forest from AREC of the funds contributed
by Anschutz to AREC pursuant to Section 2.01(a); and
(d) the ownership or operation by Anschutz Canada of mining
properties in British Columbia, Canada.
9.06 INDEMNIFICATION OF ANSCHUTZ. Except with respect to the Tax
matters covered by Article X, which shall be governed by such Article, Forest
agrees to indemnify, defend and hold harmless Anschutz, its Affiliates (but
excepting, after Closing, the Anschutz Subsidiaries) and their respective
directors, officers, employees and agents (collectively, the "ANSCHUTZ
INDEMNIFIED PARTIES") from and against any and all Losses sustained by or Claims
made against any Anschutz Indemnified Party arising out of or resulting from the
following:
(a) any breach of any of the representations, warranties and
covenants of Forest under this Agreement or any document or instrument
contemplated hereunder; and
(b) if Closing occurs and except with respect to any matters
covered by the indemnity given by Anschutz in favor of Forest pursuant to
Section 9.05(a), the ownership or operation of the Anschutz Assets
following the Closing Date.
9.07 LIMITATIONS ON INDEMNIFICATION. Notwithstanding the terms of
Sections 9.05 and 9.06:
(a) in no event shall any Party be liable pursuant to
Section 9.05 or 9.06 for exemplary, punitive, special, indirect,
consequential, remote or speculative damages;
(b) with respect to the liability of Anschutz pursuant to
Section 9.05(a) as it relates to the representation and warranty of
Anschutz set forth in Section 4.20, or pursuant to Section 9.05(b) as it
relates to environmental matters, (i) Anschutz shall not be liable, unless
and until, and then only to the extent that, the aggregate of all Losses by
or Claims against the Forest Indemnified Parties arising therefrom exceed
an amount equal to $500,000 and (ii) in no event shall Anschutz be liable
for Losses or Claims that exceed $30,000,000 in the aggregate; and
(c) the representations, warranties, covenants and indemnities
contained herein are solely for the purposes of defining the nature and
extent of the obligations of the Parties to each other and shall not be
deemed to ratify or create any rights in third parties (except for the
indemnification provisions for the benefit of the Forest Indemnified
Parties and the Anschutz Indemnified Parties, as applicable) or under any
Legal Requirements.
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9.08 INDEMNIFICATION PROCEDURE. (a) If any third party shall notify any
Party (the "INDEMNIFIED PARTY") with respect to any matter (a "THIRD-PARTY
CLAIM") that may give rise to a claim for indemnification against any other
Party (the "INDEMNIFYING PARTY") under this Agreement, then the Indemnified
Party shall promptly notify the Indemnifying Party thereof in writing; provided,
however, that no delay on the part of the Indemnified Party in notifying the
Indemnifying Party shall relieve the Indemnifying Party from any obligation
hereunder unless (and then solely to the extent) the Indemnifying Party thereby
is prejudiced.
(b) The Indemnifying Party will have the right to defend the
Indemnified Party against the Third-Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as (i) the Indemnifying
Party notifies the Indemnified Party in writing within 25 days after the
Indemnified Party has given notice of the Third-Party Claim that the
Indemnifying Party elects to assume the defense of such Third Party Claim and
does not dispute its obligation to hereunder indemnify the Indemnified Party
from and against the entirety of any Losses the Indemnified Party may suffer as
a result of such Third-Party Claim, (ii) settlement of, or an adverse judgment
with respect to, the Third-Party Claim is not in the good faith judgment of the
Indemnified Party, likely to establish a precedential custom or practice
materially adverse to the continuing business interests of the Indemnified
Party, and (iii) the Indemnifying Party conducts the defense of the Third-Party
Claim actively and diligently.
(c) So long as the Indemnifying Party is conducting the defense of the
Third-Party Claim in accordance with Section 9.08(b), (i) the Indemnified Party
may retain separate co-counsel at its sole cost and expense and participate in
the defense of the Third-Party Claim, (ii) the Indemnified Party will not
consent to the entry of any judgment or enter into any settlement with respect
to the Third-Party Claim without the prior written consent of the Indemnifying
Party (not to be withheld unreasonably), and (iii) the Indemnifying Party will
not consent to the entry of any judgment or the issuance of an injunction, the
granting of equitable relief or any settlement with respect to the Third-Party
Claim without the prior written consent of the Indemnified Party (not to be
withheld unreasonably).
(d) In the event any of the conditions in Section 9.08(b) is or becomes
unsatisfied, however, (i) the Indemnified Party may defend against, and consent
to the entry of any judgment or enter into any settlement with respect to, the
Third-Party Claim in any manner it may deem appropriate (and the Indemnified
Party need not consult with, or obtain any consent from, the Indemnifying Party
in connection therewith), (ii) the Indemnifying Party will reimburse the
Indemnified Party promptly and periodically (at least quarterly) for the costs
of defending against the Third-Party Claim (including reasonable attorneys' fees
and expenses), and (iii) the Indemnifying Party will remain responsible for any
Losses the Indemnified Party may suffer resulting from, arising out of, relating
to, in the nature of, or caused by the Third-Party Claim to the fullest extent
provided in this Agreement.
9.09 CONFIDENTIALITY. (a) After the date of this Agreement, Anschutz
shall not, directly or indirectly, use, disclose or provide, or shall not permit
any other Person under their control, directly or indirectly, to use, disclose
or provide to any other Person any non-public information concerning the
business, properties or operations of Anschutz Subsidiaries or the Anschutz
Assets, except (i) with respect to the period from the date hereof to Closing,
as may be required in the normal and ordinary course of the business of the
Anschutz Subsidiaries, (ii) as may be required to be disclosed by Anschutz on
the advice of counsel in connection with any filing or judicial, administrative
or arbitration proceeding with any Governmental Entity, and (iii) to the extent
permitted pursuant to Section 5.04.
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(b) Prior to Closing, Forest agrees to abide by the terms of its
existing confidentiality agreement with Anschutz. Following Closing, Forest
agrees to cause the Anschutz Subsidiaries to abide by the terms of the
confidentiality agreements listed in Schedule 4.14 that are binding on the
Anschutz Subsidiaries.
9.10 AREA OF MUTUAL INTEREST. (a) For a period of one year following
the Closing Date, Anschutz shall, and shall cause its Affiliates to, notify
Forest in writing of any AMI Investment Opportunity developed by, presented to
or otherwise available to Anschutz or such Affiliate (an "INVESTMENT OPPORTUNITY
NOTICE"), which Investment Opportunity Notice shall include, to the extent it is
available, a full and complete description of the applicable AMI Investment
Opportunity, the terms upon which Anschutz is offering Forest the opportunity to
participate (which terms shall be commercially reasonable and of the type that
are typically found in transactions of such nature, but in no event shall
Anschutz be obligated to offer terms more advantageous than the terms upon which
Anschutz is entitled to participate) and any other relevant information in the
possession of or known by Anschutz and its Affiliates. If following the
delivery of an Investment Opportunity Notice Anschutz or any of its Affiliates
obtain any additional information regarding an AMI Investment Opportunity that
would be relevant to a Person's decision to pursue or invest in such AMI
Investment Opportunity, Anschutz shall, or shall cause its applicable Affiliate
to, communicate such information to Forest.
(b) For a period of 45 days following the receipt by Forest of an
Investment Opportunity Notice and such other information as may be necessary to
permit Forest to meaningfully evaluate, and make an informed decision with
respect to, an AMI Investment Opportunity, Forest or its designee shall have the
right, exercisable by the delivery of written notice to Anschutz, to notify
Anschutz of its desire to acquire up to 50% of Anschutz's interest in the
applicable AMI Investment Opportunity. If Forest elects to acquire an interest
in an AMI Investment Opportunity as provided in this Section 9.10(b), Forest and
Anschutz shall promptly execute such documents and instruments and take such
other actions as may be reasonably necessary to consummate such acquisition.
(c) If Forest or its designee elects not to acquire an interest in an
AMI Investment Opportunity as provided in Section 9.10(b), Anschutz and/or the
applicable Anschutz Affiliate shall have the right to pursue or invest in such
AMI Investment Opportunity to the exclusion of Forest; provided, however, that
if Forest elects not to acquire an interest in an AMI Investment Opportunity and
the proposed terms of such AMI Investment Opportunity thereafter become
significantly more attractive (from the investor's standpoint) than those upon
which Forest's decision was based, Anschutz shall, and shall cause its
Affiliates to, supplement its prior Investment Opportunity Notice to Forest and
comply anew with the provisions of this Section 9.10.
