Document:

Exhibit 10.5

 

 

DISTRIBUTION AGREEMENT

 

DATED AS OF SEPTEMBER 9, 2005

 

BETWEEN

 

FOREST OIL CORPORATION

 

AND

 

SML WELLHEAD CORPORATION

 

 

TABLE OF
CONTENTS

 

	
  ARTICLE I

  
	
   

  
	
  DEFINITIONS

  
	
   

  	
   

  	
   

  
	
  Section 1.1

  	
  General

  	
  1

  
	
  Section 1.2

  	
  References to Time

  	
  12

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  
	
   

  	
   

  	
   

  
	
  PRELIMINARY TRANSACTIONS

  
	
   

  
	
  Section 2.1

  	
  Business Separation

  	
  12

  
	
  Section 2.2

  	
  Conveyancing and Assumption Agreements

  	
  13

  
	
  Section 2.3

  	
  Certificate of Incorporation; By-laws

  	
  13

  
	
  Section 2.4

  	
  Issuance of Stock

  	
  13

  
	
  Section 2.5

  	
  Other Agreements

  	
  13

  
	
  Section 2.6

  	
  Transfers Not Effected Prior to the
  Distribution; Transfers Deemed Effective as of the Distribution Date

  	
  13

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  
	
   

  	
   

  	
   

  
	
  THE DISTRIBUTION

  
	
   

  
	
  Section 3.1

  	
  Record Date and Distribution Date

  	
  15

  
	
  Section 3.2

  	
  The Agent

  	
  15

  
	
  Section 3.3

  	
  Delivery of Share Certificates to the Agent

  	
  15

  
	
  Section 3.4

  	
  The Distribution

  	
  15

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  
	
   

  	
   

  	
   

  
	
  CASH AMOUNT

  
	
   

  
	
  Section 4.1

  	
  Estimated Cash Amount

  	
  16

  
	
  Section 4.2

  	
  Actual Cash Amount

  	
  16

  
	
  Section 4.3

  	
  Incremental Tax Amount

  	
  16

  
	
  Section 4.4

  	
  Dispute Resolution Procedure

  	
  17

  
	
  Section 4.5

  	
  Payment of Cash Amount

  	
  17

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  
	
   

  	
   

  	
   

  
	
  SURVIVAL AND INDEMNIFICATION

  
	
   

  
	
  Section 5.1

  	
  Survival of Agreements

  	
  17

  
	
  Section 5.2

  	
  Indemnification

  	
  17

  
	
  Section 5.3

  	
  Procedures for Indemnification for
  Third-Party Claims

  	
  18

  

 

i

 

	
  Section 5.4

  	
  Reductions for Insurance Proceeds and Other
  Recoveries

  	
  19

  
	
  Section 5.5

  	
  Remedies Cumulative

  	
  20

  
	
  Section 5.6

  	
  Tax Treatment of Indemnity and Other
  Payments

  	
  20

  
	
  Section 5.7

  	
  Survival of Indemnities

  	
  20

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI

  
	
   

  	
   

  	
   

  
	
  CERTAIN ADDITIONAL COVENANTS

  
	
   

  
	
  Section 6.1

  	
  Notices to Third Parties

  	
  20

  
	
  Section 6.2

  	
  Licenses and Permits

  	
  21

  
	
  Section 6.3

  	
  Intercompany Agreements

  	
  21

  
	
  Section 6.4

  	
  Further Assurances

  	
  21

  
	
  Section 6.5

  	
  Guarantee Obligations and Liens

  	
  21

  
	
  Section 6.6

  	
  Insurance

  	
  22

  
	
  Section 6.7

  	
  Cooperation

  	
  24

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII

  
	
   

  	
   

  	
   

  
	
  ACCESS TO INFORMATION

  
	
   

  
	
  Section 7.1

  	
  Provision of Corporate Records

  	
  24

  
	
  Section 7.2

  	
  Access to Information

  	
  24

  
	
  Section 7.3

  	
  Production of Witnesses

  	
  26

  
	
  Section 7.4

  	
  Retention of Records

  	
  26

  
	
  Section 7.5

  	
  Confidentiality

  	
  26

  
	
  Section 7.6

  	
  Cooperation with Respect to Government
  Reports and Filings

  	
  27

  
	
  Section 7.7

  	
  Tax Sharing Agreement

  	
  27

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  
	
   

  	
   

  	
   

  
	
  NO REPRESENTATIONS OR WARRANTIES

  
	
   

  
	
  Section 8.1

  	
  No Representations or Warranties

  	
  27

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX

  
	
   

  	
   

  	
   

  
	
  MISCELLANEOUS

  
	
   

  
	
  Section 9.1

  	
  Conditions to the Distribution

  	
  27

  
	
  Section 9.2

  	
  Complete Agreement

  	
  29

  
	
  Section 9.3

  	
  Expenses

  	
  29

  
	
  Section 9.4

  	
  Governing Law

  	
  29

  
	
  Section 9.5

  	
  Notices

  	
  29

  
	
  Section 9.6

  	
  Amendment and Modification

  	
  30

  
	
  Section 9.7

  	
  Successors and Assigns; No Third-Party
  Beneficiaries

  	
  31

  
	
  Section 9.8

  	
  Counterparts

  	
  31

  
	
  Section 9.9

  	
  Interpretation

  	
  31

  

 

ii

 

	
  Section 9.10

  	
  Severability

  	
  31

  
	
  Section 9.11

  	
  References; Construction

  	
  31

  
	
  Section 9.12

  	
  Termination

  	
  31

  
	
  Section 9.13

  	
  Consent to Jurisdiction and Service of
  Process

  	
  31

  
	
  Section 9.14

  	
  Waivers

  	
  32

  
	
  Section 9.15

  	
  Specific Performance

  	
  32

  
	
  Section 9.16

  	
  Waiver of Jury Trial

  	
  32

  

 

	
  Exhibit A

  	
  -

  	
  Certificate of
  Incorporation of Spinco

  
	
  Exhibit B

  	
  -

  	
  Bylaws of Spinco

  
	
  Exhibit C

  	
  -

  	
  Certificate of Officers
  of Forest

  
	
  Exhibit D

  	
  -

  	
  Certificate of Officers
  of Spinco

  
	
  Exhibit E

  	
  -

  	
  Certificate of Officers
  of the Company

  

 

iii

 

DISTRIBUTION AGREEMENT

 

THIS DISTRIBUTION AGREEMENT, dated as of September 9,
2005, is between Forest Oil Corporation, a New York corporation (“Forest”), and
SML Wellhead Corporation, a Delaware corporation and a wholly owned subsidiary
of Forest (“Spinco”).

 

WHEREAS, Forest, Spinco, Mariner Energy, Inc., a
Delaware corporation (the “Company”), and MEI Sub, Inc., a Delaware
corporation and wholly owned subsidiary of the Company (“Merger Sub”), have
entered into an Agreement and Plan of Merger, dated as of September 9,
2005 (the “Merger Agreement”), pursuant to which, at the Effective Time (as
such term and other capitalized terms are defined in Article I hereof),
Merger Sub will merge with and into Spinco, with Spinco being the surviving
corporation, and Spinco becoming a wholly owned subsidiary of the Company (the “Merger”);

 

WHEREAS, this Agreement and the other Transaction
Agreements set forth certain transactions that are conditions to consummation
of the Merger;

 

WHEREAS, prior to the Distribution Date, and subject
to the terms and conditions set forth herein, Forest intends to transfer or
cause to be transferred to Spinco all of the Spinco Assets, which represent
substantially all of Forest’s Offshore Gulf of Mexico assets, and Spinco
intends to assume all of the Spinco Liabilities, as contemplated by this
Agreement (the “Contribution”);

 

WHEREAS, subject to the conditions set forth in this
Agreement, all of the issued and outstanding shares of common stock of Spinco,
par value $0.10 per share (“Spinco Common Stock”), will be distributed on a pro
rata basis (the “Distribution”) to the holders as of the Record Date of the
outstanding common stock of Forest, par value $0.10 per share (“Forest Common
Stock”); and

 

WHEREAS, the parties to this Agreement intend that the
Contribution and the Distribution qualify under Sections 368(a) and
355 of the Internal Revenue Code of 1986, as amended (the “Code”),
respectively, and that the Merger qualify as a reorganization under Section 368(a) of
the Code;

 

NOW, THEREFORE, in consideration of the
representations, warranties, covenants and agreements set forth in this
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties, intending to be
legally bound hereby, agree as follows:

 

ARTICLE I

DEFINITIONS

 

 

Section 1.1                                      General.  As used in
this Agreement, the following terms shall have the following meanings (such
meanings to be equally applicable to both the singular and plural forms of the
terms defined):

 

 

“Actual Cash Amount” shall have the meaning specified
in Section 4.2.

 

“Affiliate” shall mean, with respect to any specified
Person, any other Person that directly or indirectly, controls, is controlled
by or is under common control with, such specified Person.  For purposes of this definition, “control”
(including, with correlative meanings, the terms “controlled by” and “under
common control with”), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by contract or otherwise; provided, however,
that for purposes of this Agreement, from and after the Distribution Date, no
member of either Group shall be deemed an Affiliate of any member of the other
Group.

 

“Agent” shall mean the distribution agent to be
appointed by Forest to distribute the shares of Spinco Common Stock pursuant to
the Distribution.

 

“Agreement” shall mean this Distribution Agreement.

 

“Assets” shall mean the Spinco Assets or the Forest
Assets, as the case may be.

 

“Assumed Abandonment Liabilities” shall mean
Liabilities arising from legal obligations to plug, abandon, remove, or
otherwise retire (a) to the extent constituting Spinco Assets, all real or
immovable property, including without limitation  all platforms, pipelines and improvements
located or situated on, related to, or used in connection with the Properties; (b) to
the extent constituting Spinco Assets, all equipment, personal or movable
property, fixtures and improvements located on or to the extent reasonably
necessary in connection with the operation of the Properties, the Easements and
all other Spinco Assets including without limitation all wells (whether
producing or shut-in and whether for production, injection or disposal),
flowlines, gathering systems, processing plants, piping, tanks, buildings, boat
docks, treatment facilities, injection facilities, disposal facilities,
compression facilities, production units, tank batteries; and (c) all
other assets constituting a Spinco Asset, in each case (with respect to each of
clauses (a), (b) and (c) above) to the extent such Liabilities are
either (i) described in the FAS 143 disclosure in respect of the Spinco
Assets provided by Forest to the Company prior to the date hereof, (ii) arising
after the Measurement Date, or (iii) not within the Knowledge of Forest as
of the date hereof; provided, however, that the extent of an Assumed
Abandonment Liability shall not be limited by the specific dollar amounts
contained in the FAS 143 disclosure.

 

“Assumed Derivative Liabilities” shall mean
Liabilities under the derivatives contracts set forth in Section 1.1(A) of
the Disclosure Schedule.

 

“Assumed Environmental Liabilities” shall mean
Liabilities, to the extent arising from the conduct of the Spinco Business
(whether prior to or after the Measurement Date) (i) as the result of an
Environmental Condition or (ii) as a result of a claim by a Governmental
Authority for property damage, damage to natural resources, remediation, or
payment or reimbursement of response costs incurred or expended by such
Governmental Authority pursuant to Environmental Law; provided, that Assumed
Environmental Liabilities shall not include any Liability (i) arising from
the conduct of the Spinco Business prior to the Measurement Date that was
required to have been set forth on Section 4.10 of the Spinco Disclosure
Schedule, but that was omitted from 

 

2

 

such schedule, or (ii) in excess of $10.0 million
in the aggregate, as actually incurred by Spinco,  in connection with the conditions described
in clauses (ii) and (iv) of Section 4.10 of the Spinco
Disclosure Schedule.

 

“Business” shall mean the Spinco Business or the Forest
Business, as the case may be.

 

“Business Day” shall mean any day other than a
Saturday, Sunday or a day on which banking institutions in the City of New York
are authorized or obligated by law or executive order to close.

 

“Cash Amount” shall mean an amount calculated as
follows:

 

(i)                                     Two
hundred million dollars ($200 million); provided, however, that if the
condition described in Section 4.2 of the Spinco Disclosure Schedule has
not been satisfied, such amount shall equal two hundred seventy-five million
dollars ($275 million); less

 

(ii)                                  All
revenue recognized by Forest in accordance with GAAP applied on a consistent
basis (or as otherwise agreed by Forest, Spinco and the Company), derived from
the Spinco Assets during the Measurement Period (including, without limitation,
oil and gas revenue, settled gains and losses from Assumed Derivative
Liabilities, gas processing revenue and gas marketing revenue, but excluding
gains on sales of  property, plant and
equipment related to the Spinco Assets); less

 

(iii)                               Cash consideration of
any sale during the Measurement Period of property, plant and equipment related
to the Spinco Assets recognized by Forest in accordance with GAAP; plus

 

(iv)                              The
net assets and liabilities described in Section 1.1(B) of the
Disclosure Schedule; plus or minus, as determined below,

 

(v)                                 An
amount equal to net gas balancing assets or liabilities, as the case may be,
based on a gas price of $6.50 per mmbtu, of the Spinco Business as of the
Measurement Date (it being understood and agreed that if the net amount is positive,
such amount shall be added to the Cash Amount, and if negative, shall be
deducted from the Cash Amount); plus or minus, as determined below,

 

(vi)                              An
amount equal to the net settlement amount in respect of settlements of gas
imbalances effected during the Measurement Period (it being understood and
agreed that if the net amount is positive, such amount shall be deducted from
the Cash Amount, and if negative, shall be added to the Cash Amount); plus

 

(vii)                           All capital and operating
expenditures of Forest attributable to the Spinco Assets during the Measurement
Period calculated by Forest in accordance with GAAP, other than expenditures (A) in
connection with repairs or remediation to any Properties damaged in Hurricane
Ivan or Hurricane Lilly, (B) in connection with any environmental
Liabilities that do not constitute Assumed Environmental Liabilities or (C) amounts
described in paragraph (x) below; plus

 

3

 

(viii)                        An amount equal to hypothetical
income taxes, which amount shall be calculated by applying a rate of 35% to an
amount calculated as follows:

 

(a)                                  Item
(ii) of the Cash Amount; less

 

(b)                                 Item
(vii) of the Cash Amount; less

 

(c)                                  Item
(x) of the Cash Amount; less

 

(d)                                 Item
(xi) of the Cash Amount; plus

 

(e)                                  Capital
expenditures in item (vii) of the Cash Amount to the extent they represent
tangible assets; less

 

(f)                                    An
amount representing estimated cost depletion computed at a rate of $1.20 per
mcfe produced during the Measurement Period, subject to the adjustment as
provided in Section 4.3; plus

 

(ix)                                An
amount equal to interest expense, which amount shall be calculated, for each
calendar month during the Measurement Period (or partial month, if applicable
with respect to the last month of the Measurement Period), at a rate of 6.5%
per annum on the aggregate amount of indebtedness of the Spinco Business based
on the average for such month, which indebtedness shall be assumed to have
equaled two hundred million dollars ($200 million) on the Measurement Date and
to have been reduced on the last day of each calendar month after the
Measurement Date by net cash provided by operating activities, and increased by
net cash used in investing activities, in each case in accordance with GAAP;
plus

 

(x)                                   $1.6
million per month (prorated for any partial month) for general and
administrative expenses, plus any Retention Benefits paid to Spinco Employees
during the Measurement Period pursuant to Section 6.8(g) of the
Merger Agreement; plus

 

(xi)                                A
cash amount for costs and expenses incurred by Forest or Spinco in connection
with the Transaction Agreements and the transactions contemplated thereby
(including, without limitation, fees and expenses of legal and financial
advisors), such costs and expenses not to exceed seven million dollars
($7 million); plus or minus, as determined below,

 

(xii)                             An amount equal to the
change in working capital accounts, other than cash (accounts receivable plus
inventories plus other current assets less accounts payable and other current
liabilities, but excluding gas imbalances), excluding the effects of
FAS 143 and FAS 133, related to the Spinco Assets during the Measurement
Period (it being understood and agreed that working capital related to the
Spinco Assets at the Measurement Date shall be assumed to be zero and that if
the net amount is positive, such amount shall be added to the Cash Amount, and
if negative, shall be deducted from the Cash Amount).

