Professional Documents
Culture Documents
For The District of Delawar: Interests Pursuant To Sections 363 (B), (1) and (M) of The
For The District of Delawar: Interests Pursuant To Sections 363 (B), (1) and (M) of The
For The District of Delawar: Interests Pursuant To Sections 363 (B), (1) and (M) of The
In re
) Chapter 11
)
Debtors.
)
Deadline for Submittg Bids: July 13, 2009 at 12:00 noon Auction Date: July 20,2009 at 10:00 a.m 4:00 p.m Deadline for Objections to Sale Motion: July 21,2009 at
Hearg Date on Approval of Sale: July 27, 2009 at 1:30 p.rn
DEBTORS' MOTION FOR AN ORDER: (I) APPROVING SALE OF DEBTORS' ALASKA ASSETS FRE AN CLEAR OF ALL LIENS, CLAIMS, ENCUMBRACES
AN OTHER
BANKRUPTCY CODE; (II) ASSUMING AN ASSIGNING CERTAIN EXECUTORY CONTRACTS AND UNEXPIRD LEASES: AND (iID GRATING RELATED RELIEF
Pacific Energy Resources Ltd. ("PERL"), Pacific Energy Alaska Holding, LLC
("PEAR") and Pacific Energy Alaska Operating LLC ("PEAO") and the other above-captioned
debtors and debtors in possession (collectively, the "Debtors") hereby move ths Cour (this
"Sale Motion") for entr of an Order (a) approving the sale of
assuming and assignng certain executory contracts and unexpired leases; and ( c) granting related
i The Debtors in these cases, along with the last four digits of each Debtor's federal tax identification number, are:
Pacific Energy Resources Ltd. (3442); Petrocal Acquisition Corp. (6249); Pacific Energy Alaska Holdings LLC (tax I.D. # not available); Cameros Acquisition Corp. (5866); Pacific Energy Alaska Operatig LLC (7021); San Pedro Bay Pipeline Company (1234); Cameros Energy, Inc. (9487); and Gotland Oil, Inc. (5463). The address for all of the Debtors is i Ii W. Ocean Boulevard, Suite 1240, Long Beach, CA.
68773-002\DOCS _ LA:203777.13
relief. Capitalized terms that are not expressly defined herein shall have the meanngs ascribed
to such terms in the Sale Procedures (defined below) or, ifnot defined therein, in the proposed
Purchase and Sale Agreement (the "Agreement") between PEAO and PEAR, on the one hand,
and the Successful Bidder (defined below) for the Alaska Assets, on the other hand. The
for Sale of
the Debtors' Alaska Assets; (B) Scheduling Auction and Hearing to Consider Approval of Sale;
(C) Approving Notice of Respective Dates, Times, and Places for Auction and for Hearing on
Approval of (i) Sale and (ii) Assumption and Assignment of Certain Executory Contracts and
Unexpired Leases; (D) Approving Forms of
Procedures Order"). Pursuant to the Sale Procedures Order, the Cour approved certain
procedures (the "Sale Procedures") in connection with the sale proposed herein and set a hearng
on ths Sale Motion for July 27,2009 at 1:30 p.m. prevailing Eastern time (the "Sale Hearng,,).3
By this Sale Motion, the Debtors request authority to sell the Alaska Assets to the
highest and best bidder (the "Successful Bidder") or, alternatively, the back-up bidder (the
"Back-Up Bidder") at each auction contemplated by the Sale Procedures Order (each an
"Auction" and, collectively, the "Auctions,,).4 The Debtors also seek to assume and assign
2 The Agreement and TSA attached hereto have been revised from the original versions attached to the Sale
Procedures Motion (defmed below).
, The Debtors have elected to proceed at ths tie without a stalkg horse bidder. The Debtors contiue to reserve
the right, however, to select a stalking horse bidder pursuant to the term of
Procedures.
4 The Successful Bidder or Back-Up Bidder may be the Lenders, either together or individually, to the extent that a
credit bid is submitted under section 363(k) of
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certain executory contracts and unexpired leases (the "Assumed Executory Contracts") to the
Successful Bidder (or Back-Up Bidder) as par of
Introduction
1. Pursuant to the Sale Procedures, the Debtors are seeking offers for the sale
of
(1) "Group 1 Assets": (A) PEAO's interests in leased oil and gas
production and exploration assets located in Alaska (and related assets and contracts) that are operated or held for exploration by PERL (the "Operated Alaska mterests"); (B) PEAO's interests in leased gas production assets located in Alaska (and related assets and contracts) that are operated by Aurora Gas, LLC (the "Aurora Operated Alaska the issued and outstanding common mterests,,);5 and (C) PEAR's 50% of stock (the "Stock) of Cook Inet Pipe Line Company ("CIPL"); and
The Debtors propose to sell the Group 1 Assets and Group 2 Assets (each a "Group" and,
collectively, the "Groups") in two separate concurent Auctions that are scheduled to commence
10017-2024. Qualified Bidders (as such term is defined in the Sale Procedures) are not required
to bid for both sets of Alaska Assets but any bidder that bids for both sets must bid separately for
each set; neverteless bidders may bid for subsets of the Group 1 Assets, such as paricular
5 Aurora Gas, LLC is not an affliate of
the Debtors.
6 Collectively, the Operated Alaska Interests, the Aurora Operated Alaska Interests, and the Nonoperated Alaska
Interests are referenced herein as the "Alaska Interests." For clarfication, the term "Alaska Assets" includes the
Alaska Interests and the Stock of CLPL.
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leases and wells or bid for the Operated Alaska mterests without bidding for the Aurora
Operated Alaska mterests or the Stock (or vice versa). Bidders for the Group 2 Assets must bid
for the entirety of the Group 2 Assets. The sales of
Jurisdiction
2. The Cour has jursdiction over this Sale Motion pursuant to 28 US.C.
157 and 1334. This proceeding is a core proceeding withn the meanng of28 US.C.
l57(b)(2)(A), (M), (N and (0).
3. Venue of
4. The statutory predicates for the relief sought herein are sections 363 and
365 oftitle 11 of
the Banptcy Code and Rules 2002, 6004 and 6006 ofthe Federal Rules of
Banptcy Procedure and Rule 6004-1 of the Local Rules of the Banptcy Cour.
Backeround
5. On March 9, 2009 (the "Petition Date"), the Debtors commenced these
under chapter 11 of cases (the "Cases") by filing voluntar petitions for relief
the Banptcy
Code. The Debtors have continued in the possession of their property and have continued to
operate and manage their businesses as debtors and debtors in possession pursuant to sections
1l07(a) and 1108 of the Banptcy Code. No trstee or examiner
Unsecured
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acquisition, development and exploitation of oil and gas properties in the western United States.
The Debtors' revenue for 2008 was approximately $226.2 milion, of
or $144.9 millon, was attbutable to the Alaska Assets, with approximately $43.9 million
attbutable to the Operated Alaska mterests and $101 million attbuted to the Nonoperated
Alaska mterests.
7. PERL owns 100% of the membership interests in PEAR. PEAR owns
100% ofthe membership interests in PEAO. PEAR also owns 20,000 shares of
Stock, which
constitute 50% of all issued and outstanding shares of CIPL common stock.7 PEAR's
the assets of membership interests in PEAO and the Stock are substantially all of
PEAR.
8. PEAO owns interests in certain oil and gas leases (the "Leases")
pricipally from the State of Alaska and related assets (i.e., the Alaska mterests) that are
operated by PERL, Aurora or Union. The Alaska mterests are substantially all of the assets of
PEAO.
the sale of 9. By separate motion, the Debtors have sought approval of
the
Beta Assets.8
7 Union owns the other 50% of CIPL's issued and outstanding common stock. Union is an affiiate of Chevron the Debtors. Corporation. It is not affiiated with any of Interior Minerals 8 The term "Beta Assets" includes interests in leases from the United States Deparent of Huntington Beach, the coast of Management Service for sites located in the Beta Unit in federal waters off San Pedro Bay Pipeline Company, which owns the issued and outstanding capital stock of Californa and 100% of and operates the pipeline from the Beta Unit to shore.
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10. The Debtors have incured, and continue to incur, signficant losses with
respect to the Alaska Assets and are unable to generate suffcient positive cash flow to sustain
their ongoing operations. Since the Petition Date, these losses have either remained accrued and
unpaid or have been fuded through borrowings under the Debtor's debtor in possession
financing credit agreement, as amended (the "DIP Credit Agreement"), approved by final order
of
this Cour (the "Final DIP Financing Order"). m order to miniize their losses and protect the
the business as a going concern, the Debtors' secured lenders (the "Lenders"), as a
providing funding under the DIP Credit Agreement, required the Debtors to pursue
value of
condition of
Assets, or alternatively, to abandon such assets pursuant to requirement in the DIP Credit
Agreement, as follows: (a) a June 16, 2009 deadline to file motion to approve sale to stalkng
horse and associated procedures or, if no stalking horse, the motion to approve the Sale
the Sale
Procedures (the "Sale Procedures Motion"); (b) a July 16, 2009 deadline for entr of
Procedures Order; (c) a July 20,2009 deadline for the Auctions; (d) a July 27,2009 deadline for
entr of the Sale Order; ( e) an August 4, 2009 deadline for closing of any sales (or such later date
as may be necessar to obtain regulatory approvals). The DIP Credit Agreement also required
the Debtors to file motions to abandon the Alaska mterests by June 16, 2009 to the extent that
the proposed sale is unsuccessful, which the Debtors fied concurently with the Sale Procedures
Motion.
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12. The Debtors' losses for the Operated Alaska mterests have been fuded
solely though borrowings under the DIP Credit Agreement. During the first four months of
2009, the average monthy cash loss from the Operated Alaska mterests, inclusive of required
capital maintenance projects and mandatory provisions for futue abandonment obligations, was
approximately $500,000. These cash losses have been exacerbated in recent months from the
eruption and contiuing seismic activity at the Mount Redoubt volcano, which has caused the
shut-in ofCIPL's pipeline and terminalling facilities, the region's sole means of
bringing crude
oil to market. Whle it is expected that an alternative, albeit more costly, outlet to market wil be
developed and employed with the next couple of months, the Debtors curently budget a cash
loss of$2.5 millon for the months of
June and July 2009. Once the Debtors are able to resume
sales of crude oil, it is expected that the Operated Alaska mterests, on a normalized basis, would
continue to incur signficant operating losses of approximately $700,000 each month. The
Debtors have fied or plan to file a claim with their business interrption insurance carer to
recoup the added costs of
June and July 2009, the Debtors have accrued but unpaid amounts due to overrding royalty
interest ("ORR') holders and for lease royalty payment obligations. The prepetition amounts
due to the ORR holders and for lease royalty payment obligations is approximately $300,000.
Postpetition, based on production through May 31,2009, the Debtors estimate an additional
amount due of approximately $300,000_
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14. Each month, the Debtors are obligated to fund $200,000 into escrow
established on behalf of
the Deparent of
Natural Resources of
futue abandonment costs of the Osprey Platform in the Redoubt field. The Debtors did not
make the April and May 2009 escrow payments (totaling approximately $400,000). m addition,
the Debtors have not budgeted to make escrow payments durng the months of June and July
2009 (yielding a total amount owed of $800,000 as of July 31, 2009).
15. As with the Operated Alaska mterests, PEAO has incured, and continues
to incur, significant operating losses with respect to their Nonoperated Alaska Interests and is
unable to generate suffcient positive cash flow to sustain their ongoing operations. Each month,
Union, the operator ofthe Nonoperated Alaska mterests, sends PEAO a statement detailing
PEAO's share of Joint mterest Bilings ("JIBs") for the Nonoperated Alaska mterests. Since
September 2008, PEAO has not made any cash payments to Union with respect to these JIBs.
Rather, on a prepetition basis, Union has offset PEAO's share of
owed. As of
the Petition Date, the accrued but unpaid balance ofthe JIBs was approximately
$29.5 milion per Union. PEAO disputes ths amount. Union continues to assert postpetition
claims under JIBs relating to the Nonoperated Alaska mterests, which PEAO estimates wil total
Associates, mc. ("Albrecht"), as agent, to assist the Debtors in their efforts to market and sell
substantially all of their operating assets. Albrecht was retained by the Debtors as sales agent in
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these Cases by an order ofthe Banptcy Cour. Albrecht has been assisting PERL with the
Co., LLC ("Lazard"), as investment baner, for the purose of implementing and executing one
or more strategic alternatives_ Lazard was retained by the Debtors as investment baner in these
Cases by an order of
the Banptcy Court. Lazard has been assisting PEAR and PEAO mainly
18. With the assistance of their professionals, the Debtors conducted two
concurent processes - one for the Alaska Assets and the other for the Beta Assets (collectively,
the "Assets") - to solicit bids ("Bids") for the sale of the Assets. The Debtors and Lazard began
the sale process for the Alaska Assets by preparng an in-depth offering memorandum around
April 3, 2009, with descriptions of
provided prospective buyers with access via computer to a virtal "data room" established by the
Debtors, Lazard and the Debtors' transactional counsel, Rutan & Tucker, LLP, with respect to
for the Alaska Assets and approached more than 40 potential buyers to solicit their interest in
acquirng the Alaska Assets_ Confidentiality agreements were sent to approximately 26 of these
potential buyers, approximately 15 of such potential buyers executed and returned such
agreements, and approximately 11 requested and received the offering memorandum.9
9 The Debtors have not received any expressions of interest for any of the Alaska Assets from an "inider." the closing of any sale. Such the Debtors' employees as of Potential Bidders, however, may seek to hie some of the Debtors, who would be considered "insiders" pursuant under employees could include offcers of one or more of
section i 0 i (31) of the Bankptcy Code.
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20. None of
bidder for either of the proposed Auctions because, among other reasons, each offer had one or
more contingencies (such as a financing contingency) and/or did not include a nonrefudable
deposit. Therefore, the Debtors have decided to proceed to the Auction without a stalkng horse
bidder; however, in the Sale Procedures, the Debtors reserve the right, after consultation with the
Lenders and the Committee, to enter into an agreement with a stalkng horse bidder.
21. As a result ofthe Debtors' and Lazard's marketig effort, the Debtors
received four expressions of interests for all or portions of their Alaska Assets (one of which was
combined with an expression of interest for the Beta Assets), and three potential buyers made
site visits to Alaska.
22. The Debtors with the assistance of Lazard and their other professionals
intend to market and seek higher and better bids for the Alaska Assets and, pursuant to the Sale
Procedures, to hold the Auction on July 20, 2009 at 10:00 a.m. Eastern time. The Debtors
believe that the months of marketing efforts that have taken place to date wil result in the
highest and best price for the Alaska Assets.
The Proposed Areement
23. As noted above, the Debtors are curently proceeding towards a sale
without a stalkng horse bidder. Although ths may change depending on the outcome of
negotiations with interested paries, the Debtors have prepared a form of Agreement and TSA for
the sale of the Alaska Assets.1O As noted above, a copy ofthe Agreement and TSA, without
10 To the extent of any inconsistency between ths Sale Motion and the Agreement or TSA, the term of
the
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exhibits or schedules, as revised since the fiing ofthe Sale Procedures Motion, is attached hereto
as Exhibit A.11
24. The Sale Procedures Order contemplates that the Debtors may provide the
proposed Agreement to potential bidders and that Qualifyg Bids (as defined in the Sale
Procedures Order) must be upon the terms and conditions substantially set forth in the
Agreement. The Procedures Order also requires that Qualifying Bids are accompaned by clean
and marked versions of
Assets though separate Auctions. Therefore, there would be more than one Agreement and
related TSA and other related agreements if there is a different Successful Bidder for each Group
of Alaska Assets (or each subset of Group 1 Assets). Thus, each reference in ths Sale Motion to
the singular terms Agreement and TSA is, in context, a reference to each Agreement and TSA
and, where appropriate, other related agreements.
26. The principal terms of
have not yet been determined. The purchase price paid for the Alaska mterests at the Alaska mterests Closing (as defined in the Agreement) wil be subject to certain post-closing adjustments, which generally relate to Buyer's responsibility for costs and expenses and Buyer's entitlement to revenues relating to the Alaska mterests after the Effective Time. For example, the Alaska mterests purchase $200,000 price includes upward adjustments to cover a fixed overhead charge of for the period from the Effective Time though the Alaska mterests Closing, to
account for Buyer's purchase of oil and gas in pipelines or tans (valued at market
ii The exhibits and schedules to the Agreement can be obtained from the Debtors' investment baner, Lazard
Frres & Co. LLC, 600 Travis, Suite 2300, Houston, TX 77002, Att: Robert L. Lynd (email:
robert.lyndilazard.com), subject to appropriate confdentiality restrctions. 12 The description of the Agreement and TSA herein are only sumries of certain provisions, and the term of the
documents themselves control in the event of any inconsistency.
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68773-102\DOCS _ LA:203777. 1 3
price or, if applicable, contract price) and oil and gas imbalances (valued at $60.00 per barel of oil or $9.00 per one millon British Thermal Units of gas) as ofthe Effective Time and to cover refuds or credits to Buyer from the State of Alaska for any overpaid royalties relating to Sellers' (defined below) interest in the Group 2 Assets for periods prior to the Effective Time, and provides for downward adjustments to account for certain title defects or Alaska mterests purchased by third paries under preferential purchase rights.13 the Assets to be Sold. On the terms and subject to the conditions of the Debtors, as set fort in the Agreement Agreement, on the Closing Date, certain of (the "Sellers") shall sell, assign, transfer, convey and deliver to Successful Bidder, and Successful Bidder shall purchase, acquire and accept from the Debtors, the Alaska Assets identified in the Agreement (as proposed by a Potential Bidder, generically referred to in this sunar ofthe Agreement as the "Buyer"), wherever located in the Debtors' right, title and interest each case to the extent, and only to the extent, of therein as of the Closing Date (other than the Excluded Assets). The Alaska Assets proposed to be sold by PEAO under the Agreement, other than the Stock (which is to be sold by PEAR), are referred to in the Agreement as the "Alaska mterests." The Alaska mterests generally include all of PEAO' s right, title and interest in and to, the Agreement and Exhibits A except for the Excluded Items and subject to terms of and B to the Agreement to be prepared prior to the Alaska mterests Closing: fee interests, leases and lands; easements; wells; contracts; tangible assets; oil and gas produced after the Effective Time (as such term is defined in the Agreement); untization, communtization and pooling declarations, orders and agreements related to the properties being sold; permits; records; royalty interests; parership and joint
ventue interests; indemnties (including rights to indemnfication provided by Forest
Oil Corporation under the purchase agreement pursuant to which PERL purchased PEAO) and thd pary releases relating to the propertes, in each case only to the extent such indemnties and releases relate to (i) activities occurg on or after the Effective Time or (ii) any claim or liability assumed by Buyer under the Agreement, provided that Sellers shall retain their interest in such indemnties and releases to the extent Sellers may potentially remain liable for any such claim or liability; all intangibles, including operating revenues and accounts receivable relating to the period after the Effective Time, in each case associated with the properties or the production of oil and gas attbutable thereto; leases or subleases oftangible property;
and leases for real propert used by Sellers in connection with the operation of their
business; and right to seek a refud or credits from the State of Alaska for any overpaid royalties relating to Sellers' interests in the Nonoperated Alaska mterests (as
defied in the Sale Procedures).
Excluded Assets. The Alaska mterests exclude items listed as exclusions in the exhibits and schedules to the Agreement, and additional items such as: pipelines, fixtues, equipment, interests in land or any other property owned by any third pary; Sellers' geological or geophysical data containng information not related to the Alaska mterests; cash generated from transactions occurg prior to the Effective Time or deposits made prior to the Effective Time; items used, business prior to the Alaska consumed or disposed of in the ordinar course of mterests Closing; rights to representations, waranties, indemnties and releases other than those specifically included in the Alaska mterests; surety bonds, plugging bonds, abandonment bonds, standby trst agreements, escrow accounts
i' The Successfu Bidder's Good Faith Deposit (as such term is defied in the Sale Procedures) would be applied to
the purchase price at closing.
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for plugging, abandomnent, decommissioning, removal and restoration obligations, and other bonds posted by or at the request of Sellers, and securty deposits and other security furnished by Sellers or their predecessors in interest;
uness otherwise specified, rights under insurance policies held by Sellers or any
of
their affiiates covering any ofthe Alaska mterests or Sellers' interests in CIPL; tangible assets currently in use in connection with the ownership or operation of other property not included in the Alaska mterests; records that are subject to attorney-client privilege, work product imunty or other privileges their associated parties; interests, agaist disclosure enjoyed by Sellers or any of
operators or other third paries arsing out ofthe operation of the properties,
properties or assets owned by any person other than Sellers; clais against
Alaska mterests or CIPL prior to the Effective Time; any business interrption
insurance claims relating to the volcanc and seismic activity that began at Mount
Redoubt in March 2009; and contracts between a Seller or Sellers, on one hand, and PERL or any affliate of PERL (other than Sellers), on the other hand.
Assumed Liabilties. Liabilities to be assumed by Buyer generally include liabilities associated with ownership or operation of the Alaska Assets on or after the Effective Time; enviromnentalliabilities associated with periods prior to, on or after the Effective Time; accounts payable that accrue on or after the Effective Time; joint interest billings due to Union or its affiliates in connection with the Nonoperated Alaska mterests, whether associated with, related to or
arsing from the periods prior to, on or after the Effective Time; royalty
obligations that accrue on or after the Effective Time; claims arsing out of the the Alaska mterests on or after the Effective Time; ownership or operation of pluggig, abandomnent, decommssioning, removal and/or restoration liabilities associated with, related to or arsing from the Alaska mterests with respect to the periods prior to, on or after the Effective Time; and liabilities under litigation to which either or both Sellers is a pary or is joined as a pary as of or after the execution of the Agreement; and certain Permitted Encumbrances (as defined in
the Agreement.
Excluded Liabilties. The following claims against and liabilities and obligations of Sellers are not proposed to be assumed by Buyer: liabilities
associated with debt instrents of Sellers, except for liabilities that relate to
Permitted Encumbrances; accounts payable that have accrued prior to the Effective Time; royalty obligations accrued prior to the Effective Time; claims, the except enviromnental claims and abandomnent obligations, arsing out of ownership or operation of the Alaska mterests prior to the Effective Time; and
banptcy claims and banptcy costs, in each case except for enviomnental
clais and abandomnent obligations.
wrtten contracts, contractual rights, interests and other wrtten agreements and
instrents coverig or affecting any or all of the Alaska mterests or the
production, handling or transportation of oil and gas attbutable thereto or the use
or ownership or operation of any of the Alaska mterests or the oil, gas, water or other substances produced therefrom, as scheduled on Exhbit B to the Agreement. Sellers wil not, however, assign their interests under their secured credit facilities or contracts between a Seller or Sellers, on one hand, and PERL or any affiliate of PERL, on the other hand.
Representations and Warranties. Sellers would represent and warant
that the Agreement has been duly authorized, executed and delivered and is binding and enforceable against Sellers, subject to orders ofthe Cour. Buyer would acquire the Alaska Assets on an "AS is, WHERE is, WITH ALL
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may have against or from Sellers or any of their associated paries. Title defects not identified in a wrtten notice delivered by Buyer to Sellers withi ten days after execution of the Agreement wil be waived and wil transfer with the affected Alaska mterest.
Release. The Agreement contains a general release by Buyer that includes
Buyer, at reasonable times and upon reasonable notice durng regular business hours for as long as any Alaska mterests are in effect after the Effective Time or until all abandonment obligations have been fully satisfied and discharged or a
longer period ifrequired by applicable law.
Closings. The Agreement provides for separate closings for the sales of the Alaska mterests and the Stock, each of which closings is subject to certain conditions precedent and certai deliveries by the paries. The sale of the Alaska mterests is contemplated to occur on or before August 4, 2009 or on such other
date as the paries may agree. The sale of the Stock is contemplated to occur on
the date that the Alaska mterests sale closes, or on such other date as the parties agree. The DIP Credit Agreement requires that the closings occur no later may than August 4, 2009 or such later date as may be necessar to obtain regulatory approvals. The Agreement provides that regardless of the actual closing dates of the Effective Time. the sales, the sales shall each be effective as of
Effective Time. The Effective Time of 7:00 a.m. Californa time on July 1, 2009. The Effective Time of
monthly and quarerly fiancial statements; accounts receivable maintenance services; payables management and processing
services, including the preparation of
maintenance services, and telecommuncation services; oil and gas marketing services; engineering services; drllng and support services; on site field services;
purchasing and logistics services; land and lease admstration and general
contract administration services; environmental, health and safety compliance resources and personnel, including conducting oil spil responses using PERL owned equipment, as needed; insurance support and insurance coverage under PERL, including general PERL's policies or policies issued in the name of liability, excess liability, commercial crie, and fiduciar liability, workers' compensation, auto liability as may be requested from time to time; regulatory compliance services; management and admstrative support services and personnel, office supplies and equipment, and offce space and records retention space in Californa, including utilities; management and administrative personnel in Anchorage. Office and related costs in Anchorage to be charged directly to the
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68773-102\DOCS _LA:203777.13
Buyer; and human resources support services, payroll agent activities, and benefit plan administration support services, as needed.
Monthly Fee. $200,000.
Out of Pocket Expenses. The Buyer shall pay all actual out-of-pocket
expenses incured on behalf of the Buyer by PERL, including without limitation, capital expenditues and expenses related to management and admnistrative support services and personnel, offce space and records retention in Californa and management and administrative personnel in Alaska.
Defaults. The Buyer shall be in default if the Buyer fails to timely pay
any invoiced amount for PERL Services provided pursuant to the TSA. PERL may, at its option, suspend all or any portion of the provision of PERL Services, including PERL Services for which payment is outstanding, until such default is PERL cured and all amounts owed to PERL are paid. PERL's suspension of Services in accordance with the terms ofthe TSA shall not give rise to any default PERL or liability on the par of PERL. PERL shall be in default under the TSA if fails to provide a PERL Service to the Buyer, and such failure continues for at PERL wrtten notice; provided that if least thiy (30) days following receipt of
canot reasonably cure the failure within thi (30) days, no PERL default shall
be deemed to occur if
PERL demonstrates that it has taken steps to cure the failure within the thirt (30)-day period and diligently prosecutes the cure to
completion. Upon the occurence of a PERL default, the Buyer may, at its option
and, as its sole remedy, obtain such PERL Service from any thrd-party provider qualified to provide such PERL Service, and PERL would be obligated to pay any positive difference incured by Buyer in purchasing the service from the thirdpary provider, so long as Buyer uses all commercially reasonable efforts to
ofthe PERL Services Term (as such term is defined in the TSA), PERL shall
deliver to the Buyer a fial settlement statement settg forth the actual amount of net production, revenue and expenditues and the resulting adjustment to the
estimated proceeds already remitted to PERL or paid by the Buyer. If the Buyer does not timely deliver the wrtten report to PERL containing proposed changes, the statement as delivered by PERL wil be deemed to be correct and wil be final and binding on the Paries and not subject to fuher audit or arbitration.
Term of Agreement. The PERL Services Term (as such term is defined the TSA (subject to any the PERL Services Term, as set forth in the TSA). No PERL extension of Services shall be provided after the expiration or earlier termination of the PERL
in the TSA) shall be 180 days after the Effective Date of Services Term, except by the mutual wrtten agreement of Services may be termnated prior to the expiration of
following the procedures set fort in TSA. Discontinuation of Services. After the Effective Date (as such term is defined in the TSA), the Buyer may, without cause and in accordance with the terms and conditions ofthe Agreement, request the discontinuation ofthe PERL Services by giving PERL at least 30 days' prior wrtten notice. The Buyer may request parial discontinuation of the PERL Services and the "Seller" (i.e., PEAO) shall use commercially reasonable efforts to accommodate such request. By
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68773-002\DOCS_LA:203777.13
mutual wrtten agreement, the Paries may agree to a parial discontinuation of the PERL Services and a corresponding reduction in consideration payable under the
TSA.
Confidentiality. Each Par agrees to hold in trst and maintai confidential information, and not to disclose such information to others (other than affiliates, prospective lenders or investors, and the advisors of the foregoing) without prior wrtten approval from the providing Par.
PERL.
28. The State of Alaska shall not be precluded under the requested Sale Order
or the Agreement from exercising its authority to approve or disapprove any operator of any of
the Relevant Alaska Assets proposed by a Successful Bidder.
Assumiition and Assil!nment of Assumed Executory Contracts
29. m accordance with the Agreement, and subject to, and at the time of, the
Closing, the Debtors seek to assume and assign to the Successful Bidder certai executory
contracts and unexpired leases to be designated by the Successful Bidder (i.e., the Assumed
Executory Contracts).