9.11 TAX BASIS. On or before May 15, 1998, Anschutz shall provide
Forest with a statement, certified by Anschutz, setting forth its Tax basis or
pool balances in the Equity Securities of the Anschutz Subsidiaries and the
Anschutz Assets as of July 31, 1997, together with such materials as are
necessary to adequately document and support such statement. On or before May
15, 1999, Anschutz shall provide Forest with a statement, certified by Anschutz,
setting forth its Tax basis or pool balances in the Equity Securities of the
Anschutz Subsidiaries and the Anschutz Assets as of the Closing Date, together
with such materials as are necessary to adequately document and support such
statement. Upon request, Anschutz will provide Forest with estimates of its Tax
basis or pool balances in the Equity Securities of the Anschutz
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Subsidiaries and the Anschutz Assets as of other dates, if estimates are all
that are available due to the annual tax returns affecting any such Tax basis or
pool balances being incomplete.
9.12 TRANSITION PERIOD. During the period commencing with the Closing
and terminating on the earlier to occur of 180 days following the Closing, or
written notice to such effect from Forest (the "TRANSITION PERIOD"), Anschutz
shall cooperate with Forest to ensure the smooth transition of ownership and
operation of the Anschutz Assets. Prior to Closing, the Parties shall use their
Best Efforts to agree upon the terms of a definitive agreement setting forth the
exact scope of the services to be provided by Anschutz to Forest during the
Transition Period and the compensation to be paid by Forest to Anschutz in
connection therewith. Without limiting the generality of the foregoing, it is
the Parties' intent that (a) during the Transition Period, Anschutz shall
perform the activities described in Schedule 9.12 and (b) Forest will reimburse
Anschutz for all reasonable costs and expenses incurred by Anschutz in
connection therewith, including internal time charges and overhead.
9.13 DISCLAIMERS. (a) Except as expressly set forth in this Agreement
or the other Transaction Documents, Anschutz disclaims all liability and
responsibility for any other representation, warranty, statements or
communications (orally or in writing) to any other party (including, but not
limited to, any information contained in any opinion, information or advice that
may have been provided to any such party by any officer, stockholder, director,
employee, agent, consultant, representative or contractor of Anschutz or its
Affiliates or any engineer or engineering firm, or other agent, consultant or
representative) wherever and however made prior to Closing with respect to the
transactions contemplated hereby. Without limiting the generality of the
foregoing and without limiting any of the rights of Forest under this Agreement,
Anschutz expressly disclaims and negates any representation or warranty as to
(a) the accuracy of any information relating to the existence or extent of
reserves or the value of the Anschutz Assets based thereon, (b) the amount,
value, quality or deliverability of petroleum, natural gas or other reserves
attributable to the Anschutz Assets, or (c) any geological, engineering or other
interpretations of economic valuation. Except as set forth in this Agreement or
the other Transaction Documents, all tangible personal property included in the
Anschutz Assets is "AS IS, WHERE IS," and except as set forth in this Agreement
or the other Transaction Documents, Anschutz MAKES NO, AND DISCLAIMS ANY,
REPRESENTATION OR WARRANTY, WHETHER EXPRESS OR IMPLIED, AND WHETHER BY COMMON
LAW, STATUTE, OR OTHERWISE, AS TO (i) MERCHANTABILITY, (ii) FITNESS FOR ANY
PARTICULAR PURPOSE, (iii) CONFORMITY TO MODELS OR SAMPLES OF MATERIALS, AND
(iv) CONDITION.
(b) Except as expressly set forth in this Agreement or the other
Transaction Documents, Forest disclaims all liability and responsibility for any
other representation, warranty, statements or communications (orally or in
writing) to any other party (including, but not limited to, any information
contained in any opinion, information or advice that may have been provided to
any such party by any officer, stockholder, director, employee, agent,
consultant, representative or contractor of Forest or its Affiliates or any
engineer or engineering firm, or other agent, consultant or representative)
wherever and however made prior to Closing with respect to the transactions
contemplated hereby. Without limiting the generality of the foregoing and
without limiting any of the rights of Forest under this Agreement, Forest
expressly disclaims and negates any representation or warranty as to (a) the
accuracy of any information relating to the existence or extent of reserves or
the value of Forest's assets based thereon, (b) the amount, value, quality or
deliverability of petroleum, natural gas or other reserves attributable to the
Forest's assets, or (c) any geological, engineering or other interpretations of
economic valuation. Except as set forth in this
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Agreement or the other Transaction Documents, all tangible personal property
included in Forest's assets is "AS IS, WHERE IS," and except as set forth in
this Agreement or the other Transaction Documents, Forest MAKES NO, AND
DISCLAIMS ANY, REPRESENTATION OR WARRANTY, WHETHER EXPRESS OR IMPLIED, AND
WHETHER BY COMMON LAW, STATUTE, OR OTHERWISE, AS TO (i) MERCHANTABILITY,
(ii) FITNESS FOR ANY PARTICULAR PURPOSE, (iii) CONFORMITY TO MODELS OR SAMPLES
OF MATERIALS, AND (iv) CONDITION.
(c) The Parties agree that the preceding disclaimers are "conspicuous"
disclaimers for purposes of any applicable Legal Requirements.
9.14 RELEASE OF CERTAIN GUARANTIES AND INDEMNITIES. With respect to
certain of the Anschutz Subsidiaries and the Italian Assets, Forest acknowledges
that Anschutz (or one or more of its Affiliates) has provided, and is currently
providing, the guarantees, letters of credit, bonds or other forms of surety and
has incurred certain related obligations, each as listed on Schedule 9.14
(collectively, the "ANSCHUTZ SUPPORT ARRANGEMENTS"). With respect to such
Anschutz Support Arrangements, Forest agrees to use its Best Efforts to cause
Anschutz and its Affiliates to be released, effective as of the Closing Date,
from any liability thereunder. If Forest is unable to cause Anschutz and its
Affiliates to be released from any liability under any of the Anschutz Support
Arrangements prior to Closing, Anschutz agrees to maintain the effectiveness of
such Anschutz Support Arrangements until such time as Forest is able to
implement the arrangements that are necessary to effect a release of Anschutz
(or its applicable Affiliate or Affiliates) from any liability under such
Anschutz Support Arrangements. For so long as Anschutz (or its applicable
Affiliate or Affiliates) maintains any Anschutz Support Arrangements after
Closing in accordance with the terms of the immediately preceding sentence,
Forest agrees to indemnify, defend and hold harmless Anschutz and its Affiliates
from any liability and reasonable costs and expenses that may be suffered or
incurred by Anschutz and its Affiliates pursuant to the applicable Anschutz
Support Arrangements. At Closing, Forest shall assume all obligations of
Anschutz and Anschutz Company under the AREC Credit Facilities.
9.15 BOOKS, RECORDS, FILES AND DATA. Within 30 days following Closing,
Anschutz shall cause to be delivered to Forest all books, records, files and
data regarding the Anschutz Subsidiaries or the Anschutz Assets that are in the
possession or control of Anschutz or its Affiliates, including, without
limitation, all abstracts of title, title opinions, title curative documents,
title records, Contracts constituting the Anschutz Assets, correspondence,
geologic, geophysical and seismic records, data and information, production
records, logs, core data, pressure data, decline curves, production curves, and
accounting records.
9.16 SPECIAL AGREEMENT REGARDING AREC BALANCE SHEET. With respect to
the balance sheet of AREC as of December 31, 1997, which is a part of the
Anschutz Financial Statements, Forest and Anschutz agree as follows:
(a) if the Working Capital of AREC as of December 31, 1997, as
recalculated following the determination of the actual amount of any items
that were reflected as accruals in such balance sheet (the "RECALCULATED
WORKING CAPITAL") exceeds the Working Capital of AREC that was originally
set forth in such balance sheet (the "ORIGINAL WORKING CAPITAL") by an
amount greater than $1,000,000, Forest shall promptly pay Anschutz an
amount equal to the excess of Recalculated Working Capital over Original
Working Capital; and
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(b) if the Recalculated Working Capital is less than the
Original Working Capital by an amount that exceeds $1,000,000, Anschutz
shall promptly pay Forest an amount equal to the shortfall of Recalculated
Working Capital from Original Working Capital.
For purposes of this Section 9.16, the term "WORKING CAPITAL" shall mean current
assets less current liabilities in accordance with GAAP.
9.17 AGREEMENT REGARDING ROYALTY PLAN. With respect to any of the
Foreign Concessions listed in Part VII of Schedule 4.17 that have not been
awarded as of the Closing, or that have been awarded but for which the
overriding royalty interest under the Royalty Plan has not be assigned as of the
Closing, Forest agrees to make the appropriate assignments of the overriding
royalty interest under the Royalty Plan as in effect on the date hereof to those
persons designated as Participants by the Committee; provided, however, that in
no event shall the aggregate royalty interest for any individual Foreign
Concession exceed an amount equal to .75% of 1% of 8/8ths. The form of any such
assignments shall be in the form prescribed by the Royalty Plan or such other
form as may be necessary or appropriate under applicable laws, rules and
regulations.
