Académique Documents
Professionnel Documents
Culture Documents
In re:
) ) ) ) ) )
Chapter 11
Hearing Date: December 22, 2009 at 2:00 p.m. (prevailng Eastern time)
NOTICE OF FILING OF PURCHASE AND SALE AGREEMENT BY AND AMONG PACIFIC ENERGY RESOURCES LTD., SAN PEDRO BAY PIPELINE COMPANY, RISE ENERGY BET A, LLC AND SP BETA PROPERTIES. LLC (DATED DECEMBER 15.2009)
The above-captioned debtors and debtors-in-possession (collectively, the
"Debtors") hereby file the attached Purchase and Sale Agreement (the "Agreement") by and
among Pacific Energy Resources Ltd., San Pedro Bay Pipeline Company, Rise Energy Beta,
LLC and SP Beta Properties, LLC dated as of
December 15,2009.
The hearing to consider the Motion as it relates to approval of the Agreement is set for December 22, 2009, at 2:00 p.m. prevailing Eastern time, at the United States Bankruptcy
Court for the District of Delaware, 824 Market Street, Wilmington, Delaware 19801.
the Debtors' federal tax identification number, are: Pacific Energy Resources Ltd. (3442); Petrocal Acquisition Corp. (6249); Pacific Energy Alaska
1 The Debtors in these cases, along with the last four digits of each of
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 the Debtors is i i i w. Ocean Boulevard, Suite i 240, Long Beach, CA 90802. mailing address for all of
'I
Ira arasch (CA Bar No. 109084)
James E. O'Neill (DE Bar No. 4042) Kathleen P. Makowski (DE Bar No. 3648) 919 North Market Street, 1 ih Floor P.O. Box 8705 Wilmington, DE 19899-8705
Telephone: 302/652-4100
Facsimile: 310/652-4400
Email: ikharasch~pszilaw.com
ioneill~pszilaw.com
kmakowski~pszilaw .com
Execution COpy
D-1809900_17.DOC
TABLE OF CONTENTS
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ARTICLE 1 DEFINITIONS............................................................................. ............................ 2 1.1 Accounting Time. ................................................................................................... 2 1.2 Additional Unit Area....... ........................................................................................ 2
1.3 Aera.......................... ............................................................................................... 2 1.4 AFE. ........................................................................................................................ 2 1.5 A ffi liate Agreements............................................................................................... 2 1.6 A ffi liates. ................................................................................................................ 2 1.7 Agreement............................................................................................................... 2
1. i 4 Assumed Operating Liabilities. ..............................................................................4 1.15 Avoidance Actions. ................................................................................................. 4 1.16 Bankruptcy Case. .......................................... ......................................... ................. 4 1.17 Bankruptcy Claim. .................................................................................................. 4 1.18 Bankruptcy Code. ................................................................................................... 4 1.19 Bankruptcy Costs. ................................................................................................... 4 1.20 Bankruptcy Court.................................................. .................................................. 4 1.21 Benefit Plans. ..........................................................................................................4
1.22 Beta Field. ............................................................................................................... 4
1.23 Beta Interest or Beta Interests. ................................................................................ 4 1.24 Beta Onshore Pump Station. ................................................................................... 7
1.25 Beta Tangible Assets............................................................................................... 7 1.26 Beta Unit. ................................................................................................................ 7 1.27 Business Day........................................................................................................... 7 1.28 Buyers. .................................................................................................................... 7
1.42 CSLC Approvals..................................................................................................... 9 1.43 Curative Claims. ................... .................................................................................. 9 1.44 Debt Assumption. ................................................................................................... 9
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1.45 Defect Value. .......................................................................................................... 9 1.46 DCO R. ................... ........................................................................ ......................... 9
1.68 Lien. .... ..... ................................................................ ............................................. 14 1.69 Material Adverse Change. .................................................................................... 14 1.70 MMS. ............. ....................................................................................................... 15 1.71 MMS Approvals....................................................................................................15 1.72 MMS Assignment Approvals. .............................................................................. 15 1.73 MMS Supplemental Bond..................................................................................... 15 1.74 MMS Qualification. .............................................................................................. 15 1.75 MMS Successor Unit Operator Approval. ............................................................ 15 1.76 Net Revenue Interest (or NRI)............................... ............................................... 15
1.77 Noble.... ................................................................................................................. 16
1. 78 NORM.......... ......................................................................................................... 16 1.79 OCS Leases................. ............ ............. ...... ....... .................................................... 16
1.80 Oi i. ........................................................................................................................ 16
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1.90 Permitted Stock Encumbrances. ........................................................................... 17 1. 91 Person.................................................................................................................... 17 1.92 Platform Edith. ...................................................................................................... 17 1.93 Platform Ellen. ...................................................................................................... 17 1.94 Platform Elly. .........................................................................................;.............. 17 1.95 Platform Eureka. ................................................................................................... 17
1.96 Post-Closing Tax Period. ...................................................................................... 17 1.97 Pre-Closing Tax Period......................................................................................... 17 1.98 Proceed ing.........................;................................................................................... 17 1.99 Production Costs. .................................................................................................. 18
1.100 Production Payments. ........................................................................................... 18 1.101 Production Taxes. ................................................................................................. 18 1.102 Property or Properties. .......................................................................................... 18
1.103 Property Taxes. ..................................................................................................... 18 1.104 Purchase Price...................................... ........................................................ ......... 18
1.105 Real Property Interests................................................... ....................................... 18 1.106 Record or Records................................................................................................. 18 1.107 Restructuring Transaction. .................................................................................... 19
1.108 Rise. ...................................................................................................................... 19 1.109 Sale Order. ............................................................................................................ 19
1.115 Seller Indebtedness. .............................................................................................. 20 1.116 Silver Point............................................................................................................20 1.117 Silver Point Indebtedness......................................................................................20 1.118 SPBP. .................................................................................................................... 20 1.119 SPBP Bankruptcy Case............ ...................................... .................. ..................... 20
1.120 SPBP Interests.. .......... .................. ............ .......... .......................................... ......... 20 1.121 SPBP Stock. .......................................................................................................... 22
1.125 S WEPI................................................................................................... ..... ............ 22 1.126 Tax (or Taxes). ...................................................................................................... 22 1.127 Tax Authority.................... .................................................................................... 23 1.128 Tax Return. ...........................................................................................................23 1.129 Third Party. ........................ ................................. ...... ...................... ...................... 23 1.130 Title Defect. .......................................................................................................... 23 1.131 Title Defect Notice................................................................................................ 23 1.132 Transaction Documents. ....................................................................................... 23 1.133 Unit Agreement.....................................................................................................23 1.134 Well or Wells. ....................................................................................................... 23
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1.135 Wind-Down Budget. ............................................................................................. 23
1.136 1992 Agreement. ................................................................................................... 23
4.1 Access to Files and Properties; Access to PersonneL. ........................................... 25 4.2 Payment of Expenses. .......... ............................................. .... ................................ 25 4.3 Third Part Consents; Pre-Closing Consents........................................................ 26
4.4 Reasonable Commercial Efforts; Non-Assigned Contracts.................................. 26
4.5 Notification of Certain Matters. ........ ........ ............................................................ 27 4.6 Fees and Expenses. ............................................................................................... 28
4.7 Casualty Loss. .......... ....................................... .............. ........................................ 28
4.8 Books and Records. .............................................................................................. 28 4.9 Further Assurances. ..... ............................ ............. ..... ............ ................................ 29 4.10 No Representation or Warranty of Accuracy; Disclaimer. ................................... 29
4.11 Acknowledgments of
Buyers. ...............................................................................30
ARTICLE 5 TITLE AND TITLE DEFECTS ............................................................................. 31 5.1 Title Defect. ..........................................................................................................31 5.2 Title Defect Notice. ............................................................................................... 32 Title Defects and Defect Values............................................... 32 5.3 Determination of 5.4 Additional Unit Area and Second Unit Operating Agreement. ............................ 33 5.5 Platform Edith. ........................................................... .............. ............................. 33
5.6 Tari ffs Fi led with FERC. .... .................................................................................. 33
ARTICLE 6 CERTAIN COVENANTS BETWEEN EXECUTION DATE AND CLOSING.. 33 6.1 Insurance. .............................................................................................................. 33 6.2 Conduct of Beta Interests, Operating Interests and SPBP Pending the Closing... 34 6.3 Sale Procedures. ..................................... ............ ..................... .............................. 39 6.4 MMS Qualification. ..................... ......................... ..................... ... ........................ 39 Exhibits and Schedules. ..................................................................... 39 6.5 Delivery of
6.6 Supp lemental Disclosure. ...................................................................... ............... 39
6.7 Production Payments. .................................. ...................... .................................... 39 6.8 SPBP Books and Records. ....................................................................................39
ARTICLE 7 CLOSING DELIVERIES AND CONDITIONS.................................................... 39 7.1 Closing Date.......................................................................................................... 39
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7.2 Closing ObI igations; Deliveries..................................................... ....................... 39 7.3 Seller's Conditions................................................................................................ 42
ARTICLE 8 TERMIN A TI ON.................................................................................. .................... 45 8.1 Events of Termination......................................................................... .................. 45 8.2 Effect of Termination............................................................................................ 46
9.3 Further Assurances.................. ... .................... .......................... ............................. 47 9 .4 Post-Closing Consents. ......................................................................................... 47 Proceeds, Costs and Expenses. ....................................................... 47 9.5 Allocation of 9.6 Post-Closing Revenues. ........................................................................................48 9.7 Post-Closing Expenses.... .............................. ................................................... ..... 48
9.8 Removal of Signs. .......... ............................................. ..........................................48 9.9 Bonds. ...................................................... ... .......................................................... 48 9.10 Abandonment Obligations. ................................................................................... 48 Production Costs and Taxes Related to SPBP Conversion. .............. 49 9.11 Payment of
ARTICLE 10 TAXES, COSTS, AND FEES .............................................................................. 49 10.1 Straddle Period Allocation......... ........................... ................................... ............. 49
10.2 Other Taxes. ................... ............. ................................................... .......................49
10.3 Responsibility for Filing SPBP Tax Returns. ....................................................... 49 10.4 Tax Contests.............. ........................................ .................................................... 50
10.5 Cooperation. .............................................................. ............. ..... .......................... 50
10.6 Tax Agreements. ........................................................................ .......... ................. 50 10.7 Amended Returns...... ...... ...................................................................................... 51
ARTICLE 11 ENVIRONMENTAL MA TIERS ........................................................................ 51 11.1 Environmental Review.......................................................................................... 51 11.2 Notice of Environmental Defects.......................................................................... 51
11.3 Remedies for Environmental Defects. .................................................................. 51
ARTICLE 12 REPRESENTATIONS AND WARRANTIES .................................................... 52 12.1 Representations by Seller....... ......... ...................................................................... 52 12.2 Representations by Buyers. ................................................................................... 66
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14.4 Assignment. .......................................................................................................... 69
14.5 No Admissions. ................................................ ...................................................... 70 14.6 Third Party Beneficiaries. ..................................................................................... 70 14.7 Public Communications. ....................................................................................... 70
14.8 Headings and Titles............................................................................................... 70
14.15 Time of Essence. ............................................ ....................................................... 71 14.16 No Partnersh p. ..................................................................................................... 71 Construction. .......................................................................................... 71 14.17 Rules of 14.18 Waiver of Consequential Damages. ...................................................................... 72
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Specified Contracts Affecting the San Pedro Bay Pipeline Natural Hazard Disclosure Report California Form 593-C Form of the California Health and Safety Code Section 25359.7(a) of California Sales Tax Exemption Copy of Sale Procedures Order Transition Services Agreement
Schedules
Schedule 1.11 Schedule 1.23(k) Schedule 1.23(1) Schedule 1.57 Schedule 1.57(b) Schedule 1.57(e)
Schedule 1.57(f) Schedule 1.57(i) Schedule 1.63 Schedule 1.83(c) Schedule 1.83(d) Schedule 1.86 Schedule 1.89 Schedule 1.90 Schedule 1.11 i
Schedule 1.120(m)
Schedule 4.1(a)
Retainers Segregated Accounts Certain Excluded Items Excluded Insurance Claims Excluded Contracts Certain Excluded/Retained Third Part Operator Claims Certain Privileged Records Governmental Bonds Real Property Interests Purchased Information Technology Overriding Royalty Interests Certain Permitted Encumbrances Permitted Stock Encumbrances San Pedro Bay Pipeline SPBP Contracts Information Subject to Confidentiality Agreements Capital Expenditures
Post-Closing Obligations
Schedule 6.2(a)(xx) -
Schedule 6.2(a)(xxx) Schedule 6.2(a)(xxxviii) Schedule 12.1(e) Schedule 12.1(f) Schedule 12.1 (g) Schedule 12.1 (h) Schedule 12.1 (i) Schedule 12.1 (k)
Capital Expenditures (SPBP) Benefit Plan Amendments (SPBP) Consents Proceedings Commitments Production Sales Contracts Payment of Expenses Imbalances
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Schedule 12.1 (m) Schedule 12.1 (n) Schedule 12.1 (0) Schedu Ie 12.1 (p )(i)
Taxes Fees and Commissions Burdens on OCS Leases Payments Under OCS Leases Real Property Interests Real Property Interests Issue
Perm its
Schedule 12.1(r) Schedule 12.1 (s) Schedule 12.1(t) Schedule 12.1(u) Schedule 12.1 (v) Schedule 12.1 (x)(i)
Schedule 12.1 (x)(ii) -
Schedule 12.1(bb)(ii) Schedule 12.1(bb)(iv)Schedule 12.1(ee) Schedule 12.1 (gg) Schedule 12.1 (ii) Schedule 12.1 Uj) Schedule 12.1 (kk) Schedule 12.1(mm) Schedule 12.1(qq)
Schedule 12.1(x)(iv) -
Permit Issue Suspense Amounts P&A Calls or Options Capital Commitments Payout Non-Assumed Beta Contracts SPBP Contracts Breach or Default of Contracts Beta Tangible Assets AFE's Environmental Environmental Permits Financial Statements Undisclosed Liabilities Bank Accounts Offcers/Directors/Agents Aff Iiated Agreements Royalty Obligations Bonds Required Contracts
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(the "Execution Date"), is by and among RISE ENERGY BETA, LLC, a Delaware limited liability company with an address of201 E. John Carpenter Fwy., Suite 610, Irving, Texas 75062 ("Rise"), SP BETA PROPERTIES, LLC, a Delaware limited liability company with an address of 2 Greenwich Plaza, First Floor, Greenwich, CT 06830 ("Silver Point"), PACIFIC ENERGY RESOURCES LTD., a Delaware corporation with an address of 111 W. Ocean Boulevard, Suite 1240, Long Beach, California 90802 ("Seller"), and SAN PEDRO BAY PIPELINE COMPANY, a California corporation with an address of 111 W. Ocean Boulevard, Suite 1240, Long Beach, California 90802 ("SPBP"). Seller, SPBP, Rise and Silver Point may each be referred to herein
as a "Party" and collectively as the "Parties." Rise and Silver Point may each be referred to
A. Pursuant to three separate Purchase and Sale Agreements, Seller acquired from
Aera, SWEPI, and Noble (each as defined below) a 100% record and beneficial title interest in
the Beta Field (as defined below) and currently is designated the operator of and operates the
Beta Unit.
B. Seller owns, beneficially and of record, 100% of the issued and outstanding
capital stock of SPBP, and will own 100% of
SPBP if SPBP is converted to a limited liability company pursuant to the terms of this
Agreement (collectively, the "SPBP Stock").
C. Rise desires to purchase from Seller, and Seller desires to sell to Rise or its
designee, the Operating Interests (as defined below) free and clear of all Liens, subject to the
terms and conditions of
this Agreement.
D. Buyers desire to purchase from Seller, and Seller desires to sell to Buyers, free and clear of all Liens (other than with respect to Silver Point's Buyer Percentage of the Beta Interests (as defined below) and the SPBP Stock, which will remain subject to the Silver Point Indebtedness): (i) the Beta Interests, and (ii) the SPBP Stock, subject to the terms and conditions
of
this Agreement.
E. Seller and SPBP are debtors in possession under the protection of Chapter 11 of
the United States Bankruptcy Code pursuant to jointly administered cases under Case Number 09-10785 (the "Bankruptcy Case") filed with the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court"). The transactions contemplated by this Agreement, the Beta Interests, the Operating Interests and the SPBP Stock including the purchase and sale of hereunder, are subject to approval by the Bankruptcy Court pursuant to Sections 105, 363 and 365 of the Bankruptcy Code (as defined below) and the dismissal of the bankruptcy case of SPBP under Case Number 09-10790.
F. The purchase price to be paid by Buyers to Seller for the Beta Interests, the
Operating Interests and the SPBP Stock consists of a credit bid by Rise of the amounts specified
herein of its Seller Indebtedness (as defined below) against certain amounts owed by Seller under or in connection with the Credit Agreements (as defined below), together with the assumption by
Silver Point of certain specified liabilities, all as further described herein, as well as an
undertaking to cure the Curative Claims and to assume the Assumed Beta Liabilities.
A G R E .E M .E N I :
ARTICLE 1 DEFINITIONS
The following terms, when used in this Agreement, have the following definitions:
1.2 Additional Unit Area. The area covered by federal oi i and gas lease
bearing serial No. OCS P-0296, on which area is located Platform Edith.
"Parent Companies," "Affliated Companies," and "Controlling Interest" shall have the
following meanings:
(a) A Person's "Parent Companies" means any and all entities having a "Controlling Interest" in such Person;
(b) A Person's "Affliated Companies" means any and all entities in which the Person or the Parent Companies of such Person have a direct or
indirect "Controlling Interest"; and
(c) "Controlling Interest" means a legal or beneficial ownership of
more than 50% of the voting stock or other voting rights in an entity or the right to appoint 50% ofthe managing members or board of directors in an entity.
Any and all federal (including the Bankruptcy Code), state, Native American, county, municipal or other federal, state, foreign or local laws, statutes, ordinances, regulations, rules, permits, approvals or other regulatory requirements or authorizations and any administrative, executive or judicial or court orders or judgments, as well
1.8 Applicable Laws.
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as the common law, in each case which are applicable to any of the Parties, the Beta Interests, the Operating Interests or the SPBP Interests.
1.9 Assi2nments and Bils of Sale. (a) The instruments conveying the Beta
Interests in a form reasonably acceptable to Seller and Buyers, and (b) the Operating Company
and Affiiates.
the Beta Interests, insofar as same arise out of or relate to the period
of the Beta Interests, insofar as same arise out of or relate to the period from and
after the Effective Time;
(c) All royalty obligations associated with, related to or arising from
the Beta Interests that arise out of or relate to the period from and after the Effective Time relative to Oil and Gas acquired hereunder and/or produced and saved after the Effective Time;
insofar as the same result from spills, leaks or actions occurring at or after the
Effective Time; and
(e) All plugging, abandonment, decommissioning, removal and/or
from the Beta Interests imposed by operation of law on the owner of the Beta
Interests, other than Claims (if any) asserted in writing prior to the Effective Time (except for the MMS claim listed on Schedule 12.l(gg) currently estimated to be
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(b) All Claims associated with, related to or arising from the operation
the Operating Interests, insofar as same arise out of or relate to the period from and after the Effective Time.
of
For purposes of clarity, Assumed Operating Liabilities excludes any and all Claims and liabilities
not specifically referenced in this Section 1.4, including the Excluded Liabilities and the
1.15 Avoidance Actions. Individually and collectively, all avoidance or recovery actions under Bankruptcy Code sections 502, 510, 541, 542, 544, 545, 547, 548, 549, 550, 551, and/or 553, or under similar or related state or federal statutes and common law, including, without limitation, fraudulent transfer or conveyance laws.
1. i 6 Bankruptcy Case. Defined in the Recitals of
this Agreement.
1.19 Bankruptcy Costs. All costs and claims related to the Bankruptcy Case,
including all administrative expenses and claims for administrative expenses pursuant to Section 503 of the Bankruptcy Code.
1.20 Bankruptcy Court. Defined in the Recitals of
this Agreement.
incentive compensation, equity-based, stock option, share appreciation right, phantom stock, severance, retention, health, dental, vision, life insurance, disability, survivor benefit, tuition, vacation, voluntary employees' beneficiary association under Section 501(c)(9) of the Code,
vacation and other employee benefit and fringe benefit plans and programs (including all employee benefit plans as defined in ERISA Section 3(3), whether or not subject to ERISA),
which are currently in effect for Seller or any ERISA Affliate, which are intended to provide benefits to current or former employees, directors, offcers or independent contractors of Seller or any ERISA Affiliate and/or their beneficiaries, or for which Seller or any ERISA Affliate has
any liability, whether actual or contingent.
1.22 Beta Field. The oil and gas production unit created by the Unit
Agreement, comprising the OCS Leases, but excluding the Additional Unit Area.