30. Pursuant to the Sale Procedures Order, the Debtors are required to serve
this Sale Motion and the cure notice substantially in the form approved pursuant to the Sale
Procedures Order (the "Cure Notice") upon each counterpar to the Assumed Executory
Contracts (each a "Counterpary"). Pursuant to the Sale Procedures Order, the Cure Notice shall
state the date, time and place of
68773.002\DOCS_LA:203777.13
the assumption and assignent of Assumed Executory Contracts must be fied and served. The
Cure Notice also shall identify the amounts, if any, that the Debtors believe are owed to each
Counterpary to an Assumed Executory Contract in order to cure any defaults that exist under
such contract (the "Cure Amounts").
31. If a contract or lease is assumed and assigned pursuant to this Cour's
order approving same, then unless the Counterpary to the Assumed Executory Contract properly files and serves an objection to the Cure Amount contained in the Cure Notice, the Counterpary
to the Assumed Executory Contract will receive at the time of the Closing (or as soon as
reasonably practicable thereafter), the Cure Amount as set forth in the Cure Notice, with
Contract, such objection must set fort a specific default in any executory contract or unexpired
lease and claim a specific monetar amount that differs from the amount, if any, specified by the
Debtors in the Cure Notice.
33. Pursuant to the Sale Procedures Order, if any Counterpary objects for any
reason to the assumption and assignent of the Assumed Executory Contract, then the
Counterparymust file the objection by
or such later date, if any, set fort in the Sale Procedures Order or (b) the date otherwise
specified in the Cure Notice (or, alternatively, the date set forth in the motion to assume such
Assumed Executory Contract if such contract is to be assumed and assigned after the Sale
Hearng); provided however, that any counterpar may raise at the Sale Hearg an objection to
the assumption and assignent of
68773-102\DOCS _ LA:203777. 1 3
Successful Bidder's ability to provide adequate assurance of futue performance under the
Assumed Executory Contract.
34. Pursuant to the Sale Procedures Order, the Successful Bidder shall be
responsible for satisfying any requirements regarding adequate assurance of futue performance
that may be imposed under section 365(b) ofthe Banptcy Code in connection with the
proposed assigrent of any Assumed Executory Contract. The Cour shall make its
by any counterpary also shall be resolved by the Cour at the Sale Hearig.
Use of Proceeds
35. Net sale proceeds shall be distrbuted to the Lenders in accordance with
paragraph 21 of
the Final DIP Financing Order entered in these Cases and section 2.l0(a) ofthe
DIP Credit Agreement. The Debtors believe that it is in the best interests of
their estates to
comply with the above-referenced requirements ofthe DIP Credit Agreement and disburse a signficant portion of the sale proceeds received by the Debtors at each closing of a sale
transaction contemplated by ths Sale Motion. Such disbursement of sale proceeds is cost
effective to the estates, is consistent with practice in this Distrct and is an appropriate means of
adequately protecting the interests of the Lenders in the proceeds of
collateraL.
Relief Requested
36. By ths Sale Motion, the Debtors are requesting that ths Cour, among
68773-102\DOCS _ LA:203777.13
for Assumed Liabilities) pursuant to sections 363(b), (f) and (m) and 365 of
the Banptcy
Code, with such liens, claims, rights, interests and encumbrances (collectively, the "mterests") to
attach to the sale proceeds of the Alaska Assets with the same validity (or invalidity), priority and perfection as existed immediately prior to such sale; and (b) approve the assumption and
assignent of
the Assumed Executory Contracts under section 365 ofthe Banptcy Code,
subject to, and at the time of, the Closing under the Agreement. Pursuant to DeL. Bank. L.R.
6004-l(b)(ii), the Debtors' proposed order granting the reliefrequested herein (the "Sale Order")
accompanies this Sale Motion.
notice and a hearng, may use, sell or lease, other than in the ordinar course of
property of
the estate. . .." 11 U.S.C. 363(b)(1). Section 105(a) provides in relevant par that
"(tJhe Cour may issue any order, process, or judgment that is necessar or appropriate to car
out the provisions of
38. A sale of
ofthe Banptcy Code if a sound business justification exists for doing so. See, e.g., Meyers v.
Martin (In re Martin), 91 F.3d 389,395 (3d Cir. 1996) (citing Fulton State Bankv. Schipper (In
re Schipper), 933 F.2d 513, 515 (7th Cir. 1991));In re Abbotts Dairies of Pennsylvania, Inc.,
788 F.2d 143 (3d Cir. 1986); Stephens Indus., Inc. v. McClung, 789 F.2d 386,390 (6th Cir.
19
68773-102\DOCS _ LA:203777 .13
1986); In re Lionel Corp., 722 F.2d 1063 (2d Cir. 1983); In re Titusvile Country Club, 128 B.R.
396 (W.D. Pa. 1991);In re Delaware & Hudson Railway Co., 124 B.R. 169,176 (D. DeL. 1991).
The Delaware & Hudson Railway cour rejected the pre-Code "emergency" or "compelling
circumstances" standard, finding the "sound business purose" standard applicable and,
discussing the requirements of that test under McClung and Lionel, observing:
actors to consider in determining if there is a sound business purose for the sale include: the proportionate value of the asset to the estate as a whole; the amount of elapsed time since the filing; the likelihood that a plan of reorganization wil be proposed and confied in the near futue; the effect of the proposed disposition of the futue plan of reorganzation; the amount of proceeds to be obtained from the sale versus appraised values of the assets; and whether the asset is decreasing or increasing in value.
A non-exhaustive list off
satisfied that there is a sound business reason or an emergency justifYg the pre-confiration
sale, the cour must also determe that the trstee has provided the interested paries with
adequate and reasonable notice, that the sale price is fai and reasonable and that the Successful
consideration of all viable alternatives, and have concluded that the sale is supported by a
number of sound business reasons. The Debtors not curently have a viable alternative to the
sale. The value of the Debtors' enterprise is signficantly below the total amount of its existing
secured debt and the Debtors rely on access to funding under the DIP Credit Agreement. Hence,
the Debtors have determned, with the full support of the Lenders, that a going concern sale of
20
68773-102\DOCS _ LA:203777.13
the Debtors' operations, as required by the DIP Credit Agreement provides the best and most
efficient means for reorganizing the Debtors' affairs at this time.
41. The Debtors, through Lazard, have extensively marketed the Alaska
Assets and will conduct the sale process (including the Auctions) in accordance with the Sale
Procedures Order, which implements certain procedures designed to maximize the value that wil
be realized from the sale of the Alaska Assets.
42. As a result of
Successful Bidder's offer wil be fully tested by the market and wil constitute fair and
reasonable consideration for the Alaska Assets.
43. Based on the foregoing, the sale ofthe Alaska Assets is justified by sound
business reasons and is in the best interests ofthe Debtors and their estates. Accordingly,
pursuant to section 363(b) ofthe Banptcy Code, the Debtors request approval of
the sale to
The Asset Sale Satisfies the Requirements of Section 363(i) of the Bankruptcv Code for a Sale Free And Clear of Liens. Claims. and Interests
44. Section 363(f) of
The trstee may sell propert under subsection (b) or (c) of this
(3) such interest is a lien and the price at which such property is to liens on such Alaska Assets;
(5) such entity could be compelled, in a legal or equitable proceeding, to accept a money satisfaction of such interest.
11 U.S.C. 363(f).
45. As quoted above, section 363(f) ofthe Banptcy Code provides for the
sale of assets "free and clear of any interests." The term "any interest," as used in section 363(f),
is not defined anywhere in the Banptcy Code. Folger Adam Security v.
term "any interest." 209 F.3d at 258. The cour observed that while some cours have "narowly
interpreted that phrase to mean only in rem interests in property," the trend in modem cases is
towards "a broader interpretation which includes other obligations that may flow from ownership
of
99 F.3d 573,581-582 (4th Cir. 1996), a case cited approvingly and extensively by the Third
Circuit in Folger Adam, the scope of 11 U.S.C. 363(f) is not limited to in rem interests. Thus,
the Third Circuit in Folger Adam stated that Leckie held that the debtors "could sell their assets
under 363(f) free and clear of successor liability that otherwise would have arsen under federal
the requirements enumerated therein wil suffce to warant the sale of the Alaska Assets free and
clear of all
provided in the Agreement (collectively, the "mterests"), except with respect to any mterests that
22
68773-102\DOCS _ LA:203777.13
are Assumed Liabilities under the Agreement. See Citicorp Homeowners Servs., Inc. v. Ellot,
such mterest wil be adequately protected by either being paid in full at the time of Closing, or
by having it attach to the net proceeds of
may possess with respect thereto. The Debtors accordingly request authority to convey the
Alaska Assets to any Successful Bidder (or Back-Up Bidder), free and clear of all mterests
(except for the mterests that are Assumed Liabilities under the express terms of
the Agreement),
with such mterests to attach to the proceeds of the sale, with the same validity (or invalidity),
priority and perfection as existed immediately prior to the sale.
50. The Debtors are informed and believe that the Lenders wil consent to the
sale of
their collateral (which wil satisfy 11 U.S.C. 365(f)(2)). The Debtors have conducted
PERL, PEAR and PEAO) and the
purorted lienholders of, and
interest owners in, the Debtors' assets in conjunction with the proposed sale of
the Alaska
Assets. The Debtors have served such purorted lienholders and other interest owners notice of
this Sale Motion, and will serve such paries with notice of any Sale Order entered by ths Cour .
51. Accordingly, this Cour should approve the sale of the Alaska Assets to
the Successful Bidder (or Back-Up Bidder), free and clear ofmterests (other than Assumed
Liabilities) under Banptcy Code section 363(f), and any potential claimants should be
compelled to look exclusively to the proceeds of the sale for satisfaction of their claims.
23
68773-102\DOCS _ LA:203777. 1 3
The reversal or modification on appeal of an authorization under subsection (b) or (c) of ths section of a sale or lease of property does not affect the validity of a sale or lease under such authorization to an entity that purchased or leased such property in good faith, whether or not such entity knew of the pendency of the appeal, unless such authorization and
such sale or lease were stayed pending appeaL.
11 U.S.C. 363(m).
53. Whle the Banptcy Code does not define "good faith," the Third Circuit
in In re Abbotts Dairies of Pennsylvania, Inc., 788 F .2d 143 (3d Cir. 1986), has stated:
(t)he requirement that a purchaser act in good faith. . . speaks to the integrty of his conduct in the course of the sale proceedings. Typically, the misconduct that would destroy a purchaser's good faith status at a judicial sale involves fraud, collusion between the purchaser and other
bidders or the trstee, or an attempt to take grossly unfair advantage of
other bidders.
make an appropriate showing at the Sale Hearng that the Agreement with any Successful Bidder
(or Back-Up Bidder) is the result ofa negotiated, ar's-length transaction, in which such bidder
at all times acted in good faith under the standard set forth in Abbotts Dairies. The Debtors thus
request that the Cour find that the Successful Bidder, if any, will be purchasing the Alaska
Assets in good faith within the meang of section 363(m) of the Banptcy Code.
B. Authorization of Assumption and Assiiinment of the Assumed Executory Contracts
55. As required by the Agreement, and in order to enhance the value to the
Debtors' estates, the Debtors request approval ofthe assumption and assignent ofthe Assumed
24
68773-102\DOCS _ LA:203777 .13
Executory Contracts to the Successful Bidder (or Back-Up Bidder), subject to, and at the time of,
56. The Assumed Executory Contracts are those contracts or leases that are to
be assumed by the Debtors and assigned to any Successful Bidder as par of the sale transaction under the Agreement. The Debtors further request that the Sale provide that the Assumed
Executory Contracts wil be assigned to, and remain in full force and effect for the benefit of, the
Successful Bidder, notwithstanding any provisions in the Assumed Executory Contracts,
including those described in sections 365(b)(2) and (f)(l) and (3) of
57. Section 365(f)(2) ofthe Banptcy Code provides, in pertinent par, that:
The trstee may assign an executory contract or unexpired lease ofthe
debtor only if -
(A) the trstee assumes such contract or lease in accordance with the
contract or lease is provided, whether or not there has been a default in such contract or lease.
11 U.S.C. 365(f)(2).
58. Under section 365(a), a debtor "subject to the cour's approval, may
assume or reject any executory contract or unexpired lease ofthe debtor." 11 U.S.C. 365(a).
Section 365(b )(1), in tu, codifies the requirements for assuming an unexpired lease or
executory contract of a debtor, providing that:
(b )(1) If there has been a default in an executory contract or unexpired
lease of
the debtor, the trstee may not assume such contract or lease
25
68773-002\DOCS _ LA:203777.13
(A) cures, or provides adequate assurance that the trstee will promptly cure, such default. . . ;
(B) compensates, or provides adequate assurance that the trstee wil
lease, for any actual pecuniar loss to such pary resulting from such default; and
(C) provides adequate assurance of futue performance under such contract or lease.
11 U.S.C. 365(b)(1).
59. Although section 365 of
See In re Taylor, 913 F.2d 102 (3d Cir. 1990); Sharon Steel Corp. v. Natl Fuel Gas Distrib.
Corp., 872 F.2d 36 (3d Cir. 1989). Accordingly, assumption or rejection of any executory
contract is appropriate where the assumption or rejection would benefit the estate. Sharon Steel,
872 F.2d at 40.
60. The assumption and assigment of
be a necessar par of
the Agreement and, as stated above, wil therefore benefit the Debtors'
estates.
61. The Debtors wil send the Cure Notices to all Counterparies in
accordance with the Sale Procedures Order, notifyng such Counterparies of the potential
assumption by the Debtors and assigment to the Successful Bidder ofthe Assumed Executory
Contracts at the Sale Hearng. The Cure Notices set fort the "cure" amounts, if any, owing on
each of the Assumed Executory Contracts, according to Debtors' books and records.
26
68773-102\DOCS _ LA:203777.13
opportnity to file an objection to the proposed cure amounts set fort in the Cure Notices. To
the extent no objection is filed with regard to a paricular cure amount, such cure amount shall be
binding on the applicable contract or lease counterpary. The payment ofthe cure amounts
specified in the Cure Notices (or a different amount either agreed to by the Debtors or resolved
by the Cour as a result of a timely-filed objection filed by a contract or lease counterpary) wil
be in full and final satisfaction of all obligations to cure defaults and compensate the
counterparies for any pecunar losses under such contracts or leases pursuant to section
365(b )(1) of the Banptcy Code, unless the Debtors determne that a paricular lease or
contract is not trly executory, and does not need to be cured to transfer the Alaska Assets to the
Successful Bidder or, alternatively, the Successful Bidder subsequently elects not to have any
Assumed Executory Contract assumed or assigned to it prior to the Closing.
63. Cure Amounts disputed by any Counterpary wil be resolved by the Cour
at the Sale Hearg. m accordance with the Agreement, the Successful Bidder shall bear and pay
"adequate assurance of futue performance" to the extent required in connection with the
assumption and assignent of any Assumed Executory Contract. The meang of "adequate
assurance of futue performance" for the purpose of the assumption of executory contracts and
unexpired leases pursuant to section 365 of
circumstances of each case, but should be given "practical, pragmatic constrction." See
Carlisle Homes, Inc. v. Arrari (In re Carlisle Homes, Inc.), 103 B.R. 524, 538 (Bank. D.NJ.
27
68773-102\DOCS _ LA:203777.13
1989); see also In re Natco Indus., Inc., 54 B.R. 436, 440 (Ban. S.D.N.Y. 1985) (adequate
assurance of future performance does not mean an absolute assurance that debtor wil thrve and
pay rent); In re Bon Ton Rest. & Pastry Shop, Inc., 53 B.R. 789, 803 (Ban. N.D. IlL. 1985). If
necessar, the Successful Bidder will provide evidence of its ability to provide adequate
counsel to the agents for the Lenders; (iv) paries known by the Debtors to assert liens, claims,
rights, interests or encumbrances of record in the Alaska Assets; (v) federal, state and local
taxing authorities who have a reasonably known interest in the Alaska Assets; (vii) the United
States Attorney for the Distrct of
States Deparent of Justice; (ix) the counterparies to the Assumed Executory Contracts; and
(x) those persons who have requested notice pursuant to Rule 2002 ofthe Federal Rules of
Banptcy Procedure.14
66. The Debtors have served, or will serve, the Notice of Auction and Sale
Hearng, substantially in the form attached to the Sale Procedures Motion as Exhbit D, on their
known creditors.
67. Several sections of the Banptcy Code and Banptcy Rules dictate the
suffciency of
notice and adequacy of service. As discussed below, the content and maner of
ths Sale Motion to potential bidders.
28
68773-02\DOCS _ LA:203777. 1 3
service of
this Sale Motion in accordance with the Sale Procedures Order and the notices related
that a trstee may sell assets other than in the ordinar course of business "after notice and hearng." Under section 102(1) of the Banptcy Code, the phrase "afer notice and hearing" means "notice as is appropriate in the paricular circumstances, and such opportty for a hearng as is appropriate in the paricular
circumstances." 11 U.S.C. 102(1)(A). m accordance with the
Rule 2002 provides that notice of a sale shall "include the time and place of any public sale, the terms and conditions of any private
sale and the time fixed for filing objections." FED. R. BANKR. P. 2002. Local Rule 2002-1 (b) specifies the pares on whom a
motion for a sale other than in the ordinar course of
business must be served in cases pending in ths jursdiction. m accordance with the Sale Procedures Order, the Debtors have provided suffcient
notice of the Auction and Sale Hearg to the appropriate paries.
Federal Rules of
BanDtCY Procedure 6004 and 6006: Banptcy Rule 6004 requires that notices of sales of assets out of business comply with Rule 2002. As set fort above, the Debtors have complied with Banptcy Rule
the ordinar course of
2002. Banptcy Rule 6006 requires notice of a motion to assume or assign an executory contract or unexpired lease to be
the Sale Motion (as well as the Sale Motion itself) wil be served on counterparies to the Assumed Executory Contracts as provided in the Sale Procedures Order, and thus
and notice of
Procedural Due Process: The notice ofthis Sale Motion that is being provided is "reasonably calculated" to apprise interested paries of the pendency of the matter and to afford them an
opportity to object. See Mullane v. Central Hanover Bank &
Trust Co., 339 U.S. 306, 314, 70 S.Ct. 652, 94 L.Ed. 865 (1950).
afforded adequate notice ofthis Sale Motion and the hearng on the relief requested hereby.
68. The Debtors submit that the notice of
provided, and intend to provide, is reasonable and appropriate and should be approved by this
that the order approving this Sale Motion become effective immediately upon its entr.
Conclusion
70. The Debtors' proposed sale of
Motion, including the assumption and assigrent ofthe Assumed Executory Contracts, is
supported by sound business reasons, as set forth herein. The proposed sale is proper, necessar
and serves the best interests ofthe Debtors, their estates, their creditors and all paries in interest.
The Debtors thus request that the Cour approve the proposed sale of the Alaska Assets free and
clear of all interests, liens, claims, and encumbrances including successor liabilities (but
excluding Assumed Liabilities), as requested, including, without limitation, the assumption and
assigrent ofthe Assumed Executory Contracts, to each Successful Bidder, if any.
No Prior Request
71. No prior request for the relief sought in ths Sale Motion has been made to
this or any
other cour.
WHEREFORE, the Debtors respectfully request that this Cour (i) grant this Sale
Motion and authorize the sale of the Alaska Assets to the Successful Bidder on substantially the
terms ofthe proposed Agreement in accordance with the Sale Procedures Order; (ii) approve the
30
68773-102\DOCS _ LA,203777. i 3
assumption and assignent ofthe Assumed Executory Contracts in accordance with the
Agreement and the Sale Procedures Order entered by the Court; and (iii) grant such other and
Pi:Ji~~::
Ira D. Kharasch (CA Bar No.1 09084) Maxim B. Litvak (CA Bar No. 215852) Robert M. Saunders (CA Bar No. 226172) James E. O'Neil (Bar No. 4042) Scotta E. McFarland (Bar No. 4184) 919 Nort Market Street, 17th Floor P.O. Box 8705
Wilmigton, DE 19899-8705
Telephone: 302/652-4100
Facsimile: 310/652-4400
Email: ikharasch(gpszjlaw.com
31
68773-102\DOCS _LA:203777 .13
mre )
Chapter I I
)
Debtors. )
)
Deadline for Submitting Bids: July 13, 2009 at 12:00 noon Auction Date: July 20, 2009 at 10:00 a.m p.m. 4:00
Deadline for Objections to Sale Motion: July 21, 2009 at Hearig Date on Approval of
NOTICE OF DEBTORS' MOTION FOR AN ORDER: (I APPROVING SALE OF DEBTORS' ALASKA ASSETS FRE AND CLEAR OF ALL LIENS, CLAIMS, ENCUMBRACES AND OTHER
INTERESTS PURSUANT TO SECTIONS 363(b), (1) AND (m) OF THE BANKRUPTCY CODE, (II) ASSUMING AND ASSIGNING CERTAIN EXECUTORY CONTRACTS
(as such term is defined in the Sale Motion); (v) federal, state and local taxing authorities who have a reasonably known interest in the Alaska Assets; (vi) the United States Attorney for the Delaware; (vii) the mternal Revenue Service; (viii) the United States Deparent of Distrct of Justice; (ix) the counterparies to the Assumed Executory Contracts (as such term is defied in the
the Sale Motion); and (x) those persons who have requested notice pursuant to Rule 2002 of Federal Rules of
Banptcy Procedure.2
PLEASE TAK NOTICE that, on the date hereof, the above-captioned debtors
and debtors in possession (collectively, the "Debtors") fied the enclosed Debtors' Motion for an
i The Debtors in these cases, along with the last four digits of each of the Debtors' federal tax identification
number, are: Pacific Energy Resources Ltd. (3442); Petrocal Acquisition Corp. (6249); Pacific Energy Alaska
Holdings, LLC (tax I.D. # not available); Cameros Acquisition Corp. (5866); Pacific Energy Alaska Operatig LLC (7021); San Pedro Bay Pipeline Company (1234); Cameros Energy, Inc. (9487); and Gotland Oil, Inc. (5463). The the Debtors is 1 Ii W. Ocean Boulevard, Suite 1240, Long Beach, CA 90802. mailing address for all of the
2 To maintain confdentiality, the Debtors' investment baner, Lazard Frres & Co. LLC, wil send a copy of
Sale Motion to potential bidders. The Debtors have served the Notice of Auction and Sale Hearg, substantially in
the form attched to the Sale Procedures Motion as Exhbit D, on their known creditors.
68773-002\DOCS _ LA:203777.13
Order: (i) Approving Sale of the Debtors' Alaska Assets Free and Clear of All Liens, Claims,
the Bankrptcy
Encumbrances and Other Interests Pursuant to Sections 363(b), (j and (m) of
Code, (ii) Assuming and Assigning Certain Executory Contracts and Unexpired Leases, and (iii)
Granting Related Relief(the "Sale Motion"), with the United States Banptcy Cour for the
Distrct of
Delaware, 824 Market Street, 3rd Floor, Wilmngton, Delaware 19801 (the
"Banptcy Cour").
PLEASE TAK FURTHER NOTICE that, on July 1, 2009, the Banptcy
the Debtors' Alaska Assets; (B)
Cour entered its Order (A) Approving Procedures For Sale of
Scheduling Auction and Hearing to Consider Approval of Sale; (C) Approving Notice of Respective Dates, Times, and Places for Auction and for Hearing on Approval of (i) Sale and (ii)
Assumption and Assignment of Certain Executory Contracts and Unexpired Leases; (D)
Approving Forms of
the
Assets is July 13, 2009 at 12:00 noon (prevailing Eastern time); (ii) the date and time of
auction for the Alaska Assets shall take place on July 20,2009 at 10:00 a.m. (prevailing Eastern
time); (iii) any response or objection to the relief sought in the Sale Motion must be filed with
the Banptcy Cour on or before 4:00 p.m. (prevailing Eastern time) on July 21, 2009; and (iv)
the hearng on the Sale Motion shall take place on July 27,2009 at 1 :30 p.m. (prevailing Eastern
tirne).
2
68773-102\DOCS _ LA:203777.13
the Debtors c/o Pacific Energy Alaska Operating LLC, 111 W. Ocean Boulevard, Suite 1240,
Long Beach, CA, Att: Gerald A. Tywoniuk, Chief Financial Officer (email:
gtywoniuk(gpacenergy.com), with a copy to: (a) the Debtors' financial advisor, Zolfo Cooper
LLC, 1166 Avenue ofthe Americas, 24th Floor, New York, NY, Att: Scott W. Winn, Senior
Managing Director (email: swinn(gzolfocooper.com) and Mark A. Cervi (email:
mcervi(gzolfocooper.com); (b) the Debtors' investment baner, Lazard Frres & Co. LLC, 600
LLP, 10100 Santa Monica Blvd., lIth Floor, Los Angeles, Californa 90067-4100, Att: Ira D.
Kharasch (email: ikharasch(gpszjlaw.com) and Robert M. Saunders (email:
rsaunders(gpszjlaw.com) and (B) Pachulski Stang Ziehl & Jones LLP, 919 N. Market St., 17th
Floor, Wilmington, Delaware 19801, Att: James A. O'Neil (email: joneil(gpszjlaw.com); (ii)
Rutan & Tucker, LLP, 611 Anton Blvd., 14th Floor, Costa Mesa, CA 92626, Att: Gregg
Amber (email: gamber(grutan.com) and Garett Sleichter (email: gsleichter(grutan.com); and
(iii) Schully, Roberts, Slattery & Marno, PLC, 1100 Poydras Street, Suite 1800, New Orleans,
Bingham McCutchen LLP, 399 Park Avenue, New York, NY 10022, Att: Jeffrey S. Sabin
(email: jeffrey.sabin~bingham.com); and (ii) Skadden, Ars, Slate, Meagher & Flom LLP, 333
3
68773-002\DOCS _LA:203777 .13
West Wacker Drive, Chicago, Ilinois 60606, Att: Seth E. Jacobson (email:
seth.j acobson(gskadden. com).
PLEASE TAK FURTHER NOTICE that a form of
the original versions ofthe Agreement and TSA attached to the motion to approve the Sale
Procedures (defined in the Sale Procedures Order).
PLEASE TAK FUTHER NOTICE that, prior to the Sale Hearng, the
Debtors plan to file with the Cour and serve upon the (a) Office ofthe United States Trustee; (b)
counsel to the Official Commttee of
persons who have requested notice pursuant to Rule 2002 ofthe Federal Rules of
Banptcy
Procedure; and (e) any persons or entities that have filed an objection or other response to the
Sale Motion or otherwise fie and serve upon Debtors' banptcy counsel a request for service
ofthe Sale Motion, the Agreement and TSA proposed by any Successful Bidder (as well as any
Back-Up Bidder) that are substantially in the forms acceptable to the Debtors in their reasonable
discretion after consultation with the Lenders and the Committee.3
ACCORDANCE WITH THIS NOTICE, THE BANUPTCY COURT MAY GRA THE
RELIEF REQUESTED BY THE SALE MOTION WITHOUT FURTHER NOTICE OR
HEARG.
, The Successful Bidder or Back-Up Bidder may be the Lenders, either together or individually, to the extent that a
credit bid is submitted under section 363(k) of
4
68773-102\DOCS _ LA:203777.13
Ira D. Kharasch (CA Bar No.1 09084) Maxim B. Litvak (CA Bar No. 215852) Robert M. Saunders (CA Bar No. 226172) James E. O'Neil (Bar No. 4042) Scotta E. McFarland (Bar No. 4184) 919 North Market Street, 17th Floor P.O. Box 8705
Wilmgton, DE 19899-8705
Telephone: 302/652-4100
~ /!L;z~a-
5
68773-102\DOCS _ LA:203777. i 3
EXHIBIT A
FORM
r 1
BY AND BETWEEN
AND
Dated as of , 2009
TABLE OF CONTENTS
Pal!e
ARTICLE 1
1.
1.2
1.