 

4

 

“Claims Administration” shall mean the processing of
claims made under the Policies, including the reporting of claims to the
insurance carrier, management and defense of claims, and providing for
appropriate releases upon settlement of claims.

 

“Claims Made Policies” shall have the meaning
specified in Section 6.6(a).

 

“Code” shall have the meaning specified in the
Recitals hereof.

 

“Company” shall have the meaning specified in the
Recitals hereof.

 

“Company Common Stock” shall have the meaning
specified in the Merger Agreement.

 

“Company Consent” shall have the meaning specified in
the Merger Agreement.

 

“Contribution” shall have the meaning specified in the
Recitals hereof.

 

“Disclosure Schedule” shall mean the schedule prepared
and delivered by Forest to Spinco as of the date of this Agreement.

 

“Dispute Notification” shall have the meaning
specified in Section 4.4.

 

“Distribution” shall have the meaning specified in the
Recitals hereof.

 

“Distribution Date” shall mean the date and time that
the Distribution shall become effective.

 

“Easement” shall mean any easement, right of way,
servitude, permit, license, franchise, right of ingress or egress, property use
agreement or other estate or similar right or privilege.

 

“Effective Time” shall have the meaning specified in
the Merger Agreement.

 

“Employee Benefits Agreement” shall mean the Employee
Benefits Agreement of even date herewith between Forest and Spinco.

 

“Environmental Condition” shall mean soil or water
contamination, other types of environmental damage or contamination, or other
consequences of releases of Hazardous Materials in, on, under or migrating from
the Spinco Assets, in each case in violation of Environmental Law.

 

“Environmental Law” shall have the meaning specified
in the Merger Agreement.

 

“Estimated Cash Amount” shall have the meaning
specified in Section 4.1.

 

“Exchange Act” shall mean the Securities Exchange Act
of 1934, as amended, together with the rules and regulations of the SEC
promulgated thereunder.

 

“Forest” shall have the meaning specified in the
preamble hereof.

 

5

 

“Forest Assets” shall mean, collectively, all of the
right, title and interest of Forest and the Forest Subsidiaries in all their
respective assets and properties, tangible or intangible, other than the Spinco
Assets.

 

“Forest Business” shall mean all of the businesses and
operations conducted by Forest and the Forest Subsidiaries (other than the
Spinco Business) at any time, whether prior to, on or after the Distribution
Date.

 

“Forest Common Stock” shall have the meaning specified
in the Recitals hereof.

 

“Forest Group” shall mean Forest and the Forest
Subsidiaries.

 

“Forest Indemnitees” shall mean Forest, each Affiliate
of Forest immediately after the Distribution Date and each of their respective
present and former Representatives and each of the heirs, executors, successors
and assigns of any of the foregoing.

 

“Forest Liabilities” shall mean, collectively, (i) all
Liabilities of Forest and all Liabilities of the Forest Subsidiaries, including
the Liabilities of Forest under the Transaction Agreements, and (ii) all
Liabilities set forth on Section 1.1(C) of the Disclosure Schedule;
provided that Forest Liabilities shall not include the Spinco Liabilities.

 

“Forest Subsidiaries” shall mean all direct and
indirect Subsidiaries of Forest immediately after the Distribution Date.

 

“GAAP” shall have the meaning specified in the Merger
Agreement.

 

“Governmental Authority” shall have the meaning
specified in the Merger Agreement.

 

“Group” shall mean the Forest Group or the Spinco
Group, as the case may be.

 

“Hazardous Material” shall have the meaning specified
in the Merger Agreement.

 

“Indemnifiable Losses” shall mean all Losses,
Liabilities, damages, claims, demands, judgments or settlements of any nature
or kind, including all reasonable costs and expenses (legal, accounting or
otherwise as such costs are incurred) relating thereto, suffered by an
Indemnitee, including any reasonable costs or expenses of enforcing any
indemnity hereunder.

 

“Indemnifying Party” shall mean a Person that is
obligated under this Agreement to provide indemnification.

 

“Indemnitee” shall mean a Person that may seek
indemnification under this Agreement.

 

“Independent Accounting Firm” shall mean Grant
Thornton or BDO Seidman, LLP or, if either of such firms is not independent and
available, such other independent accounting firm of national reputation
mutually acceptable to Forest and Spinco (or, if Forest and Spinco are unable
to agree upon such a firm, then either party shall select one such firm and
those two firms shall select a third firm, in which event “Independent
Accounting Firm” shall mean such third firm).

 

6

 

“Information” shall mean all records, books,
contracts, instruments, computer data and other data and information.

 

“Knowledge” of any Person or person shall mean the
knowledge after due inquiry of the executive officers of such Person
(including, with respect to Forest’s or Spinco’s knowledge, the head of the
Spinco Business unit).

 

“Liability” or “Liabilities” shall mean all debts,
liabilities and obligations whether absolute or contingent, matured or
unmatured, liquidated or unliquidated, accrued or unaccrued, known or unknown,
whenever arising, and whether or not the same would properly be reflected on a
balance sheet.

 

“Liens” shall have the meaning specified in the Merger
Agreement.

 

“Litigation Matters” shall mean actual, threatened or
future litigation, investigations, claims or other legal matters that have been
or may be asserted against, or otherwise adversely affect, Forest and/or Spinco
(or members of either Group).

 

“Losses” shall have the meaning specified in the
Merger Agreement.

 

“Material Adverse Effect” shall have the meaning
specified in the Merger Agreement.

 

“Measurement Date” shall mean 12:01 a.m. Central
time on July 1, 2005.

 

“Measurement Period” shall mean the period from the
Measurement Date through the Distribution Date.

 

“Merger” shall have the meaning specified in the
preamble hereof.

 

“Merger Agreement” shall have the meaning specified in
the Recitals hereof.

 

“Occurrence Basis Policies” shall have the meaning
specified in Section 6.6(a).

 

“Offshore Gulf of Mexico” shall have the meaning
specified in the Merger Agreement.

 

“Permitted Liens” shall have the meaning specified in
the Merger Agreement.

 

“Person or person” shall mean a natural person,
corporation, company, partnership, limited partnership, limited liability
company, or any other entity, including a Governmental Authority.

 

“Policies” shall mean all insurance policies,
insurance contracts and claim administration contracts of any kind of Forest
and its Subsidiaries (including members of the Spinco Group) and their
predecessors which were or are in effect at any time at or prior to the
Distribution Date, including primary, excess and umbrella, commercial general
liability, fiduciary liability, product liability, automobile, aircraft,
property and casualty, business interruption, directors and officers liability,
employment practices liability, workers’ compensation, crime, errors and
omissions, special accident, cargo, employee dishonesty and operator’s extra
expense insurance policies and 

 

7

 

captive insurance company arrangements, together with
all rights, benefits and privileges thereunder.

 

“Privileged Information” shall mean, with respect to
either Group, Information regarding a member of such Group, or any of its
operations, Assets or Liabilities (whether in documents or stored in any other
form or known to its employees or agents) that is or may be protected from
disclosure pursuant to the attorney-client privilege, the work product doctrine
or another applicable privilege, that a member of the other Group may come into
possession of or obtain access to pursuant to this Agreement or otherwise.

 

“Reconciliation Statement” shall have the meaning
specified in Section 4.2.

 

“Record Date” shall mean the close of business on the
date to be determined by the Board of Directors of Forest as the record date
for determining stockholders of Forest entitled to receive the Distribution,
which date shall be a business day preceding the day of the Effective Time.

 

“Registration Statements” shall mean the Registration
Statement on Form 10 (or, if such form is not appropriate, the appropriate
form pursuant to the Exchange Act) to be filed by Spinco with the SEC to effect
the registration of the Spinco Common Stock pursuant to the Exchange Act in
connection with the Distribution, the Registration Statement on Form S-4
to be filed by the Company with the SEC to effect the registration under the
Securities Act of the issuance of the shares of Company Common Stock into which
shares of Spinco Common Stock will be converted pursuant to the Merger and the
Registration Statement on Form S-1 to be filed by the Company with the SEC
to effect the registration under the Securities Act of the resale of the shares
of Company Common Stock by certain selling stockholders.

 

“Representative” shall mean, with respect to any Person,
any of such Person’s directors, officers, employees, agents, consultants,
advisors, accountants, attorneys and representatives.

 

“Requisite Approval” shall have the meaning specified
in the Merger Agreement.

 

“Retention Benefits” shall have the meaning specified
in the Merger Agreement.

 

“Review Period” shall have the meaning specified in Section 4.2.

 

“SEC” shall mean the U.S. Securities and Exchange
Commission.

 

“Securities Act” shall mean the Securities Act of
1933, as amended, together with the rules and regulations of the SEC
promulgated thereunder.

 

“Spinco” shall have the meaning specified in the
preamble hereof.

 

“Spinco Assets” shall mean, collectively, all of the
right, title and interest of Forest and the Forest Subsidiaries prior to the Contribution
in and to:

 

(a)                                  (i) all
real property interests of Forest and the Forest Subsidiaries in the Offshore
Gulf of Mexico, including without limitation the leasehold estates in and to
the oil, gas and mineral leases described on Schedule 1.1(D)(a)(i) (and
any extensions, renewals, 

 

8

 

ratifications or amendments to such interests whether or not such
extensions, renewals, ratifications or amendments are described on Schedule 1.1(D)(a)(i) (collectively,
the “Properties,” or singularly, a “Property”)), (ii) the overriding
royalty interests and reversionary interests described on Schedule 1.1(D)(a)(ii) and
(iii) the other assets described on Schedule 1.1(D)(a)(iii);

 

(b)                                 all
real or immovable property and rights incident to or used in conjunction with
the Properties, including (i) all rights with respect to the use and
occupation of the surface of and the subsurface depths under the Properties; (ii) all
rights with respect to any pooled, communitized or unitized acreage by virtue
of any Property being a part thereof, including all production from such pool
or unit allocated to any such Property; (iii) all platforms, pipelines and
improvements located or situated on, related to, or used in connection with the
Properties; and (iv) all surplus, materials stocks and inventory listed on
Schedule 1.1(D)(b)(iv);

 

(c)                                  all
Easements to the extent related to or used in connection with the Properties;

 

(d)                                 all
oil, gas, condensate and other hydrocarbons produced from or attributable to
the Properties from and after the Measurement Date or in storage on the
Measurement Date (the “Hydrocarbons”) and all equipment, personal or movable
property, fixtures, inventory and improvements located on or to the extent
reasonably necessary in connection with the operation of the Properties and the
Easements or with the production, treatment, sale, or disposal of the
Hydrocarbons, byproducts or waste produced therefrom or attributable thereto,
including all wells (whether producing, shut in or abandoned, and whether for
production, injection or disposal), wellhead equipment, pumps, pumping units,
flowlines, gathering systems, interests in processing plants, platforms,
pipelines, vessels, computer software and hardware, piping, tanks, buildings,
boat docks, treatment facilities, injection facilities, disposal facilities,
compression facilities, spare parts, tools, production units, heaters,
separators, dehydrators, tank batteries, abandoned property, offices and office
equipment and supplies at Forest’s Metairie and Lafayette offices, and other
materials, supplies, equipment, facilities, appurtenances and machinery;

 

(e)                                  all
contracts and instruments, including but not limited to those listed on Schedule 1.1(D)(e)(i),
to the extent the same relate to the Properties after the Measurement Date
(collectively, the “Contracts”);

 

(f)                                    any
and all books and records (including without limitation those referred to in Section 7.1),
files, muniments of title, reports, intellectual property (including without
limitation patents, trade secrets and copyrights), state and MMS compliance
information, logs core samples, geological, geophysical (to the extent not
subject to third party consents or restriction on transfer) and engineering
data and information (including blueprints, maps, diagrams, annotated logs,
cross sections and all data room material) and interpretive data, analysis and
similar information, whether or not of a proprietary nature (including without
limitation seismic processing methods) to the extent related to the Properties;

 

(g)                                 the
rights of Spinco and its Subsidiaries under this Agreement and the other
Transaction Agreements;

 

9

 

(h)                                 all
noncash consideration of any sale after the Measurement Date of property, plant
and equipment related to the assets described in paragraphs (a) through (g) above;

 

(i)                                     any
and all proceeds, benefits, refunds, settlements, income or revenue accruing
and attributable to the Spinco Assets prior to the Measurement Date to the
extent they are in connection with any Assumed Abandonment Liability, any
Assumed Environmental Liability or any Assumed Derivative Liability;

 

(j)                                     any
and all proceeds from the settlements of contract disputes with purchasers of
Hydrocarbons or byproducts from the Properties, insofar as said disputes are
attributable to periods after the Measurement Date;

 

(k)                                  any
and all rights, titles, claims and interests of Forest and its Subsidiaries to
or under any policy or agreement of insurance or indemnity, any bond, or to any
insurance proceeds or awards, to the extent attributable to pre-Measurement
Date events and to the extent they are in connection with any Assumed
Abandonment Liability or any Assumed Environmental Liability;

 

(l)                                     any
and all claims and causes of action of Forest and its Subsidiaries arising from
acts, omissions or events, or damages to or destruction of property, occurring
prior to the Measurement Date to the extent they are in connection with any
Assumed Abandonment Liability or any Assumed Environmental Liability; and

 

(m)                               all
accounts receivable, inventories and other current assets (other than cash)
attributable to the assets described in paragraphs (a) through (l) above
from and after the Measurement Date.

 

Notwithstanding the foregoing, the Spinco Assets shall
not include, and there is excepted, reserved and excluded from the Contribution
contemplated hereby:  (a) those
certain interests in and to the Properties described on Schedule 1.1(D)(x)
and the assets described in paragraphs (b) through (i) above related
to such Properties (the “Excluded Properties”), (b) all furniture,
fixtures and equipment located in and all contracts relating to, Forest’s
office at 707 Seventeenth Street, Suite 3600, Denver, Colorado 80202, (c) subject
to Section 7.1, all corporate, financial, legal and Tax records of Forest
and the Forest Subsidiaries which are related to the Forest Business, (d) any
and all business models, analyses, memoranda or similar documents generated by Forest
or its advisers during or in the context of the consideration, negotiations or
approvals of any of the Transaction Agreements, (e) any and all proceeds,
benefits, refunds, settlements, income or revenue accruing and attributable to
the Spinco Assets prior to the Measurement Date (other than in connection with
any Assumed Abandonment Liability, any Assumed Environmental Liability or any
Assumed Derivative Liability), (f) any and all claims of Forest and its
Subsidiaries for refunds of or loss carry forwards with respect to Taxes
attributable to the Spinco Assets for any period prior to the Distribution
Date, (g) any and all proceeds from the settlements of contract disputes
with purchasers of Hydrocarbons or byproducts from the Properties, insofar as
said disputes are attributable to periods prior to the Measurement Date, (h) any
and all rights to use Forest’s name, marks trade dress or insignia, or to use
the name of any other Forest Subsidiary, (i) any and all rights, titles,
claims and interests of Forest and the Forest Subsidiaries to or under any
policy or agreement of insurance or indemnity, any bond, or to any insurance
proceeds or 

 

10

 

awards, to the extent attributable to pre-Measurement
Date events and to the extent that Forest has remediated or otherwise resolved
without liability to Spinco any associated Spinco Liability (other than in
connection with any Assumed Abandonment Liability or any Assumed Environmental
Liability), (j) any employment, consulting, office lease or accounting service
contracts listed on Schedule 1.1(D)(y), and (k) any and all claims and
causes of action of Forest and the Forest Subsidiaries arising from acts,
omissions or events, or damages to or destruction of property, occurring prior
to the Measurement Date (other than in connection with any Assumed Abandonment
Liability or any Assumed Environmental Liability).