ARTICLE X
TAXES
10.01 PREPARATION AND FILING OF TAX RETURNS. (a) With respect to each
Tax Return covering a taxable period ending on or before the Closing Date
that is required to be filed after the Closing Date for, by or with respect
to the Anschutz Subsidiaries (other than the Tax Returns described in Section
10.01(c)), Anschutz shall cause such Tax Return to be prepared, shall cause
to be included in such Tax Return all items of income, gain, loss, deduction
and credit or other items (collectively "TAX ITEMS") required to be included
therein, and shall deliver the original of such Tax Return to Forest at least
30 days prior to the due date (including extensions) of such Tax Return.
Anschutz shall pay to Forest the amount of any Anschutz Taxes shown to be due
on such Tax Return not less than five days prior to the due date of such Tax
Return. Forest shall cause the Anschutz Subsidiaries to file timely such Tax
Return with the appropriate taxing authority and to pay the amount of Taxes
shown to be due on such Tax Return.
(b) With respect to each Tax Return covering (i) a taxable period
beginning on or before the Closing Date and ending after the Closing Date or,
(ii) a taxable period beginning after the Closing Date, that is required to be
filed after the Closing Date for, by or with respect to the Anschutz
Subsidiaries (other than the Tax Returns described in Section 10.01(c)), Forest
shall cause such Tax Return to be prepared, shall cause to be included in such
Tax Return all Tax Items required to be included therein. Forest shall
determine the portion, if any, of the Tax due with respect to the period covered
by such Tax Return which is an Anschutz Tax. At least 30 days prior to the due
date (including extensions) of such Tax Return, Forest shall deliver to Anschutz
a copy of such Tax Return and of its determinations. Anschutz shall pay to
Forest the amount of the Anschutz Tax reflected on the Tax Return not less than
five days prior to the due date of such Tax Return. Forest shall cause the
Anschutz Subsidiaries to file timely such Tax Return with the appropriate taxing
authority and to pay timely the amount of Taxes shown to be due on such Tax
Return.
(c) Anschutz shall cause to be included in the consolidated federal,
state and country income Tax Returns, if any, of the Anschutz Group for all
periods ending on or before or which include the
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Closing Date, all Tax Items of the Anschutz Subsidiaries that are required to be
included therein, shall file timely all such Tax Returns with the appropriate
taxing authorities and shall pay timely all Taxes due with respect to the
periods covered by such Tax Returns.
10.02 368(a) REORGANIZATION. Forest shall cooperate with Anschutz to
cause the acquisition of the Anschutz Subsidiaries to qualify as a
reorganization under section 368(a) of the Code.
10.03 ACCESS TO INFORMATION. (a) Anschutz shall grant to Forest (or its
designees) access at all reasonable times to all of the information, books and
records relating to the Anschutz Subsidiaries (including workpapers and
correspondence with taxing authorities), and shall afford Forest (or its
designees) the right (at Forest's expense) to take extracts therefrom and to
make copies thereof, to the extent reasonably necessary to permit Forest (or its
designees) to prepare Tax Returns, to conduct negotiations with Tax authorities,
and to implement the provisions of, or to investigate or defend any Claims
between the Parties arising under, this Agreement.
(b) Forest shall grant or cause the Anschutz Subsidiaries to grant to
Anschutz (or its designees) access at all reasonable times to all of the
information, books and records relating to the Anschutz Subsidiaries within the
possession of Forest, the Anschutz Subsidiaries (including workpapers and
correspondence with taxing authorities), and shall afford Anschutz (or its
designees) the right (at Anschutz's expense) to take extracts therefrom and to
make copies thereof, to the extent reasonably necessary to permit Anschutz (or
its designees) to prepare Tax Returns, to conduct negotiations with Tax
authorities, and to implement the provisions of, or to investigate or defend any
Claims between the parties arising under, this Agreement.
(c) Each of the Parties will preserve and retain all schedules,
workpapers and other documents relating to any Tax Returns of or with respect to
the Anschutz Subsidiaries or to any Claims affecting the Anschutz Subsidiaries
until the expiration of the statute of limitations (including extensions)
applicable to the taxable period to which such documents relate or until the
final determination of any controversy with respect to such taxable period, and
until the final determination of any payments that may be required with respect
to such taxable period under this Agreement.
10.04 ANSCHUTZ TAX INDEMNIFICATIONS. Anschutz hereby agrees to protect,
defend, indemnify and hold harmless the Forest Indemnified Parties from and
against, and agrees to pay, all Taxes imposed and all costs and expenses
(including, without limitation, litigation costs and reasonable attorneys' and
accountants' fees and disbursements) incurred (all herein referred to as "TAX
LOSSES") as a result of a Claim, notice of deficiency, or assessment by, or any
obligation owing to, any taxing authority for:
(a) Any Anschutz Taxes;
(b) Any Taxes of any corporation (other than the Anschutz
Subsidiaries) that is or was a member of the Anschutz Group or of any other
affiliated group of corporations of which the Anschutz Subsidiaries was a
member at any time on or prior to the Closing Date; and
(c) Any Taxes attributable to the transactions contemplated by
this Agreement.
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10.05 FOREST TAX INDEMNIFICATIONS. Forest agrees to protect, defend,
indemnify and hold harmless the Anschutz Indemnified Parties from and against,
and agrees to pay, all Tax Losses incurred as a result of a Claim, notice of
deficiency, or assessment by, or any obligation owing to, any taxing authority
for any Taxes of the Anschutz Subsidiaries attributable to any Post-Closing
Taxable Period.
10.06 TAX INDEMNIFICATION PROCEDURES. (a) If a Claim shall be made by
any taxing authority that, if successful, would result in the indemnification of
a Person under this Agreement (referred to herein as the "TAX INDEMNIFIED
PARTY"), the Tax Indemnified Party shall promptly notify the Party obligated
under this Agreement to so indemnify (referred to herein as the "TAX
INDEMNIFYING PARTY") in writing of such fact.
(b) The Tax Indemnified Party shall take such action in connection with
contesting such Claim as the Tax Indemnifying Party shall reasonably request in
writing from time to time, including the selection of counsel and experts and
the execution of powers of attorney, provided that (i) within 30 days after the
notice described in Section 10.06(a) has been delivered (or such earlier date
that any payment of Taxes is due by the Tax Indemnified Party but in no event
sooner than five days after the Tax Indemnifying Party's receipt of such
notice), the Tax Indemnifying Party requests that such Claims be contested,
(ii) the Tax Indemnifying Party shall have agreed to pay to the Tax Indemnified
Party all costs and expenses that the Tax Indemnified Party incurs in connection
with contesting such Claims, including, without limitation, reasonable
attorneys' and accountants' fees and disbursements, and (iii) if the Tax
Indemnified Party is requested by the Tax Indemnifying Party to pay the Tax
claimed and xxx for a refund, the Tax Indemnifying Party shall have advanced to
the Tax Indemnified Party, on an interest-free basis, the amount of such Claim.
The Tax Indemnified Party shall not make any payment of such Claims for at least
30 days (or such shorter period as may be required by applicable law) after the
giving of the notice required by Section 10.06(a), shall give to the Tax
Indemnifying Party any information reasonably requested relating to such Claim,
and otherwise shall cooperate with the Tax Indemnifying Party in good faith in
order to contest effectively any such Claim.
(c) Subject to the provisions of Section 10.06(b), the Tax Indemnified
Party shall enter into a settlement of such Claim with the applicable taxing
authority or prosecute such Claim to a determination in a court or other
tribunal of initial or appellate jurisdiction, all as the Tax Indemnifying Party
may request.
(d) If, after actual receipt by the Tax Indemnified Party of an amount
advanced by the Tax Indemnifying Party pursuant to Section 10.06(b)(iii), the
extent of the liability of the Tax Indemnified Party with respect to the Claims
shall be established by the final judgment or decree of a court or other
tribunal or a final and binding settlement with an administrative agency having
jurisdiction thereof, the Tax Indemnified Party shall promptly repay to the Tax
Indemnifying Party the amount advanced to the extent of any refund received by
the Tax Indemnified Party with respect to the Claims together with any interest
received thereon from the applicable taxing authority and any recovery of legal
fees from such taxing authority, net of any Taxes as are required to be paid by
the Tax Indemnified Party with respect to such refund, interest or legal fees
(calculated at the maximum applicable statutory rate of Tax without regard to
any other Tax Items). Notwithstanding the foregoing, the Tax Indemnified Party
shall not be required to make any payment hereunder before such time as the Tax
Indemnifying Party shall have made all payments or indemnities then due with
respect to the Tax Indemnified Party pursuant to this Agreement.
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(e) Promptly after a final determination, the Tax Indemnifying Party
shall pay to the Tax Indemnified Party the amount of any Tax Losses to which the
Tax Indemnified Party may become entitled by reason of the provisions of this
Article X.
10.07 SURVIVAL OF TAX PROVISIONS. Anything to the contrary in this
Agreement notwithstanding, the representations, warranties, covenants,
agreements, rights and obligations of the Parties with respect to any Tax
matters covered by this Agreement (including the representations and warranties
set forth in Sections 3.07 and 4.07) shall survive the Closing and shall not
terminate until one day after the expiration of the statute of limitations
(including extensions) applicable to such Tax matters.