DEFIITIONS .......................................... .......................... ..................................1 Abandonment Obligations ......................................................................... ...........1 Affected Employees. ..................................... ........................................................ i Affliates ............................................................................................................... 2 Agreement........ ....................................... .................. ............................................ 2 Alaska Interest or Alaska Interests .......................................................................2 Alaska Interests Closing ....................................................................................... 3 Alaska Interests Closing Date .............. .................. ................. .............................. 3 Alaska Interests Deposit....................................................................................... 3
Alaska Interests Purchase Pnce ............................................................................3
1.9
1.1
Allocated Value ................................................. ................................................... 3 Applicable Laws ........ ...........................................................................................3 Assignment and Bil of Sale .................................................................................4
Associated Pares................................................................................................. 4
Bankptcy Case................................................................................................... 4 Bankptcy Claim ........ ...................................................................... ............ .......4 Bankptcy Code .......... ................. ...................... ...................................... ...........4 Bankptcy Costs.. .................... .......................... .................................................. 5 Bankrptcy Court.................................................................................................. 5 Business Day......................................................................................................... 5
Buyer ........................................................... .................... .... ........... .......................5 Casualty Loss........................................................................................................ 5 CERCLA...............................................................................................................5 CIPLC ........................... ................. ............................. ............................... ........... 5 Claim or Claims ................................................... .................. ............................... 5 Confidentiality Agreement......................................................... ........................... 5
Consents................................................................................................................ 5
Effective Time .................................................... .................................................. 6 Environmental Laws ....................................................... ..... ..... ...... ...................... 6 Environmental Liabilties...................................................................................... 6 Escrow Agreement.......................................................... ..... ................................. 6 Excluded Items...................................................................................................... 6 Excluded Liabilties.............................................................................................. 8 Execution Date............................................... .................................... ................... 8 Fee Interests.......................................................................................................... 8 Final Alaska Interests Purchase Pnce...................................................................8
Final Settlement Statement .................................................... ........... .................... 8
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1.43 1.44 1.45 1.46 1.47 1.48 1.49 1.50 1.51
Forest Indemnities................................................................................................. 8 GAA....................................................................................................................8 Gas........................................................................................................................8 Governmental Bonds ................................ .............. .......................................... .... 8 Governmental Entity .................................. ................................... ........................ 9 Hiring Period......................................................................................................... 9
Imbalances ............................................................................................................ 9
1.2
1.53 1.54 1.55 1.56 1.57 1.58 1.59 1.60 1.61 1.62 1.63 1.64 1.65 1.66 1.67 1.68 1.69
Liabilty or Liabilties ............. .......... ............. ....................... ................................ 9 Material Amount ................................................................................................... 9 Minimal Defect .......................... .... ....... .................... .......... ....................... ...........9
Net Revenue Interest............................................................................................. 9
PEAH ............... ..................................................................... .... ..........................1 0 PEAO ...................................................... ............................................................1 0 PERL......... ..........................................................................................................1 0 Permits................................................................................................................ 10
Permitted Encumbrances .................................................................................... 10 Person.................................................................................................................. 10
Preliminary Alaska Interests Purchase Price ......................................................10 Preliminar Settlement Statement..... ............. ............................................... ...... 10 Production Taxes ................................................................................................ 10
Property or Propertes ............................. .............................. ............................ ..1 0
1.0
1.71
1.72
1.3 1.4
1.75
1.6
1.77
1.8
1.79 1.80 1.81 1.82 1.83 1.84 1.85 1.86 1.87
Related Agreements ............................................. ...............................................12 Remaining Employees .................................................... .................................... 12 Royalty Interests ................................................................................................ .12 Sale Order........................................................................................................... 12 Sale Procedures Order......................................................................................... 12 Securities Act...................................................................................................... 12 Seller or Sellers .. ....................................... .......................................................... 12 Silver Point.......................................................................................................... 12 Site Visit Indemnity Agreement ......................................................................... 12 Stock................................................................................................................... 13 Stock Closing...................................................................................................... 13
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1.88 1.89 1.90 1.91 1.92 1.93 1.94 1.95 1.96 1.97 1.98 1.99
Strct Liability..................................................................................................... 13 Tangible Assets................................................................................................... 13 Thid Par .... ........ ..................... ................... ........... ..... .... ........................ ....... ...13 Title Defect......................................................................................................... 13 Title Defect Notice............................................. ................................. ................ 13 Transaction Documents .......................................... ...... ................. .......,... ....... ...13 Uncured Title Defect........................................................................................... 13 Uncured Title Defects Value ..............................................................................13 Units.................................................................................................................... 13 1.00 WARN Act..........................................................................................................14 1.01 Well or Wells ......................................................................................................14
ARTICLE 2
2.1
2.2
ARTICLE 3
3.1
PURCHASE PRICE ....................... ....... ....... ..... ............ ............. ........................ 14 Purchase Price. .................................................................................................... 14
Increases in Alaska Interests Purchase Price ...................................................... 14
Decreases in Alaska Interests Purchase Price.....................................................
3.2
3.3
15
ARTICLE 4
4.1
16 17
Environmental Review.................... ................... ...... ............................ ...............17 Tangible Assets; Casualty Loss. .........................................................................17 No Representation or Waranty of Accuracy; Disclaimer. ................................. 18 Acknowledgments of Buyer ..................... .................................... ................ ...... 18 Independent Evaluation ...................................................................................... 21 Buyer's Confidentiality Obligations; Press Releases. ........................................21
ARTICLE 5
5.1
5.2
5.3
5.4
5.5 5.6
TITLE AND TITLE DEFECTS .........................................................................22 Title Defect......................................................................................................... 22 Title Defect Notice.............................................................................................. 22 Determnation of Title Defects and Defect Values.............................................23 Calculation of Defect Value. ....................... ..... ................................................... 23 Consequences of Title Defect ........... ............................................... ..... ...... ........ 24 Description and Other Errors ............................................................................. 24
ARTICLE 6 CERTAIN COVENANTS BETWEEN EXECUTION DATE AND CLOSINGS ................................................................................................... ...... 25 6.1 Related Agreements. ......................................................... .................................. 25
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6.2
6.3 6.4 6.5 6.6 6.7 6.8
Thid Pary Notifications and Regulatory Approvals for the Alaska Interests. .............................................................................................................. 25 Third Pary Notifications and Regulatory Approvals for the Stock. ..................26 Termnation of Sellers' Insurance....................................................................... 26 Conduct of Business Pending the Alaska Interests Closing. ..............................26 Preferential Rights to Purchase. ..........................................................................28 Sale Procedures................................................................................................... 29 Payment of Deposits ...........................................................................................29
ALASKA INTERESTS CLOSING ....................................................................29 Alaska Interests Closing Date............................................................................. 29 Closing Obligations; Deliveries.......................................................................... 29 Sellers' Conditions.............................................................................................. 31 Buyer's Conditions .............................................................................................32
STOCK CLOSING .................................................................................... ......... 33 Stock Closing Date. ........................ ....................................................................33 Closing Obligations; Deliveries.......................................................................... 33 Sellers' Conditions.............................................................................................. 34 Buyer's Conditions............................................................................................. 34
ARTICLE 7
7.1
ARTICLE 8
8.1
8.2
8.3 8.4
ARTICLE 9
9.1
9.2
9.3 9.4
TERMINATION .................................................................................................35 Events of Termnation......................................................................................... 35 Effect of Termnation. ....................... ............................................ ............ .......... 36 Events of Termnation of Stock Sale .................................................................. 36 Effect of Termnation of Stock Sale. .................................................................. 36
10.3 Further Assurances.............................................................................................. 37 1 0.4 Post-Closing Consents. ....................................................................................... 37 i 0.5 Buyer's Compliance...... ...................................................................................... 38 10.6 Allocation of Proceeds, Costs and Expenses. .....................................................38
10.7 Plugging and Abandoning Wells and Platforms; Remediation; Security for Buyer's Obligations....................................................................................... 3 8
10.8 Preliminar Settlement Statement....................................................................... 40 10.9 Final Settlement Statement. ................................................................................40 10.10 Post-Closing Revenues .......................................................................................41 10.11 Post-Closing Expenses ............................................................ .......................... ..41
10.12 Audits.................................................................................................................. 41 10.13 Reservation of Claims......................................................................................... 42
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ARTICLE 12 POST-CLOSING OPERATIONS BY BUYER .................................................43 12.1 Operation by Buyer ............................................. ................................................ 43 12.2 Removal of Signs ........................... .....................................................................43 12.3 Risk of Loss ............................................................................... ......................... 43
ARTICLE 13 EMPLOYEES AND PERSONNL ...................................................................43 13.1 Offers of Employment. .............................. .................................................. .......43 13.2 WARN Act Indemnification ...............................................................................44 i 3.3 General Employee Provisions. ........................... ................................................. 44
ARTICLE 14 BUYER'S RELEASE, DISCHARGE, AND COVENANT NOT TO SUE; BUYER'S OBLIGATIONS TO INDEMNIF, DEFEND, AN HOLD HARMLESS; DISPUTE RESOLUTION ..............................................45 14.1 Buyer's Release and Discharge of Sellers and their Associated Paries.............45 14.2 Buyer's Covenant Not to Sue Sellers or their Associated Pares ......................45
14.3 Buyer's Obligations to Indemnify, Defend, and Hold Sellers and their Associated Paries Harless............................................................................... 45
14.4 Buyer's Obligations. ........................................................................................... 46 14.5 Buyer's Duty to Defend......................................................................................48 14.6 Dispute Resolution.............................................................................................. 48
14.7 Retroactive Effect............................................................................................... 48 14.8 Inducement to Sellers.......................................................................................... 48
ARTICLE iS ENVIRONMENTAL MATTERS ......................................................................48 15.1 Buyer's Acknowledgment Concerning Possible Contamination of the Tangible Assets and the Properties .....................................................................48 15.2 Disposal of Materials, Substances, and Wastes; Compliance with Law ............49
ARTICLE 18 MISCELLANOUS ...................................... ..... ................................................ 54 18.1 Entire Agreement ................................................ ................................................ 54
18.2 Successors and Assigns; Amendment; Survival................................................54
18.6 No Admissions ....................................................................... ............................. 55 18.7 No Third Pary Beneficiares .............................................................................55 18.8 Public Communications ...................................................................................... 55
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18.9 Headings and Titles............................................................................................. 55
i 8.12 Counterpars ............................................................. ................... ......... ...............55 18.13 Not to Be Constred against the Drafter.............................................................56 18.14 No Waiver .................. ................ ................................... ................................. ..... 56 18.15 Expenses............................................................................................................. 56 18. i 6 Time of Essence .............................. ............. ........... ............................ ................ 56
18.17 No Parnership ............................... ................................................................ ..... 56
18.18 Foreign Trade Law Compliance .........................................................................56 18.19 Rules of Construction .........................................................................................56
Description of the Alaska Interests Certain Contracts Comprising the Alaska Interests Form of Assignment and Bil of Sale Form of Non-Foreign Affidavit Copy of Site Visit Indemnity Agreement Copy of Sale Procedures Order
- Form of Transition Services Agreement
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This Purchase and Sale Agreement (this "Agreement"), dated as of , 2009 (the "Execution Date"), is by and between , a
OPERATING LLC, a Delaware limited liabilty company with an address of 111 W. Ocean
Boulevard, Suite 1240, Long Beach, California 90802 ("PEAO"), and PACIFIC ENERGY ALASKA HOLDINGS, LLC, a Delaware limited liabilty company with an address of 111 W. Ocean Boulevard, Suite 1240, Long Beach, California 90802 ("PEAH"). PEAO and PEAH may each be referred to herein as a "Seller" and collectively as the "Sellers." Sellers and Buyer may each be referred to herein as a "Parv" and collectively as the "Paries."
with an address of
RJ) C!IA1~:
A. Pursuant to an Asset Sales Agreement by and between Forest Oil Corporation and
PERL (as defined below) and a Membership Interest Purchase Agreement by and among Forest Oil Corporation, Forest Alaska Holdings LLC, Forest Alaska Operating LLC and PERL, each dated May 24, 2007, as amended, Sellers acquired the Alaska Interests (as defined below), and PEAH acquired the Stock (as defined below) and 100% of the membership interests in PEAO.
B. Buyer desires to purchase the Alaska Interests and the Stock from Sellers, and
Sellers desire to sell the Alaska Interests and the Stock to Buyer, in each case effective as of the Effective Time (as defined below), and subject to the terms and conditions of this Agreement.
C. Sellers are debtors in possession under the protection of Chapter 11 of the United
States Bankrptcy Code pursuant to jointly administered cases under Case Number 09-10785
(the "BankrDtcv Case") fied with the United States Bankrptcy Court for the District of Delaware (the "BankDtcv Cour"). The transactions contemplated by this Agreement,
including the purchase and sale of the Alaska Interests and the Stock hereunder, are subject to
approval by the Bankrptcy Court pursuant to Sections 105, 363 and 365 of the Bankrptcy
Code (as defined below).
AGRJ)J)MJ)NI~:
In consideration of their mutual promises under this Agreement, the benefits to be
derived by each Pary, and other good and valuable consideration, the Paries agree as follows:
ARTICLE i DEFINTIONS
The following terms, when used in this Agreement, have the following definitions:
Ha).
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1.
Companies, " "Affliated Companies," and "ControIIng Interest" shall have the following meanings:
(a) A Person's "Parent ComDanies" means any and all entities having a
(b) A Person's "Affiiated Companies" means any and all entities in which the Person or the Parent Companies of such Person have a direct or indirect "ControIIng
Interest"; and
(c) "Controllng Interest" means a legal or beneficial ownership of more than
1.4 Agreement. Defined in the preamble of this Agreement, as more paricularly described in Section l8.l9(c).
1.5 Alaska Interest or Alaska Interests. All of Sellers' right, title and interest in and
to, except for the Excluded Items and subject to the limitations and terms expressly set forth
herein and in Exhibit A and Exhibit B:
(a) All Fee Interests, Leases and Lands, together with corresponding surface
and subsurface interests in and to all the property and rights incident thereto, including any Units; all tenements and hereditaments belonging to the Leases and the Units; all production from the Units allocated to any such Lands; and all reversionary interests, cared interests, options, convertble interests, net profits interests, together with all
rights that arse by operation of Applicable Laws or otherwise in all properties and land
agreements (including all units formed by voluntay agreement and those formed under
the rules, regulations, orders or other offcial acts of Governmental Authorities) to the extent they relate to the Propertes or the production of Oil and Gas therefrom;
(h)
(i)
All Permits;
All Records;
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(k) All parnership and joint venture interests (tax, state law or otherwise)
affecting any Properties, Easements, Wells or Tangible Assets;
(I) To the extent assignable, all rights to indemnities (including the Forest
Indemnities) and releases from any Thid Pary relating to the Properties, Easements, Wells or Tangible Assets, in each case only to the extent such indemnities and releases relate to (i) activities occurng on or after the Effective Time or (ii) any Claim or Liabilty assumed by Buyer under this Agreement, provided that Sellers shall retain their interest in such representations, waranties, indemnities and releases to the extent Sellers
may potentially remain liable for any such Claim or Liabilty;
(m) All intangibles, including operating revenues and accounts receivable
relating to the period after the Effective Time, in each case associated with the Propertes
or the production of Oil and Gas attbutable thereto;
(n) All leases or subleases of Tangible Property as to which Sellers are (i)
lessor or sublessor or (ii) lessee or sublessee, together with any options to purchase the underlying property; and
(0) All leases for real property used by Sellers in connection with the
operation of their business (such as leases for office and warehouse space, but excluding the Leases); and
(p) Right to seek a refund or enjoy credits from the State of Alaska for any
The Alaska Interests shall explicitly exclude the Excluded Items, which are not being
transferred hereunder.
1.7 Alaska Interests Closinl! Date. The date on which the Alaska Interests Closing occurs, subject to the modification of the term "Alaska Interests Closing Date" as set forth in
Section 6.6(d).
1.10 Allocated Value. The portion of the Purchase Price allocated to specific portons of the Alaska Interests and the Stock as set fort on Schedule 5.
1.11 Applicable Laws. Any and all federal, state, native American, county, municipal or other federal, state or local laws, ordinances, regulations, rules, permts, or other regulatory requirements and any administrative, executive or judicial or court orders or judgments, as well
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as the common law, in each case which are applicable to any of the Paries, CIPL, the Alaska
Interests, or the Stock.
and Affliates.
1.4 Assumed Liabilties. The following Liabilities of Sellers:
(a) All Liabilties associated with, related to or ansing from the ownership of
joint interest bilings due to Chevron or its affliates in connection with (e) All the Chevron Operated Assets, whether associated with, related to or ansing from the
periods prior to, on or after the Effective Time;
(f) All royalty obligations associated with, relating to or ansing from the
Liabilties associated with, related to or ansing from the Alaska Interests with respect to the periods prior to, on or afer the Effective Time;
(i) All Liabilities under litigation to which either or both Sellers is currently a
CD Penntted Encumbrances.
For purposes of clanty, Assumed Liabilties excludes any aud all Liabilities not
specifically referenced in this Section 1.4.
1.5 1.7
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1.18 Bankruptcv Costs. All costs and claims related to the Banptcy Case,
including all administrative expenses and claims for administrative expenses pursuant to Section 503 of the Bankptcy Code.
1.9 Bankruptcv Court. Defined in the Recitals of this Agreement.
1.20 Bbl Barel of oiL.
1.21 Business Dav. Any day on which the Bankptcy Cour is physically open to the
public.
1.22 Buver. Defined in the preamble of ths Agreement.
1.23 Casualtv Loss. Any loss, damage or reduction in value of the Tangible Assets
that occurs during the period between the Execution Date and the Alaska Interests Closing as a
result of acts of God, fire, explosion, terrorism, earhquake, volcanic activity, windstorm, storm
or flood, but excluding any loss, damage or reduction in value as a result of depreciation,
ordinary wear and tear and any change in condition of the Tangible Assets for production of Oil and Gas through normal depletion (including the watering out of any well or sand infitration of any well).
1.25 Chevron Operated Assets. All of PEAO's assets and other interests in or
associated with the Trading Bay Unit or Trading Bay Field in Cook Inlet, Alaska.
1.27 Claim or Claims. Collectively, any and all written or oral claims, demands,
suits, causes of action, losses, damages, liabilties, fines, penalties and costs (including attorneys' fees and costs of litigation) asserted or, as applicable, fied by any Person.
1.28 Confidentialtv l!reement. The Confidentiality Agreement, dated ( ),
1.29 Consents. Any approval, consent, ratification, waiver or other authorization from
any Person (including any of the foregoing issued, granted, granted, given or otherwise made
available by or under the authority of any Governmental Entity or pursuant to any Applicable
Laws), including those set fort on Schedule 1.
1.30 Contracts. All farout and fann agreements, operating agreements, production
sales and purchase contracts, processing contracts, gathering contracts, transportation contracts, saltwater disposal agreements, sudace leases, subsudace leases, division and transfer orders, areas of mutual interest, balancing contracts, and all other written contracts, contractual rights,
interests and other written agreements and instrments covering or affecting any or all of the Alaska Interests or the production, handling or transporttion of Oil and Gas attributable thereto
or the use or ownership or operation of any of the Alaska Interests or the Oil, Gas, water or other
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substances produced therefrom, to be assigned to or assumed by Buyer under this Agreement, including those certain contracts listed on Exhibit B, but excluding the Credit Agreements.
1.31 Credit Aereements. (i) The Senior Secured Super Priority Priming Debtor in Possession Credit and Guaranty Agreement, dated as of March 11, 2009, among PERL, Sellers, J. Aron, Silver Point and certain other lenders, guarantors and others pary thereto, as amended, supplemented and modified from time to time, and (ii) the Second Lien Credit Agreement, dated August 24, 2007, among Sellers, J. Aron, Silver Point and certain other lenders, guarantors and others pary thereto, as amended, supplemented and modified from time to time.
1.32 Defect Value. With respect to each Title Defect, the reduction of the value of the affected Property as a result of such Title Defect, calculated in accordance with the guidelines set forth in Section 5.4.
1.35 Effective Time. In the case of (i) the Alaska Interests, as of 7:00 a.m. California
time on July 1, 2009, and (ii) the Stock, as of the Stock Closing.
1.36 Environmental Laws. Any and all Applicable Laws of any Governmental Entity whose purpose is to conserve or protect human health, the environment, wildlife or natural
resources, including those Applicable Laws relating to storage, handling and use of chemicals and other hazardous materials; those relating to the generation, processing, treatment, storage, transport, disposal, cleanup, remediation or other management of waste materials or hazardous substances of any kind; and those relating to the protection of environmentally sensitive or
protected areas. Without limiting the foregoing, Environmental Laws expressly includes 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; CERCLA; the
Amendments Act of 1984, as amended; the Toxic Substances Control Act, as amended; the Hazardous Materials Transportation Act, as amended; Title 46 of the Alaska Statutes; and Title
18 ofthe Alaska Administrative Code.
1.37 Environmental Liabilties. All Liabilties under Environmental Laws relating
to, arsing out of, in connection with, or attrbutable to ownership or operation of the Alaska
Interests, whether associated with, related to or arising from the periods prior to, on or after the Effective Time.
1.38 Escrow Aereement. Defined in Section io.7(c).
1.39 Exclnded Items. The (i) reservations, exceptions and exclusions, if any, listed on Exhibit A and Exhibit B, (ii) the items listed in Schedule 2, and (ii) the following:
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owned by any Third Pary such as lessors, contractors, purchasers or transporters of Oil or Gas, including any of Sellers' Affliates;
(b) Sellers' geological or geophysical data containing information not related
Entities, contractors and vendors, and (iii) other cash equivalents, in each case to the extent that such cash was generated from transactions occurring prior to the Effective Time or such deposit was made prior to the Effective Time or such transactions or
deposits do not relate to the Alaska Interests;
(d) items used, consumed or disposed of in the ordinary course of business
Indemnities) and releases from any Third Party, except indemnities and releases that are specifically included in the Alaska Interests pursuant to Section 1.5(1.
(f) all surety bonds, plugging bonds, abandonment bonds, standby trst
agreements, escrow accounts for plugging, abandonment, decommissioning, removal and restoration obligations, and other bonds posted by or at the request of Sellers, and securty deposits and other security furished by Sellers or their predecessors in interest;
(g) except for the right to proceeds assigned pursuant to Section 6.4, all rights
under insurance policies held by Sellers or any of their Affiiates covering any of the
Alaska Interests or Sellers' interests in CIPL;
(h) Tangible Assets currently in use in connection with the ownership or
U) any interests, propertes or assets owned by any Person other than Sellers;
(k) any and all Claims against operators or other third parties arsing out of
the operation of the Propertes, Alaska Interests or CIPL prior to the Effective Time;
(I) the Redoubt Interrption Claim; and
(m) all Contracts between a Seller or Sellers, on one hand, and PERL or any
Affliate of PERL (other than Sellers), on the other hand.
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1.40 Excluded Liabilties. Without limiting the definition of Assumed Liabilties or implying that Buyer is assuming any Liabilty other than the Assumed Liabilties, the following Claims against and Liabilties and obligations of Sellers are excluded and not assumed by Buyer:
(a) All Liabilties associated with, related to or ansing from debt instrments
to which one or both Sellers is a pary, except for Liabilties that relate to Permitted
Encumbrances;
(b) All accounts payable that have accrued prior to the Effective Time;
(c) All royalty obligations associated with, related to or ansing from the
ansing out of the ownership or operation of the Alaska Interests prior to the Effective Time; and
(e) All Bankrptcy Claims (except Environmental Claims and Abandonment
rights under grant deeds, mineral deeds, conveyances or assignments, as described on Exhibit A.
1.43 Final Alaska Interests Purchase Price. The actual Alaska Interests Purchase
Price, as adjusted in accordance with Section 3.2 and Section 3.3, determned based on the Final
Settlement Statement.
1.45 Forest Indemnities. Sellers' rights to indemnification provided by Forest Oil Corporation under the Assets Sales Agreement and Membership Interest Purchase Agreement, each as amended, referenced in the Recitals to this Agreement and under that certain indemnity
letter dated January 29, 2008, as supplemented on November 6, 2008.
gases.
1.48 Governmental Bonds. All bonds or other forms of financial security (including
all lease-specific abandonment bonds, areawide bonds, operator bonds, right of way bonds, supplemental bonds for abandonment accounts) required by the DNR or other Governmental
Entities in connection with Buyer's acquisition and ownership of the Alaska Interests or Buyer's
designation as an operator of the Propertes or any Alaska Interest.
-8-
1.49 Governmental Entitv. Any federal, state, native American, county, municipal or other federal, state or local governental entity or judicial or regulatory agency, board, body,
deparment, bureau, commssion, instrmentality, court, trbunal or quasi-governmental entity in
any jurisdiction (domestic or foreign) having jurisdiction over any Pary or any affected asset, or over any of the transactions contemplated by ths Agreement.
1.50 Hirinl! Period. Defined in Section 13.l(a).
1.51 Imbalances. Over-production or under-production subject to an imbalance or make-up obligation with respect to Oil and Gas produced from or allocated to the Properties,
regardless of whether such over-production or under-production, imbalance or make-up
obligation arises at the wellhead, pipeline, gathering system, transportation or other location and regardless of whether the same arses under contract or by operation of Applicable Laws.
1.52 .T. Aron. J. Aron & Company.
1.54 Leases. The Oil and Gas leases and subleases, and the sudace and subsudace
leasehold estates created thereby, as described in Exhibit A.
1.55 Liabiltv or Liabilties. Collectively, all damages (including consequential and
punitive damages), including damages for personal injury, death or damage to personal or real
property (both sudace and subsurace) and costs for remediation, restoration or clean up of
contamination, whether the injury, death or damage occurred or occurs on or off any of the
Properties by migration, disposal or otherwise; losses; fines; penalties, expenses; costs to remove or modify facilities on or under any of the Properties; costs to recondition or repai the Tangible Assets; all Abandonment Obligations, including without limitation, plugging liabilties for all Wells, platforms, pipelines and other facilities; attorneys' fees; court and other costs incurred in
defending a Claim; liens; and judgments; in each instance, whether these damages and other
costs are foreseeable or unforeseeable.
1.57 Minimal Defect. Any individual Title Defect with a Defect Value of less than
$1,000,000.
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federal, state, local or trbal) certificates, consents, permts, licenses, orders, authonzations, franchises and related instruments or nghts relating to the ownership, operation or use of the Properties, including credits or the nght to create credits or other transferable nghts relating to
past or future emissions reductions.
limited liabilty company, joint stock company, trust, estate, unincorporated organzation,
Governmental Entity or other entity.
1.70 Post-Closing Approvals. The Successor Operator Approval and the Stock
Transfer Approval, each of which Buyer shall obtain as soon as possible post-Closing.
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1.75 Propertv Conditions. The physical condition or any other aspect of the
Properties and the Tangible Assets, including (a) the strctural integrity of any improvements on
the Properties or the Tangible Assets; (b) the conformity of improvements on the Propertes or
the Tangible Assets to any plans or specifications for such Properties or the Tangible Assets;
(c) the conformity of the Propertes or the Tangible Assets to past, curent or future applicable
zoning or building code requirements; (d) the existence of soil instabilty, past soil repais, soil additions or conditions of soil fill, or susceptibilty to landslides; (e) the suffciency of any
undershoring; (t) the suffciency of any drainage; (g) whether the Properties or the Tangible
Assets are located wholly or parally in a flood plain or a flood hazard boundary or similar area;
(h) any other matter affecting the stabilty or integrity of the land, or any buildings or
improvements situated on or as par of the Propertes or the Tangible Assets; (i) the availabilty
of public utilities and services for the Propertes or the Tangible Assets; U) the fitness or suitabilty of the Properties or the Tangible Assets for any intended use; (k) the potential for further development of the Alaska Interests; (I) the existence of vested land use, zoning or
building entitlements affecting the Alaska Interests or the Tangible Assets; or (m) the presence of toxic wastes, hazardous materials or friable asbestos in, on or about the Alaska Interests or the Tangible Assets.
1.76 Propertv Taxes. All federal, state or local taxes, assessments, levies or other
charges, which are imposed upon the Properties or other real and personal property of Sellers that is acquired by Buyer hereunder, 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.
1.77 Prospective Emplovees. Defined in Section 13.1(a).
other applicable Governmental Entity of the transfer of the Stock from PEAH to Buyer.