1.23 Beta Interest or Beta Interests. All of
the following:
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(a) an undivided 1 00% (of 8/8ths) interest in, to and under the OCS
Leases (including leasehold interests, fee interests, record title, operating rights,
carried interests or other interests), together with all Oil and Gas produced and saved therefrom or allocable thereto;
(b) the Beta Tangible Assets, whether leased or owned, including those described on Exhibit A;
(c) an undivided 1 00% (of 8/8ths) interest (including leasehold interests, fee interests, record title, operating rights, carried interests or other
interests) in and to the Properties in which or on which the Beta Tangible Assets or other Beta Interests exist or are located, whether in whole or in part, and the
Properties covered by the OCS Leases, together with any lands, leases or
interests pooled, unitized or communitized therewith (other than the Additional Unit Area);
(d) to the extent transferable, all right, title and interest of the Seller
and any of its Affliates in and to the Governmental Bonds related to the Beta Interests, but in any event, the cash and other collateral, if any, posted or
escrowed in connection therewith;
(e)
all right, title and interest In, to and under the Assumed Beta
Contracts;
(f) to the extent assignable, all representations, warranties, rights to
indemnities and releases from any Third Party relating to (a) through (d) above or
otherwise relating to the Beta Field;
(g) Seller's geological, geoseismic or geophysical data, as well as any
with the ownership, use or operation of the OCS Leases, the Beta Tangible Assets or the other Beta Interests;
() all accounts receivable (including production receipts, production
Time, whether the same is attributable to Oil and Gas produced and saved (or are otherwise attributable to the ownership or operations of the other Beta Interests) on or after the Accounting Time;
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(k) to the extent related to the Beta Interests or the Operating Interests,
all deposits by Seller or its Affliates with Governmental Entities, contractors and vendors (including customer deposits and security for rent, electricity, telephone
or otherwise), credits, claims for refunds (including Tax, insurance and other
refunds), prepaid charges and expenses, including any prepaid insurance, prepaid rent, rights of offset in respect thereof and all retentions or holdbacks of Seller or its Affiiates (other than SPBP), including those held by Third Parties, except for
retainers paid to professional service providers as described on Schedule 1.23(k);
(I) to the extent related to the Beta Interests or the Operating Interests,
all cash, cash equivalents, treasury instruments and other investment property of Seller, and all of Seller's bank accounts, deposit accounts and amounts contained in Seller's lock boxes as of the Effective Time, except for the portion (if any) of
cash of Seller on hand as of the Closing Date (i) funded to Seller by Buyers or their respective Affiiates in respect of, and forming a part of, the Wind-Down
Budget, (ii) segregated accounts of Seller as required by the Bankruptcy Court and described on Schedule 1.23(\, including the reserve accounts established with respect to the Production Payments, and (iii) needed to pay any outstanding
checks issued by Seller in connection with the operation of
the Operating rnterests in the ordinary course of business during the 90-day
period immediately preceding the Closing Date, so long as such checks were
issued and dated subsequent to the Accounting Time, other than cash specified in the Wind-Down Budget to pay outstanding checks issued by Seller that are not related to the Beta Interests or the Operating Interests;
(m) except for Seller's rights with respect to the insurance claims
case to the extent insuring or otherwise related to the Beta Interests, the
Operating Interests or the SPBP Interests;
(n) all assets of Seller or any of its Affiliates (other than SPBP) held
propert, whether owned or licensed, or electronic data or fies relating to or used principally in connection with the Beta Interests; and
(p) all other tangible assets owned by Seller in connection with the
The Beta Interests shall explicitly exclude the Excluded Items, which are not being transferred hereunder, and the Operating Interests.
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1.24 Beta Onshore Pump Station. The pumping station and related facilities located in Long Beach, California, where the San Pedro Bay Pipeline connects to other onshore pipelines, as depicted on Exhibit B.
1.25 Beta Tan2ible Assets. An undivided 100% (of 8/8ths) interest in and to
Platform Eureka, Platform Elly, Platform Ellen and all Wells, facilities, machinery, fixtures, pipelines, flowlines, lease term lines, transmission lines, structures, facilities, wellheads, tanks,
pumps, compressors, gathering lines, improvements, meters, computers, softare, desks, offce
furniture and other miscellaneous personal property or equipment located on or used in connection with the use or operation of the OCS Leases or other Beta Interests and with any of such platforms and all other tangible assets related to the Beta Interests or the Operating Interests not otherwise included within the definition of Operating Tangible Assets, together with all data
and Records associated therewith and all Oil and Gas in pipelines or in tanks (including in
storage, line fill and tank bottoms) upstream of the sales custody transfer meter at the Effective Time that are fairly attributable to the Beta Interests (regardless of whether produced and saved
prior to or after the Effective Time), together with any other Records relating to the Beta
Interests (or the ownership, use, operation, maintenance, repair or disposition thereof); provided,
that the Beta Tangible Assets shall not include the Operating Tangible Assets or any Excluded Items.
1.26 Beta Unit. The oil and gas production unit created by the Unit
Agreement, comprised of the OCS Leases together with the federal oil and gas lease bearing
serial No. OCS-P-0296.
1.27 Business Day. A day other than a Saturday, Sunday or day on which
commercial banks in the State of
1.29 Buyer Percenta2e. 51.75% in the case of Rise and 48.25% in the case of
Silver Point.
1.30 Casualty Loss. Any loss, damage or reduction in value of the Beta
Tangible Assets, the Operating Tangible Assets or the SPBP Tangible Assets of any kind
whatsoever that occurs during the period between the Execution Date and the Closing as a result of acts of God, fire, explosion, terrorism, earthquake, windstorm, storm, flood, blowout or any taking in condemnation or under right of eminent domain or proceedings for such purpose,
pending or threatened, from or any other cause or casualty of any kind, including any loss, damage or reduction that may be attributable to Seller or any Third Party, 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 Beta Tangible Assets or the SPBP Tangible Assets for production of Oil and Gas through normal depletion (including the watering out of any well or sand infitration of any well).
1.3 i CERCLA. The Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.c. 9601 et.seq, as amended.
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1.36 Code. The Internal Revenue Code of i 986, or any successor statute
thereto, as amended.
1.37 Competin2 Transaction. Any transaction or series of related transactions involving: (a) any merger, amalgamation, share exchange, recapitalization, consolidation, liquidation or dissolution of Seller or SPBP; (b) any direct or indirect acquisition (by asset purchase, stock purchase, merger, or otherwise) by any Person or "group" (as defined under
Section i 3(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) of all or substantially all of the Beta Interests, the Operating Interests or the SPBP Interests (including any capital stock of or ownership interest in SPBP), or any license, lease or long term supply agreement having a similar economic effect; or (c) any direct or indirect acquisition of beneficial ownership (as defined under Section 13(d) of the Exchange Act) by any Person or "group" of all
or substantially all of the voting stock of Seller or any tender or exchange offer that if
consummated would result in any Person or group beneficially owning all or substantially all of the voting stock of Seller.
1.38 Consents. Any approval, consent, ratification, waiver or other authorization from any Person (including any of the foregoing issued, granted, given or
otherwise made available by or under the authority of any Governmental Entity or pursuant to any Applicable Laws), including (a) to the extent required and requested by either Buyer, the consent of Aera, Noble and SWEPI with respect to the transfer of Seller's right, title and interest
in the MMS Supplemental Bond to Buyers, (b) the final, unconditional approval of any
Governmental Entity required in connection with the sale and transfer of the SPBP Stock to
Buyers, such approval to be in such form and substance as Buyers determine in their reasonable discretion to be acceptable, (c) the MMS Approvals, (d) the CSLC Approvals, and (e) those set forth on Schedule 12.l(e).
1.39 Contracts. All farmout and farmin agreements, operating agreements,
production sales and purchase contracts, processing contracts, gathering contracts, transportation contracts, saltwater disposal agreements, surface leases, subsurface leases, division and transfer
orders, areas of mutual interest, balancing contracts, and all other written or oral contracts,
contractual rights, interests and other written or oral agreements and instruments to which Seller or SPBP is a party (or otherwise bound by) covering or affecting (a) the SPBP Stock, (b) any or
all of the Beta Interests, the Operating Interests or the SPBP Interests, (c) the production,
D-1809900_17,OOC
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handling or transportation of Oil and Gas attributable thereto, or (d) the use or ownership or operation of any of the Beta Interests, the Operating Interests or the SPBP Interests or the Oil, Gas, water or other substances produced therefrom, but excluding the Credit Agreements.
1.40 Credit A2reements. (i) The Senior Secured Super Priority Priming
Debtor in Possession Credit and Guaranty Agreement, dated as of March 1 i, 2009, among Seller,
Pacific Energy Alaska Operating LLC, Pacific Energy Alaska Holdings, LLC, J. Aron & Company, Silver Point Finance LLC and certain other lenders, guarantors and others party thereto, as amended, supplemented and modified from time to time, and (ii) the Second Lien
Credit Agreement, dated August 24, 2007, among Pacific Energy Alaska Operating LLC, Pacific Energy Alaska Holdings, LLC, 1. Aron & Company, Silver Point Finance LLC and certain other lenders, guarantors and others party thereto, as amended, supplemented and modified from time
to time.
1.41 CSLC. The California State Lands Commission and any successor
Governmental Entity.
sale of
1.42 CSLC Approvals. The final unconditional approval of the CSLC of the the SPBP Stock or, if applicable, the Beta Interests and the Operating Interests, to Buyers.
1.43 Curative Claims. The Claims of Third Parties that Bankruptcy Court requires a Buyer to payor satisfy as a condition to approving the sale of the Beta Interests, the Operating Interests and SPBP Stock.
1.44 Debt Assumption. Defined in Section 3. i.
1.45 Defect Value. With respect to each Title Defect, Buyers' good faith
estimate of the reduction of the value of the affected Beta Interest, Operating Interest, SPBP
Stock or Property as a result of such Title Defect.
1.46 DCOR. Dos Cuadras Offshore Resources LLC, a Texas limited liability
company.
1.48 Effective Time. 11 :59 p.m. California time on the Closing Date.
O-1809900_17,OOC
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presence, testing, discharging or handling of chemicals, hazardous substances (as that term is defined by CERCLA), petroleum (including crude oil or any fraction thereof), natural gas, natural gas liquids, synthetic gas, waste materials and other hazardous materials; (iii) the release, reporting, investigation or remediation of waste materials, hazardous substances (as that term is defined by CERCLA), petroleum (including crude oil or any fraction thereof), natural gas, natural gas liquids, synthetic gas, or other hazardous substances, materials or wastes of any kind (including any substances that may have an adverse impact on human health, wildlife or the environment); or (iv) the protection of threatened or endangered species. Without limiting the foregoing, Environmental Laws expressly includes the Clean Air Act, 42 U.S.C. 7401 et. seq.; the Federal Water Pollution Control Act, 33 U.S.C 1251 et. seq.; the Rivers and Harbors Act of 1899,33 U.S.c. 401 et, seq.; the Safe Drinking Water Act, 42 U.S.c. 300f et. seq.; CERCLA; the Resource Conservation and Recovery Act, 42 U.S.C. 690 i et. seq.; of 1976, as amended; the Hazardous and Solid Waste Amendments Act of i 984, as amended; the Toxic Substances Control Act, 15 U.S.c. 2601 et. seq.; the National Environmental Policy Act of
1969, as amended, the Oil PolIution Act of 1990, as amended, and the Hazardous Materials
Transportation Act, as amended 19 U.S.c. 7401 et. seq., and all similar state, local, foreign
and international laws, including the California Safe Drinking Water and Toxic Enforcement Act of 1986 (Proposition 65) and all state and local laws relating to climate change, all as in effect as of the date of this Agreement.
1.53 Environmental Liabilties. AII Claims under Environmental Laws
relating to, arising out of, in connection with, or attributable to ownership or operation of the
Beta Interests or the SPBP Interests, respectively.
this
Agreement been considered a single employer with the Seller within the meaning of Section
414(b), (c), (m) or (0) of the Code or Section 4001(b) of
ERISA.
1.57 Excluded Items. (i) The reservations, exceptions and exclusions, if any,
listed on Exhibit A, (ii) the items listed on Schedule i .57, and (iii) the folIowing:
(a) all rights to representations, warranties, indemnities and releases
from any Third Parties that do not constitute or relate in any way to the Beta
Interests, the Operating Interests or the SPBP Interests;
(b) except for the right to proceeds assigned pursuant to Section 6.3,
aII rights under insurance policies held by SelIer or any of its Affliates (other
DOC
D-J 809900_1 7
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than SPBP) covering any of the Beta Interests, the Operating Interests or SPBP
Interests with respect to the insurance claims set forth on Schedule 1.57(b );
(c) Platform Edith, and the Oil and Gas Rights associated with
Platform Edith (including Federal Lease bearing serial no. OCSP-0296) and the Additional Unit Area, other than rights, titles, and benefits in, to and under any
Assumed Beta Contracts relating thereto, provided, further, however, that this
shall constitute an Excluded Item only to the extent that Seller owns no record,
legal or other beneficial right, title or interest in and to Platform Edith, the Oil and Gas Rights associated with Platform Edith (including Federal Lease bearing serial no. OCSP-0296) and the Additional Unit Area;
(d) the 6" crude oil pipeline between Platform Edith and Platform Elly;
(e) all Contracts to which Seller is a party that are listed on Schedule 1.57( e );
(f) all of
parties arising out of the operation of the Beta Interests attributable to Seller's
ownership or the operations conducted prior to the Effective Time identified on Schedule 1.57(f), insofar and only insofar as: (i) no settlement of the Claims may involve (nor shall Seller take any legal position or assert any argument which could reasonably result in) any additional burden, liability or obligation of a Buyer after Closing unless Seller has first obtained the prior written consent of that Buyer, (ii) Seller shall have no right (and shall not exclude from the sale) any other Claims, whether known or unknown, liquidated or contingent, that
Seller may have against operators or other third parties arising out of the
operation of
Effective Time;
(g) all Avoidance Actions of Seller;
(h) the rights of Seller, its Affiliates (other than SPBP) and former and
current directors and offcers of Seller and its Affiliates (including SPBP) under Seller's D&O insurance policies;
(i) to the extent not related to the Beta Interests or the Operating
Interests, Records of Seller and its Affliates (other than SPBP) that are subject to
U) all Claims unrelated to the ownership and operation of the Beta Interests, the Operating Interests, the SPBP Stock or the SPBP Interests as
conveyed by this Agreement.
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Liabilities or Assumed Operating Liabilities or implying that Buyers are assuming any Claims, liabilities or obligations other than the Assumed Beta Liabilities or the Assumed Operating
Liabilities, the following Claims, liabilities and obligations are expressly excluded and not
assumed by any Buyer:
(a) all Claims, liabilities and obligations of Seller or any Affiliate of
Seller (other than SPBP) associated with, related to or arising from note or debt instruments to which Seller is or may be a party, except for any Claims, liabilities and obligations that expressly relate to Permitted Encumbrances;
(b) all accounts payable of Seller or any Affiliate of Seller (other than
SPBP) attributable to the Beta Interests or the Operating Interests that relate to
the period prior to the Accounting Time;
(c) all royalty obligations of Seller or any Affliate of Seller (other
than SPBP) associated with, related to or arising from the Beta Interests that
relate to the period prior to the Accounting Time;
(d) other than Production Costs, all Claims, liabilities and obligations arising out of the ownership or operation of the Beta Interests or the Operating
Interests prior to the Effective Time including all Environmental Liabilities relating to the Beta Interests or the Operating Interests existing prior to or as of
the Effective Time; except solely those plugging and abandonment Claims,
Beta Liabilities;
(f) the full and complete payment of any remaining Claims, liabilities and obligations associated with, related to, or arising from, the Production
Payments, as well as any costs, expenses, or liabilities associated with the release and re-conveyance of the Production Payments to Seller prior to Closing;
(g) other than Production Costs, any Claims, liabilities or obligations relating to the ownership, operation or disposition of any assets or businesses of Seller or its Affiliates (other than SPBP), including any assets or operations of Seller in Alaska (including any plugging, abandonment, decommissioning and/or
restoration claims or liabilities relating thereto) or the sale or other disposition thereof;
(h) any Claims, liabilities and obligations (i) of Seller or its Affliates (other than SPBP) for any Taxes including, for the avoidance of doubt, any
liability for Taxes pursuant to Section 1.502-6 of
provisions of state, local or foreign Tax Law (but excluding Taxes with respect to SPBP that are attributable to the Post-Closing Tax Periods), (ii) for any Taxes imposed on or with respect to the Beta Interests or the Operating Interests or the
D-1809900_17
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operations of the Beta Interests or the Operating Interests for all Pre-Closing Tax
Periods, and (iii) Seller's share of any Taxes described in Article 10;
Additional Unit Area or the ownership, operation, maintenance, repair, plugging, decommissioning, or abandonment of Platform Edith and any well drilled on (or pipeline or other facilities installed in, on or under) the Additional Unit Area;
U) other than Production Costs, any Claims, liabilities and obligations arising out of, relating to or with respect to (i) the employment or performance of services of any employee, former employee or consultant of Seller or any of its
Affiiates, or termination of employment or services by Seller or any of its Affiiates of any such employee, former employee or consultant, (ii) workers' compensation claims against Seller or any of its Affliates, or (iii) any Benefit
Plan, whether arising prior to or after the Closing Date; and
(k) other than Production Costs, all other Claims, liabilities and
obligations of Seller or its Affliates (other than SPBP) arising out of, relating to or otherwise in respect of the ownership or operation of the Beta Interests or the
Operating Interests on or before the Effective Time and all other Claims,
liabilities and obligations of Seller or its Affliates (other than SPBP) other than the Assumed Beta Liabilities and the Assumed Operating Liabilities.
1.59 Execution Date. Defined in the preamble.
1.60 FERC. Federal Energy Regulatory Commission.
1.6 i Financial Statements. Each of the unaudited balance sheets and related
statements of income of
1.62 Gas. Natural gas, including casinghead gas, gas-well gas and other hydrocarbon gases.
1.63 Governmental Bonds. All of the following: (i) the MMS Supplemental
Bond and, to the extent related to the Beta Interests, the Operating Interests or the SPBP
Interests, any other bonds, deposit accounts, trust accounts, U.S. Treasury notes, investment
securities, cash or other collateral and all other forms of financial security posted by, maintained on behalf of or at the request of Seller or any Affiliate thereof, including all lease-specific
abandonment bonds, areawide bonds, operator bonds, right of way bonds, surety bonds and bonds for plugging, abandonment, decommissioning, removal and restoration obligations, (ii) any trust agreements or other agreements entered into in connection with the items in clause (i), in each case whether posted or entered for the benefit of Seller, any of its Affliates or any respective predecessor in interest thereof, and whether held directly by Seller, any Affliate or by
a Governmental Entity or other Third Party, as more particularly described on Schedule 1.63.
board, body, department, bureau, commission, instrumentality, court, tribunal or quasi0-1 809900_1
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governmental entity in any jurisdiction (domestic or foreign) having jurisdiction over any Party
or any affected asset, or over any of
1.66 Knowled2e. The actual knowledge of (a) in the case of Buyers, such
Person's Chief Executive Offcer, President, Chief Financial Offcer, Chief Accounting Officer,
Tywoniuk, Seller's Acting Chief Executive Offcer and Chief Financial Officer, Steve Liles, Seller's Vice President and General Manager, Beta Operations, Marina Robertson, Seller's HSE Manager, William Lyng, Seller's Controller, and Jennifer Kuritz, Seller's Treasurer after reasonable investigation and inquiry. With respect to the reasonable investigation and inquiry of
the Persons set forth in (b) above, such Persons shall not be required to undertake any
investigation or inquiry of Third Parties relating to the ownership of the Beta Interests, the Operating Interests and the SPBP Interests for the period of time prior to Seller's ownership of the Beta Interests, the Operating Interests and SPBP.
1.67 LACT Unit. The lease automated custody transfer unit at the Beta
Onshore Pump Station.
1.68 Lien. Any lien, encumbrance, pledge, mortgage, deed of trust, security interest, Claim, lease, charge, option, right of first refusal, easement, servitude, proxy, voting trust or agreement, transfer restriction under any equity holder or similar agreement or any other
restriction or limitation whatsoever, including any Contract granting any of
the foregoing.
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occurrence of any military or terrorist attack, (4) changes in GAAP or other accounting principles or changes in Applicable Laws, (5) the taking of any action required by this Agreement; provided, that none of the changes, effects, events or occurrences described in
clauses (1), (2) and (3) have a materially disproportionate effect on Seller, SPBP or the Beta
Interests, the Operating Interests or SPBP Interests relative to other similarly situated industry participants in the oil, gas or pipeline gathering and processing industry or the oil and gas or
pipeline industry, or (b) any changes in prices for commodities.
1.70 MMS. The Minerals Management Service, Pacific OCS Region, of the
U.S. Department ofthe Interior, and any successor Governmental Entity.
1.71 MMS Approyals. The (i) final, unconditional approval by the MMS of the transfer and assignment of the MMS Supplemental Bond or, to the extent required, all
interests of Seller and any Affliate of Seller in any U.S. Treasury notes and other investment securities, trust accounts, cash or other collateral posted, held or pledged pursuant to the MMS Supplemental Bond to the Buyers, (ii) the receipt of the MMS Assignment Approvals, (iii) the MMS Successor Unit Operator Approval, and (iv) the final, unconditional approval of any other Governmental Entities required in connection with the sale and transfer of the Beta Interests or the Operating Interests to Buyers, including the United States Department of Justice, such approvals to be in such form and substance as Buyers determine in their reasonable discretion to be acceptable (and without any material, additional cost or liability of any Buyer in connection
therewith).
Decommissioning Liabilities Trust Agreement dated effective as of March 1, 2007, among U.S.
Bank National Association, Seller, and the MMS and (b) any performance bonds, trust
agreements, or similar instruments, cash collateral, deposits, letters of credit or other collateral or financial support provided or posted in connection therewith.