10.08 AUDITS. From and after Closing, Forest agrees to cooperate with
Anschutz and the Anschutz Subsidiaries with respect to any audits by
Governmental Entities for taxes pertaining to the Anschutz Subsidiaries
attributable to a Pre-Closing Taxable Period. Anschutz and Anschutz
Subsidiaries shall have full authority to settle such audits, provided that, if
an audit item settlement would have a Material Adverse Effect on Forest or an
Anschutz Subsidiary on an ongoing basis, then Anschutz will obtain the prior
consent of Forest before settling such item, which consent shall not be
unreasonably withheld. Anschutz will keep Forest informed of audits with
respect to the Anschutz Subsidiaries or the Anschutz Assets.
ARTICLE XI
MISCELLANEOUS
11.01 NOTICES. Any notice, request, instruction or other correspondence
to be given hereunder by one Party to another (a "NOTICE") shall be in writing
and mailed by registered or certified mail, return receipt requested, postage
prepaid, or delivered personally (which shall include delivery by a courier or
messenger service) or by telecopy transmission with confirmation of receipt, as
follows:
If to Forest, addressed to: Forest Oil Corporation
0000 Xxxxxxxx, Xxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attention: V. Xxxxx Xxxxxxxx
Fax No.: (000) 000-0000
If to Anschutz, addressed to: The Anschutz Corporation
000 Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
Fax No.: (000) 000-0000
Notice given by mail or by personal delivery shall be effective (and deemed to
have been given) upon actual receipt. Notice given by telecopier shall be
effective upon actual receipt if received and confirmed by return transmission
during the recipient's normal business hours or at the beginning of the
recipient's next business day after receipt if not received during the
recipient's normal business hours. No Notice shall be given to or by any
Anschutz Subsidiaries. Any Party may change any address to which Notice is to
be given to it by giving Notice as provided above of such change of address.
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11.02 GOVERNING LAW AND CONSTRUCTION. The provisions of this Agreement
and the documents delivered pursuant hereto shall be governed by and construed
in accordance with the laws of the State of Colorado (excluding any
conflicts-of-law rule or principle that might refer same to the laws of another
jurisdiction), except to the extent that same are mandatorily subject to the
laws of another jurisdiction pursuant to the laws of such other jurisdiction.
The fact that one representation and warranty in this Agreement may be
duplicative of or may overlap, in whole or in part, or may be more general or
specific than, another representation and warranty in this Agreement shall not
negate, diminish or modify either representation and warranty, as each shall be
construed and interpreted independently. The Parties have participated jointly
in the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement.
11.03 ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS. This Agreement (together
with all Schedules and Exhibits attached hereto) and the other Transaction
Documents and the existing confidentiality agreement between Forest and Anschutz
constitute the entire agreement between the Parties pertaining to the subject
matter hereof and thereof and supersedes all prior agreements, understandings,
negotiations and discussions, whether oral or written, of the Parties, and there
are no representations, warranties, covenants or agreements between the Parties
in connection with the subject matter hereof and thereof except as set forth
specifically herein or therein or contemplated hereby or thereby. No
supplement, modification or waiver of this Agreement shall be binding unless
executed in writing by the Party or Parties to be bound thereby and expressly
referencing this Agreement. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other provision
hereof (regardless of whether similar) nor shall any such waiver constitute a
continuing waiver unless otherwise expressly provided.
11.04 SUCCESSORS; THIRD PARTY BENEFICIARIES. This Agreement shall be
binding upon and inure to the benefit of the Parties and their respective
successors and assigns. Nothing in this Agreement, express or implied, is
intended to confer upon any Person other than the Parties and their respective
successors and assigns any rights, benefits or obligations hereunder, except for
the indemnification provisions for the benefit of the Forest Indemnified Parties
and the Anschutz Indemnified Parties, as applicable.
11.05 SEVERABILITY. If any one or more of the provisions contained in
this Agreement or in any document delivered pursuant hereto shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Agreement or any other such document.
11.06 MULTIPLE COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.07 FURTHER ASSURANCES. After Closing, the Parties will take all
appropriate action and execute any documents, instruments or conveyances of any
kind that may be reasonably necessary to effectuate the intent of this
Agreement.
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11.08 REMEDIES. Except as otherwise expressly stated in this Agreement,
the rights and remedies provided by this Agreement are cumulative, and the use
of any one right or other remedy by any Party shall not preclude or constitute a
waiver of its rights to use any or all other remedies. Such rights and remedies
are given in addition to any other rights and remedies a Party may have by law,
statute or otherwise.
IN WITNESS WHEREOF, the Parties hereby execute this Agreement as of the day
and year first above written.
FOREST OIL CORPORATION
By:
Name: /s/ Xxxxxx X. Xxxxxxx
Title: /s/ President and Chief Financial Officer
THE ANSCHUTZ CORPORATION
By:
Name: /s/ Xxxxxxx X. Xxxxxx
Title: /s/ Vice President
EXHIBIT 2.04(i)
SECOND AMENDMENT TO
SHAREHOLDERS AGREEMENT
This SECOND AMENDMENT TO SHAREHOLDERS AGREEMENT (this "AMENDMENT") is
entered into by and between Forest Oil Corporation, a New York corporation
("FOREST"), and The Anschutz Corporation, a Kansas corporation ("ANSCHUTZ"),
this _____ day of __________, 1998.
Forest and Anschutz have entered into that certain Shareholders Agreement
dated as of July 27, 1995, as amended by a First Amendment to Shareholders
Agreement dated as of January 24, 1996 (the "SHAREHOLDERS AGREEMENT").
The Board of Directors of Forest (the "BOARD"), in approving the Purchase
and Sale Agreement (the "PURCHASE AND SALE AGREEMENT"), dated as of
____________, 1998, between Forest and Anschutz, also approved certain
amendments to the Shareholders Agreement.
NOW, THEREFORE, for and in consideration of the premises and of the mutual
agreements herein contained, and the mutual benefits to be derived therefrom the
parties agree as follows (terms used but not otherwise defined shall have the
same meaning as in the Shareholders Agreement):
1. Article I of the Shareholders Agreement is hereby amended by adding
the following definitions:
"FOREST SHARES" has the meaning given such term in the Purchase and
Sale Agreement.
"SHARES" means the Purchaser Shares and the Forest Shares.
"TRANSACTION DOCUMENTS" means the Transaction Documents (as defined
in the Purchase Agreement) and the Transaction Documents (as defined in the
Purchase and Sale Agreement).
2. The definition of "Section 16(b) Liability" in Article I, the
definition of "Section 16(b) Matter" in Article I, Section 3.2, Section 3.2(f),
Section 3.2(h), Section 3.2(i), Section 3.3(a)(1), Section 5.1, and Section 5.5
are hereby amended by replacing "Purchaser Shares" with "Shares."
3. Section 2.2(b) is hereby amended in its entirety to read as
follows:
(b) In all notices, registrations, applications, statements,
pleadings, memoranda, briefs and other documents submitted to or filed with
any Governmental Body (including, without limitation, in any Action
referred to in Section 2.2(c)), none of the Company, Purchaser and their
respective Affiliates shall assert any position or claim with respect to
the acquisition (or deemed acquisition) or disposition (or deemed
disposition) by Purchaser of "beneficial ownership" of, or a "pecuniary
interest" or "indirect pecuniary interest" in (i) any of the Purchaser
Shares that is inconsistent with the position or claim
that Purchaser acquired (or shall have been deemed to acquire) "beneficial
ownership" of, or a "pecuniary interest" or "indirect pecuniary interest"
in, all of the Purchaser Shares on or before the date of this Agreement or
(ii) any of the Forest Shares that is inconsistent with the position or
claim that Purchaser acquired (or shall have been deemed to acquire)
"beneficial ownership" of, or a "pecuniary interest" or "indirect pecuniary
interest" in, all of the Forest Shares on or before the date of this
Amendment, except that Purchaser may assert any such inconsistent position
or claim if Purchaser, based on advice of counsel, determines that there is
a reasonable basis to conclude that as a result of the failure to assert
such inconsistent position or claim, Purchaser, any person who controls
Purchaser within the meaning of any applicable Regulation or any of their
respective shareholders, directors, officers, employees, agents and
Affiliates could be in violation of any applicable Regulation or could
become subject to any sanction, fine, award or other penalty, whether civil
or criminal.
4. Section 3.2(f) is further amended by replacing the reference to
"Section 2.1" with "Section 3.1."
Except as expressly amended hereby, the Shareholders Agreement is hereby
ratified and confirmed, and as hereby amended, shall remain in full force and
effect in accordance with its terms, conditions and provisions.
EXECUTED in multiple counterparts, each having the force and effect of an
original, effective as of the date first written above.