1.84 Records. All books and records, fies, records, data, correspondence, studies,
surveys, reports, Oil and Gas sales contract fies, gas processing fies, geologic, proprietary geophysical and seismic data (including raw data and any interpretative data or information relating to such geologic, geophysical and seismic data) and other data (in each case whether in written or electronic format) in Sellers' possession and relating to the operation of the Properties,
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including all title records, prospect information, title opinions, title insurance reports, abstracts, property ownership reports, customer lists, supplier lists, sales materials, well logs, well tests, maps, engineering data and reports, health, environmental and safety information and records,
"Records" shall not include (a) Sellers' general corporate, accounting and financial books,
records and software, even if containing references to Propertes, (b) books, records (including
seismic data) and fies that may not be disclosed under the terms of any Thid Pary agreement (and consent to make disclosure has not been obtained) or are not transferable without payment of fees or penalties (except as may be agreed to be paid by Buyer) or cannot be disclosed under Applicable Laws, (c) information entitled to legal privilege, including attorney work product and
attorney-client communications (excluding title opinions, which shall be included in the
Records), and information relating to Excluded Items, (d) Sellers' studies related to internal reserve assessments, (e) income tax information, (f) records relating to the acquisition or
disposition (or proposed acquisition or disposition) of the Properties, including proposals
received from or made to, and records of negotiations with, Persons other than Buyer and
economic analyses associated therewith, (g) seismic data already owned or held by Buyer, and (h) Excluded Items.
1.85 Related Al!reements. Defined in Section 6.l(a).
1.87 Rovaltv Interests. All royalties, overrding royalties, sliding scale royalties, shut-in royalties, rights to royalties in kind, or other interests in production of Oil and Gas,
excluding working interests, as set forth on Exhibit A.
1.88 Sale Order. The sale order entered by the Bankrptcy Court approving the consummation of the purchase and sale of the Alaska Interests and the Stock as contemplated by this Agreement.
1.89 Sale Procedures Order. The Sale Procedures Order attached hereto as Exhibit F,
which was entered by the Bankptcy Court on r 1, 2009.
1.90 Securities Act. The Securities Act of 1933, as amended, or any successor law
thereto, as well as all regulations and rules issued pursuant to that act or any such successor law thereto.
1.91 Seller or Sellers. Defined in the preamble ofthis Agreement.
1.92 Silver Point. Silver Point Finance, LLC.
1.93 Site Visit Indemnitv Al!reement. The Agreement for Indemnification and
Responsibility for Damages to the Subject Properties in Connection with Site Visit and
Investigation, dated as of ( 1, 2009, between Sellers and Buyer, as amended and
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1.96 Stock Closing Date. The date on which the Stock Closing occurs.
1.97 Stock Deposit. Defined in Section 6.8.
1.98 Stock Purchase Price. Defined in Section 3.1(b).
1.99 Strict Liabiltv. Includes smct statutory liabilty, smct products liabilty and
1.100 Tancible Assets. All pipelines, flowlines, plants, gathering and processing
systems, buildings, vehicles, compressors, meters, tanks, machinery, tools, pullng machines, utilty lines, personal property, all computer and automation equipment located in proxiuuty to the Propertes (including SCADA equipment and Rosemont transuutters, telecommunications equipment, field radio telemetr and associated frequencies and licenses, pressure transuutters and central processing equipment that is used primarly in connection with the ownership or operation of the Properties), equipment, fixtures, and improvements and other appurtenances, on or to, the Properties, insofar as they are used or were obtained in connection with the ownership,
operation, maintenance or repair of the Propertes or relate to the production, treatment, sale, or
disposal of Oil and Gas produced from the Properties or attributable thereto.
1.101 Third Partv. A Person other than Buyer and its Affliates or Sellers and their Affliates.
1. 102 Transition Services Agreement. A Transition Services Agreement to be entered into between PERL and Buyer at the Alaska Interests Closing, substantially in the form of
Exhibit G.
1.103 Transition Termination Date. The date that the Transition Services Agreement
expires or is teruunated.
1.107 Uncured Title Defect. Any Title Defect, other than a Minimal Defect, with
respect to which Sellers do not cure or agree to cure pursuant to Section 5.5(a).
1.108 Uncured Title Defects Value. The aggregate Defect Value for all Uncured Title Defects.
1. 109 Units. All rights in any pooled or unitized or communitized acreage by virte of the Lands being a par thereof, as described on Exhibit A.
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wells, Gas wells, injection wells, disposal wells and water wells associated with the Propertes, including wells drilled after the Execution Date.
2.2 Assumption. From and after the Alaska Interests Closing, but effective as of the Effective Time, Buyer shall assume and be responsible for all Assumed Liabilties, all on the
terms more specifically provided in this Agreement.
ARTICLE 3
PURCHASE PRICE
3. i Purchase Price.
(a) Alaska Interests Purchase Price. The total purchase price for the Alaska
(b) Stock Purchase Price. The total purchase price for the Stock wil be
$( J (the "Stock Purchase Price." and together with the Alaska Interests
the contrary, (i) the Stock Purchase Price shall not be subject to adjustment and (ii) the
Alaska Interests Purchase Price shall be subject to adjustment only as set forth in
Section 3.2 and Section 3.3 below. Except as set forth in Section 3.2 and Section 3.3, Buyer and Sellers agree that there shall be no adjustments to the Purchase Price of any kind, of any amount, for any reason.
3.2 Increases in Alaska Interests Purchase Price. The Alaska Interests Purchase
Price wil be increased by the following amounts:
(a) the amount of any costs and expenses, accounts payable and other
disbursements, including royalties, rentals, Property Taxes or Production Taxes, and penalties and interest, paid by Sellers and faily attbutable to Buyer pursuant to this Agreement, including any capital expenditures permitted under this Agreement pursuant
to Section 6.5(a)(iv)
(b) a fixed overhead charge of $200,000 per month for the period beginning at
the Effective Time and ending at the Alaska Interests Closing Date;
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(c) the amount of all prepaid expenses, including Property Taxes, that are paid by Sellers and fairly attbutable to the Alaska Interests for the penod of time on or after
fill and tank bottoms) upstream of the sales custody transfer meter at the Effective Time that are fairly attributable to the Properties, which shall have a value equal to the market pnce or, if applicable, the contract pnce in effect as of the Effective Time;
(ii) all Oil and Gas held by Sellers or by ClPL for the account of
Sellers (including Oil in storage, linefill and tank bottoms) at the Effective Time, which shall have a value equal to the market price or, if applicable, the contract pnce in effect as of the Effective Time;
(iii) all Imbalances owed to Sellers by a Third Pary as of the Effective
Time, multiplied by $60.00 per Bbl in the case of Oil and $9.00 per MMBTU in the case of Gas;
(e) the amount of any taxes paid by Sellers pursuant to Arcle 11;
(f) the amount of any refunds or credits received or enjoyed by or for Buyer's
account from the State of Alaska for any overpaid royalties relating to Sellers' interests in the Chevron Operated Assets for penods pnor to the Effective Time; and
(g) the amount of all proceeds, receipts (including producing receipts, dnIIng
receipts and construction overhead receipts), reimbursements, credits, and income paid to or received by Buyer, including proceeds from the sale of Oil and Gas (excluding the Oil and Gas accounted for in Sections 3.2(c)(i) and 3.2(c)(ii)), net of all applicable Property
Taxes and Production Taxes and royalties paid by Buyer, that are fairly attibutable to
Sellers pursuant to this Agreement.
3.3 Decreases in Alaska Interests Purchase Price. The Alaska Interests Purchase
Pnce wil be decreased by the following amounts:
(a) an amount equal to any costs and expenses, accounts payable and other
disbursements, including royalties, rentals, Property Taxes or Production Taxes, and penalties and interest, that are paid by Buyer and fairly attributable to Seller pursuant to
this Agreement;
(b) the amount of all proceeds, receipts (including producing receipts, dnIIng receipts and constrction overhead receipts), reimbursements, credits, and income paid to
or received by Sellers, excluding proceeds from the sale of Oil and Gas, net of all
applicable Property Taxes, Production Taxes and royalties paid by Sellers, that are fairly
attbutable to Buyer pursuant to this Agreement;
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(c) the amount of any suspended funds retained by Sellers pursuant to Section 1O.6( a );
(d) the amount, if any, by which the aggregate of the Uncured Title Defects
Value exceeds $1,000,000; Drovided, however, that in no event wil the Alaska Interests Purchase Price be decreased under this Section 3.3(d) by more than $2,500,000;
Effective Time, multiplied by $60.00 per Bbl in the case of Oil and $9.00 per MMBTU in the case of Gas.
ARTICLE 4
BUYR'S REVIEW
4.1 Buver's Review Before the Execution Date.
(a) Prior to the Execution Date, Sellers have made available to Buyer certain
data relating to the Alaska Interests, the Stock and the Propertes for Buyer's review.
Buyer acknowledges that it thoroughly reviewed all of this material before Buyer submitted its offer to purchase the Alaska Interests and the Stock and executed ths Agreement. Buyer shall notify Sellers in writing if it wishes to review files or data in
addition to those previously provided, but Sellers' obligation to provide additional fies or
data shall be limted to fies and data that are reasonably available to it. SELLERS HAVE NO OBLIGATION TO PROVIDE ACCESS TO, AND BUYER WAIVS
it has reviewed and inspected the Alaska Interests (including the Tangible Assets), the
Stock and the Property, in each case to its satisfaction to enable it to submit its offer to purchase the Alaska Interests and the Stock and to execute this Agreement, and that it is not entitled to a reduction in the Purchase Price (except in strct accordance with the adjustment provisions of Section 3.2 and Section 3.3), indemnification or any other recourse of any kind whatsoever against Sellers or any of their respective Associated
Pares if Title Defects arse after the Execution Date. Buyer has undertaken all
appropriate inquiry to its satisfaction, and has made an informed decision to acquire the Stock and the Alaska Interests on the basis of its own investigations and without reliance
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on statements or investigations by any other Person, including Sellers, CIPL, PERL and
their respective Associated Paries.
4.2 Access to Assets and ProDertIes.
(a) Buyer acknowledges that it has had the opportunity to inspect and
inventory the Tangible Assets and the Properties before the Execution Date. On Buyer's request, Sellers wil provide additional access to the Tangible Assets and the Propertes at any reasonable time before the Alaska Interests Closing on and subject to the terms of the Site Visit Indemnity Agreement.
(b) All visits to the premises and facilties by Buyer and on Buyer's behalf
wil be scheduled by mutual consent ofthe Paries, subject to Buyer's providing Sellers at least five Business Days' written notice of the locations that it wishes to visit and the proposed times. Sellers may accompany Buyer and its Associated Paries during their site
visits. Entr onto the Tangible Assets and the Propertes wil be subject to Thid-Par restrctions, if any, and to Sellers' safety, industrial hygiene and drug and alcohol
requirements, and at Buyer's sole risk and expense (including the cost of helicopter and
boat charers to access platforms).
4.3 Environmental Review. Prior to the Execution Date, Buyer and its Associated
Pares were offered an opportunity to inspect and inventory (i) the Tangible Assets and the
Properties with respect to environmental matters and (ii) Sellers' environmental records relating
to the Tangible Assets and the Property, and Buyer has conducted such reviews to its satisfaction.
4.4 Tanl!ible Assets: Casualtv Loss.
(a) Buyer acknowledges that (i) prior to the Execution Date, it has had the opportunity to inspect and inventory the condition of the Tangible Assets and Propertes to its satisfaction and (ii) there wil be no adjustment of the Purchase Price on the basis of the condition of the Tangible Assets or Properties. Buyer acknowledges that certain of the Tangible Assets observed during Buyer's inspections may be used or replaced with items of substantially equivalent condition and value before the Alaska Interests Closing as a result of normal and customary operations.
(b) Through and until the Alaska Interests Closing, Sellers shall notify Buyer of each instance of Casualty Loss to the Tangible Assets or any par thereof occurrng from and after the Execution Date, to the extent known to Sellers and to the extent the
estimated amount of such Casualty Amount is a Material Amount.
(c) If, after the Effective Time, any porton of the Tangible Assets suffers a
Casualty Loss (including as a result of volcanic activity or other acts of God), then Buyer
shall neverteless be required to close.
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or implied) and expressly disclaim all representations and waranties as to the accuracy or completeness of the fies or any other information that they have provided to Buyer or may provide to Buyer or that have been provided or may be provided by Sellers'
Associated Paries or other Persons. Conveyance of the Alaska Interests (including the
Tangible Assets), the Stock and the Property shall be without representation or waranty whatsoever (express, statutory or implied) as to title, description, physical condition of
the Alaska Interests (including the Tangible Assets), the Stock or the Propertes
(including the environmental condition), of the Alaska Interests (including the Tangible Assets and Propertes that are par of the Alaska Interests), quality, value, fitness for
purpose, merchantabilty or otherwise. Buyer shall satisfy itself prior to the Alaska Interests Closing, and at the Alaska Interests Closing wil be deemed to have satisfied itself entirely as to the tye, condition, quality and extent of the property and property
interests that comprise the Alaska Interests (including the Tangible Assets, the Properties, the Stock and any other property or assets that are par ofthe Alaska Interests) being sold and conveyed to Buyer pursuant to this Agreement.
(b) BUYER ACKNOWLEDGES THAT, EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, SELLERS HAVE NOT MADE, AND WILL
NOT MAKE, ANY REPRESENTATION OR WARRNTY WHATSOEVER (EXPRESS, IMLIED OR STATUTORY) IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY IT,
REPRESENTATION ON SELLERS' BEHALF. ALL DATA, INORMATION AND OTHER MATERILS FURNISHED BY SELLERS ARE PROVIDED TO BUYR AS A CONVNIENCE ONLY, AND RELIANCE ON OR USE OF THEM
IS AT BUYER'S SOLE RISK.
for the exploration, development, production, treating and transporting of Oil and Gas, and that physical changes to the environment may have occurred or wil occur as a result
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of such use aud that Sellers have disclosed, and Buyer is further aware, that there exists the possibility that there could have occurred or wil occur from such use one or more
groundwater, soil, seabed or subsudace strata of any real property included in the
Properties and of contiguous or a series of contiguous, real propertes not a par of the
Properties and that pursuant to Alaska Statute 46.03.780 Buyer may be liable to the State
of Alaska for damages based on the injuries to, including the death of, fish, animals,
vegetation, or the environment of the State of Alaska;
(c) Buyer has entered into this Agreement based solely on its own
investigation of the physical condition of the Tangible Assets and the Properties
environment);
(d) Buyer acknowledges that at the Stock Closing it wil acquire the Stock and at the Alaska Interests Closing it wil acquire the Alaska Interests, including the Tangible Assets and the Properties, based solely on its own investigation of the physical or other
condition thereof and assumes the risk that adverse conditions outside the scope of Sellers' representations and waranties set forth in Section 16.1 may not be revealed by Buyer's own investigation. Buyer, with full knowledge of the foregoing and after conducting the investigations and evaluations referenced in the immediately preceding sentence and elsewhere in this Agreement, is ACQUIRG THE STOCK AND THE
ALASKA INTERESTS, INCLUDING THE TANGffLE ASSETS AND THE PROPERTY, ON AN "AS is, WHERE is, WITH ALL FAULTS" BASIS, and,
Buyer, by acquiring the Stock and the Alaska Interests on an "AS IS, WHERE IS, WITH
ALL FAULTS" basis, waives any other rights of indemnification, contrbution or recourse it may have against or from Sellers or any of their Associated Paries with respect to the condition of the Stock and the Alaska Interests, including the
environmental condition of the Tangible Assets, the Properties and the surrounding
environment and any and all damage to the Tangible Assets, the Properties and the
surrounding environment (including as a result of volcanic activity or other acts of God). As par of Buyer's agreement to purchase and accept the Stock and the Alaska Interests "AS IS, WHERE IS, WITH ALL FAULTS" and not as a limitation on such agreement,
except as specifically set fort in this Agreement to the contrary, Buyer hereby
unconditionally and irevocably waives and releases any and all actual or potential rights Buyer might have against Sellers regarding any form of waranty, express or implied, of
any kind or type, relating to the Stock, the Alaska Interests, its improvements or the Property Conditions, and such waiver and release is absolute, complete, total and unlimited in every way. Except as specifically set forth in this Agreement to the contrary, such waiver and release includes a waiver and release of express waranties,
implied warranties, waranties of fitness for a paricular use, waranties of
merchantabilty, warranties of habitability, Strict Liabilty rights, and claims of every kind and type, including claims regarding defects which might have been discoverable,
claims regarding defects which were not or are not discoverable, environmental claims,
environmental liability claims, and all other extant or later created or conceived of Strict Liabilty or Strict Liability type claims and rights;
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(e) In connection with the waivers, releases and limitations of liabilty set
forth in this Agreement (including in Article 14), Buyer expressly waives any rights
under Section 1542 of the California Civil Code, which provides:
Buyer has been advised by its legal counsel as to the significance of this waiver of Section 1542 relating to unknown, unsuspected and concealed Claims, and Buyer
acknowledges that it fully understands and agrees to such waiver;
(f) Buyer hereby agrees, represents and warrants that the matters released,
waived, and limited herein are not limited to matters which are known or disclosed. In this connection and to the extent penntted by law, including the decision of the Alaska
Supreme Court in Witt v. Watkins, 579 P.2d 1065 (Alaska 1978), Buyer hereby agrees,
represents and warants that Buyer realizes and acknowledges that factual matters now
unknown to it may have given or may hereafter give rise to causes of action, claims, demands, debts, controversies, damages, costs, losses, and expenses which are presently unknown, unanticipated and unsuspected, and Buyer further agrees, represents and
warants that the waivers and releases herein have been negotiated and agreed upon in
light of that realization and that Buyer nevertheless hereby intends to release, discharge and acquit Sellers from any such unknown causes of action, claims, demands, debt, controversies, damages, costs, losses and expenses which might in any which way be included in the waivers and matters released as set forth in this Agreement; and
(g) Without limiting clauses (d) and (e) above, Buyer expressly acknowledges
future Oil and Gas production rates, value of exploration prospects, operating costs and Abandonment Obligations, based on Buyer's own abilties and skils to explore, produce, operate, and abandon the Properties and the Alaska Interests
and is not relying on Sellers' own estimates of such data.
(ii)
NORM.
(iii) Portions of the Properties and the Alaska Interests are or may be
located in a "Flood Zone" as defined by the U.S. Federal Emergency Management Administration or other Government Entities.
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maintenance, improvement or abandonment of any intellectual property rights included within the Alaska Interests or owned or held by CIPL would not infringe
any patent, copyright, trademark or trade secret rights of any Person.
(h)
By initialing where indicated below, Buyer specifically agrees to the foregoing acknowledgements, disclaimers and releases in this Section 4.6.
BUYER
(Initials)
Alaska Interests (including the Tangible Assets), or the quantity and quality of any Oil and Gas or other minerals, if any, that may be produced from the Alaska Interests and the Propertes, and
TANGffLE ASSETS), THE STOCK OR PROPERTIES, OR OTHER PERSONAL PROPERTY OR FIXTURES LOCATED THEREON OR USED IN CONNCTION
THEREWITH. Buyer further acknowledges that, in entering into this Agreement, it has relied solely upon its independent examination of the Alaska Interests (including the Tangible Assets
and the Properties) and the Stock and the public records relating to the Alaska Interests
(including the Tangible Assets and the Properties) and the Stock and its independent estimates, computations, evaluations, reports, and studies based thereon. Buyer acknowledges that it has made such investigation of the Property Conditions as Buyer deems adequate, and shall rely solely upon its own investigation of such conditions and not upon any statement or opinion by
Sellers or any Associated Pary of Sellers or any Third Pary. Except for representations in
Section 16.1, Sellers shall not be responsible for any innocent or negligent misrepresentation or failure to investigate the Alaska Interests or the Stock on the par of Sellers, any Associated Party
of Sellers or any Third Pary.
information concerning the Alaska Interests (including the Tangible Assets) and the
Stock, as set forth in the Confidentiality Agreement and the Site Indemnity Agreement.
(b) In the event of termination of this Agreement, Buyer shall promptly, and
in any event withn five days of such termnation, (i) return to Sellers all documentation
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or other information concerning the Alaska Interests, the Stock or otherwise pursuant to
or in connection with this Agreement, that it obtained from Sellers or any Associated
Pary of Sellers or CIPL, (ii) destroy all of its work papers and analyses that incorporate the information, and (iii) be subject to these confidentiality obligations for five years after the Execution Date, all in accordance with the Confidentiality Agreement. However, (i) if
the Alaska Interests Closing occurs, then Buyer's confidentiality obligations under this
Section 4.8 with respect to the Alaska Interests wil not survive the Alaska Interests
Closing and (ii) if the Stock Closing occurs, then Buyer's confidentiality obligations
under this Section 4.8 with respect to the Stock wil not Survive the Stock Closing.
however, that each of the following is subject in all respects to any disclosure on Exhibit A or
Exhibit B to the contrary, including the disclosure of any mortgage, deed of trst, lien,
Encumbrance, Claim, royalty, obligation or interest:
(a) Sellers' title to all or any par of
Claim not listed or referenced on Exhibit A or Exhibit B that would induce a purchaser to suspend payment of proceeds for the Alaska Interest or require the furnshing of security or indemnty. Evidence that Sellers receive their full share of proceeds from a purchaser or Third-Pary operator for an Alaska Interest shall constitute a presumption that no Title Defect exists with respect to such Alaska Interest;
(b) Sellers' working interest would be reduced if a Third Pary were to
exercise a reversionary, back-in or other similar right affecting Sellers' title to the Leases not listed or referenced on Exhibit A or Exhibit B; or
(c) Sellers default in any material respect under a material provision of a
lease, farout agreement or other Contract, which default results in a material loss of title to any par of the Alaska Interests;
provided, however, that the term "Title Defect" does not include (i) a lien or encumbrance in the form of a judgment secured by a supersedes bond or other security approved by the court issuing
the order; (ii) the loss of lease acreage between the Execution Date and the Alaska Interests
Closing Date because the term of a Lease expires; (ii) any defect, Claim, encumbrance,
5.2 Title Defect Notice. Buyer wil have until ten days after the Execution Date to
provide Sellers a written notice ("Title Defect Notice") of any Title Defect that Buyer in good
faith finds unacceptable. Each Title Defect Notice must include, in reasonable detail, a
description of (a) the Alaska Interest with respect to which the claimed Title Defect relates, (b) the nature of such claimed Title Defect, and (c) Buyer's calculation of the Defect Value in accordance with the guidelines set forth in Section 5.4. Any Title Defect that is not identified by
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a timely-delivered Title Defect Notice wil thereafter be forever waived by Buyer and such Title Defect wil transfer with the affected Alaska Interest. 5.3 Determination of Title Defects and Defect Values.
(a) Within thee Business Days after Sellers' receipt of a Title Defect Notice,
Sellers wil notify Buyer as to whether Sellers agree with the Title Defect claimed therein and/or the proposed Defect Value attnbuted to such Title Defect. If Sellers do not agree
with any such claimed Title Defect and/or any such proposed Defect Value, then the Paries wil promptly enter into good faith negotiations and wil attempt to agree on such
matters. The value agreed to by the Paries with respect to a Title Defect wil be the
a Title Defect or the associated Defect Value within five Business Days after Sellers' receipt of a Title Defect Notice, then, upon Sellers' or Buyer's wntten request, the
disputes wil be submitted to the Bankrptcy Court for resolution.
5.4 Calculation of Defect Value.
(a) If, because of a Title Defect, title to or Sellers' nghts in a paricular Alaska
Interest fails completely with the effect that Sellers have no ownership interest in such Alaska Interest, the Defect Value wil be the Allocated Value of such Alaska Interest.
(b) If a Title Defect exists because Sellers own a lesser Net Revenue Interest in a Property, then the Defect Value wil be the Allocated Value for such Property
multiplied by a fraction (i) the numerator of which is the net present value, as of the Effective Time, of Sellers' interest in the future net revenues from such Property (the
"PV-NRI") minus the net present value as of the Effective Time, of Sellers' interest in the future net revenues from such Property calculated based upon the same production, cost,
and assumed future pnce estimates and discount rate and such other methods, techniques
and assumptions utilzed but takng into account the Title Defect, and (ii) the
denominator of which is the PV -NRL
(c) If a Title Defect is a lien, encumbrance or other charge upon a paricular
Alaska Interest that is liquidated in amount, then the Defect Value for such Title Defect shall be the amount necessary to be paid to remove the Title Defect from the affected Alaska Interest.
(d) If a Title Defect represents an obligation or burden upon a paricular
Alaska Interest of a type not described in Section 5.4(b) or Section 5.4(c). then the Defect Value with respect to such Title Defect wil be the sum the Pares mutually agreed upon in good faith as the present value of the adverse economic effect such Title Defect wil have on such Alaska Interest. If the Pares cannot reach an agreement as to such Defect Value, then the dispute wil be submitted to the Bankuptcy Court for resolution.
(e) If less than 100% of the assets comprising an Alaska Interest is subject to
a Title Defect, the Paries agree that only the value of the portion of the Alaska Interest
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affected by the Title Defect wil be used to consider the Defect Value; accordingly, the
Pares agree that the value of any porton of the Alaska Interest (if less than 100% of the
Alaska Interest) affected by the Title Defect wil be based on an amount equal to (i) the product of (A) the Allocated Value of 100% of such Alaska Interest and (B) a fraction, the numerator of which is the average weighted production of the porton of the Alaska Interest affected by the Title Defect and the denominator of which is the aggregate average weighted production of 100% of the Alaska Interest, or (ii) if the Alaska Interest
is not a producing Alaska Interest, as reasonably agreed to among the Pares. The Pares
agree that the phrase "average weighted production" as used herein wil be based on the historical production information from Sellers' records for the three full calendar months immediately preceding the Execution Date.
(f) Notwithstanding the foregoing provisions of this Section 504, a Title
Defect with respect to an Easement wil be deemed a Title Defect of the Property
serviced by such Easement, unless an appropriate replacement Easement is obtained by
Sellers therefor.
(g) The calculation of a Defect Value wil take into consideration any and all
5.5 Consequences of Title Defect. Sellers wil have five Business Days after the
final determnation of a Title Defect and its associated Defect Value to elect, in their sole
discretion, by written notice to the Buyer, any of the following:
(a) to cure, or agree to cure, the Title Defect;
In connection with the exercise of the option set forth in the preceding clause (a), Sellers may delay the Alaska Interests Closing for up to 30 days while they investigate the Title Defect and
possible curative measures, and such right to delay the Alaska Interests Closing wil be in
addition to any other rights of Sellers' to delay the Alaska Interests Closing under this
Agreement.
5.6 DescnDtIon and Other Errors. If either Party determnes, either before or
within 30 days after the Alaska Interests Closing, that the description of an Alaska Interest is incorrect or that certain Alaska Interests were erroneously included in or erroneously excluded from the respective definitions thereof, other sales information or any conveyancing instruments,
then Sellers and Buyer shall meet and use their respective commercially reasonable efforts to
resolve the error without need of furher consideration, and shall, as applicable, execute and
deliver, or use commercially reasonable efforts to cause to be executed and delivered, such other instruments of conveyance and tae such other actions as either Pary reasonably may request in connection therewith. If the Paries cannot resolve any such purported error withn 15 days of the
commencement of negotiations, then the issue wil be submitted to the Bankrptcy Court for
resolution.
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Interests wil be subject to the terms and conditions of all oil, gas and mineral leases,
assignments, subleases, farout agreements, unit agreements, joint operating agreements,
transportation agreements, obligations and other Contracts, in each case to the extent that Sellers are paries (or as such Contracts are otherwise binding upon Sellers) and that concern or pertain to the Alaska Interests (each of the foregoing, but expressly excluding any agreement that constitutes an Excluded Item, a "Related Agreement" and collectively, the "Related Agreements").
(b) At the Alaska Interests Closing and to the extent approved by the Sale
Order, the Paries wil execute and deliver all documents necessary for Buyer to assume
the Related Agreements, and the Buyer shall assume all of Sellers' obligations and
liabilties under the Related Agreements, subject to the terms of the Transition Agreement. Buyer's obligations shall apply to all Related Agreements, whether or not
recorded.
(c) Buyer acknowledges that, by virtue of its purchase of the Stock, all
obligations and liabilties under all agreements to which CIPL is a party shall remain the
obligations and liabilties of CIPL and neither Seller nor any of its Associated Pares
shall have any obligation or liabilty under any such agreement.