1.74 MMS Qualification. Due authorization and qualification from the MMS to hold mineral leases and/or rights-of-way on the Outer Continental Shelf relating to the Beta
Interests.
by the MMS of Rise or its Affliate as the successor unit operator for the Beta Unit, the OCS
Leases, Platform Ellen, Platform Elly and Platform Eureka.
1.76 Net Revenue Interest (or NRn. The undivided interest in share of Oil and Gas produced from, or attributable to, a particular lease, Well, mineral fee, or other acreage or oil and gas property to which a Person is entitled, after deducting all lessor royalties,
production payments, overriding royalties, net profits interests and any other burdens on
D-1809900_17,DOC
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production to which a Person (or its interest therein) is subject, and is expressed as a percentage or a decimal interest.
OCS-P 0301 and OCS-P 0306, affecting lands located in federal waters offshore California.
1.80 OiL. Crude oil, distilate, drip gasoline, condensate and other liquid
hydrocarbons.
1.81 Oil and Gas Ri2hts. Defined in the Second Unit Operating Agreement.
Contracts;
(c) the real propert interests and leases listed on Schedule 1.83(c);
and
(d) all of Seller's right, title and interest in, to and under any software,
propert, whether owned or licensed, or electronic data or fies relating to or used in connection with the Operating Interests; provided, however, that Seller, prior to Closing, shall make and deliver to Buyers the items listed on Schedule 1.83(d).
1.84 Operatin2 Tan2ible Assets. All of Seller's interest in and to all facilities,
machinery, fixtures, facilities, improvements, desks, offce furniture and other miscellaneous personal property or equipment located at Seller's executive office at 111 W. Ocean Boulevard, Suite 1240, Long Beach, California 90802 and/or used in connection with the use or operation of the Operating Interests, together with all data and Records associated therewith at the Effective Time that are fairly attributable to the Operating Interests (regardless of whether produced and saved prior to or after the Effective Time), together with any other Records relating to the Operating Interests (or the ownership, use, operation, maintenance, repair or disposition thereof); provided, that the Operating Tangible Assets shall not include the Beta Tangible Assets or any Excluded Items.
1.85 Or2anizational Documents. With respect to any Person, its certificate of incorporation, formation or organization (or comparable) document, its by-laws, partnership
0-1 809900_17 DOC
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1.86 ORRI. The overriding royalty interests affecting the Beta Interests or
SPBP Interests in favor of the lenders (or Affliates of such lenders) under the Credit Agreement and more particularly described in Schedule 1.86.
1.87 Party or Parties. Defined in the preamble of
this Agreement.
1.92 Platform Edith. The offshore oil and gas platform located in the Beta
Unit on Federal Lease bearing serial no. OCS P-0296, offshore California, which is not currently
owned or operated by Seller.
1.93 Platform Ellen. The offshore oil and gas platform located in the Beta
Unit on Federal Lease bearing serial no. OCS P-0300, offshore California.
1.94 Platform Elly. The offshore oil and gas platform located in the Beta Unit
on Federal Lease bearing serial no. OCS P-0300, offshore California.
1.95 Platform Eureka. The offshore oil and gas platform located in the Beta
Unit on Federal Lease bearing serial no. OCS P-030 1, offshore California.
1.96 Post-Closin2 Tax Period. Any tax period beginning after the Closing
Date or the portion of any Straddle Period beginning on the day after the Closing Date.
1.97 Pre-Closin2 Tax Period. Any tax period ending on or before the Closing Date and the portion of any Straddle Period ending on the Closing Date.
complaint fied with the FERC relating to SPBP or the SPBP Interests.
D-1809900_17,DOC
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1.99 Production Costs. All royalty obligations and costs and expenses for
goods and services incurred by Seller in the ordinary course of business related to the operation of the Beta Interests and the Operating Interests between the Accounting Time and the Effective
Time other than costs and expenses for which cash is excluded from the definition of Beta
Interests in Section 1.23(\ above to pay outstanding checks issued by Seller in connection with
the operation of the Beta Interests and the Operating Interests in the ordinary course of business during the 90-day period immediately preceding the Closing Date. For purposes of clarity, Production Costs shall not include any Claim, liability or obligation of Seller or its Affliates related to tort or breach of contract.
1.100 Production Payments. Any and all payment obligations of Seller or its
Affliates under (i) Attachment I to the Assignment and Bill of Sale dated effective as of
November i, 2006, at 7:00 a.m. Pacific Time, from Aera to Seller, (ii) Attachment I to the
Assignment and Bill of Sale dated effective as of
from SWEPI to Seller, and (iii) Attachment I to the Assignment and Bill of Sale dated effective November 1, 2006, at 7:00 a.m. Pacific Time, from Noble to Seller. as of
1.101 Production Taxes. All federal, state or local taxes, assessments, levies or other charges, which are imposed upon production from the Beta Interests, including excise taxes on production, severance or gross production, as well as any interest, penalties and fines assessed or due in respect of any such taxes, whether disputed or not.
i. i 02 Property or Properties. The real property in which or on which the Beta
Tangible Assets, Operating Tangible Assets (or, as the context may imply, the SPBP Tangible Assets) exist or are located, whether in whole or in part; the real propert covered by the OCS
Leases.
1.103 Property Taxes. All federal, state or local taxes, assessments, levies or other charges, which are imposed upon the Properties or other real and personal propert of
Seller or SPBP that are acquired by Buyers hereunder, including 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.
1.104 Purchase Price. Defined in Section 3.1.
1.105 Real Property Interests. Defined in Section 12.1 (p )(ii).
1.106 Record or Records. All books and records, fies, data, correspondence, studies, surveys, reports, maps, and other fies in any way related to the Beta Interests, the
Operating Interests, SPBP, the SPBP Stock, or the SPBP Interests, including 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 Seller's possession or control and relating to the Properties, the Beta Interests, the Operating Interests, SPBP, or the SPBP Interests, including all title records, prospect information, title opinions, title insurance reports, abstracts, propert ownership reports, customer lists, supplier lists, sales materials, well logs, well tests, maps, engineering data and reports, health, environmental and
D-1809900_17,DOC
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safety information and records, lease and land fies, title files, Third-Party licenses, promotional materials, operational records, technical records, service and warranty records, reserve estimates and economic estimates; production and processing records, division order, lease, land and rightof-way files, accounting and financial fies, tax records (other than income tax), and contract files (including all files regarding the Contracts and related files), as well as all files and records
relating to employees and Benefit Plans of Seller; together with all employee and labor
employment, compensation, health, Benefit Plan information of both SPBP and, to the extent
they are involved with the ownership, operation or disposition of the Beta Interests, the
employees of Seller; together with any engineering designs, technical plans, drawings, analysis, maintenance and inspection reports relating to the Platform Ellen, Platform Elly and Platform
Eureka; provided, however, "Records" shall not include (a) Seller's general corporate,
accounting and financial books and records that do not relate to the above, (b) books, records (including seismic data) and files that may not be disclosed under the terms of any Third Party 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 Buyers) or cannot be disclosed under Applicable Laws, to the extent Seller has both identified to Buyers the existence and general nature of same and uses reasonable commercial and diligent efforts to obtain all
necessary Third Party consent to disclose and provide same to Buyers (c) information relating
solely to Excluded Items, (d) income tax information of Seller, or (e) records relating to the
acquisition or disposition (or proposed acquisition or disposition) of the Properties in connection
with this sales transaction, including proposals received from or made to, and records of
negotiations with, Persons other than Buyers and economic analyses associated therewith.
1. i 07 Restructurin2 Transaction. Either (a) a recapitalization transaction
involving, in whole or in part, Seller and its existing security holders or creditors, or (b) a transaction or series of transactions, including by way of a plan of reorganization or plan of arrangement or compromise, in connection with a liquidation or reorganization or other continuation of the business relating to all or any material portion of the Beta Interests, the
Operating Interests or the SPBP Interests.
1.108 Rise. Defined in the preamble to this Agreement.
1.109 Sale Order. The sale order entered by the Bankruptcy Court reasonably
satisfactory in form and substance to Buyers, approving the consummation of the purchase and
sale of the Beta Interests, the Operating Interests and the SPBP Stock as contemplated by this
Agreement, including the absence of any contingent liability of Buyers as successors to Seller under applicable principles of common law. Notwithstanding any provision of this Agreement, the Sale Order shall have, without limitation, (1) approved the sale of the Beta Interests, the Operating Interests and the SPBP Stock to Buyers on substantially the terms and conditions set forth in this Agreement and authorized Seller to proceed with the transactions contemplated by this Agreement; (2) contained specific findings that each Buyer is a good faith purchaser of the
Beta Interests, the Operating Interests and the SPBP Stock for purposes of Section 363(m) of
the
Bankruptcy Code and that there have been no agreements between a Buyer and any other entity regarding the Beta Interests, the Operating Interests and the SPBP Stock within the ambit of Bankruptcy Code Section 363(n); (3) provided that the sale of the Beta Interests, the Operating
Interests and the SPBP Stock to Buyers shall be free and clear of all Liens (other than with
respect to Silver Point's Buyer Percentage of
D-1809900_17,DOC
remain subject to the Silver Point Indebtedness) in accordance with Section 363 of the
Bankruptcy Code except for Permitted Encumbrances (excluding any Permitted Encumbrances
under the Credit Agreements) and, with respect to the SPBP Stock, Permitted Stock
Encumbrances; (4) provided that, except for the Assumed Beta Liabilities and the Assumed Operating Liabilities provided in this Agreement, Buyers shall not assume any liabilities of
Seller; (5) provided pursuant to Bankruptcy Rules 6006(d) and 6004(h) that the Sale Order shall not be stayed but shall be effective immediately; and (6) provided for the dismissal of the SPBP
Bankruptcy Case immediately upon the closing of the transactions contemplated under this
Agreement.
1.110 Sale Procedures Order. The Sale Procedures Order attached hereto as
Exhibit I, which was entered by the Bankruptcy Court on July 1,2009.
Ll.
1.111 San Pedro Bay Pipeline. The sixteen-inch (16") oil pipeline from Platform Elly to the Beta Onshore Pump Station, as depicted and further described on Schedule
1.112 Second Unit Operatin2 A2reement. The Unit Operating Agreement,
Beta Unit, San Pedro Bay Area, Outer Continental Shelf, Offshore California, dated as of August 1, 1982, as amended.
1.113 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.
1.1 14 Seller. Defined in the preamble of this Agreement.
1.115 Seller Indebtedness. All indebtedness and other obligations under the
Credit Agreements.
1. 117 Silver Point Indebtedness. Indebtedness under that certain Amended and Restated Senior Secured Credit and Guaranty Agreement, among Silver Point Finance, LLC, as Administrative Agent and Collateral Agent, the lenders party thereto, and SP Beta Properties, LLC, as Borrower, to be entered into on the Closing Date.
1.119 SPBP Bankruptcy Case. Case Number 09-10790 fied with the
Bankruptcy Court.
1.20 SPBP Interests. All of real, personal, and mixed property interests of
SPBP as of the Effective Time, whether tangible
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(a) an undivided 1 00% (of 8/8thS) interest (and all legal, record and beneficial interest) in and to the San Pedro Bay Pipeline;
(b) all pipelines, pipeline facilities, trap sites, compressors, equipment,
fixtures, flowlines, receipt meters, delivery meters, regulatory stations, materials, improvements and personal property related to or used in connection with the ownership or operation of the San Pedro Bay Pipeline, together with the other SPBP Tangible Assets;
(c) all easements, rights of way, servitudes, fee lands, surface and
use or operation of the San Pedro Bay Pipeline or the assets described in any
other subparts of
(d) all Permits of Seller or its Affliates related to the ownership, use
or operation of
the San Pedro Bay Pipeline or the assets described in subparts (b)
or (c) above;
(e) the Beta Onshore Pump Station and LACT Unit;
(f) all land or other real property underlying the compressors, as well
as other real property warehouse leases, storage leases, fee interests or other real property interests described or used by Seller or its Affliates in connection with the ownership, use or operation of the interests and assets described in any of the
other subparts of
this definition;
held by Seller or its Affiliates in connection with the interests or assets described in subparts (a) - (f) above;
(h) all software, computer systems, computer servers and other
intellectual property, whether owned or licensed, of Seller or its Affliates in connection with the ownership, use or operation of the assets or interests in the
other subparts of
this definition;
(i) the Properties in which or on which the SPBP Tangible Assets exist
or are located, whether in whole or in part; the Properties that are owned or
leased by SPBP; and any other Properties in which SPBP has an interest of any
kind;
U) to the extent transferable, all surety bonds, plugging bonds,
bonds posted by or at the request of SPBP, and security deposits and other security furnished by SPBP or its or their predecessors in interest, and in any
event, the cash and other collateral, if any, posted or escrowed in connection therewith;
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the SPBP Interests, whether attributable to periods prior to, on or after the
Effective Time and all income attributable to the SPBP Interests subsequent to
the Accounting Time; and
(m) all Contracts relating to, arising out of or in connection with any
interests or assets described in subparts (a) - (I) above or otherwise relating to the ownership, use, operation, maintenance, repair or disposition of the other SPBP Interests, including those Contracts set forth on Exhibit D and Schedule 1.120(m) (collectively, the "SPBP Contracts").
1.121 SPBP Stock. Defined in the Recitals.
1.122 SPBP Tan2ible Assets. The San Pedro Bay Pipeline and all facilities, machinery, fixtures, computers, softare, desks, offce furniture, other miscellaneous equipment
and other tangible assets associated with and used in connection with the San Pedro Bay
Pipeline, consisting of approximately 91,161 feet of
to the 20" O.D. sphere launcher on Platform Elly and terminating with three crude pipelines from the Beta Onshore Pump Station to the THUMS terminal downstream of the LACT Unit, and the other SPBP Interests, and data and Records related to the SPBP Tangible Assets or the operations of SPBP and all Oil and Gas in pipelines or in tanks (including in storage, line fill and tank bottoms) upstream of the sales custody transfer meter at the Effective Time that are fairly attributable to the SPBP Interests (regardless of whether allocable to attributable to periods prior
to the Effective Time), together with any other Records relating to the SPBP Interests (or the
ownership, use, operation, maintenance, repair or disposition thereof).
1.123 Stock Power. A stock power, in form and substance satisfactory to of the SPBP Stock to a
1.124 Straddle Period. Any taxable period that begins on or before and ends
after the Closing Date.
1.125 SWEPI. SWEPI LP, a Delaware limited partnership.
1.126 Tax (or Taxes). Means (i) all taxes, assessments, duties, levies, imposts or other similar charges imposed by a Tax Authority, including all income, franchise, profits, capital gains, capital stock, transfer, gross receipts, sales, use, transfer, service, occupation, ad
valorem, property, excise, severance, windfall profits, premium, stamp, license, payroll, employment, social security, unemployment, disability, environmental (including taxes under Code Section 59A), alternative minimum, add-on, value-added, withholding and other taxes, assessments, charges, duties, levies, imposts or other similar charges of any kind whatsoever (whether payable directly or by withholding and whether or not requiring the .filing of a Tax Return), and all estimated taxes, deficiency assessments, additions to tax, additional amounts imposed by any Tax Authority, including any interest, penalty, or addition thereto, whether
D-1809900_17,DOC
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disputed or not; (ii) any liability for the payment of any amount of the type described in the
immediately preceding clause (i) as a result of being a member of a consolidated, affiliated, unitary, combined, or similar group with any other corporation or entity at any time on or prior to
the Closing Date; and (iii) any liability for the payment of any amount of the type described in the preceding clauses (i) or (ii) whether as a result of contractual obligations to any other Person or operation oflaw.
1.128 Tax Return. Any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.
1.129 Third Party. A Person other than Buyers and their respective Affiliates or Seller and its Affiiates.
1.130 Title Defect. Defined in Section 5.1.
1.131 Title Defect Notice. Defined in Section 5.2.
1.132 Transaction Documents. Defined in Section 14.1.
including Oil wells, Gas wells, injection wells, disposal wells and water wells on or allocable to the Beta Interests or SPBP Interests.
1.135 Wind-Down Bud2et. That certain budget approved by both Seller and Buyers prior to the Closing containing the line item expenses of Seller's and its Affliates'
bankruptcy estates necessary for the wind-down of Seller's and its Affliates' bankruptcy estates pursuant to the Bankruptcy Case, excluding any amounts relating to SPBP.
1.136 1992 A2reement. The agreement dated September 1, 1992 by and among Union Oil Company of California, Kerr-McGee Corporation, Minoco 1980-IPL Oil & Gas
Program, Minoco UAQ, Limited, Shell Western E&P, Inc., FM Properties Operating Co., Santa Fe Energy Resources, Inc., Hamilton Brothers Oil Company, Hamilton Brothers Exploration
Company and Hamilton Brothers Corporation, covering, among other things, the right to install a
ARTICLE 2
PURCHASE AND SALE
2.1 Interests. Upon the terms and subject to the conditions hereof, Seller
shall sell the Beta Interests, the Operating Interests and the SPBP Stock to Buyers at the Closing,
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in each case, free and clear of all Liens, other than, with respect to the Beta Interests and the
Operating Interests, the Permitted Encumbrances and, with respect to Silver Point's Buyer Percentage of the Beta Interests and the SPBP Stock, other than the Silver Point Indebtedness.
Upon the terms and subject to the conditions hereof, at Closing (a) Rise shall buy the Operating
Interests and its Buyer Percentage of the Beta Interests and the SPBP Stock, and (b) Silver Point shall buy its Buyer Percentage of the Beta Interests and the SPBP Stock for the consideration set this Agreement and the Sale Order. forth herein and subject to the terms and conditions of
2.2 Assumption. Upon the terms and subject to the conditions hereof, from
and after the Closing, on the terms more specifically provided in this Agreement, (a) each Buyer shall assume and be responsible for its Buyer Percentage of all Assumed Beta Liabilities, and (b) Rise shall assume and be responsible for all Assumed Operating Liabilities.
2.3 Ri2ht to Add or Delete Assets. At any time prior to the Closing Date,
upon giving at least five (5) Business Days' prior written notice to Seller, Buyers shall have the right, in their sole discretion, to delete in whole or part any of the Beta Interests, the Operating
Interests or the SPBP Interests and not acquire such deleted Beta Interests, Operating Interests or
SPBP Interests at the Closing (and, in the case of SPBP Interests, SPBP shall convey such items prior to Closing to Seller), or to add in whole or in part any item which would otherwise be an Excluded Item (other than Claims referred to in Sections 1.57(g)-(j) and acquire such added item at the Closing; provided, however, that no adjustment shall be made to the Purchase Price as
a result of any such deletion or addition; provided, however, that, except with respect to any
assets of SPBP, no item may be added except if and to the extent it relates to or may reasonably be deemed to be included within or used in connection with the Beta Interests, the Operating Interests or the SPBP Interests.
ARTICLE 3
PURCHASE PRICE
3.1 Purchase Price. The total consideration (the "Purchase Price") for the acquisition of the Beta Interests, the Operating Interests and the SPBP Stock at Closing is (a) a credit bid on the Closing Date by Rise of $80,000,000 of the Seller Indebtedness owing to Rise as of the Closing Date (the "Rise Credit Bid") in consideration of the acquisition by Rise of its the Operating Interests, Buyer Percentage of the Beta Interests and the SPBP Stock, and 100% of (b) immediately thereafter, the assumption on the Closing Date by Silver Point of $177,500,000 of the Seller Indebtedness plus the balance (but not to exceed $22,000,000) of the DIP Credit
Agreement owed to Silver Point or its Affiliates (the "Debt Assumption") in consideration of acquisition by Silver Point of the Silver Point Buyer Percentage of each of
the SPBP Stock, (c) the assumption on the Closing Date by each of
the the Beta Interests and Rise and Silver Point of their
respective Buyer Percentages of the Assumed Beta Liabilities, and (d) the assumption on the Closing Date by Rise or its designee ofthe Assumed Operating Liabilities.
3.2 Receipt of Benefits. To the extent that, on or after the Effective Time, Seller receives any payments, accounts receivable, proceeds, credits or other benefits attributable
to the Beta Interests, the Operating Interests or the SPBP Interests after the Accounting Time,
Seller shall immediately (and in no case later than five (5) Business Days after the same is
received) pay and deliver to Buyers the same.
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3.3 Several Liabilty. The obligation of each Buyer to pay and perform its
obligations under or related to this Agreement is several and not joint, and no Buyer shall have liability for any obligation or breach by the other. Without limiting the foregoing, if prior to
Closing a Buyer elects not to consummate the Closing in breach of its obligations under this
Agreement (a "Non-Performing Buyer"), then the other Buyer shall have no liability to Seller, any of Seller's Affliates or any Third Party for the failure of the Closing to occur, and Seller acknowledges that Seller shall have no right to pursue Claims against the other Buyer with
respect thereto. When obligations are set forth for Buyers, each is responsible only for its Buyer Percentage of that obligation.
(a) From the date hereof until the Closing, Seller and SPBP will give each Buyer, and its attorneys and other representatives, access at all reasonable times to the Beta Interests, the Operating Interests and the SPBP Interests, and to
any contract fies, lease or other title fies, production fies, well fies,
environmental files and other fies and Records of Seller or SPBP pertaining to their ownership or operation of the Beta Interests, the Operating Interests, the SPBP Interests or the SPBP Stock. In connection with its access to the Beta Interests, the Operating Interests and the SPBP Interests, each Buyer shall have the right at all reasonable times to inspect and test the same. In addition, Seller
shall use its reasonable best efforts to immediately seek and obtain consent to
disclose to a Buyer any Records or data which Seller cannot provide to such Buyer without, in its opinion, breaching confidentiality agreements with other
parties, as identified on Schedule 4.1 (a). All information obtained by a Buyer, its attorneys or representatives shall, unless disclosure is required by Applicable Law, be maintained in strict confidence, for use solely in connection with its evaluation of the Beta Interests, the Operating Interests, the SPBP Stock and the
SPBP Interests, and prior to Closing shall not be disclosed to any other Third
Part without Seller's prior written consent.
