EXHIBIT 2.9
MEMBERSHIP INTEREST PURCHASE AGREEMENT
DATED AS OF MAY 24, 2007
AMONG
FOREST ALASKA HOLDING LLC,
AS SELLER;
FOREST ALASKA OPERATING LLC,
AS THE COMPANY;
FOREST OIL CORPORATION
(FOR PURPOSES OF SECTIONS 7.6, 7.14, 10.1 AND ARTICLE XII ONLY)
AND
PACIFIC ENERGY RESOURCES LTD.
AS BUYER
TABLE OF CONTENTS
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ARTICLE I DEFINITIONS.....................................................1
ARTICLE II EFFECTIVE DATE; CLOSING.........................................7
2.1 Effective Date; Closing.............................................7
2.2 Proceedings at Closing..............................................8
ARTICLE III SALE AND PURCHASE OF MEMBERSHIP INTERESTS; CONSIDERATION........8
3.1 Sale and Purchase of Membership Interests...........................8
3.2 Amount and Form of Consideration....................................8
3.3 Payment of Consideration............................................8
3.4 Price Adjustments...................................................8
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE COMPANY....9
4.1 Organization and Power..............................................9
4.2 Authorizations; Execution and Validity.............................10
4.3 Capitalization. ...................................................10
4.4 Financial Statements; Other Financial Data.........................10
4.5 Consents...........................................................11
4.6 No Defaults or Conflicts...........................................11
4.7 Agreements, Contracts and Commitments..............................11
4.8 Litigation.........................................................12
4.9 Taxes..............................................................12
4.10 Fees...............................................................13
4.11 Absence of Certain Changes or Events...............................13
4.12 Compliance with Laws...............................................14
4.13 Transactions with Related Parties..................................14
4.14 Books and Records..................................................14
4.15 Information Furnished..............................................14
4.16 Directors and Officers.............................................14
4.17 Bank Accounts......................................................14
4.18 Owned Real Property................................................15
4.19 Leased Real Property...............................................15
4.20 Intentionally left blank...........................................15
4.21 Title to Oil and Gas Properties....................................15
4.22 Environmental Matters..............................................16
4.23 Bonding Matters....................................................17
4.24 Insurance..........................................................17
4.25 ERISA..............................................................17
4.26 Condition of Assets................................................17
4.27 Lease Operating Expenses...........................................17
4.28 Hedging Transactions...............................................17
4.29 Prepayment Premium; Total Company Debt.............................18
ARTICLE V REPRESENTATIONS AND WARRANTIES OF SELLER.......................18
5.1 Organization and Good Standing.....................................18
5.2 Authorization of Agreement.........................................18
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5.3 Conflicts, Consents of Third Parties ..............................18
5.4 Brokers ...........................................................19
5.5 Litigation.........................................................19
5.6 Ownership of Membership Interests..................................19
5.7 Tax Status.........................................................19
5.8 Marketable Title...................................................19
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF BUYER........................19
6.1 Organization and Good Standing.....................................19
6.2 Authorization of Agreement.........................................20
6.3 Conflicts, Consents of Third Parties...............................20
6.4 No Default.........................................................20
6.5 Litigation.........................................................20
6.6 Investment Intent..................................................20
6.7 Disclosure of Information..........................................20
6.8 Funding Commitments................................................21
6.9 Brokers ...........................................................21
ARTICLE VII ADDITIONAL AGREEMENTS..........................................21
7.1 Further Actions....................................................21
7.2 Conduct of Business Pending Closing................................21
7.3 Title Defects......................................................22
7.4 Environmental Defects..............................................24
7.5 Gas Imbalances.....................................................25
7.6 Access to Information..............................................26
7.7 Regulatory Approvals...............................................26
7.8 Agreement to Defend................................................26
7.9 Other Actions......................................................26
7.10 LIMITATION AND DISCLAIMER OF IMPLIED REPRESENTATIONS AND
WARRANTIES OF THE COMPANY AND SELLER...............................26
7.11 Change of Company Name.............................................27
7.12 Account Signatories................................................27
7.13 Cooperation with Financing.........................................27
7.14 Hedge Assumption...................................................28
ARTICLE VIII CONDITIONS TO CLOSING..........................................28
8.1 Buyer's Conditions.................................................28
8.2 Seller's Conditions................................................29
ARTICLE IX DELIVERIES AT CLOSING..........................................29
9.1 Deliveries by Seller to Buyer......................................29
9.2 Deliveries by Buyer to Seller and the Company......................30
ARTICLE X TRANSITION OPERATIONS..........................................31
10.1 Transition Operations..............................................31
ARTICLE XI TERMINATION....................................................31
11.1 Termination........................................................31
11.2 Effect of Termination .............................................32
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ARTICLE XII INDEMNIFICATION................................................32
12.1 Seller and FOC Indemnification....................................32
12.2 Buyer Indemnification.............................................32
12.3 Indemnification Procedures........................................32
12.4 Limits on Indemnification.........................................33
ARTICLE XIII TAXES..........................................................34
13.1 Sales and Use Taxes; Property Taxes...............................34
13.2 Tax Proceedings...................................................35
13.3 Real and Personal Property Taxes..................................35
13.4 Property Tax Reporting............................................35
13.5 Production Taxes..................................................35
13.6 Income Taxes......................................................36
13.7 Purchase Price Allocation.........................................36
ARTICLE XIV GENERAL........................................................36
14.1 Governing Law; Choice of Forum....................................36
14.2 Amendments........................................................36
14.3 Waivers ..........................................................36
14.4 Notices...........................................................36
14.5 Successors and Assigns, Parties in Interest.......................37
14.6 Severability......................................................37
14.7 Entire Agreement .................................................37
14.8 Schedules ........................................................38
14.9 Remedies .........................................................38
14.10 Expenses..........................................................38
14.11 Release of Information; Confidentiality...........................38
14.12 Certain Construction Rules........................................38
14.13 Counterparts......................................................39
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MEMBERSHIP INTEREST PURCHASE AGREEMENT
This Membership Interest Purchase Agreement dated as of May 24, 2007 (the
"Agreement") is entered into by and among Pacific Energy Resources Ltd., a
Delaware corporation ("Buyer"), Forest Alaska Operating LLC, a Delaware limited
liability company (the "Company"), Forest Alaska Holding LLC, a Delaware limited
liability company ("Seller"), and, for purposes of Sections 7.6, 7.14, 10.1 and
Article XII only, Forest Oil Corporation, a New York corporation ("FOC")
pertaining to the purchase and sale of 100% of the membership interests of the
Company.
WHEREAS, the Seller owns all the outstanding membership interests (the
"Membership Interests") of the Company; and
WHEREAS, Buyer desires to purchase from Seller and Seller desires to sell
to Buyer all of the Membership Interests on the terms and subject to the
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements, representations,
warranties and subject to the conditions contained herein, the parties hereto
hereby agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement:
"Affiliate" means, as to any Person, a Person that, directly or indirectly,
controls, is controlled by, or is under common control with such Person.
"Aggregate Title Defect Value" has the meaning specified in Section 7.3(d).
"Aggregate Environmental Defect Value" has the meaning specified in Section
7.4(c).
"Agreement" has the meaning specified in the preamble hereof.
"Allocated Values" means the allocation of values of the Oil and Gas
Properties included in the Ownership Interests set forth on Exhibit "A-2"
attached hereto. The Allocated Values for each Oil and Gas Property has been
agreed to by Buyer and Seller and represents a good faith allocation of value of
the Oil and Gas Properties.
"Base Purchase Price" has the meaning specified in Section 3.2.
"Basket Amount" has the meaning specified in Section 11.4(a).
"Buyer" has the meaning specified in the preamble hereof.
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"CERCLA" has the meaning specified in the definition of "Environmental
Laws."
"CERCLIS" means the Comprehensive Environmental Response, Compensation and
Liability Information System List.
"Closing" has the meaning specified in Section 2.1.
"Closing Date" has the meaning specified in Section 2.1.
"Closing Date Amounts" means the aggregate of the amounts set forth in
Subsections 3.3(a)(i), (ii) and (iii).
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning specified in the preamble hereof.
"Company Debt" means (a) all indebtedness of the Company for the repayment
of borrowed money, whether or not represented by bonds, debentures, notes or
similar instruments, all accrued and unpaid interest thereon, and, solely with
respect to the Credit Agreement, all unpaid premiums, prepayment penalties, fees
and other amounts; (b) all other indebtedness of the Company evidenced by bonds,
debentures, notes or similar instruments, including all accrued and unpaid
interest thereon, including intercompany debt; and (c) all obligations of the
Company as lessee under capital leases as determined in accordance with GAAP.
"Company's Senior Lender" means Credit Suisse.
"Confidentiality Agreement" means that certain Confidentiality Agreement by
and between Forest Oil Corporation and Buyer dated March 8, 2007.
"Contract" means any contract, agreement, indenture, note, bond, loan,
instrument, lease, conditional sale contract, mortgage, license, franchise,
insurance policy or commitment, whether written or oral.
"Credit Agreement" means the First Lien Credit Agreement and the Second
Lien Credit Agreement, each dated as of December 8, 2006 (together with all
ancillary agreements) by and among the Company, as Borrower, the Company's
Senior Lender, and certain other financial institutions, as Lenders (as amended
and supplemented as of the date hereof).
"Defensible Title" means such right, title and interest that is (a) with
respect to Ownership Interests of record, evidenced by an instrument or
instruments filed of record in accordance with the conveyance and recording laws
of the applicable jurisdiction to the extent necessary to give the Company and
Buyer, through its ownership of the Membership Interests, the right to enjoy the
benefits of possession of the Ownership Interests reflected on Exhibit "A", and,
with respect to Ownership Interests not yet earned under a farmout agreement, if
any, is described in and subject to a farmout agreement containing terms and
provisions reasonably consistent with terms and provisions used in the domestic
oil and gas business and under which there exists no default by the Company and
(b) subject to Permitted Liens, free and clear of all Liens, claims,
infringements, and other burdens.
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"DGCL" means the Delaware General Corporation Law.
"Effective Date" has the meaning specified in Section 2.1.
"Environmental Defect" has the meaning specified in Section 7.4(b).
"Environmental Law" means any Law of any Governmental Authority whose
purpose is to conserve or protect human health, the environment, wildlife or
natural resources, including, without limitation, the Clean Air Act, as amended,
the Federal Water Pollution Control Act, as amended, the Rivers and Harbors Act
of 1899, as amended, the Safe Drinking Water Act, as amended, the Comprehensive
Environmental Response, Compensation and Liability Act, as amended ("CERCLA"),
the Superfund Amendments and Reauthorization Act of 1986, as amended, the
Resource Conservation and Recovery Act of 1976, as amended, the Hazardous and
Solid Waste Amendments Act of 1984, as amended, the Toxic Substances Control
Act, as amended, the Hazardous Materials Transportation Act, as amended, and
Title 18 of the Alaska Administrative Code.
"Financial Statements" has the meaning specified in Section 4.4.
"FOC" has the meaning specified in the preamble hereof.
"GAAP" means accounting principles generally accepted in the United States
of America, as in effect from time to time and applied on a consistent basis.
"Governmental Authority" means any federal, state, provincial, local or
foreign government or governmental regulatory body and any of their respective
subdivisions, agencies, instrumentalities, authorities, courts or tribunals
"Hazardous Material" means (a) any "hazardous substance," as defined by
CERCLA; (b) any "hazardous waste" as defined by the Resource Conservation and
Recovery Act, as amended; or (c) petroleum, petroleum hydrocarbons, or any
fraction or byproducts thereof.
"Hedging Transaction" means any futures, hedge, swap, collar, put, call,
floor, cap, option or other contract that is intended to benefit from, relate to
or reduce or eliminate the risk of fluctuations in the price of commodities,
including Hydrocarbons, interest rates, currencies or securities.
"Hydrocarbons" means oil, condensate, gas, casinghead gas and other liquid
or gaseous hydrocarbons.
"Income Taxes" means all taxes, assessments, levies or other charges,
including any interest, penalties and additions thereto which are imposed upon a
Party (whether disputed or not), and
i. which are based or assessed upon a Party's capital, income or receipts,
including, without limitation, federal, state, local or foreign income,
franchise and gross receipts Taxes assessed by a Governmental Authority
(but only to the extent the same are assessed upon income or receipts), and
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ii. any payroll taxes, capital taxes or withholding taxes, or any other
taxes, assessments, levies or other charges which are imposed by a
Governmental Authority other than Property Taxes.
"Indemnified Party" has the meaning specified in Section 12.3(a).
"Indemnifying Party" has the meaning specified in Section 12.3(a).