6.2 Third Partv Notifications and Rel!ulatorv Approvals for the Alaska Interests.
(a) Buyer acknowledges that the sale of the Alaska Interests may require the
providing of notice to, and Consent of, lessors, joint interest owners, farmers, sublessors, assignors, grantors, paries to agreements, Governmental Entities having jurisdiction
(including a borough, municipality, city, or vilage in the State of Alaska, the State of
Alaska, Department of Natural Resources, Division of Oil & Gas, the United States Bureau of Land Management, the Regulatory Commission of Alaska, the United States Environmental Protection Agency, the Alaska Oil and Gas Conservation Commssion,
and State of Alaska, Deparment of Natural Resources, Mental Health Trust Land
(b) Buyer acknowledges that it is and shall be solely responsible for obtaining
all Consents applicable to the sale of the Alaska Interests (including a borough,
municipality, city, or vilage in the State of Alaska, the State of Alaska, Deparment of
Natural Resources, Division of Oil & Gas, the United States Bureau of Land
Management, the Regulatory Commission of Alaska, the United States Environmental Protection Agency, the Alaska Oil and Gas Conservation Commssion, and State of Alaska, Deparment of Natural Resources, Mental Health Trust Land Offce) and wil furnsh Sellers with copies, or other acceptable proof, of the granting or receipt of each
6741023353-033
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such Consent (other than the Post-Closing Approvals) at least two days before the Alaska Interests Closing Date.
(c) If Buyer does not furnsh Sellers with all Consents (other than the Post-
Closing Approvals) applicable to the sale of the Alaska Interests (including a borough, municipality, city, or vilage in the State of Alaska, the State of Alaska, Deparment of
Natural Resources, Division of Oil & Gas, the United States Bureau of Land
Management, the Regulatory Commssion of Alaska, the United States Environmental Protection Agency, the Alaska Oil and Gas Conservation Commssion, and State of Alaska, Deparment of Natural Resources, Mental Health Trust Land Offce) at least two days before the Alaska Interests Closing Date, then Sellers may, at their option, elect to
(i) delay the Alaska Interests Closing as to any or all of the Alaska Interests, with no charge to either Pary for the delay, to permt Buyer to obtain the Consents; (ii) waive the
condition set forth in Section 7.3(d) and proceed with the Alaska Interests Closing
without all Consents; or (iii) elect not to proceed with the Alaska Interests Closing and
termnate this Agreement.
6.3 Third Partv Notifications and Rel!atorv Approvals for the Stock.
(a) Buyer acknowledges that the sale of the Stock may require the providing
of notice to, and Consent of, certain Third Paries.
(b) Buyer acknowledges that it is and shall be solely responsible for obtaining all Consents applicable to the sale of the Stock and wil fuish Sellers with copies, or other acceptable proof, of the granting or receipt of each such Consent (other than the
Post-Closing Approvals) at least two days before the Stock Closing Date.
(c) If Buyer does not furnish Sellers with all Consents applicable to the sale of
Stock (other than the Post-Closing Approvals) at least two days before the Stock Closing Date, then Sellers may, at their option, elect to (i) delay the Stock Closing as to the Stock,
with no charge to either Pary for the delay, to permt Buyer to obtain the Consents; (ii)
waive the condition set forth in Section 8.3( c) and proceed with the Stock Closing
without all Consents; or (ii) elect not to proceed with the Stock Closing.
6.4 Termination of Sellers' Insurance. Until the Alaska Interests Closing Date, Sellers shall maintain all insurance that they have provided for the Alaska Interests or the Property, including any insurance they or any of their Affiiates may cary as operator of any
Alaska Interests. At the Alaska Interests Closing, Sellers shall assign to Buyer all Sellers' right title and interest in any proceeds to be received pursuant to such insurance policies with respect
to any casualty or loss (other than the Redoubt Interrption Claim) occurrng between the
Effective Time and the Alaska Interests Closing Date, provided there has been no Purchase Price adjustment as a result of the event giving rise to the proceeds.
result from or relate to, the Banptcy Case and orders entered therein, or the Credit Agreements, from the Execution Date to the Alaska Interests Closing Date, except as
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provided herein or as otherwise consented to in writing by Buyer, Sellers, on a joint and several basis, wil:
(i) not act in any mauner with respect to the Properties other than in
the normal, usual and customar manner, consistent with prior practice (including
paying or causing to be paid all associated costs and expenses, and meant to
preserve intact the business and Properties and associated goodwil);
(ii) except as referenced in Exhibit A, not dispose of or relinquish any
of the Properties (other than sales of Oil and Gas in the ordinary course; the disposition of used, surplus or obsolete Tangible Assets; relinquishment resulting
from the expiration of a non-producing Lease; and the abandonmeut of a Lease not operated by Sellers or their Affliated Paries);
an agreement for capital expenditures or workover expenditures with respect to the Properties in excess of $1,000,000 (net to Sellers' interest), except as required by Applicable Law or when required by an emergency when there shall have been insuffcient time to obtan advance consent (provided, that Sellers wil promptly notify Buyer of any such emergency expenditures);
(v) not incur Liabilties with respect to the Propertes for which Buyer
would be responsible afer the Alaska Interests Closing, other than transactions in the normal, usual and customary manner, of a nature and in an amount consistent with past practices employed by Sellers with respect to the Properties;
(vi) not take any affinative action that would result in any of the
(vii) not cancel any financial indebtedness owed to Sellers that is fairly
attibutable to the Properties for the period of time on or after the Effective Time;
(viii) not, except as otherwise provided in this Agreement, amend or termnate, or violate, breach, or default under, any agreement relating to the
Propertes having a value in excess of $1 ,000,000;
(ix) use commercially reasonable efforts to preserve relationships with
each Third Pary having material business dealings with respect to the Properties;
(x) pay all taxes and assessments with respect to the Properties that
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right to purchase notifications. Sellers shall provide such notifications promptly after the Execution Date with respect to each applicable Property and shall comply in all material respects with the agreement in which the applicable preferential purchase right arses insofar as it pertins to such preferential right, to the extent required or authorized by the
Bankptcy Court.
(b) If, prior to the Alaska Interests Closing Date, a holder of a preferential
purchase right notifies Sellers that it elects to exercise its rights with respect to a Property (in accordance with the agreement under which the preferential purchase right arses), such Property wil not be sold to Buyer (subject to the remaining provisions in this
Section 6.6), and the Alaska Interests Purchase Price wil be reduced by the relevant
Allocated Value or, if
the preferential right affects less than 100% of such Property, a pro
rata portion thereof calculated using the methodology contemplated by Section 6.6( c ).
and the Paries wil remove such Property (or porton thereof) from this Agreement.
Sellers shall promptly notify Buyer of the exercise of any preferential purchase rights in
respect of the Properties. Notwithstanding the aforementioned, Buyer remains obligated
to purchase the remainder of the Propertes not affected by exercised preferential purchase rights in accordance with this Agreement.
(c) If less than 100% of a Property is purchased pursuant to the exercise of a
preferential purchase right, the Pares agree that only the value of the purchased porton
of the Property wil be used to consider an adjustment to the Alaska Interests Purchase
Price pursuant to Section 6.6(b ); accordingly, the Paries agree that the value of any
porton of the Property (if less than 100% of the Property) purchased pursuant to the
exercise of a preferential purchase right wil be based on an amount equal to (i) the product of (A) the Allocated Value of 100% of such Property and (B) a fraction, the
numerator of which is the average weighted production of the purchased portion of the Property and the denominator of which is the aggregate average weighted production of 100% of the Property, or (ii) if the Property is not a producing Property, as reasonably agreed to among the Paries. The Pares agree that the phrase "average weighted
production" as used herein wil be based on the historical production information from
Sellers' records for the three full calendar months immediately preceding the Execution
Date.
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(d) If for any reason the purchase and sale of a Property or porton thereof
covered by an exercised preferential purchase right is not or cannot be consummated with the holder of the preferential purchase right withn (120) days after the Alaska Interests
Closing Date and the holder of such preferential right does not object, or waives any objection, to the satisfaction of Buyer, to a sale of such Property hereunder, Sellers shall
sell, assign and convey to Buyer and Buyer shall purchase and accept from Sellers, within
ten Business Days after Sellers' prompt notice of the same to Buyer, such Properties pursuant to the terms of this Agreement and for a purchase price equal to the Allocated
Value (or any portion thereof pursuant to Section 6.6(c)) (provided, that "Alaska Interests Closing Date" with respect to such Propertes shall mean the date of assignment of such
Propertes from Sellers to Buyer).
6.7 Sale Procedures. The sale procedures regarding the transactions contemplated
by this Agreement wil be governed by the Sale Procedures Order and any other applicable orders, including the Sale Order, entered by the Bankptcy Court.
6.8 Pavment of DeDosits. On or before the deadline required by the Sale Procedures Order, Buyer shall pay to Sellers by wire transfer of immediately available funds to an account or accounts specified by Sellers: (i) an amount prescribed in the Sale Procedures Order with
respect to the Alaska Interests Purchase Price (without taking into account any adjustments
pursuant to Section 3.2 or Section 3.3) (the "Alaska Interests Deposit"), and (ii) an amount
prescribed in the Sale Procedures Order with respect to the Stock Purchase Price (the "Stock
Deposit"). Both the Alaska Interests Deposit and the Stock Deposit shall be nonrefundable
except as specifically set fort in Artcle 9. At the Alaska Interests Closing, the Alaska Interests
Deposit shall be applied to the Preliminary Alaska Interests Purchase Price. At the Stock
Closing, the Stock Deposit shall be applied to the Stock Purchase Price.
7.1 Alaska Interests Closinl! Date. The purchase and sale of the Alaska Interests
contemplated by this Agreement (the "Alaska Interests Closing") shall take place at 611 Anton Boulevard, 14th Floor, Costa Mesa, Californa, on or before August 4,2009 or at such other time
and place as the Pares may agree; provided. however, that the Alaska Interests Closing shall in
acknowledgement and agreement to the acknowledgements, disclaimers and releases set forth in Section 4.6. (ii) compliance with the conditions set forth in Section 7.3(a) and (iii) the incumbency and specimen signature of each officer of Buyer executing this
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par.
(b) Certficate of Sellers. Each Seller shall deliver to Buyer a certificate in
form and substance satisfactory to Buyer, effective as of the Alaska Interests Closing Date and executed by such Sellers' duly authorized offcer, certfying as to (i) compliance with the conditions set fort in Section 7 A(a), and (ii) the incumbency and specimen
signature of each offcer of such Seller executing this Agreement and the other
(c) Assil!nment and Bil of Sale. Sellers and Buyer shall execute and deliver counterpars of the Assignment and Bil of Sale. The Assignment and Bil of Sale, when
delivered at the Alaska Interests Closing, shall be effective as of the Effective Time, be
without waranty of any kind (e.g., title, fitness, condition), and shall restate (or
incorporate by reference) the indemnities, releases and waivers contained in this Agreement.
(i) Exhibit A to this Agreement states Sellers' interest in the Alaska
Interests, to the best of Sellers' knowledge and belief. The Assignment and Bil of Sale shall not, however, state or warant the interests in the Alaska Interests
assigned to Buyer.
(ii) The Paries shall execute and acknowledge any such other
instruments reasonably necessary to effectuate the conveyance of the Alaska Interests to Buyer, including without limitation, separate instruments on any
offcially approved form for the assignment of the Leases and for each Lease,
to Sellers that Buyer has obtained all required Consents (other than the Post-Closing
Approvals) related to the sale of the Alaska Interests.
(f) Financial Securitv. Buyer shall deliver to Sellers evidence reasonably
satisfactory to Sellers of Buyer's abilty to pedorm fully its financial obligations under this Agreement, including Abandonment Obligations, together with evidence reasonably
satisfactory to Sellers that Buyer has otherwise satisfied all requirements of Applicable
Law with respect to transfer of the Alaska Interests, including Buyer's delivery to Sellers of the original counterpar of all Governmental Bonds.
(g) Payment of Purchase Price. Buyer wil pay to Sellers an amount equal
to the Preliminar Alaska Interests Purchase Price, less the amount of the Alaska Interests Deposit (which shall be credited toward the Alaska Interests Purchase Price), by wire transfer of immediately available funds to an account or accounts specified by Sellers.
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(h) Transition Services Al!reement. PERL and Buyer shall execute and
Obligations, and each other platform and facilty that is included in the applicable
Alaska Ioterests or located on the Property;
(ii) that each appropriate bond, surety letter, letter of credit, other
(k) Other Documents. The Paries shall execute and deliver other documents reasonably required to close the sale of the Alaska Ioterests and implement the related
terms of this Agreement, including assignents, deeds, assumption agreements,
additional bils of sale and the like, as well as instrments necessary under operating
agreements, plans of unitization and Applicable Laws affecting the Alaska Ioterests to transfer the Alaska Interests and related obligations from Sellers to Buyer.
(I) Deliverv of Possession. Sellers shall deliver possession of the Tangible
Assets to Buyer at Buyer's expense as soon as practicable after the Alaska Ioterests
Closing Date.
Interests Closing are subject to the satisfaction or waiver in writing by Sellers at or prior to the Alaska Ioterests Closing, of the following conditions:
(a) Representations True: Performance of Oblil!ations. All representations and waranties of Buyer contained in this Agreement shall be tre in all material respects at and as of the Alaska Interests Closing as if such representations and waranties were
made at and as of the Alaska Ioterests Closing, and Buyer shall have pedormed and
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declare ilegal, or seeking substantial damages in connection with, the sale of the Alaska
Interests or related transactions contemplated by the Agreement.
(c) Governmental Bonds. Buyer shall have delivered to Sellers copies of all Governmental Bonds, together with evidence satisfactory to Sellers that all Governmental Bonds have been accepted by the applicable Governmental Entities; and Buyer shall have delivered to Sellers evidence reasonably satisfactory to Sellers that Buyer has otherwise
satisfied all requirements of Applicable Law with respect to transfer of the Alaska
Interests.
(d) Consents. Each Consent related to the Alaska Interests (other than the
Post-Closing Approvals) shall have been obtained and shall be in full force and effect.
certifying that (i) Buyer has purchased insurance (on a claims made basis) covering Buyer's ownership and operation of the Tangible Assets and Property in such amounts,
and with such deductibles and limits, as is commercially reasonable and (ii) such insurance wil be in full force and effect as of the Alaska Interests Closing Date.
(f) Chaniie of ODerator. Buyer shall have obtained all regulatory approvals
and permts and satisfied all requirements of financial security to operate the Alaska
Interests (other than the Post-Closing Approvals).
(h) BankruDtcv Court ADDrovaI. The Bankptcy Court shall have issued
the Sale Order and the Sale Order shall have become final and shall not have been stayed.
(i) Actions. Buyer shall have taken all actions described in Section 7.2 as
Interests Closing are subject to the satisfaction or waiver in writing by Buyer at or prior to the Alaska Interests Closing, of the following conditions:
(a) ReDresentations True: Performance of Obliiiations All representations
and waranties of Sellers contained in this Agreement regarding the Alaska Interests shall
be true in all material respects at and as of the Alaska Interests Closing as if such
representations and warranties were made at and as of the Closing, and Sellers shall have
pedormed and satisfied in all material respects all obligations required by this Agreement to be pedormed and satisfied by them at or prior to the Alaska Interests Closing.
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declare ilegal, or seeking substantial damages in connection with, the sale of the Alaska
Interests or related transactions contemplated by the Agreement.
(c) Bankruptcv Court Approval. The Bankptcy Court shall have issued
the Sale Order and the Sale Order shall have become final and shall not have been stayed.
(d) Actions. Sellers shall have taken all actions described in Section 7.2 as
being required of Sellers.
Agreement (the "Stock Closing") shall take place at 611 Anton Boulevard, 14' Floor, Costa Mesa, California, on the Alaska Interests Closing Date, or at such other time and place as the
Pares may agree; provided. however, that the Stock Closing shall in any event be effective as of
by Buyer's duly authorized offcer, certfying as to (i) Buyer's acknowledgement and agreement to the acknowledgements, disclaimers and releases set fort in Section 4.6. (ii) compliance with the conditions set fort in Section 8.3(a) and (ii) the incumbency and
specimen signatue of each offcer of Buyer executing this Agreement and the other
form and substance satisfactory to Buyer, effective as of the Stock Closing Date and executed by such Sellers' duly authorized offcer, certifying as to (i) compliance with the conditions set forth in Section 8A(a). and (ii) the incumbency and specimen signature of
each offcer of such Seller executing this Agreement and the other Transaction
to Sellers that Buyer has obtained all required Consents (other than the Post-Closing
Approvals) related to the sale of the Stock.
(d) Pavment of Purchase Price. Buyer wil pay to Sellers an amount equal
to the Stock Purchase Price, less the amount of the Stock Deposit (which shall be applied to the Stock Purchase Price), by wire transfer of immediately available funds to an account or accounts specified by Sellers.
(e) Stock. PEAH shall arange for delivery to the Buyer of the original certificate representing the Stock, duly endorsed for transfer (or accompanied by duly
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executed stock powers), with such delivery to be made upon Buyer's provision to Sellers
of the Stock Transfer ApprovaL.
(f) Other Documents. The Pares shall execute and deliver other documents
reasonably required to close the sale of the Stock and implement the related terms of this Agreement, and to transfer the Stock from PEAH to Buyer upon Buyer's provision to
Sellers of the Stock Transfer ApprovaL. Sellers' representative on the board of directors
of CIPL shall resign from such board concurrent with the Stock Closing.
(g) Bankruptcv Court Approval. The Bankrptcy Court shall have issued
the Sale Order and the Sale Order shall have become final and shall not have been stayed.
(a) Representations True: Performance of Obligations. All representations and waranties of Buyer contained in this Agreement shall be tre in all material respects at and as of the Stock Closing as if such representations and waranties were made at and
as of the Stock Closing, and Buyer shall have performed and satisfied in all material respects all obligations required by this Agreement to be performed and satisfied by it at or prior to the Stock Closing.
theatened before any cour or Governental Entity seeking to restrain, prohibit, or declare ilegal, or seeking substantial damages in connection with, the sale of Stock and
related transactions contemplated by the Agreement.
(c) Consents. Each Consent related to the sale of the Stock (except for the
Post-Closing Approvals) shall have been obtained and shall be in full force and effect.
(d) Alaska Interests Closing. The Alaska Interests Closing shall occur
concurrently with the Stock Closing.
(g) Bankruptcv Court Approval. The Bankptcy Court shall have issued
the Sale Order and the Sale Order shall have become final and shall not have been stayed.
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and warranties of Sellers contained in this Agreement regarding the Stock shall be tre in
all material respects at and as of the Stock Closing as if such representations and
waranties were made at and as of the Stock Closing, and Sellers shall have performed
and satisfied in all material respects all obligations required by this Agreement to be
performed and satisfied by it at or prior to the Stock Closing.
(d) Actions. Sellers shall have taken all actions described in Section 8.2 as
being required of Sellers.
ARTICLE 9
TERMATION
9.1 Events of Termination. This Agreement may be termnated at any time prior to
(d) by Sellers, if the Alaska Interests Closing has not occurred on or before
August 4, 2009 due, in whole or in par, to Buyer's failure to perform any covenant or obligation contained in this Agreement that is required to be performed by such date
(including Buyer's failure to obtain any Consents);
(f) by either Sellers or Buyer, if the Bankrptcy Court does not enter the Sale
Procedures Order and the Sale Order on or before September 10, 2009; or
(g) by Sellers, with written notice to Buyer if there is a material violation or
Agreement and such violation or breach has not been waived by Sellers or cured by
Buyer within seven days after receipt of written notice thereof from Sellers.
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9.l(d) or 9.1(f), such termnation shall be without liabilty to any Pary and Sellers shall refund the Alaska Interests Deposit to Buyer within thee Business Days of the date of such termnation.
Agreement or any other provision of this Agreement to the contrar, the terms of any
confidentiality provisions contained in the Site Visit Indemnity Agreement and the
Confidentiality Agreement shall remain in full force and effect.
9.3 Events of Termination of Stock Sale. The sale of Stock contemplated by this
Agreement may be termnated at any time prior to the Stock Closing:
(a) as provided in Section 6.3(c)(iii;
(c) by Sellers, if the Stock Closing has not occurred on or before August 4,
2009 due, in whole or in par, to Buyer's failure to perform any covenant or obligation contained in this Agreement that is required to be performed by such date (including Buyer's failure to obtain any Consents); or
(e) by Sellers, with written notice to Buyer if there is a material violation or
Agreement and such violation or breach has not been waived by Sellers or cured by
Buyer within seven days after receipt of written notice thereof from Sellers.
9.4 Effect of Termination of Stock Sale.
pursuant to Section 9.3(b) or 9.3(c), such termnation shall be without liability to any Pary and Sellers shall refund the Stock Deposit to Buyer within three Business Days of the date of such termnation.
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pursuant to Section 9.3(a). 9.3(d). or 9.3(e), Buyer shall fodeit the Stock Deposit, which shall be retained by Sellers as liquidated damages, and such termination shall otherwise be without liabilty to any Pary.
(b) Survival of Confdentialitv. Notwithstanding the termnation of the sale
of Stock contemplated by this Agreement or any other provision of this Agreement to the contrary, the terms of any confidentiality provisions contained in the Site Visit Indemnity Agreement and the Confidentiality Agreement shall remain in full force and effect.
10.1 Filng and Recording. Sellers wil decide which Pary wil fie or record the
conveyance documents in the appropriate governental records. The recording Pary wil
provide either the original or photocopies of the fied or recorded document, including the
recording data, as agreed to by the Paries, to the non-recording Pary. Buyer shall reimburse
Sellers for the fiing, recording, and other reasonable fees that Sellers incur if Sellers fie or
record the documents.
10.2 Copies. If originals or the last-remaining copies of any data or Records are
provided to Buyer, Sellers may have access to them at reasonable times and upon reasonable notice during regular business hours for as long as any Alaska Interests are in effect after the Effective Time (or until all of the Abandonment Obligations have been fully satisfied and discharged or a longer period if required by Applicable Law). Sellers may, during this period and at their expense, make copies of the data and records pursuant to a reasonable request. Without limiting the generality of the two preceding sentences, for as long as any Alaska Interests are in effect after the Effective Time (or unti all of the Abandonment Obligations have been fully satisfied and discharged or for a longer period if required by Applicable Law), Buyer may not destroy or give up possession of any original or last-remaining copy of the data or Records without first offering Sellers the opportunity, at Sellers' expense, to obtain the original or a copy. After ths period expires, Buyer must offer to deliver the data and Records (or copies) to Sellers,
at Sellers' expense, before giving up possession or destroying them.
10.3 Further Assurances. Buyer and Sellers each shall, from time to time after the
Alaska Interests Closing and upon reasonable request from the other Pares, execute,
acknowledge and deliver in proper form any conveyance, assignment, transfer or other
instrument reasonably necessary to accomplish the sale of Alaska Interests and the Stock and related obligations contemplated by this Agreement (including the correction of scrivener's errors in the preparation of documents delivered at the Alaska Interests Closing).
(other than the Post-Closing Approvals), Buyer shall use its best efforts and proceed
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dilgently after the Alaska Interests Closing to obtain and promptly provide evidence of such Consents to Sellers. Buyer shall also use its best efforts and proceed dilgently after the Alaska Interests Closing to obtain and promptly provide evidence to Sellers of the Post-Closing Approvals.
(b) From and after the Effective Time, Buyer wil be responsible for all
amounts due under any Contract, including the Related Agreements, related to all or any portion of the Alaska Interests that requires approval for assignment.
10.5 Buver's Compliance. From and after the Alaska Interests Closing, Buyer shall
comply with (a) all Applicable Laws applicable to Buyer's ownership or operation of the Alaska Interests, and (b) all Related Agreements, in either case insofar as they concern or pertain to the Alaska Interests. If and when Buyer obtains Successor Operator Approval, Buyer shall comply with all Applicable Laws applicable to Buyer's operatorship of the Alaska Interests.
10.6 Allocation of Proceeds. Costs and Expenses.
(a) All proceeds, receipts, reimbursements, receivables, credits and income
attibutable to the Alaska Interests, including all rights to production of Oil and Gas and proceeds from the sale of such production, to the extent accruing during the period prior to the Effective Time, shall be for the account of Sellers.
(b) All proceeds, receipts, reimbursements, receivables, credits and income
faily attbutable to the Alaska Interests, including all rights to production of Oil and Gas
and proceeds from the sale of such production, accruing durng the period from and after
the Effective Time, shall be for the account of Buyer. For accounts pertaining to the Alaska Interests held by Sellers in suspense or escrow at the Effective Time, Sellers wil pay in full the royalty accounts, if any, that were suspended because the amount due is less than the statutory minimum for payment and, as to all other such accounts, shall retain such funds and wil disburse funds from time to time after the Alaska Interests Closing upon proof satisfactory to Sellers that the money is due to the Person claiming it.
(c) Except as otherwise provided in this Agreement and subject to the Alaska
Interests Purchase Price adjustments in Section 3.2 and Section 3.3, Sellers wil be
responsible for handling all invoices and makng all payments and disbursements before the Alaska Interests Closing Date and Buyer wil be responsible for handling all invoices and making all payments and disbursements on or after the Alaska Interests Closing Date.
10.7 Plul!l!nl! and Abandoninl! Wells and Platforms: Remediation: Securitv for
Buver's Oblil!ations.
(a) Buyer recognizes, assumes and covenants to either timely pedorm and
accomplish properly, or cause to be timely pedormed and accomplished properly, in accordance with Applicable Law and the Related Agreements, all of Sellers' obligations to plug, abandon, decommssion, restore and remediate the Alaska Interests (including
the Tangible Assets) and the Propertes affected thereby, whether arsing before, on or
after the Effective Time, including obligations, as applicable, to:
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(i) obtain plugging exceptions in operator's name for each Well with a
and platforms;
(iv) close all pits; and
(v) restore and remediate the sudace, subsudace, seabed and offshore
sites associated with the Tangible Assets and the Properties (all of the foregoing
in this Section 10.7(a). "Abandonment Obligations").
(b) Buyer wil pay all costs and expenses associated with the obligations
assumed under Section 1O.7(a). Subject to Section 1O.7(c), at the Alaska Interests Closing
Buyer shall (i) deliver to Sellers satisfactory documentation that Buyer has secured all necessary bonds required by any Governmental Entity or Thrd Pary in order to own and,
where applicable, operate the Assets, and evidence that Buyer has obtained an
appropriate release or assumption agreement from each obligee of the pedormance bonds identified on Schedule 3 in order that Sellers shall have no further obligations under such
pedormance bonds subsequent to the Alaska Interests.
(c) As ofthe Execution Date, the DNR has stated that the trust account for the
Redoubt Unit wil be $12,000,000. PERL has established an Escrow Agreement for
Abandonment Liabilties for Redoubt Unit ("Escrow Agreement") in favor of DNR into which PERL has deposited the sum of approximately $6,800,000. The terms of the Escrow Agreement between PERL and DNR anticipates that such Escrow Agreement shall be fully funded by March 1, 2010. Notwithstanding the Escrow Agreement, Buyer agrees to assume the Abandonment Obligations and shall secure all of Buyer's postClosing plugging and abandonment and sudace restoration obligations pertaining to the
Redoubt Unit, providing for such terms by fully funding the existing escrow or by
replacing such funds with a bond issued by an approved surety as is acceptable to Sellers and DNR in their reasonable discretion.
(d) Buyer shall maintain accurate records of
obtained. Sellers or their authorized representatives may audit Buyer's records for the purpose of verifying the actual expenditures inCurred in pedorming the Abandonment Obligations. Any disputes concernng the amount of such expenditures or their attrbution to pedormance of Abandonment Obligations shall be subrntted to the Bankrptcy Court
for resolution.
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10.8 Preliminarv Settlement Statement. Sellers wil prepare, in accordance with this Agreement, a statement ("Prelimnarv Settlement Statement"), and deliver a copy to Buyer no later than thee Business Days pnor to the Alaska Interests Closing Date, setting fort each
adjustment to the Alaska Interests Purchase Pnce they anticipate to be appropnate as of the
Alaska Interests Closing Date to determine the Preliminary Alaska Interests Purchase Pnce and showing the calculation of such adjustments in accordance with Aricle 3. Buyer wil have one Business Day after receipt of the Preliminary Settlement Statement to review such statement and to provide wntten notice to Sellers of Buyer's objection, if any, to any item on the Preliminary Settlement Statement. Buyer's notice wil clearly identify the item(s) objected to and the reasons and support for the objection(s). The Pares shall attempt to agree on the amount of the Preliminary Alaska Interests Purchase Price to be paid at the Alaska Interests Closing no later
than one Business Day pnor to the Alaska Interests Closing. If the Pares do not agree by that
date, the anthmetic average of Sellers' and Buyer's respective good faith estimates shall be used to determne the adjustments to the Preliminary Alaska Interests Purchase Pnce. If Buyer does not provide wntten objection(s) within the one Business Day penod, the Paries wil treat the Preliminary Settlement Statement as correct for purposes of determning the Preliminar Alaska Interests Purchase Pnce.
