Mariner Energy, Inc. MEI Sub, Inc. 2101 CityWest Boulevard Building 4, Suite 900 Houston, Texas 77042
Exhibit 2.2
Mariner Energy, Inc.
MEI Sub, Inc.
0000 XxxxXxxx Xxxxxxxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxxxx, Xxxxx 00000
MEI Sub, Inc.
0000 XxxxXxxx Xxxxxxxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxxxx, Xxxxx 00000
February 3, 2006
Forest Oil Corporation
Forest Energy Resources, Inc.
000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Forest Energy Resources, Inc.
000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
Reference is made to that certain Agreement and Plan of Merger (the “Merger Agreement”) dated
as of September 9, 2005 among Forest Oil Corporation (“Forest”), Forest Energy Resources, Inc.
(“Spinco”), Mariner Energy, Inc. (the “Company”) and MEI Sub, Inc. (“Merger Sub,” and together with
Forest, Spinco and the Company, the “Parties”). Capitalized terms used but not defined herein
shall have the meanings ascribed to such terms in the Merger Agreement. The Parties are entering
into this letter agreement (this “Letter Agreement”) to amend the Transaction Agreements as
described below.
The Parties agree to the following, notwithstanding any provision to the contrary in any
Transaction Agreement, and each Transaction Agreement shall be deemed amended to the extent
inconsistent with the following:
(a) Fractional Shares. Book entries, certificates or scrip representing fractional
shares of Spinco Common Stock shall be distributed in the Distribution; however, no book
entries, certificates or scrip representing fractional shares of Company Common Stock shall
be issued in the Merger to any holder of Spinco Common Stock. Instead, the Company shall
instruct its transfer agent to aggregate all fractional shares of Company Common Stock which
would have been issued in the Merger but for this provision, sell such shares in the public
market and distribute to such holders of Spinco Common Stock a portion of the net proceeds
of such sale in accordance with their respective fractional share amounts.
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(b) Book Entry. All shares of Company Common Stock to be issued in the Merger shall be
issued in book entry, without physical certificates.
(c) Letter of Credit. The Company’s obligations under Section 6.20 of the Merger
Agreement shall be satisfied by means of a letter of credit rather than a performance bond.
The terms of such letter of credit shall be consistent with Section 6.20 of the Company
Disclosure Schedule.
(d) Office Space. At Forest’s reasonable request, the Company and Spinco shall permit
employees of Forest to use, for a transition period ending three months after the Closing,
office space in Spinco’s Lafayette office, provided the Company or Spinco then currently
occupies such property. At the Company’s or Spinco’s reasonable request, Forest shall
permit employees of the Company or Spinco to use, for a transition period ending three
months after the Closing, office space in Forest’s Denver office, provided Forest then
currently occupies such property.
(e) Employees. The employment of all persons who are employees of Spinco immediately
prior to the Distribution but who are on short-term disability (“STD”) or workers’
compensation leave at that time (“Covered Employees”) shall be transferred from Spinco to
Forest immediately prior to the Distribution and shall remain eligible for the same benefits
normally available to Forest employees on STD or workers’ compensation leave. At the
Closing, Forest shall provide the Company with a schedule identifying all Covered Employees.