(b) Seller and its Affliates shall immediately make available to Rise
all employees of Seller and its Affliates to discuss potential employment with
Rise (or an Affiiate of Rise) and/or the provision of certain consulting services.
Notwithstanding anything stated herein to the contrary, Seller shall remain solely
and agents of Seller and Seller's Affliates and neither Buyer shall have any obligation to hire or employ any employee or former employee of Seller or its
Affiliates.
4.2 Payment of Expenses. Other than with respect to pre-petition costs, prior
to Closing, Seller wil, in the ordinary course of business, (a) payor discharge timely all
expenses relating to its ownership interests in the Beta Interests, the Operating Interests and the
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SPBP Stock for which it receives an invoice prior to the Closing Date, and (b) cause SPBP to payor discharge timely all expenses relating to the SPBP Interests for which it receives an invoice prior to the Closing Date, except in each case for expenses disputed by Seller or SPBP, as applicable, in good faith. After the Closing, Seller will payor discharge timely all expenses as contemplated by the Transition Services Agreement.
4.3 Third Party Consents~ Pre-Closin2 Consents.
(a) Each Buyer acknowledges that the sale of the Beta Interests, the Operating Interests and the SPBP Stock may require the providing of written
notice to, and Consent of, lessors, joint interest owners, farmers, sub
lessors,
assignors, grantors, parties to agreements, Governmental Entities having jurisdiction (including the FERC, the CSLC, the California Coastal Commission, the City of Long Beach, the Port of Long Beach and the MMS), or other Third
Parties identified in Schedule 12.l( e ).
asterisk (the "Pre-Closing Consents"), and wil furnish Buyers with copies, or
other acceptable proof, of the granting or receipt of each such Pre-Closing
Consent at least one (1) Business Day before the Closing Date.
(c) Seller shall promptly (and in no case later than two (2) Business
Days following the Execution Date) give written notices to all Third Parties and Governmental Entities whose Consent is required to consummate the transactions contemplated herein or other Consents that may be identified by any Buyer to Seller prior to the Closing, including those identified in Schedule 12.l(e).
(d) Seller and Buyers shall use all commercially reasonable efforts (i)
to obtain all of the Consents, and (i i) to prepare all of the draft forms of
Assignments and Bills of Sale, Stock Powers, and all other forms, filings and
applications necessary to obtain all of the Consents, so that such forms are
complete and reasonably acceptable to Seller and Buyers and should be accepted by the applicable Governmental Entity upon receipt.
(e) Unless waived by Buyers, if a Pre-Closing Consent is not obtained
prior to the Closing, each Buyer shall have the right, in its sole discretion, (i) to
not close or consummate the transactions contemplated herein, (ii) to elect that the SPBP Stock and/or any Beta Interests and/or any Operating Interests affected by the failure to obtain such Pre-Closing Consent be deemed an Excluded Item(s)
and the Purchase Price shall be reduced by the value of the affected Beta
Buyer, in its good faith opinion, or (iii) to proceed to Closing subject to the
agreement ofthe other Buyer to the provisions of Section 4.4(b) hereof.
4.4
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inconsistent with the provisions or intent of this Agreement and will use its
commercially reasonable efforts to take, or cause to be taken, all actions and to
do, or cause to be done, all things reasonably necessary, proper, or advisable
(a) Seller agrees that it wil not voluntarily undertake any course of action
consummate the transactions contemplated by this Agreement, including (i) cooperating with each Buyer in determining whether any Consents of any Governmental Entity, the Bankruptcy Court or Third Party are required in
connection with the consummation of the transactions contemplated hereby; (ii) using commercially reasonable efforts to obtain any such Consents and to effect any such declarations, filings, and registrations; (iii) using commercially reasonable efforts to cause to be lifted or rescinded any injunction or restraining order or other order adversely affecting the ability of the Parties to consummate the transactions contemplated hereby; (iv) using commercially reasonable efforts
to defend, and cooperate in defending, all Proceedings challenging this
Agreement or the consummation ofthe transactions contemplated hereby; and (v) executing any additional instruments necessary to consummate the transactions contemplated hereby.
(b) To the extent that any of the Beta Interests, the Operating Interests
or the SPBP Stock (including any instrument, document or agreement related thereto) are not assignable or deliverab Ie without the Consent of another Person, which Consent is not obtained on or before the Closing Date, and Buyers elect to
close and consummate the transactions contemplated herein without such nonobtained Consents (collectively, the "Waived Consents"), then after Closing,
Seller shall continue to use its commercially reasonable efforts to obtain such
Consents, and, at the election of Buyers, and to the maximum extent permitted
under the applicable agreements and under Applicable Law, until such Consent is
obtained: (i) Seller shall hold such Beta Interest, Operating Interest or SPBP
Stock in trust for the benefit of Buyers, as of and from the Closing Date, and shall
perform and discharge fully all the obligations under such Beta Interests,
Operating Interests or SPBP Stock arising from and after the Closing Date in
accordance with the terms of the Transition Services Agreement, (ii) Seller shall, without further consideration therefor, pay, assign and remit to Buyers promptly
all monies, rights and other considerations received in respect of such
performance, (iii) Seller shall promptly exercise its rights and options under all such contracts, agreements and commitments only as directed by Buyers and at Buyers' expense, and (iv) if and when any such Consent is obtained or such
contract or other applicable Beta Interest or Operating Interest shall otherwise
become assignable, Seller shall promptly, but in any event no later than three (3)
Business Days after obtaining such Consent or ability to assign, assign all its rights and obligations thereunder to Buyers in accordance with the other terms
and provisions hereof.
4.5 Notification of Certain Matters. Seller shall give prompt written notice
to Buyers of: (i) the occurrence or nonoccurrence of any event the occurrence or nonoccurrence of which, Seller reasonably expects would cause any representation or warranty made by Seller
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in Section 12.1 to be untrue or inaccurate at or prior to the Closing or (ii) any failure of Seller to comply with or satisfy any covenant, condition, or agreement to be complied with or satisfied by Seller hereunder prior to the Closing. Each Buyer shall give prompt written notice to Seller of: (i) the occurrence or nonoccurrence of any event the occurrence or nonoccurrence of which, to that Buyer's actual knowledge, would be likely to cause that Buyer's representation or warranty contained in Section 12.2 to be untrue or inaccurate at or prior to the Closing, or (ii) any failure of that Buyer to comply with or satisfy any covenant, condition, or agreement to be complied with or satisfied by that Buyer hereunder prior to the Closing. The delivery of any written notice pursuant to this Section 4.5 shall not be deemed to: (x) modify the representations or warranties hereunder of the Party delivering such written notice, (y) modify the conditions to the Parties' respective obligations to consummate the Closing set forth in Article 7 or (z) limit or otherwise affect the remedies available hereunder to the Party receiving such written notice.
4.6 Fees and Expenses. All fees and expenses incurred in 'connection with this Agreement by Seller will be borne by and paid by Seller, including the fees and expenses of obtaining any Consent or approval of a Governmental Entity whether before or after the Closing, as set forth in the Wind-Down Budget. All fees and expenses incurred in connection with this Agreement by any Buyer will be borne by and paid by that Buyer.
4.7 Casualty Loss. From the date hereof until the Closing, Seller shall promptly notify Buyers of any Casualty Loss of which Seller becomes aware. If any Casualty Loss occurs prior to the Closing to any of the Beta Interests, the Operating Interests or SPBP Interests and such Beta Interests, Operating Interests or SPBP Interests may be repaired prior to the Closing and, when repaired, the value of such Beta Interests, Operating Interests or SPBP
Interests shall not be materially diminished, then Seller may repair such Casualty Loss prior to
the Closing at Seller's cost and shall notify Buyers of such election. If Seller (i) elects to repair such Casualty Loss and such repair is not completed prior to the Closing or the repair(s) completed by Seller do not cause the value of such Beta Interests, Operating Interests or SPBP Interests to be substantially the same as such value prior to the Casualty Loss, or (ii) is unable or unwiling to repair the Casualty Loss prior to the Closing, then either (x) either Buyer shall have the right to not close or consummate the transactions contemplated herein, (y) Buyers may elect to proceed to the Closing and either, at Buyers' sole option and election: (l) accept the Beta
Interests, the Operating Interests or SPBP Interests affected by the Casualty Loss, but the
Purchase Price shall be reduced by the amount, in the good faith determination of Buyers, to be the estimated cost of repair or replacement, or (2) accept the Beta Interests or SPBP Interests affected by the Casualty Loss, without reduction of the Purchase Price, but, in such case, Seller shall cause all proceeds of insurance, Third Part indemnities, or any other proceeds or amounts paid (or to be paid) to Seller in connection with such Casualty Loss to be paid and delivered to Buyers, or (z) if any Buyer refuses to waive the claimed Casualty Loss, the subject Properties affected by the Casualty Loss shall become Excluded Items and the Purchase Price shall be
reduced by a reasonable value therefor as determined by Buyers, in their good faith opinion
(or
the repair or replacement cost) for such excluded Beta Interests, Operating Interests or SPBP
Interests.
4.8 Books and Records. At or promptly after the Closing (but in any event the Transition Services Agreement), Seller shall deliver to Buyers all books and Records pertaining to the Beta Interests, the Operating
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Interests and SPBP Interests that are in Seller's possession or control and do not constitute Excluded Items; provided, however, that Seller shall be entitled to make and retain a copy of any and all books and Records delivered to Buyers; provided, that except as required by the
Bankruptcy Court or by Applicable Laws, Seller shall maintain the confidentiality of all such books and Records and shall not disclose any of the same without Buyers' prior written approval.
4.9 Further Assurances. After the Closing, Seller shall execute and deliver, and shall otherwise cause to be executed and delivered, from time to time, such further instruments, notices, division orders, transfer orders and other documents, and do such other and
further acts and things, as may be necessary to more fully and effectively grant, convey and assign the Beta Interests, the Operating Interests and the SPBP Stock, respectively, to Buyers, in accordance with the terms of this Agreement.
4.10 No Representation or Warranty of Accuracy~ Disclaimer.
(a) Except as set forth in this Agreement, any Exhibit or Schedule to
INCLUDING THE ACCURACY OR COMPLETENESS OF DATA, INFORMATION OR MATERIALS FURNISHED AT ANY TIME TO A
BUYER OR ANY OF ITS ASSOCIATED PERSONS IN CONNECTION WITH THE SPBP STOCK OR THE SPBP INTERESTS (INCLUDING THE SPBP TANGIBLE ASSETS), THE BETA INTERESTS (INCLUDING THE BETA TANGIBLE ASSETS) OR THE QUALITY OR QUANTITY OF OIL AND GAS RESERVES (IF ANY) ATTRIBUTABLE TO THE BETA INTERESTS OR THE SPBP INTERESTS, OR THE ABILITY OF THE
BETA INTERESTS OR THE SPBP INTERESTS TO PRODUCE OIL AND GAS. NONE OF SELLER'S ASSOCIATED PARTIES (NOR ANY OTHER
AGREEMENT, ANY EXHIBIT OR SCHEDULE TO THIS AGREEMENT, ANY CERTIFICATE OF SELLER DELIVERED AT THE CLOSING, IN
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THE ASSIGNMENTS AND BILLS OF SALE OR THE STOCK POWERS, ALL DATA, INFORMATION AND OTHER MATERIALS FURNISHED
BY SELLER ARE PROVIDED TO BUYERS AS A CONVENIENCE ONLY, AND RELIANCE ON OR USE OF THEM IS AT BUYERS' RISK.
and the Properties have been used for the exploration, development, production,
treating and transporting of Oil and Gas, and that physical changes to the environment may have occurred or will occur as a result of such use and that
Seller has disclosed, and it is further aware, that there exists the possibility that there could have occurred or will occur from such use one or more releases of
waivers, releases and limitations of liability set forth in this Agreement (including in Article 12), it expressly waives any rights under Section 1542 of the California Civil Code, which provides:
"A general release does not extend to claims which the creditor
It has been advised by its legal counsel as to the significance of this waiver of Section 1542 relating to unknown, or unsuspected and concealed Claims, and it acknowledges that it fully understands and agrees to such waiver;
(c) Without limiting any subsection of this Section 4.11, upon the
Closing, it wil be deemed to have expressly acknowledged the following specific disclaimers:
(i) Assuming the accuracy of Seller's representations and
prospective data such as future Oil and Gas production rates, value of
exploration prospects, operating costs and Abandonment Obligations,
based on its own abilities and skills to explore, produce, operate, and
abandon the Properties, the Beta Interests, the Operating Interests and the SPBP Interests and is not relying on Seller's estimates of such data.
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or NORM in quantities typical for oil field operations in the areas in which
the Properties are located.
(iii) The OCS Leases and the San Pedro Bay Pipeline are or
may be deemed to be within a Seismic Hazard Zone as designated under the Seismic Hazards Mapping Act (California Public Resources Code Sections 2690-2699.6).
(iv) The Buyers acknowledge receipt of the Natural Hazard
Disclosure Report attached hereto as Exhibit E and have reviewed the disclosures set forth therein.
(d) California Health and Safety Code Section 25359.7 provides that
any owner of nonresidential real property who knows, or has reasonable cause to believe, that any release of hazardous substances, as defined under California law, has come to be located on or beneath that real property shall, prior to the sale
of that real propert by that owner, give written notice of that condition to the
buyer of that real property. It acknowledges that it has received written notice from Seller that one or more "hazardous substances," as defined under California law, has come to be located in or on the Beta Interests, the Operating Interests and the SPBP Interests. It further acknowledges that it has received from Seller a written notice pursuant to Section 25359.7(a) of the California Health and Safety Code. A copy of such written notice is attached hereto as Exhibit G.
ARTICLE 5 TITLE AND TITLE DEFECTS
5.1 Title Defect. "Title Defect" means anyone or more of
the following:
(a) Seller owns less than full legal and equitable and beneficial title to all or any part ofthe Beta Interests, the Operating Interests or the SPBP Stock; or
(b) SPBP owns less than full legal and equitable and beneficial title to
all or any part ofthe SPBP Interests; or
(c) Seller's record title interest, operating rights or other beneficial
interest in the OCS Leases, the other Beta Interests (other than obligations to pay royalties to the MMS and under the ORRIs), any of the Operating Interests or any
of the SPBP Interests is less than 100%; or
minus the royalty to the MMS, which can be as high as 33- i /3% but immediately before the Closing will be 25%; or
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which default results in a loss of title to or forfeiture of any part of the Beta
Interests, the Operating Interests or the SPBP Interests, as the case may be; or
(g) the Beta Interests, the Operating Interests or the SPBP Interests are
subject to any Liens, other than Permitted Encumbrances and Permitted Stock
Encumbrances; or
(h) Seller has less than an undivided 100% (of 8/8ths) of all right and
title in and ownership of all capacity and rights to use and market, in its sole discretion, any pipelines, gathering lines, platforms, processing facilities, treatment plants or other facilities constituting any part of the Beta Interests or the Operating Interests or, indirectly through its ownership of SPBP, the SPBP
Interests, subject in the case of the SPBP Interests to the rights of any shipper on the San Pedro Bay Pipeline under any Contract constituting an SPBP Interest; or
(i) any Third Party holds a reversionary, back-in or other similar right
(excluding the ORRIs) in or to the Beta Interests, the Operating Interests or the SPBP Interests; or
not otherwise free from any other title imperfections or other Liens that a reasonably prudent purchaser of oil and gas properties would not typically
accept.
U) the Beta Interests, the Operating Interests or the SPBP Interests are
5.2 Title Defect Notice. Buyers will have until five (5) days prior to the
Closing Date to provide Seller written notice ("Title Defect Notice") of any Title Defect that Buyers in good faith find unacceptable. Each Title Defect Notice must include, in reasonable detail, a description of (a) the Beta Interest, the Operating Interest, the SPBP Interest or the
SPBP Stock with respect to which the claimed Title Defect relates, (b) the nature of such claimed Title Defect, and (c) Buyers' estimate of the Defect Value. Except as contemplated under the
Assignments and Bils of Sale, any Title Defect that is not identified by a timely-delivered Title
Defect Notice will thereafter be forever waived by Buyers and such Title Defect will transfer with the affected Beta Interest, SPBP Interest or the SPBP Stock.
5.3 Determination of
(a) Within three (3) Business Days after Seller's receipt of a Title Defect Notice, Seller will notify Buyers as to whether Seller agrees with the Title
Defect claimed therein and/or the proposed Defect Value attributed to such Title
Defect. If Seller does not agree with any such claimed Title Defect and/or any
such proposed Defect Value, then the Parties wil promptly enter into good faith
negotiations and will attempt to agree on such matters. The value agreed to by the Parties with respect to a Title Defect will be the Defect Value for such Title Defect.
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existence of a Title Defect or the associated Defect Value within five (5) Business Days after Seller's receipt of a Title Defect Notice, then, at Buyers' sole option and election, either (x) Buyers shall have the right to not close or consummate the
affected by the Title Defect, but the Purchase Price shall be reduced by the
diminution in value to such affected Beta Interests, Operating Interests or SPBP Interests, as established by Buyers, in their good faith opinion.
5.4 Additional Unit Area and Second Unit Operatin2 A2reement. Seller
does not own any leasehold working interest in the Federal Lease bearing serial no. OCS P-0296, the Additional Unit Area or Platform Edith; however, pursuant to the Second Unit Operating OR is the recognized Agreement, Seller is the unit operator of the Additional Unit Area but DC sub-operator of the additional Unit Area. At the Closing, Seller shall assign to each Buyer its Buyer Percentage all of Seller's right, title and interest to the Second Unit Operating Agreement,
and each Buyer shall accept such assignment and shall assume its Buyer Percentage of all of Seller's obligations and liabilities under the Second Unit Operating Agreement arising and
accruing at or after the Effective Time.
5.5 Platform Edith. Each Buyer acknowledges that, pursuant to the 1992
Agreement, DCOR, as the owner of
0296, has the right to use the San Pedro Bay Pipeline to move its oil to shore subject to the payment of a tariff to SPBP, and Seller acknowledges that, pursuant to the 1992 Agreement, it
currently has, and Buyers will acquire pursuant hereto, the right to, among other things, install a submarine gas pipeline to Platform Edith from Platform Elly and the right to install and use a
submarine electric power cable from Platform Elly to Platform Edith and to use any excess
electric power not used by DCOR on Platform Edith.
5.6 Tariffs Filed with FERC. Each Buyer acknowledges that the San Pedro
the SPBP Tangible Assets are operated as a common carrier pipeline system subject to tariffs filed with the FERC.
Bay Pipeline and certain of
maintain all insurance at the current levels and with the same deductibles and reserves that are in effect as of the date of this Agreement with respect to the Beta Interests, the Operating Interests and the SPBP Interests, including any insurance it or any of its Affiliates (including SPBP) may carry as operator of any Beta Interests, the Operating Interests or SPBP Interests. At the Closing, Seller shall assign to each Buyer its Buyer Percentage of all Seller's right, title and interest in any
proceeds that may be received pursuant to, or any benefits relating to such insurance policies
with respect to, any casualty or loss that has occurred on or after the Execution Date, except to
the extent there has been an adjustment to the Purchase Price therefor pursuant to, Section
4. 7(y)(l) or insurance proceeds have already been paid and delivered to Buyers pursuant to
Section 4.7(y)(2).
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6.2
Closin2.