10.9 Final Settlement Statement.
Alaska Interests Closing, Sellers wil prepare, in accordance with ths Agreement, a statement ("Final Settement Statement"), and deliver a copy to Buyer no later than 30 days after the Alaska Interests Closing Date, setting forth its determnation of each
adjustment to the Alaska Interests Purchase Pnce but excluding any amounts paid by the Pares under Section 10.10 and Section 10.11, and showing the calculation of such
adjustments in accordance with Arcle 3. Buyer wil have five days after receipt of the Final Settlement Statement to review such statement and to provide written notice to Sellers of Buyer's objection to any item on the statement. Buyer's notice wil clearly identify the item(s) objected to and the reasons and support for the objection(s). If Buyer
does not provide wntten objection(s) within the five-day penod, the Paries wil treat the
Final Settlement Statement as correct and the Final Alaska Interests Purchase Pnce wil
not be subject to furter adjustment. If Buyer provides wntten objection(s) within the
five-day penod, the Pares wil treat the Final Settlement Statement as correct with respect to the items not objected to, and Buyer and Sellers wil meet to negotiate and
resolve the objections within three days of Sellers' receipt of Buyer's objections. If the Pares agree on all objections, the Paries wil treat the adjusted Final Settlement Statement as agreed upon by the Paries as correct and the Final Alaska Interests Purchase Price wil not be subject to further adjustment. Any items not agreed to at the end of such three-day penod may, upon either Sellers' or Buyer's wntten request, be
submitted to the Bankrptcy Court for resolution.
(b) Payment of Final Alaska Interests Purchase Price. If the Final Alaska
Interests Purchase Pnce is more than the Preliminar Alaska Interests Purchase Pnce, Buyer wil pay such difference to Sellers via wire transfer to an account or accounts specified by Sellers, in inuediately available funds, within two Business Days after the
Final Settlement Statement has been agreed to by the Paries or determned by the
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Bankrptcy Court, as applicable. If the Final Alaska Ioterests Purchase Price is less than the Preliminary Alaska Interests Purchase Pnce, Sellers wil pay such difference to Buyer via wire transfer to an account specified by Buyer, in immediately available funds, within two Business Days after the Final Settlement Statement has been agreed to by the Paries
or as determned by the Bankptcy Court, as applicable.
10.10 Post-Closinl! Revenues. Except as expressly provided otherwise in ths Agreement, Buyer shall pay to Sellers any and all amounts received afer the Alaska Interests Closing by Buyer (to the extent not accounted for in the Preliminary Settlement Statement or the Final Settlement Statement) that are attnbutable to the ownership of the Alaska Ioterests pnor to the Effective Time. Except as expressly provided otherwise in this Agreement, Sellers shall pay to Buyer any and all amounts received after the Alaska Ioterests Closing by Sellers (to the extent not accounted for in the Preliminar Settlement Statement or the Final Settlement Statement) that are attnbutable to the ownership of the Alaska Ioterests on or after the Effective Time. The Pary responsible for a payment required under this Section 10.10 shall pay the Pary entitled to receive payment within ten Business Days after the end of the month in which such amounts were received by the Party responsible for payment and no furter adjustments shall be made with respect to such amounts in the Final Settlement Statement.
10.11 Post-Closinl! Expenses. Except as expressly provided otherwise in this Agreement, Sellers shall reimburse Buyer for any and all costs and disbursements paid afer the
Alaska Interests Closing by Buyer dunng the 30-day penod immediately following the Alaska Ioterests Closing Date (to the extent not accounted for in the Preliminary Settlement Statement or
the Final Settlement Statement) that are attbutable to the ownership of the Alaska Ioterests pnor to the Effective Time. Except as expressly provided otherwise in this Agreement, Buyer shall reimburse Sellers for any and all costs and expenses paid after the Alaska Ioterests Closing by Sellers dunng the 30-day penod immediately following the Alaska Ioterests Closing Date (to the
extent not accounted for in the Preliminar Settlement Statement or the Final Settlement
Statement) that are attnbutable to the ownership of the Alaska Interests on or after the Effective Time. The Pary responsible for a payment required under this Section 10.11 shall pay the Pary entitled to receive payment within ten Business Days after the end of the month in which such amounts were received by the Party responsible for payment and no further adjustments shall be made with respect to such amounts in the Final Settlement Statement.
10.12 Audits. Notwithstanding anything in this Agreement to the contrary, (a) Sellers
shall have the right to conduct and paricipate in audits related to joint operations provided for
under any operating or other Contract relating to the Alaska Ioterests in accordance with the terms thereof to the extent any such audit relates to the penod of time prior to the Effective
Time, (b) Buyer shall have the right to conduct and participate in audits related to joint
operations provided for under any operating or other Contract relating to the Alaska Ioterests in accordance with the terms thereof to the extent any such audit relates to the period of time on or after the Effective Time, and (c) no audit Claim of Sellers or Buyer related to joint operations under any operating or other Contract relating to the Alaska Ioterests in accordance with the terms thereof is waived or released by Sellers or Buyer under this Agreement, nor shall any indemnity in this Agreement affect any such audit Claim by Sellers or Buyer related to joint operations under any operating or other Contract relating to the Alaska Interests in accordance
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with the terms thereof to the extent any such audit relates to the period prior to the Alaska
Ioterests Closing Date.
10.13 Reservation of Claims. At the Alaska Ioterests Closing, Sellers shall reserve all Claims, accounts receivable and rights of any kind concernng the Alaska Ioterests or Propertes against any Third Pary (to the extent such Claims, accounts receivable and rights would not be a recoupment or setoff against any Assumed Liabilty), which Claims, accounts receivable or
rights accrue before the Effective Time (including those against overrding royalty owners,
royalty owners, working-interest owners, and Oil or Gas purchasers), whether discovered before
or after the Alaska Interests Closing.
as of the Alaska Ioterests Closing Date. Whether the Alaska Ioterests are valued based on the previous year's production or any other basis, Buyer is obligated to pay the current year's ad valorem tax assessment and all subsequent Property Taxes, subject to the following apportionment provisions. The basis of the apportionment wil be the assessment for the tax year in which the Alaska Interests Closing Date occurs or, if that assessment is not known, then the
basis of the apportionment wil be the assessment for the previous tax year. Buyer wil be responsible for all Property Taxes and interest that are applied to the Alaska Interests
retroactively after the Alaska Ioterests Closing Date.
11.2 Production Taxes. All Production Taxes attributable to the Alaska Ioterests wil
be apportioned between the Paries as of the Alaska Ioterests Closing Date. Sellers wil be
responsible for paying or withholding all Production Taxes that have accrued before the Alaska Interests Closing Date and for filing all statements, returns, and documents pertinent to them.
Buyer wil be responsible for paying or withholding all Production Taxes that accrue or are applied retroactively after the Alaska Ioterests Closing Date; for filing all statements, returns,
documents incident to them; and for obtaining reimbursements, if any, relating to those taxes.
11.3 Other Taxes. Buyer wil pay all applicable state and local sales taxes, use taxes,
gross receipts taxes, business license taxes, other taxes (except taxes imposed on Sellers'
income), and fees from and after the Alaska Interests Closing Date. Buyer wil pay all state and local taxes, including penalty and interest, if any, assessed after the Alaska Ioterests Closing
Date against any Pary attributable to periods after the Alaska Interests Closing Date with respect
to this transaction or, if paid by Sellers, Buyer wil promptly reimburse Sellers for amounts paid if related to the period after the Effective Time. Sellers wil pay all applicable state and local
sales taxes, use taxes, gross receipts taxes, business license taxes, other taxes (except taxes
imposed on Seller's income), and fees prior to the Alaska Interests Closing Date. Buyer wil pay all state and local taxes, including penalty and interest, if any, assessed after the Alaska Ioterests
Closing Date against any Pary attbutable to periods prior to the Alaska Interests Closing Date with respect to this transaction or, if paid by Buyer, Sellers wil promptly reimburse Buyer for
amounts paid if related to the period prior to the Effective Time. Buyer wil pay all documentar stamp taxes and documentar transfer taxes.
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ARTICLE 12
POST-CLOSING OPERATIONS
If the Alaska Interests Closing occurs, the provisions of this Arcle 12 shall apply.
12.1 Operation. As of the Alaska Interests Closing, operation of the Alaska Interests
wil be conducted under, subject aud pursuant to the terms of the Transition Services Agreement.
On the Transition Termination Date, operation of the Alaska Interests wil be tued over to, and
12.2 Removal of Siims. Sellers may either remove their names and signs from any
Property, or may require Buyer to do so. If Sellers' name or signs remain on any Property after the Transition Termnation Date, Buyer shall (a) remove any remaining signs and references to Sellers promptly, but no later than the time required by Applicable Law or 45 days afer the
Transition Termnation Date, whichever occurs first, (b) install signs complying with Applicable
Laws, including signs showing Buyer as operator of any Alaska Interests of which it is the
operator, and (c) notify Sellers of the removal and installation. Sellers reserve a right of access to
any Property after the Alaska Interests Closing to remove their signs and names from all the
Property, or to confir that Buyer has done so. If Sellers remove signs because Buyer has not
done so, Sellers wil charge its costs to Buyer, and Buyer wil pay Sellers' invoice within 15 days
after receipt.
12.3 Risk of Loss. Unless this Agreement is termnated, the risk of loss for damage to or destrction of the Alaska Interests or any of the Property wil pass from Sellers to Buyer as of the Effective Time, INCLUDING DAMAGE OR DESTRUCTION RESULTING IN
Emplovment.
(a) Buyer may select and offer employment with Buyer to all or a porton of those employees of Sellers or PERL who are identified on a list to be provided by Sellers
within ten days after the Execution Date (the "Prospective EmDlovees"). Buyer's offers
of employment to the selected Prospective Employees shall be made in writing and shall be made during a "Hiring Period" beginning on the date of this Agreement and ending on the 30th day prior to the Transition Termination Date. Such offers may impose a ten-day deadline for response, so long as the deadline for response is within the Hirng Period.
The date as of which employment with Buyer is to begin in accordance with all such
offers shall be the day after the Transition Termination Date. Buyer may require that
each Prospective Employee submit a formal application for employment. Buyer shall have no obligation under this Agreement to employ any Prospective Employee. Those Prospective Employees who accept Buyer's employment offers and become employees
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of Buyer on day after the Transition Termnation Date are the "Affected Emplovees."
Sellers make no representation or waranty, express or implied, regarding the qualifications, capabilties or fitness for duty of any of the Affected Employees. The
Prospective Employees who do not become Affected Employees are the "Remaining
Emplovees." Nothing in this Agreement shall affect Buyer's right to termnate the
employment of any Affected Employee on or afer the date he or she becomes an
employee of Buyer, with or without cause, or Sellers' or PERL's right to termnate the employment of any Prospective Employee or Remaining Employee, before or after the Alaska Interests Closing Date.
(b) Buyer shall control and be responsible for the process of selecting from
the Prospective Employees those Prospective Employees to whom Buyer makes an offer of employment.
(c) At least five days prior to the Transition Termnation Date, Buyer shall
13.2 WARN Act Indemnification. Buyer shall indemnify Sellers and each of their
Affliates against all liabilities arising out of the notification or other requirements of the Worker
Adjustment and Retraining Notification Act of 1988, as amended ("WARN Act") and each
comparable law of any state, with respect to the Affected Employees.
13.3 General Emplovee Provisions.
(a) If any of the arangements described in this Aricle 13 are determned by
the U.S. Internal Revenue Service or other applicable Governmental Entity, or by a cour of competent jursdiction, to be prohibited by Applicable Law, Sellers and Buyer shall modify such arangements to as closely as possible retan the intent and economic benefits and burdens of the paries as reflected herein in a manner which is not prohibited
by Applicable Law.
(b) As soon as reasonably practicable after the Alaska Interests Closing Date, and to the extent required for Buyer to comply with the terms of this Aricle 13, Sellers wil provide to Buyer a list of all Affected Employees' length of service used under the employee benefit plans or policies of Sellers or their Affiiates as of the Alaska Interests
Closing Date.
(c) If Buyer hires any Remaining Employee within six months after he or she
termnates employment with Sellers or PERL, Buyer shall notify Sellers of such event and shall reimburse Sellers or PERL for any severance pay paid by Sellers or PERL to such Remaining Employee immediately after the hie date.
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14.1 Buyer's Release and Discharl!e of Sellers and their Associated Parties. Buyer releases and discharges Sellers and their Associated Pares from each Claim and Liabilty
relating to the Alaska Interests (including the Tangible Assets), CIPL, the Stock, the Properties and the transactions contemplated hereby (including all Abandonment Obligations), regardless of when or how the Claim or Liabilty arose or accrued, or arses or accrues, or whether the Claim
14.2 Buyer's Covenant Not to Sue Sellers or their Associated Partes. Buyer covenants not to sue Sellers or their Associated Paries with regard to any Claim or Liabilty relating to the Alaska Interests (including the Tangible Assets), CIPL, the Stock, the Propertes,
and the transactions contemplated hereby (including any Abandonment Obligations), regardless
of when or how the Claim or Liabilty arose or accrued, or arses or accrues, or whether the Claim or Liabilty is foreseeable or unforeseeable. BUYR'S COVENANT NOT TO SUE
14.3 Buyer's Oblil!ations to Indemnfy. Defend. and Hold Sellers and their Associated Parties Harmless. Buyer wil indemnfy, defend, and hold harless Sellers and
their Associated Paries for, and wil pay to Sellers the amount of, each Claim and Liabilty
relating to, arsing, directly or indirectly, from or in connection with:
(a) any breach of any representation or waranty made by Buyer in this
Agreement, the Assignment and Bil of Sale or any other certificate or document
delivered by Buyer pursuant to this Agreement;
(b) any breach by Buyer of any covenant or obligation of Buyer in this
Agreement, the Assignment and Bil of Sale or any other certificate or document
delivered by Buyer pursuant to this Agreement; and
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(c) the Alaska Interests (including the Tangible Assets), CIPL, the Stock, the
Obligations),
regardless of when or how the Claim or Liabilty arose or accrued, or arses or accrues, or
whether the Claim or Liabilty is foreseeable or unforeseeable. BUYR'S OBLIGATIONS TO INEMNIFY, DEFEND, AND HOLD SELLERS AND THEIR ASSOCIATED PARTIES
HARMESS INCLUDE CLAIMS AND LIABILITIES RESULTING IN ANY WAY FROM THE NEGLIGENCE OR STRICT LIABILITY OF SELLERS OR THEIR
ASSOCIATED PARTIES, WHTHER THE NEGLIGENCE OR STRICT LIABILITY IS ACTIV, PASSIV, JOINT, OR CONCURRENT. The only exception to Buyer's obligations
to indemnify, defend, and hold Sellers and their Associated Paries harless is stated in Section l4.4(c), and the obligations are binding on Buyer and its successors and assigns.
defend, and hold Sellers and their Associated Paries harless and its covenant not to sue Sellers or their Associated Paries, the Claims and Liabilties subject to the obligations
include the following:
(i) the ownership of the Stock and the Alaska Interests by Sellers,
PERL or their respective Associated Pares, the operation of the Tangible Assets,
Alaska Interests, CIPL, and the Propertes by Sellers, PERL or their respective
Associated Paries, and the acts or omissions of Sellers, PERL or their respective Associated Pares in connection with the Alaska Interests, CIPL, the Properties or
the Related Agreements, whether arsing or accruing before or after the Effective
Time.
(ii) the ownership of the Stock and the Alaska Interests by Buyer, the
operation of the Alaska Interests, CIPL, Tangible Assets and the Propertes by
Buyer or its Associated Paries, and the acts or omissions of Buyer or its
Associated Partes in connection with the Alaska Interests, CIPL, the Propertes or
indemnify, defend, and hold Sellers and their Associated Paries harmless and its
covenant not to sue Sellers or their Associated Pares include Claims and Liabilities arising in any manner from the following:
(i) the review, inspection and assessment of the Alaska Interests and
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(ii) any error in describing the Alaska Interests or the Property, or any
Related Agreements;
(iv) closing withont a Consent;
this transaction;
(vi) obligations to plug and abandon Wells, pipelines and platforms and
Assets or any Property, including Claims and Environmental Liabilties, or failure to comply with the Environmental Laws;
(x) remediation activities, including damages incurred by Buyer or its
Effective Time to include the Stock, CIPL, the Alaska Interests or Property or Sellers' ownership of or activities regarding the Stock, CIPL, the Alaska Interests
or Property; and
(xii) obligations to inspect or to repair or recondition any of the Alaska
Interests or Property.
(c) Buyer's obligations to indemnify, defend, and hold Sellers and their
Stock or the Propertes that result from a judgment rendered or settlement reached
in a lawsuit fied before the Effective Time, but only to the extent that acts or omissions that gave rise to the cause of action are attibutable to the conduct or
operation or ownership of Sellers or their Associated Paries before the Effective
Time; or
(ii)
Documents.
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(d) The Pares recognze that certin lawsuits with respect to the Stock, CIPL,
the Properties and the Alaska Interests may have been fied before the Effective Time,
but concern activities continuing after the Effective Time, so that after the Execution
Date, Buyer may be a proper pary to such lawsuits. For these lawsuits, Buyer's
obligations to indemnify, defend, and hold Sellers and their Associated Paries harless
wil apply to activities occurrng after the Effective Time. Sellers wil continue to defend their own interests and provide principal counsel in an action under this Section l4.4(d)
for which they remains a pary after the Effective Time.
14.5 Buver's Dutv to Defend. Buyer acknowledges that its obligations to indemnify,
defend, and hold Sellers and their Associated Pares harless under this Agreement include
obligations to pay the attorneys' fees and court and other costs incured by Sellers and their Associated Paries in defending all Claims. As to each Claim and Liabilty, Sellers, at their sole option, may elect to (a) manage their own defense, in which event Buyer shall reimburse Sellers and their Associated Paries for all attorneys' fees and court and other costs reasonably incurred in defending a Claim, upon delivery to Buyer of invoices for these fees and costs; or (b) tender its defense as to any Claim to Buyer, in which event Buyer wil be responsible for all aspects of defending the Claim at issue and resulting Liabilties.
14.6 Dispute Resolution. Any and all disputes between the Pares relating to, arsing out of, in connection with, or attributable to this Agreement, including this Arcle 14, the Sale
Procedures Order and/or the Sale Order, shall be submitted to the Bankrptcy Court for
resolution. Any decision of the Bankrptcy Court regarding this Agreement shall be conclusive
and wil be binding on the Paries and their respective successors and assigns, subject to any rights to rehearng, appeal or certorari.
14.7 Retroactive Effect. In addition to the assumption of liabilities and releases and
indemnities in the Agreement applicable to times from and after the Execution Date, Buyer
acknowledges that its obligations to release, discharge, defend, and hold Sellers and their
Associated Paries harmless and its covenant not to sue Sellers or their Associated Paries apply
to matters occurring or arsing before the Execution Date to the extent provided in this Agreement.
14.8 Inducement to Sellers. BUYR ACKNOWLEDGES THAT IT HAS EVALUATED ITS OBLIGATIONS UNDER THIS ARTICLE 14 BEFORE IT DETERMIND AND SUBMITTED ITS OFFER TO PURCHASE THE ALASKA INTERESTS AND THE STOCK AND THAT ITS ASSUMPTION OF THESE OBLIGATIONS IS A MATERIL INUCEMENT TO SELLERS TO ENTER INTO
THIS AGREEMENT WITH, AND CLOSE THE SALES OF THE ALASKA INTERESTS AND THE STOCK HEREUNDER.
ARTICLE 15
ENVIRONMNTAL MATTERS
have been used for exploration, development, production, processing and transportation of Oil
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and Gas and that there may be petroleum, produced water, wastes, or other materials located on
or under the Properties or associated with the Alaska Interests or CIPL. Equipment and sites included in the Tangible Assets or the Propertes or owned, leased or operated by or on behalf of CIPL may contain asbestos, hazardous substances, or NORM. NORM may affx or attach itself to the inside of Wells, materials, and equipment as scale, or in other forms; the Wells, materials, and equipment located on the Properties or included in the Alaska Interests or owned, leased or operated by or on behalf of CIPL may contain NORM and other wastes or hazardous substances; and NORM-containing material and other wastes or hazardous substances may have been buried,
come in contact with the soil, or otherwise been disposed of on the Properties or propertes
owned, leased or operated by or on behalf of CIPL. Special procedures may be required for the remediation, removal, transportation, or disposal of wastes, asbestos, hazardous substances, and
NORM from the Tangible Assets and the Propertes or from propertes owned, leased or
operated by or on behalf of CIPL. Buyer is aware that it may be strctly liable under Alaska Statute 46.03.822 for any hazardous substances that mayor have been released on or from the
Tangible Assets or the Propertes or on or from properties owned, leased or operated by or on
behalf of CIPL.
ASBESTOS, HAZARDOUS SUBSTANCES, AND NORM FROM THE ALASKA INTERESTS AND THE PROPERTIES AND ASSOCIATED ACTIVTIES AND WILL CONDUCT THESE ACTIVTIES IN ACCORDANCE WITH ALL APPLICABLE
LAWS, INCLUDING THE ENVIRONMENTAL LAWS.
15.2 DisDosal of Materials. Substances. and Wastes: ComDiiance with Law. Buyer
shall store, handle, transport and dispose of or discharge all materials, substances, and wastes from the Alaska Interests, Tangible Assets and the Properties (including produced water, drillng
fluids, NORM, and other wastes), whether present before or after the Effective Time, in
accordance with Applicable Laws. Buyer shall keep records of the types, amounts, and location of materials, substances, and wastes that are stored, transported, handled, discharged, released, or disposed of onsite and offsite. When any Lease or other lease included in the Alaska Interests
terminates or Buyer subsequently transfers any porton of the Alaska Interests, Buyer shall
undertake additional testing, assessment, closure, reporting, or remedial action with respect to the Tangible Assets, Alaska Interests or Properties as is necessary to satisfy all local, state, or federal requirements in effect at that time and necessary to restore the Alaska Interests, Properties or Tangible Assets.
Agreement and the Transaction Documents to which Sellers are pares have been duly
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Seller is a pary, when executed and delivered by Seller wil constitute, the legal, valid
and binding obligation of Seller, enforceable against Seller in accordance with its terms, subject to the general principles of equity and all orders entered or to be entered in the Bankptcy Case and any related proceedings.
power and authonty to execute, deliver, and pedorm this Agreement and the Transaction
Documents to which it is a pary and to consummate the transactions contemplated
hereunder and thereunder. The execution, delivery, and pedormance of this Agreement and the Transaction Documents to which Buyer is a pary have been duly authonzed by
all requisite pares, and this Agreement and the Transaction Documents to which it is a
pary has been duly executed and delivered by Buyer.
(c) Oualifications and Bondin!.. Buyer is now, and, upon and after the
Closing, shall continue to be, qualified with all applicable Governmental Authorities to own and operate the Alaska Interests and has, and shall maintain, all necessary bonds, permts and other authorizations required by any Governmental Entity or Third Pary in order to own or operate the Alaska Interests including, but not limited to, those bonds identified on Schedule 3.
(d) Enforceabiltv. This Agreement constitutes, and the Transaction
Documents to which it is a pary, when executed and delivered by Buyer wil constitute, the legal, valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms, except as enforceabilty may be subject to (i) bankptcy, insolvency, reorganization or other similar Applicable Laws now or hereafter in effect affecting the enforcement of creditors nghts generally, and (ii) general pnnciples of equity (regardless of whether enforceabilty is considered in a proceeding in equity or at law).
liabilty, contingent or otherwise, for broker's fees, finder's fees, agent's commissions, or other similar forms of compensation in connection with this Agreement or any contract or
transaction contemplated hereby or thereby for which Sellers shall have any
responsibilty whatsoever. Buyer releases Sellers and their Associated Parties from, and
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shall fully protect, indemnify, and defend Sellers and their Associated Pares and hold
them harless from and against, any and all Liabilties relating to, arising out of or connected with, directly or indirectly, commissions, finders' fees, or other remuneration due to any such agent, broker, or finder claiming by, through, or under Buyer or any
Affliate of Buyer.
(g) Investil!ation. Buyer, for itself and on behalf of its Affliates, investors,
evaluate the merits and risks of its acquisition of the Stock, Alaska Interests and the
Properties. Buyer has had the opportunity to ask questions and receive answers relating to the Stock, Alaska Interests and the Properties, and to obtain such additional information as Buyer has desired regarding, the business, financial condition and affairs of CIPL. In
makng its decision to enter into this Agreement and to consummate the transactions contemplated herein, Buyer has relied solely upon the representations and waranties
made in this Agreement and upon its contractual rights in this Agreement to conduct its
own independent, due-dilgence investigation of the Stock, Alaska Interests and the Properties. ACCORDINGLY, BUYR, FOR ITSELF AND ON BEHALF OF ITS ASSOCIATED PARTIES ACKNOWLEDGES THAT NEITHER SELLERS NOR ANY ASSOCIATED PARTIES OF SELLERS HAVE MADE, AND SELLERS,
FOR THEMSELVES AND FOR THEIR RESPECTIV ASSOCIATED PARTIES,
and account and not with a view toward any sale or distrbution thereof, nor with any present intention of makng a distribution of any fractional undivided interests within the meaning of the Securities Act or any applicable state blue sky laws or other applicable securities laws; and
(iii) has received and thoroughly read this Agreement, including all
schedules and exhibits hereto. Buyer has had an opportunity to discuss this Agreement and the disclosures herein with its legal counseL. Buyer acknowledges
that it has had the opportunity to ask questions of Sellers and their Associated
Pares and that Buyer has received satisfactory answers respecting, and has
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obtained such additional information as Buyer has desired in connection with, the transactions contemplated by this Agreement.
(i) Buyer acknowledges that the Alaska Interests and the Stock have
not been registered under the Securities Act or any other securities laws and may
be sold, assigned, pledged or otherwise disposed of in the absence of such
own benefit and account and is not acquiring the Alaska Interests or Stock with
the intent of distrbuting fractional undivided interests in them or otherwise sellng them in a manner that would be subject to regulation by federal or state securities laws. If Buyer sells, transfers, or otherwise disposes of the Alaska
Interests, the Stock or fractional undivided interests in them in the future, it wil do so in compliance with Applicable Laws.
Buyer has at no time been presented with or solicited by or through (iii) any public promotion or other form of advertsing in connection with this transaction.
(I) Basis of Buver's Decision. Buyer:
(i) has reviewed and investigated the Stock, the Alaska Interests and
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(iv) has evaluated the merits and risks of purchasing the Alaska
Interests and the Stock and has formed an opinion based solely upon its knowledge and experience and not in reliance on any statements or actions by
Sellers or their Associated Pares; and
(v) is acquiring the Alaska Interests and the Stock "AS is, WHERE is, WITH ALL FAULTS."
this Agreement with Buyer, and to close the transactions contemplated hereunder.
ARTICLE 17
COMMNICATIONS
delivery or mailed by certified mail, postage prepaid and return receipt requested, or by
telecopier, as follows:
If to Sellers:
Rutan & Tucker, LLP Altn: Gregg Amber 611 Anton Blvd., Suite 1400 Costa Mesa, California 92626
Telephone: (714) 641-5100
10100 Santa Monica Blvd., lIth Floor Los Angeles, Californa 90067
Telephone: (310) 277-6910
Telephone: r Facsimile: (
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Notice given by personal delivery, courier service or mail shall be effective upon actual receipt. Notice given by telecopier shall be effective upon actual receipt if received during the recipient's normal business hours, or at the beginning of the recipient's next business day after receipt if not received during the recipient's normal business hours. Any Pary may change any address to which notice is to be given to it by giving Notice as provided above of such change of address.
ARTICLE 18 MISCELLANEOUS
18.1 Entire Al!reement. This Agreement, the Transition Services Agreement, the
Confidentiality Agreement, the Site Visit Indemnity Agreement and the other documents and instruments and other agreements specifically referred to herein or delivered pursuant hereto, including the exhibits and the schedules hereto (collectively, the "Transaction Documents"), (a) constitute the entire agreement between the Parties with respect to the subject matter hereof and supersede all prior agreements and understandings, both written and oral, between the Paries with respect to the subject matter hereof except for the Confidentiality Agreement and Site Visit Indemnity Agreement, which shall continue in full force and effect, and shall survive any
termnation of this Agreement or the Alaska Interests Closing and the Stock Closing in
accordance with its terms; and (b) are not intended to confer upon any other Person any rights or
remedies hereunder. Each Pary agrees that (i) the other Pary (including its agents and
representatives) has made no other representation, waranty, covenant or agreement to or with such Pary relating to the transactions contemplated hereby other than those expressly set forth in the Transaction Documents, and (ii) such Pary has not relied upon any representation, waranty, covenant or agreement relating to the transactions contemplated hereby, other than those referred to in clause (i) above.