"Injunction" means a temporary restraining order, preliminary or permanent
injunction or other order issued by a court of competent jurisdiction, an order
of a Governmental Entity having jurisdiction over any Party hereto, or any legal
restraint or prohibition.
"Knowledge", with respect to any entity, means knowledge of such entity's
executive officers, after reasonable investigation.
"Lands" has the meaning specified in the definition of "Oil and Gas
Properties."
"Law" means any federal, state, provincial, municipal, local or foreign
law, statute, rule, rule, writ, order, decree, ordinance, code or regulation.
"Leases" has the meaning specified the definition of "Oil and Gas
Properties."
"Legal Proceeding" means any judicial, administrative or arbitral action,
suit, proceeding (public or private), litigation, investigation, complaint,
claim or governmental proceeding.
"Lien" means any lien, pledge, mortgage, deed of trust, security interest,
attachment, right of first refusal, option, easement, covenant, encroachment, or
any other adverse claim whatsoever.
"Litigation" means the Legal Proceedings, Orders and Official Actions
listed on Schedule 4.8.
"Losses" has the meaning specified in Section 12.1.
"Material Adverse Effect" means:
(i) As to Buyer, any breach of Buyer's representations and warranties,
which individually or in the aggregate with other breaches would materially
impair Buyer's ability to consummate the transactions contemplated by this
Agreement or prevent the consummation of any of the transactions
contemplated hereby.
(ii) As to Seller, any breach of Seller's representations and warranties,
which individually or in the aggregate with other breaches would materially
impair Seller's ability to consummate the transactions contemplated by this
Agreement or prevent the consummation of any of the transactions
contemplated hereby.
(iii) As to the Company, (A) any breach of the Company's representations
and warranties which individually or in the aggregate with other breaches,
would result in a
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decrease in the Company's value by an amount greater or equal to five
percent (5%) of the Purchase Price, or (B) any change in its financial
condition or results of operations which has or would, with the passage of
time, result in a decrease in the Company's value by an amount greater or
equal to five percent (5%) of the Purchase Price; provided, however, that
any effect, direct or indirect, occasioned by a decline in the price of
crude oil or natural gas, whether in global, national or local markets
shall be excluded from any Material Adverse Effect calculation hereunder.
"Material Contracts" has the meaning specified in Section 4.7.
"Membership Interests" has the meaning specified in the preamble hereof.
"Notification Deadline" has the meaning specified in Section 7.3(a).
"Official Action" shall mean any domestic or foreign decision, order, writ,
injunction, decree, judgment, award or any determination, both as presently
existing and effective or presently existing and as may become effective in the
future, by any court, administrative body, or other tribunal.
"Oil and Gas Properties" means all right, title, interest and estate, real
or personal, recorded or unrecorded, movable or immovable, tangible or
intangible, in and to: (i) oil and gas leases, oil, gas and mineral leases,
subleases and other leaseholds, royalties, overriding royalties, net profit
interests, mineral fee interests, carried interests and other properties and
interests (the "Leases") and the lands covered thereby ("Land(s)") and any and
all oil, gas, water or injection xxxxx thereon or applicable thereto (the
"Xxxxx"); (ii) any pools or units which include all or a part of any Land or
include any Well (the "Units") and including without limitation all right, title
and interest in production from any such Unit, whether such Unit production
comes from xxxxx located on or off of the Lands, and all tenements,
hereditaments and appurtenances belonging to, used or useful in connection with
the Leases, Lands and Units; (iii) interests under or derived from all
contracts, agreements and instruments applicable to or by which such properties
are bound or created, to the extent applicable to such properties, including,
but not limited to, operating agreements, gathering agreements, marketing
agreements (including commodity swap, collar and/or similar derivative
agreements), transportation agreements, processing agreements, unitization,
pooling and communitization agreements, declarations and orders, joint venture
agreements, and farmin and farmout agreements; (iv) easements, permits,
licenses, servitudes, rights-of-way, surface leases and other surface rights
appurtenant to, and used or held for use to the extent applicable to such
properties; and (v) equipment, machinery, fixtures and other tangible personal
property and improvements located on or used or obtained in connection with such
properties. Attached hereto as Exhibit "A" is a description of the Oil and Gas
Properties. The respective "net revenue interest" and "working interest" of the
Company in the Oil and Gas Properties described on Exhibit "A" (the "Ownership
Interests") shall be a part of the definition of "Oil and Gas Properties."
"Order" means any order, judgment, Injunction, ruling, writ, award, decree,
statute, law, ordinance, rule or regulation.
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"Ownership Interests" has the meaning specified in the definition of "Oil
and Gas Properties."
"Party" mean Seller, the Company, FOC, the Buyer or any permitted successor
or assignee thereof.
"Permit" means any permit, license, certificate (including a certificate of
occupancy) registration, authorization, application, filing, notice,
qualification, waiver of any of the foregoing or approval of a Governmental
Authority.
"Permitted Liens" means: (a) Liens for Taxes that are not yet due and
payable or that are being contested in good faith by appropriate proceedings and
as to which adequate reserves have been established in accordance with GAAP, (b)
operators' liens and statutory liens for labor and materials, where payment is
not due (or that, if delinquent, are being contested in good faith); (c)
operating agreements, unit agreements, unitization and pooling designations and
declarations, gathering and transportation agreements, processing agreements,
gas, oil and liquids purchase, sale and exchange agreements and other contracts,
agreements and installments; (d) statutory or regulatory authority of
governmental agencies; (e) easements, surface leases and rights, plat
restrictions, pipelines, grazing, logging, canals, ditches, reservoirs,
telephone lines, power lines, railways and similar encumbrances that have not
materially affected or interrupted, and are not reasonably expected to
materially affect or interrupt, the claimed ownership of the party, the
operation of the Oil and Gas Properties or the receipt of production revenues
from the Oil and Gas Properties affected thereby; (f) liens, charges,
encumbrances and irregularities in the chain of title which, because of
remoteness in or passage of time, statutory cure periods, marketable title acts
or other similar reasons, have not materially affected or interrupted, and are
not reasonably expected to materially affect or interrupt, the claimed ownership
of the party, the operation of the Oil and Gas Properties or the receipt of
production revenues from the Oil and Gas Properties affected thereby; and (g)
other liens set forth in Schedule 4.21.
"Person" means any natural person, corporation, partnership, limited
liability company, trust, unincorporated organization, Governmental Authority,
or other entity.
"Property Taxes" means all federal, state or local taxes, assessments,
levies or other charges, which are imposed upon the Oil and Gas Properties or
other real and personal property owned by the Company, including, without
limitation, ad valorem, property, documentary or stamp, as well as any interest,
penalties and fines assessed or due in respect of any such taxes, whether
disputed or not.
"Production Taxes" means all federal, state or local taxes, assessments,
levies or other charges, which are imposed upon production from the Oil and Gas
Properties, including, without limitation, excise taxes on production, severance
or gross production, as well as any interest, penalties and fines assessed or
due in respect of any such taxes, whether disputed or not.
"Purchase Price" has the meaning specified in Section 3.2.
"Real Property Leases" has the meaning specified in Section 4.19.
"Related Party" means (i) any Affiliate of the Company or Seller.
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"Schedule" means a disclosure schedule provided by Seller to Buyer pursuant
to this Agreement.
"Securities Act" means the Securities Act of 1933, as amended.
"Seller" has the meaning specified in the preamble hereof.
"Subsidiaries" means, with respect to any Person, each entity as to which
such Person (either alone or through or together with any other Subsidiary) (i)
owns beneficially or of record or has the power to vote or control, 50% or more
of the voting securities of such entity or of any class of equity interests of
such entity the holders of which are ordinarily entitled to vote for the
election of the members of the Board of Directors or other persons performing
similar functions, (ii) in the case of partnerships, serves as a general
partner, (iii) in the case of a limited liability company, serves as a managing
member or owns a majority of the equity interests or (iv) otherwise has the
ability to elect a majority of the directors, trustees or managing members
thereof.
"Taxes" means, collectively, Income Taxes, Property Taxes and Production
Taxes.
"Tax Return" means any return, report, information statement, or similar
statement required to be filed with respect to any Taxes (including any attached
schedules), including, without limitation, any information return, claim for
refund, amended return and declaration of estimated Tax.
"Title Defect" has the meaning specified in Section 7.3(a).
"Title Defect Value" means, with respect to each Title Defect, the
reduction of the Allocated Value of the affected Ownership Interest as a result
of such Title Defect as determined in Section 7.3.
"Units" has the meaning specified in the definition of "Oil and Gas
Properties".
"Xxxxx" has the meaning specified in the definition of "Oil and Gas
Properties."
ARTICLE II
EFFECTIVE DATE; CLOSING
2.1 Effective Date; Closing. The effective date (for accounting purposes
only) of the transactions contemplated hereby shall be at 7:00 a.m., Alaska
Standard Time, on January 1, 2007 (the "Effective Date"). The Closing of the
transactions contemplated hereby (the "Closing") shall take place at the offices
of Seller, 000 Xxxxxxxxxxx Xx., Xxxxx 0000, Xxxxxx, XX 00000 at 10:00 a.m.,
Mountain Standard Time, on the later of (i) two business days after satisfaction
of all conditions to Closing (including agreement of the Parties on all Purchase
Price adjustments pursuant to Section 3.4), or June 30, 2007 (the "Closing
Date"). Notwithstanding any provision herein to the contrary, in no event shall
the Closing occur later than July 31, 2007.
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2.2 Proceedings at Closing. All proceedings to be taken and all documents
to be executed and delivered by all parties at the Closing shall be deemed to
have been taken and executed simultaneously, and no proceedings shall be deemed
taken nor any documents executed or delivered until all have been taken,
executed and delivered.
ARTICLE III
SALE AND PURCHASE OF MEMBERSHIP INTERESTS; CONSIDERATION
3.1 Sale and Purchase of Membership Interests. On the Closing Date, subject
to the terms and conditions set forth herein, the Seller will sell, transfer,
convey, assign and deliver to Buyer, and Buyer will purchase from the Seller,
the Membership Interests.
3.2 Amount and Form of Consideration. The total purchase price to be paid
by Buyer to Seller in consideration of the Membership Interests is FOUR HUNDRED
TWENTY MILLION DOLLARS AND NO/CENTS (US$420,000,000.00) (the "Base Purchase
Price"), subject to adjustment as provided in Section 3.4 (the Base Purchase
Price, as so adjusted, is the "Purchase Price").
3.3 Payment of Consideration.
(a) In consideration of the sale, transfer, conveyance, assignment and
delivery of the Membership Interests, Buyer will, subject to adjustment
pursuant to Section 3.4 hereof:
(i) Pay the Seller a performance deposit (the "Deposit") in the
amount of FOUR MILLION TWO HUNDRED THOUSAND DOLLARS AND NO/CENTS
(US$4,200,000.00) by wire transfer of immediately available funds upon
the execution of this Agreement;
(ii) pay the Seller an amount equal to the balance of the
Purchase Price by wire transfer of immediately available funds on the
Closing Date; and
(b) The Purchase Price shall be paid by wire transfer of immediately
available funds to Seller in accordance with the instructions of Seller
delivered to Buyer not later than 48 hours prior to the Closing).
3.4 Price Adjustments. The Base Purchase Price will be adjusted:
(a) Upward by the amount of US$18,433,160 being consideration for the
Company's working capital as at December 31, 2006;
(b) downward as may be required in Section 7.3 or 7.4;
(c) downward by the amount of the Deposit;
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(d) downward by the amount of $380,000,000, being $375,000,000 in debt
as reflected on the December 31, 2006 balance sheet plus the
$5,000,000 put premium which arises upon the early termination of the
Credit Agreement;
(e) upward by the amount of any cash equity contribution to the
Company by Seller or FOC between the date hereof and Closing, but
solely to the extent such contribution (i) reduces the principal or
the put premium under the Credit Agreement or (ii) is made pursuant to
Section 7.02 of the First Lien Credit Agreement; and
(f) upward or downward as may be required in Section 13.3.
No later than ten days before Closing, Seller will deliver to Buyer a
statement setting forth the Purchase Price as adjusted pursuant to this Section
3.4. Buyer shall have five days to review the statement and, if Buyer agrees
with Seller's calculations, the Parties shall proceed to Closing as scheduled.
If Buyer disagrees with Seller's calculations, the Parties shall negotiate in
good faith for five days to resolve their differences. If the Parties still
cannot agree after such five day period, they shall proceed to mediation with a
mutually agreeable mediator. If they cannot agree on a mediator within five
days, or if they are unable to reach agreement within ten days after selecting a
mediator, Closing shall proceed with the Purchase Price adjusted per the
adjustment demand of the Buyer. The allocated value of the adjusted assets
subject to dispute, as set forth in Exhibit A-2, shall be placed by Buyer in an
interest-bearing escrow account pending resolution of the dispute, and,
following Closing, the Parties shall immediately refer the adjustment dispute to
binding arbitration.