If a Covered Employee on STD leave returns to work at or prior to the time when such
individual would cease to be eligible for Forest’s STD leave (which eligibility ceases 180
days from the inception of disability, inclusive of an elimination period), the Company or
an affiliate of the Company shall offer such Covered Employee employment on the same terms
and conditions as would have applied to such Covered Employee had he or she remained
continuously employed with Spinco and its affiliates from the inception of such Covered
Employee’s disability, and such Covered Employee will thereupon be deemed to be a Continuing
Spinco Employee for purposes of the Transaction Agreements. If a Covered Employee on
workers’ compensation leave returns to work within six months of going on such leave, the
Company or an affiliate of the Company shall offer such Covered Employee employment on the
same terms and conditions as would have applied to such Covered Employee had he or she
remained continuously employed with Spinco and its affiliates from the inception of such
Covered Employee’s workers’ compensation leave, and such Covered Employee will thereupon be
deemed to be a Continuing Spinco Employee for purposes of the Transaction Agreements. Each
such Covered Employee who accepts such offer of employment from the Company or an affiliate
of the Company shall have no further employment relationship with Forest or any affiliate of
Forest. With respect to the period during which any Covered Employees participate in
Forest’s STD program or are on workers’ compensation leave (and during any COBRA
continuation period applicable to any such Covered Employee or his or her dependents),
Forest (or its insurer) shall administer the benefits that such employees receive pursuant
to the terms of Forest’s
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medical, dental, vision, life insurance, voluntary life insurance,
accidental death and dismemberment insurance, voluntary accidental death and dismemberment insurance,
employee assistance program, flexible benefits program, long term disability, club
memberships and bus pass plans (collectively, the “Covered Employee Forest Plans”) as in
effect on the Distribution Date and as may be amended by Forest in its sole discretion;
provided, that if any such Covered Employee returns to work on a date other than the first
day of a calendar month, such Covered Employee shall remain eligible for participation under
the Covered Employee Forest Plans until the last day of the calendar month in which such
Covered Employee returns to work. With respect to the period during which any Covered
Employees participate in Forest’s STD program, the Company shall pay to Forest an amount
equal to the sum of (i) Forest’s 2006 COBRA rates to maintain medical, dental and vision
insurance during such period for such Covered Employees and their dependents who participate
in the Covered Employee Forest Plans, and (ii) Forest’s actual costs during such period for
the provision of STD, life insurance, voluntary life insurance, accidental death and
dismemberment insurance, voluntary accidental death and dismemberment insurance, employee
assistance program, flexible benefits program, long term disability, club memberships and
bus pass benefits. Covered Employees who ultimately become employees of the Company (or an
affiliate of the Company) pursuant to this paragraph shall be entitled, starting on the
first day of the first calendar month following the date of commencement of employment (or
if such date of commencement of employment is the first day of a calendar month, starting on
such date of commencement of employment), to all benefits accruing to Spinco Employees
pursuant to the terms of the Employee Benefits Agreement after the date of commencement of
employment (“Commencement Date”), but shall not be entitled to any such benefits accruing
prior to such date; provided, however, that (A) such Covered Employees shall be entitled to
the conversion of their Unvested Forest Stock Options existing at the Commencement Date to
options to acquire shares of the Company Common Stock utilizing the Option Exchange Ratio
provided in Section 2.9 of the Merger Agreement, but according to daily closing prices for
the last five trading days immediately preceding the Commencement Date (rather than daily
closing prices before and after the Effective Time) and (B) in lieu of a direct plan-to-plan
transfer of assets with respect to such Covered Employees from the Forest Savings Plan to
the Company Savings Plan as provided in Section 6.9(d) of the Merger Agreement, each such
Covered Employee shall be allowed to elect a direct rollover from the Forest Savings Plan to
the Company Savings Plan on such reasonable terms and conditions as are agreed to by Forest
and the Company (such terms and conditions shall, however, permit an in-kind rollover of any
outstanding loan from the Forest Savings Plan to such Covered Employee).
(f) Relocation Benefits. Spinco or the Company may impose the condition that any
relocation benefits paid to an employee pursuant to Section 6.8(e) of the Merger Agreement
must be repaid by the employee if such employee voluntarily terminates employment with
Spinco or the Company, as applicable, within one year of such employee’s relocation.