FOREST OIL CORPORATION
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
THE ANSCHUTZ CORPORATION
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
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EXHIBIT 2.04(j)
AMENDMENT NO. 2 TO
REGISTRATION RIGHTS AGREEMENT
This AMENDMENT NO. 2 TO REGISTRATION RIGHTS AGREEMENT this ("AMENDMENT") is
entered into by FOREST OIL CORPORATION, a New York corporation (the "COMPANY"),
and THE ANSCHUTZ CORPORATION, a Kansas corporation (the "SHAREHOLDER"), this
____ day of _________, 1998.
The Company and the Shareholder entered into a Registration Rights
Agreement dated as of May 19, 1995, and amended as of November 5, 1996 (the
"REGISTRATION RIGHTS AGREEMENT"). Terms not otherwise defined herein have the
meanings stated in the Registration Rights Agreement or, if not defined therein,
in the Purchase Agreement (as defined therein).
The Board of Directors of Forest, in approving the Purchase and Sale
Agreement dated as of _____________, 1998, between Forest and Anschutz, also
approved certain amendments to the Registration Rights Agreement.
NOW, THEREFORE, the parties agree as follows:
1. The definition of "Registrable Shares" in the last sentence of
Recital D is hereby amended to read in its entirety as follows:
The Shareholder Shares and, when acquired by the Shareholder, the Tranche B
Warrant Shares, and the Forest Shares (acquired by the Shareholder pursuant
to a Purchase and Sale Agreement dated as of ________________, 1998
between the Shareholder and the Company) are collectively referred to as
the "REGISTRABLE SHARES."
2. Except as otherwise provided herein, all provisions of the
Registration Rights Agreement shall remain in full force and effect and shall be
binding upon the parties hereto.
3. This Amendment may be executed in any number of counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the parties have executed and delivered this Amendment
as of the date first written above.
FOREST OIL CORPORATION
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
THE ANSCHUTZ CORPORATION
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
EXHIBIT 2.04(k)
AMENDMENT NO. 2 TO
RIGHTS AGREEMENT
This AMENDMENT NO. 2 TO RIGHTS AGREEMENT (this "AMENDMENT") is entered into
by Forest Oil Corporation, a New York corporation (the "COMPANY"), and Xxxxx
Xxxxxx Shareholder Services L.L.C., a New York limited liability company, as
rights agent (the "RIGHTS AGENT"), this ____ day of ____________, 1998.
The Company and the Rights Agent entered into a Rights Agreement dated as
of October 14, 1993 and amended as of July __, 1995 (the "RIGHTS AGREEMENT").
The Board of Directors of the Company (the "BOARD"), in approving that
certain Purchase and Sale Agreement dated as of _________________, 1998 (the
"PURCHASE AND SALE AGREEMENT"), between the Company and The Anschutz Corporation
(the "PURCHASER"), also approved certain amendments to the Rights Agreement; and
NOW, THEREFORE, the parties agree as follows (terms used but not otherwise
defined herein shall have the same meanings as in the Purchase and Sale
Agreement):
1. Notwithstanding any other provision of the Rights Agreement, (a)
the execution or the delivery of one or more of the Transaction Documents or the
conclusion of one or more of the Transactions (including, without limitation (i)
the acquisition by the Purchaser or any of its Affiliates of the Forest Shares
and (ii) the "beneficial ownership" (as defined in the Rights Agreement) by any
of the Purchaser and its Affiliates of the foregoing) will not cause or permit
the Rights to become exercisable, the Rights to be separated from the stock
certificates to which they are attached or any provision of the Rights Agreement
to apply to the Purchaser or any other person by reason of or in connection with
the Transaction Documents or the Transactions, including, without limitation,
the designation of the Purchaser or any other person as an Acquiring Person (as
defined in the Rights Agreement) the occurrence of a Distribution Date (as
defined in the Rights Agreement) and the occurrence of a Shares Acquisition Date
(as defined in the Rights Agreement), and (b) for purposes of this Rights
Agreement, none of the Purchaser and its Affiliates shall at any time be deemed
to be the Beneficial Owner (as defined in the Rights Agreement) of the shares of
Common Stock and other securities referred to in the preceding clause (a),
provided, however, that this amendment shall not effect any amendment of the
Rights Agreement with respect to the acquisition or beneficial ownership of
Voting Securities (as defined in the Rights Agreement) that are not referred to
in the preceding clause (a) that may be acquired or owned beneficially by any of
the Purchaser and its Affiliates from time to time (other that Voting Securities
acquired pursuant to or in connection with, or beneficially owned as a result
of, the payment of a dividend on or split-up, merger, reclassification,
recapitalization, reorganization, combination, subdivision, conversion, exchange
of shares or the like with respect to such Voting Securities).
2. Except as otherwise amended herein, all provisions of the Rights
Agreement shall remain in full force and effect and shall be binding upon the
parties hereto.
3. This Amendment may be executed in any number of counterparts, each
of such shall be deemed an original, but all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their respective officers, each of whom is duly authorized, as
of the date first written above.
FOREST OIL CORPORATION
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
XXXXX XXXXXX SHAREHOLDER SERVICES L.L.C.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
SCHEDULE 1.01
DEFINITIONS
"ACQUISITION PROPOSAL" shall have the meaning ascribed thereto in
Section 5.04.
"ACTION" shall mean an action, suit, investigation, complaint or other
proceeding pending against or affecting a Person or its property, whether civil
or criminal, in law or equity, or before any arbitrator or Governmental Entity.
"AFFILIATE" of a Person shall mean any other Person controlling, controlled
by or under common control with that first Person; provided, however, that the
term "Affiliate" (a) when used to refer to Affiliates of the Anschutz
Subsidiaries (as opposed to Affiliates of any other Person, such as Anschutz),
shall only mean Persons controlled by the Anschutz Subsidiaries (rather than
Persons controlling the Anschutz Subsidiaries or under common control with the
Anschutz Subsidiaries) and (b) when used to refer to Affiliates of Anschutz,
shall exclude the Anschutz Subsidiaries and their Affiliates. As used in this
definition, the term "control" includes (x) with respect to any Person having
voting shares or the equivalent and elected directors, managers or Persons
performing similar functions, the ownership of or power to vote, directly or
indirectly, shares or the equivalent representing 50% or more of the power to
vote in the election of directors, managers or Persons performing similar
functions, (y) ownership of 50% or more of the equity or equivalent interest in
any Person or (z) the ability to direct the business and affairs of any Person
by acting as a general partner, manager or otherwise.
"AGREEMENT" shall have the meaning ascribed thereto in the introduction to
this Agreement.
"AIP" shall mean Anschutz Italian Petroli S.r.L., an Italian company.
"AMI INVESTMENT OPPORTUNITY" shall mean any opportunity to acquire an
interest (whether directly or indirectly, through the ownership of Equity
Securities in a Person or otherwise) in any Oil and Gas Interest located within
six miles of the boundaries of the areas covered by the Foreign Concessions
constituting Oil and Gas Properties, but excluding opportunities to acquire the
stock of publicly traded companies to the extent such acquisition would not
result in Anschutz or its Affiliates becoming an Affiliate of such company.
"ANSCHUTZ" shall have the meaning ascribed thereto in the introduction to
this Agreement.
"XXXXXXXX XXXXXXX" shall mean Xxxxxxxx Xxxxxxx Corporation, an Alberta
corporation.
"ANSCHUTZ ASSETS" shall mean the Italian Assets and all assets, rights,
properties and interests of the Anschutz Subsidiaries, of any kind or character,
whether owned, leased or licensed and whether real or personal, tangible or
intangible, corporeal or incorporeal.
"ANSCHUTZ CANADA" shall mean Anschutz Canada Exploration Corporation, an
Alberta corporation and an Affiliate of Anschutz.
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"ANSCHUTZ FINANCIAL STATEMENTS" shall have the meaning ascribed thereto in
Section 4.05.
"ANSCHUTZ GERMANY" shall mean Anschutz Germany GmbH, a German limited
liability company and an indirect wholly-owned subsidiary of Anschutz.
"ANSCHUTZ GROUP" shall mean "affiliated group" of corporations of which
Anschutz Company, a Delaware corporation, is the "common parent" with the
meaning of section 1504 of the Code and any other group of corporations that
includes a Anschutz Subsidiary that files a combined, unitary or consolidated
Tax Return.
"ANSCHUTZ INDEMNIFIED PARTIES" shall have the meaning ascribed thereto in
Section 9.06.
"ANSCHUTZ SUBSIDIARIES" shall mean, collectively, the entities identified
in Section 2.01(b), Xxxxxxxx Xxxxxxx, Xxxxxxxx Canada, Anschutz Germany and
Anschutz Thailand, all of their respective wholly or partially owned Affiliates
and all entities listed in Schedule 4.12.
"ANSCHUTZ SUPPORT ARRANGEMENTS" shall have the meaning ascribed thereto in
Section 9.14.