Such arbitration shall be conducted in Houston, Texas under the auspices of
the US Chamber of Commerce (the "Chamber"). It shall be conducted by a single
arbitrator chosen by mutual agreement of the Parties. Should the Parties fail to
reach agreement on an arbitrator, an arbitrator shall be chosen by the Chamber
in accordance with their Rule of Arbitration; provided that such arbitrator
shall be an expert in the valuation of oil & gas properties with at least 10
years of experience in the industry and may, but need not, be an attorney. The
arbitration shall be conducted with the greatest possible haste. The award of
the arbitrator shall be limited to an award to Seller of cash money, bounded by
the initial claims of the Parties as to the proper value of the adjustments.
Each Party shall bear its own costs, and the jointly incurred arbitration fees
shall be split equally between the Parties.
The foregoing arbitration clause shall apply only to disputes as to
potential Purchase Price adjustments made under this Section 3.4.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE COMPANY
The Seller and the Company hereby represent and warrant to Buyer as of the
date hereof and as of the Closing Date as follows:
4.1 Organization and Power. The Company is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Delaware and is
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qualified and in good standing to transact business in each jurisdiction in
which such qualification is required by Law, except where the failure to be so
qualified would not have a Material Adverse Effect. The Company has all
requisite corporate power and authority to execute, deliver and perform its
obligations under this Agreement and to consummate the transactions contemplated
hereby. The Company has heretofore delivered to Buyer complete and correct
copies of its constituent documents, each as amended to date.
4.2 Authorizations; Execution and Validity. The execution and delivery of
this Agreement by the Company, the performance of this Agreement by the Company
and the consummation by the Company of the transactions contemplated hereby and
thereby to be consummated by it, have been duly authorized by all necessary
corporate action and no other corporate action on the part of the Company is
necessary with respect thereto. This Agreement has been duly executed and
delivered by the Company and, when duly and validly executed and delivered by
Buyer and Seller, will constitute a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and similar laws of general applicability and by general principles
of equity.
4.3 Capitalization.
(a) The authorized equity ownership of the Company consists solely of
the Membership Interests, which are owned 100% of record and beneficially,
free and clear of any Liens (other than Liens that shall be released at or
prior to Closing) by Seller, and have been duly authorized and validly
issued, and are fully paid and non-assessable. There are no outstanding
options, subscriptions, warrants, calls, commitments, preemptive rights or
other rights obligating the Company to issue or sell any Membership
Interests or any securities convertible into or exercisable for any
Membership Interests, or otherwise requiring Seller or the Company to give
any Person the right to receive any benefits or rights similar to any
rights enjoyed by or accruing to the holders of Membership Interests or any
rights to participate in the equity or net income of the Company. All of
the issued Membership Interests of the Company were issued, and to the
extent purchased or transferred, have been so purchased or transferred, in
compliance with all applicable Laws, including federal and state securities
laws, and any preemptive rights and any other statutory or contractual
rights of any Seller.
(b) The Company has no Subsidiaries. The Company does not own,
directly or indirectly, any capital of or other equity interest in or has
any other investment in or outstanding loans to any corporation,
partnership or other entity or organization. There are no stockholders'
agreements, voting trusts or other agreements or understandings to which
Seller or the Company is a party or by which either is bound with respect
to the transfer or voting of any Membership Interests.
4.4 Financial Statements; Other Financial Data. Attached hereto on Schedule
4.4 are correct and complete copies of (i) the audited balance sheet of the
Company as of December 31, 2006, together with the related audited statements of
income and retained earnings and of cash flows for the period ended December 31,
2006 and (ii) the unaudited balance sheet of the Company as of March 31, 2007,
together with the related unaudited statements of income and
10
retained earnings and of cash flows for the quarter ended March 31, 2007 (the
"Financial Statements"). The Financial Statements present fairly in all material
respects the financial position of the Company as of the dates indicated, and
the results of its operations for the respective periods indicated. The
Financial Statements have been prepared in conformity with GAAP.
4.5 Consents. Schedule 4.5 sets forth the consents, authorizations and
approvals that must be obtained or waived prior to the consummation or
performance by the Company and Seller of the transactions contemplated by this
Agreement; excluding, therefrom any consents, authorizations and approvals that
the Buyer may be required to obtain in order to lawfully conduct business in
Alaska generally and to operate the Oil and Gas Properties, specifically.
4.6 No Defaults or Conflicts. Neither the execution and delivery by the
Company of this Agreement nor the consummation or performance by the Company of
the transactions contemplated by this Agreement to be consummated or performed
by it (i) results or will result in any violation of its constituent documents;
(ii) subject to obtaining any required consent under the Credit Agreement,
violates or conflicts with, or constitutes a breach of any of the terms or
provisions of or a default under, or results in the creation or imposition of
any Lien upon any property or asset of the Company, the trigger of any charge,
payment or requirement of consent, or the acceleration or increase of the
maturity of any payment date under: (A) any Contract or (B) any applicable Law
or Order to which the Company or any of its respective properties is subject.
4.7 Agreements, Contracts and Commitments. Except for the Leases or the
Units, all of which are listed on Exhibit "A," the Company has listed in
Schedule 4.7 all leases, contracts, agreements and instruments to which it is a
party as of the date hereof (i) which is an employment agreement between the
Company, on the one hand, and its officers and employees, on the other hand,
(ii) which, upon Closing, will (either alone or upon the occurrence of any
additional acts or events, including the passage of time) result in any material
payment or benefit (whether of severance pay or otherwise) becoming due, or the
acceleration or vesting of any right to any material payment or benefits, from
Buyer or the Company to any officer, director, consultant or employee of the
Company, (iii) which involves payment by or to the Company of more than
US$250,000 or extends for a term of six months or more, (iv) which expressly
limits the ability of the Company to compete in or conduct any line of business
or compete with any Person or in any geographic area or during any period of
time, in each case, if such limitation is or is reasonably likely to be material
to the Company, (v) which is a material joint venture agreement, joint operating
agreement, partnership agreement or other similar contract or agreement
involving a sharing of profits and expenses with one or more third Persons, (vi)
the benefits of which will be increased, or the vesting of the benefits of which
will be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement, or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement (including any stock option plan, stock appreciation rights plan,
restricted stock plan or stock purchase plan) or (vii) which is a limited
liability operating agreement or equity holder rights agreement or which
otherwise provides for the issuance of any securities in respect of this
Agreement (the "Material Contracts"). The Company has not breached, nor to the
Company's or Seller's Knowledge is there any claim or any legal basis for a
claim that the Company or any third party has breached, any of the terms or
conditions of any Material
11
Contract, except where any such breach, whether considered individually or in
the aggregate, could not be reasonably expected to result in a Material Adverse
Effect.
4.8 Litigation. There are no Legal Proceedings pending or, to the Company's
Knowledge, threatened against or affecting the Company or any of its assets that
are reasonably likely to have a Material Adverse Effect on the Company. The
Company is not subject to any Order or Official Action. There are no Legal
Proceedings pending against or, to the Company's or Seller's Knowledge,
threatened in writing against, the Company that questions the validity or
legality of any of this Agreement or any action taken or to be taken by the
Company in connection herewith or therewith.
4.9 Taxes.
(a) Except as disclosed on Schedule 4.9:
(i) There are no Liens for Taxes upon any of the properties or
assets of the Company (except for Permitted Liens).
(ii) No agreements relating to allocation or sharing of, or
liability or indemnification for, Taxes exist between the Company and
any other Person. Any internal tax allocation agreement shall
terminate at the Closing.
(iii) The Company is not a party to any arrangement, nor does it
hold any Oil and Gas Property in an entity treated as a tax
partnership for Tax purposes.
(iv) Within the times and in the manner prescribed by law, the
Company has filed all federal, state and local tax returns and all tax
returns for foreign countries, provinces and other governing bodies
having jurisdiction to levy taxes upon it.
(v) To the Company's and Seller's knowledge, all tax returns
filed by the Company for the taxable years ending in 2000 through 2006
constitute complete and accurate representations of their respective
tax liabilities for such years and accurately set forth all items (to
the extent required to be included or reflected in such returns)
relevant to their future tax liabilities, including the tax bases of
its properties and assets.
(v) The Company has not waived or extended any applicable statute
of limitations relating to the assessment of federal, state, local or
foreign taxes.
(vi) No examination of the federal, state, local or foreign tax
returns of the Company are currently in progress nor, to the Company's
and Seller's knowledge, is any such examination threatened.
(b) The Company is a disregarded entity for federal income tax
purposes under Section 7701 of the Code.
12
4.10 Fees. The Company has not paid or become obligated to pay any fee or
commission to any broker, finder or intermediary in connection with the
transactions contemplated hereby for which the Company or Buyer shall have
liability following the Closing.
4.11 Absence of Certain Changes or Events. Except as set forth on Schedule
4.11, as disclosed in the Financial Statements, since December 31, 2006, or
otherwise where the Buyer has consented in writing, (i) the Company has
conducted its business only in the ordinary course consistent with past practice
in all material respects, and (ii) there has not been any transaction or
occurrence by which the Company has:
(a) suffered any Material Adverse Effect;
(b) declared, set aside or paid any dividend or other distribution
(whether in cash, stock or property) with respect to any of its outstanding
Membership Interest, or made any redemption, purchase or other acquisition
of any of its equity securities;
(c) other than the principal payment of US$625,000 made under the
Credit Agreement on March 30, 2007 and payments that are within the scope
of Section 3.4(e) above, cancelled or paid any Company Debt (in any amount)
or waived any receivables, claims or rights in excess of US$100,000
individually or in the aggregate;
(d) suffered any uninsured casualty loss or damage in excess of
US$100,000 individually or in the aggregate;
(e) amended any material term of any equity security or Material
Contract of the Company;
(f) hired any employees;
(g) made any payments to any Affiliates except in the ordinary course
of business pursuant to the Intercompany Services Agreement referred to in
Section 10.1;
(h) incurred any obligation to make capital expenditures in excess of
US$250,000 individually or in the aggregate;
(i) sold, leased, encumbered or otherwise disposed of, or agreed to
sell, lease (whether such lease is an operating or capital lease), encumber
or otherwise disposed of any portion of its assets, other than in the
ordinary course of business consistent with past practice;
(j) amended any of its organizational documents, including its limited
liability company operating agreement;
(k) adopted any plan or agreement of merger or liquidation; or
(1) made any change in its accounting methods, principles or
practices.
13
4.12 Compliance with Laws. Schedule 4.12 lists all material Permits. The
Company holds all material Permits necessary for the lawful conduct of its
business and is in compliance in all material respects, with all Laws and Orders
applicable to its business and has filed with the proper authorities all
statements and reports required by the Laws and Orders to which the Company or
any of its properties or operations are subject. No claim has been made by any
Governmental Authority (and, to the Company's and Seller's Knowledge, no such
claim is anticipated) to the effect that the business conducted by the Company
fails to comply, in any respect, with any Law.
4.13 Transactions with Related Parties. Except as set forth in Schedule
4.13:
(a) No Related Party of the Company other than Seller has entered
into, or has had any direct or indirect financial interest in, any Material
Contract, transaction or business dealings involving the Company;
(b) No Related Party of the Company owns or has any interest in,
directly or indirectly, in whole or in part, any tangible or intangible
property used in the conduct of the business of the Company; and
(c) The Company has not, directly or indirectly, guaranteed or assumed
any indebtedness for borrowed money or otherwise for the benefit of any
Related Party of the Company.
4.14 Books and Records. The minute books and records of the Company are
current as of the date hereof (and shall be current as of the Closing) with
respect to all undertakings and authorizations, and contain a true, complete and
correct record of all actions taken at all meetings and by all written consents
in lieu of meetings of the Company's board of directors, or any committees
thereof, and members of the Company. The capital ledger and related Membership
Interest transfer records of the Company contain a true, complete and correct
record of the original issuance, transfer and other capitalization matters of
the Membership Interests. The accounting, financial reporting, and business
books and records of the Company accurately and fairly reflect in all material
respects the business and condition of the Company and the transactions and the
assets and liabilities of the Company with respect thereto. Without limiting the
generality of the foregoing, the Company has not engaged in any transaction with
respect to its business or operations, maintained any bank account therefor or
used any funds of the Company in the conduct thereof except for transactions,
bank accounts and funds that have been and are reflected in the normally
maintained books and records of the business.
4.15 Information Furnished. The Company has made available to Buyer and its
directors, officers, employees, counsel, representatives, financing sources,
customers, creditors, accountants and auditors, true and correct copies of all
agreements, documents, and other items listed on the Schedules to this Agreement
and all books and records of the Company.