 

“Spinco Business” shall mean the business conducted by
Forest and its Subsidiaries on the Measurement Date related to the Spinco Assets.

 

“Spinco Common Stock” shall have the meaning specified
in the Recitals hereof.

 

“Spinco Disclosure Schedule” shall have the meaning
specified in the Merger Agreement.

 

“Spinco Group” shall mean Spinco and the Spinco
Subsidiaries.

 

“Spinco Indemnitees” shall mean Spinco, the Company,
each Affiliate of Spinco and the Company immediately after the Distribution
Date and each of their respective present and former Representatives and each
of the heirs, executors, successors and assigns of any of the foregoing.

 

“Spinco Liabilities” shall mean (i) all
Liabilities of the Spinco Business to the extent arising after the Measurement
Date and attributable to the conduct of the Spinco Business after the
Measurement Date, including without limitation the liabilities of Spinco under
the Transaction Agreements, (ii) the Assumed Environmental Liabilities, (iii) the
Assumed Abandonment Liabilities and (iv) the Assumed Derivative
Liabilities, but excluding (x) Taxes (which shall be governed by the Tax
Sharing Agreement) and (y) the Liabilities set forth on Schedule 1.1(E).

 

“Spinco Subsidiaries” shall mean all direct and
indirect Subsidiaries of Spinco.

 

“Subsidiary” shall have the meaning specified in the
Merger Agreement.

 

“Taxes” shall mean all taxes, charges, fees, duties,
levies, imposts, rates or other assessments imposed by any federal, state,
local or foreign Taxing Authority, including, but not limited to, income, gross
receipts, excise, property, sales, use, license, capital stock, transfer,
franchise, payroll, withholding, social security, value added or other taxes
(including any interest, penalties or additions attributable thereto); and “Tax”
shall mean any of such Taxes.

 

“Tax Sharing Agreement” shall mean the Tax Sharing
Agreement of even date herewith among Forest, Spinco and the Company.

 

“Taxing Authority” shall mean any Governmental
Authority or any quasi-governmental or private body having jurisdiction over
the assessment, determination, collection or imposition of any Tax (including
the United States Internal Revenue Service or any successor thereto, including,
but not limited to its agents, representatives and attorneys).

 

11

 

“Third-Party Claim” shall mean any claim, suit,
derivative suit, arbitration, inquiry, proceeding or investigation by or before
any court, any governmental or other regulatory or administrative agency or
commission or any arbitration tribunal asserted by a Person who or which is
neither a party hereto nor an Affiliate of a party hereto.

 

“Transaction Agreements” shall mean this Agreement,
the Employee Benefits Agreement, the Merger Agreement, the Tax Sharing
Agreement and the Transition Services Agreement.

 

“Transition Services Agreement” shall mean the
Transition Services Agreement of even date herewith between Forest and Spinco.

 

Section 1.2                                      References to Time. 
All references in this Agreement to times of the day shall be to New
York City time.

 

ARTICLE II

PRELIMINARY TRANSACTIONS

 

Section 2.1                                      Business Separation.

 

(a)                                  On
or prior to the Distribution Date, Forest shall take or cause to be taken all
actions necessary to cause the transfer, assignment, delivery and conveyance to
Spinco of all of the Spinco Assets, free and clear of all Liens other than
Permitted Liens, and Spinco shall assume, and thereafter timely pay, perform
and discharge when due, all of the Spinco Liabilities.

 

(b)                                 The
separation of the Forest Assets and the Spinco Assets, as contemplated by this
Agreement shall be effected in a manner that does not unreasonably disrupt
either the Forest Business or the Spinco Business.  Subject to Section 2.6, to the extent
the separation of any of the Assets cannot be achieved in a reasonably
practicable manner, Spinco and Forest will enter into appropriate arrangements
regarding the shared Asset, subject to Company Consent not to be unreasonably
withheld.  Any costs related to the use
of a shared Asset that is not separated as of the Distribution Date shall be
allocated in a reasonable manner as agreed by Spinco and Forest, subject to
Company Consent not to be unreasonably withheld.

 

(c)                                  On
or prior to the Distribution Date, Forest and Spinco will use their
commercially reasonable efforts to amend, in form and substance reasonably
satisfactory to the Company, all contractual arrangements between or among Forest,
Spinco, their respective Affiliates and any other Person (other than the
contractual arrangements relating to the Distribution and the Merger) that
either (i) relate to the Forest Business but relate predominantly to the
Spinco Business or (ii) relate solely to the Spinco Business, but, by
their terms, contain provisions relating to a member of the Forest Group, so
that, after the Distribution Date, such contractual arrangements (x) will
relate solely to the Spinco Business and (y) will eliminate any provisions
relating to a member of the Forest Group and, in either event, will inure to
the benefit of the Spinco Group on substantially the same economic terms as
such arrangements exist as of the date hereof. 
On or prior to the Distribution Date, Forest and Spinco will use their
commercially reasonable efforts to amend, in form and substance reasonably
satisfactory to the 

 

12

 

Company, all
contractual arrangements between or among Forest, Spinco, their respective
Affiliates and any other Person (other than the contractual arrangements
relating to the Distribution and the Merger) that either (i) relate to the
Spinco Business but relate predominantly to the Forest Business or (ii) relate
solely to the Forest Business, but, by their terms, contain provisions relating
to a member of the Spinco Group, so that, after the Distribution Date, such
contractual arrangements (x) will relate solely to the Forest Business and
(y) will eliminate any provisions relating to a member of the Spinco Group
and, in either event, will inure to the benefit of the Forest Group on
substantially the same economic terms as such arrangements exist as of the date
hereof.  If, in any case, such amendment
cannot be obtained, or if an attempted amendment thereof would be ineffective
or would adversely affect the rights of Forest or Spinco thereunder, Forest and
Spinco will, subject to Section 2.6, cooperate in negotiating a mutually
agreeable arrangement, in form and substance reasonably satisfactory to the
Company, under which Forest or Spinco, as applicable, will obtain the benefits
and assume the obligations thereunder.

 

(d)                                 Forest
hereby represents and warrants to Spinco and the Company that at the time of
the Distribution and at the Measurement Date, the Spinco Assets, together with
the Assets set forth on Schedule 1.1(D)(x), constitute all of Forest’s,
Spinco’s and their respective Subsidiaries’ business and assets in the Offshore
Gulf of Mexico and property related thereto, and Forest, Spinco or such
Subsidiary owns the Spinco Assets free and clear of all Liens other than
Permitted Liens.

 

Section 2.2                                      Conveyancing and Assumption Agreements.  In connection with the transfer of the Spinco
Assets and the assumption of the Spinco Liabilities contemplated by Section 2.1,
Forest and Spinco shall execute, or cause to be executed by the appropriate
entities, conveyancing and assumption instruments in such forms (as special
warranty deeds, where applicable) as shall be reasonably acceptable to Forest,
Spinco and the Company.

 

Section 2.3                                      Certificate of Incorporation; By-laws.  The Certificate of Incorporation and Bylaws
of Spinco immediately prior to the Distribution Date will be in the forms
attached as Exhibits A and B, respectively.

 

Section 2.4                                      Issuance of Stock. 
Prior to the Distribution Date, the parties hereto shall take all steps
necessary so that the number of shares of Spinco Common Stock outstanding and
held by Forest shall equal 50,637,010; provided, however, that if the condition
described in Section 4.2 of the Spinco Disclosure Schedule has not
been satisfied, such number of shares shall equal 51,368,707.

 

Section 2.5                                      Other Agreements. 
Each of Forest and Spinco shall, prior to the Distribution Date, enter
into, and cause the appropriate members of the Group of which it is a member to
enter into, the other Transaction Agreements.

 

Section 2.6                                      Transfers Not Effected Prior to the Distribution; Transfers Deemed
Effective as of the Distribution Date.  To the extent that any transfers contemplated
by this Article II shall not have been consummated on or prior to the
Distribution Date, the parties shall use their commercially reasonable efforts
to effect such transfers as promptly following the
Distribution Date as shall be practicable. 
Nothing herein shall be deemed to require the transfer 

 

13

 

of any Assets or the assumption of any Liabilities
which by their terms or operation of law cannot be transferred or assumed; provided,
however, that Forest and Spinco shall and shall cause their respective
Subsidiaries to use commercially reasonable efforts to obtain any necessary
consents or approvals for the transfer of all Assets and the assumption of all
Liabilities contemplated to be transferred or assumed pursuant to this Article II.  In the event that any such transfer of Assets
or assumption of Liabilities has not been consummated, effective on or before
the Distribution Date, the party retaining such Asset or Liability shall
thereafter hold such Asset in trust for the use and benefit of the party
entitled thereto (at the expense of the party entitled thereto) and retain such
Liability for the account of the party by whom such Liability is to be assumed
pursuant hereto, and take such other action as may be reasonably requested by
the party to which such Asset is to be transferred, or by whom such Liability
is to be assumed, as the case may be, in order to place such party, to the
extent reasonably possible, in the same position as would have existed had such
Asset or Liability been transferred or assumed as contemplated hereby.  As and when any such Asset becomes
transferable or such Liability can be assumed, such transfer or assumption
shall be effected forthwith.  Without limiting the generality of the
foregoing, the parties shall use commercially reasonable efforts to allow
Spinco or the Company to retain operatorship of any Property or other Spinco
Asset following the Distribution Date. 
Subject to the foregoing, the parties agree that, as of the Distribution
Date (or such earlier time as any such Asset may have been acquired or
Liability assumed), each party hereto shall be deemed to have acquired complete
and sole beneficial ownership over all of the Assets, together with all rights,
powers and privileges incident thereto, and shall be deemed to have assumed in
accordance with the terms of this Agreement all of the Liabilities, and all
duties, obligations and responsibilities incident thereto, which such party is
entitled to acquire or required to assume pursuant to the terms of this
Agreement.  If the transfer of any
seismic licenses to Spinco in connection with the Contribution is subject to a
transfer, assignment or consent fee, Forest and the Forest Subsidiaries shall provide
notice to Spinco and the Company of the existence of such fee and, if requested
by the Company, shall cooperate reasonably (without the obligation to incur any
expense) with Spinco and the Company to minimize the amount of such fee, which
shall (if such transfer was requested by the Company) be paid by Spinco.  Spinco shall not, without Company Consent,
bear the costs of any transfer, assignment or consent fees, or fees in
connection with filings with the MMS or with any state agency or authority, in
connection with the transfer of any Spinco Assets in the Contribution, other
than seismic licenses as provided in the immediately preceding sentence; and
other than any transfer, assignment or consent fees payable to any Taxing
Authority, which shall be governed by the Tax Sharing Agreement.  Notwithstanding any other provision in this
Agreement, with respect to all seismic licenses for which the Company does not
request that Spinco pay an applicable transfer, assignment or consent fee or
that cannot otherwise be transferred to Spinco in accordance with this Section 2.6,
Forest shall retain all rights and obligations under such seismic licenses and
shall owe no further obligation to the Company or Spinco with respect
thereto.  Further, notwithstanding any other
provision in this Agreement, with respect to computer software that Forest
currently uses for any of the Forest Assets, Forest shall not be obligated to
transfer such software to Spinco to the extent such transfer would adversely
affect Forest’s ability to continue use of such software for the Forest
Assets.  The parties acknowledge and
agree that the payment of any transfer or assignment fees by Forest, Spinco,
the Company or any of their respective Subsidiaries in connection with the
transfer of any assets to Spinco or in connection with the Merger shall not
constitute costs and expenses incurred in connection with the Transaction
Agreements and the 

 

14

 

transactions contemplated thereby for purposes of
paragraph (xi) of the definition of Cash Amount.

 

ARTICLE III

THE DISTRIBUTION

 

 

Section 3.1                                      Record Date and Distribution Date.  Subject to the satisfaction of the conditions
set forth in Section 9.1, the Board of Directors of Forest, consistent
with the Merger Agreement and New York law, shall establish the Record Date and
the Distribution Date and any appropriate procedures in connection with the
Distribution.  The Distribution Date
shall be no earlier than the Business Day on which the Effective Time occurs.

 

Section 3.2                                      The Agent.  Prior to
the Distribution Date, Forest shall enter into an agreement with the Agent
providing for, among other things, the Distribution to the holders of Forest
Common Stock in accordance with this Article III.

 

Section 3.3                                      Delivery of Share Certificates to the Agent.  Prior to the Distribution Date, Forest shall
deliver to the Agent a share certificate representing (or authorize the related
book-entry transfer of) all of the outstanding shares of Spinco Common Stock to
be distributed in connection with the Distribution.  After the Distribution Date and Effective
Time, upon the request of the Agent, Spinco shall provide all certificates for
shares (or book-entry transfer authorizations) of Spinco Common Stock that the
Agent shall require in order to effect the Distribution.

 

Section 3.4                                      The Distribution.

 

(a)                                  Subject
to the terms and conditions of this Agreement, Spinco shall instruct the Agent
to distribute on a pro rata basis, as of the Distribution Date, a total of
50,637,010 shares of Spinco Common Stock in respect of the outstanding shares
of Forest Common Stock held by holders of record of Forest Common Stock on the
Record Date; provided, however, that if the condition described in Section 4.2
of the Spinco Disclosure Schedule has not been satisfied, such number of
shares shall equal 51,368,707.  All
shares of Spinco Common Stock distributed in the Distribution shall be duly
authorized, validly issued, fully paid, non-assessable
and free of preemptive rights.

 

(b)                                 Notwithstanding
anything herein to the contrary, no certificate or scrip representing
fractional shares of Spinco Common Stock shall be distributed in the
Distribution.  All fractional shares of
Spinco Common Stock that a holder of Forest Common Stock would otherwise be
entitled to receive as a result of the Distribution shall be aggregated and if
a fractional share results from such aggregation, such fractional share shall
be treated in accordance with the procedure set forth in the following
sentence.  Spinco shall instruct the
Agent to aggregate all fractional shares of Spinco Common Stock, sell such
shares in the public market and distribute to holders of Forest Common Stock
who otherwise would have been entitled to such fractional shares of Spinco
Common Stock a pro rata portion of the net proceeds of such sale.

 

15

 

(c)                                  Subject
to the terms and conditions of this Agreement, on the Distribution Date and in
connection with the Contribution, Spinco shall pay to Forest the Estimated Cash
Amount determined pursuant to Section 4.1 (if such amount is positive), or
Forest shall pay to Spinco the Estimated Cash Amount determined pursuant to Section 4.1
(if such amount is negative), in either case by wire transfer in immediately
available funds to a bank previously designated by the payee.

 

ARTICLE IV

CASH AMOUNT

 

Section 4.1                                      Estimated Cash Amount. 
At least ten (10) Business Days prior to the Distribution Date, Forest
shall prepare and deliver to the Company a calculation of Forest’s estimate of
the Cash Amount (the “Estimated Cash Amount”), together with a statement
setting forth in reasonable detail the basis and calculation thereof.

 

Section 4.2                                      Actual Cash Amount. 
On or prior to the sixtieth (60th) calendar day after the Distribution
Date, Forest shall prepare and deliver to Spinco and the Company a revised
calculation of the Cash Amount based to the extent applicable on the actual
operations of Spinco during the Measurement Period (the “Actual Cash Amount”), together with a
statement setting forth in reasonable detail the basis and calculation
thereof.  In preparing the Actual Cash
Amount, Forest shall consult with the Company and its Representatives.  During the ninety (90) calendar days
after receipt by Spinco of the Actual Cash Amount statement (the “Review Period”), Spinco shall review
the Actual Cash Amount statement in order to determine whether the Actual Cash
Amount statement should be adjusted.  If
Spinco so determines, Spinco shall, within five (5) Business Days after
the end of the Review Period, deliver to Forest a reconciliation of the
calculation of the Actual Cash Amount to Spinco’s proposed adjustment (the “Reconciliation Statement”), together
with a statement setting forth in reasonable detail the basis of its
calculation.  Unless Forest delivers the
Dispute Notification referred to in Section 4.4 below, the Reconciliation
Statement shall be deemed to be final, binding and conclusive on the parties
hereto.