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(g) Continuing Spinco Employees. If the Closing occurs on a date other than the first
day of a calendar month, (i) the Continuing Spinco Employees shall remain
eligible for participation under Forest’s medical, dental, vision, life insurance,
voluntary life insurance, accidental death and dismemberment insurance, voluntary accidental
death and dismemberment insurance, employee assistance program and flexible benefits plans
(collectively, the “Continuing Spinco Employee Forest Plans”) until the last day of the
calendar month in which the Closing occurs; (ii) the Continuing Spinco Employees will be
eligible for participation under the Company’s corresponding benefits plans (if any)
beginning on the first day of the first calendar month following the date of the Closing;
and (iii) if the employment of a Continuing Spinco Employee is terminated prior to the first
day of the first calendar month following the date of the Closing, such Continuing Spinco
Employee shall remain eligible for participation under the Continuing Spinco Employee Forest
Plans until the last day of the calendar month in which the Closing occurs, and Forest shall
offer COBRA coverage to each such terminated Continuing Spinco Employee. With respect to
the period from the Closing until the last day of the calendar month in which the Closing
occurs, the Company shall pay to Forest an amount equal to the sum of (i) Forest’s 2006
COBRA rates to maintain medical, dental and vision insurance during such period for the
Continuing Spinco Employees and their dependents who participate in the Continuing Spinco
Employee Forest Plans, and (ii) Forest’s actual costs during such period for the provision
of life insurance, voluntary life insurance, accidental death and dismemberment insurance,
voluntary accidental death and dismemberment insurance, employee assistance program and
flexible benefits to the Continuing Spinco Employees.
(h) Distribution Record Date. The Parties agree that, unless the Company consents
otherwise, the Closing shall occur no earlier than five Business Days after the Record Date
for the Distribution. Subject to the approval of the Board of Directors of Forest, and
subject to the Company’s Registration Statement on Form S-1 being effective, the Parties
agree that the Record Date for the Distribution shall be no later than five Business Days
prior to the 2006 annual meeting of the Company’s stockholders.
(i) List of Current Spinco Employees. Schedule A to the Employee Benefits Agreement is
amended by making the deletions and additions indicated on Annex 1 hereto.
(j) Company Common Stock. The two references to the term “Spinco Common Stock” in
Section 9.1(c) of the Distribution Agreement are each amended to refer to “Company Common
Stock.” The words “to be issued in connection with the Distribution and the Merger,
respectively,” in such Section 9.1(c) are amended to read “to be issued in connection with
the Merger,”.
(k) Requisite Approval. Section 5.20 of the Merger Agreement is restated in its
entirety as follows:
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“Vote Required. The only vote of the stockholders of the Company required under any
of the DGCL or the Company’s Second Amended and Restated Certificate of
Incorporation for adoption of this Agreement and the approval of
the Certificate of Amendment of the Company’s Second Amended and Restated
Certificate of Incorporation is the affirmative vote of the holders of a majority of
the outstanding shares of Company Common Stock entitled to vote (sometimes referred
to herein as the “Requisite Approval”).”
(l) Certain Covenants. Clause (i) of Section 6.2(b) of the Merger Agreement is deleted
in its entirety, and clauses (ii) and (iii) are re-numbered clauses (i) and (ii),
respectively. The penultimate sentence of Section 6.2(b) of the Merger Agreement is
amended to add, after the parenthetical “(whether in cash, securities or property)”, the
phrase “, except to Forest or any of its wholly owned Subsidiaries”. Section 6.2(f) of the
Merger Agreement is amended to add, after the words “Other than”, the phrase “dispositions
of property to Forest or any of its wholly owned Subsidiaries,”. The Parties acknowledge
and agree that any dividend or other distribution by Spinco or any of its Subsidiaries to
Forest or any of its Subsidiaries (other than the Cash Amount) permitted as a result of the
amendments effected by this paragraph (l) shall be included in the calculation of the Cash
Amount pursuant to the Distribution Agreement as a deduction thereto (with the value of any
non-cash dividends or distributions being reasonably determined by the Company).
(m) Amendments to Distribution Agreement. Section 4.3 of the Distribution Agreement is
amended by changing the date therein from June 30, 2006 to September 30, 2006. In the
introductory paragraph to the definition of “Spinco Assets,” the words “prior to the
Contribution” shall be changed to “prior to the Distribution”. The word “and” at the end of
clause (l) of the definition of “Spinco Assets” shall be deleted, and the period at the end
of clause (m) thereof shall be replaced with “; and”. A new clause (n) shall be inserted in
the definition of “Spinco Assets,” which clause shall read as follows:
“(n) all cash attributable to the assets described in paragraphs (a) through
(m) above from and after December 1, 2005.”