4.16 Directors and Officers. Schedule 4.16 lists all of the directors and
officers of the Company as of the Closing Date. The Company has no employees.
4.17 Bank Accounts. Attached hereto as Schedule 4.17 is a list of all banks
or other financial institutions with which the Company has an account, showing
the type and account
14
number of each such account, and the names of the persons authorized as
signatories thereon or to act or deal in connection therewith.
4.18 Owned Real Property. Other than the Oil and Gas Properties and those
properties listed on Schedule 4.18, the Company does not own any real property.
4.19 Leased Real Property. Schedule 4.19 contains a complete and correct
list of all real property leases and any and all amendments thereto relating to
the leased real property to which the Company is a party or is bound (the "Real
Property Leases"). The Company has provided to Buyer correct and complete copies
of the Real Property Leases. Except as disclosed in Schedule 4.19, (i) each of
the Real Property Leases is in full force and effect, and, to the Company's and
Seller's Knowledge, is enforceable against the landlord which is party thereto
in accordance with its terms (except as such enforceability may be limited by
bankruptcy, insolvency, reorganization and similar laws affecting creditors
generally and by the availability of equitable remedies), (ii) there are no
subleases under the Real Property Leases and none of the Real Property Leases
has been assigned (other than collateral assignments to Company's Senior Lender
which will be released in their entirety at or prior to the Closing), (iii) no
notices of default or notices of termination have been received by the Company
with respect to the Real Property Leases which have not been withdrawn or
canceled and (iv) the Company is not, and to the Company's and Seller's
Knowledge, no other party is, in default under any Real Property Lease. To the
Company's and Seller's Knowledge there has been no receipt of any written notice
of a proceeding in eminent domain or other similar proceeding affecting property
listed on Schedule 4.19.
4.20 Intentionally left blank.
4.21 Title to Oil and Gas Properties. The Company now has and will have at
Closing Defensible Title to all Oil and Gas Properties included in the Ownership
Interests. Each Oil and Gas Property included or reflected in the Ownership
Interests entitles the Company to receive not less than the undivided interest
set forth in (or derived from) the Ownership Interests of all Hydrocarbons
produced, saved and sold from or attributable to such Oil and Gas Property, and
the portion of the costs and expenses of operation and development of such Oil
and Gas Property that is borne or to be borne by the Company is not greater than
the undivided interest set forth in the Ownership Interests. No fact,
circumstance or condition of the title to an Oil and Gas Property shall be
considered to effect a reduction in the value of the assets, unless due
consideration has been given to (a) the length of time that such Oil and Gas
Property has been producing Hydrocarbons and has been credited to and accounted
for by the Company and its predecessors in title, if any, and (b) whether any
such fact, circumstance or condition is of the type that can generally be
expected to be encountered in the area involved and is usually and customarily
acceptable to reasonable and prudent operators, interest owners and purchasers
engaged in the business of the ownership, development and operation of oil and
gas properties. All proceeds from the sale of the Company's share of the
Hydrocarbons being produced from its Oil and Gas Properties are currently being
paid in full to the Company by the purchasers thereof on a timely basis, and
none of such proceeds are currently being held in suspense by such purchaser or
any other party.
15
4.22 Environmental Matters. Except as set forth in Schedule 4.22 or in the
case of matters which have been resolved to the extent required by Environmental
Laws and for which no further remediation obligation or liability under
Environmental Laws exists:
(a) the Company has conducted and continues to conduct its business
and operated its assets, and the condition of each facility and property
currently owned, leased and operated by the Company is, in material
compliance with all Environmental Laws;
(b) the Company has not been notified by any Governmental Authority or
other third party that any of the operations or assets of the Company is
the subject of any investigation or inquiry by any Governmental Authority
evaluating whether any material remedial action is needed to respond to a
release or threatened release of any Hazardous Material or to the improper
storage or disposal (including storage or disposal at offsite locations) of
any Hazardous Material where such investigation or inquiry remains
unresolved as of the date hereof;
(c) neither the Company nor, to the Company's and Seller's Knowledge,
any other Person has filed any notice under any federal, state or local law
indicating that (i) the Company is responsible for the improper release
into the environment, or the improper storage or disposal, of any Hazardous
Material, or (ii) any Hazardous Material is improperly stored or disposed
of upon any property of the Company;
(d) the Company does not have any material contingent liability in
connection with (i) the release or threatened release into the environment
at, beneath or on any of the Oil and Gas Properties, or (ii) the storage or
disposal of any Hazardous Material;
(e) the Company has not received any claim, complaint, notice, inquiry
or request for information with respect to any alleged violation of any
Environmental Law or regarding potential liability under any Environmental
Law relating to operations or conditions of any facility or property
(including off site storage or disposal of any Hazardous Material from such
facilities or property) currently or formerly owned, leased or operated by
the Company;
(f) none of the Oil and Gas Properties is listed on the National
Priorities List pursuant to CERCLA or on the CERCLIS or on any other
federal or state list as sites requiring investigation or cleanup;
(g) the Company is not directly transporting and is not directly
arranging for the transportation of, any Hazardous Material to any location
which is listed on the National Priorities List pursuant to CERCLA, on the
CERCLIS, or on any similar federal or state list or which is the subject of
federal, state or local enforcement actions or other investigations that
may lead to material claims against the Company for remedial work, damage
to natural resources or personal injury, including claims under CERCLA;
(h) there are no sites, locations or operations at which the Company
is currently undertaking any remedial or response action relating to any
such disposal or release, as required by Environmental Laws; and
16
(i) all underground storage tanks and solid waste disposal facilities
owned or operated by the Company are used and operated in material
compliance with Environmental Laws.
(j) The Company and its Subsidiaries have obtained and are in
compliance with all material Permits under all Environmental Laws required
for the operation of the businesses of the Company as currently conducted
and, to the Knowledge of the Company and Seller, there are no pending or
threatened, actions or proceedings alleging violations of or seeking to
modify, revoke or deny renewal of any such Permits. Schedule 4.12 lists all
such Permits.
4.23 Bonding Matters. Schedule 4.23 lists all of the bonds and other
security arrangements that Seller or Company maintains as to the Oil and Gas
Properties or any portion thereof. No claim has been made by any Governmental
Authority that the Company has failed to comply with any law or regulation
governing the requirements of bonds as to the Seller's or Company's operations
of the Oil and Gas Properties.
4.24 Insurance. Schedule 4.24 lists all of the insurance policies and
coverages of any sort maintained by the Company, Seller or any of their
Affiliates which, any way, affect the Company's operations relating to the Oil
and Gas Properties. Such insurance coverage complies with all legal and
customary requirements for a business conducing operations such as those
conducted by the Company on or relating to the Oil and Gas Properties. The
Company has complied in all material respects with the terms and provisions of
such policies. Between the Effective Date and Closing, Seller shall insure that
policies substantially equivalent to those set forth on Schedule 4.24 shall
remain in full force and effect.
4.25 ERISA. The Company does not employ and has not at any time employed
any individual. The Company neither maintains nor contributes to, nor has it
previously maintained or contributed to, any "employee benefit plans," as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), whether or not subject to ERISA, and the Company has not,
nor will it have any liabilities or obligations with respect to employee benefit
plans maintained or contributed to or previously maintained or contributed to by
the Company or any trade or business, whether or not incorporated that together
with the Company would be deemed a "single employer" within the meaning of
Section 4001(a)(15) of ERISA, and the rules and regulations promulgated
thereunder.
4.26 Condition of Assets. The Company has maintained all of the Company's
tangible assets and properties owned or leased on the date hereof in good
working order and operating condition, subject only to ordinary wear and tear.
4.27 Lease Operating Expenses. The information provided to Buyer by Seller
and the Company with respect to the Company's historical lease operating
expenses is accurate and complete in all material respects.
4.28 Hedging Transactions. Schedule 4.28 contains a complete and correct
list of all Hedging Transactions (including each outstanding commodity or
financial hedging position) entered into by or assigned to the Company or for
the account of any of its customers as of the
17
date of this Agreement ("Forest Xxxxxx"). All material Forest Xxxxxx were, and
any material Forest Xxxxxx entered into after the date of this Agreement will
be, entered into in accordance with applicable Laws, and in accordance with the
investment, securities, commodities, risk management and other policies,
practices and procedures employed by the Company, and were, and will be, entered
into with counterparties believed at the time and still believed to be
financially responsible and able to understand (either alone or in consultation
with its advisers) and to bear the risks of such material Forest Xxxxxx. The
Company has, and will have, duly performed all of its obligations under the
material Forest Xxxxxx to the extent that such obligations to perform have
accrued, and, to the Knowledge of the Company and Seller, there are and will be
no breaches, violations, collateral deficiencies, requests for collateral or
demands for payment, or defaults or allegations or assertions of such by any
party thereunder.
4.29 Prepayment Premium; Total Company Debt. The total of all penalties,
premiums, fees, cost reimbursements or other payments (other than principal and
accrued interest) payable as a result of the early termination of the Credit
Agreement due to the transactions contemplated by this Agreement do not exceed
US$5,000,000, and the total principal amount of Company Debt does not exceed
$375,000,000. The Company is current with respect to all interest payments on
Company Debt.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as follows:
5.1 Organization and Good Standing. Seller is duly organized, validly
existing and in good standing under the laws of Delaware and has all requisite
power and authority Seller to execute, deliver and perform its obligations under
this Agreement and to consummate the transactions contemplated hereby and
thereby to be consummated by it. Seller is not a "foreign person" within the
meaning of Section 1445 of the Code.
5.2 Authorization of Agreement. The execution and delivery of this
Agreement by Seller and the performance of the transactions contemplated herein
by Seller have been duly authorized by all necessary action, and no other action
on the part of Seller is necessary to authorize this Agreement or consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Seller and constitutes a valid and binding obligation
of Seller, enforceable against Seller in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and similar laws of general applicability and by general principles
of equity.
5.3 Conflicts, Consents of Third Parties. Neither the execution and
delivery by Seller of this Agreement nor consummation or performance by Seller
of the transactions contemplated hereby to be consummated or performed by Seller
will: (a) violate any Law, (b) violate its constituent documents, (c) violate
any Order to which Seller is a party or by which Seller is bound or (d) require
any consent, approval or authorization, except for those listed on Schedule 5.3.
18
5.4 Brokers. Seller has not paid or become obligated to pay any fee or
commission to any broker, finder or intermediary in connection with the
transactions contemplated hereby for which the Buyer shall have any liability
following the Closing.
5.5 Litigation. As of the date of this Agreement there are no Legal
Proceedings, or, to the Knowledge of Seller, threatened against or affecting
Seller that is reasonably likely to have a Material Adverse Effect on Seller or
the transactions contemplated by this Agreement, nor is there any judgment,
decree, injunction, rule or order of any Governmental Entity or arbitrator
outstanding against Seller that is reasonably likely to have a Material Adverse
Effect on Seller or the transactions contemplated by this Agreement.
5.6 Ownership of Membership Interests. Seller is the record and beneficial
owner of all of the Membership Interests, and those Membership Interests are
owned by Seller free and clear of all Liens (other than those that shall be
released at Closing), including, without limitation, voting trusts or
stockholders agreements. Seller has full authority to transfer pursuant to this
Agreement all of the Membership Interests, free and clear of all Liens (other
than those that shall be released at Closing), including, without limitation,
voting trusts or stockholders agreements.
5.7 Tax Status.
(a) Seller is a not a non-resident alien, foreign corporation, foreign
partnership, foreign trust, or foreign estate (as those terms are defined
in the Internal Revenue Code and income tax regulations).
(b) Seller shall provide to Buyer the Certificate of Non-Foreign
Status in the form set forth in Exhibit "B".
(c) Seller is a disregarded entity for federal income tax purposes
under Section 7701 of the Code, such that this transaction will be treated,
for federal income tax purposes, as a sale of assets by its parent company,
FOC.
5.8 Marketable Title. The delivery by Seller to Buyer at the Closing of the
Membership Interests vest Buyer at such time of delivery with good and
marketable title to all of the Membership Interests, free and clear of all Liens
(other than restrictions on transfer pursuant to applicable securities laws).
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller and the Company as follows:
6.1 Organization and Good Standing. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Prior to the Closing Date, Buyer shall be duly qualified to do business in and
specifically to operate oil and gas properties in the State of Alaska. Buyer has
all requisite power and authority to execute, deliver and
19
perform its obligations under this Agreement and to consummate the transactions
contemplated hereby and thereby to be consummated by it.
6.2 Authorization of Agreement. The execution and delivery of this
Agreement by Buyer and the performance of the transactions contemplated herein
by the Buyer have been duly authorized by all necessary action by the Buyer, and
no other action on the part of Buyer is necessary to authorize this Agreement or
to consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by Buyer and constitutes a valid and binding
obligation of Buyer and is enforceable against Buyer in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and similar laws of general applicability and to
general principles of equity.