 

Section 4.3                                      Incremental Tax Amount. 
On or prior to June 30, 2006, Forest shall prepare and deliver to
Spinco and the Company a calculation of estimated income taxes included in the
calculation of the Actual Cash Amount, revised only to reflect actual
depreciation, depletion, and amortization deductions to be claimed by Forest
with respect to Spinco Assets during the Measurement Period, together with a
statement setting forth in reasonable detail the basis and calculation thereof.
Within 15 Business Days of receipt of the calculation, (a) if the revised
calculation exceeds the hypothetical income taxes included in the calculation
of the Actual Cash Amount, then Spinco shall pay to Forest an amount equal to
such excess and (b) if the revised calculation is less than the
hypothetical income taxes included in the calculation of the Actual Cash
Amount, then Forest shall pay to Spinco an amount equal to such
difference.  In either case, payment
shall be made in cash by wire transfer in immediately available funds to a bank
previously designated by Forest or Spinco, as the case may be.

 

16

 

Section 4.4                                      Dispute Resolution Procedure.  Within five (5) Business Days after
receipt of the Reconciliation Statement, Forest shall notify Spinco of any
dispute thereof, specifying the amount in dispute thereof and, in reasonable
detail, the basis for and its calculation thereof (the “Dispute Notification”). Thereafter, Forest and Spinco shall
attempt to resolve the dispute, and any such resolution shall be final, binding
and conclusive on the parties hereto.  If
Forest and Spinco are unable to reach a resolution within thirty
(30) Business Days after the receipt by Spinco of the Dispute
Notification, Forest and Spinco shall submit the items remaining in dispute for
resolution to the Independent Accounting Firm. 
The Independent Accounting Firm shall, within thirty (30) Business
Days after such submission, determine and report to Forest and Spinco upon such
remaining disputed items, and such report shall be final, binding and conclusive
on the parties hereto.  The fees and
disbursement of the Independent Accounting Firm shall be allocated between Forest
and Spinco in the same proportion that the aggregate amount of such remaining
disputed items so submitted to the Independent Accounting Firm that is
unsuccessfully disputed by each such party (as finally determined by the
Independent Accounting Firm) bears to the total amount of such remaining
disputed items so submitted.

 

Section 4.5                                      Payment of Cash Amount. 
Not later than three (3) Business Days following the date on which
the Cash Amount is deemed to be final, binding and conclusive, (a) if the
Cash Amount exceeds the Estimated Cash Amount, then Spinco shall pay to Forest
an amount equal to such excess, with interest accrued thereon from the
Distribution Date to the payment date at the rate of 6.5% per annum, and (b) if
the Cash Amount is less than the Estimated Cash Amount, then Forest shall pay
to Spinco an amount equal to such difference, with interest accrued thereon
from the Distribution Date to the payment date at the rate of 6.5% per annum,
in either case in cash by wire transfer in immediately available funds to a
bank previously designated by Forest or Spinco, as the case may be.

 

ARTICLE V

SURVIVAL AND INDEMNIFICATION

 

Section 5.1                                      Survival of Agreements. 
All representations, warranties, covenants and agreements of the parties
hereto contained in this Agreement shall survive the Distribution Date.

 

Section 5.2                                      Indemnification.

 

(a)                                  Except
as specifically otherwise provided in the other Transaction Agreements, Spinco
shall indemnify, defend and hold harmless the Forest Indemnitees from and
against all Indemnifiable Losses arising out of or due to the failure of any
member of the Spinco Group (i) to pay or satisfy any Spinco Liabilities,
whether such Indemnifiable Losses relate to events, occurrences or
circumstances occurring or existing, or whether such Indemnifiable Losses are
asserted, before, on or after the Distribution Date, or (ii) to perform
any of its obligations under this Agreement.

 

(b)                                 Except
as specifically otherwise provided in the other Transaction Agreements, Forest
shall indemnify, defend and hold harmless the Spinco Indemnitees from and
against all 

 

17

 

Indemnifiable
Losses arising out of or due to the failure of any member of the Forest Group (i) to
pay or satisfy any Forest Liabilities, whether such Indemnifiable Losses relate
to events, occurrences or circumstances occurring or existing, or whether such
Indemnifiable Losses are asserted, before, on or after the Distribution Date, (ii) to
transfer to Spinco or any member of the Spinco Group all of the Spinco Assets,
or (iii) to perform any of its obligations under this Agreement.  In addition to and without limiting the
generality of the foregoing, Forest shall indemnify, defend and hold harmless
the Spinco Indemnitees from and against all Indemnifiable Losses (including
Indemnifiable Losses arising from the Spinco Indemnitees’ efforts to collect
from other potentially responsible parties) in excess of $10.0 million in the
aggregate, as actually incurred by Spinco, arising in connection with the
conditions described in clauses (ii) and (iv) of Section 4.10 of
the Spinco Disclosure Schedule, provided that Spinco shall have used
commercially reasonable efforts to collect from other potentially responsible
parties their share of costs associated with such conditions, including without
limitation the pursuit of litigation against such potentially responsible
parties at Forest’s reasonable request.

 

(c)                                  Notwithstanding
anything to the contrary set forth herein, indemnification relating to any
arrangements between any member of the Forest Group and any member of the
Spinco Group (which arrangements, if entered into on or after the date hereof,
shall have been executed subject to Company Consent) for the provision after
the Distribution Date of goods and services in the ordinary course shall be
governed by the terms of such arrangements and not by this Section or as
otherwise set forth in this Agreement and the other Transaction Agreements.

 

(d)                                 Indemnification
for matters subject to the Tax Sharing Agreement is governed by the terms,
provisions and procedures of the Tax Sharing Agreement and not by this Article V.

 

Section 5.3                                      Procedures for Indemnification for Third-Party Claims.

 

(a)                                  Forest
shall, and shall cause the other Forest Indemnitees to, notify Spinco in
writing promptly after learning of any Third-Party Claim for which any Forest
Indemnitee intends to seek indemnification from Spinco under this
Agreement.  Spinco shall, and shall cause
the other Spinco Indemnitees to, notify Forest in writing promptly after
learning of any Third-Party Claim for which any Spinco Indemnitee intends to
seek indemnification from Forest under this Agreement.  The failure of any Indemnitee to give such
notice shall not relieve any Indemnifying Party of its obligations under this Article V
except to the extent that such Indemnifying Party is actually prejudiced by
such failure to give notice.  Such notice
shall describe such Third-Party Claim in reasonable detail considering the
Information provided to the Indemnitee and shall indicate the amount (estimated
if necessary) of the Indemnifiable Loss that has been claimed against or may be
sustained by such Indemnitee.

 

(b)                                 Except
as otherwise provided in paragraph (c) of this Section 5.3, an
Indemnifying Party may, by notice to the Indemnitee and to Forest, if Spinco is
the Indemnifying Party, or to the Indemnitee and Spinco, if Forest is the Indemnifying
Party, at any time after receipt by such Indemnifying Party of such Indemnitee’s
notice of a Third-Party Claim, undertake (itself or through another member of
the Group of which the Indemnifying Party is a member) the defense or
settlement of such Third-Party Claim, at such Indemnifying Party’s own expense
and by counsel reasonably satisfactory to the Indemnitee.  If an Indemnifying Party undertakes the
defense of any Third-Party Claim, such Indemnifying Party shall control the 

 

18

 

investigation and
defense or settlement thereof, and the Indemnitee may not settle or compromise
such Third-Party Claim, except that such Indemnifying Party shall not (i) require
any Indemnitee, without its prior written consent, to take or refrain from
taking any action in connection with such Third-Party Claim, or make any public
statement, which such Indemnitee reasonably considers to be against its
interests, or (ii) without the prior written consent of the Indemnitee and
of Forest, if the Indemnitee is a Forest Indemnitee, or the Indemnitee and of
Spinco, if the Indemnitee is a Spinco Indemnitee, consent to any settlement
that does not include as a part thereof an unconditional release of the
relevant Indemnitees from liability with respect to such Third-Party Claim or
that requires the Indemnitee or any of its Representatives or Affiliates to
make any payment that is not fully indemnified under this Agreement or to be
subject to any non-monetary remedy. 
Subject to the Indemnifying Party’s control rights, as specified herein,
the Indemnitees may participate in such investigation and defense, at their own
expense.  Following the provision of
notices to the Indemnifying Party, until such time as an Indemnifying Party has
undertaken the defense of any Third-Party Claim as provided herein, such
Indemnitee shall control the investigation and defense or settlement thereof,
without prejudice to its right to seek indemnification hereunder.

 

(c)                                  If
an Indemnitee reasonably determines that there may be legal defenses available
to it that are different from or in addition to those available to its
Indemnifying Party which make it inappropriate for the Indemnifying Party to
undertake the defense or settlement thereof, then such Indemnifying Party shall
not be entitled to undertake the defense or settlement of such Third-Party
Claim; and counsel for the Indemnifying Party shall be entitled to conduct the
defense of such Indemnifying Party and counsel for the Indemnitee (selected by
the Indemnitee) shall be entitled to conduct the defense of such Indemnitee, in
which case the reasonable fees, costs and expenses of such counsel for the
Indemnitee (but not more than one counsel reasonably satisfactory to the
Indemnifying Party) shall be paid by such Indemnifying Party, it being
understood that both such counsel shall cooperate with each other to conduct
the defense or settlement of such action as efficiently as possible.

 

(d)                                 In
no event shall an Indemnifying Party be liable for the fees and expenses of
more than one counsel for all Indemnitees (in addition to local counsel and its
own counsel, if any) in connection with any one action, or separate but similar
or related actions, in the same jurisdiction arising out of the same general
allegations or circumstances.

 

(e)                                  If
the Indemnifying Party undertakes the defense or settlement of a Third-Party
Claim, the Indemnitee shall make available to the Indemnifying Party and its
counsel all information and documents reasonably available to it which relate
to any Third-Party Claim, and otherwise cooperate as may reasonably be required
in connection with the investigation, defense and settlement thereof, subject
to the terms and conditions of a mutually acceptable joint defense agreement.

 

Section 5.4                                      Reductions for Insurance Proceeds and Other Recoveries.  The amount that any Indemnifying Party is or
may be required to pay to any Indemnitee pursuant to this Article V shall
be reduced (retroactively or prospectively) by any insurance proceeds or other
amounts actually recovered from third parties by or on behalf of such
Indemnitee in respect of the related Indemnifiable Losses.  The existence of a claim by an Indemnitee for
insurance or against a third party in respect of any Indemnifiable Loss shall not,
however, delay or reduce any 

 

19

 

payment pursuant to the indemnification provisions
contained herein and otherwise determined to be due and owing by an
Indemnifying Party.  Rather the
Indemnifying Party shall make payment in full of such amount so determined to
be due and owing by it and, if, and to the extent that, there exists a claim
against any third party (other than an insurer) in respect of such
Indemnifiable Loss, the Indemnitee shall assign such claim against such third
party to the Indemnifying Party. 
Notwithstanding any other provisions of this Agreement, it is the
intention of the parties hereto that no insurer or any other third party shall
be (i) entitled to a benefit it would not be entitled to receive in the
absence of the foregoing indemnification provisions or (ii) relieved of
the responsibility to pay any claims for which it is obligated.  If an Indemnitee shall have received the
payment required by this Agreement from an Indemnifying Party in respect of any
Indemnifiable Losses and shall subsequently actually receive insurance proceeds
or other amounts in respect of such Indemnifiable Losses, then such Indemnitee
shall hold such insurance proceeds in trust for the benefit of such Indemnifying
Party and shall pay to such Indemnifying Party a sum equal to the amount of
such insurance proceeds or other amounts actually received, up to the aggregate
amount of any payments received from such Indemnifying Party pursuant to this
Agreement in respect of such Indemnifiable Losses.

 

Section 5.5                                      Remedies Cumulative. 
The remedies provided in this Article V shall be cumulative and
shall not preclude assertion by any Indemnitee of any other rights or the
seeking of any other remedies against any Indemnifying Party.  However, the procedures set forth in Section 5.3
shall be the exclusive procedures governing any indemnity action brought under
this Agreement, except as otherwise specifically
provided in any of the other Transaction Agreements.

 

Section 5.6                                      Tax Treatment of Indemnity and Other Payments.  For all Tax purposes, the parties agree to
treat any payment to the other party required by this Agreement (including any
payment with respect to the Cash Amount) as either a contribution by Forest to
Spinco or a distribution by Spinco to Forest, as the case may be, occurring
immediately prior to the Distribution, except as otherwise mandated by
applicable law.

 

Section 5.7                                      Survival of Indemnities. 
The obligations of each of Forest and Spinco under this Article V
shall survive the sale or other transfer by it of any of its Assets or Business
or the assignment by it of any of its Liabilities, with respect to any
Indemnifiable Loss of the other related to such Assets, Business or
Liabilities.

 

ARTICLE VI

CERTAIN ADDITIONAL COVENANTS

 

Section 6.1                                      Notices to Third Parties. 
In addition to the actions described in Section 6.2, the members of
the Forest Group and the members of the Spinco Group shall cooperate to make
all other filings and give notice to and obtain consents from all third parties
that may reasonably be required to consummate the transactions contemplated by
this Agreement and the other Transaction Agreements, including, without
limitation, to cause a member of the Spinco Group to succeed Forest as operator
of any of the Spinco Assets (both of record and under contractual
arrangements).

 

20

 

Section 6.2                                      Licenses and Permits. 
Each party hereto shall cause the appropriate members of its Group to
prepare and file with the appropriate licensing and permitting authorities
applications for the transfer or issuance, as may be necessary or advisable in
connection with the transactions contemplated by this Agreement and the other
Transaction Agreements, to its Group of all material governmental licenses and
permits required for the members of its Group to operate its Business after the
Distribution Date.  The members of the
Spinco Group and the members of the Forest Group shall cooperate and use
commercially reasonable efforts to secure the transfer or issuance of the
licenses and permits.

 

Section 6.3                                      Intercompany Agreements. 
Except as set forth on Section 6.3 of the Disclosure Schedule, all
contracts, licenses, agreements, commitments and other arrangements, formal and
informal, between any member of the Forest Group, on the one hand, and any
member of the Spinco Group, on the other hand, in existence as of the
Distribution Date, pursuant to which any member of either Group makes payments
in respect of Taxes to any member of the other Group or provides to any member
of the other Group goods or services (including management, administrative,
legal, financial, accounting, data processing, insurance and technical
support), or the use of any Assets of any member of the other Group, or the
secondment of any employee, or pursuant to which rights, privileges or benefits
are afforded to members of either Group as Affiliates of the other Group, shall
terminate as of the close of business on the day prior to the Distribution
Date, except as specifically provided herein or in the other Transaction
Agreements.  From and after the
Distribution Date, no member of either Group shall have any rights under any
such contract, license, agreement, commitment or arrangement with any member of
the other Group, except as specifically provided herein or in the other
Transaction Agreements.