(a) Subject in all respects to the requirements and restrictions of, or as
may result from or relate to, the Bankruptcy Case and orders entered therein
(including the Sale Order), or the Credit Agreements, from the Execution Date to
the Closing Date, except as provided herein or as otherwise consented to in
writing by Buyers, Seller shall, with regard to the Beta Interests and the
Operating Interests (and SPBP shall, and Seller shall cause SPBP, with regard to
Leases, the Beta Tangible Assets or the SPBP Interests (other than sales of Oil and Gas in the ordinary course);
(iii) maintain insurance upon the Beta Interests, the Operating
Interests and the SPBP Interests in such amounts and kinds comparable to
that in effect on the date of
this Agreement;
default under, any material right or Claiin included in the Beta Interests, the Operating Interests or the SPBP Interests;
(vi) except as described on Schedule 6.2( a)(vi), not incur any Claims, liabilities or obligations with respect to the Beta Interests, the Operating Interests or SPBP Interests for which either Buyer would be responsible after the Closing, other than transactions consistent with this
Agreement and in the normal, usual and customary manner and of a nature
and in an amount consistent with past practices employed by Seller with
respect to the Beta Interests, the Operating Interests or the SPBP Interests,
as the case may be;
(vii) not take any affrmative action that would result in any of
the Beta Interests, the Operating Interests, the SPBP Interests or the SPBP
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Stock becoming subject to any new Lien, restriction on operation or use, any additional Claim, obligation or liability, or any new Lien that could
impose a Claim, liability or obligation;
(viii) not cancel, modify, discharge or satisfy any financial
indebtedness owed to Seller that is fairly attributable to the Beta Interests, the Operating Interests or the SPBP Interests for the period of time at or after the Execution Date, except for indebtedness owed from any Affiiate of Seller to Seller described on Schedule 6.2(a)(viii);
(ix) not, except as otherwise provided in this Agreement, amend
or terminate any Contract relating to the Beta Interests, the Operating Interests or SPBP Interests having a value in excess of $25,000 or a term
greater than 90 days;
(x) not violate, breach, or default under, any Contract relating
to the Closing set forth in Article VII below to not be satisfied or fulfilled;
(xii) not take any action that would adversely affect the ability
Agreement;
(xiii) use commercially reasonable efforts to preserve (and cause
SPBP to preserve) (A) its present business operations, organization and goodwill with respect to the Beta Interests, the Operating Interests, SPBP
and the SPBP Interests and (B) its relationships with each Third Party
having material business dealings with respect to the Beta Interests, the
Operating Interests or the SPBP Interests;
(xiv) pay all Taxes and assessments with respect to the Beta
Interests, the Operating Interests and the SPBP Interests that become due and payable prior to the Effective Time or that relate to periods prior to the Effective Time, other than with respect to Taxes and assessments contested
owner and operator of the Beta Interests, the Operating Interests and the
SPBP Interests;
(xvi) except as described on Schedule 6.2(a)(xvi), not (A) alter or amend any of its Benefit Plans, (B) pay any bonus to, make any loan, payor transfer any assets to, or grant any increase in the compensation of, any employees or any of its directors, offcers or employees, (C) adopt, enter into or become bound by any Benefit Plan;
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upon all or a portion of the Beta Interests, the Operating Interests or the SPBP Interests that would be binding on Buyers or SPBP, or modify any existing production sales contracts or enter into any new production sales
contracts, except contracts terminable at wil or with written notice of
the Operating Interests or the SPBP Interests which will cost (or which
could involve the payment of amounts) in excess of $25,000, individually
withheld or delayed), (2) cancel or terminate any Assumed Beta Contract, Assumed Operating Contract or SPBP Contract, (3) amend or waive any
term or provision of any Assumed Beta Contract, Assumed Operating
Contract or SPBP Contract, (4) extend the term of any Assumed Beta
Contract, Assumed Operating Contract or SPBP Contract for a period
longer than sixty (60) days, (5) enter into any hedging, forward sales or similar agreements with respect to production from the Beta Interests, the
Operating Interests or the SPBP Interests, or (6) enter into any transaction,
which could bind all or any part of the Beta Interests, the Operating
Interests, the SPBP Interests, the SPBP Stock or either Buyer;
(xxi) except as reasonably requested by Buyers, including the
Documents of SPBP or issue or agree to issue any additional shares of stock (or other equity interests) of SPBP or any class or series, or any securities convertible into or exchangeable or exercisable for stock (or other equity interests), or issue any options, warrants or other rights to
acquire any capital stock (or other equity interests);
(xxii) not permit SPBP to make any loan to or enter into any transaction with any employees of SPBP or any directors, offcers or
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employees of SPBP, except for the payment of salaries and benefits to which all similarly situated employees are generally entitled that are
(xxiii) not permit SPBP to issue, create, incur, assume, guarantee, endorse or otherwise become liable or responsible with respect to (whether directly, contingently or otherwise) any indebtedness for borrowed money, or issue any notes, bonds, debentures or other similar securities, or grant
any option, warrant or right to purchase any of the same, or issue any security convertible or exchangeable or exercisable for debt securities of
SPBP;
collections or receivables (whether or not past due) or fail to payor delay payment of pay abIes or other liabilities;
(xxv) not permit SPBP to enter into any Contract, understanding or commitment that restrains, restricts, limits or impedes the ability of SPBP to compete with or conduct any business or line of business in any
geographic area or solicit the employment of any persons;
(xxvi) not permit SPBP to introduce any material change with respect to the operation of SPBP, including any material change in
services, or any change in its pricing, or grant any pricing discount or allowance for any customer or supplier not in accordance with its past
practices or existing policies;
(xxvii) except as contemplated by the terms hereof, not permit
period, adopt or change any accounting method with respect to Taxes, file any amended Tax Return, enter into any closing agreement or other similar arrangement or agreement, settle or compromise any proceeding with respect to any Tax claim or assessment relating to the SPBP, surrender any right to claim a refund of Taxes, consent to any extension or waiver of the limitation period applicable to any Tax claim or assessment relating to the
SPBP, or take any other similar action relating to the filing of any Tax
Return or the payment of any Tax;
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(xxxi) not permit SPBP to declare, payor set aside for payment any amounts for dividends or other distributions (including any amounts for the repurchase or redemption of any equity interests) with regard to the SPBP Stock or make any provision therefor or take any action in connection therewith, other than cash dividends;
restructuring;
(xxxiii) not permit SPBP to pledge or mortgage any of its assets or otherwise cause or permit a Lien (other than Permitted Encumbrances) to exist against any of the SPBP Interests or other assets of SPBP;
reclassification of the securities of SPBP or amend the terms of any outstanding securities of SPBP;
otherwise acquire, directly or indirectly, any securities of SPBP;
permit SPBP to () amend or establish any Benefit Plan, (ii) pay, or incur any obligation for any payment of, any contribution or other amount to, or with respect to, any Benefit Plan, (iii) pay any bonus to, make any loan, payor transfer any assets to, or grant any increase in the compensation of, any employees or any of its directors, offcers or employees relating to the Beta Interests, the Operating Interests or SPBP or (iv) make any increase in the pension, retirement or other benefits of any employees or any of its
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the foregoing.
6.3 Sale Procedures. The sale procedures regarding the transactions contemplated by this Agreement will be governed by the Sale Procedures Order and any other applicable orders, including the Sale Order, entered by the Bankruptcy Court.
6.4 MMS Qualification. If not already so qualified, each Buyer shall obtain
MMS Qualification on or prior to the Closing Date.
6.5 Delivery of Exhibits and Schedules. Within four (4) Business Days after
the Execution Date, Seller shall deliver to Buyers each of
Services Agreement, which is attached hereto as of the date of this Agreement) and Schedules
referenced in this Agreement.
6.6 Supplemental Disclosure. Seller will promptly supplement or amend
each of the Schedules identified in Article 12 hereto with respect to any matter that arises or is discovered after the date the Schedules are delivered pursuant to Section 6.5 that, if existing or known at such date, would have been required to be set forth or listed in such Schedules hereto; provided, however, that for purposes of determining whether a breach exists with respect to any of the representations and warranties hereunder, any such supplemental or amended disclosure will not act to modify the representations and warranties of Seller and will not be deemed to have been disclosed to Buyers unless Buyers otherwise expressly consent in writing.
6.7 Production Payments. Seller will use commercially reasonable efforts to
reach a settlement with each of Aera, SWEPI and Noble with respect to, and to pay, the
Production Payments in an amount reasonably acceptable to Buyers.
6.8 SPBP Books and Records. Seller will, and will cause SPBP to, cooperate
with Buyers, at Buyers' request, to clarify, ratify or otherwise properly document, in SPBP's minute books and stock transfer records, Seller's exclusive ownership of the SPBP Stock free all Liens (other than Permitted Stock Encumbrances) and other material matters. and clear of
7.1 Closin2 Date. The purchase and sale of the Beta Interests, the Operating
Interests and the SPBP Stock contemplated by this Agreement (the "Closing") shall take place at 10:00 a.m. PST at 611 Anton Boulevard, 14th Floor, Costa Mesa, California, (or such other time and place as may be agreed by the Parties) on the day that is five (5) Business Days after the satisfaction or waiver of all conditions to Closing in Sections 7.3 and 7.4 (other than conditions those that by their nature are to be satisfied at Closing, but subject to the satisfaction or waiver of conditions at such time).
7.2 Closin2 Obli2ations; Deliveries. Subject to the satisfaction or waiver of the conditions precedent to the Closing set forth in Sections 7.3 and 7.4, at the Closing the all of following shall occur:
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Date and executed by that Buyer's duly authorized officer, certifying as to (i) compliance with the conditions set forth in Section 7.3 and (ii) the incumbency
and specimen signature of each offcer of that Buyer executing this Agreement
form and substance satisfactory to Buyers, effective as of the Closing Date and executed by Seller's duly authorized officer, certifying as to (i) compliance with the conditions set forth in Section 7.4, and (ii) the incumbency and specimen
signature of each offcer of Seller executing this Agreement and the other
(i) Seller and Buyers shall execute and deliver counterparts of the
Assignments and Bills of Sale relating to the Beta Interests. Such Assignments and Bills of Sale, when delivered at the Closing, shall be effective as of the
Effective Time and shall incorporate by reference the terms and provisions of
this
Agreement.
(ii) Seller and an Affiiate of Rise designated by Rise prior to Closing
shall execute and deliver counterparts of the Operating Company Bil of Sale. The Operating Company Bill of Sale, when delivered at the Closing, shall be effective as of the Effective Time and shall incorporate by reference the terms
and provisions of
this Agreement.
(iii) Seller shall execute and deliver to Buyers any documents required
(iv) Seller shall deliver to Buyers a good standing certificate, certified copies of the articles of incorporation and bylaws, minute books and stock
transfer books and all other Organizational Documents for SPBP.
(v) The Parties shall execute and acknowledge any such other
execute letters-in-Iieu-of-transfer orders (or other instruments) to give written notice of the transactions hereunder to remitters of proceeds from the sale of Oil and Gas production from the Beta Interests, each in a form reasonably acceptable
to Buyers.
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(f) Payment of Purchase Price. Each Buyer will pay to Seller the
above, by crediting to Seller the amount of the Credit Bid against, and/or assuming a portion of, the Seller Indebtedness, and Buyers shall assume the
Assumed Beta Liabilities.
(g) Transition Services Agreement. Seller and an Affiliate of Rise
shall execute and deliver counterparts of a Transition Services Agreement in substantially the form attached hereto as Exhibit 1.
Interests and SPBP Interests. Seller shall deliver to Buyers evidence reasonably satisfactory to Buyers that all of the Beta Interests, the Operating Interests, SPBP Stock, and SPBP Interests are being delivered to Buyers at Closing free and clear
of all Liens, other than Permitted Encumbrances and Permitted Stock
Encumbrances and other than with respect to Silver Point's Buyer Percentage of the Beta Interests and the SPBP Stock, which will remain subject to the Silver
Point Indebtedness.
(k) Resignations. Seller shall deliver properly executed and delivered
resignations from each offcer and director of SPBP, dated effective as of the
Closing Date.
evidence satisfactory to Buyers that any agency agreement, power of attorney, or similar authorization granted by SPBP shall be been fully revoked and terminated by SPBP on or before the Closing, in a manner that results in no liability to SPBP.
delivered release agreement, executed by Seller and its Affliates (other than
SPBP), in form and substance satisfactory to Buyers, fully releasing any and all Claims that they may have against SPBP, whether known or unknown, liquidated
or contingent, or against Buyers and their respective Associated Persons, other
(n) Other Documents. The Parties shall execute and deliver other
documents reasonably required or requested to close the sale of the Beta
Interests, the Operating Interests and the SPBP Stock and implement the related terms of this Agreement, including assignments, deeds, assumption agreements,
additional bills of sale and the like, as well as instruments necessary under
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Beta Interests, the Operating Interests and the SPBP Stock to transfer the Beta
Interests, the Operating Interests and the SPBP Stock to Buyers from Seller.
(0) Delivery of Possession. Seller shall deliver possession of the Beta
representations and warranties of Buyers contained in this Agreement shall be true in all material respects at and as of the Closing as if such representations and
warranties were made at and as of the Closing, and Buyers shall have performed
and satisfied in all material respects all obligations required by this Agreement to be performed and satisfied by them at or prior to the Closing; provided, however, that either Buyer may assign its rights to acquire its Buyer Percentage ofthe Beta Interests and the SPBP Stock, and, with respect to Rise, the Operating Interests, to the other Buyer and, so long as the other Buyer acquires all of the Beta Interests, the Operating Interests and the SPBP Stock in accordance with the terms of this Agreement, Seller's condition set forth in this Section 7.3(a) shall be satisfied with respect to Buyers' obligations to consummate the Closing.
the Agreement.
( c) Bankruptcy Court ApprovaL. The Bankruptcy Court shall have (i)
entered the Sale Order and the effectiveness ofthe Sale Order shall not have been stayed and no motion for rehearing or reconsideration shall be pending and (ii) cancelled or waived any secured debt (if any) remaining owed by Seller or any other debtor in the Bankruptcy Case to any Buyer after taking into account the Rise Credit Bid and the Debt Assumption.
(d) Closing Obligations and Deliveries. Buyers shall have performed
each of
warranties were made at and as of the Closing (other than the representations and
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warranties set forth in Sections 12.l(a), il and il, which shall be true in all
respects); provided, however, that for purposes of this Section 7.4(a), when determining the accuracy of the representations and warranties of Seller
contained in this Agreement, with respect to any representations and warranties that are qualified by "Knowledge" or are based on Seller's "Knowledge," such "Knowledge" qualifications shall be disregarded, and (ii) Seller and the other Buyer shall have performed and satisfied all obligations required by this Agreement to be performed and satisfied by it at or prior to the Closing.
Agreement.
(c) Consents. Each Pre-Closing Consent shall have been obtained and
other Waived Consents wil be obtained within a reasonable period of time after the Closing without material additional cost or liability to Buyers or SPBP.
(e) Bankruptcy Court Approval. The Bankruptcy Court shall have (i)
entered the Sale Order and the effectiveness of
form and substance reasonably satisfactory to that Buyer) shall not have been stayed and no motion for rehearing or reconsideration shall be pending, and shall authorize and approve, among other things, the sale, transfer and assignment of the Beta Interests, the Operating Interests and the SPBP Stock, free and clear of all Liens (other than with respect to Silver Point's Buyer Percentage of the Beta Interests and the SPBP Stock, which will remain subject to the Silver Point Indebtedness), in accordance with the terms and conditions of this Agreement
and the Transition Services Agreement, and (ii) approved the Wind-Down Budget in form and substance satisfactory to Buyers.
(f) Assumption of Contracts. The Bankruptcy Court shall have
approved the Seller's assumption and assignment (as such terms have meaning
under the Bankruptcy Code) of the Assumed Beta Contracts and Assumed
through the Closing, no Material Adverse Change shall have occurred and be
continuing.
(h) Defect Values. The () the Defect Value of all Title Defects,
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Defects, individually or in the aggregate, shall not exceed $5,000,000, and (iii) Casualty Losses, individually or in the aggregate, shall not exceed $5,000,000.
(i) Aggregate Cure Amounts. The aggregate Cure Amounts (as
defined in the Sale Procedures Order) relating to the Assumed Beta Contracts,
Assumed Operating Contracts and the SPBP Contracts shall not exceed $1,400,000. To the extent that any disputed Cure Amount has not yet been
resolved or determined by order of
Amount for the purposes of calculating the aggregate Cure Amounts; provided, however, that, if there is a dispute between Seller and the non-debtor Contract counterparty regarding (a) the nature or amount of any Curative Claims, or (b) any other matter pertaining to assumption, Buyers shall be authorized to direct Seller to reject any executory contract or unexpired lease to the extent Buyers, in the exercise of their good faith judgment, conclude that the Curative Claims as
determined (or likely to be determined by the Bankruptcy Court) renders
U) DIP Credit Agreement. That certain Senior Secured Super Priority Priming Debtor In Possession Credit and Guaranty Agreement, dated March 11, 2009 (as subsequently amended, the "DIP Credit Agreement") shall have not expired or terminated except as described in Section 7.5 and there shall not be a
pending, uncured Default (as defined in the DIP Credit Agreement).
(k) Production Payments. Either, (i) the Production Payments shall all have been (A) paid prior to or at the Closing in an amount agreed upon by Seller with the approval of Buyers and (B) released and/or re-conveyed to Seller, free and clear of any Liens at or prior to Closing, or (ii) prior to or at the Closing, funds covering the Production Payments shall have been segregated in an amount and with provisions for release approved by the Bankruptcy Court that will satisfy the Production Payments without further recourse to Seller, Buyers or their properties.
(I) Availability of Beta Interests, Operating Interests and SPBP Stock.
the Beta Interests, the Operating Interests and the SPBP Stock shall be owned by
Except for Permitted Encumbrances and Permitted Stock Encumbrances, all of
Seller, free and clear of any Liens (other than with respect to Silver Point's Buyer Percentage of the Beta Interests and the SPBP Stock, which will remain subject to Liens in respect of the Silver Point Indebtedness), and available for purchase by Buyers as contemplated by this Agreement pursuant to the terms hereof.
(n) Resignations. Buyers shall have received the written resignations and release of claims to fees or expenses of each of the directors and officers of SPBP, each in form and substance reasonably satisfactory to Buyers.
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(0) SPBP Bankruptcy Case. The Bankruptcy Court shall have entered
by Applicable Laws (including Environmental Laws) related to the Beta Interests, the Operating Interests and the SPBP Interests necessary for Seller to serve as the operator of the Beta Interests pursuant to the Transition Services Agreement.
7.5 Order of Actions~ DIP Credit A2reement. The Parties agree that, at
Closing (i) upon the consummation of the Rise Credit Bid, all claims of Rise under the DIP Credit Agreement shall have been satisfied and extinguished in full and (ii) the Rise Credit Bid
shall have been deemed to be made, and the associated satisfaction and extinguishment of claims shall have been deemed to occur, prior to the Debt Assumption by Silver Point.
ARTICLE 8 TERMINATION
8.1 Events of Termination. This Agreement may be terminated at any time
31, 2009 due, in whole or in part, to any failure of the conditions of Seller's obligation to close and consummate the transactions herein to be fully satisfied, as such conditions are set forth in Section 7.3;
(d) by either Buyer, if the Closing has not occurred on or before
December 31, 2009 due, in whole or in part, to any failure of the conditions of such Buyer's obligation to close and consummate the transactions herein to be fully satisfied, as such conditions are set forth in Section 7.4 above;
(e) by either Buyer or by Seller, upon the Bankruptcy Court's entry of
any Buyer, upon Seller's entry into a definitive agreement related to a Competing Transaction or Restructuring Transaction;
(f) by either Buyer, if the Bankruptcy Case is dismissed or converted
to one or more cases under chapter 7 of the Bankruptcy Code, an examiner with
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362 of the Bankruptcy Code lifting the automatic stay with respect to any
material portion ofthe Beta Interests, the Operating Interests or SPBP Interests;
(g) by either Buyer if one or more Casualty Losses occur prior to the
Closing, the value of
U) by either Buyer if (i) Seller fails to timely deliver the Exhibits and Schedules to this Agreement in accordance with Section 6.5 above, or (ii) such Exhibits and Schedules are not acceptable to such Buyer, in such Buyer's sole
and absolute discretion, and such terminating Buyer notifies Seller that the
Exhibits and/or Schedules are not acceptable within five Business Days of receipt thereof;
provided, however, that, notwithstanding the foregoing, the dates set forth above in subsections (b), (c) and (d) above shall for all purposes hereunder be deemed to be April 30, 2010, if on
December 31, 2009, either Buyer delivers written notice to Seller and the other Buyer (an
"Extension Notice") that the dates set forth in such subsections should be so extended and if, and only if, one or all of the conditions to Buyers' obligations to close the transactions contemplated
hereby specified in Sections 7.4(a), il, (f, (Q, .w, il, (k, il, ., ., (Q, (i or i9 above
have not been satisfied or waived as of such date. If any Buyer delivers an Extension Notice
then, unless the Seller otherwise agrees, the Closing shall occur on a date that is at least thirt (30) days following the date of the Extension Notice, but if and only if all conditions to Closing
shall have been satisfied or waived as of such Closing Date.
8.2 Effect of Termination. If this Agreement is terminated pursuant to
Section 8.1, such termination shall be without liability to any Party; provided, however, that
termination shall not relieve any Party of liability for breach of this Agreement occurring prior to termination.
9.1 Filn2 and Recordin2. Buyers shall be responsible to file or record the
conveyance documents in the appropriate governmental records; provided, however, that Seller shall cooperate with, and assist, Buyers in connection therewith, including as described in the
Transition Services Agreement. The recording Part will provide either the original or
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photocopies of the filed or recorded document, including the recording data, as agreed to by the Parties, to the non-recording Parties. Each Buyer shall reimburse Seller for its Buyer Percentage of the fiing, recording, and other reasonable fees that Seller incurs if Seller fies or records the documents.
9.3 Further Assurances. Buyers and Seller each shall, from time to time after the Closing and upon reasonable request from any other Party, execute, acknowledge and deliver in proper form any conveyance, assignment, transfer or other instrument reasonably necessary to accomplish the sale of Beta Interests, the Operating Interests and SPBP Stock and related obligations contemplated by this Agreement (including the correction of scrivener's errors in the preparation of documents delivered at the Closing).
9.4 Post-Closin2 Consents. Except with respect to Waived Consents, if any, Buyers shall be responsible for obtaining any Consents or Permits not obtained prior to Closing;
provided, however, that Seller shall use commercially reasonable efforts to assist Buyers in
obtaining such Consents or Permits. If Buyers elect to close without any Waived Consents,
Seller shall use its best efforts and proceed diligently after the Closing to obtain and promptly provide evidence of all Waived Consents to Buyers and Seller shall also use its best efforts and proceed diligently after the Closing to obtain and promptly provide evidence to Buyers of the requisite approvals of each Waived Consent as more specifically set forth in Section 4.4 above.