6.3 Conflicts, Consents of Third Parties. Neither the execution and
delivery by Buyer of this Agreement nor consummation or performance by Buyer of
the transactions contemplated hereby to be consummated or performed by Buyer
will: (a) violate any Law, (b) violate the certificate of incorporation or
bylaws of Buyer, (c) violate any Order to which Buyer is a party or by which
Buyer is bound (d) violate any loan or credit agreement (subject to obtaining
required consent under its Credit and Guaranty Agreement dated November 30, 2006
with X. Xxxx & Company (the "PERL Credit Agreement")), note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession, franchise,
or license applicable to Buyer, (iii) any joint venture or other ownership
arrangement of Buyer or (e) require any consent from, authorization or approval
or other action by, and no notice to or declaration, filing or registration with
any Governmental Authority, except for those regulatory approvals and consents
as would be required of any company similarly situated.
6.4 No Default. Except as would not reasonably be expected to have a
Material Adverse Effect on Buyer, Buyer is not in default or violation of any
term, condition or provision of (a) the its constituent documents, (b) any loan
or credit agreement (subject to obtaining required consent under the PERL Credit
Agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license to which Buyer is now a
party or by which Buyer or any of its properties or assets is bound, or (c) any
Order applicable to Buyer.
6.5 Litigation. As of the date of this Agreement there is no suit, action
or proceeding pending, or, to the knowledge of Buyer, threatened against or
affecting Buyer that is reasonably likely to have a Material Adverse Effect on
Buyer, nor is there any judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against Buyer that is reasonably
likely to have a Material Adverse Effect on Buyer.
6.6 Investment Intent. Buyer is acquiring the Membership Interests for its
own account and not with a view towards distribution thereof within the meaning
of Section 2(11) of the Securities Act.
6.7 Disclosure of Information. Buyer represents that it has had a full
opportunity to ask questions of and receive answers from the Company regarding
the Company and its business, assets, results of operation, and financial
condition.
20
6.8 Funding Commitments. Buyer has in place such financing commitments as
are necessary to pay the Closing Date Amounts in full at the Closing. Buyer has
provided evidence of such commitments on Schedule 6.8, which commitments are
subject to the terms and conditions set forth on Schedule 6.8 (the financing
contemplated by such commitments is referred to herein as the "Debt Financing").
6.9 Brokers. Buyer has not paid or become obligated to pay any fee or
commission to any broker, finder or intermediary in connection with the
transactions contemplated hereby for which the Seller shall have any liability
following the Closing.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 Further Actions. At any time from and after the Closing, at the request
of a Party and without further consideration, each other Party shall execute and
deliver such further agreements, certificates, instruments and documents and
perform such other actions as the requesting Party may reasonably request in
order to fully consummate the transactions contemplated hereby and carry out the
purposes and intent of this Agreement.
7.2 Conduct of Business Pending Closing. Prior to the Closing Date, the
Company will (except as approved in writing by Buyer or otherwise permitted
under this Agreement):
(a) carry on its business only in the ordinary course and in a manner
consistent with past practice;
(b) maintain its properties and facilities, including those held under
leases, in their current good working order and condition, ordinary wear
and tear excepted;
(c) not sell, lease, encumber or otherwise dispose of, or agree to
sell, lease (whether such lease is an operating or capital lease), encumber
or otherwise dispose of any portion of its assets, other than in the
ordinary course consistent with past practice;
(d) use all commercially reasonable efforts to maintain and preserve
its business organization intact, retain its present officers and maintain
its relationships with suppliers, vendors, customers, creditors and others
having business relations with it;
(e) not declare, set aside or pay any dividend or other distribution
(whether in stock or property) with respect to any of its equity
securities, or make any redemption, purchase or other acquisition of any of
its equity securities;
(f) not issue any Membership Interests or options, warrants or other
rights to purchase Membership Interests, or any securities convertible
into, or exchangeable for Membership Interests;
(g) not borrow any money or incur or guarantee any indebtedness for
borrowed money;
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(h) not enter into or amend any material contracts or agreements;
(i) not amend its organizational documents, including without
limitation its limited liability operating agreement;
(j) not adopt any plan or agreement of merger or liquidation;
(k) not cancel or pay any Company Debt (in any amount, but except for
payments that are within the scope of Section 3.4(e) above) or waive any
receivables, claims or rights in excess of US$100,000 individually or in
the aggregate;
(1) not make any payments to any Affiliates except in the ordinary
course of business pursuant to the Contract Operating Agreement referred to
in Section 10.1;
(m) not make any change in its accounting methods, principles or
practices
(n) not enter into any commitments for capital expenditures in excess
of US$250,000 (with the exception of emergency or lease-saving expenses,
which shall be disclosed to Buyer as soon as is practicable); and
(o) not enter into any employment, consulting or similar contract or
agreement with any officer or director of the Company, or hire any
employees.
7.3 Title Defects.
(a) Buyer must deliver to the Company in writing at least three
business days prior to the Closing Date (the "Notification Deadline") a
written notice specifying each alleged defect associated with the Ownership
Interests in the Oil and Gas Properties that it asserts constitutes a
violation of the representations set forth in Section 4.21 (a "Title
Defect"), a description of each such Title Defect and Buyer's proposed
Title Defect Value for such Title Defect. If such notice is not timely
submitted, Buyer will be deemed to have waived any basis for an adjustment
based on a violation of the representations set forth in Section 4.21, as
well as waived its basis for any claim or other assertion of rights or
damages based on a breach of such representations.
(b) Buyer may request an adjustment to the Base Purchase Price at any
time on or before the Notification Deadline, if the adjustment is based on
a Title Defect. A notice requesting an adjustment must be made in
accordance with Section 7.3(a). If Buyer gives notice under subsection (a)
above, the parties will meet and use their best efforts to agree on the
validity of the claim and, if applicable, the amount of the adjustment,
using the following criteria:
(i) If the claim is based on the Company owning a different net
revenue interest than that shown on Exhibit "A", then the adjustment
will be the absolute value of the number determined by the following
formula:
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Adjustment = A x (1-[B/C]
A = Allocated Value for the affected Ownership Interest
B = Correct net revenue interest for the affected Ownership
Interest
C = Net revenue interest for the affected Ownership Interest as
shown on Exhibit "A"
(ii) If the claim is based on an obligation or burden that is
liquidated, the adjustment will be the sum necessary to remove the
obligation or burden from the affected Ownership Interest.
(iii) If the claim is based on an obligation or burden that is
not liquidated, but can be estimated with reasonable certainty, the
adjustment will be the sum necessary to compensate Buyer for the
adverse economic effect on the affected Property.
(c) If the amount of the adjustment for each Title Defect cannot be
determined based on the above criteria, and if Buyer, Seller and the
Company cannot otherwise agree on the amount of an adjustment or the
parties are unable to agree upon whether a Title Defect exists, subject to
the provisions of Section 7.3(d) below, the Parties shall agree to resolve
the dispute under the arbitration provisions in this Agreement.
(d) No adjustment to the Base Purchase Price for Title Defects shall
be made unless and until the aggregate value of all Title Defects (herein
called the "Aggregate Title Defect Value") exceeds one percent (1%) of the
Base Purchase Price, and once the deductible is exceeded, only the value of
all Title Defects in excess of such deductible shall be considered in
applying this Section 7.3.
(e) For purposes of this section, the costs to cure a Title Defect
under Section 7.3(b) above shall not be counted towards the Aggregate Title
Defect Value.
(f) Seller may, at its sole option, notify Buyer on or before the
Closing that it elects to cure some or all of the Title Defects. No price
adjustment will be made for Title Defects that Seller elects to cure. If
any Title Defect is not cured prior to Closing, an adjustment to the Base
Purchase Price will be calculated under the criteria set forth in this
section, but only if the net amount of all adjustments based on the Title
Defects exceeds the Aggregate Title Defect Value.
(g) If, prior to the Closing, any portion of the Oil and Gas
Properties or related equipment is destroyed or impaired by fire or other
casualty, Buyer may elect:
(i) to treat such destruction or impairment as a Title Defect in
accordance with this Section 7.3, or
(ii) to purchase the Membership Interests notwithstanding any
such destruction (without adjustment to the Purchase Price therefor),
in which case, Seller shall, at the Closing, pay to Buyer all sums
paid to the Company or Seller
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by third-parties (including insurance proceeds relating thereto) and
assign to Buyer all sums to which Seller is entitled, as the case may
be, by reason of the destruction of such Oil and Gas Properties or
related equipment and shall assign, transfer and set over unto the
Company or Buyer all of the right, title and interest of Seller in and
to any unpaid awards or other payments from third-parties arising out
of the destruction of such Oil and Gas Properties or related
equipment.
(h) Notwithstanding anything to the contrary in this Section 7.3, the
adjustments attributable to the effects of all Title Defects upon any Oil
and Gas Property shall not exceed the Allocated Value of such particular
Oil and Gas Property.
(i) All Title Defects not raised within the time period provided in
paragraph (b) above shall be waived by Buyer for all purposes, including
but not limited to Article XII.
7.4 Environmental Defects.
(a) Buyer shall have the right to conduct an environmental assessment
of the Oil and Gas Properties during the period beginning on the date of
this Agreement and ending at the close of business on the Notification
Deadline. The confidentiality obligations of the Confidentiality Agreement
shall be applicable to all information acquired by Buyer in the course of
its environmental assessment. During normal business hours and after
providing the Company and Seller reasonable prior notice of any such
activities, Buyer and its representatives shall be permitted to enter upon
the Oil and Gas Properties and all buildings and improvements thereon,
inspect the same, review files and generally conduct such tests,
examinations, and investigations as are consistent with the American
Society for Testing and Materials standard Phase I environmental audit and
which have been approved by Company in writing. Seller will have the right
to (i) witness such investigation and (ii) promptly receive a copy of all
results, analyses and reviews.
(b) Buyer will notify Seller on or before the Notification Deadline of
(i) the existence of any environmental condition on the Oil and Gas
Properties that Buyer reasonably believes constitutes a breach of the
Company's representations and warranties set forth in Section 4.22
("Environmental Defect"), and (ii) the estimated cost to remediate or cure
such condition on each individual Oil and Gas Property, determined
utilizing the most cost effective and appropriate method of cure or
remediation available under the circumstances. With respect to any
Environmental Defect:
(i) Seller shall have the right, but not the obligation, to
undertake such remedial action as may be required Environmental Law as
currently applied to cure by such Environmental Defect by sending
written notice of its binding commitment to effectuate such cure and
the details and timing of such curative action, and if such commitment
is reasonably satisfactory to Buyer, the Base Purchase Price would not
be reduced on account of such Environmental Defect
24
(ii) Buyer and Seller may also, upon their mutual agreement, set
the costs to cure the Environmental Defect and the Base Purchase Price
shall be reduced by such agreed costs while Buyer shall be responsible
for any cure; and
(iii) If, within fifteen (15) days following the notice of an
Environmental Defect as to any Oil and Gas Property, Buyer and Seller
cannot reach mutual agreement as contemplated in Section 7.4(b)(i) or
(ii) above on either the value of an Environmental Defect or whether
an Environmental Defect exists, the Parties agree to resolve the
dispute under the arbitration provisions in this Agreement.
(c) No adjustment to the Base Purchase Price for Environmental Defects
shall be made unless and until the aggregate value of all Environmental
Defects (herein called the "Aggregate Environmental Defect Value") exceeds
one percent (1%) of the Base Purchase Price, and once the deductible is
exceeded, only the value of all Environmental Defects in excess of such
deductible shall be considered in applying this Section 7.4.
(d) For purposes of this section, the costs to cure an Environmental
Defect determined under Section 7.4(b)(i) and (ii) above shall not be
counted towards the Aggregate Environmental Defect Value.
(e) Notwithstanding anything to the contrary in this Section 7.4, the
adjustments attributable to the effects of all Environmental Defects upon
any Oil and Gas Property shall not exceed the Allocated Value of such
particular Oil and Gas Property.
(f) All Environmental Defects not raised within the time period
provided in paragraph (b) above shall be waived by Buyer for all purposes,
including but not limited to Article XII.