 

Section 6.4                                      Further Assurances. 
In addition to the actions specifically provided for elsewhere in this
Agreement, each of the parties hereto shall use commercially reasonable efforts
to take, or cause to be taken, all actions, and to do, or cause to be done, all
things reasonably necessary, proper or advisable under applicable laws,
regulations and agreements to consummate and make effective the transactions
contemplated by this Agreement and the other Transaction Agreements.  Without limiting the foregoing, each party
hereto shall cooperate with the other party, and execute and deliver, or use
commercially reasonable efforts to cause to be executed and delivered, all
instruments, and to make all filings with, and to obtain all consents,
approvals or authorizations of, any governmental or regulatory authority or any
other Person under any permit, license, agreement, indenture or other
instrument, and take all such other actions as such party may reasonably be
requested to take by any other party hereto from time to time, consistent with
the terms of this Agreement and the other Transaction Agreements, in order to
effectuate the provisions and purposes of this Agreement.

 

Section 6.5                                      Guarantee Obligations and Liens.

 

(a)                                  Forest
and Spinco shall use their commercially reasonable efforts, and shall cause
their respective Groups to use their commercially reasonable efforts:  (x) to terminate, or to cause a member
of the Spinco Group to be substituted in all respects for any member of the Forest
Group in respect of, all obligations of any member of the Forest Group under
any Spinco Liabilities for which such member of the Forest Group may be liable,
as guarantor, original tenant, primary obligor or otherwise, and (y) to
terminate, or to cause Spinco Assets to be 

 

21

 

substituted in all
respects for any Forest Assets in respect of, any liens or encumbrances on Forest
Assets which are securing any Spinco Liabilities.  If such a termination or substitution is not
effected by the Distribution Date:  (i) Spinco
shall indemnify and hold harmless the Forest Indemnitees for any Indemnifiable
Loss arising from or relating thereto, and (ii) without the prior written
consent of Forest, from and after the Distribution Date, Spinco shall not, and
shall not permit any member of the Spinco Group to, renew or extend the term
of, increase its obligations under, or transfer to a third party, any loan,
lease, contract or other obligation for which a member of the Forest Group is
or may be liable or for which any Forest Asset is or may be encumbered unless
all obligations of the Forest Group and all liens and encumbrances on any Forest
Asset with respect thereto are thereupon terminated by documentation reasonably
satisfactory in form and substance to Forest.

 

(b)                                 Forest
and Spinco shall use their commercially reasonable efforts, and shall cause
their respective Groups to use their commercially reasonable efforts:  (x) to terminate, or to cause a member
of the Forest Group to be substituted in all respects for any member of Spinco
Group in respect of, all obligations of any member of the Spinco Group under
any Forest Liabilities for which such member of the Spinco Group may be liable,
as guarantor, original tenant, primary obligor or otherwise, and (y) to
terminate, or to cause Forest Assets to be substituted in all respects for any
Spinco Assets in respect of, any liens or encumbrances on Spinco Assets which
are securing any Forest Liabilities.  If
such a termination or substitution is not effected by the Distribution
Date:  (i) Forest shall indemnify
and hold harmless the Spinco Indemnitees for any Indemnifiable Loss arising
from or relating thereto, and (ii) without the prior written consent of
Spinco, from and after the Distribution Date, Forest shall not, and shall not
permit any member of the Forest Group to, renew or extend the term of, increase
its obligations under, or transfer to a third party, any loan, lease, contract
or other obligation for which a member of the Spinco Group is or may be liable
or for which any Spinco Asset is or may be encumbered unless all obligations of
the Spinco Group and all liens and encumbrances on any Spinco Asset with
respect thereto are thereupon terminated by documentation reasonably
satisfactory in form and substance to Spinco.

 

Section 6.6                                      Insurance.

 

(a)                                  Rights Under Policies.  Notwithstanding any other provision of this
Agreement, from and after the Distribution Date, Spinco and the Spinco
Subsidiaries will have no rights with respect to any Policies, except that (i) Forest
will use commercially reasonable efforts to assist Spinco in asserting claims
for any loss, liability or damage with respect to the Spinco Assets or Spinco
Liabilities under Policies with third-party insurers which are “occurrence
basis” insurance policies (“Occurrence Basis Policies”) arising out of insured
incidents occurring from the date coverage thereunder first commenced until the
Distribution Date to the extent that the terms and conditions of any such
Occurrence Basis Policies and agreements relating thereto so allow and (ii) Forest
will use commercially reasonable efforts to assist Spinco to continue to
prosecute claims with respect to Spinco Assets or Spinco Liabilities properly
asserted with an insurer prior to the Distribution Date under Policies with
third-party insurers which are insurance policies written on a “claims made”
basis (“Claims Made Policies”) arising out of insured incidents occurring from
the date coverage thereunder first commenced until the Distribution Date to the
extent that the terms and conditions of any such Claims Made Policies and
agreements relating thereto so allow; provided, that in the case of both
clauses (i) and (ii) above, 

 

22

 

(A) all of Forest’s
and each Forest Subsidiary’s reasonable costs and expenses incurred in
connection with the foregoing are promptly paid by Spinco, (B) Forest and
the Forest Subsidiaries may, at any time, without liability or obligation to
Spinco or any Spinco Subsidiary (other than as set forth in Section 6.6(c)),
amend, commute, terminate, buy-out, extinguish liability under or otherwise
modify any Occurrence Basis Policies or Claims Made Policies (and such claims
shall be subject to any such amendments, commutations, terminations, buy-outs,
extinguishments and modifications), and (C) any such claim will be subject
to all of the terms and conditions of the applicable Policy.  Forest’s obligation to use commercially
reasonable efforts to assist Spinco in asserting claims under applicable
Policies will include using commercially reasonable efforts in assisting Spinco
to establish its right to coverage under such Policies (so long as all of Forest’s
reasonable costs and expenses in connection therewith are promptly paid by
Spinco).  In the event that the terms and
conditions of any Policy do not allow Spinco the right to assert or prosecute a
claim as set forth in clause (i) or (ii) above, then in such
case, Forest shall use commercially reasonable efforts to pursue such claim
under such Policy and Spinco shall promptly pay all of Forest’s and each Forest
Subsidiary’s reasonable costs and expenses incurred in connection therewith.

 

(b)                                 Assistance by Forest.  Until the second anniversary of the
Distribution Date, Forest will use commercially reasonable efforts to assist
Spinco in connection with any efforts by Spinco to acquire insurance coverage
with respect to the Spinco Business for incidents occurring prior to the
Distribution Date; provided, that all of Forest’s reasonable costs and expenses
incurred in connection with the foregoing are promptly paid by Spinco.

 

(c)                                  Forest Actions.  In the event that after the Distribution
Date, Forest or any Forest Subsidiary proposes to amend, commute, terminate,
buy-out, extinguish liability under or otherwise modify any Policies under
which Spinco has rights to assert claims pursuant to Section 6.6(a) in
a manner that would adversely affect any such rights of Spinco (i) Forest
will give Spinco prior written notice thereof (it being understood that the
decision to take any such action will be in the sole discretion of Forest) and (ii) Forest
will pay to Spinco its equitable share (which shall be determined by Forest in
good faith based on the amount of premiums paid or allocated to the Spinco
business in respect of the applicable Policy) of any net proceeds actually
received by Forest from the insurer under the applicable Policy as a result of
such action by Forest (after deducting Forest’s reasonable costs and expenses
incurred in connection with such action).

 

(d)                                 Administration.  From and after the Distribution Date:

 

(i)                                     Forest
or a Forest Subsidiary, as appropriate, will be responsible for the Claims
Administration with respect to claims of Forest and the Forest Subsidiaries
under the Policies; and

 

(ii)                                  Spinco
or a Spinco Subsidiary, as appropriate, will be responsible for the Claims
Administration with respect to claims of Spinco and the Spinco Subsidiaries
under the Policies.

 

(e)                                  Insurance Premiums.  Subject to clause (B) of the
proviso to Section 6.6(a), from and after the Distribution Date, Forest
will pay, if so directed by Spinco, all premiums 

 

23

 

(retrospectively-rated
or otherwise) as required under the terms and conditions of the respective
Policies in respect of periods prior to the Distribution Date, whereupon Spinco
will upon the request of Forest, promptly reimburse Forest for that portion of
such premiums paid by Forest as are reasonably determined by Forest (and
reasonably approved by Spinco) to be attributable to the Spinco Business.

 

(f)                                    Agreement for Waiver of Conflict and Shared Defense.  In the event that a Policy provides coverage
for both Forest and/or a Forest Subsidiary, on the one hand, and Spinco and/or
a Spinco Subsidiary, on the other hand, relating to the same occurrence, Forest
and Spinco agree to defend jointly and to waive any conflict of interest
necessary to the conduct of that joint defense.

 

(g)                                 Nothing
in this Section 6.6 will be construed to limit or otherwise alter in any
way the indemnity obligations of the parties to this Agreement, including those
created by this Agreement, by operation of law or otherwise.

 

Section 6.7                                      Cooperation.  Spinco
and its Affiliates shall cooperate and assist Forest, at Forest’s expense, in
all reasonable efforts by Forest to pursue claims related to any gas imbalance
at High Island 469.

 

ARTICLE VII

ACCESS TO INFORMATION

 

Section 7.1                                      Provision of Corporate Records.  Prior to or as promptly as practicable after
the Distribution Date, Forest shall deliver or make available to Spinco all
corporate books and records (including Tax records) of the Spinco Group in its
possession and complete and accurate copies of all relevant portions of all
corporate books and records of the Forest Group relating directly and
predominantly to the Spinco Assets, the Spinco Business, or the Spinco
Liabilities.  Forest may retain complete
and accurate copies of such books and records. 
From and after the Distribution Date, all such books, records and copies
shall be the property of Spinco.  Prior
to or as promptly as practicable after the Distribution Date, Spinco shall
deliver or make available to Forest all corporate books and records (including
Tax records) of the Forest Group in its possession and complete and accurate
copies of all relevant portions of all corporate books and records of the
Spinco Group relating directly and predominantly to the Forest Assets, the Forest
Business, or the Forest Liabilities. 
Spinco may retain complete and accurate copies of such books and
records.  From and after the Distribution
Date, all such books, records and copies shall be the property of Forest.  The costs and expenses incurred in the
provision of records or other information to a party shall be paid for
(including reimbursement of costs incurred by the receiving party) by the
delivering party.

 

Section 7.2                                      Access to Information. 
From and after the Distribution Date, each of Forest and Spinco shall
afford to the other and to the other’s Representatives reasonable access and
duplicating rights during normal business hours to all Information within
the possession or control of such party’s Group relating to the other party’s
Group’s pre-Distribution business, Assets or Liabilities or relating to or
arising in connection with the relationship between the 

 

24

 

Groups on or prior to the Distribution Date, to the extent
such access is reasonably required for a reasonable purpose (including, without
limitation, for the purpose of calculating the Cash Amount pursuant to Article IV
of this Agreement), subject to the provisions below regarding Privileged
Information.  Without limiting the
foregoing, Information may be requested under this Section 7.2 for audit,
accounting, regulatory, claims, litigation and Tax purposes, as well as for
purposes of fulfilling disclosure and reporting obligations.

 

In furtherance of the foregoing:

 

(a)                                  Each
party hereto acknowledges that:  (i) each
of Forest and Spinco (and the members of the Forest Group and the Spinco Group,
respectively) has or may obtain Privileged Information; (ii) there are
and/or may be a number of Litigation Matters affecting each or both of Forest
and Spinco; (iii) both Forest and Spinco have a common legal interest in
Litigation Matters, in the Privileged Information and in the preservation of
the confidential status of the Privileged Information, in each case relating to
the pre-Distribution business of the Forest Group or the Spinco Group or
relating to or arising in connection with the relationship between the Groups
on or prior to the Distribution Date; and (iv) both Forest and Spinco
intend that the transactions contemplated hereby and by the Merger Agreement
and the other Transaction Agreements and any transfer of Privileged Information
in connection therewith shall not operate as a waiver of any potentially
applicable privilege.

 

(b)                                 Each
of Forest and Spinco agrees, on behalf of itself and each member of the Group
of which it is a member, not to disclose or otherwise waive any privilege
attaching to any Privileged Information relating to the pre-Distribution
business of the other Group or relating to or arising in connection with the
relationship between the Groups on or prior to the Distribution Date, without
providing prompt written notice to and obtaining the prior written consent of
the other, which consent shall not be unreasonably withheld; provided, however,
that Forest and Spinco shall not be required to give any such notice or obtain
any such consent and may make such disclosure or waiver with respect to
Privileged Information if such Privileged Information relates solely to the
pre-Distribution business of the Forest Group in the case of Forest or the
Spinco Group in the case of Spinco.  In
the event of a disagreement between any member of the Forest Group and any
member of the Spinco Group concerning the reasonableness of withholding such
consent, no disclosure shall be made prior to a resolution of such disagreement
by a court of competent jurisdiction, provided that the limitations in this
sentence shall not apply in the case of disclosure required by law and so
certified as provided in the first sentence of this paragraph.

 

(c)                                  Upon
any member of the Forest Group or any member of the Spinco Group receiving any
subpoena or other compulsory disclosure notice from a court, other governmental
agency or otherwise which requests disclosure of Privileged Information, in
each case relating to pre-Distribution business of the Spinco Group or the Forest
Group, respectively, or relating to or arising in connection with the
relationship between the Groups on or prior to the Distribution Date, the
recipient of the notice shall promptly provide to the other Group (following
the notice provisions set forth herein) a copy of such notice, the intended
response, and all materials or information relating to the other Group that
might be disclosed.  In the event of a
disagreement as to the intended response or disclosure, unless and until the
disagreement is resolved as provided in paragraph (b) of this
Section, the parties shall cooperate to assert all defenses to 

 

25

 

disclosure claimed
by either party’s Group, and shall not disclose any disputed documents or
information until all legal defenses and claims of privilege have been finally
determined, except as otherwise required by a court order requiring such
disclosure.

 

Section 7.3                                      Production of Witnesses. 
Subject to Section 7.2, after the Distribution Date, each of Forest
and Spinco shall, and shall cause each member of its respective Group to make
available to Spinco or Forest or any member of the Spinco Group or of the Forest
Group, as the case may be, upon written request, such Group’s directors,
officers, employees and agents as witnesses to the extent that any such Person
may reasonably be required in connection with any Litigation Matters,
administrative or other proceedings in which the requesting party may from time
to time be involved and relating to the pre-Distribution business of the Forest
Group or the Spinco Group or relating to or in connection with the relationship
between the Groups on or prior to the Distribution Date.  The costs and expenses incurred in the
provision of such witnesses shall be paid by the party requesting the
availability of such persons.

 

Section 7.4                                      Retention of Records. 
Except as otherwise agreed in writing, or as otherwise provided in the
other Transaction Agreements, each of Forest and Spinco shall, and shall cause
the members of the Group of which it is a member to, retain all Information in
such party’s Group’s possession or under its control, relating directly and
predominantly to the pre-Distribution business, Assets or Liabilities of the
other party’s Group until such Information is at least ten years old or
until such later date as may be required by law, except that if, prior to the
expiration of such period, any member of either party’s Group wishes to destroy
or dispose of any such Information that is at least three years old, prior to
destroying or disposing of any of such Information, (a) the party whose
Group is proposing to dispose of or destroy any such Information shall provide
no less than 30 days’ prior written notice to the other party, specifying
the Information proposed to be destroyed or disposed of, and (b) if, prior
to the scheduled date for such destruction or disposal, the other party
requests in writing that any of the Information proposed to be destroyed or
disposed of be delivered to such other party, the party whose Group is
proposing to dispose of or destroy such Information promptly shall arrange for
the delivery of the requested Information to a location specified by, and at
the expense of, the requesting party.