9.5 Allocation of
attributable to the Beta Interests or the Operating Interests, including all rights to
production of Oil and Gas and proceeds from the sale of such production but excluding all Oil and Gas in pipelines or in tanks (including in storage, line fill
and tank bottoms) upstream of the sales custody transfer meter at the Accounting
Time to the extent attributable to the Beta Interests or the Operating Interests, and, regardless of whether during the period prior to or after the Effective Time,
shall be for the account of Buyers.
(b) For accounts pertaining to the Beta Interests or the Operating
Interests held by Seller in suspense or escrow at the Effective Time, Seller wil
pay in full the royalty accounts (or, at Buyers' election, pay and transfer such
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amounts to Buyers at Closing for Buyers' dispersal and payment), 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 Closing.
9.6 Post-Closin2 Revenues. Except as expressly provided otherwise in this Agreement, Seller shall pay to Buyers, pro rata to their Buyer Percentages, any and all amounts received after the Closing by Seller that are attributable to the ownership of the Beta Interests or the Operating Interests. Payment under this Section 9.6 shall be made within five (5) Business
Days after such amounts were received by Seller and no further adjustments shall be made with
respect to such amounts in the Final Settlement Statement. 9.7 Post-Closin2 Expenses. Except as expressly provided otherwise in this Agreement, Seller shall reimburse each Buyer for any and all costs and disbursements paid after
the Closing by that Buyer during the ninety (90) day period immediately following the Closing
Date that are attributable to the ownership of the Beta Interests, the Operating Interests or the
SPBP Stock prior to the Effective Time. Except as expressly provided otherwise in this
Agreement, each Buyer shall reimburse Seller for its Buyer Percentage of any and all costs and expenses paid after the Closing by Seller during the thirty (30) day period immediately following
the Closing Date that are attributable to the ownership of the Beta Interests, the Operating Interests or the SPBP Stock at or after the Effective Time. The Part responsible for a payment required under this Section 9.7 shall pay the Party entitled to receive payment within five (5)
Business Days after receipt thereof by the Party responsible for payment and no further adjustments shall be made with respect to such amounts.
Agreement, following the Closing, Seller shall continue to serve as operator under the OCS
Leases and perform certain "PERL Services," as defined and described in the Transition Services Agreement. During the PERL Services Term (as defined in the Transition Services Agreement), Seller shall (i) with respect to theSPBP Stock, act on behalf, and at the direction, of Buyers with respect to the MMS and CSLC and as otherwise directed by Buyers, and (ii) comply with the
provisions of Section 4.4(b) with respect to, and maintain in full force and effect, each
Governmental Bond to which Section 4.4(b) applies.
9.10 Abandonment Obligations. Following the Closing, Buyers covenant not to take any action that would impair the rights or security of Aera, SWEPI and Noble, existing as of the date of this Agreement, with respect to the plugging, abandonment and decommissioning of the Beta Tangible Assets and the SPBP Tangible Assets, including any security interests of
Aera, SWEPI and Noble in any bonds posted by or at the request of Seller or any Affliate of Seller related to such plugging, abandonment and decommissioning, and in any U.S. Treasury notes or other investment securities, trust accounts, cash or other collateral that may be posted,
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held or pledged pursuant thereto, whether by Seller or any predecessor in interest thereof, and whether held directly by Seller, any Affiliate or by a Governmental Entity or other Third Party.
shall be allocated between the Pre-Closing Tax Periods and the Post-Closing Tax Periods in the
manner described below:
(a) All Production Taxes attributable to the Beta Interests or the
Seller will be responsible for paying all Production Taxes that are attributable to
the Pre-Closing Tax Period as determined under Section 1 0.1 (b).
(b) Any Taxes that accrued during a Straddle Period shall be allocated
between the Pre-Closing Tax Period and the Post-Closing Tax Period based on an interim closing of the books as of the close of the Closing Date.
10.2 Other Taxes.
(a) Except as otherwise provided herein, Seller will prepare and timely
fie Tax Returns for and timely pay all applicable federal, state and local income
Taxes, sales Taxes, use Taxes, gross receipts Taxes, business license Taxes, and
all other applicable Taxes required to be fied by it, and wil timely pay all Taxes relating thereto.
documentary stamp and other transfer Tax Returns in connection with the
(b) Buyer will prepare and timely fie all sales, use, transfer,
transfers of the Beta Interests, the Operating Interests and the SPBP Interests
hereunder. Buyer shall timely pay the transfer Taxes in connection with the transfers hereunder. For tangible personal property located in California that Buyers intend to be used in offshore waters, Buyers agree to execute and deliver
to Sellers at the Closing the California Sales Tax Exemption set forth in Exhibit
H.
10.3 Responsibilty for Filn2 SPBP Tax Returns.
(a) SPBP shall prepare and fie (and prior to the Closing, Seller shall cause SPBP to prepare and fie) (in a manner consistent with past practices) with
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the appropriate Tax Authorities all Tax Returns of SPBP required to be fied
before the Closing Date, and SPBP shall pay (and prior to the Closing, Seller
shall cause SPBP to pay) all Taxes required to be paid by SPBP prior to the Closing (other than Taxes which SPBP is contesting in good faith and about
which Seller immediately provides written notice to Buyers); provided, however, that no such Tax Return shall be fied without the prior written consent of Buyers
which consent shall not unreasonably be withheld. Seller shall not have any liability if a Tax Return of SPBP is not timely filed as a result of Buyers'
unreasonable failure to provide its consent. To the extent permitted by applicable law, SPBP shall continue to be included in the consolidated federal income and unitary state income or franchise tax returns of a group that includes Seller for the period through and including the Closing Date.
(b) From and after the Closing, SPBP shall prepare (or cause to be
prepared) and file or cause to be filed when due all Tax Returns that are required
(c) For any Straddle Period of SPBP, SPBP shall timely prepare or
cause to be prepared, and fie or cause to be filed, all Tax Returns required to be filed by SPBP (other than any income or franchise Tax Return where SPBP is to be included in a group that includes Seller) and shall pay the Taxes due with
respect to such Tax Returns; provided, however, at least 10 days prior to the
filing of such Tax Returns, Seller shall pay to SPBP its allocable portion of such
Taxes, as determined pursuant to Section 10.1 for such Tax Return.
10.4 Tax Contests. Following the Closing, Buyers wil have full control over all Tax audits or other Tax contests (each a "Tax Claim") relating to SPBP.
10.5 Cooperation. Seller, SPBP and Buyers shall reasonably cooperate, and
shall cause their respective Affiiates, offcers, employees, agents, auditors and other
representatives to reasonably cooperate, in preparing and fiing all Tax Returns pertaining to PreClosing Tax Periods and Straddle Periods and in resolving all disputes and Tax audits with
respect to all Tax Returns and Tax-related matters pertaining to Pre-Closing Tax Periods and Straddle Periods, including by maintaining and making available to each other all records
necessary in connection with Taxes and making employees available on a mutually convenient
basis to provide additional information or explanation of any material provided hereunder or to testify at proceedings relating to any Tax Claim.
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10.7 Amended Returns. SPBP shall not fie (and Buyer shall not permit SPBP
to file) any amended Tax Return of SPBP for any Pre-Closing Tax Period without the prior
written consent of Seller, which consent shall not unreasonably be withheld; provided, however, that if Seller has been liquidated, SPBP may fie an amended Tax Return unless any person who
was a director, offcer or equity holder of SPBP or any of its Affiliates during a period prior to
the Closing could have personal liability for additional Tax as a result of the fiing of such
amended Tax Return.
the Beta Interests, the Operating Interests and the SPBP Interests at any time during the period from the Execution Date and ending on the date that is five (5) days prior to the Closing (the "Examination
including a Phase 1 Assessment, of
Environmental Defect affecting a Beta Interest, Operating Interest or SPBP Interest, Buyers shall
promptly notify Seller of such alleged Environmental Defect. To be effective, such written
notice (an "Environmental Defect Notice") must (a) be in writing, (b) be received by Seller prior
to the expiration of
specific detail, (d) identify the specific Beta Interest, Operating Interest or SPBP Interest affected by such Environmental Defect, and (e) Buyers' reasonable good faith estimate of the
Environmental Defect Value.
11.3 Remedies for Environmental Defects. The following shall apply with respect to alleged Environmental Defects:
(a) Upon the receipt of an Environmental Defect Notice from any
Buyer asserting an alleged Environmental Defect, Seller shall have the option, but not the obligation, to attempt to cure such Environmental Defect at any time prior to the Closing.
(b) With respect to each alleged Environmental Defect that is not
SPBP Interest as is, but the Purchase Price shall be reduced by the
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Environmental Defect Value therefor (as Buyers may supplement such value prior to Closing based on any new or additional information received by Buyers prior to the Closing); or
(ii) elect to exclude the affected Beta Interests, Operating
Interests or SPBP Interests from the transaction, in which case the affected asset will become an Excluded Item (and in the case of SPBP Interests, SPBP shall convey the same to Seller prior to Closing) and the applicable Purchase Price shall be reduced by the value therefor established by such
Buyer, in its good faith opinion.
the Bankruptcy Court and to (a) Authorization. Subject to approval of the Sale Order, this Agreement and the Transaction Documents to which Seller is
a party have been duly authorized, executed and delivered by Seller. The
execution, delivery, and performance by Seller of this Agreement and each other
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 Bankruptcy Case (including the Sale Order) and any related proceedings.
(c) Organization and Existence. Seller is a corporation duly organized
and validly existing under the laws of
the
Sale Order to which they are a party, nor the consummation by it of the transactions contemplated hereby or thereby do or will (a) conflict with or result in a violation of any provision of Seller's or SPBP's Organizational Documents,
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D-1809900_17,DOC
(b) conflict with or result in a violation of any provision of, or constitute (with or
without the giving of written notice or the passage of time or both) a default
under, or give rise (with or without the giving of written notice or the passage of time or both) to any right of termination, cancellation, or acceleration under, any bond, debenture, note, mortgage or indenture, or any lease, Contract, agreement, or other instrument or obligation to which Seller or SPBP is a party or by which Seller or SPBP or any of their respective properties may be bound, (c) result in the creation or imposition of any Lien upon the properties of Seller or SPBP, or (d) violate any Applicable Law binding upon Seller or SPBP.
(e) Consents. Except for the Consents, orders, declarations, fiings or
threatened against Seller in connection with its ownership of the Beta Interests, the Operating Interests, SPBP Stock or SPBP Interests (including any actions
or affecting the execution and delivery of this Agreement by Seller or SPBP, or the consummation ofthe transactions contemplated hereby by Seller.
12.l( g): (a) neither Seller nor SPBP has incurred expenses, or have made commitments to make expenditures, in connection with its ownership or operation of the Beta Interests, the Operating Interests or SPBP Interests,
respectively, after the Effective Time, other than routine expenses incurred in the
ordinary course of normal operation in accordance with generally accepted
practices in the oil and gas industry, insofar as such expenses do not exceed,
individually or in the aggregate, $25,000; and (b) no proposals are currently
outstanding to drill additional Wells, or to deepen, plug back, or rework existing Wells, or to conduct other operations for which Consent is required or to conduct any other operations other than in the ordinary course of normal operation.
(h) Production Sales Contracts. There exist no agreements or
arrangements for the sale of Seller's share of Oil and Gas (including calls on, or other rights to purchase, production, whether or not the same are currently being
exercised) other than (a) the production sales contracts (in this Section, the "Scheduled Production Sales Contracts") described in Schedule 12.l(h) or (b) agreements or arrangements which are cancelable on ninety (90) days written
notice or less without penalty or detriment. Seller is presently receiving a price
for all production from (or attributable to) each Beta Interest covered by a
Scheduled Production Sales Contract as computed in accordance with the terms
of such contract, and is not having deliveries of gas from any Oil and Gas
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(i) Payment of Expenses. All expenses (including all bills for labor,
materials and supplies used or furnished for use in connection with the Beta
Interests, the Operating Interests and SPBP Interests, and all severance,
operation by Seller or SPBP and for which Seller or SPBP has received an invoice, have been, and are being, paid (timely, and before the same become
delinquent) by Seller or SPBP, as applicable, except (i) such expenses and Taxes
as are disputed in good faith by Seller or SPBP and for which an adequate
accounting reserve has been established by Seller or SPBP, and (ii) as otherwise set forth on Schedule i 2.l(i). Neither Seller nor SPBP is delinquent with respect
to its obligations to bear costs and expenses relating to the development and
operation of
compliance, in all material respects with all Applicable Laws relating to the ownership, use and operation of the Beta Interests, the Operating Interests, the
SPBP Stock and the SPBP Interests.
(k) Prepayments: Imbalances. Neither Seller nor SPBP is obligated by
virtue of a take or payor other prepayment arrangement to deliver Oil or Gas, or proceeds from the sale thereof, attributable to the Beta Interests, the Operating Interests and the SPBP Interests at some future time without receiving immediate payment therefor at or after the time of delivery. Schedule 12.1 (k) sets forth all
production and pipeline imbalances of Seller and SPBP as of
such schedule with respect to the Beta Interests, the Operating Interests and SPBP Interests.
(I) Intellectual Property. Seller and SPBP own or have valid licenses
ownership of the Beta Interests, the Operating Interests and the SPBP Interests,
respectively.
taxes and other Taxes and assessments of any kind whatsoever, whether or not such Taxes are shown on any Tax Return, that is owed, or due and owing, by
Seller or SPBP for the Beta Interests or the Operating Interests, SPBP or with
respect to the SPBP Interests through the year 2008, have been fully and timely paid in full (but only to Seller's Knowledge with respect periods before Seller acquired SPBP). Except as set forth on Schedule 12.l(m) (and, with respect to
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SPBP, only to Seller's Knowledge with respect to periods before Seller acquired
SPBP):
(i) Seller and SPBP have timely fied all Tax Returns required to be fied with respect to Seller, the Beta Interests, the Operating
Interests, the SPBP Stock and SPBP with the appropriate Tax Authorities,
and all such Tax Returns were prepared in the manner required by
Applicable Law, accurately reflect the liability for Taxes of Seller, the Beta
Interests, the Operating Interests, the SPBP Stock and SPBP and are
correct and complete in all respects.
(ii) Each of Seller and SPBP has timely paid all Taxes due and
payable by it (whether or not such Taxes are shown on any Tax Return) with respect to Seller, the Beta Interests, the Operating Interests, the SPBP
Stock and SPBP.
deficiency or assessment from any Tax Authority or other Governmental Entity with respect to liabilities for Taxes of Seller, the Beta Interests, the Operating Interests, the SPBP Stock or SPBP which have not been fully paid or finally settled.
(iv) Neither Seller nor SPBP has waived any statute of
Taxes with respect to Seller, the Beta Interests, the Operating Interests, the SPBP Stock or SPBP or agreed to any extension of time with respect to a Tax assessment or deficiency with respect to Seller, the Beta Interests, the Operating Interests, the SPBP Stock or SPBP.
limitations in respect of
(v) There are no Liens with respect to Taxes upon the Beta
Interests, the Operating Interests, the SPBP Stock or the assets of SPBP, except for statutory Liens for Taxes not yet due and payable or Liens for
Taxes that are being contested in good faith by appropriate proceedings
affliated, combined, consolidated, unitary or other similar group (other than a group the common parent of which is Seller) filing a consolidated tax return and (B) has no liability for Taxes of any person arising from the application of Treasury Regulation Section 1.1502-6 or any analogous provision of state, local or foreign law, or as a transferee or successor, by
contract, or otherwise.
(vii) No power of attorney granted by or with respect to SPBP
foreign law) has been entered into by or with respect to SPBP. The Seller has delivered or made available to Buyers for inspection (A) complete and
0- 1809900_1 7,DOC
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correct copies of all income Tax Returns that include SPBP for the last three Tax years and (B) complete and correct copies of all private letter rulings, revenue agent reports, closing agreements, settlement agreements, deficiency notices and any similar documents submitted by, received by or agreed to by or on behalf of SPBP and relating to material Taxes for such
taxable periods.
the Beta Interests and the Operating Interests have been timely withheld, collected or deposited as the case may be, and to the extent required, have been paid to the relevant Tax Authority.
(ix) SPBP is not a part to, or bound by, or has any obligation under, any tax allocation or sharing agreement or similar contract or
arrangement or any agreement that obligates it to make any payment
completed contract method of accounting, the long-term contract method of accounting, the cash method of accounting or Section 481 of the Code (or any comparable provisions of state, local or foreign law) or for any other reason.
(xi) SPBP has never been either a "distributing corporation" or a "controlled corporation" in a distribution in which the parties to such
distribution treated the distribution as one to which Section 355 of the
Code is applicable.
(xii) SPBP has never been a United States real propert holding
the Code.
(xiii) SPBP has never engaged in any transaction that could give rise to (A) a reporting obligation under Section 6111 of the Code or the regulations thereunder, (B) a list maintenance obligation under Section the Code or the regulations thereunder, (C) a disclosure obligation 6112 of of a "reportable transaction" under Section 6011 of the Code and the
0- i 809900_ i 7 DOC
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the Beta Interests, the Operating Interests, SPBP or the SPBP Interests are subject to any tax partnership agreement or provisions requiring a partnership income tax return to be fied under
(xiv) None of Subchapter K of
the Code.
(n) Fees and Commissions. Except as set forth in Schedule 12.l(n), no broker, investment banker, financial advisor or other Person is entitled to any broker's, finder's, financial advisor's or other similar fee or commission in connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Seller or SPBP.
(0) Title. Seller has good and defensible title to all Beta Interests and
Operating Interests free and clear of all Liens other than Permitted Encumbrances and SPBP has good and defensible title to all SPBP Interests, free and clear of all
Liens other than Permitted Stock Encumbrances. Schedule 12.l( 0) sets forth all
royalties, overriding royalties, production payments, net profits, interests or other burdens on Seller's interests in the OCS Leases or the Oil and Gas produced and saved therefrom.
neither Seller nor, to Seller's Knowledge, any other Third Party thereto is
in default thereunder or in breach thereof. Seller owns an undivided 100% (of 8/8ths) record, legal, beneficial and working interest in and to the OCS
Leases. All royalties, rental and other payments due by Seller and SPBP and, to Seller's Knowledge, by any Third Part, under the OCS Leases have been properly and timely paid in all material respects except as described on Schedule 12.l(p)(i, and all conditions to be performed by
Seller or SPBP and, to Seller's Knowledge, by any Third Party, necessary
to keep the OCS Leases in force and effect have been fully performed in all material respects. Seller has applied to the MMS for royalty relief and
the following is the status of such request: an application has been made;
list of all easements, rights of way, servitudes, surface fee lands and subsurface lease agreements, surface use agreements, or other rights or
agreements related to the use of the surface or subsurface in connection
with the ownership, use or operation of the Beta Interests, the Operating Interests or the SPBP Interests (the "Real Property Interests"). Except as set forth on Schedule 12.l(p )(iii), there exists no breach or default under
the Real Property Interests by Seller, SPBP or, to Seller's Knowledge, by
any other Person that is a party to such Real Propert Interests, and no
event has occurred that with written notice or lapse of time or both would
constitute a breach or default under any such Real Property Interests by
0-1809900_17,DOC
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Seller, SPBP or, to Seller's Knowledge, any other Person who is a party to
such Real Property Interests. Other than the Real Property Interests, no
(q) Permits. Schedule 12.1( q )(i) sets forth a true, correct and complete
list of all Permits. Except as set forth in Schedule 12.1(q)(ii), all Permits
affecting or required to own and/or operate the Beta Interests, the Operating
Interests or the SPBP Interests (i) have been obtained and maintained (and no
material violation exists in respect thereof), (ii) are in the possession of Seller and
have been, or at least ten (l0) days prior to Closing will be, made available for
Buyers' review by Seller, and (iii) are being transferred to Buyers in this
transaction, to the extent owned or held by Seller and transferable by Seller.
(r) Suspense Amounts. Schedule 12.1(r) sets forth all amounts held in suspense by Seller or SPBP relative to the Beta Interests, the Operating Interests
and the SPBP Interests.
a true, accurate and complete list or description of: (i) all pending or expected Claims for plugging, abandonment, decommissioning, remediation, surface restoration or similar obligations associated with the Beta Interests, the Operating Interests and the SPBP Interests; (ii) all bonds, escrows, cash collateral or other financial support relating to such obligations and Claims held by Seller or SPBP or to which Seller or SPBP are parties or are otherwise bound by or liable for in
connection with the Beta Interests, the Operating Interests and the SPBP
Interests, respectively.
(t) Call or Option. Except as expressly set forth on Schedule 12.1(t),
no entity or Person has any call upon, option to purchase or similar rights, regarding the Beta Interests, the Operating Interests, the SPBP Interests or any Oil or Gas produced therefrom or associated therewith.
(u) Capital Commitments. There are no oral or written commitments
for capital expenditures equal to or in excess of $50,000, whether individually or in the aggregate, with respect to any of the Beta Interests, the Operating Interests
or the SPBP Interests for which all of the activities anticipated in such commitments have not been completed by the date of this Agreement, except as
set forth on Schedule 12.1(u).
(v) Payout Status. Schedule 12.1(v) contains a complete and accurate
the dates shown in such Schedule, any "payout" balance, as of with regard to the Production Payments, as well as otherwise with regard to any other portion of the Beta Interests, the Operating Interests or the SPBP Interests
list of the status of
payout.
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Interests, no Affiliate of Seller owns or holds any record or beneficial title to any
of the Beta Interests, the Operating Interests, the SPBP Stock or the SPBP
Interests.