18.2 Successors and Assiims: Amendment: SurvivaL. This Agreement is binding on and inures to the benefit of the Parties and their respective successors, heirs, representatives, and assigns and may be supplemented, altered, amended, modified, or revoked only in writing signed
by both Paries. Neither the assignment of this Agreement nor of any Alaska Interests, the Stock
or any par or portion thereof wil relieve Buyer of its obligations under this Agreement unless and to the extent Sellers consent in writing to release Buyer, which consent may be withheld for any reason. All of the covenants, agreements, representations and waranties, and indemnities
made by each Pary contained in this Agreement shall survive the Alaska Interests Closing and the Stock Closing.
18.3 Exclusive Remedv. If the Alaska Interests Closing occurs, the express
indemnities set forth in this Agreement shall be the exclusive remedies for the Paries for the
breach of any representation, waranty or covenant set forth in ths Agreement or any Claim arsing out of, resulting from or related to the transactions contemplated hereby, and each Pary
hereby releases, waives and discharges, and covenants not to sue (and shall cause its Associated Pares to release, waive, discharge and covenant not to sue) with respect to, any cause of action
not expressly provided for in this Agreement, including Claims under state or federal securities Laws and Claims available at common law, in equity or by statute.
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18.4 Choice of Law. This Agreement and its pedormance shall be construed in
accordance with, and enforced under, the internal laws of the State of California, without regard to choice of law rules of any jurisdiction, including Californa.
18.5 Assiimment. Neither this Agreement nor the rights and obligations under it may be assigned or delegated by Buyer without Sellers' prior written consent, which consent may be withheld for any reason, and an attempted assignment or delegation is null and void; provided, however, that Buyer may assign this Agreement to a wholly-owned subsidiar so long as Buyer remains primarly liable for any and all obligations of Buyer hereunder.
18.6 No Admissions. To the fullest extent permtted by Applicable Laws, including
Federal Rule of Civil Procedure Rule 408, neither this Agreement, nor any par of it, nor any
pedormance hereunder, nor any payment of any amount hereunder, shall constitute or may be
18.7 No Third Part Beneficiaries. The only third pary beneficiares of this
Agreement are the Associated Paries of Sellers and solely respect to Aricle 14. Except as set forth in the immediately preceding sentence, there are no Third Pary beneficiares of this
Agreement.
concerning this Agreement or the transactions contemplated by this Agreement without the other
Pares' prior written consent, which consent shall not be unreasonably withheld; provided,
however, that, upon giving the other Parties at least 24-hours' advance notice, any Party (or an Affliate of such Pary) may make or issue, or cause to be made or issued, any press release or
and convenience of reference only and do not linut or otherwise affect or interpret the terms or provisions of this Agreement.
18.10 Bulk Transfer Law. Buyer waives compliance with the provisions of any
applicable bulk sales or bulk transfers Law.
18.11 Severabiltv. The provisions of this Agreement are severable at Sellers' option. If a court of competent jurisdiction finds any par of this Agreement to be void, invalid or
otherwise unenforceable, then Sellers may decide whether to enforce this Agreement without the void, invalid, or unenforceable parts or to terminate this Agreement.
18.12 Counterparts. This Agreement may be executed in multiple counterpars, each
of which shall be deemed to be an original, and all of which together shall be considered one
instrument.
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18.13 Not to Be Construed al!aInst the Drafter. Each Pary acknowledges that it has read this Agreement, has had opportunity to review it with an attorney of its choice, and has
agreed to all of its terms. Under these circumstances, the Paries agree that the rule of
constrction that a contract be construed against the drafter may not be applied in interpreting
this Agreement.
18.14 No Waiver. No waiver by either Pary of any par of this Agreement shall be
deemed to be a waiver of any other par of this Agreement or a waiver of strict pedormance of
the waived par in the future.
18.15 Expenses. Except as otherwise expressly provided herein, all expenses incurred
by each Pary in connection with the transaction contemplated herein, including, without limitation, attorney's fees, are for the account of the Pary incurnng the same, and the Pary incurring such expenses shall defend, indemnify, and hold haress the other Pary from and against such expenses.
18.16 Time of Essence. Time is of
18.18 Foreil!n Trade Law Compliance. Both Paries agree that all imports, exports,
and re-exports, if any, under ths Agreement shall be undertaken in accordance with all
Applicable Laws of the United States with respect to foreign trade and export control. Both
Pares furter agree to fully cooperate in complying with such Applicable Laws and in assisting
the other Pary with such compliance. If licenses of any kind are required, including United States trade or export licenses, exports/re-exports and/or technology sharng wil occur only after such licensees) have been obtained. Buyer shall notify Sellers of any request of a United States Governmental Entity for information, documentation, or data relating to any Contract that Buyer
has entered into with Sellers. Buyer shall provide responses to requests from a United States Governent Entity for information, documentation, or data of any kind to such entity promptly upon request. Copies of the responses to a United States Governmental Entity shall be provided
to Sellers promptly upon Sellers' request.
Sellers are relying upon the representations and waranties of Buyer that it shall fully comply with all United States foreign trade and export control laws and regulations including any prohibitions on the transfer or release of products or technology contrar to such Applicable
Laws or regulations.
18.19 Rules of Construction. For purposes of this Agreement:
(a) Unless the context otherwise requires, (i) "or" is not exclusive; (ii) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAA; (iii) words in the singular include the plural and words in the plural include the singular; (iv) words in the masculine include the feminine and words in the feminine include the masculine; (v) any date specified for any action that is not a Business Day shall be deemed to mean the first Business Day after such date; (vi) a reference to a Pary includes its successors and permtted assigns; (vii) the word "includes" and its syntactical
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varants mean "includes, but is not limited to" and corresponding syntactical variants, and the rule ejusdem generis shall not be invoked to restrict or limit the scope of the general term or phrase followed or preceded by an enumeration of paricular examples; (viii) the words "hereof," "herein," and "hereunder" and words of similar import shall refer to this Agreement as a whole and not to any paricular provision of this Agreement; and (ix) any
reference to dollars shall be a reference to U.S. dollars.
(b) References in this Agreement to Arcles, Pars, Sections, or other
reference herein, form a par of this Agreement, and shall have the same force and effect as if actually set out in the body of this Agreement. All references to this Agreement shall include all Exhibits and Schedules, as well as all attachments incorporated herein. All references in this Agreement to Exhibits and Schedules refer to the Exhibits and Schedules to this Agreement, unless expressly provided otherwise.
(d) In the event of a conflct between (i) the provisions of ths Agreement and
(ii) the provisions of any other document, the provisions of this Agreement shall control
and prevail as between the Paries.
(e) References herein to any agreement or other instrument shall, unless the
context otherwise requires (or the definition thereof otherwise specifies), be references to
the same as it may from time to time be changed, amended, modified, amended and
restated, or extended.
(Signature Page Follows)
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The Paries have executed this Agreement on the date below their signatures, to be enforceable and binding as of the Execution Date.
Dated:
,2009
Title: President
Dated:
,2009
By:
Dated:
,2009
(BUYR)
By: Name: Title:
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Exhibits A through F to the Purchase and Sale Agreement are available upon request from the
EXHIBIT G
to Purchase and Sale Agreement
FORM
Exhibit G to
Purchase and Sale Agreement (Alaka)
The definitions of capitalized terms used but not defined in this Agreement are set forth in that certain Purchase and Sale Agreement (together with the Exhibits and Schedules made a
In connection with the purchase and sale of the Alaska Interests pursuant to the Purchase Agreement, PERL has agreed to assist Buyer by providing certain transition services with respect
to the Alaska Interests operated by PERL ("Assets") for a limted time period following the
Alaska Interests Closing, upon the terms and conditions set fort herein.
NOW, THEREFORE, for a good and valuable consideration, the receipt and suffciency
of which are hereby acknowledged, the Pares agree as follows:
ARTICLE I
PERL SERVICES
Section 1.1 Services. Buyer has requested that PERL provide, following the Alaska Interests Closing, certin transition services relating to the Assets. The Paries agree that PERL wil provide or cause to be provided the transition services described on Schedule 1. in substantially the same manner as those services have been provided with respect to the Assets
during the period immediately preceding the date of this Agreement (collectively, the "PERL
Services") for the period commencing as of the Alaska Interests Closing Date and ending (i) on
the next Business Day after Buyer is approved by the State of Alaska, Deparment of Natural
Resources, Division of Oil & Gas as the successor unit operator of the Assets; (ii) one hundred twenty (120) days after the Alaska Interests Closing Date; or (iii) upon discontinuation of services in accordance with Section 5.1; whichever occurs first (the "PERL Services Term"). PERL shall have no obligation to materially alter the PERL Services to accommodate changes in the commercial or physical operation of the Assets.
Section 1.2 Emplovees. At all times during the performance of PERL
Services, all persons pedorming such PERL Services (i) shall be in the employ and/or under the control of PERL (including agents, contractors, temporary employees and consultants); (ii)
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shall be independent from Buyer and not employees of Buyer; and (Ui) shal not be entitled to any payment, benefit or perquisite directly from Buyer on account of such PERL Services. PERL wil
not be required to provide any paricular PERL Service if the provision of such service would
violate any Applicable Laws or Contracts. PERL wil use commercially reasonable effort to secure consents and/or approvals of vendors, lessors and licensors relating to the provision of the PERL Services.
PERL Services and that the personnel providing such services have other responsibilties and wil not be dedicated full time to performng the PERL Services.
Section 1.4 Records. PERL shall maintain or cause to be maintained true and correct records of all receipts, invoices, reports and such other documents as are customanly maintained by it for its own operations relating to the PERL Services rendered hereunder. Buyer shall have the right to inspect such records during regular offce hours following reasonable prior
written notice of any such inspection.
Section 1.5 Representatives of PERL. PERL wil, at all times during the
PERL Services Term, keep representatives of PERL available either by telephone, pager or in person, to receive communications from Buyer regarding the PERL Services and to respond to inquiries concerning the performance of the PERL Services. The PERL representatives are
desiguated in Schedule 1.5.
Section 1.6 Limitation of PERL Services. Except as expressly agreed herein, in connection with the performance of its obligations under this Agreement, in no event shall PERL be obligated to: (a) make modifications to its existing systems; (b) acquire additional
assets, equipment, rights or propertes (including computer equipment, software, furiture,
furnishings, fixtures, machinery, vehicles, tools and other tangible personal property); (c) hire
additional employees; (d) undertake any capital expenditures; (e) pay any costs related to the
transfer or conversion of data from PERL to Buyer; or (t) identify, list or register PERL as the
operator of any facility for which a permit, license or registration is required under
Environmental Laws or identify, list or register PERL as the generator of any hazardous
materials arising from operation of the Assets afer the Alaska Interests Closing.
withheld or delayed), PERL wil not incur any capital expenditures for an individual project or matter in excess of $250,000 (net to the interest of Buyer) except in case of emergency or as may otherwise be required to prevent injury or damage to Persons, property or the environment or except for capita expenditues that have been approved prior to the date of ths Agreement or are
covered by the authorizations for expenditures ("AP's") listed on Schedule to the Purchase
Agreement.
ARTICLE II
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COMPENSA nON
Section 2.1 ComDensation for PERL Services. Buyer shall pay to PERL the
amounts set forth on Schedule 2.1 for the provision of the PERL Services.
avaiable funds to PERL for such purpose or () PERL has received and is then holding adequate immediately available funds from Buyer for PERL Services.
Section 2.3 Forward Invoicinl!. PERL, at its option, may advance any funds needed to make any payments on behalf of Buyer pursuant to any of the PERL Services, and Buyer shall reimburse PERL for all such advances. In lieu of advancing such funds, PERL may, at its sole option, require Buyer to advance to PERL the estimated amount of the payments
requied to be made on behalf of Buyer in connection with provision of the PERL Services for
any month; and adjustment between the estimated payment amounts and the actual payment
amounts shall be made on the next month's biling. Such advances shall be reflected in an invoice from PERL to Buyer and shall be due and payable on or before the later of (i) ten (10) Business Days before the first day of the calendar month in which it is anticipated such estimated payments wil be incurred or (II) thee (3) Business Days after such invoice is received by Buyer.
ARTICLE II
PAYMNT AN DEFAULT
Section 3.1 Submission of Invoice. PERL shall submit an invoice (the
"Invoice") to Buyer on or before the tenth (10th) Business Day of each month settng forth the amounts due PERL hereunder for the PERL Services for the preceding month and any advances made by PERL on behalf of Buyer pursuant to Section 2.3 for which Buyer has not made an
advance payment pursuant to Section 2.2.
amounts invoiced to it by wire transfer of immediately available funds to the bank account
designated by PERL. Adjustment credits or debits shall be shown on the Invoice next succeeding
the Invoice in which the adjustment is made. Interest wil accrue on any unpaid invoiced
amounts at a per annum rate equal to the sum of (a) the greater of U.S. Prime Rate and four
percent (4.0%) plus (b) ten percent (10.0%) ("Interest Rate"), from the date due, compounded quarerly, until such amounts, together with all accrued and unpaid interest thereon, are paid in full. Any preexisting obligation to make payment for the PERL Services provided hereunder shall
surive the termnation of a PERL Service and this Agreement.
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Section 3.3 Pavment Disputes. As soon as reasonably practicable, but in no event later than twenty (20) days after Buyer receives an Invoice, Buyer may object to any
invoiced amounts for any PERL Service, provided such objection is made in wntig to PERL and that Buyer promptly and timely pays to PERL any and all invoiced amounts that are not disputed. As soon as reasonably practicable, but in no event later than fifteen (15) days afer PERL receives Buyer's written report, the Pares shall meet and underte to agree on the adjustments (if any) to
the Invoice. If the Paries fail to agree on the adjustments (if any) within the fifteen (15)-day
penod, either Pary may subnut the disputed items to a qualified accounting referee acceptable to
the Pares for resolution. The Pares shall direct the accounting referee to resolve the dispute
within twenty (20) days after having the relevant matenals subnutted for review. The decision of
the accounting referee wil be binding on and non-appealable by the Pares. The fees and expenses
associated with the accounting referee wil be borne equally by the Pares. Any amounts owed by one Par to the other as a result of the final Invoice amount wil be paid within five (5) Business
Days after the date when the amounts are agreed upon by the Pares or the Pares receive a
decision of the accounting referee, and the adjustments included in the final Invoice wil be final
and binding between the Pares and not subject to further audit or arbitration.
Section 3.4 Default.
Buyer fails to timely pay any invoiced amount for PERL Services provided pursuant to this Agreement in accordance with the provisions of this Article 3.
(ii) Upon the occurrence of a Buyer Default, PERL may, at its option,
suspend all or any porton of the provision of PERL Services hereunder, including PERL Services for which payment is outstading, until such time as the Buyer Default is cured and all amounts owed to PERL under this Agreement for such suspended PERL Services are paid in full. PERL's suspension of the provision of any of the PERL Services in accordance
with this Section 3.4(a) shall not give nse to any default or liabilty on the par of
PERL.
(i) PERL shall be in default under this Agreement (a "PERL Default") if PERL fails to provide a PERL Service to Buyer in accordance with the terms and conditions of this Agreement, which failure continues for at least thirty (30) days
following receipt of wntten notice to PERL; provided, if PERL cannot reasonably cure
such failure withn such tly (30)-day penod, no PERL Default shall be deemed to occur
provided PERL demonstrates that it has taen steps to cure such failure within such thiry (30)-day penod and dilgently prosecutes such cure to completion.
(ii) Upon the occurrence of a PERL Default, Buyer may, at its option and
as its sole remedy, (A) secure such PERL Service from any Person qualified to provide such PERL Service (a "Third Parv Provider") and (B) for the minimum remaing term
PERL is obligated to provide such PERL Service under the terms of this Agreement, receive from PERL concurently on the date payment is due to a Thd Par Provider, payment of the positive dierence, if any, between the cost of purchasing such substitute PERL Service and
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the amount that would have been paid to PERL under the terms of this Agreement for such
PERL Service if no PERL Default with respect to such PERL Service had occurred. Buyer wil use all commercially reasonable efforts to minimze any such positive difference.
Section 3.5 Taxes. Any sales or similar taxes imposed on PERL for PERL
Services that PERL is required to payor incur shall be passed on to Buyer as an explicit
surcharge and shall be paid by Buyer in addition to any PERL Service fee payment, whether included in the applicable Invoice or added retroactively. If Buyer submits to PERL a timely and valid resale or other exemption certificate acceptable to PERL and suffcient to support the
exemption from taxes, then such taxes wil not be added to the PERL Service fee payable
pursuant to this Aricle 3; provided, if PERL is ever required to pay such taxes, Buyer wil promptly reimburse PERL for such taxes, including any interest, penalties and attorneys' fees
related thereto. The Partes wil cooperate to minimize the imposition of any taxes.
Section 3.6 Transition Acconntinl!. Not later than the fifteenth (l5th) Business Day following each month, PERL shall prepare or cause to be prepared a detailed settlement
statement of the Assets and Buyer's estimated share of operating revenues and expenditures
detaling the estiated production volumes and revenues, operating costs, capital expenditures,
royalties, overrding royalties, severance and ad valorem taxes and wil disburse any receipts, net
of expenses, to Buyer within five (5) days from the date of such settlement statement. All
remittances to Buyer shall be made by wire transfer to the account of Buyer, Account No.
eighty (180) days after the end of the PERL Services Term, PERL wil deliver to Buyer a final settlement statement (the "Final Service Settlement Statement") setting fort the actual amount of net production, revenue and expenditues and the resulting adjustment to the estimated proceeds already remitted to PERL or paid by Buyer. As soon as reasonably practicable, but in no event later than twenty (20) days afer Buyer receives the Final Settement Statement, Buyer may deliver
to PERL a wntten report containing any changes that Buyer proposes to be made to such
statement. If Buyer fails to timely deliver the written report to PERL contaning changes Buyer proposes to be made to the Final Service Settlement Statement, the statement as delivered by PERL wil be deemed to be correct and wil be final and binding on the Paries and not subject to further audit or arbitration. As soon as reasonably practicable, but in no event later than fifteen (15) days after PERL receives Buyer's written report, the Pares shall meet and undertake to agree on the final adjustments to the Final Service Settlement Statement. If the Parties fail to
agree on the final adjustments withn the fifteen (l5)-day penod, either Pary may submit the disputed items to the accounting referee for resolution. The Pares shall direct the accounting referee to resolve the disputes withn twenty (20) days after having the relevant materials submitted for review. The decision of the accounting referee wil be binding on and non-appealable by the
Pares. The fees and expenses associated with the accounting referee wil be borne equally by the
Pares. Any amounts owed by one Pary to the other as a result of the Final Service Settlement
Statement, together with interest on such amount from (and including) the Alaska Interests
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Closing Date to (and excluding) the date of payment at the Interest Rate, wil be paid withn five
(5) Business Days afer the date when the amounts are agreed upon by the Paries or the Paries receive a decision of the accounting referee, and the adjustments included in the Final Service
Settlement Statement wil be final and binding between the Paries and not subject to furter
audit or arbitration.
ARTICLE IV
TERM OF AGREEMENT
No PERL Services shall be provided afer the expiration or ealier temunation of the PERL Services Term, except by the mutual wntten agreement of Pares. The PERL Services may be termnated prior to the expiration of the PERL Services Term by following the procedures set
fort in Article 5.
ARTICLE V
CESSATION OF SERVICES
Section 5.1 Discontinuation of Services. After the Effective Date, Buyer may,
without cause and in accordance with the terms and conditions hereunder, request the
discontinuation of the PERL Services by giving PERL at least thirty (30) days' prior written notice, provided: (a) Buyer shall be liable to PERL for all costs and expenses PERL remains obligated to pay under any existing contract or arangement related to the PERL Services and (b) PERL shall use commercially reasonable efforts to minimize all such costs and expenses. Buyer
may request parial discontinuation of the PERL Services and PERL shall use commercially
reasonable efforts to accommodate such request. In such case, by mutual written agreement,
the Parties may agree to a paral discontinuation of the PERL Services and a corresponding
Section 5.2 Procedures Upon Discontinuation or Termination of Servces. Upon the discontinuation or termination of the PERL Services hereunder, this Agreement shall be of no furer force and effect, except as to obligations accrued pnor to the date of discontinuation or
termnation; provided however, Arcle I, Arcle VI, Arcle VII and Sections 8.2, 8.3, 8.4 and
8.12 of this Agreement shall survive such discontinuation or termnation. PERL shall, within
thirty (30) days after discontinuation or termnation of the PERL Services, deliver to Buyer at Buyer's sole cost and expense all property in its possession, including all books, records, contracts, receipts for deposits and all other papers or documents maintained by PERL and which pertain exclusively to the PERL Services; provided, PERL may retain archival copies of matenals
provided to Buyer pursuant to this Section 5.2.
Section 5.3 Continuation of PERL Services Post PERL Services Term. The
Pares ackoowledge and agree that the PERL Services wil contiue (and PERL shal continue to pedorm and be compensated) past the PERL Services Term as necessary to complete such PERL
Services applicable to the production month in which the PERL Services Term expires including
(without limitation) accounts payable, revenue accounting and regulatory and reporting services.
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ARTICLE VI
CONFENTIALITY
Section 6.1 Generallv. Each Pary agrees: (a) to hold in trst and maintain
confidential; (b) not to disclose to others (other than Affliates, prospective lenders or investors,
and the advisors of the foregoing, all to the extent such paries are bound by similar obligations of confidentialty) without pnor wntten approval from the providing Par; (c) not to use for any
purpose, other than such purpose as may be authonzed in writing by the providing Party; and
(d) to prevent duplication of and disclosure to any other par, any information received from the
Services provided hereunder, information disclosed by either Pary orally, visually, in wnting or
in other tangible form, and includes all nonpublic or propnetary information of any nature
(including prices, trade secrets, technological know-how, data and all other nonpublic or propnetar concepts, methods of doing business, ideas, matenals or information), and all
information denved from any nonpublic or propnetay information.
Section 6.2 ExceDtions. The foregoing obligations of confidence,
nondisclosure and nonuse shall not apply to any information that: (a) was in the public domain at the time of disclosure by one Pary to the other; (b) enters the public domain though no fault of the disclosing Pary; (c) was communicated to one Par by a non-Pary free of any obligation of confidence known to the recipient; or (d) was developed by offcers, employees or agents of or consultants to one Pary independently of and without reference to the propneta information of
another Pary, and, in the case ofthe disclosing Pary, was not developed while performing under
this Agreement. Specific information shall not be deemed to come under the above exceptions
merely because it is embraced by more general information that is or becomes public knowledge.
Section 6.3 Required Disclosure. The receiving Party may disclose the
providing Party's information to the extent necessar or convenient and appropnate to attorneys of
litigants or to Governmental Authonties to comply with any obligation imposed on the receiving
Pary in connection with a proceeding in a cour or other Govemmental Authonty of competent junsdiction, provided that the receiving Pary gives reasonably prompt notice to the providing Pary
of the need for such disclosure, together with such other information about the proceeding as wil enable the providing Pary to evaluate the obligation and the need and to elect either to intervene
or otherwise appear or act in the proceeding to protect directly the providing Pary's information at the expense of the providing Pary. Alternatively, the providing Par may request the receiving
Pary to, and if so requested, the receiving Pary shall, make a reasonable and diligent effort at the expense of the providing Pary to obtain a protective order or otherwise to protect the confidentiality of information sought to be obtained in said proceeding.
Section 6.4 Lenl!th of Confidentialiv Oblil!ation. Each Party agrees to
maintain and protect the confidentiality of the information of the providing Pary as set forth in this Article VI for a period of two (2) years from the date of termination of this Agreement.
FORM
ARTICLE VII
INEMNITY
Section 7.1 Buver's Indemnification for Non-Partv Claims. Buyer agrees,
to the fullest extent permtted by Applicable Laws, to release, indemnify, defend and hold haress
PERL and its Affliates against and from all Claims asserted by non-Pares caused by or arsing out
of or resulting from the provision of PERL Services pursuant to ths Agreement. Buyer shall periodically reimburse any Person entitled to indemnity under this Aricle VII for its legal and other expenses incurred in connection with defending any such Claim. The indemnity obligations of Buyer pursuant to the preceding sentence shall apply to any Claim asserted against PERL in connection with or as a result of the performance of PERL Services, including any Claim actually or allegedly resulting from the sole, joint or concurrent negligence, or other fault
of PERL, as well as any strct liabilty Claim that may be asserted or imposed against PERL,
including, but not limited to, any such Claims asserted pursuant to Environmental Laws;
provided, however, such indemnity obligations shall not apply to any Claim actually resulting on the account of the wilful misconduct of PERL.
the written underlying Claim, if any) as then known by PERL, involving a non-Pary for which Buyer believes it may have an obligation of indemnty under ths Agreement, Buyer shal, if it so elects in accordance with this Section 7.2 (without prejudice to its right to contest its obligation of indemnity under this Agreement), assume the defense of any such Claim with counsel selected by Buyer, and PERL shall cooperate in all reasonable respects. In all instances, PERL may
employ separate counsel and parcipate in the defense of any such Clai; provided, if Buyer has
assumed the defense of any Claim pursuant to this Section 7.2 and has agreed to indemnify PERL, the fees and expenses of counsel employed by PERL with respect to such Claim shall be borne solely by PERL. With respect to any such Claim: (a) Buyer shall defend PERL against
such Claim, (b) Buyer shall pay any judgment entered or settlement, (c) Buyer shall not consent to the entry of any judgment or enter into any settlement that (i) does not include a provision whereby the plaintiff or claimant in the matter releases PERL from all liability with respect to such Clai, and (ii) would restrict PERL's ability to conduct its business in the ordinar course,
and (d) PERL shall not consent to the entry of any judgment or enter into any settlement with
respect to such Claim without Buyer's prior written consent. If Buyer has not elected to
undertake the defense of any such Claim, or if Buyer assumes the defense of any such Claim pursuant to this Section 7.2 but fails to dilgently defend against the Claim within thiy (30) days following any written notice from PERL assertng such failure, then PERL shall have the right to defend, at the sole cost and expense of Buyer (to the extent PERL is entitled to indemnfication hereunder), such Claim by all appropriate proceedings. In such instances, PERL shall have full control of such defense and proceedings; provided, PERL shall not sette such Claim without the written consent of Buyer; provided further, if Buyer fails to notify PERL in writing as to whether or not it consents to such settlement withn thirty (30) days following its receipt of notice of such settlement from PERL, then such consent shall be deemed given. Buyer may participate in, but
not control, any defense or settlement controlled by PERL pursuant to ths Section 7.2, and Buyer shall bear its own costs and expenses with respect to such participation. Notwithstanding the
other provisions of this Section 7.2, if Buyer disputes its potential liabilty to PERL under this
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Section 7.2 and if such dispute is resolved in favor of Buyer, Buyer shall not be required to bear the costs and expenses of PERL's defense pursuant to ths Section 7.2.
ARTICLE VII
MISCELLANEOUS
Section 8.1 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original instrument, but all such counterpars together shall constitute but one agreement.
Section 8.2 Notices. All notices that are required or may be given pursuant to
ths Agreement shall be suffcient in all respects if given in writing and sent (properly addressed
as set forth below) via (a) U.S. mail with all postage and other charges fully prepaid; (b)
electronic mail with a PDF of the notice or other communication attached (with the original sent by U.S. mail the same day such electronic mail is sent); (c) facsimile transmission; (d) hand delivery; or (e) commercial overnight delivery services.
If to PERL:
NAM
ADDRESS Facsimile: Attention: Email: With a copy to:
If
to Buyer:
NAM
ADDRESS Facsimile: Attention: Email: With a copy to:
Either Pary may change its address by notifying the other Pary in writing of such address
change. A notice shall be deemed effective on the date on which such notice is received by the addressee, if by mail, or on the date sent, if by facsimile, on the date received (as evidenced by fax machine confirmation of receipt) or if by electronic mail, on the date received (as evidenced
legal relations between the Paries shall be governed by and constred in accordance with the internal laws of the State of California, without regard to principles of conflcts of laws that would direct the application of the laws of another jurisdiction.