 

Section 7.5                                      Confidentiality. 
Subject to Section 7.2, which shall govern Privileged Information,
from and after the Distribution Date, each of Forest and Spinco shall hold, and
shall use reasonable best efforts to cause its Affiliates and Representatives
to hold, in strict confidence all Information concerning the other party’s
Group obtained by it prior to the Distribution Date or furnished to it by such
other party’s Group pursuant to this Agreement or the other Transaction
Agreements and shall not release or disclose such Information to any other
Person, except its Affiliates and Representatives, who shall be advised of the
provisions of this Section 7.5, and each party shall be responsible for a
breach by any of its Affiliates or Representatives; provided, however, that any
member of the Forest Group or the Spinco Group may disclose such Information to
the extent that (a) disclosure is compelled by judicial or administrative
process or, based on advice of such Person’s counsel, by other requirements of
law, or (b) such party can show that such Information was (i) in the
public domain through no fault of such Person or (ii) lawfully acquired by
such Person from another source after the time that it was furnished to such
Person by the other party’s Group, and not acquired from such source subject to
any confidentiality obligation on the part of such source known to the
acquiror.  Notwithstanding the foregoing,
each of Forest and Spinco shall be deemed to have satisfied its 

 

26

 

obligations under this Section 7.5 with respect
to any Information (other than Privileged Information) if it exercises the same
care with regard to such Information as it takes to preserve confidentiality
for its own similar Information.

 

Section 7.6                                      Cooperation with Respect to Government Reports and Filings.  Forest, on behalf of itself and each member
of the Forest Group, agrees to provide any member of the Spinco Group, and
Spinco, on behalf of itself and each member of the Spinco Group, agrees to
provide any member of the Forest Group, with such cooperation and Information
as may be reasonably requested by the other in connection with the preparation
or filing of any government report or other government filing contemplated by
this Agreement or in conducting any other government proceeding relating to the
business of the Forest Group or the Spinco Group, Assets or Liabilities of
either Group or relating to or in connection with the relationship between the
Groups prior to, on or after the Distribution Date.  Each party shall promptly forward copies of
appropriate notices, forms and other communications received from or sent to
any government authority which relate to the Forest Group, in the case of the
Spinco Group, or the Spinco Group, in the case of the Forest Group.  Each party shall make its employees and
facilities available during normal business hours and on reasonable prior
notice to provide explanation of any documents or Information provided
hereunder.

 

Section 7.7                                      Tax Sharing Agreement. 
None of the provisions of this Article VII are intended to
supercede any provision in the Tax Sharing Agreement with respect to matters
related to Taxes.

 

ARTICLE VIII

NO REPRESENTATIONS OR WARRANTIES

 

Section 8.1                                      No Representations or Warranties.  Except as expressly set forth herein or in
any other Transaction Agreement, Spinco and Forest understand and agree that no
member of the Forest Group is representing or warranting to Spinco or any
member of the Spinco Group in any way as to the Spinco Assets, the Spinco
Business or the Spinco Liabilities. 
Except as expressly set forth herein or in any other Transaction
Agreement, Forest and Spinco understand and agree that no member of the Spinco
Group is representing or warranting to Forest or any member of the Forest Group
in any way as to the Forest Assets, the Forest Business or the Forest
Liabilities.

 

ARTICLE IX

 

MISCELLANEOUS

 

Section 9.1                                      Conditions to the Distribution.  The obligations of Forest pursuant to this
Agreement to effect the Distribution shall be subject to the fulfillment (or
waiver by Forest with Company Consent) at or prior to the Distribution Date of
the following conditions:

 

(a)                                  All
material consents, approvals and authorizations of any Governmental Authority
legally required for the making of the Distribution and the consummation of the
other 

 

27

 

transactions
contemplated by the Transaction Agreements shall have been obtained and be in
effect in all material respects at the Distribution Date;

 

(b)                                 Any
waiting period applicable to the Distribution or the Merger (including any
extended waiting period arising as a result of a request for additional
information by either the Federal Trade Commission or the Antitrust Division of
the Department of Justice) under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the rules and regulations promulgated
thereunder, shall have expired or been terminated and no court of competent
jurisdiction or other Governmental Authority shall have issued any decree,
judgment, injunction, writ, rule or other order that is in effect
restraining, enjoining, prohibiting or otherwise imposing any material
restrictions or limitations on the Distribution or the Merger;

 

(c)                                  The
Registration Statements shall have become effective in accordance with the
Exchange Act and the Securities Act and shall not be the subject of any stop
order or proceedings seeking a stop order; all necessary permits and
authorizations under state securities or “blue sky” laws, the Securities Act
and the Exchange Act relating to the issuance and trading of shares of Spinco
Common Stock to be issued in connection with the Distribution and the Merger,
respectively, shall have been obtained and shall be in effect; and such shares
of Spinco Common Stock and such other shares required to be reserved for
issuance in connection with the Merger shall have been approved for listing on
the New York Stock Exchange, Inc., subject to official notice of issuance;

 

(d)                                 The
Requisite Approval shall have been obtained;

 

(e)                                  No
action, proceeding or investigation by any Governmental Authority with respect
to the Distribution or the Merger shall be pending that seeks to restrain, enjoin,
prohibit or delay the making of the Distribution, the consummation of the
Merger or the consummation of the other transactions contemplated by the Merger
Agreement or to impose any material restrictions or requirements thereon or on
any of the parties with respect thereto;

 

(f)                                    No
action shall have been taken, and no statute, rule, regulation or executive
order shall have been enacted, entered, promulgated or enforced by any
Governmental Authority with respect to the Distribution or the Merger that, individually
or in the aggregate, would (i) restrain, prohibit or delay the making of
the Distribution or the consummation of the Merger or (ii) impose any
material restrictions or requirements thereon or on any of the parties with
respect thereto;

 

(g)                                 Forest
shall have received an opinion of Weil, Gotshal & Manges LLP to the
effect that the Contribution will constitute a reorganization
under Section 368(a) of the Code and the Distribution will qualify
under Section 355 of the Code.  In
rendering such opinion, Weil, Gotshal & Manges LLP may require and
rely upon representations contained in certificates of officers of Forest,
Spinco and the Company substantially in the forms attached as Exhibits C, D and E hereto;

 

(h)                                 The
Company shall have performed in all material respects its covenants and
agreements contained in the Merger Agreement required to be performed at or
prior to the Distribution Date;

 

28

 

(i)                                     The
representations and warranties of the Company contained in the Merger Agreement
shall have been true and correct in all respects when made and as of the
Distribution Date as if made at such time (except to the extent such
representations and warranties address matters as of a particular date), except
in each case (i) where the failure to be true and correct, individually or
in the aggregate, would not have a Material Adverse Effect on the Company or (ii) to
the extent specifically contemplated by the Merger Agreement;

 

(j)                                     Forest
shall have received the bondholder consent referenced in Section 3.2 of
the Forest Disclosure Schedule to the Merger Agreement; and

 

(k)                                  Spinco
and the Company shall have irrevocably confirmed to Forest and each other that
each condition of the Merger Agreement to Spinco’s and the Company’s respective
obligations to effect the Merger has been fulfilled or will be fulfilled at the
Effective Time or is or has been waived by Spinco or the Company, as the case
may be.

 

Section 9.2                                      Complete Agreement. 
This Agreement, the Exhibits and the Disclosure Schedule hereto,
the other Transaction Agreements and other documents referred to herein shall
constitute the entire agreement between the parties hereto with respect to the
subject matter hereof and shall supersede all previous negotiations, commitments
and writings with respect to such subject matter.  The Disclosure Schedule delivered
pursuant hereto is expressly made a part of, and incorporated by reference
into, this Agreement.  In the case of any
conflict between the terms of this Agreement and the terms of any other
Transaction Agreement, the terms of such other Transaction Agreement shall be
applicable.

 

Section 9.3                                      Expenses.  Except as
otherwise set forth herein or in the Merger Agreement, whether or not the
Distribution or the other transactions contemplated by this Agreement are
consummated, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby (including costs and expenses
attributable to the separation of the Assets as contemplated herein) shall be
paid by the party incurring such costs or expenses.

 

Section 9.4                                      Governing Law.  This
Agreement shall be governed by and construed in accordance with the laws of the
State of Delaware, without reference to its conflicts of laws principles.

 

Section 9.5                                      Notices.  All notices
and other communications required or permitted to be given hereunder shall be
in writing and shall be deemed given upon (a) a transmitter’s confirmation
of a receipt of a facsimile transmission (but only if followed by confirmed
delivery of a standard overnight courier the following business day or if
delivered by hand the following business day), (b) confirmed delivery of a
standard overnight courier or when delivered by hand or (c) the expiration
of five business days after the date mailed by certified or registered
mail (return receipt requested), postage prepaid, to the parties at the
following addresses (or at such other addresses for a party as shall be
specified by like notice):

 

29

 

If to Forest or any member of the Forest Group, to:

 

Forest Oil
Corporation

1600 Broadway, Suite 2200

Denver, Colorado
80202

Attention:  General Counsel

Facsimile:  (303) 812-1510

 

with a copy (which shall
not constitute effective notice) to:

 

Vinson &
Elkins L.L.P.

666 Fifth Avenue,
26th Floor

New York, NY 10103-0040

Attention:  Alan P. Baden

Facsimile:  (917) 849-5337

 

If to Spinco or any member of the Spinco Group prior
to the Distribution Date, to:

 

SML Wellhead
Corporation

c/o Forest Oil
Corporation

1600 Broadway, Suite 2200

Denver, Colorado
80202

Attention:  General Counsel

Facsimile:  (303) 812-1510

 

If to Spinco or any member of the Spinco Group after
the Distribution Date, to:

 

SML Wellhead
Corporation

c/o Mariner Energy, Inc.

2101 CityWest
Blvd.

Building 4, Suite 900

Houston, TX 77042

Attention:  General Counsel

Facsimile:  (713) 954-5555

 

with a copy (which shall
not constitute effective notice) to:

 

Baker Botts L.L.P.

910 Louisiana
Street

Houston, Texas
77002

Attn:  Kelly B. Rose

Facsimile:  (713) 229-7996

 

or to such other address as any party hereto may have
furnished to the other parties by a notice in writing in accordance with this
Section.  Any notices or other
communications required or permitted to be given hereunder to the Company shall
be given pursuant to the terms of the Merger Agreement.

 

Section 9.6                                      Amendment and Modification. 
This Agreement may be amended, modified or supplemented only by a
written agreement signed by all of the parties hereto, with a Company Consent.

 

30

 

Section 9.7                                      Successors and Assigns; No Third-Party Beneficiaries.  This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties hereto and
their successors and permitted assigns, but neither this Agreement nor any of
the rights, interests and obligations hereunder shall be assigned by any party
hereto without the prior written consent of the other party and Company
Consent.  Except for the provisions of
Sections 5.2 and 5.3 relating to indemnities, which are also for the
benefit of the Indemnitees, this Agreement is solely for the benefit of Forest,
Spinco and the Company and their respective Subsidiaries, Affiliates,
successors and assigns, and is not intended to confer upon any other Persons
any rights or remedies hereunder.  For
the avoidance of doubt, the parties agree that the Company shall be a third
party beneficiary of this Agreement.

 

Section 9.8                                      Counterparts.  This
Agreement may be executed in counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.

 

Section 9.9                                      Interpretation.  The Article and
Section headings contained in this Agreement are solely for the purpose of
reference, are not part of the agreement of the parties hereto and shall not in
any way affect the meaning or interpretation of this Agreement.

 

Section 9.10                                Severability.  If any provision of this Agreement or the
application thereof to any person or circumstance is determined by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions hereof, or the application of such provision to persons or
circumstances other than those as to which it has been held invalid or
unenforceable, shall remain in full force and effect and shall in no way be
affected, impaired or invalidated thereby, so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party.

 

Section 9.11                                References;
Construction.  References to
any “Article,” “Exhibit,” “Schedule” or “Section,” without more, are to
Articles, Exhibits, Schedules and Sections to or of this Agreement.  Unless otherwise expressly stated, clauses
beginning with the term “including” or similar words set forth examples only
and in no way limit the generality of the matters thus exemplified.

 

Section 9.12                                Termination.  Notwithstanding any provision hereof,
following termination of the Merger Agreement, this Agreement may be terminated
and the Distribution abandoned at any time prior to the Distribution Date by
and in the sole discretion of the Board of Directors of Forest.  In the event of such termination, no party
hereto or to any other Transaction Agreement (other than the Merger Agreement)
shall have any Liability to any Person by reason of this Agreement or any other
Transaction Agreement (other than the Merger Agreement).

 

Section 9.13                                Consent to
Jurisdiction and Service of Process. 
Each of the parties to this Agreement hereby irrevocably and
unconditionally (i) agrees to be subject to, and hereby consent and
submits to, the jurisdiction of the courts of the State of Delaware and of the
federal courts sitting in the State of Delaware, (ii) to the extent such
party is not otherwise subject to service of process in the State of Delaware,
hereby appoints the Corporation Trust Company as such party’s agent in the
State of Delaware for acceptance of legal process and (iii) agrees that
service 

 

31

 

made on any such agent set forth in (ii) above
shall have the same legal force and effect as if served upon such party
personally within the State of Delaware.

 

Section 9.14                                Waivers.  Except as provided in this Agreement, no
action taken pursuant to this Agreement, including, without limitation, any
investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any representations,
warranties, covenants or agreements contained in this Agreement.  The waiver by any party hereto of a breach of
any provision hereunder shall not operate or be construed as a waiver of any
prior or subsequent breach of the same or any other provision hereunder.

 

Section 9.15                                Specific
Performance.  The parties
hereto agree that irreparable damage would occur in the event any provision of
this Agreement was not performed in accordance with the terms hereof and that
the parties shall be entitled to specific performance of the terms hereof, in
addition to any other remedy at law or in equity.

 

Section 9.16                                Waiver of
Jury Trial.  Each of the
parties hereto irrevocably and unconditionally waives all right to trial by
jury in any litigation, claim, action, suit, arbitration, inquiry, proceeding,
investigation or counterclaim (whether based in contract, tort or otherwise)
arising out of or relating to this Agreement or the actions of the parties
hereto in the negotiation, administration, performance and enforcement thereof.

 

32

 

IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed as of the date first above written.

 

	
   

  	
  FOREST OIL CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SML WELLHEAD CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

33Exhibit
4.2

 

REGISTRATION RIGHTS AGREEMENT

 

REGISTRATION
RIGHTS AGREEMENT (as amended from time to time, this “Agreement”), dated as of
August 10, 2005, by and between CF Industries Holdings, Inc., a
Delaware corporation (the “Company”) on the one hand, and each of the
stockholders listed on the signature pages to this Agreement (each
individually a “Stockholder” and, collectively, the “Stockholders”)
on the other hand.

 

W I  T
N  E  S  S  E  T  H:

 

WHEREAS,
the parties hereto wish to enter into this Registration Rights Agreement to
memorialize their agreement regarding registration rights with respect to the
Company.

 

NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto, intending to be legally
bound hereby, agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

1.1           Definitions.  The following terms when used
in this Agreement shall have the following meanings (such definitions to be
equally applicable to the singular and plural forms thereof):

 

“Affiliate”
of any Person means any other Person which directly, or indirectly through one
or more intermediaries, controls, or is controlled by, or is under common
control with, such Person. The term “control” (including the terms
“controlling,” “controlled by” and “under common control with”) as used with
respect to any Person means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise.

 

“Agreement”
shall have the meaning provided in the Introduction.

 

“Board”
shall mean the Board of Directors of the Company.

 

“Commission”
shall mean the Securities and Exchange Commission.

 

“Common
Stock” shall mean the common stock, par value $.01 per share of the
Company.

 

“Company”
shall have the meaning provided in the Introduction.

 

“Demand
Registration” shall have the meaning provided in Section 2.1.

 

 

“Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended.

 

“Holder”
means any Stockholder that holds Registrable Securities and any transferees of
such Registrable Securities provided that such transfer is made in accordance
with the terms of this Agreement; provided, however, that such
Stockholder or transferee, as the case may be, holds Registrable Securities
representing not less than 5% of the then outstanding Common Stock.  For purposes of this Agreement, the Company
may deem and treat the registered holder of Registrable Securities as the
Holder and absolute owner thereof, and the Company shall not be affected by any
notice to the contrary.