(x) Contracts.
12.l(x)(i sets forth a true, correct and complete list of the only Contracts relating to the Beta Interests or the Operating Interests.
(ii) Schedule 12.l(x)(ii) sets forth all Contracts to which SPBP
(A) cannot be terminated by Seller without penalty upon sixty (60) days or less written notice and (B) involves an annual base rental
of
correct and complete copies of all Assumed Beta Contracts, and Contracts listed in Schedules 12.l(x)(i and 12.l(x)(ii) (including all amendments or
0- i 809900_17,DOC
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supplements thereto). Except as set forth on Schedule 12.l(x)(iii), and other than with respect to breaches or defaults caused solely by the fiing
and continuance of the Bankruptcy Case, there exist no breach or default under such Contracts by Seller, SPBP or, to Seller's Knowledge, by any
other Person that is a part to such Contracts, and no event has occurred
that with written notice or lapse of time or both would constitute a breach or default under any such Contract by Seller, SPBP or, to Seller's Knowledge, any other Person who is a party to such Contracts. Other than
the Assumed Beta Contracts and the Contracts on Schedule 12.1 (x)(iv), no
Contracts or other agreements are required to own and/or operate the Beta Interests, the Operating Interests, the SPBP Stock or the SPBP Interests.
(y) Preferential Rights. There are no preferential rights to purchase,
rights of first refusal, rights of first offer, or similar rights that are applicable to, or would result in rights in favor of Third Parties, in connection with the sale or
transfer of the Beta Interests, the Operating Interests, the SPBP Stock or the
SPBP Interests in connection with the transactions contemplated hereby.
(z) Tangible Property; Platforms. Except as set forth on Schedule
12.l(z), all Beta Tangible Assets, SPBP Tangible Assets, and other personal property and equipment constituting part of the Beta Interests, the Operating Interests or the SPBP Interests are in a state of repair so as to be adequate for normal operations, as such operations were conducted during the calendar year 2009. None of Platform Ellen, Platform Elly or Platform Eureka are vessels
under any Applicable Laws (nor are they registered, or required to be registered, as flagged vessels with the United States Coast Guard).
and the SPBP Interests, neither Seller (nor SPBP) has entered into, or is subject to, any agreements, consents, orders, decrees, judgments, Permit conditions, or other directives of any Governmental Entities in existence
as of the date of this Agreement based on any Environmental Laws that
relate to the future use of any of the Beta Interests, the Operating Interests
or the SPBP Interests or that require any change in the present conditions,
0- 1809900_1 7,DOC
Knowledge, oral, notice from any Person of, nor are Seller, SPBP or any
of their Affliates aware of, any release, disposal, event, condition,
circumstance, activity, practice or incident concerning any land, facilty, asset or propert or any other matter as to which liability may arise
legally or contractually included in the Beta Interests, the Operating
Law; or (B) may give rise to or results in any common law or other
liability or obligation to any Person.
(iii) All material reports, studies, written notices from
documents specifically addressing environmental matters related to Seller's ownership or operation of the Beta Interests, the Operating
. Interests or the SPBP Interests (and any other matter as to which liability
may arise relating to the Beta Interests, the Operating Interests or the SPBP Interests under any Environmental Law), which are in Seller's or
SPBP's possession or control, have been made available to Buyer.
(iv) Seller is in compliance with all Environmental Laws, which
compliance includes, but is not limited to, the possession by Seller of all Permits and other governmental authorizations required under all Environmental Laws, and compliance with the terms and conditions
thereof. To Seller's Knowledge, there are no circumstances presently
existing that may prevent or interfere with full compliance in the future with Environmental Laws existing as of the date of this Agreement. All
Permits and other governmental authorizations currently held by Seller
pursuant to all Environmental Laws are identified in Schedule
12.l(bb)(iv).
(v) To Seller's Knowledge, there are no past or present actions,
activities, circumstances, conditions, events or incidents, including, without limitation, the release, emission, discharge, presence or disposal
of any hazardous or toxic substances, materials or wastes of any kind (including any substances that may have an adverse impact on human health, wildlife or the environment), relating to the Beta Interests, the
Operating Interests or the SPBP Interests that could form the basis of any common law liability or other liability to any Person, or otherwise result in any costs or liabilities under Environmental Law.
(vi) Except as otherwise set forth in this Agreement, Seller is
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wastes of any kind (including any substances that may have an adverse impact on human health, wildlife or the environment), (B) to remove or remediate hazardous or toxic substances, materials or wastes of any kind (including any substances that may have an adverse impact on human
health, wildlife or the environment), (C) to give notice to or receive
all employees actively employed by Seller or SPBP in connection with the Beta Interests, the Operating Interests or SPBP Interests as of the
Execution Date and all employees employed in connection with the Beta
"Employees").
(ii) Except as listed on Schedule 12.l(cc), none of the
made or threatened involving the Employees. Except as listed on Schedule 12.l(cc), there are no material controversies, strikes, lockouts or work stoppages pending or, to Seller's Knowledge, threatened as to the
Employees.
(dd) SPBP Stock.
(i) The SPBP Stock consists of 1,000 shares of common stock
of SPBP, with a per share par value of $1.00. The SPBP Stock constitutes all of the issued and outstanding shares of capital stock of SPBP. All of
the SPBP Stock is validly issued, fully paid, and non assessable. No shares of common stock of SPBP are held by SPBP as treasury stock. There is no existing option, warrant, call, commitment, or other
agreement or arrangement to which SPBP is a party requiring, and there are no convertible securities of SPBP outstanding which upon conversion would require, the issuance of any additional shares of common stock of SPBP or other securities convertible into shares of common stock or other equity security of SPBP. Except as may otherwise be provided for under
this Agreement, SPBP has not, since December 3 i, 2008, paid any
dividend or similar distribution with respect to the Shares or repurchased,
SPBP Stock, free and clear of all Liens, except for the Permitted Stock
D-1809900_17,DOC
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Encumbrances. Upon the Closing and the execution and delivery of the
Stock Power, Seller wil convey to Buyers good, valid and defensible title
to the SPBP Stock, free and clear of any and all Liens (other than with
respect to Silver Point's Buyer Percentage of the SPBP Stock, which wil
the Closing Date pursuant to the terms of this Agreement, as of the date
of such conversion and as of the Closing Date, Seller will be the legal,
record and beneficial owner of all of the issued and outstanding
membership interests of SPBP, free and clear of all Liens, except for the Permitted Stock Encumbrances.
(ee) Financial Statements.
(i) Schedule 12.l( ee) contains a true and complete copy of the
unaudited balance sheets of Seller and SPBP as of October 31, 2009 (the "Balance Sheet Date"), and the related statement of income for the 10
month period then ending and a statement of income for the 12 month period ending December 31, 2008 (the "Financial Statements")
(ii) The Financial Statements fairly present in all material
respects the financial condition and the results of the operations of Seller
and SPBP, as of
The minute books of SPBP with respect to the period of Seller's ownership of SPBP contain accurate and complete records of all meetings and
accurately reflect all corporate action of the shareholders and the board of
directors (including committees) of SPBP. Likewise, the stock transfer books of
SPBP with respect to the period of Seller's ownership of SPBP contain accurate
and complete records. To Seller's Knowledge, there is no document, certificate,
Contract or arrangement, the existence of which, or a description of which, is missing from the minute books or stock transfer books of SPBP that could negatively impact Buyers' respective rights to own the SPBP Stock or to operate
the SPBP Interests free and clear of all Liens (other than the Permitted Stock Encumbrances).
Except as set forth in Schedule 12.l(gg) or as otherwise disclosed in this Agreement, neither Seller nor SPBP has any liabilities or obligations or Claims, except for liabilities or obligations or Claims reflected or reserved against in the
Financial Statements.
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SPBP is not a public utility (or public utility company) under applicable
laws ofthe State of California.
(ii) Bank Accounts.
Schedule 12.l(i) contains a true and complete list of the name of each bank and trust company with which SPBP has an account, safe deposit box or vault and the names of aII Persons authorized to draw upon such account or who
have authorized access to any such safe deposit box or vault.
Uj) Officers/Directors/Agents.
Set forth on Schedule 12.l(kk) is a true and complete list of aII of the
folIowing Contracts (the "Affliate Agreements"): (a) each Contract between Seller and/or its Affliates (other than SPBP), on the one hand, and SPBP on the
other, (b) each guarantee, letter of credit, reimbursement agreement, keep-well
agreement, equity contribution agreement, credit support agreement or Contract under which SPBP has any obligation on behalf of, for the benefit of or that relate to obligations of, or to the business or assets of, Seller or any of its Affiliates (other than SPBP) and (c) any other arrangement pursuant to which SelIer or any Affiliate of Seller provides any service to SPBP.
(ii) Additional Unit Area. Notwithstanding the inclusion of federal oil
and gas lease bearing serial No. OCS-P-0296 in the Beta Unit, Seller represents
and warrants that (i) SelIer owns no record or beneficiary interest in federal oil
and gas lease bearing serial No. OCS-P-0296, (ii) no part of federal oil and gas lease bearing serial No. OCS-P-0296 is included under (or bound by) the terms of either (\) that Unit Operating Agreement dated October 1, 1978, by and among Shell Oil Company, Oxy Petroleum, Inc., Aminoil USA, Inc., Santa Fe Energy Company, Hamilton Brothers Oil Company, Hamilton Brothers Exploration Company, Hamilton Brothers Oil & Gas Corporation, as amended, nor (2) that Unit Operating Agreement dated August 1, 1982, by and among Shell California Production Inc., Chevron U.S.A. Inc., Petro Lewis Beta Company Joint Venture,
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operation or liability associated with Platform Edith, federal oil and gas lease bearing serial No. OCS-P-0296, or any wells, pipelines or other associated facilities driled or installed in, on or under such federal oil and gas lease bearing
serial No. OCS-P-0296.
Interests or the SPBP Interests, and neither Seller nor any of its Affiiates are
currently in default with respect to its obligation to pay such royalty obligations.
(nn) Employee Benefits.
contingent or otherwise, at any time within six (6) years prior to the
Closing Date with respect to (A) any "defined benefit plan" as defined in
Section 3(35) of ERISA; (B) any pension plan subject to the funding standards of Section 302 of ERISA or Section 412 of the Code; (C) any
"multiemployer plan" as defined in Section 3(37) of ERISA or Section
4 I 4(f) of the Code; (D) any "multiple employer plan" within the meaning
of Section 210(a) of ERISA or Section 413(c) of the Code; or (E) any benefits provided under any life, medical or health plan (other than as an
incidental benefit under any Benefit Plan intended to be "qualified" within the meaning of Section 401 (a) of the Code) that provides benefits to retirees or other terminated employees other than benefit continuation
rights under COBRA.
(ii) There are no pending or threatened claims by or on behalf of any
the Benefit Plans, by any person covered thereby (other than ord inary
have any liability or that could result in a Lien attaching to the Beta
Interests, the Operating Interests and/or the SPBP Stock.
(iii) Seller has delivered to or made available to Buyers, with respect to
each Benefit Plan that is a "group health plan" (as defined in Section
4980B(g) of
the names and contact information for each the Code), a list of individual who: (A) is currently receiving health care continuation coverage under COBRA, (B) is eligible to receive health care continuation coverage under COBRA and with respect to whom the "election period" (as defined in Section 4980B(f)(5) of the Code) has not expired, or (C) will otherwise be an "M&A Qualified Beneficiary" (as such phrase is defined in Section 54.4980B-9, Q&A-4 of the Treasury Regulations) in connection with the
D-1809900_17,DOC
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(00) Insurance. Each of Seller and SPBP have insurance policies in full
force and effect (a) for such amounts as are sufficient for all requirements of Applicable Laws and all agreements to which Seller or SPBP is a party or by which Seller or SPBP is bound, and (b) which are in such amounts, with such against such risks and losses, as are reasonable for the business, deductibles and
assets and properties of Seller and SPBP. Excluding insurance policies that have business, no insurance policy expired and been replaced in the ordinary course of has been cancelled within the last two years and, to the Knowledge of Seller, no threat has been made to cancel any insurance policy of the Seller or SPBP during such period. All such insurance will remain in full force and effect immediately following the consummation of the transactions contemplated hereby. No event
has occurred, including the failure by Seller or SPBP to give any notice or information or Seller or SPBP giving any inaccurate or erroneous notice or
information, which limits or impairs the rights of Seller or SPBP under any such
insurance policies.
(pp) Sufficiency of the Beta Interests and the Operating Interests. The
Beta Interests and the Operating Interests constitute all assets, properties and rights necessary to utilize or operate the Beta Field in the manner presently
(qq) Bonds. Schedule 12.l( qq) is a complete and accurate list of all Governmental Bonds necessary (including those required by Applicable Laws) to operate the Beta Interests or the Operating Interests.
(a) Existence. It is a limited liability company duly organized, validly existing and in good standing under the Applicable Laws of Delaware.
(b) Power. Authorization. Execution. It has all requisite power and
authority to execute, deliver, and perform this Agreement and the Transaction
Documents to which it is a party and to consummate the transactions
contemplated hereunder and thereunder. The execution, delivery, and performance of this Agreement and the Transaction Documents to which it is a party have been duly authorized by all requisite action and authorization, and this Agreement and the Transaction Documents to which it is a party has been duly
executed and delivered by it.
( c) Enforceabil itv. Th is Agreement constitutes, and the Transaction
D-1809900_17,DOC
performance by it of the terms hereof (and in accordance with the terms and conditions of the Sale Order) and thereof do not conflict with or result in a
violation of:
(i) its Organizational Documents, or
(ii) any material agreement, instrument, order, writ, judgment,
(e) Brokers. Neither it nor any of its Affliates has incurred any liability, 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 Seller or SPBP shall have any responsibility whatsoever.
(f) Bankruptcy. There are no bankruptcy, reorganization or
arrangement proceedings pending against, contemplated by, or to its knowledge, threatened against it.
(g) Basis of
the Assignment and Bill of Sale and in the Stock Power, has evaluated the merits and risks of purchasing the Beta Interests, the Operating Interests and the SPBP Stock and has formed an opinion based solely upon its knowledge and experience and not in reliance on any statements or actions by Seller or its Associated Parties.
ARTICLE 13 COMMUNICATIONS
Unless otherwise provided in this Agreement, any notice, request, instruction, correspondence or
other document to be given hereunder by either Part to the other shall be in writing and
delivered in person or by courier service requiring acknowledgment of receipt of delivery or
mailed by certified mail, postage prepaid and return receipt requested, or by telecopier, as
follows:
If
to Seller:
D- 1809900_1 7,DOC
Rutan & Tucker, LLP Attn: Gregg Amber 611 Anton Blvd., Suite 1400 Costa Mesa, California 92626
Telephone: (714) 641-5100
to Rise:
Suite610
Irving, Texas 75062
Telephone: (972) 556-2950
Haynes and Boone, LLP Attn: Robert D. Albergotti and Richard M. Fijolek
2323 Victory A venue
Suite 700
Telephone: (214) 651-5000
If
to Silver Point:
SP Beta Properties, LLC Attn: Reza Fardad 2 Greenwich Plaza, First Floor Greenwich, CT 06830
Telephone: (203) 542-4210
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to SPBPC:
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 Part 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 14 MISCELLANEOUS
14.1 Entire A2reement. This Agreement, the Confidentiality 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 among the Parties with respect to
the subject matter hereof and supersede all prior agreements and understandings, both written
and oral, among the Parties with respect to the subject matter hereof except for the Credit
Agreement, which shall continue in full force and effect, and shall survive any termination of this Agreement or the Closing in accordance with its terms; and (b) are not intended to confer upon any other Person any rights or remedies hereunder.
14.2 Successors and Assiens; 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 Parties. All of the covenants, agreements, and indemnities made by each Party contained in this Agreement shall survive the Closing; provided, however, that any representations or warranties made by Seller or Buyers in this Agreement shall automatically
expire upon the Closing.
14.3 Choice of Law; Venue. This Agreement and its performance shall be
construed in accordance with, and enforced under, the internal laws of the State of Delaware, without regard to choice of law rules of any jurisdiction, including California, except solely to
the extent the law of California is mandated with regard to the conveyance of the OCS Leases or
certain Beta Tangible Assets (and only to the extent so required). The Parties submit to the exclusive jurisdiction of the Bankruptcy Court (or any court exercising applicable jurisdiction
over the Bankruptcy Court) over any dispute arising out of or relating to this Agreement and any other agreement or instrument contemplated hereby or entered into in connection herewith.
14.4 Assi2nment. Prior to Closing, neither this Agreement nor the rights and obligations under it may be assigned or delegated by a Buyer without Seller's prior written consent, which consent shall not be unreasonably withheld; provided, however, that a Buyer may
assign this Agreement without consent of Seller: (i) to any Affiiate of Rise or Silver Point that
D-1809900_J7,DOC
-69-
has obtained MMS Qualification on or prior to the Closing Date, or (ii) in connection with an assignment of rights or interests as collateral to any creditor of such Buyer; in each case, so long as the Buyer so assigning this Agreement remains primarily liable for any and all obligations of such Buyer hereunder. After the Closing, each Buyer's respective rights and obligations under this Agreement shall be freely assignable by that Buyer without the consent of Seller or the other
Buyer.
14.5 No Admissions. To the fullest extent permitted by Applicable Laws, including Federal Rule of Civil Procedure Rule 408, neither this Agreement, nor any part hereof, nor any performance hereunder, nor any payment of any amount hereunder, shall constitute or
may be construed as a finding, evidence of, or an admission or acknowledgment of (a) any
liability, fault, past or present wrongdoing, or violation of law, rule, regulation, or policy, by either Seller or Buyer or their respective Associated Parties or (b) any rights, claims or positions
asserted by any Third Part.
deemed to create any third party beneficiary rights in any person or entity not a party to this
Agreement.
14.7 Public Communications. Unless provided otherwise in this Agreement, and excluding required fiings as part of the Bankruptcy Case, no Party shall make or issue, or
cause to be made or issued, any press release or public communication concerning this Agreement or the transactions contemplated by this Agreement without the other Party's prior written consent, which consent shall not be unreasonably withheld; provided, however, that, upon giving the other Party at least 24-hours' advance written notice, a Party (or an Affiiate of
such Party) may make or issue, or cause to be made or issued, any press release or public
communication as such Party reasonably determines may be required by Applicable Laws or the
public disclosure requirements applicable to such Part or any Affliate of such Part or required
under the rules of
any stock exchange on which a Part's (or its Affiiates) securities are publicly
traded.
14.8 Headin2s and Titles. The headings and titles in this Agreement are for guidance and convenience of reference only and do not limit or otherwise affect or interpret the this Agreement. terms or provisions of
14.9 Bulk Transfer Law. Buyers waive compliance with the provisions of
any
illegal, or incapable of being enforced by any law or public policy, all other terms or provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any Party. Upon such determination that any term or other provision is invalid, illegal, or incapable of being enforced, the Parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as
originally contemplated to the greatest extent possible
D-1809900_J 7,DOC
-70-
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 Parties agree that the rule of
construction that a contract be construed against the drafter may not be applied in interpreting
this Agreement.
14.13 No Waiver. No waiver by either Part of any part of this Agreement shall be deemed to be a waiver of any other part of this Agreement or a waiver of strict performance
of
14.14 Expenses. Except as otherwise expressly provided herein, all fees and
expenses incurred by each Party in connection with the transactions contemplated herein,
including attorney's fees, are for the account of the Party incurring the same, and the Party
incurring such expenses shall be responsible for the payment of such fees and expenses.
create a joint venture, partnership, tax partnership, or agency relationship among the Parties.
14.17 Rules of Construction. For purposes of
this Agreement:
(a) Unless the context otherwise requires, (i) "or" is not exclusive; (ii)
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 Part includes its successors
and permitted assigns; (vii) the word "includes" and its syntactical variants 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 particular
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 particular
provision of this Agreement; and (ix) any reference to dolIars shaII be a reference
to U.S. dollars.
(b) References in this Agreement to Articles, Parts, Sections, or other subdivisions are, unless otherwise specified, to corresponding Articles, Parts,
D-1809900_17,DOC
-71-
section headings of this Section 14.17(b )), nor the Table of Contents, shall be
deemed to be a part of this Agreement or this Section 14.17(b ).
(c) All Exhibits and Schedules to this Agreement are hereby
incorporated by reference herein, form a part of this Agreement, and shall have this Agreement. All the same force and effect as if actually set out in the body of 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
Agreement and (ii) the provisions of any other Transaction Document, the
provisions of
( e) References herein to any agreement or other instrument shall, unless the context otherwise requires (or the definition thereof otherwise
14.18 Waiver of Consequential Dama2es. EACH PARTY IRREVOCABLY WAIVES AND AGREES NOT TO SEEK INDIRECT, CONSEQUENTIAL, PUNITIVE OR
D-1809900_17,DOC
-72-
Thc Paries have executed this Agrcement on the date below their signatures, to be
enforceable and binding as of the Execution Date.
B: ~/~ y --By:
By:
Financial Officer
By:
Financial Offcer
The Parties have executed this Agreement on the date below their signatures, to be
cnforceable and binding as of the Execution Date.
By:
By:
Financial Officer
By: ____
Name: Gerald Tywoniuk
Title: Acting Chief
Financial Offcer
The Partes have executed this Agreement on the date below their signatures, to be the Execution Date.
By:
Financial Offce
Y PIPElNE COMPANY
.By:
V&..