FORM
(b) Any and all disputes between the Parties relating to, arising out of, in connection with, or attributable to this Agreement shall be submitted to the Bankruptcy Court for resolution. Any decision of the Bankruptcy Court regarding this Agreement shall be conclusive and wil be binding on the Parties and their respective successors and assigns,
subject to rights of rehearing, appeal or certioriari. Each of the Paries hereby irrevocably
consents to the exclusive jurisdiction and venue of such court (and of the appropriate appellate
courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent pemitted by law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in such court or that any such suit, action or proceeding brought in such court has been brought in an inconvenient forum. Process in any such suit, action or proceeding may be served on any pary anywhere in the world, whether withn or without the
jursdiction of such court. The Partes hereby waive tral by jury in any action, proceeding or
counterclaim brought by any Party against another in any matter whatsoever arsing out of or in relation to or in connection with this Agreement.
Section 8.4 Captions. The captions in this Agreement are for convenience
only and shall not be considered a par of or affect the constrction or interpretation of any provision of this Agreement.
Section 8.5 Waivers. Any failure by any Pary to comply with any of its
obligations, agreements or conditions herein contained may be waived by the Pary to whom
such compliance is owed by an instnent signed by the Pary to whom compliance is owed and
expressly identified as a waiver, but not in any other manner. No waiver of, or consent to a change in, any of the provisions of this Agreement shall be deemed or shall constitute a waiver
of, or consent to a change in, other provisions hereof (whether or not similar), nor shall such waiver constitute a continuing waiver unless otherwise expressly provided.
Section 8.6 Assil!nment. No Pary shall assign or otherwise transfer all or any
par of ths Agreement, nor shall any Pary delegate any of its rights or duties hereunder, without
the prior written consent of the other Pary and any transfer or delegation made without such
consent shall be void. Subject to the foregoing, this Agreement shall be binding upon and inure
to the benefit of the Paries hereto and their respective successors and assigns.
Section 8.7 Entire Al!reement. This Agreement and the Schedules attached
hereto constitute the entie agreement among the Pares pertaining to the subject matter hereof,
and supersede all prior agreements, understandings, negotiations and discussions, whether oral or written, of the Pares pertaining to the subject matter hereof.
Section 8.8 Amendment. This Agreement may be amended or modified only by an agreement in writing signed by PERL and Buyer and expressly identified as an amendment or modification.
Section 8.9 No Third-Person Beneficiaries. Nothing in ths Agreement shall
entitle any Person other than Buyer, PERL, PEAO AN PEAH to any claim, cause of action,
remedy or right of any kind.
Section 8.10 References.
In this Agreement:
FORM
(a) References to any gender includes a reference to all other genders;
(b) References to the singular includes the plural, and vice versa;
(c) Reference to any Aricle or Section means an Artcle or Section of this
Agreement;
(d) Reference to any Schedule means a Schedule to this Agreement, all of
words of similar import are references to this Agreement as a whole and not any particular
Section or other provision of this Agreement;
(f) References to "$" or "dollars" means United States dollars; and
Section 8.11 Construction: Maximum Interest. Each of PERL and Buyer has
had the opportunity to exercise business discretion in relation to the negotiation of the detals of the transaction contemplated hereby. This Agreement is the result of ar's-length negotiations
from equal bargaining positions. It is expressly agreed that this Agreement shall not be constred
against any Party, and no consideration shall be given or presumption made, on the basis of who drafted this Agreement or any paricular provision thereof. If this Agreement shall require the
payment of interest in excess of the maximum amount permssible under applicable law, then the
interest obligations of the Pary owing interest hereunder shall, automatically and retroactively, be deemed reduced to the highest maximum amount permissible under applicable law. In the
event a Pary receives as interest an amount that would exceed such maximum applicable rate,
the amount of any excess interest shall not be applied to the payment of interest hereunder, but
shall, automatically and retroactively, be applied to the reduction of other obligations due
hereunder. In the event and to the extent such excess amount of interest exceeds the outstanding obligations hereunder, any such excess amount shall be immediately returned to the Pary who paid such excess amount.
Section 8.12 Limitation on Damal!es. Notwithstanding anything to the
contrary contained herein, none of Buyer, PERL or any of their respective Affliates shall be
entitled to consequential, special or punitive damages in connection with this Agreement and the transactions contemplated hereby (other than consequential, special or punitive damages suffered by third Persons for which responsibility is allocated between the Paries pursuant to the terms of this Agreement) and each of Buyer and PERL, for itself and on behalf of its Affliates, hereby expressly waives any nght to consequential, special or punitive damages in connection with ths Agreement and the transactions contemplated hereby (other than consequential, special or
punitive damages suffered by third Persons for which responsibilty is allocated between the
Paries pursuant to the terms of this Agreement).
FORM
IN WITNESS WHEREOF, this Agreement has been signed by each of the Paries as of the date first above written.
PERL:
Name:
Title:
BUYR:
By:
Name:
Title:
DRAFT
SCHEDULE 1.
to
6. Computer hardware and software and support services, data processing and storage, computer backup and maintenance services, help desk services, and
telecommunication services.
7. Oil and gas marketing services.
8. Engineering services.
9. Drillng and support services.
10. On-site field services, including without limitation foremen, pumpers and field
technicians. i 1. Purchasing and logistics services. i 2. Land and lease administration and general contract administration services 13. Environmental, health and safety compliance resources and personnel, including, but not limited to, conducting oil spil responses using PERL-owned equipment, as needed. 14. Insurance support and insurance coverage under PERL's policies or policies issued in the name of PERL, including general liability, excess liability, commercial crime, fiduciary liability, workers' compensation, and auto liabilty as may be requested from time to time.
15. Regulatory compliance services. 16. Management and administrative support services and personnel, office supplies
and equipment, and offce space and records retention space in California, including utilties. 17. Management and administrative personnel in Anchorage. Offce and related costs in Anchorage to be charged directly to Buyer.
18. Human resources support services, payroll agent activities, and benefit plan
administration support services, as needed.
DRAFT
SCHEDULE 2.1 to the
the PERL Services. The pares agree that the foregoing amount is the value of the PERL Services to be provided under the Agreement.
2. Out-of-Pocket Expenses - All actual out-of-pocket expenses incurred on behalf of Buyer
by PERL including, without limitation, fees and expenses reflected on the lease operating statement, fees and expenses incurred in connection with the engagement of subcontractors, outside consultants, advisors, independent reserve engineers and accountants that PERL may engage to advise on PERL matters, capital costs attbutable to the operation and conduct of the
Assets, and all fees and expenses for payroll, insurance, offce and other supplies, and equipment and materials that may be required in the operation and conduct of the Assets (including, without limitation, actual payroll and benefit costs for general and administrative personnel located in Anchorage, AK, and actual costs of operating that offce (rent, equipment, supplies, etc.)).
In re
) Chapter 1 I
)
Case No. 09-10785 (KJC)
(Jointly Administered)
Related to Docket No.
Debtors.
ORDER (I) APPROVING SALE OF THE DEBTORS' ALASKA ASSETS FREE AND CLEAR OF ALL LIENS, CLAIMS, ENCUMBRANCES AND OTHER INTERESTS PURSUANT TO SECTIONS 363(b), (f) AND (m) OF THE BANKRUPTCY CODE, (II) ASSUMING AND ASSIGNING CERTAIN EXECUTORY CONTRACTS AN UNEXPIRED LEASES; AND (ill) GRANTING RELATED RELIEF
THIS MATTER is before the Cour on the motion (the "Sale Motion") of
Pacific
Energy Resources Ltd. ("PERL"), Pacific Energy Alaska Holding, LLC ("PEAR") and Pacific
Energy Alaska Operating LLC ("PEAO") and the other above-captioned debtors and debtors in
possession (collectively, the "Debtors") for entr of
and 365 (the "Bankptcy Code"), and Rules 2002, 6004, and 6006 of
the
Banptcy Court; (A) approving the Purchase and Sale Agreement (the "Agreement") and
Transition Services Agreement ("TSA"),2 substantially in the forms attached hereto as Exhibit
1 The Debtors in these cases, along with the last four digits of each of
number, are: Pacific Energy Resources Ltd. (3442); Petrocal Acquisition Corp. (6249); Pacific Energy Alaska
Holdings, LLC (tax J.D. # not available); Cameros Acquisition Corp. (5866); Pacific Energy Alaska Operating LLC (7021); San Pedro Bay Pipeline Company (1234); Cameros Energy, Inc. (9487); and Gotland Oil, Inc. (5463). The mailing address for all of the Debtors is I I I W. Ocean Boulevard, Suite 1240, Long Beach, CA 90802. 2 Unless otherwise noted, capitalized terms used herein have the meanings set forth in the Sale Motion, Sale Procedures Order, Sale Procedures, Agreement or TSA (each, as defined herein).
68713-002\DOCS _ LA:204082.7
A,3 by and between PEAH and PEAO, on the one hand, and the Successful Bidder, on the other
hand, pursuant to which the Successful Bidder has offered to acquire certain of the Alaska Assets
as set forth in the Agreement (the "Relevant Alaska Assets"); (B) granting the Debtors authority
to sell the Relevant Alaska Assets as fuher set forth in the Agreement free and clear of liens,
claims, interests and encumbrances (except as otherwse provided in the Agreement and subject
to the Assumed Liabilities) (the "Sale"); and (C) authorizing the Debtors to assume and assign the Assumed Executory Contracts; and
The Sale Motion having been served upon (i) Office of
parties known by the Debtors to assert liens, claims, rights, interests or encumbrances of record in the Alaska Assets; (v) federal, state and local taxing authorities who have a reasonably known
interest in the Alaska Assets; (vii) the United States Attorney for the District of Delaware; (vii)
the Internal Revenue Service; (viii) the United States Deparment of Justice; (ix) the
counterparties to the Assumed Executory Contracts; and (x) those persons who have requested
notice pursuant to Rule 2002 of the Federal Rules of
Auction and Sale Hearing having been served on all known creditors of
Notice of
the Sale Motion having been provided in accordance with this Court's
Order (A) Approving Procedures For Sale of the Debtors' Alaska Assets; (B) Scheduling
Auction and Hearing to Consider Approval of Sale; (C) Approving Notice of Respective Dates,
Times, and Places
for Auction andfor Hearing on Approval of (i) Sale and (ii) Assumption and
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Assignment of
Notice; and (E) Granting Related Relief(the "Sale Procedures Order"); and
It fuher appearing that the legal and factual bases set forth in the Sale Motion
and at the hearing thereon which took place on July 27, 2009 (the "Sale Hearng") establish
just
cause for the relief granted herein; and after due deliberation thereon,
NOW, THEREFORE, THE COVRT HEREBY FINDS THAT:
(0). Venue is proper in this District and in this Cour pursuant to 28 V.S.C. 1408 and 1409.
2. This Order constitutes a final and appealable order within the meaning of
28 V.S.C. 158(a). To any extent necessary under Banruptcy Rule 9014 and Rule 54(b) of
the
Federal Rules of
Banptcy Procedure, the Court finds that there is no just reason for delay in the
implementation of this Order, and directs entry of
property of
ordinar course of
section 363(b) of
5.
is treated as the Successful Bidder as set forth below) is purchasing the Relevant Alaska Assets
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in good faith and is a good faith purchaser withn the meaning of 11 D.S.C. 363(m), and is
therefore entitled to the protection of that provision, and otherwse has proceeded in good faith in
all respects in connection with this proceeding in that: (a) the Successful Bidder recognized that
the Debtors were free to deal with any other pary interested in acquiring the Relevant Alaska
Assets; (b) the Successful Bidder complied with the provisions in the Sale Procedures Order; (c)
all payments to be made by the Successful Bidder and other agreements or arangements entered
into by the Successful Bidder in connection with the sale have been disclosed; (d) the Successful
Bidder has not violated 11 D.S.C. 363(n) by any action or inaction; and (e) the negotiation and
execution of the Agreement and any other agreements or instruents related thereto was in good
faith.
C. Hiehest and Best Offer
6. The Debtors conducted an Auction with respect to the Relevant Alaska
Assets in accordance with, and have otherwise complied in all respects with, the Sale Procedures
Order. The Sale Procedures and Auction for the Relevant Alaska Assets afforded a full, fair and
reasonable opportunity for any person or entity to make a higher or otherwise better offer to
purchase the Relevant Alaska Assets. The Auction was duly noticed and conducted in a
noncollusive, fair and good faith maner and a reasonable opportnity has been given to any
interested pary to make a higher and better offer for the Alaska Assets (or Group or any subset
Alaska Assets, and would provide a greater recovery for the Debtors' estates than would be
provided by any other available alternative. The Debtors' determination that the terms of
the
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Agreement constitute the highest and best offer for the Alaska Assets constitutes a valid and
sound exercise of
entity or group of entities has offered to purchase the Relevant Alaska Assets for greater
economic value to the Debtors' estates (or any of
9. Approval of
the transactions contemplated thereby are in the best interests ofthe Debtors, their creditors, their
suffcient, and sound business purpose and justification for the sale prior to, and outside of, a
plan of reorganization.
11. The consideration provided by the Successful Bidder pursuant to the
Agreement constitutes reasonably equivalent value and fair consideration for the Relevant
Alaska Assets under the Banptcy Code and under the laws of
deliver the Agreement and all other documents contemplated thereby, and no further consents or approvals are required for the Debtors to consummate the transactions contemplated by the
Agreement, except as otherwise set forth in the Agreement and the TSA.
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the Debtors
13. The Successful Bidder is not a mere continuation of the Debtors, there is
not substantial continuity between the Successful Bidder and the Debtors, and there is no
continuity of enterprise between the Debtors and the Successful Bidder.
14. No common identity of
15. The sale is not being entered into fraudulently. The sale has been properly
noticed.
17. The Successful Bidder does not constitute a successor to the Debtors or
the estates.
18. The sale does not amount to a consolidation, merger or defacto merger of
them.
(the "Closing") of
Order, the Debtors may assume the Assumed Executory Contracts, as identified in the
Agreement, and assign each of them to the Successful Bidder pursuant to section 365 of
the
Banptcy Code free and clear of all Encumbrances (as defined below) except as otherwse
provided in the Agreement and subject to the Assumed Liabilities, and notwithstanding any anti6
68773-002\DOCS_LA:2040B2,7
assignment clause as provided in section 365(f) ofthe Bankruptcy Code. The assumption and
assignment of the Assumed Executory Contracts pursuant to the terms of this Order is integral to
the Agreement and is in the best interests of the Debtors and their estates, creditors and other
paries in interest, and represents the reasonable exercise of sound and prudent business judgment by the Debtors.
20. The respective amounts set forth on the cure notice approved pursuant to
the Sale Procedures Order (the "Cure Notice"), and served upon each counterpary to the
Assumed Executory Contracts (each a "Counterpar"), are the sole amounts necessary under
sections 365(b)(1 )
(A) and (B) and 365(f)(2)(A) ofthe Banptcy Code to cure all defaults and
pay all actual pecuniary losses under the Assumed Executory Contracts (the "Cure Amounts").
The Successful Bidder shall pay the Cure Amounts for each of
Contracts.
21. The Successful Bidder has provided adequate assurance of its future
performance under the relevant Assumed Executory Contracts within the meaning of
sections 365(b)(1)(C), 365(b)(3) (to the extent applicable) and 365(f)(2)(B) of
the Banptcy
Code.
G. Section 363 Sale
22. The conditions of Section 363(f) of
satisfied in full; therefore, the Debtors may sell the Relevant Alaska Assets free and clear of any
interest in such property, except as otherwise provided in the Agreement and subject to the
Assumed Liabilities.
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23. With respect to any and all entities and persons asserting any options,
pledges, security interests, claims, equities, reservations, third par rights, replacement liens,
superpriority claims, voting trusts or similar arangements, liens, charges or other encumbrances
(other than easements, restrictive covenants, leases, overrding royalty interests and licenses
encumbering property owned by the Debtors) or restrictions on or conditions to transfer or
assignment of any kind (including, without limitation, restrictions or conditions on or to the transfer, assignment or renewal of licenses, permits registrations and authorizations or approvals
Relevant Alaska Assets or the Debtors (collectively, the "Encumbrances"), except as otherwise
provided in the Agreement and subject to the Assumed Liabilities, either (i) such person or entity
has consented to the sale and transfer, license and assignment, as applicable, free and clear of its
Encumbrance, with such Encumbrance to attach to the net proceeds of such sale and transfer,
license and assignment, as applicable, respectively, (ii) applicable nonbanptcy law permits
sale ofthe assets free and clear of such Encumbrance, (iii) such Encumbrance is in bona
fide
dispute, (iv) such person or entity could be compelled, in a legal or equitable proceeding, to accept a money satisfaction of such Encumbrance, or (v) Buyer is obligated to obtain
governental or regulatory approval after the Sale.
24. The Successful Bidder would not have entered into the Agreement and
Assets to the Successful Bidder or (to the extent permitted by the Agreement) its respective assignees, the assumption, assignment and sale of the Assumed Executory Contracts to the
8
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Successful Bidder or (to the extent permitted by the Agreement) its respective assignees, and the
assumption of
the Assumed Liabilities by the Successful Bidder or (to the extent permitted by
the Agreement) its respective assignees were not, except as otherwise provided in the Agreement
and subject to the Assumed Liabilties, free and clear of all Encumbrances of any kind or natue
whatsoever, or if
the Successful Bidder would, or in the future could (except as provided in the
Agreement or any amendments thereto, and subject to the Assumed Liabilities), be liable for any of such Encumbrances or other future liabilities arising out of past conduct of the Debtors or the
Debtors' past ownership of
25. The Successful Bidder is not purchasing all of the Debtors' assets. The
Successful Bidder is only purchasing the Relevant Alaska Assets and is not purchasing any
assets other than the Relevant Alaska Assets, to the extent set forth in the Agreement. The
Relevant Alaska Assets do not include the Excluded Assets, as defined in the Agreement. The
Excluded Assets shall remain subject to existing Encumbrances, if any.
26. The Successful Bidder is assuming the Assumed Liabilities, as set forth in
the Agreement, and is not assuming any obligations other than the Assumed Liabilties.
27. The Debtors are not assuming and assigning all of
leases to the Successful Bidder. The Debtors are only assuming and assigning to the Successful
Bidder the Assumed Executory Contracts in accordance with the terms of
not assuming and assigning any executory contracts or leases other than the Assumed Executory
Contracts.
28. Given all of the circumstances of
adequacy and fair value of the purchase price under the Agreement, the proposed sale of the
9
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Relevant Alaska Assets to the Successful Bidder constitutes a reasonable and sound exercise of
the Debtors' business judgment and should be approved.
H. Lenders
29. Sale proceeds from the Sale, net of reasonable out-of-pocket costs of
the
Sale (the "Net Sale Proceeds), shall be distributed to the agents for the Lenders in accordance
with paragraph 21 of
the Final Order Pursuant to 11 U.S.c. 105,361,362, 363, 364, 365 and
priority Post
(4) Granting Adequate Protection; and (5) Modifing Automatic Stay, entered June 4,2009
(Docket No. 415) (the "Final DIP Financing Order") entered in these Cases and section 2.IO(a)
of
Agreement").
I. Miscellaneous
30. All findings of fact and conclusions of law anounced by the Court at the
not been withdrawn, waived, or settled as anounced to the Cour at the hearing on the Sale
Motion or by stipulation fied with the Court, and all reservations of rights included therein, are,
except as provided in other orders ofthe Cour, hereby overrled on the merits or the interests of
such objections have been otherwise satisfied or adequately provided for.
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2. The Agreement and TSA and all other documents attached as exhibits to
the Agreement and TSA (substantially in the form thereof) are hereby approved in all respects,
and shall be deemed in full force and effect, binding and benefiting the Debtors and the
Successful Bidder.
3. The Debtors are authorized and empowered to execute and deliver to the
Successful Bidder the Agreement and the other agreements contemplated thereby (including,
without limitation, the TSA), and to implement and consummate all of
perform all obligations contemplated by the Agreement, including, without limitation, to sell the
Relevant Alaska Assets to the Successful Bidder and to assume and assign to the Successful
Bidder the Assumed Executory Contracts, all on the terms of
price set forth therein (subject to any adjustments set forth therein), and determined in
accordance with the Agreement. The Debtors are authorized and empowered to deliver deeds,
bils of sale, assignments and other such instruents and/or documentation that may be
necessar or requested by the Successful Bidder in accordance with the terms of the Agreement
to evidence the transfers required or otherwse contemplated by the Agreement.
4. Pursuant to the Sale Procedures Order, in the event that the Successful
Bidder fails to consummate an approved sale because of a breach or failure to perform on the
part of
the Successful Bidder, the Debtors are authorized, but not required, without any other or
fuher order or authorization from the Cour and without any other or fuher notice, to
the
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Agreement and TSA with such Back-Up Bidder, which are substantially in the form of
Exhibit
the rights and privileges of
the "Successful
Bidder" for purposes ofthis Order, and shall be treated in all respects as the "Successful Bidder"
under the terms of this Order.
5. As contemplated by the Court's Consent Order Authorizing the
Employment and Retention of Lazard Frres & Co. LLC as Investment Banker and Financial
Advisor to the Debtors Nunc Pro Tunc to the Petition Date Pursuant to 11 Us.e. 327(a) and
328(a), Fed. R. Bankr. P. 2014 and 2016, and Del. Bankr. L.R. 2014-1, entered May 1,2009
(Docket No. 264), upon the Closing and subject to final allowance of compensation and
reimbursement of expenses by a separate order ofthe Court, the Debtors are authorized to use
the proceeds of the sale to pay the allowed fees and expenses of
6. Upon the Closing, the Successful Bidder shall take title to and possession
of
the Relevant Alaska Assets in accordance with and subject to the Agreement and Assumed
the Banptcy Code and the Agreement, including any
by the Agreement, the transfer oftitle to the Relevant Alaska Assets and the Assumed Executory
Contracts shall be free and clear of any interest and free of all Encumbrances, including, any
options, pledges, security interests, claims, equities, reservations, third par rights, voting trusts
or similar arangements, liens, charges or other encumbrances (other than easements, restrctive
covenants, leases, overriding royalty interests and licenses encumbering propert owned by the
4 To be submitted at later date.
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68773.002\DOCS_LA:204082.7
permits registrations and authorizations or approvals of or with respect to govemmental units and
Relevant Alaska Assets or the Debtors. Except for the Assumed Liabilities or as otherwise
contemplated by the Agreement, all Encumbrances shall attach solely to the net proceeds of
the
sale with the same extent, validity and priority as they attached to the Relevant Alaska Assets immediately prior to the Closing.
7. Upon Closing and without fuher order of
further notice, in parial satisfaction of the allowed secured claims of the Lenders, the Debtors
shall distribute the Net Sale Proceeds to the agents for the Lenders in accordance with paragraph
21 of the Final DIP Financing Order and section 2. 1 O(a) of
not expressly or impliedly agreeing to assume any of the Debtors' liabilities, the transactions
the
Debtors nor does the Successful Bidder constitute a successor to the Debtors, and the transactions contemplated by the Agreement are not being entered into fraudulently or in order to
escape liability from the Debtors' debts.
9. This Order shall be binding in all respects upon the Debtors, their estates,
all creditors of, and holders of equity interests in, any Debtor (whether known or unkown), any
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68773-002\DOCS_LA:204082.7
holders of Encumbrances on the Relevant Alaska Assets, all owners of easements, restrictive
covenants, leases, overrding royalty interests and licenses encumbering propert owned by the
Debtors, all non-Debtor paries to the Assumed Executory Contracts, all successors and assigns
of
the Successful Bidder, each Debtor and its respective affiiates and subsidiaries, the Relevant
Alaska Assets and any trustees, if any, subsequently appointed in the Debtors' chapter 11 cases
or upon a conversion to chapter 7 under the Banptcy Code of any of
Order and the Agreement shall inure to the benefit of the Debtors, their estates, their creditors, the Successful Bidder and their respective successors and assigns.
10. Except for the Assumed Liabilties or as otherwise provided for in this
Order or the Agreement, the Successful Bidder shall not have any liability or responsibility for
any liability or other obligation of
provided herein or in the Agreement, the Successful Bidder shall not be liable for any claims
against the Debtors or any of their predecessors or affliates, whether mown or unown as of
the applicable Closing, now existing or hereafter arising, whether fixed or contingent, with
respect to the Debtors or any obligations of
assume and assign each Assumed Executory Contract to the Successful Bidder free and clear of
all Encumbrances, except as otherwse provided in the Agreement and subject to the Assumed
Liabilities. The payment of Cure Amounts (if any) shall (a) effect a cure of
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68773-002\DOCS_LA;204082.7
thereunder as of the Closing Date, (b) compensate for any actual pecuniar loss to such nonDebtor party resulting from such default, and (c) together with the assumption of
the Assumed
performance thereof. The Successful Bidder shall then have assumed the Assumed Executory
Contracts and, pursuant to section 365(f) and 365(k) of
the Debtors of such Assumed Executory Contracts shall not be a default thereunder. After the
payment of the relevant Cure Amounts, neither the Debtors nor the Successful Bidder shall have
any further liabilities to the non-Debtor paries to the Assumed Executory Contracts other than
the Successful Bidder's obligations under the Assumed Executory Contracts that become due
and payable on or after the Closing Date, except as otherwse provided in the Agreement and
subject to the Assumed Liabilities.
12. Any provisions in any Assumed Executory Contract that prohibit or
condition the assigrent of such Assumed Executory Contract or allow the par to such
Assumed Executory Contract to terminate, recaptue, impose any penalty, condition on renewal
or extension or modify any term or condition upon the assigrent of such Assumed Executory
Contract, constitute unenforceable anti-assignment provisions that are void and of no force and
effect. All other requirements and conditions under sections 363 and 365 of
the Banptcy
Code for the assumption by the Debtors and assignment to the Successful Bidder of the Assumed
Executory Contracts have been satisfied. Upon the Closing, in accordance with sections 363 and
365 of
the Banptcy Code, the Successful Bidder shall be fully and irrevocably vested with all
rights, title and interest of the relevant Debtor under the applicable Assumed Executory
Contracts.
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Successful Bidder, the Successful Bidder shall be deemed to be substituted for each relevant
Debtor as a pary to the applicable Assumed Executory Contracts and the Debtors shall be
relieved from all
14. The Successful Bidder has provided adequate assurance of its future
performance under the relevant Assumed Executory Contracts within the meaning of sections
365(b)(l )(c), 365(b)(3) (to the extent applicable) and 365(f)(2)(B) of
paries to the Assumed Executory Contracts are forever bared and enjoined from raising or
asserting against Successful Bidder any assignment fee, default, breach or claim or pecuniary
loss, or condition to assignment, arising under or related to the Assumed Executory Contracts
existing as ofthe Closing or arising by reason of the Closing, except for any amounts that are
Assumed Liabilities being assumed by the Successful Bidder under the Agreement.
17. The Successful Bidder is a good faith purchaser within the meaning of
section 363(m) of
section 363(m) of
Banptcy Procedure, this Order shall be effective immediately upon entry and the Debtors are
authorized to close the sale immediately upon entry of
68173-002\DOCS_LA:204082.7
19. This Order is and shall be binding upon and govern the acts of all entities,
including, without limitation, all filing agents, fiing offcers, title agents, title companies,
recorders of mortgages, recorders of deeds, registrars of deeds, administrative agencies,
govemmental deparments, secretaies of state, federal and local offcials, and all other persons
and entities who may be required by operation of law, the duties of their offce, or contract, to accept, file, register or otherwse record or release any documents or instruments, or who may be required to report or insure any title or state oftitle in or to any lease; and each of the foregoing
persons and entities is hereby directed to accept for filing any and all of the documents and
instruments necessar and appropriate to consummate the transactions contemplated by the
Agreement.
20. This Order constitutes authorization under all applicable jurisdictions
versions of
the Uniform Commercial Code for the Successful Bidder to fie UCC termination
statements with respect to all security interests in or liens on the Relevant Alaska Assets.
21. The failure specifically to include any paricular provision of the
Agreement or TSA in this Order shall not diminish or impair the effectiveness of such provision,
it being the intent of the Cour that the Agreement and TSA be authorized and approved in their
entirety.
22. This Court shall retain jurisdiction to, among other things, interpret,
implement, and enforce the terms and provisions of
modifications thereto and any waivers and consents thereunder and each of the agreements
executed in connection therewith to which the Debtors (or any of
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been assigned by the Debtors to the Successful Bidder, and to adjudicate, if necessary, any and
all disputes concerning or relating in any way to the Sale.
23. To the extent that any provisions of
the provisions in the Agreement, TSA or any related instrent or document, any prior order, or
any pleading with respect to the motions in this case, the terms of this Order shall control.
Dated:
,2009
Honorable Kevin J. Carey
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