 

“Merger
Agreement” shall mean the Agreement and Plan of Merger, dated as of
July 21, 2005, by and among the Company, CF Merger Corp., and CF
Industries, Inc.

 

“Person”
shall mean any natural person, corporation, firm, limited liability company,
partnership, association, government, governmental agency or other entity,
whether acting in an individual, fiduciary or other capacity.

 

“Piggyback
Registration” shall have the meaning provided in Section 3.1.

 

“Prospectus”
shall mean the prospectus included in any registration statement, as amended or
supplemented by any prospectus supplement with respect of the terms of the
offering of any security of the Company covered by such registration statement
and all other amendments or supplements to the prospectus, including post
effective amendments, and all material incorporated, or deemed to be
incorporated, by reference in such prospectus.

 

“Registrable
Securities” shall mean any shares of Common Stock issued to a Stockholder
pursuant to the Merger Agreement and any equity securities of the Company
issued or issuable with respect to any such Common Stock by way of stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization or otherwise,
except, in the case of any such securities issued with respect to Common Stock,
for any such securities that are not “restricted securities,” as such term is
defined in Rule 144(a) under the Securities Act.  As to any particular Registrable Securities,
such securities shall cease to be Registrable Securities when (a) a
registration statement with respect to the sale of such securities shall have
become effective under the Securities Act and such securities shall have been
disposed of in accordance with such registration statement, (b) they shall
have been distributed to the public pursuant to Rule 144 (or any successor
provision) under the Securities Act, (c) they shall have been otherwise
transferred, new certificates for them not bearing a legend restricting further
transfer shall have been delivered by the Company and subsequent disposition of
them shall not require registration or qualification of them under the Securities
Act or any similar state law then in force, (d) they become eligible for
resale pursuant to Rule 144(k) (or any successor provision) under the
Securities Act, or (e) they shall have ceased to be outstanding.

 

2

 

“Registration”
shall have the meaning provided in Section 2.1.

 

“Registration
Expenses” shall have the meaning provided in Section 6.1.

 

“Restricted
Period” means the one-year “Restricted Period” set forth in those certain
Lock-Up Agreements, executed and delivered by the Stockholders in connection
with the initial public offering of the Company’s common stock, as such
one-year period may be extended in accordance with the terms of such Lock-Up
Agreements.

 

“Rule 144”
shall mean Rule 144 promulgated under the Securities Act.

 

“Securities
Act” shall mean the Securities Act of 1933, as amended.

 

ARTICLE II

 

DEMAND REGISTRATIONS

 

2.1           Requests for Registration. 
Subject to the terms and conditions hereof, at any time after the
expiration of the Restricted Period, if any Holder or Holders who hold in the
aggregate not less than 25% of the then outstanding Registrable Securities
request in writing registration under the Securities Act of any of its or their
Registrable Securities (a “Registration”), which request specifies the
approximate number of Registrable Securities requested to be registered, then
within ten (10) days after receipt of any such request, the Company shall
give written notice of such requested Registration to all other Holders and
shall include in the Registration all Registrable Securities with respect to
which the Company has received written requests for inclusion therein within 15
days after the date of mailing of the Company’s notice.  The Registration requested pursuant to this
Section 2.1 is referred to herein as a “Demand Registration”.

 

2.2           Registration. 
Holders shall be entitled to not more than two (2) Demand
Registrations, in the aggregate.  Subject
to the limitations set forth in this Section 2.2 and in Section 2.4,
no more than one Demand Registration may be requested in any six-month
period.  The Company shall pay all
Registration Expenses in connection with each Demand Registration.  No request for a Demand Registration shall be
permitted unless the Registrable Securities sought to be included in such
Demand Registration have an expected market value of at least $25 million.  A Registration shall not count as a Demand
Registration until it has become effective, and any Registration shall not
count as a Demand Registration unless the initiating Holder or Holders and
other Holders are able to register and sell at least 50% of the Registrable
Securities requested to be included in such Registration.

 

2.3           Priority on Demand Registrations.  If a
Demand Registration is an underwritten offering and the managing underwriters
advise the Company in writing that in their opinion the number of Registrable
Securities and other securities requested to be included in such offering,
exceeds the number of Registrable Securities and other securities, if any,
which can be sold in an orderly manner in such offering and/or that the number
of shares of Registrable Securities proposed to be included in such offering
would adversely affect the price per share of the Common Stock, the Company shall

 

3

 

include in the Registration, prior to the inclusion of any securities
which are not Registrable Securities, the number of Registrable Securities
requested to be included which, in the opinion of the underwriters, can be so
sold, pro rata (or as may have otherwise been agreed among the Holders of
Registrable Securities to be included in such Registration) among the
respective Holders thereof on the basis of the amount of Registrable Securities
requested to be registered by each such Holder; provided that if the number of
Registrable Securities to be included in the Registration is less than 75% of
the number requested to be so included, the Holders of Registrable Securities
covered by such Demand Registration shall be entitled to withdraw such request,
upon the affirmative vote of Holders holding at least 66% of such Registrable
Securities, and, if such request is withdrawn, the Demand Registration shall
not count as a permitted Demand Registration hereunder, and the Company shall
pay all Registration Expenses in connection with the withdrawn
Registration.  Any Persons who
participate in Demand Registrations not at the Company’s expense must pay their
share of the Registration Expenses as provided in Article VI.

 

2.4           Restrictions on Registrations.  The
Company shall not be obligated to effect any Demand Registration within six
months after the effective date of a Registration demanded by the holders of
registration rights under a Registration in which the Holders were given
Piggyback Rights pursuant to Article III. 
The Company may, not more than twice in any 12-month period, postpone
for up to 90 days the filing or the effectiveness of a registration statement for
a Demand Registration if the Board determines in good faith that (i) such
postponement is necessary in order to avoid premature disclosure of a matter
the Board has determined would not be in the best interest of the Company to be
disclosed at such time or (ii) the Demand Registration would materially
and adversely impact the Company; provided, that in such event, the
Holders of Registrable Securities covered by the Demand Registration shall be
entitled, upon the affirmative vote of holders holding at least 66% of such
Registrable Securities, to withdraw such request and, if such request is
withdrawn, the Demand Registration shall not count as a permitted Demand
Registration hereunder, and the Company shall pay all Registration Expenses in
connection with the withdrawn Registration; provided  further,
that upon the election of the Company and upon notice to the Holders of
Registrable Securities to be included in such Registration, one such
postponement may be extended to not more than 120 days at the sole discretion
of the Company.

 

2.5           Selection of Underwriters.  In
connection with a Demand Registration, the Company shall select the investment
banker(s) and manager(s) to administer the offering.

 

ARTICLE III

 

PIGGYBACK REGISTRATIONS

 

3.1           Right to Piggyback. 
Subject to the terms and conditions hereof, at any time after the
Restricted Period whenever the Company proposes to register (including for this
purpose a Registration effected by the Company for shareholders other than
Holders) any of its securities under the Securities Act (other than (i) a
Registration

 

4

 

under Article II hereof, (ii) a Registration of securities
solely relating to an offering and sale pursuant to any employee stock plan or
other employee benefit plan arrangement, including any registration on
Form S-8 (or any successor form thereto) or (iii) a Registration of
securities issued in an acquisition or business combination including any
Registration on Form S-4 (or any successor form thereto)) (a “Piggyback
Registration”), the Company shall give at least 20 days’ written notice to
all Holders of the Company’s intention to effect such a Registration and shall
include in the Registration, subject to any agreement among the Holders to be
included in such Registration, all Registrable Securities with respect to which
the Company has received written requests for inclusion therein within 10 days
after the receipt of the Company’s notice.

 

3.2           Piggyback Expenses.  The
Registration Expenses of the Holders shall be paid by the Company in all Piggyback
Registrations.

 

3.3           Priority on Primary Registrations.  If a
Piggyback Registration is an underwritten primary Registration on behalf of the
Company and the managing underwriters advise the Company in writing that in
their opinion the number of securities requested to be included in such
Registration exceeds the number which can be sold in an orderly manner in such
offering and/or that the number of securities proposed to be included in such
offering would adversely affect the price per share of the Common Stock, the
Company shall include in the Registration (i) first, the securities the
Company proposes to sell, and (ii) second, the Registrable Securities
requested to be included in the Registration pro rata among the Holders on the
basis of the number of shares proposed to be registered by each or as such
holders may otherwise agree, and (iii) third, other securities requested
to be included in the Registration pro rata among the holders of such other
securities on the basis of the number of shares requested to be registered by
each such holder or as such holders may otherwise agree.

 

3.4           Priority on Secondary Registrations.  If a
Piggyback Registration is an underwritten secondary Registration on behalf of
holders of the Company’s securities other than Registrable Securities and the
managing underwriters advise the Company in writing that, in their opinion, the
number of securities requested to be included in the Registration exceeds the
number which can be sold in an orderly manner in such offering and/or that the
number of securities proposed to be included in such offering would adversely
affect the price per share of the Common Stock, the Company shall include in
the Registration (i) first, the securities requested to be included
therein by the holders requesting such Registration pro rata among the holders
of such other securities on the basis of the number of shares requested to be
registered by each such holder or as such holders may otherwise agree,
(ii) second, the Registrable Securities requested to be included in such
Registration pro rata among the Holders on the basis of the number of shares
proposed to be registered by each or as such Holders may otherwise agree, and
(iii) third, other securities requested to be included in the Registration
pro rata among the holders of such other securities on the basis of the number
of shares requested to be registered by each such holder or as such holders may
otherwise agree.

 

5

 

3.5           Selection of Underwriters.  If
any Piggyback Registration is an underwritten offering, the Company shall
select the investment banker(s) and manager(s) to administer the offering.

 

ARTICLE IV

 

LOCK UP AGREEMENTS

 

4.1           General.  Each Holder agrees not to
effect any sale, distribution or other transfer (including sales pursuant to
Rule 144) of equity securities of the Company, or any securities
convertible into or exchangeable or exercisable for such securities, during a
period of up to 180 days (as may be requested by the Company and the managing
underwriters) following any underwritten, registered public offering of Common
Stock, beginning on the effective date of such underwritten, registered
offering (except for sales of such securities as part of such underwritten,
registered offering) whether or not the Holder sold shares in such offering,
unless the managing underwriters otherwise agree.

 

ARTICLE V

 

REGISTRATION PROCEDURES

 

5.1           Registration Procedures. 
Whenever the Holders have requested that any Registrable Securities be
registered pursuant to this Agreement, the Company shall use its best efforts
to effect the Registration and the sale of such Registrable Securities in
accordance with the intended method of disposition thereof, and pursuant
thereto the Company shall as expeditiously as possible:

 

(a)           Prepare and, in the case of a Demand
Registration, no later than 60 days after a request for a Demand Registration,
file with the Commission a registration statement with respect to such
Registrable Securities and use its best efforts to cause the registration
statement to become effective and remain effective until the earlier of
(i) the date when all Registrable Securities covered by the registration
statement have been sold, or (ii) 120 days from the effective date of the
registration statement; provided, that before filing a registration
statement or Prospectus or any amendments or supplements thereto, furnish to
the Holders of Registrable Securities covered by such registration statement
and the underwriter or underwriters, if any, copies of all such documents
proposed to be filed, including documents incorporated by reference in the
Prospectus and, if requested by such Holders, the exhibits incorporated by
reference, and such Holders shall have the opportunity to object to any information
pertaining to such Holders that is contained therein and the Company will make
the corrections reasonably requested by such Holders with respect to such
information prior to filing any registration statement or amendment thereto or
any Prospectus or any supplement thereto; provided  further, that
the period for the preparation and filing of a Demand Registration shall be 120
days if a request for a Demand Registration is made in the first 45 days of any
year;

 

6

 

(b)           Prepare and file with the Commission such
amendments and supplements to the registration statement and the Prospectus
used in connection therewith as may be necessary to keep the registration
statement effective for the period referred to in Section 5.1(a) and
comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by the registration statement during such
period in accordance with the intended methods of disposition by the sellers
thereof as set forth in the registration statement;

 

(c)           Furnish to each seller of Registrable
Securities such number of copies of the registration statement, each amendment
and supplement thereto, the Prospectus included in the registration statement
(including each preliminary prospectus) and such other documents as such Holder
may reasonably request in order to facilitate the disposition of the
Registrable Securities owned by such Holder;

 

(d)           Use commercially reasonable efforts to
register or qualify such Registrable Securities under such other securities or
blue sky laws of such jurisdictions as any Holder thereof reasonably requests
and do any and all other acts and things which may be reasonably necessary or
advisable to enable such Holder to consummate the disposition in such
jurisdictions of the Registrable Securities owned by such Holder; provided,
however, provided, that the Company will not be required to
(i) qualify generally to do business in any jurisdiction where it would
not otherwise be required to qualify but for this subparagraph (d),
(ii) subject itself to taxation in any such jurisdiction or
(iii) consent to general service of process in any such jurisdiction;

 

(e)           Notify each such Holder, at any time when a
Prospectus relating thereto is required to be delivered under the Securities
Act, of the happening of any event as a result of which the Prospectus included
in such registration statement contains an untrue statement of a material fact
or omits any fact necessary to make the statements therein not misleading, and,
at the request of any such Holder, the Company shall prepare a supplement or
amendment to the Prospectus so that, as thereafter delivered to the purchasers
of such Registrable Securities, such Prospectus shall not contain an untrue statement
of a material fact or omit to state any material fact necessary to make the
statements therein not misleading;

 

(f)            Promptly notify each seller of Registrable
Securities and the underwriter or underwriters, if any: (i) when the
registration statement, any pre-effective amendment, the Prospectus or any
Prospectus supplement or post-effective amendment to the registration statement
has been filed and, with respect to the registration statement or any
post-effective amendment, when the same has become effective, (ii) of any
written request by the Commission for amendments or supplements to the
registration statement or Prospectus, (iii) of the notification to the
Company by the Commission of its initiation of any proceeding with respect to
the issuance by the Commission of any stop order suspending the effectiveness
of the registration statement, (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification of any
Registrable Securities for sale under the applicable securities or blue sky
laws of any jurisdiction and (v) of any other material written
communication from the Commission relating to the registration statement or the
Prospectus.

 

7

 

(g)           Cause all such Registrable Securities to be
listed on each securities exchange on which similar securities issued by the
Company are then listed and, if not so listed, to be listed on the NASD
automated quotation system;

 

(h)           Provide a transfer agent and registrar for all
such Registrable Securities not later than the effective date of such
registration statement;

 

(i)            Make available, for inspection by any seller
of Registrable Securities, any underwriter participating in any disposition
pursuant to such registration statement, and any attorney, accountant or other
agent retained by any such seller or underwriter, all financial and other
records, pertinent corporate documents and properties of the Company, and cause
the Company’s officers, directors, employees and independent accountants to
supply all information reasonably requested by any such seller, underwriter,
attorney, accountant or agent in connection with such registration statement;

 

(j)            Make available to its security holders, as
soon as reasonably practicable, an earnings statement covering the period of at
least twelve months beginning with the first day of the Company’s first full
calendar quarter after the effective date of the registration statement, which
earnings statement shall satisfy the provisions of Section 1l(a) of
the Securities Act and Rule 158 thereunder; and

 

(k)           If requested, cause to be delivered,
immediately prior to the effectiveness of the registration statement (and, in
the case of an underwritten offering, at the time of delivery of any Registrable
Securities sold pursuant thereto), letters from the Company’s independent
certified public accountants addressed to each selling Holder (unless such
selling Holder does not provide to such accountants the appropriate
representation letter required by rules governing the accounting
profession) and each underwriter, if any, stating that such accountants are
independent public accountants within the meaning of the Securities Act and the
applicable rules and regulations adopted by the Commission thereunder, and
otherwise in customary form and covering such financial and accounting matters
as are customarily covered by letters of the independent certified public
accountants delivered in connection with primary or secondary underwritten
public offerings, as the case may be;

 

(l)            In connection with an underwritten offering,
(i) make such representations and warranties to such selling Holders and
the underwriters with respect to the Registrable Securities and the
registration statement as are customarily made by issuers to underwriters in
primary or secondary underwritten offerings, (ii) obtain opinions of
counsel to the Company and updates thereof addressed to each selling Holder and
the underwriters covering the matters customarily covered in opinions requested
in primary or secondary underwritten offerings, and (iii) make available,
on a reasonable basis, senior management personnel of the Company to
participate in, and cause them to cooperate with the selling Holders or the
managing underwriter in any underwritten offering in connection with “road
show” and other customary marketing activities, including “one on one” meetings
with prospective purchasers of the Registrable Securities to be sold in the
underwritten offering.