7.5 Gas Imbalances. Within 120 days after the Closing Date, Seller and
Buyer shall, based upon data available at that time, determine (a) the total
amount of overproduction of gas attributable to and accounted for under the name
of the Company and related to the Oil and Gas Properties (e.g., volumes of gas
taken from the Leases, or on lands unitized therewith, by the Company in excess
of those volumes which the Company would be entitled to receive) and (b) the
total amount of underproduction of gas attributable to and accounted for under
the name of the Company and related to the Oil and Gas Properties (e.g., volumes
of gas not taken from the Leases, or on lands unitized therewith, despite the
Company's Ownership Interest in and right to receive such volumes). If the total
amount of overproduction (as so determined) exceeds the total amount of
underproduction (as so determined) the Base Purchase Price shall be adjusted
downward in an amount equal to US$5.72 per Mcf times such excess. If the total
amount of underproduction (as so determined) exceeds the total amount of
overproduction (as so determined) the Base Purchase Price shall be adjusted
upward in an amount equal to US$5.72 per Mcf times such excess. The amount of
any upward adjustment shall be paid by Buyer to Seller, or the amount of any
downward adjustment shall be paid by Seller to Buyer, within five days after
determination thereof. Notwithstanding the foregoing, only imbalances subject to
legally enforceable rights of recovery will be subject to the determination
hereunder.
25
7.6 Access to Information. Upon reasonable notice, the Company, FOC and
Seller shall afford to Buyer's officers, employees, accountants, counsel and
other representatives access, from the date hereof until the Closing Date, to
all of the properties, books, contracts, commitments, files and records of the
Company and, to the extent that they pertain to the Oil and Gas Properties, FOC,
as well as to the Company's, Seller's and FOC's officers and employees (to the
extent that any of FOC's officers and employees are responsible for matters
pertaining to the Company or its assets and properties) and, during such period,
the Company shall furnish to Buyer (a) a copy of each material report, schedule,
registration statement and other document filed or received by it during such
period and (b) all other information concerning its business, properties and
personnel as Buyer may reasonably request. Buyer agrees that it will not, and
will cause its respective representatives not to, use any information obtained
pursuant to this Section 7.6 for any purpose unrelated to the consummation of
the transactions contemplated by this Agreement. The Confidentiality Agreement
shall apply with respect to the information furnished thereunder and hereunder,
and any other activities contemplated thereby. Buyer shall indemnify, defend and
hold harmless the Company and the Seller from and against any and all claims,
actions, causes of action, demands, assessments, losses, damages, liabilities,
judgments, settlements, penalties, costs and expenses (including reasonable
attorneys' fees and expenses), of any nature whatsoever asserted against or
suffered by the Company or the Seller relating to, resulting from or arising out
of the conduct of Buyer or its representatives in the course of any examinations
or inspections made by Buyer or its representatives under this Section 7.6,
except to the extent of gross negligence or wilfull misconduct on the part of
Company, or any of its employees, agents or Affiliates.
7.7 Regulatory Approvals. Each Party hereto shall cooperate and use its
reasonable best efforts to promptly prepare and file all necessary documentation
to effect all necessary applications, notices, petitions, filings and other
documents, and use all commercially reasonable efforts to obtain (and will
cooperate with each other in obtaining) any consent, acquiescence,
authorization, order or approval of, and any exemption or nonopposition by, any
Governmental Entity required to be obtained or made by Company, the Seller or
Buyer or any of their respective Affiliates in connection with the transactions
contemplated hereby or the taking of any action contemplated thereby or by this
Agreement.
7.8 Agreement to Defend. In the event any claim, action, suit,
investigation or other proceeding by any governmental body or other person or
other legal or administrative proceeding is commenced that questions the
validity or legality of the transactions contemplated hereby or seeks damages in
connection therewith, the parties hereby agree to cooperate and use their
commercially reasonable efforts to defend against and respond thereto.
7.9 Other Actions. Except as contemplated by this Agreement, neither the
Company, the Seller nor Buyer shall, nor permit any of its Affiliates to, take
or agree or commit to take any action that is reasonably likely to result in any
of its respective representations or warranties hereunder being untrue in any
material respect or in any of the conditions to the transactions contemplated
hereby set forth in Article VIII not being satisfied. Each of the parties agrees
to use its reasonable best efforts to satisfy the conditions to Closing set
forth in this Agreement.
7.10 LIMITATION AND DISCLAIMER OF IMPLIED REPRESENTATIONS AND WARRANTI ES
OF THE COMPANY AND SELLER. THE EXPRESS REPRESENTATIONS
26
AND WARRANTIES OF THE COMPANY AND SELLER CONTAINED IN THIS AGREEMENT ARE
EXCLUSIVE AND ARE IN LIEU OF ALL OTHER REPRESENTATIONS AND WARRANTIES, EXPRESS,
IMPLIED, STATUTORY OR OTHERWISE. AT OR PRIOR TO CLOSING, BUYER SHALL HAVE
CONDUCTED SUCH INSPECTIONS OF THE COMPANY AND ITS ASSETS AS BUYER DEEMS
NECESSARY AND SHALL HAVE SATISFIED ITSELF AS TO THE CONDITION OF THE COMPANY AND
ITS ASSETS; HOWEVER, NO SUCH INSPECTION SHALL BE DEEMED BE IN LIEU OR CONSTITUTE
A WAIVER OF ANY EXPRESS REPRESENTATION OR WARRANTY CONTAINED IN THIS AGREEMENT.
EXCEPT AS OTHERWISE PROVIDED IN THE REPRESENTATIONS AND WARRANTIES SET FORTH IN
THIS AGREEMENT, THE COMPANY AND SELLER MAKE NO WARRANTY OR REPRESENTATION,
EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, AS TO THE ACCURACY OR COMPLETENESS OF
ANY DATA, REPORTS, RECORDS, PROJECTIONS, INFORMATION OR MATERIALS NOW,
HERETOFORE OR HEREAFTER FURNISHED OR MADE AVAILABLE TO BUYER OR ITS
REPRESENTATIVES BY THE COMPANY, SELLER OR BY THE AGENTS OR REPRESENTATIVES OF
EITHER; ANY AND ALL SUCH DATA, RECORDS, REPORTS, PROJECTIONS, INFORMATION AND
OTHER MATERIALS FURNISHED BY THE COMPANY, SELLER OR BY THE AGENTS OR
REPRESENTATIVES OF EITHER OR OTHERWISE MADE AVAILABLE TO BUYER OR BUYER'S
REPRESENTATIVES ARE PROVIDED TO OR FOR THE BENEFIT OF BUYER AS A CONVENIENCE,
AND SHALL NOT CREATE OR GIVE RISE TO ANY LIABILITY OF OR AGAINST THE COMPANY,
SELLER OR ANY AGENT OR REPRESENTATIVE OF EITHER; AND ANY RELIANCE ON OR USE OF
THE SAME SHALL BE AT BUYER'S SOLE RISK.
7.11 Change of Company Name. Each of Buyer and the Company undertakes and
agrees that promptly after the Closing, it will take all actions necessary to
change the name of the Company to delete the use of the name "Forest", any
derivative thereof and/or any logos or trademarks related thereto by sixty (60)
days after Closing.
7.12 Account Signatories. Seller shall cause the Company to change the
names of the accounts and the names of the officers, employees, agents or other
similar representatives of the Company, as designated by Buyer at or prior to
the Closing, who thereafter shall be authorized to transact business with
respect to the accounts, safe deposit boxes, lock boxes or other relationships
with the banks, trust companies, securities brokers and other financial
institutions set forth in Schedule 4.17.
7.13 Cooperation with Financing. In order to assist with obtaining
financing for the transactions contemplated by this Agreement, the Company shall
provide and shall use their commercially reasonable best efforts to cause its
representatives (including legal and accounting advisors) to provide all
cooperation reasonably requested by Buyer in connection with such financing,
including, but not limited to, (i) assisting Buyer and its financing sources in
preparing any offering document and materials for rating agency presentations,
(ii) furnishing information for the preparation of financial statements, pro
forma statements and other financial data customarily included in offerings of
the type contemplated by the financing, and (iii) cooperation with prospective
lenders in performing their due diligence. Buyer shall use its commercially
reasonable best efforts to obtain the Debt Financing (or, if the Debt Financing
is not available to
27
Buyer, alternative acquisition financing sufficient to fund the transactions
contemplated by this Agreement) and to obtain the required consent under Buyer's
Credit and Guaranty Agreement dated November 30, 2006 with X. Xxxx & Company
(the "PERL Credit Agreement").
7.14 Hedge Assumption. Between the date hereof and the Closing Date, Seller
and FOC will use reasonable commercial efforts, at no cost to Seller or FOC, to
assist Buyer in finalizing its hedging strategy following Closing, including
efforts to assign and novate all of the Forest Xxxxxx to a financial
counterparty of Buyer's choosing. In the event that Buyer fails to so novate and
assign all of the Forest Xxxxxx, Buyer shall have the following option: Between
the date of execution hereof and five business days prior to Closing, Buyer
shall elect either:
(a) To have the Company assign and novate, at no cost and with no
further liability or obligation to Buyer or the Company, all of the Forest
Xxxxxx to FOC; or
(b) To have the Company assign and novate, at no cost and with no
further liability or obligation to Buyer or the Company, all of the Forest
Xxxxxx to FOC, whereupon FOC shall immediately enter into identical
transactions (each, a "Mirror Hedge") with Buyer, each of which shall be
supported by customary derivative agreements and shall provide Buyer the
same economic benefits, rights and obligations that the Company would have
under all of the Forest Xxxxxx but for the novation to FOC; provided,
however, that such Mirror Hedge shall have a term of no more than 60 days.
ARTICLE VIII
CONDITIONS TO CLOSING
8.1 Buyer's Conditions. Unless otherwise waived in writing prior to the
Closing, the obligation of Buyer to complete the Closing is subject to
fulfillment prior to or at the Closing of each of the following conditions:
(a) No Legal Proceeding. At the Closing, no Legal Proceeding shall be
pending or threatened seeking to enjoin or prevent, nor shall an
Injunction, Order or Official Action have been issued prohibiting
consummation of the transactions contemplated hereby.
(b) Bank Accounts. Seller shall have caused the Company to change the
authorized account signatories as contemplated by Section 7.12.
(c) Fulfillment of Obligations. Seller shall have duly perfoiined or
complied with all of the obligations and covenants to be performed or to
which compliance is required under the terms of this Agreement at or prior
to the Closing Date.
(d) Accuracy of Representations and Warranties. The representations
and warranties of the Company and Seller set forth herein shall be true and
correct (without giving effect to any limitation as to "materiality" or
"Material Adverse Effect" set forth therein) at and as of the Closing Date,
as if made at and as of such time except where the failure of such
representations and warranties to be so true and correct (without giving
effect to any limitation as to "materiality" or "Material Adverse Effect"
set forth therein)
28
individually or in the aggregate has not had, and would not be reasonably
likely to have or result in, a Material Adverse Effect on the Company.
(e) Closing Deliveries. Seller or the Company as is appropriate shall
have delivered at or before Closing all of the items listed in Section 9.1.
(f) Other Items. Buyer shall have received (i) the proceeds of the
Debt Financing or alternative financing sufficient to fund the transactions
contemplated by this Agreement, and (ii) the required consent under the
PERL Credit Agreement.
8.2 Seller's Conditions. Unless otherwise waived in writing prior to
Closing, the obligation of Seller to complete the Closing is subject to
fulfillment prior to or at Closing of each of the following conditions.
(a) No Legal Proceedings. At the Closing, no Legal Proceeding shall be
pending or threatened seeking to enjoin or prevent, nor shall an
Injunction, Order or Official Action have been issued prohibiting
consummation of the transactions contemplated hereby.
(b) Accuracy of Representations and Warranties. The representations
and warranties of Buyer set forth herein shall be true and correct (without
giving effect to any limitation as to "materiality" or "Material Adverse
Effect" set forth therein) at and as of the Closing Date, as if made at and
as of such time except where the failure of such representations and
warranties to be so true and correct (without giving effect to any
limitation as to "materiality" or "Material Adverse Effect" set forth
therein) individually or in the aggregate has not had, and would not be
reasonably likely to have or result in, a Material Adverse Effect on Buyer.
(c) Closing Deliveries. Buyer shall have delivered at or before
Closing all of the items listed in Section 9.2.