"ANSCHUTZ TAX(ES)" shall mean (a) with respect to any Taxes measured or
determined by reference to income, the amount of such Taxes attributable to the
Anschutz Subsidiaries for all or any portion of a period ending on or before the
Closing Date and (b) with respect to non-income Taxes of the Anschutz
Subsidiaries other than AREC, the amount of such Taxes attributable to all or a
portion of any period ending before January 1, 1998. The determination of the
period to which a particular Tax is attributable shall be made by an interim
closing of the books except for ad valorem Taxes and franchise Taxes based on
capital which shall be prorated on a daily basis.
"ANSCHUTZ THAILAND" shall mean Anschutz (Thailand) Company Limited, a
limited liability company formed under the laws of Thailand and an indirect
wholly-owned subsidiary of Anschutz.
"APPROVAL" shall mean 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 Entity or any other Person and the
expiration or termination of all prescribed waiting, review or appeal periods
with respect to any of the foregoing.
"AREC" shall mean Anschutz Ranch East Corporation, a Colorado corporation
and Affiliate of Anschutz.
"AREC CREDIT FACILITIES" shall mean collectively, (a) that certain Note
Purchase Agreement, dated as of June 3, 1993, as amended, between Anschutz, et
al. and Great American Life Insurance Company, American Empire Surplus Lines
Insurance Company, Great American Insurance Company and Windsor Insurance
Company, pertaining to the Senior Secured Notes (as defined therein) in the
aggregate principal amount of $53,000,000 due May 31, 2003, and the documents
and instruments executed in connection therewith including, without limitation,
the Senior Notes and the Deeds of Trust as defined therein, and (b) that certain
Note Purchase Agreement, dated as of June 3, 1993, as amended, between Anschutz,
et al. and AT&T Commercial Finance Corporation, pertaining to the Subordinated
Secured Notes (as defined therein) in the aggregate principal amount of
$24,000,000, due May 31, 2007, with Arrearage Amount (as
-4-
defined therein) due May 31, 2025, and the documents and instruments executed in
connection therewith, including, without limitation, the Subordinated Secured
Notes and the Deeds of Trust defined therein. If the indebtedness evidenced by
the Note Purchase Agreement referenced in clause (b) immediately preceding is
satisfied in full prior to Closing, the reference to such indebtedness shall be
deemed to have been deleted from this definition. In addition, if the liens,
deeds of trust and other security interests securing such indebtedness are
released in full prior to Closing, any references to the instruments creating
such liens, deeds of trust and other security interests that are contained in
any of the Schedules to this Agreement shall be deemed to have been deleted.
"BALANCE SHEET DATE" shall have the meaning ascribed thereto in
Section 4.05.
"BEST EFFORTS" shall mean the taking by a Person of such action as would be
in accordance with reasonable commercial practices as applied to the particular
matter in question; provided, however, that such action shall not include the
incurrence of unreasonable expense.
"CANADIAN MERGER" shall have the meaning ascribed thereto in Section 5.11.
"CASH AMOUNT" shall have the meaning ascribed thereto in Section 2.01(a).
"CASUALTY DEFECT" shall have the meaning ascribed thereto in Section 7.04.
"CLAIM" shall mean any and all claims, causes of action, demands, lawsuits,
suits, proceedings, investigations or audits by Governmental Entities and
administrative orders, whether civil or criminal, in law or in equity or before
any arbitrator or Governmental Entity.
"CLOSING" shall have the meaning ascribed thereto in Section 2.03.
"CLOSING DATE" shall have the meaning ascribed thereto in Section 2.03.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"CONSOLIDATED SUBSIDIARY" of a Person at any date shall mean any subsidiary
of such Person or other entity the accounts of which would be consolidated with
those of the Person and its consolidated financial statements in accordance with
GAAP as of that date.
"CONTRACT" shall mean any contract, agreement, option, right to acquire,
preferential purchase right, preemptive right, warrant, agreement regarding
Debt, indenture, debenture, note, bond, loan, loan agreement, collective
bargaining agreement, lease, mortgage, franchise, license, purchase order, bid,
commitment, letter of credit, Guarantee, surety or any other legally binding
arrangement, whether oral or written.
"DEBT" of a Person at any date shall mean, without duplication, the sum of
(a) all obligations of the Person (i) for borrowed money, (ii) evidenced by
bonds, debentures, notes or other similar instruments, (iii) to pay the deferred
purchase price of property or services, except trade accounts payable or other
accounts payable arising in the ordinary course of business, (iv) as lessee
under capitalized leases, (v) under letters of credit issued for the account of
the Person and (vi) arising under acceptance of facilities,
-5-
plus (b) all Debt (as defined in clause (a)) of others Guaranteed by the Person,
plus (c) all Debt (as defined in clauses (a) and (b)) of others secured by an
Encumbrance on any asset of the Person and whether or not such obligations are
assumed by the Person.
"DEBT INSTRUMENTS" shall mean, collectively, (a) the Indenture dated as of
September 8, 1993, between Forest and Shawmut Bank, Connecticut (National
Association), as amended, (b) the Amended and Restated Credit Agreement dated as
of August 31, 1995, among Forest, Subsidiary Guarantors (as defined therein) and
The Chase Manhattan Bank, as agent, as amended, and (c) the Indenture dated as
of September 29, 1997, among Canadian Forest Oil Ltd., Forest, as guarantor, and
State Street Bank and Trust Company.
"DEFECT NOTICE" shall have the meaning ascribed thereto to Section 7.01.
"DEFECT VALUE" shall have the meaning ascribed thereto to Section 7.03(b).
"DESIGNATED VALUE" shall have the meaning ascribed thereto in
Section 7.03(a).
"EMPLOYEE OPTIONS" shall have the meaning ascribed thereto in
Section 3.12(b).
"EMPLOYEE PLAN" shall mean, with respect to a Person, any plan, contract,
commitment, program, policy, arrangement or practice maintained or contributed
to by such Person and providing benefits to any employee, former employee,
director or agent of such Person, including, without limitation, (a) any ERISA
Plan, (b) any Multiemployer Plan, (c) any other "Employee Benefit Plan" (within
the meaning of Section 3(3) of ERISA), (d) 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 (e) any plan, contract,
commitment, program, policy, arrangement or practice providing for "Fringe
Benefits" or perquisites, including, without limitation, benefits relating to
automobiles, clubs, vacations, child care, parenting, sabbatical or sick leave
and medical, dental, hospitalization, life insurance and other types of
insurance.
"ENCUMBRANCE" shall mean any mortgage, deed of trust, lien (statutory or
otherwise), pledge, hypothecation, charge, deposit arrangement, preference,
priority, security interest, charge, Claim, option, right of first refusal or
other transfer restriction or encumbrance of any kind (including, but not
limited to, consents to assignment, preferential purchase rights, conditional
sales agreement or other title retention agreement, and the filing of or
agreement to give any financing statement under the Uniform Commercial Code or
comparable law of any jurisdiction to evidence any of the foregoing).
"ENVIRONMENTAL LAWS" shall mean any and all Legal Requirements relating to
the regulation or protection of human health, safety or the environment or to
the 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, Environmental Release, transport or handling or pollutants,
contaminants, chemicals or toxic or hazardous substances or wastes.
"ENVIRONMENTAL NOTICE" shall have the meaning ascribed thereto in
Section 4.20(b)(ii).
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"ENVIRONMENTAL PERMITS" shall have the meaning ascribed thereto in
Section 4.20(a).
"ENVIRONMENTAL RELEASE" shall mean any release, spill, emission, discharge,
leaking, pumping, injection, deposit, disposal, dispersal, leaching or migration
into the indoor or outdoor environment (including, without limitation, ambient
air, surface water, ground water and surface or subsurface strata) or into or
out of any property, including the movement of Hazardous Materials through or in
the air, soil, surface water, ground water or property, including of energy or
noise.
"EQUIPMENT" shall mean all tangible personal property of a Person,
including but not limited to, all equipment, and all of its forms, wherever
located, now or hereafter existing.
"EQUITY SECURITIES" shall mean, with respect to a Person, the capital stock
of such 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/or calls, commitments, or
claims of any character relating to, any shares of its capital stock and any
securities convertible into or exchangeable or exercisable for any of the
foregoing.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974 and
the rules and regulations promulgated thereunder, in each case as amended as of
the date hereof and as the same may be amended or modified from time to time.
References to titles, subtitles, sections, paragraphs, or other provisions of
ERISA and the rules or regulations promulgated thereunder also refer to
successor provisions.
"ERISA PLAN" of a Person shall mean an "Employee Pension Benefit Plan"
( within the meaning of Section 3(2) of ERISA) other than a Multiemployer
Plan, that is covered by Title IV of ERISA or subject to the minimum funding
standards of section 412 of the Code that is maintained by the Person, to
which the Person contributes or has an obligation to contribute or with
respect to which the Person is an "Employer" (within the meaning of Section
3(5) of ERISA).
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"EXEMPT ASSETS" shall mean (a) reserves of oil, natural gas, shale or tar
sands, (b) rights to reserves of oil, natural gas, shale or tar sands, or
(c) associated exploration or production assets, each within the meaning of the
Xxxx-Xxxxx-Xxxxxx Act.