 

8

 

ARTICLE VI

 

REGISTRATION EXPENSES

 

6.1           In General.  All expenses incident to the
Company’s performance of or compliance with this Agreement, including without
limitation, all Registration and filing fees, fees and expenses of compliance with
securities or blue sky laws, printing expenses, messenger and delivery
expenses, and fees and disbursements of counsel for the Company and all
independent certified public accountants, underwriters (excluding discounts and
commissions and transfer taxes, if any, attributable to the sale of Registrable
Securities) and other Persons retained by the Company (all such expenses being
herein called “Registration Expenses”), shall be borne by the Company,
and the Company shall pay its internal expenses (including, without limitation,
all salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit or quarterly review, the
expense of any liability insurance and the expenses and fees for listing the securities
to be registered on each securities exchange on which similar securities issued
by the Company are then listed or on the NASD automated quotation system.

 

6.2           Reimbursement by the Company.  In
connection with each Registration, the Company shall reimburse the Holders
covered by such Registration for the reasonable fees and disbursements of one
counsel chosen by the Holders of a majority of the Registrable Securities
covered by such Registration.

 

6.3           Obligations of the Holders of Securities.  To the
extent registration expenses are not required to be paid by the Company, each
Holder of securities included in any Registration hereunder shall pay those
registration expenses allocable to the registration of such Holder’s securities
so included, and any registration expenses not so allocable shall be borne by
all sellers of securities included in the Registration in proportion to the
aggregate selling price of the securities to be so registered.

 

ARTICLE VII

 

INDEMNIFICATION

 

7.1           In General.  The Company shall indemnify,
to the fullest extent permitted by law, each Holder, its officers, directors
and Affiliates and each Person who controls such Holder (within the meaning of
the Securities Act) against all losses, claims, damages, liabilities and expenses
arising out of or based upon any untrue or alleged untrue statement of material
fact contained in any registration statement, Prospectus or preliminary
Prospectus or any amendment thereof or supplement thereto or any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading or any violation or alleged
violation by the Company of the Securities Act, the Exchange Act or applicable
blue sky laws, except insofar as the same are made in reliance and in
conformity with information relating to such Holder furnished in writing to the
Company by such Holder expressly for use therein or caused by such Holder’s
failure to deliver to such Holder’s immediate

 

9

 

purchaser a copy of the registration statement or Prospectus or any
amendments or supplements thereto (if the same was required by applicable law
to be so delivered) after the Company has furnished such Holder with a
sufficient number of copies of the same. 
In connection with an underwritten offering, the Company shall indemnify
such underwriters, their officers and directors and each Person who controls
such underwriters (within the meaning of the Securities Act) to the same extent
as provided above with respect to the indemnification of the Holders.

 

7.2           Information from the Holders.  In
connection with any registration statement in which a Holder is participating,
each such Holder shall furnish to the Company in writing such information and
affidavits as the Company reasonably requests for use in connection with any
such registration statement or Prospectus and, shall indemnify, to the fullest
extent permitted by law, the Company, its officers, directors Affiliates, and
each Person who controls the Company (within the meaning of the Securities Act)
against all losses, claims, damages, liabilities and expenses arising out of or
based upon any untrue or alleged untrue statement of material fact contained in
the registration statement, Prospectus or preliminary Prospectus or any
amendment thereof or supplement thereto or any omission or alleged omission of
a material fact required to be stated therein or necessary to make the
statements therein not misleading, but only to the extent that the same are
made in reliance and in conformity with information relating to such Holder
furnished in writing to the Company by such Holder expressly for use therein or
caused by such Holder’s failure to deliver to such Holder’s immediate purchaser
a copy of the registration statement or Prospectus or any amendments or
supplements thereto (if the same was required by applicable law to be so
delivered) after the Company has furnished such Holder with a sufficient number
of copies of the same; provided, however, that the obligation to indemnify
shall be several, not joint and several, among such Holders and the liability
of each such Holder shall be in proportion to and limited to the net amount
received by such Holder from the sale of Registrable Securities pursuant to
such registration statement.

 

7.3           Notice of Claim.  Any
Person entitled to indemnification hereunder shall (i) give prompt written
notice to the indemnifying party of any claim with respect to which it seeks
indemnification and (ii) unless in such indemnified party’s reasonable
judgment a conflict of interest between such indemnified and indemnifying
parties may exist with respect to such claim, permit such indemnifying party to
assume the defense of such claim with counsel reasonably satisfactory to the
indemnified party.  If such defense is
assumed, the indemnifying party shall not be subject to any liability for any
settlement made by the indemnified party without its consent (but such consent
will not be unreasonably withheld).  An
indemnifying party who is not entitled to, or elects not to, assume the defense
of a claim shall not be obligated to pay the fees and expenses of more than one
counsel for all parties indemnified by such indemnifying party with respect to
such claim, unless in the reasonable judgment of any indemnified party there
may be one or more legal or equitable defenses available to such indemnified
party which are in addition to or may conflict with those available to another
indemnified party with respect to such claim. 
Failure to give prompt written notice shall not release the indemnifying
party from its obligations hereunder.

 

10

 

7.4           Survival of Indemnification. The indemnification provided for under this
Agreement shall remain in full force and effect regardless of any investigation
made by or on behalf of the indemnified party or any officer, director or
controlling Person of such indemnified party and shall survive the transfer of
securities.

 

7.5           Contribution.  If
the indemnification provided for in or pursuant to this Article VII is due
in accordance with the terms hereof, but is held by a court to be unavailable
or unenforceable in respect of any losses, claims, damages, liabilities or
expenses referred to herein, then each applicable indemnifying party, in lieu
of indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified Person as a result of such losses, claims, damages,
liabilities or expenses in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the indemnified
party on the other in connection with the statements or omissions which result
in such losses, claims, damages, liabilities or expenses as well as any other relevant
equitable considerations.  The relative
fault of the indemnifying party on the one hand and of the indemnified Person
on the other shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
the indemnifying party or by the indemnified party, and by such party’s
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.  In
no event shall the liability of any selling Holder be greater in amount than
the amount of net proceeds received by such Holder upon such sale or the amount
for which such indemnifying party would have been obligated to pay by way of
indemnification if the indemnification provided for under Section 7.1 or
7.2 hereof had been available under the circumstances.

 

ARTICLE VIII

 

PARTICIPATION IN UNDERWRITTEN REGISTRATIONS

 

8.1           Participation in Underwritten Registrations.  No
Person may participate in any Registration hereunder which is underwritten
unless such Person (a) agrees to sell such Person’s securities on the
basis provided in any underwriting arrangements approved by the Company and
(b) completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents required under the
terms of such underwriting arrangements.

 

ARTICLE IX

 

REPORTS UNDER THE SECURITIES LAWS

 

9.1           Reports Under the Securities Laws.  With
a view to making available to the Holders the benefits of Rule 144 and any
other rule or regulation of the Commission that may at any time permit a
Holder to sell securities of the Company to the public without Registration,
the Company agrees to:

 

11

 

(a)           File with the Commission in a timely manner
all reports and other documents required of the Company under the Securities
Act and the Exchange Act; and

 

(b)           Furnish to any holder so long as the Holder
owns any of the Registrable Securities forthwith upon request a written
statement by the Company that it has complied with the reporting requirements
of the Securities Act and the Exchange Act.

 

ARTICLE X

 

TRANSFER OF REGISTRATION RIGHTS

 

10.1         Transfer of Registration Rights. 
Provided that the Company is given prompt written notice by or on behalf
a Holder of any transfer of Registrable Securities by such Holder stating the
name and address of the transferee of such Registrable Securities and
identifying the securities with respect to which the rights under this
Agreement are being assigned and such transferee agrees in writing to be bound
by the terms and conditions of this Agreement, the rights of the Holder under
this Agreement may be transferred in whole or in part at any time to any such
transferee, so long as such transfer of securities is in accordance with all
applicable state and federal securities laws and regulations.  The Company shall be responsible for the
Registration Expenses of any transferee or assignee pursuant to this
Section 10.1 to the same extent as the original transferor.

 

ARTICLE XI

 

INFORMATION BY HOLDERS OF REGISTRABLE SECURITIES

 

11.1         Reporting of Sales.  Each
Holder shall report to the Company sales made pursuant to any Registration of
such Registrable Securities.

 

ARTICLE XII

 

MISCELLANEOUS

 

12.1         Notices.  Any notice, demand, offer, or
other instrument required or permitted to be given pursuant to this Agreement
shall be in writing signed by the party giving such notice and shall, to the
extent reasonably practicable, be sent by telecopy (with confirmation of
receipt), and if not reasonably practicable to send by telecopy, then by hand
delivery, overnight courier or certified mail (return receipt requested), to
the other parties at the addresses set forth below:

 

If
to the Company:

 

CF
Industries Holdings, Inc.

One
Salem Lake Drive

Long
Grove, IL 60047

Attention:  General Counsel

Facsimile:  847-438-2005

 

12

 

If
to a Stockholder, to the address(es) set forth on the counterpart signature
pages of this Agreement signed by such Stockholder.

 

If
to a transferee Holder, to the address of such Holder set forth in the transfer
documentation provided to the Company;

 

Each
party may change the place to which notice shall be sent or delivered or
specify one additional address to which copies of notices may be sent, in
either case by similar notice sent or delivered in like manner to the other
parties.  Without limiting any other
means by which a party may be able to prove that a notice has been received by
the other party, a notice shall be deemed to be duly received: (a) if sent
by hand or overnight courier, the date when duly delivered at the address of
the recipient; (b) if sent by certified mail, the date of the return
receipt; or (c) if sent by telecopy, upon receipt by the sender of an
acknowledgment or transmission report generated by the machine from which the
telecopy was sent indicating that the telecopy was sent in its entirety to the
recipient’s telecopy number.

 

12.2         Captions.  Titles or captions of Sections
or Articles contained in this Agreement are inserted only as a matter of
convenience and for reference, and in no way define, limit, extend or describe
the scope of this Agreement or the intent of any provision hereof.

 

12.3         Amendment.  The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given without the prior written consent of the
Holders of a majority of the Registrable Securities; provided, however,
that without a Holder’s written consent no such amendment, modification,
supplement or waiver shall affect adversely such Holder’s rights hereunder in a
discriminatory manner inconsistent with its adverse effects on rights of other
Holders hereunder (other than as reflected by the different number of shares
held by such Holder); provided, further, that the consent or
agreement of the Company shall be required with regard to any termination,
amendment, modification or supplement of, or waivers or consents to departures
from, the terms hereof, which affect the Company’s obligations hereunder.

 

12.4         Waiver.  Any waiver of any term or
condition shall not be construed as a waiver of any subsequent breach or a
subsequent waiver of the same term or condition, or as a waiver of any other
term or condition, of this Agreement. 
The failure of any party to assert any of its rights hereunder shall not
constitute a waiver of any of such rights.

 

12.5         Survival.  The several indemnities,
agreements, representations, warranties and each other provision set forth in
this Agreement and made pursuant hereto

 

13

 

shall remain in full force and effect regardless of any investigation
(or statement as to the results thereof) made by or on behalf of any party, any
director or officer of such party, or any controlling person of any of the
foregoing, and shall survive the transfer of any Registrable Securities, and
the indemnification and contribution provisions set forth in Article VII
shall survive termination of this Agreement.

 

12.6         Counterparts.  This
Agreement may be executed in any number of counterparts, each of which shall be
an original but all of which together shall constitute one and the same
instrument.

 

12.7         Entire Agreement; Assignment.  This
Agreement and any agreement, document or schedule attached hereto or
thereto or referred to herein or therein, constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral, of
the parties with respect to the subject matter hereof. Any oral representations
or modifications concerning this instrument shall be of no force or effect
unless contained in a subsequent written modification signed by the party to be
charged.  The registration rights of any
Holder under this Agreement with respect to any Registrable Securities may be
transferred and assigned in accordance with this Agreement.  This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto, and their respective
successors and permitted assigns.

 

12.8         Severability.  If
any provision of this Agreement is invalid or unenforceable, the balance of
this Agreement shall remain in full force and effect, and this Agreement shall
be construed in all respects as if such invalid or unenforceable provision were
omitted, so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party.  Upon any such determination that
any provision of this Agreement is invalid or unenforceable, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner
in order that the transactions contemplated hereby are consummated as
originally contemplated to the greatest extent possible.

 

12.9         Governing Law.  This
Agreement shall be governed by and construed in accordance with the laws of the
State of New York, regardless of the laws that might otherwise govern under
applicable principles of conflicts of laws thereof.  Each of the parties hereto agrees that
process may be served upon them in any manner authorized by the laws of the
State of Delaware for such persons and waives and covenants not to assert or
plead any objection which they might otherwise have to such jurisdiction and
such process.

 

12.10       Consent to Jurisdiction. 
Without limiting the provisions of Article VII hereof, the parties
agree that any legal proceeding by or against any party or with respect to or
arising out of this Agreement may be brought in or removed to the United States
District Court for the State of Delaware or in any Delaware state court, as the
party or parties instituting such legal action or proceeding may elect.  By execution and delivery of this Agreement,
each party irrevocably and unconditionally submits to the exclusive
jurisdiction of such courts and to the appellate courts therefrom.  The parties

 

14

 

irrevocably consent to the service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by registered or certified airmail, postage prepaid, to such parties at
the addresses specified in Section 12.1. Any such service of process shall
be effective five (5) business days after mailing, or, if hand delivered,
upon delivery.  Nothing herein shall
affect the right to serve process in any other manner permitted by applicable
law.  The parties hereby waive any right
to stay or dismiss any action or proceeding under or in connection with this
Agreement brought before the foregoing courts on the basis of (a) any
claim that it is not personally subject to the jurisdiction of the above-named
courts for any reason, or that it or any of its property is immune from the
above-described legal process, (b) that such action or proceeding is
brought in an inconvenient forum, that venue for the action or proceeding is
improper or that this Agreement may not be enforced in or by such courts, or
(c) any other defense that would hinder or delay the levy, execution or
collection of any amount to which any party is entitled pursuant to any final
judgment of any court having jurisdiction.

 

[Signature Page Follows]

 

*
* * * *

 

15

 

IN
WITNESS WHEREOF, the parties hereto have executed this Registration Rights
Agreement as of the date first written above.

 

	
   

  	
  CF
  INDUSTRIES HOLDINGS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Stephen R. Wilson

  	
   

  
	
   

  	
   

  	
  Name:  Stephen R. Wilson

  
	
   

  	
   

  	
  Title:    President
  and Chief Executive

  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GROWMARK, Inc.

  
	
   

  	
  1701 Towanda Avenue

  
	
   

  	
  Bloomington, IL 61701-9972

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William Davisson

  	
   

  
	
   

  	
   

  	
  Name: William Davisson

  
	
   

  	
   

  	
  Title: CEO

  

 

16

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