ARTICLE IX
DELIVERIES AT CLOSING
9.1 Deliveries by Seller to Buyer. At the Closing, Seller or the Company as
is appropriate shall deliver, or shall cause to be delivered, to Buyer the
following:
(a) appropriate evidence of the Membership Interests, and such
instruments or documents evidencing the sale, assignment, transfer and
conveyance by the Seller to Buyer of the Membership Interests in accordance
with the terms hereof;
(b) a certificate of both the Company and the Seller, dated as of the
Closing Date, setting forth those resolutions authorizing the consummation
of the transactions contemplated hereby, and certifying that such
resolutions were duly adopted and have not been rescinded or amended as of
the Closing Date;
29
(c) certificate of both the Company and the Seller attesting as to the
incumbency and signature of each officer of the Company and the Seller, as
applicable, who shall execute this Agreement and any other agreement in
connection herewith on behalf of the Company or the Seller, as the case may
be, and certifying as being complete and correct the copies attached to
such certificate of the Company's constituent documents, each as in effect
on such date;
(d) a certificate of existence of the Company from the Secretary of
State of the State of Delaware and a certificate of the good standing of
the Company from State of Delaware, and a certificate of qualification of
the Company as an entity authorized to do business in Alaska, in each case
dated as of a date not earlier than 10 days prior to the Closing Date;
(e) the originals of all minute books, Membership Interests transfer
records, electronic data and corporate and all other records of the
Company, including but not limited to, all land, geological, engineering
and geophysical work files relating to the Company's Oil and Gas
Properties;
(f) pay-off letters from Credit Suisse, XX Xxxxxx Chase and any other
providers of Company Debt in form and substance satisfactory to Buyer and
its financing source, specifying, among other things, that all of the
Credit Agreement and all other loan documents related thereto shall be
canceled upon payment of the pay-off amounts set forth therein, together
with evidence that all Liens in favor of Credit Suisse, XX Xxxxxx and any
other secured lenders have been or, upon payment of the pay-off amounts set
forth therein will be, released (the "Pay-off Letters");
(g) general releases of claims against the Company, in form and
substance satisfactory to Buyer and its financing source, from Seller, FOC
and their Affiliates, and all officers and directors of the Company;
(h) the resignation of each of the present directors and officers of
the Company; and
(i) all consents or waivers referred to on Schedule 4.5.
9.2 Deliveries by Buyer to Seller and the Company. At the Closing, in
addition to making the payments described in Sections 3.2 and 3.3, Buyer shall
deliver to Seller the following:
(a) a certificate of a duly authorized representative of Buyer, dated
the Closing Date, authorizing the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby, and
certifying that such authorizations are in full force and effect and have
not been rescinded or amended as of the Closing Date;
(b) evidence satisfactory to Seller indicating (i) payment in full of
the amounts reflected in the Pay-off Letters or (ii) a complete and general
release of the Seller and FOC from all liabilities and obligations under
the Company Debt; and
30
(c) a certificate of a duly authorized representative of Buyer
attesting as to the incumbency and signature of each person who shall
execute this Agreement or any other material document related to this
transaction.
ARTICLE X
TRANSITION OPERATIONS
10.1 Transition Operations. With respect to any portion of the Oil and Gas
Properties operated by Company or its agent, after Closing and until such time
as Buyer may be recognized and approved by the applicable federal or state
agency as Operator of such portion of the Oil and Gas Properties, FOC shall
operate such portion of the Oil and Gas Properties for the account of Buyer,
under the terms of the Intercompany Services Agreement listed on Schedule 4.7
between the Company and FOC. In connection with such operations under the
Intercompany Services Agreement, the Company shall pay FOC consistent with the
provisions of thereof, plus an additional fee equal to US$200,000 per month,
provided that such additional fees shall begin to accrue from the first day of
the first month beginning at least 90 days after Closing. Upon Buyer being
recognized as operator as to all of the Oil and Gas Properties, Buyer shall
deliver to FOC written notice of its intention to assume operations, designating
the date of its intended assumption. On such date, the Intercompany Services
Agreement shall immediately terminate and be of no further force and effect,
with no further liability thereunder on the part of either Buyer or the Company,
except for reimbursements and a pro rata portion of the operating fee for the
period through the date of termination and any indemnity protections that
survive termination per the terms of the Intercompany Services Agreement.
ARTICLE XI
TERMINATION
11.1 Termination. This Agreement may be terminated and the transactions
contemplated hereby may be abandoned at any time prior to the Closing Date:
(a) by mutual written consent of the Company, Seller and Buyer;
(b) by any of the Company, Seller or Buyer if any Governmental Entity
shall have issued any Injunction or taken any other action permanently
restraining, enjoining or otherwise prohibiting the consummation of the
transactions contemplated hereby and such Injunction or other action shall
have become final and nonappealable;
(c) (i) by Seller in the event of a material breach by the Buyer of
one or more provisions of this Agreement, in particular the representations
and warranties in Article VI above and (ii) by Buyer in the event of a
material breach by either the Seller or the Company of one or more
provisions of this Agreement, in particular the representations and
warranties in Articles IV and V above;
(d) by Seller or Buyer if the total amount of uncured and unwaived
Title Defects and/or Environmental Defects exceeds 10% of the Base Purchase
Price;
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11.2 Effect of Termination.
(a) In the event of termination of this Agreement by Seller pursuant
to Section 11.1(c)(i) above or if all other Closing conditions have been
satisfied (other than those that can only be satisfied at Closing), except
that the condition in Section 8.1(f) has not been satisfied, Seller shall
be entitled to retain the Deposit, together with any interest earned
thereon. This shall be in the nature of liquidated damages for Buyer's
breach, and not a penalty. If the Closing does not occur by July 31, 2007
or is terminated as a result of a breach by Buyer as contemplated by
Section 11.1(c)(i) above or if the failure to close is the result of the
condition in Section 8.1(f) not being satisfied as contemplated above, the
Seller's retention of the Deposit is Seller's sole remedy against the
Buyer. However, if this Agreement does not close on the date specified
above or is terminated due the negligence, fault or willful failure of the
Seller or for the reasons described in Section 11.1(a), (b), (c)(ii), or
(d), the Deposit, together with any interest earned thereon shall be
delivered to Buyer.
(b) In the event of termination of this Agreement by any party hereto
as provided in Section 11.1, this Agreement shall forthwith become void and
there shall be no liability or obligation on the part of any Party hereto
except (i) under the Confidentiality Agreement, (ii) with respect to this
Section 11.2, the second and third sentences of Section 7.6, and Section
14.10, and (iii) to the extent that such termination results from the
willful breach by a Party hereto of any of its representations and
warranties or of any of its covenants or agreements contained in this
Agreement.
ARTICLE XII
INDEMNIFICATION
12.1 Seller and FOC Indemnification. Subject to the limitations set forth
in Section 12.4 hereof, the Seller and FOC hereby jointly and severally agree to
indemnify and hold Buyer and each of its Affiliates, and the officers,
directors, employees and agents thereof, harmless from and against any and all
claims, judgments, causes of action, liabilities, obligations, guarantees,
damages, losses, deficiencies, costs, penalties, interest and expenses,
including without limitation, cost of investigation and defense, and reasonable
attorneys' fees and expenses, net of any collected insurance proceeds
(collectively, "Losses"), arising out of, based upon, attributable to or
resulting from any, breach of a representation, warranty, agreement or covenant
of the Company or Seller contained in or made pursuant to this Agreement
(without giving effect to any limitation as to "materiality" or "Material
Adverse Effect" set forth therein).
12.2 Buyer Indemnification. Buyer hereby agrees to indemnify and hold
Seller, the Company, each of their respective Affiliates and each of their
respective officers, directors, employees and agents harmless from and against
any and all Losses arising out of, based upon, attributable to or resulting from
any breach of any representation, warranty, agreement or covenant on the part of
Buyer contained in or made pursuant to this Agreement (without giving effect to
any limitation as to "materiality" or "Material Adverse Effect" set forth
therein).
12.3 Indemnification Procedures.
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(a) If any third party asserts any claim against a Party to this
Agreement which, if successful, would entitle the Party to indemnification
under this Article XII (the "Indemnified Party"), it shall give notice of
such claim to the Party from whom it intends to seek indemnification (the
"Indemnifying Party") and the Indemnifying Party shall have the right to
assume the defense and, subject to Section 12.3(b), settlement of such
claim at its expense by representatives of its own choosing acceptable to
the Indemnified Party (which acceptance shall not be unreasonably
withheld). The failure of the Indemnified Party to notify the Indemnifying
Party of such claim shall not relieve the Indemnifying Party of any
liability that the Indemnifying Party may have with respect to such claim,
except to the extent that the defense is materially prejudiced by such
failure. The Indemnified Party shall have the right to participate in the
defense of such claim at its expense (which expense shall not be deemed to
be a Loss), in which case the Indemnifying Party shall cooperate in
providing information to and consulting with the Indemnified Party about
the claim. If the Indemnifying Party fails or does not assume the defense
of any such claim within 20 days after written notice of such claim has
been given by the Indemnified Party to the Indemnifying Party, the
Indemnified Party may defend against or, subject to Section 12.3(b), settle
such claim with counsel of its own choosing at the expense (to the extent
reasonable under the circumstances) of the Indemnifying Party.
(b) If the Indemnifying Party does not assume the defense of a claim
involving the asserted liability of the Indemnified Party under this
Article XII, no settlement of such claim shall be made by the Indemnified
Party without the prior written consent of the Indemnifying Party, which
consent shall not be unreasonably withheld or delayed. If the Indemnifying
Party assumes the defense of such a claim, (i) no settlement thereof may be
effected by the Indemnifying Party without the Indemnified Party's consent
unless (A) there is no finding or admission of any violation of Law or any
violation of the rights of any Person and no effect on any other claim that
may be made against the Indemnified Party, (B) the sole relief provided is
monetary damages that have been paid in full by the Indemnifying Party and
(C) the settlement includes, as an unconditional term thereof, the giving
by the claimant or the plaintiff to the Indemnified Party of a release in
form and substance reasonably satisfactory to the Indemnified Party, from
all liability in respect of such claim, and (ii) the Indemnified Party
shall have no liability with respect to any compromise or settlement
thereof effected without its consent.
12.4 Limits on Indemnification. Notwithstanding anything to the contrary
contained in this Agreement:
(a) Seller shall not have any obligation to provide indemnification
for Losses arising out of breaches of representations and warranties,
unless the amount of all such Losses pursuant to Section 12.1 exceeds
US$250,000 (the "Basket Amount"). The maximum aggregate amount for which
Seller may be liable under this Article XII for breaches of representations
and warranties shall be limited to twenty-five percent (25%) of the Base
Purchase Price. This paragraph (a) shall not apply to Losses suffered by a
Buyer Indemnified Party pursuant to Sections 4.3, 4.4 (but at only as to
the last sentence thereof), 4.8, 4.9, 4.10, 4.11, 4.13, 4.25, 5.4, 5.6, 5.7
and 5.8.
33
(b) Buyer shall not have any obligation to provide indemnification for
Losses pursuant to Section 12.2 arising out of or related to breaches of
representations and warranties unless the aggregate amount of all such
Losses pursuant to such Section exceeds the Basket Amount in which case
Buyer shall be only liable to Seller for the amount of such Losses that
exceed the Basket Amount. The maximum aggregate amount for which Buyer may
be liable under this Article XII shall be limited to twenty-five percent
(25%) of the Base Purchase Price.
(c) Except for the representations and warranties of (i) the Company
in Sections 4.21 and 4.22, the exclusive remedies for which are provided in
Sections 7.3 and 7.4, respectively, (ii) Seller contained in Section 5.6,
which shall survive indefinitely, and Section 4.25, which shall survive
until the expiration of the applicable statute of limitations, the
respective representations of the Company, Seller and Buyer contained in
this Agreement shall survive the Closing for a period of one year, and
thereafter none of the Company, Seller or Buyer shall have any liability
whatsoever (whether pursuant to this Agreement or otherwise) with respect
to such representation or warranty. This Section 12.4(c) shall have no
effect upon any other obligations of the parties hereto under this
Agreement, whether to be performed before, at or after the Closing, which
shall survive until fulfilled or the expiration in accordance with their
terms.
(d) Any payments made to Seller, the Company or the Buyer pursuant to
this Article XII shall constitute an adjustment of the Purchase Price for
Tax purposes and shall be treated as such by the Buyer and Seller on their
Tax Returns.
(e) An Indemnifying Party shall not be liable under this Article XII
for Losses resulting from any event relating to a breach of a
representation or warranty if the Indemnifying Party can establish that the
Indemnified Party had actual knowledge on or before the Closing Date of
such event.
(f) Notwithstanding anything else contained in this Article XII,
Seller hereby agrees to indemnify and hold Buyer and each of its Affiliates
(including the Company), and the officers, directors, employees and agents
thereof, harmless from and against any and all Losses arising from any
litigation (i) which arises out of actions, conduct or events which occur
prior to the Effective Date or (ii) that was not disclosed to Buyer and
which arises out of actions, conduct or events that occurred between the
Effective Date and the Closing Date. This indemnity shall be subject to the
procedures of Section 12.3, and shall survive indefinitely.
ARTICLE XIII
TAXES
13.1 Sales and Use Taxes; Property Taxes. The Purchase Price, as adjusted
herein, is exclusive of any sales taxes and other transfer taxes in connection
with the sale of the Membership Interests. Buyer shall bear the cost of all
applicable sales taxes, real property transfer taxes, and filing and recording
fees payable as a result of the transfer of the Membership Interests. If at any
time after the Closing, Seller or any Affiliate shall become liable for taxes or
34
fees for which Buyer is responsible under this paragraph, Buyer shall promptly
reimburse Seller or such Affiliate for such taxes and fees, including any
penalties and interest thereon. Buyer shall defend, indemnify and hold Seller
harmless with respect to the payment of any such taxes and fees, including any
interest or penalties assessed thereon.