"FOREIGN CONCESSIONS" shall mean all agreements (and applications and
planned applications therefor) with Governmental Entities (or their designated
representative with responsibility for granting rights to explore for, develop
and produce hydrocarbons), of countries other than the United States, whereby
the holder thereof or grantee thereunder has (or in the case of an application
or planned application, is applying or will apply to have) an interest in oil,
gas or other hydrocarbon reserves and production, and/or the right to explore
for, develop or produce oil, gas or other hydrocarbons, including production
sharing contracts and agreements, concessions, licenses and leases.
"FOREST" shall have the meaning ascribed thereto in the introduction to
this Agreement.
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"FOREST COMMON STOCK" shall mean the common stock, $.10 par value, of
Forest.
"FOREST FINANCIAL STATEMENTS" shall have the meaning ascribed thereto in
Section 3.05.
"FOREST INDEMNIFIED PARTIES" shall have the meaning ascribed thereto in
Section 9.05.
"FOREST SHARES" shall have the meaning ascribed thereto in Section 2.04(c).
"GAAP" shall mean generally accepted accounting principles as in effect in
the United States of America from time to time.
"GOOD TITLE" shall mean, with respect to a specific Oil and Gas Property,
such title that:
(a) is deducible of record from all official records kept by
Governmental Entities responsible for the recordation of ownership of such
assets, if any, including, without limitation, applicable county or parish
clerks offices, state land offices, the Minerals Management Service, and
all comparable Governmental Entities in countries other than the United
States;
(b) entitles the owner thereof to a Net Revenue Interest in each
Unit or Well, as applicable, located on the lands covered thereby that is
not less than the interest shown as the Net Revenue Interest for such Oil
and Gas Property, Unit or Well on Schedule 4.17;
(c) subjects the owner thereof to a Working Interest in each
Unit or Well, as applicable, located on the lands covered thereby that is
no greater than the interest shown as the Working Interest for such Oil and
Gas Property, Unit or Well in Schedule 4.17; and
(d) is free and clear of all Encumbrances other than the
Permitted Encumbrances.
"GOVERNMENTAL ENTITY" shall mean any governmental, quasi-governmental,
state, county, city or other political subdivision of the United States or any
other country, or any agency, court or instrumentality, foreign or domestic, or
statutory or regulatory body thereof.
"GUARANTEE" shall mean, with respect to any Person, any obligation,
contingent or otherwise of such Person directly or indirectly guaranteeing any
Debt or obligation of any other Person or in any manner providing for the
payment of any Debt or performance of obligations of any other Person or the
investment of funds in any other Person or otherwise protecting the holder of
the Debt or the beneficiary of such obligations 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
correlative meaning.
"XXXX-XXXXX-XXXXXX ACT" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, and the related rules, regulations and
published interpretations thereunder.
"HAZARDOUS MATERIALS" shall mean, collectively, (a) any petroleum or
petroleum products, geothermal products, natural gas, flammable explosives,
radioactive materials, asbestos in any form that is
-8-
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 that are present in concentrations or at locations that
present a threat to human health or the environment.
"INDEMNIFIED PARTY" shall have the meaning ascribed thereto in
Section 9.08(a).
"INDEMNIFYING PARTY" shall have the meaning ascribed thereto in
Section 9.08(a).
"INDEPENDENT ENGINEERS" shall have the meaning ascribed thereto in
Section 4.18.
"INTERCOMPANY INDEBTEDNESS" shall mean any Debt (a) owed by an Anschutz
Subsidiary to Anschutz or an Affiliate of Anschutz or (b) owed to an Anschutz
Subsidiary by Anschutz or an Affiliate of Anschutz.
"INVESTMENT OPPORTUNITY NOTICE" shall have the meaning ascribed thereto in
Section 9.10(a).
"ITALIAN ASSETS" shall mean the Foreign Concessions and other assets,
interests and instruments described in section 1 of Part VII of Schedule 4.17.
"KNOWLEDGE" shall mean, with respect to a Person, the actual knowledge of
the officers and directors of such Person, in each case after reasonable
investigation and inquiry of (a) any employees of such Person with supervisory
responsibility over the matter in question or that are likely to have
information regarding such matter and (b) the officers, directors and employees
of any direct or indirect subsidiary of such Person that have supervisory
responsibility over the matter in question or are likely to have information
regarding such matter.
"LEGAL REQUIREMENTS" shall mean, subject to Section 1.02, all applicable
federal, state and local laws (statutory, judicial or otherwise), judgments,
decrees, orders, statutes, ordinances, rules, regulations or permits, in each
case, whether foreign or domestic, including, without limitation, (a) all laws,
ordinances and regulations relating to environmental protection, health and
safety, (b) the Securities Act and the Exchange Act and all orders issued and
regulations promulgated under the Securities Act and the Exchange Act and
(c) all interest, escrow and escheat filing requirements relating to suspense
funds.
"LICENSE" shall mean any license, permit, franchise, certificate of
authority or order, or any extension, modification or waiver of the foregoing,
issued by any Governmental Entity, but excluding any Oil and Gas Interests.
"LOSSES" shall mean all losses, costs, damages, liabilities and expenses of
every type, including, without limitation, court costs and reasonable attorneys'
fees and expenses.
-9-
"MATERIAL ADVERSE EFFECT" shall mean, in relation to any asset or Person,
any material and adverse affect on such asset, or on the assets, liabilities,
financial position, business, operations or affairs, taken as a whole, of such
Person.
"MULTIEMPLOYER PLAN" shall mean, with respect to a Person, a "Multiemployer
Plan" (within the meaning of Section 3(37) of ERISA) to which such Person
contributes or has an obligation to contribute or which provides benefits to any
employee, former employee, director or agent of such Person.
"NET REVENUE INTEREST" shall mean, with respect to any Oil and Gas
Property, the interest in and to all production of oil, gas and hydrocarbon
minerals saved, produced and sold from such Oil and Gas Property, after giving
effect to all valid lessors' royalties, overriding royalties, production
payments, net profits interests, carried interests, liens and other encumbrances
or charges against production therefrom, and without reduction, suspension or
termination for the productive life of such Oil and Gas Property.
"NON-AREC ANSCHUTZ ASSETS" shall have the meaning ascribed thereto in
Section 2.02(a)(i)(B).
"NOTICE" shall have the meaning ascribed thereto in Section 11.01.
"NOTIFICATION DEADLINE" shall have the meaning ascribed thereto in
Section 7.01.
"OIL AND GAS INTERESTS" shall mean (a) oil and gas leases, oil, gas and
other mineral leases, oil leases, gas leases, Foreign Concessions, and any other
real property interests, leases, or Contracts granting the right to explore for
and produce hydrocarbons and (b) all interests in Units or Xxxxx, fee interests,
subleases, mineral rights, farmouts, back-in interests, joint venture interests,
operating rights, royalties, overriding royalties, production payments, net
profits interests, carried interests, easements, rights-of-way, surface leases,
permits, licenses and other interests, together with all rights, titles,
interests, tenements, hereditaments, appurtenances, benefits and privileges
attributable to each such interest.
"OIL AND GAS PROPERTIES" shall mean the Oil and Gas Interests listed on
Schedule 4.17.
"ORIGINAL WORKING CAPITAL" shall have the meaning ascribed thereto in
Section 9.16(a).
"PARTY(IES)" shall have the meaning ascribed thereto in the Introduction to
this Agreement.
"PERMITTED ACTIVITIES" shall have the meaning ascribed thereto in
Section 5.04.