The Distribution Agreement’s definition of “Cash Amount” is amended in the following
respects:
In item (ii), the phrase “or any of its subsidiaries” shall be inserted immediately
after the word “Forest” (in the first instance where “Forest” appears).
In item (iii), the words “during the Measurement Period” shall be changed to “from
the Measurement Date through November 30, 2005”, and the phrase “or any of its
subsidiaries” shall be inserted immediately after the word “Forest.”
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In item (vi), the phrase “received or paid by Forest or any of its subsidiaries”
shall be inserted immediately after the phrase “net settlement amount.”
In item (vii), the phrase “or any of its subsidiaries” shall be inserted immediately
after the word “Forest” (in both instances where “Forest” appears).
In item (xii), the period at the end of the item shall be deleted and replaced with
the following: “; plus or minus, as determined below,”.
The following new item (xiii) shall be added: “An amount to adjust for components of
items (i)-(xii) of this definition that are compensated through the actual
settlement of intercompany accounts arising under that Intercompany Services
Agreement dated December 1, 2005 between Forest and Spinco. For purposes of the
preceding sentence, if the net settlement amount results in an amount payable to
Spinco, such net amount will be added to the Cash Amount, and if the net settlement
results in an amount payable to Forest, such net amount will be deducted from the
Cash Amount.”
The Parties acknowledge and agree that the amendments set forth in this paragraph
(m) are not intended to change the respective positions of the Parties with respect
to the calculation of the Cash Amount from what they would have been had (A) the
Contribution been consummated immediately prior to the Distribution and (B) the
Intercompany Services Agreement referred to above not been executed.
(n) Notices. After the date of this Letter Agreement, any notices to be delivered to
Forest or Spinco (prior to the Effective Time) under the Transaction Agreements shall be
delivered to Forest Oil Corporation or Forest Energy Resources, Inc., 000 Xxxxxxxxxxx
Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxx 00000, Attention: General Counsel, Facsimile: (000)
000-0000. After February 3, 2006, any notices to be delivered to the Company or Spinco
(after the Effective Time) under the Transaction Agreements shall be delivered to One
BriarLake Plaza, Suite 2000, 0000 Xxxx Xxx Xxxxxxx Xxxxxxx Xxxxx, Xxxxxxx, Xxxxx 00000,
Attention: General Counsel, Facsimile: (000) 000-0000.
This Letter Agreement will be governed by, and construed in accordance with, the laws of the
State of Delaware without giving effect to the conflicts of law principles thereof.
Each Party represents to each other Party that this Letter Agreement has been duly executed
and delivered by such Party and, assuming the due execution and delivery thereof by each other
Party, is a legal, valid and binding obligation of such Party, enforceable in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting the rights of creditors generally and by general
principles of equity.
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This Letter Agreement may be executed in counterparts, each of which shall be deemed an
original and all of which shall constitute one and the same instrument.
If the foregoing is in accordance with your understanding please indicate your agreement by
signing below, at which time this Letter Agreement will constitute a binding agreement among us.
| Very truly yours, MARINER ENERGY, INC. |
||||
| By: | /s/ Xxxx X. Xxxxxx | |||
| Name: | Xxxx X. Xxxxxx | |||
| Title: | Vice President, Chief Financial Officer and Treasurer | |||
| MEI SUB, INC. |
||||
| By: | /s/ Xxxx X. Xxxxxx | |||
| Name: | Xxxx X. Xxxxxx | |||
| Title: | Vice President, Chief Financial Officer and Treasurer | |||
Accepted and Agreed as of
the date first above written:
the date first above written:
FOREST OIL CORPORATION |
||||||
By: |
/s/ Cyrus X. Xxxxxx XX | |||||
| Title: Vice President, General Counsel and Secretary | ||||||
FOREST ENERGY RESOURCES, INC. |
||||||
By: |
/s/ X.X. Xxxxxx | |||||
| Title: President | ||||||
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