13.2 Tax Proceedings. In the event Seller receives notice of any payments
due, claim, adjustment or other proceeding relating to Real or Personal Property
Taxes for the year in which the Effective Date occurs, Seller shall notify Buyer
in writing within 30 days of receiving notice thereof. As to any such taxes
Buyer shall, at Buyer's expense, control or settle the contest of such
examination, claim, adjustment, or other proceeding, and shall indemnify Seller
against all losses, damages, costs, expenses, liabilities, claims, demands,
penalties, fines, assessments, settlements, and any related expenses in
connection therewith. If, on execution of this Agreement, Seller or the Company
is actively disputing any Real or Personal Property Tax assessments involving
the Oil and Gas Properties for the year in which the Effective Date occurs,
Seller shall fully inform Buyer of the basis for, and status of, the dispute and
shall permit Buyer to direct and/or participate in the dispute to the full
extent permitted by law.
13.3 Real and Personal Property Taxes. All ad valorem taxes, real property
taxes and personal property taxes ("Real and Personal Property Taxes") for the
year in which the Effective Date occurs shall be apportioned as of the Effective
Date between Seller and Buyer. Seller shall be liable for the portion of such
Real and Personal Property Taxes based upon the number of days in the year
occurring prior to the Effective Date, and Buyer shall be liable for the portion
of such taxes based upon the number of days in the year occurring on and after
the Effective Date. At least 5 days prior to Closing, Seller will provide Buyer
with the amount of Real and Personal Property Taxes paid by Seller with respect
to the year which includes the Effective Date and the amount of such Taxes
allocable to Buyer, which amount shall be deducted from the Purchase Price at
Closing.
13.4 Property Tax Reporting. Company has, or will have, filed any such
renditions, reports, or returns required to be filed with respect to Real and
Personal Property Taxes before Closing. Buyer shall file all reports and returns
required to be filed or submitted after Closing that are incident to Real and
Personal Property Taxes assessed for the year in which the Effective Date occurs
but that are not submitted by Seller prior to the Closing Date. Buyer shall pay
any assessed Real and Personal Property Taxes assessed after Closing and shall
invoice Seller for its allocable share of such taxes, if any, pursuant to
Section 13.3 above, which invoice shall be paid promptly by Seller.
13.5 Production Taxes. All Production Taxes (including deductions, credits
or refunds pertaining thereto) attributable to the ownership or operation of, or
production and revenue from, the Oil and Gas Properties prior to the Effective
Date are Seller's responsibility, and shall be allocated to and paid by Seller.
All Production Taxes (including deductions, credits or refunds pertaining
thereto) attributable to the ownership or operation of, or production and
revenue from, the Oil and Gas Properties on and after the Effective Date are the
responsibility of Buyer, and shall be allocated to and paid by Buyer. Production
Taxes will be allocated by the Parties so that the Party which is entitled to
the revenue from production shall bear the burden of the Production Tax in
respect thereto. Notwithstanding the foregoing, any excess Production Tax
credits
35
available to the Company or Seller, but unused as of Closing shall accrue to the
Company or Buyer to the extent permitted by applicable law.
13.6 Income Taxes. Seller shall be responsible for Income Taxes imposed on
Seller to the extent they relate to any period, whether before, on, or after the
Effective Date, and all items of deduction, credit, loss or gain or refund
pertaining to Income Taxes imposed on Seller shall remain and belong to Seller,
no matter when received, assessed or paid. Buyer shall be responsible for Income
Taxes imposed on Buyer to the extent they relate to any period, whether before,
on, or after the Effective Date, and all items of deduction, credit, loss or
gain or refund pertaining to Income Taxes imposed on Buyer shall remain and
belong to Buyer, no matter when received, assessed or paid.
13.7 Purchase Price Allocation. The allocation of the Purchase Price in
accordance with Exhibit A-2 is intended to comply with the allocation method
required by Section 1060 of the Code. Buyer and Seller shall cooperate to comply
with all substantive and procedural requirements of Section 1060 and the
Treasury Regulations thereunder, including without limitation the filing by
Buyer and Seller of IRS Form 8594 with their federal income tax returns for the
taxable year in which the Closing occurs. Buyer and Seller agree that neither
will take, nor will they permit any Affiliate to take, a position for income tax
purposes that is inconsistent with the allocation of the Purchase Price.
ARTICLE XIV
GENERAL
14.1 Governing Law; Choice of Forum. This Agreement shall be governed and
interpreted in accordance with the laws of the State of Delaware, without regard
to the conflict of law principles thereof Any dispute arising hereunder shall be
brought, if at all, in the state or federal courts located in Delaware. Each
party agrees not to assert any argument of inconvenient forum in response to the
filing of an action in any such court..
14.2 Amendments. This Agreement may only be amended by an instrument in
writing executed by Company, Buyer and Seller.
14.3 Waivers. The observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively) by the party entitled to enforce such term, but such waiver shall
be effective only if it is in a writing signed by the party entitled to enforce
such term and against which such waiver is to be asserted. Unless otherwise
expressly provided in this Agreement, no delay or omission on the part of any
party in exercising any right or privilege under this Agreement shall operate as
a waiver thereof, nor shall any waiver on the part of any party of any right or
privilege under this Agreement operate as a waiver of any other right or
privilege under this Agreement nor shall any single or partial exercise of any
right or privilege preclude any other or further exercise thereof or the
exercise of any other right or privilege under this Agreement.
14.4 Notices. Any notice or other communications required or permitted
hereunder shall be in writing and shall be sufficiently given (and shall be
deemed to have been duly given
36
upon receipt) if sent by overnight mail, registered mail or certified mail,
postage prepaid, or by hand, to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):
(a) If to Buyer, to:
000 X. Xxxxx Xxxxxxxxx
Xxxxx 0000
Xxxx Xxxxx, XX 9080
Attn: President
Tel.: 000.000.0000
Fax: 000.000.0000
(b) If to Seller and/or the Company, to:
000 Xxxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, XX 00000
Attn: General Counsel
Tel.: 000.000.0000
Fax: 000.000.0000
14.5 Successors and Assigns, Parties in Interest. This Agreement shall be
binding upon and shall inure solely to the benefit of the parties hereto and
their respective successors, legal representatives and permitted assigns.
Neither this Agreement nor any rights or obligations hereunder may be assigned
without the written consent of the other parties, which consent shall not be
unreasonably withheld, except that Buyer may make an assignment of its rights
hereunder to its financing source for collateral security purposes. Nothing in
this Agreement, express or implied, is intended to or shall confer upon any
Person, other than the parties hereto and their respective successors, legal
representatives and permitted assigns, any rights, benefits or remedies of any
nature whatsoever under or by reason of this Agreement, and no Person shall be
deemed a third party beneficiary under or by reason of this Agreement.
14.6 Severability. If any provision of this Agreement or the application of
any such provision to any Person or circumstance, shall be declared judicially
to be invalid, unenforceable or void, such decision shall not have the effect of
invalidating or voiding the remainder of this Agreement, it being the intent and
agreement of the parties that this Agreement shall be deemed amended by
modifying such provision to the extent necessary to render it valid, legal and
enforceable while preserving its intent or, if such modification is not
possible, by substituting therefor another provision that is valid, legal and
enforceable and that achieves the same objective.
14.7 Entire Agreement. This Agreement (including the Confidentiality
Agreement, the Exhibits and Schedules hereto, and the documents and instruments
executed and delivered in connection herewith) constitutes the entire agreement
among the parties with respect to the subject matter hereof and supersedes all
prior and contemporaneous agreements and understandings, whether written or
oral, among the parties or any of them with respect to the subject matter
hereof, and there are no representations, understandings or agreements relating
to
37
the subject matter hereof that are not fully expressed in this Agreement and the
documents and instruments executed and delivered in connection herewith. All
Exhibits and Schedules attached to this Agreement are expressly made a part of,
and incorporated by reference into, this Agreement.
14.8 Schedules. Nothing in the Schedules is intended to broaden the scope
of any representation or warranty contained in the Agreement or to create any
covenant unless clearly specified to the contrary herein. Any disclosure on one
Schedule shall be deemed to be disclosed on all Schedules and under the
Agreement. Inclusion of any item in the Schedules (a) shall be deemed to be
disclosure of such item on all Schedules and under the Agreement, (b) does not
represent a determination that such item is material nor shall it be deemed to
establish a standard of materiality, (c) does not represent a determination that
such item did not arise in the ordinary course of business, (d) does not
represent a determination that the transactions contemplated by the Agreement
require the consent of third parties and (e) shall not constitute, or be deemed
to be, an admission to any third party concerning such item. The Schedules
include descriptions of instruments or brief summaries of certain aspects of the
Company and its business and operations. The descriptions and brief summaries
are not necessarily complete and are provided in the Schedules to identify
documents or other materials previously delivered or made available.
14.9 Remedies. Each of the parties hereto acknowledges and agrees that (i)
the provisions of this Agreement are reasonable and necessary to protect the
proper and legitimate interests of the other parties hereto, and (ii) the other
parties hereto would be irreparably damaged in the event any of the provisions
of this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties hereto shall
be entitled to preliminary and permanent injunctive relief to prevent breaches
of the provisions of this Agreement by other parties hereto without the
necessity of proving actual damages upon posting of a suitable bond, and to
enforce specifically the terms and provisions hereof and thereof, which rights
shall be cumulative and in addition to any other remedy to which the parties
hereto may be entitled hereunder or at law or equity.
14.10 Expenses. The Seller, on the one hand, and Buyer, on the other hand,
shall bear their respective expenses (including, without limitation, fees and
disbursements of counsel, accountants and other experts) incurred in connection
with the preparation, negotiation, execution, delivery and performance of this
Agreement, each of the other documents and instruments executed in connection
with or contemplated by this Agreement and the consummation of the transactions
contemplated hereby and thereby.
14.11 Release of Information; Confidentiality. The parties shall cooperate
with each other in releasing information concerning this Agreement and the
transactions contemplated hereby. No press releases or other public
announcements concerning the transactions contemplated by this Agreement shall
be made by any party without prior consultation with and written consent of each
other party, except for any legally required communication by any party and then
only with prior consultation and at least 12 hours notice together with copies
of all drafts of the proposed text, prior to the time the communication is made
public.
14.12 Certain Construction Rules. The article and section headings and the
table of contents contained in this Agreement are for convenience of reference
only and shall in no way
38
define, limit, extend or describe the scope or intent of any provisions of this
Agreement. Whenever the context may require, any pronoun used in this Agreement
shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns, pronouns and verbs shall include the plural and vice
versa. In addition, as used in this Agreement, unless otherwise provided to the
contrary, (a) all references to days, months or years shall be deemed references
to calendar days, months or years and (b) any reference to a "Section,"
"Article," or "Schedule" shall be deemed to refer to a section or article of
this Agreement or an Exhibit or Schedule attached to this Agreement. The words
"hereof', "herein", and "hereunder" and words of similar import referring to
this Agreement refer to this Agreement as a whole and not to any particular
provision of this Agreement. Unless otherwise specifically provided for herein,
the term "or" shall not be deemed to be exclusive.
14.13 Counterparts. This Agreement may be executed (including by facsimile
transmission) in multiple counterparts, each of which shall be deemed an
original and all of which taken together shall constitute one instrument binding
on all the parties, notwithstanding that all the parties are not signatories to
the original or the same counterpart.
[SIGNATURES CONTAINED ON FOLLOWING PAGE]
39
IN WITNESS WHEREOF, this Agreement has been duly executed as of the date
first above written.
BUYER:
PACIFIC ENERGY RESOURCES LTD.
By: /s/ Xxxxxx Xxxx
----------------------------------
Name: Xxxxxx Xxxx
Title: President
COMPANY:
FOREST ALASKA OPERATING LLC
By: /s/ Xxxx X. Xxxxxxx
-----------------------------------
Name: Xxxx X. Xxxxxxx
Title: Vice President, Business Development
SELLER:
FOREST ALASKA HOLDING LLC
By: /s/ Cyrus X. Xxxxxx XX
-----------------------------------
Name: Cyrus X. Xxxxxx XX
Title: Vice President & Secretary
FOC (for purposes of Sections 7.6, 7.14, 10.1
and Article XII only):
FOREST OIL CORPORATION
By: /s/ Xxxxx X. Xxxxx
---------------------------------
Name: Xxxxx X. Xxxxx
Title: Executive Vice President
& Chief Financial Officer
40