"PERMITTED ENCUMBRANCES" shall mean, with respect to a given Oil and Gas
Property:
(a) lessors' royalties, overriding royalties, and division
orders and sales contracts covering oil, gas or associated liquid or
gaseous hydrocarbons, gas balancing or deferred production agreements,
rights to recoupment, unitization, communitization and pooling designations
and agreements, reversionary interests and similar burdens if and to the
extent the net cumulative effect of such burdens does not operate to reduce
the Net Revenue Interest at any time in such Oil and Gas Property to less
than the Net Revenue Interest set forth in Schedule 4.17 for such Oil and
Gas Property;
-10-
(b) preferential rights to purchase and required third party
consents to assignments and similar agreements with respect to which:
(i) waivers or consents are obtained from the
appropriate parties prior to Closing,
(ii) the appropriate time period for asserting such
rights has expired without an exercise of such rights prior to
Closing,
(iii) arrangements can be made by Anschutz that are
acceptable to Forest in order for Forest to receive the same
economic and operational benefits as if all such waivers and
consents had been obtained; or
(iv) are not triggered or put into effect as a result of
the transactions provided for in this Agreement;
(c) liens for taxes or assessments not yet due or not yet
delinquent or, if delinquent, that are not material or are being contested
in good faith in the normal course of business (and with respect to the
Anschutz Subsidiaries, for which adequate reserves have been established);
(d) all rights to approve, required notices to, filings with, or
other actions by Governmental Entities in connection with the sale or
conveyance of the Anschutz Assets or the Purchased Equity Interests if the
same are customarily obtained subsequent to such sale or conveyance;
(e) rights of reassignment, to the extent any exist as of the
date of this Agreement, upon the surrender or expiration of any Oil and Gas
Interest constituting such Oil and Gas Property;
(f) easements, rights-of-way, servitudes, permits, surface
leases and other rights in respect of surface operations, pipelines,
grazing, logging, canals, ditches, reservoirs or the like; conditions,
covenants or other restrictions; and easements for streets, alleys,
highways, telephone lines, pipelines, railways and other easements and
rights-of-way, on, over or in respect of such Oil and Gas Property that
individually, or in the aggregate, do not have a Material Adverse Effect on
the ownership, operation, value or use of such Oil and Gas Property;
(g) liens, if any, to be released at Closing in a form
acceptable to Forest;
(h) the terms and conditions of all leases, agreements, orders,
pooling or unitization agreements or declarations included in the Anschutz
Assets or to which the Anschutz Assets are subject (including the Contracts
listed in Schedules 4.14 and 4.17) as long as same do not reduce the Net
Revenue Interest for such Oil and Gas Property listed in Schedule 4.17 and
do not increase the Working Interest for such Oil and Gas Property as
listed in Schedule 4.17;
(i) rights reserved to or vested in any Governmental Entity
authorized to control or regulate such Oil and Gas Property in any manner,
and all applicable Legal Requirements;
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(j) materialmen's, mechanics', repairmen's, employees',
contractors', operators' or other similar liens or charges arising in the
ordinary course of business incidental to construction, maintenance or
operation of such Oil and Gas Property:
(i) if they have not been filed pursuant to applicable
Legal Requirements, or
(ii) if filed, they have not yet become due and payable
or payment is being withheld as provided by law or pending
resolution of Anschutz's good faith contest thereof;
(k) all other liens, charges, encumbrances, contracts,
agreements, instruments, obligations, defects and irregularities
(including, without limitation, tax partnerships and liens of operators
relating to obligations not yet due pursuant to which Anschutz or the
Anschutz Subsidiaries are not in default) that are not such as to interfere
materially with the use, operation or value of the Anschutz Assets; and
(l) the AREC Credit Facilities.
"PERSON" shall mean any natural person, firm, partnership, association,
corporation, limited liability company, company, trust, entity, public body or
government.
"POST-CLOSING TAXABLE PERIOD" shall mean all or a portion of (a) any
taxable period after the Closing Date or (b) any taxable period with respect to
which the Tax is computed by reference to Tax Items, assets, capital or
operations of the Anschutz Subsidiaries arising after, or existing subsequent
to, the Closing Date.
"PRE-CLOSING TAXABLE PERIOD" shall mean all or a portion of (a) any taxable
period up to and including the Closing Date or (b) any taxable period with
respect to which the Tax is computed by reference to Tax Items, assets, capital
or operations of the Anschutz Subsidiaries arising on or before, or existing as
of, the Closing Date.
"PROPRIETARY RIGHT" shall mean any copyright, uncopyrighted work,
trademark, trademark right, service xxxx, trade name, trade name right, patent,
patent right, unpatented invention, license, permit, trade secret, know-how,
invention, computer software, seismic data or intellectual property right or any
other proprietary right including any application or License for, or the
goodwill of the business relating to, any of the foregoing.
"PROXY STATEMENT" shall have the meaning ascribed thereto in
Section 6.06(a)(i).
"PURCHASED EQUITY INTERESTS" shall mean all of the issued and outstanding
equity interests of Anschutz Canada, Anschutz Germany and Anschutz Thailand.
"REAL PROPERTY" shall mean all real property interests, together with all
tenements, hereditaments, easements, rights of ways, privileges and
appurtenances to those interests and improvements and fixtures on or to those
interests.
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"RECALCULATED WORKING CAPITAL" shall have the meaning ascribed thereto in
Section 9.16(a).
"REGISTRATION RIGHTS AGREEMENT" shall mean that certain Registration Rights
Agreement dated as of May 19, 1995, by and between Forest and Anschutz, as
amended by that certain Amendment No. 1 to Registration Rights Agreement dated
November 5, 1996.
"RIGHTS" shall have the meaning ascribed thereto in Section 3.12(b).
"RIGHTS AGREEMENT" shall have the meaning ascribed thereto in
Section 3.12(b).
"RIGHTS PREFERRED STOCK" shall have the meaning ascribed thereto in
Section 3.12(a).
"ROYALTY PLAN" shall mean that certain Royalty Plan No. 6 of the Anschutz
Corporation, dated effective as of November 1, 1993. Capitalized terms used in
this Agreement in reference to the Royalty Plan and not otherwise defined in
this Agreement shall have the meaning ascribed thereto in the Royalty Plan.
"SEC DOCUMENTS" shall have the meaning ascribed thereto in Section 3.14.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"SHAREHOLDERS AGREEMENT" shall mean that certain Shareholders Agreement
dated July 27, 1995, by and between Forest and Anschutz, as amended by that
certain First Amendment to Shareholders Agreement dated as of January 24, 1996.
"SHAREHOLDERS MEETING" shall have the meaning ascribed thereto in
Section 6.06(a)(i).
"TAX INDEMNIFIED PARTY" shall have the meaning ascribed thereto in
Section 10.06(a).
"TAX INDEMNIFYING PARTY" shall have the meaning ascribed thereto in
Section 10.06(a).
"TAX ITEMS" shall have the meaning ascribed thereto in Section 10.01(a).
"TAX LOSSES" shall have the meaning ascribed thereto in Section 10.04.
"TAX RETURN" shall mean a report, return or other information required to
be filed by a Person with or submitted to a Governmental Entity with respect to
Taxes, including, where permitted or required, combined or consolidated returns
for any group of entities that includes the Person.
"TAXES" shall mean all taxes, charges, fees, levies, duties, imposts,
withholdings, restrictions, fines, interest, penalties, additions to tax or
other assessments or charges, including, but not limited to, income, excise,
property, withholding, sales, use, gross receipts, value added and franchise
taxes, license recording, documentation and registration fees and customs duties
imposed by any Governmental Entity.
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"THAILAND NOTE" shall mean the promissory note, dated November 26, 1996,
payable by The Anschutz Overseas Corporation ("AOC"), a Colorado corporation and
a wholly-owned subsidiary of Anschutz, to Anschutz Thailand, and originally made
by Anschutz; such promissory note being the replacement of the original equity
contribution made by AOC to Anschutz Thailand.
"THIRD-PARTY CLAIM" shall have the meaning ascribed thereto in
Section 9.08(a).
"TITLE DEFECT" shall have the meaning ascribed thereto in Section 7.01.
"TRANSACTION DOCUMENTS" shall have the meaning ascribed thereto in
Section 3.01.
"TRANSITION PERIOD" shall have the meaning ascribed thereto in
Section 9.12.
"UNIT" shall mean any unitized, pooled or communitized oil or gas
properties.
"WELL" shall mean any well, whether for the production of oil, gas or other
substances or for injection or disposal, whether existing or future, and whether
active, shut-in or abandoned.
"WORKING CAPITAL" shall have the meaning ascribed thereto in Section 9.16.
"WORKING INTEREST" shall mean, with respect to each Oil and Gas Property,
the interest in and to the full and entire oil and gas leasehold estates of the
lands and depths within such Oil and Gas Property (after giving effect to
applicable pooling or unitization), and all rights and obligations of every kind
and character appurtenant thereto, or arising therefrom, without regard to any
valid lessor's royalties, overriding royalties, production payments, carried
interests, liens and other encumbrances or charges against production therefrom,
insofar as such interest is burdened with the obligation to bear and pay costs
of operations in respect of such Oil and Gas Property and without increase,
temporarily or otherwise, for the respective productive lives of such Oil and
Gas Property.
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The following schedules have been intentionally omitted and will be
supplied to the Commission upon request:
Exhibit 2.04(i) Form of Second Amendment to Shareholders Agreement
2.04(j) Form of Amendment No. 2 to Registration Rights Agreement
2.04(k) Form of Amendment No. 2 to Rights Agreement
Schedule 1.01 Defined Terms
3.03 Consents and Approvals (Forest)
3.08(a) Litigation (Forest)
3.10(c) Employee Matters (Forest)
4.03 Approvals (Anschutz)
4.06 Absence Certain Changes or Events (Anschutz)
4.07 Tax Claims (Anschutz)
4.12 Anschutz Subsidiaries; Capitalization
4.14 Contracts
4.17 Property (Anschutz)
4.18(d) Xxxxx
4.18(e) Overbalance
4.20 Environmental Matters
4.23 Special Purpose Company
5.03 Negative Covenants
9.12 Transition Period Obligations
9.14 Anschutz Support Arrangements