Financial Offcer
Schedule 1.11
to
Purchase and Sale Agreement (Beta)
2.
3.
Unit Agreement for Exploration, Development, and Production Operations on the Beta Unit, San Pedro Bay Area, Outer Continental Shelf, Offshore California dated to be effective as of April 15, 1983, as amended. Unit Operating Agreement, Beta Unit, San Pedro Bay Area, Outer Continental Shelf, Offshore California, dated as fOctober 1, 1978, as amended. Unit Operating Agreement, Beta Unit, San Pedro Bay Area, Outer Continental Shelf, Offshore California, dated as of August 1,
1982, as amended.
4.
Agreement dated September 1, 1992, by and between Union Oil Company of California, Kerr-McGee Corporation, Minoco 1980IPLC Oil & Gas Program, Minoco UAQ, Limited, FM Properties Operating Co., Santa Fe Energy Resources, Inc., Hamilton
Brothers Corporation, and Shell Western E&P Inc.
5.
6. 7.
Royalty Relief Agreement and Guidelines for Administration of Royalty Relief on Leases OCS-P- 300 and 301, dated October 20, 2008. Sinking Fund Trust Agreement dated as of November 1,2006 between Seller and Aera Energy LLC. Supplemental Bond For Decommissioning Liabilities Trust
Agreement, dated March 1,2007, among U.S. Bank National
Association, Seller., and The United States of America acting by and through the Minerals Management Service United States
Department of
the Interior.
8. 9. 10.
1 1.
California: OCS-P-306.
*
Pipeline Operating Agreement, dated as of March 12, 2008, by
12.
13.
between Seller and SPBP. Petroleum Pipeline Transportation Agreement, dated November 1, 2006, between Seller and SPBP. Conoco Phillips Company Crude Oil Purchase Agreement dated March 16, 2007 and subsequently amended with effective dates of April 1, 2007 (Amendment No.1), April 1, 2009 (Amendment No. 2), April 1,2009 (Amendment No.3), May 1,2008 (Amendment
2283/023353-0034
105581809.12/21/09
14.
15.
*
16.
17.
No.4), and April 1,2009 (Amendment No.5). Fork Lift Lease between Hyster Capital and Seller with regards to the lease ofthe fork lift used at Platform Eureka. Fork Lift Lease between De Lage Landen Financial Svcs and Seller with regards to the fork lift used at the Beta Onshore Pump Station. Agreement between Verizon and Seller regarding Business Beta Onshore Pump Station Tl Line. Agreement between Seller and Arrowhead with regards to water service for Platform Elly, Platform Ellen, Platform Eureka, and
the Beta Onshore Pump Station. Lease, dated October 20,2006, between LS 111 West Ocean Co. LLC
18.
19.
(formerly known as Landmark Square Co LLC) and Seller, as amended by that certain First Amendment to Lease dated February 19, 2007 and that certain Second Amendment to Lease dated May 30,2007. Agreement between Alta Offce Services and Seller regarding coffee service for the executive offces, dated January 1, 2009 Business Video and Music Service Agreement between Seller and Charter Communications, dated April 3, 2007 Agreements between Seller and Color Broadband, Inc. with regards to
executive offce landline (Phone) and bandwidth service
24.
25.
Agreement between Seller and Tab Answer regarding Network Answering Service, dated March 20, 2007 Agreement between Seller and Verizon regarding the Internet Connection between Seller's office in Long Beach, California, and the San Pedro Bay Pipeline Agreement between Seller and Verizon California regarding landline and fax lines at the Seller's executive offce in Long Beach, California and San Pedro Bay Pipeline Agreements regarding Verizon Wireless Cell phones for employees to which Seller is party
Connection Agreement Beta Station to Cardinal Thums 10-inch
26.
27.
Pipeline between Cardinal Pipeline L.P. and Seller, dated June 21, 2007 Connection Agreement Beta Station to Crimson California Thums 8inch Pipeline between Crimson California Pipeline L.P. and Seller,
dated June 21, 2007
28.
Connection Agreement Beta Station to Crimson California Thums 12inch Pipeline between Crimson California Pipeline L.P. and Seller,
dated June 21, 2007
29.
30.
Marketing Agreement between DMC Oil Marketing and Seller dated March 30, 2009 (contract # 0902) Spill Management Services Contract between The O'Brien's Group and Seller, dated September 15,2006.
2283/023353-0034
1055818,09 a i 2/2 1/09
-2-
31.
32. 33.
Letter Agreement dated April 28, 1981, by and between Shell Oil Company and Standard Gas Company Offshore Pipeline Crossing Agreement dated October 9, 1979, by and between Shell Oil Company and Thums Long Beach Company.
Offshore Pipeline Crossing Agreement dated December 19, i 979, by
34.
*
35.
36.
37. 38.
and between Shell Oil Company and Southern California Edison Company. Rental agreement between Seller and One Touch Offce Technology (# 0028/09) dated May 122009 for two model 3500C Toshiba color copier/printer/scanner/fax located at the executive offce Rental agreement between Seller and One Touch Offce Technology rental agreements (#0029/09) dated May 12 2009 for one MPC 2050 Ricoh color copier/printer/scanner/fax, and one MF 171 SPF Ricoh color copier/printer/scanner/fax Platform Ellen and Platform Eureka License issued to Seller by Color Broadband Communications, Inc. dated July 17,2009 for use of Platform Ellen as antenna site. United States Department of the Interior - Geological Survey right of use and easement dated January 8, 1980 to Shell Oil Company. Call Sign - WXY983 License. Licensee: Aera. License is used for marine communications from Platform Elly to marine vessels and onshore facilities including the U.S. Coast Guard. Expiration:
September 24,2011. Registered with the U.S. Federal
39.
Communications Commission and licensed to Aera. Call Sign - KPD249 License. Licensee: Aera. License is used for
communications between individuals located on Platforms Elly,
Ellen and Eureka. Expiration: January 26, 2015. Registered with the U.S. Federal Communications Commission and licensed to Aera.
*
* * * *
Microsoft 50 Cor Microsoft Offce 2007 A s Licenses Microsoft 150 Cor Microsoft Offce 2007 Suites Licenses
Microsoft 50 (Cor Microsoft Visio Pro 2007 Licenses
* *
Microsoft 150 Cor Microsoft Offce 2003 A s Licenses Microsoft 150 Cor Microsoft Offce 2003 Suites Licenses
Microsoft 150 (Cor ) Microsoft Offce XP Suites Licenses
2283/023353-0034
1055818,09 a 12/21/09
-3-
52. 53.
*
*
54. 55.
56. 57. 58. 59. 60. 61. 62. 63. 64. 65. 66.
*
*
* *
*
Microsoft 20 (Corp) Windows Server 2003 Licenses Microsoft 20 (Corp) Windows Server 2003 R2, x32 Ed. Licenses Microsoft 20 (Corp) Windows Server 2003 R2, x64 Ed. Licenses Microsoft 20 (Corp) Windows Server 2003, x64 Ed. Licenses Microsoft 5 (Corp) Windows Server 2008, x64 Ed. Licenses Microsoft 150 (Individual) Windows XP Pro Licenses 150 (Individual) Symantec Antivirus Licenses 2 (Server) Symantec Backup Licenses 150 (Individual) Symantec Ghost Licenses
7 (ASP) Petrow
are Licenses
* * *
*
150 (Individual) Exchange CAL Licenses 50 (Individual) Express Maintenance Licenses 1 (Server) Websense Web Filter v7 Licenses 5 (ASP) PayChex Licenses Corel Corporation 150 (individual) Win Zip licenses
2283/023353-0034 1055818,09.12121/09
-4-
Schedule 1.23(k)
Retainers
(In US Dollars)
Retainer Balance (a 10/31/09
Pachulski
R uta n
Schully
22831023353-0034
1055818,09 al2121109
-5-
Schedule 1.23(1
Segregated Accounts
Account Title
Aera and Swepi
Bank
Wells Fargo
Bank Account
GL Account
1001-021
Cash Amount as
of
Nov. 30,2009
760-5919286
$ 6,320,001.62
Wells Fargo
760-5919294
1 00 1-022
$1,290,300.70
Wells Fargo
760-5919278
1001-023
$ 427,482.64
ORRI Obligations
Auction deposits in dispute:
Account Title
New Alaska Energy
Bank
The Private
Bank of
Bank Account
12000638
GL Account
i 00 1-0 1 0
Cash Amount as of
Nov. 30, 2009 (1)
$250,000.00
California
Kromriver Ltd.
The Private
Bank of
12000638
1001-010
$1,000,000.00
California
(1) These amounts are deposited in Client Trust Accounts with Pachulski Stang Ziehl &
Jones LLP.
2283/023353-0034
1055818,09 a i 2/21109
-6-
Schedule 1.57
to
Purchase and Sale Agreement
(Beta)
Certain Excluded Items
1. All rights and claims unrelated to the ownership and operation ofthe Beta Interests, the Operating Interests, the SPBP Stock or the SPBP Interests, including the following: a. All rights and claims related to a deposit made by Polytec Resources Limited, a company incorporated under the laws of the British Virgin Islands, in connection with the sale of certain assets not related to the Beta Interests, Operating Interests and SBPB Interests.
2283/023353-0034 1055818,09.12/21/09
-7-
Schedule 1.57(b)
to
Purchase and Sale Agreement
(Beta)
Excluded Insurance Claims
1. Claim under business interruption policy (loss of
production income) (Combined Cover Note JHB-CJP-1654) for losses incurred by Pacific Energy Operating LLC and its affliates, as a result of volcanic eruption at Mt. Redoubt, Alaska).
2283/023353-0034
1055818,09 a 12/21/09
-8-
Schedule 1.57(e)
(Beta)
Excluded Contracts
1. To the extent not transferable and subject to the rights of arising pursuant to the terms of
the Purchase and Sale Agreement to which these disclosure schedules are a part of, the third party insurance policies (but not including the proceeds therefrom) listed on Exhibit 1.57(1) to this schedule.
2. Amended and Restated Purchase and Sale Agreement, dated November 1,2006, between Aera Energy LLC and Seller.
3. First Amendment to Amended and Restated Purchase and Sale Agreement, dated December 1, 2006, between Aera Energy LLC and Seller.
4. Purchase and Sale Agreement, dated February 28, 2007, between Noble Energy, Inc. and
Seller.
5. Purchase and Sale Agreement, dated November 13, 2006, between SWEPT LP and Seller.
6. First Amendment to Purchase and Sale Agreement, dated December I, 2006, between
8. First Amendment to Participation Agreement, dated October 31, 2006, between Seller., SWEPI LP and Wolverine Gas and Oil Corporation.
9. Second Amendment to Participation Agreement dated February 15, 2007 by and between
12. Spill Response Membership Agreement, dated October 4, 2006, between Seller and Marine Preservation Corporation (an organization that exists exclusively to promote the welfare and interests of the petroleum and petroleum transportation industries with regard
to minimizing the impact of
13. Master Service Agreement, dated September 27, 1996, between Marine Spill Response Corporation and Seller (governs access if required to equipment, vessels and personnel on standby, ready to respond to a spill at any time within a specified timeframe; MSRC
2283/023353-0034
1055818,09 aI2/21/09
-9-
also conducts drills and training in conjunction with Seller's facility spill response drills for facility-specific readiness).
14. Agreement between A WSI and Seller regarding Employee Drug Testing Service, dated
December 20, 2006 (annual membership expires December 31, 2009).
15. Agreement between Seller and Blue Shield Of
16. Flexible Spending Account Administrative Services Agreement between Creative Benefits, Inc. and Seller. 17. Agreements between Seller and Guardian regarding Group Dental insurance, dated
January 1, 2008.
19. Agreement between Seller and Unum Life Insurance Company ofCA regarding Group Life Insurance (L TD), dated March 1,2007.
20. Agreement between Seller and Unum Life Insurance Company ofCA regarding Group Life Insurance (AD&D), dated March 1,2007.
21. Seller's Agreements regarding Group Vision Insurance - VisionServicePlan - (Ca), dated March 1,2007.
22. Master Services Agreements between Seller and the parties listed below:
2283/023353-0034
19.
20. 21.
B&T Vacuum Service dated October 3, 2007 Badger Daylighting Corp. dated June 13, 2007 Baker Hughes Oilfeild Operations, Inc. and Baker Petrolite Corporation dated April
9, 2007
22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. 41. 42. 43. 44. 45. 46. 47. 48. 49. 50. 51. 52. 53. 54. 55. 56. 57. 58. 59. 60.
Bakersfield Pipe & Supply dated March 1, 2007 Basin Valve Company dated May 3, 2007 Bear Welding, Inc. dated June 1, 2007 Black Gold & Supply, Inc. dated June 11,2007 B-Line Sales, Inc. dated June 19,2007 Brinderson dated March 22, 2007 Brothers N Trucking dated June 12,2007 C&H Technical Services dated March 7, 2007 Cableco dated March 3, 2007 Cannon Associates dated March 3, 2007 CD Lyon dated February 23, 2007 Central Fishing Tool, Inc. dated June 12, 2007 Centre-Point Corporation dated March 3, 2009 Century Calibrating Company dated June 27, 2007 Certex USA dated May 17, 2007 Clean Harbors Environmental dated February 4, 2008 Collins Backhoe & Water dated July 13,2007 Compliance Services, Inc. dated June 20, 2007 Contra Costa Electric, Inc. dated July 16, 2007 Coordinated Wire Rope dated March 7, 2007
Creative Concepts dated March 7, 2007
Cryder Construction, Inc. September 15,2007 D.T. Trucking Hot Shot, Inc. dated November 13,2007 DCS Testing & Equipment, Inc. dated February i 3, 2007 Delta Testing Services dated February 13, 2007 Dion & Sons dated June 7, 2007 Divecon Services, Inc. dated March 7, 2007 Diversified Inspections dated March 7, 2007 Diversified Project Services International dated November 1, 2007 Diversified Technology Services dated April 17, 2007 Durainey's Crane Service dated November 7, 2007 Eagle Trucking & Crane dated September 4, 2007
Elco Incorporated dated October 7,2007
Enterprise Drilling Fluids dated July 20, 2007 Envent Corporation dated March 29, 2007 Farwest Corrosion dated March 6, 2007 Flow Solutions dated February 13, 2007 Flowtech Industries dated Fugrow West, Inc. dated July 6, 2007
2283/023353-0034 1055818,09.12/21/09
-11-
61. 62. 63. 64. 65. 66. 67. 68. 69. 70. 71. 72. 73. 74. 75. 76. 77. 78. 79. 80. 81. 82. 83. 84. 85. 86. 87. 88. 89. 90. 91. 92. 93. 94. 95. 96. 97. 98. 99. 100. 101. 102. 103.
G&J Hot Oiling, Inc. dated August 14,2007 General Marine Contracting dated January 18, 2008 General Petroleum Corporation dated March 5, 2007 General Production Service dated June 15, 2007 Geosearch Logging dated June 21, 2007
Golden West Machine dated June 15,2007
GT Analytical Service dated June 15, 2007 Hagemeyer North America dated July 24, 2007 Halliburton Energy Services dated March 21, 2007 Harbor Resources, Inc. dated July 17,2007 Heli-Flight, Inc. dated August 10, 2007 Hooper Engineering dated April 11, 2007
Hot Shot Services, Inc. dated June 12,2007
Hurley Company dated June 20, 2007 Inlet Offshore Divers, LLC dated December 10, 2007 In-Place Machining dated May 23, 2007 Instrument Control Services dated May 13, 2009 Inter-Mountain Pipe and Threading dated June 22, 2007 International Energy Services dated March 27, 2009 Irwin Industries, Inc. dated August 13,2007 JA Edmonson, Inc. dated February 26, 2008
JD Rush Company dated July 16, 2007
John M. Philips dated June 25, 2007 Kelley Controls Inc. dated February 19, 2008 Kenyon Enterprises dated March 7, 2007 KovaleffMechanical Services dated July 28, 2009 Lacey Oil Tool Company dated June 11, 2007 Life Saver dated February 20, 2007 Long Beach Hose & Coupling dated February 23, 2007 Lovell Construction, Inc. Dated June 11, 2007 M.D. Electric dated February 9, 2007 Management Advisory Services dated June 22, 2007 Marshall Institute Inc dated February 15, 2007 Melo's Gas & Gear dated June 20, 2007 Moeller Constuling dated August 17, 2007 MP Environmental Services, Inc. dated February 16, 2007 Nabors Well Services Co. dated February 27, 2007 Nixon-Egli Eqiupment Co. dated March 7, 2007 NPT Oil Corporation dated March 18, 2008 Oceanside Engineering & Manufacturing dated August 27,2007 Omega Industrial Supply dated June 19, 2007
2283/023353-0034
1055818,09 a 12/2 1/09
-12-
110. PC Mechanical, Inc. dated March 22, 2007 111. Pensoinger Trai ler Rentals, Inc. dated October 15, 2007 112. PFT/Alexandar Services Inc. March 26, 2007
113. Power and Compression Systems dated May 30, 2007
120. PSC Industrial Services dated July 10, 2007 121. PTS Rentals Inc. dated March 3, 2008
122. Puretec Industrial Water dated July 26, 2007
124. Quantum Driling Motors dated July 3, 2007 125. R&T dated October 6, 2008
126. Rain for Rent dated June 21, 2007
2283/023353-0034
151. Subserface Consultants & Associates, LLC dated April 12, 2007
153. Systems Measurement Service, Inc. dated March 7, 2007 154. Systems Measurement Services, LP dated February 15, 2008
155. Talco Trucking, Inc. dated June 11, 2007
160. Thomas Crane & Trucking Co. Inc. dated March 3, 2007
16 i. TIC - The Industrial Company, Inc. dated February 21,2007
170. Ventura Compressor & Pump Repair, Inc. dated January 31, 2007
171. Ventura Valve Services, Inc. dated October 1,2007
173. W.A Rasic Construction Co., Inc. dated May 25, 2007
174. Water & Energy Systems Technology, Inc. dated June 12,2007
175. Waveland Services, Inc. dated March 7, 2007 176. Wayne's Hot Oil Service dated July 19, 2007
177. Wellhead Inc. dated March 13,2007
2283/023353-0034
PoliqyTeim ,.
June 15th, 2009June 15th, 2010
...
. '.. PolicyNo.&CIer
Steadfast (Zurich)
BOG9261 718-02
Umts I Terms
Per Occurrence
$ i ,000,000
General Liability
Auto Liability
Zurich American
BAP 926 I 7 I 9-03
Umbrella
Control
of
Well
Lloyds of London
JHBCJP i 654
CA Earthquake
CV Starr
09TR3626300 I
Aggregate $2,000,000 Products Completed Ops $2,000,000 Personal Advertising Injury $1,000,000 Fire Legal $100,000 Medical Expense $10,000 Sudden & Accidental Pollution Oed. Each Occurrence $25,000 Limit of Liability $35,000,000 Retention NIL (subject to indemnity of $ i 00,000) Combined Single Limit $ I ,000,000 Under / Uninsured $1,000,000 Med Payment $5,000 Comp / Coli $1,000 Bodily Injury By Accident $ 1 ,000,000 Bodily Injury by Disease $1,000,000 Bodily Injury Disease Each $1,000,000 Outer Shelf, Maritime, USL&H, Per Occurrence $ i 5,000,000 Aggregate $ 15,000,000 Sudden & Accidental Pollution included Per Occurrence $85,000,000 Aggregate $85,000,000 Sudden & Accidental Pollution CA Oil Spil Endorsement CA Per Occurrence / Agg $45,000,000 each Care, Custody & Control $5,000,000
Deductible Drill & Workover/ProducinglCCC
$500,000/ $250,000 / $250,000
Property
(Off Shore)
CA Earthquake
Propert
(On shore)
$150,000/
Actual Loss
CA
$27,501.09
Non-owned Aircraft
Employee Benefit Plan
Oed. CA / EO each claim 45 /75 days Combined Single Limit $ 10,000,000 Medical Payments $5,000 Aggregate $1,000,000
2283/023353-0034 1055818,09.12/21/09
-15-
Schedule 1.57(0
(Beta)
2283/023353-0034
i 0558 i 8,09 a i 2/21/09
-16-
Schedule 1.63
to
Purchase and Sale Agreement
(Beta)
Governmental Bonds
Purpose
Beta Abandonment Liability Account MMS Oil and Gas
Lease Bonds
Bank
Account Number
US Bank
104841001
Federal Reserve Bank of St. Louis Federal Reserve Bank of St. Louis (Account in the name
of Seller.)
ACE Surety
Company through Westchester Fire Insurance Company
Port of Long Beach Pipeline License HD 7149 Bond* City of Long Beach
Department of
Cash Collateral posted with ACE (Collateral agreement is between Seller and Westchester) 7578920246 (Pledged account in the name of Seller)
$3,000,000.00
$ i 00,000.00
$500,000.00
Public Works
Pipeline Facility
Permit P-188-96*
Total
$103,846,330.32
All of the accounts referenced above contain cash that colIateralizes the bonds. All bonds and bond accounts are in the name of Seller. Bonds designated by "*,, indicate bonds that are
for the benefit ofSPBP.
2283/023353-0034
1055818,09 a12/21/09
-17-
Schedule 1.83(c)
Landmark Square Co LLC) and Seller, as amended by that certain First Amendment to
Lease dated February 19,2007 and that certain Second Amendment to Lease dated May
30, 2007.
2283/023353-0034 1055818,09012/21/09
-18-
Schedule 1.83(d)
to
Purchase and Sale Agreement
(Beta)
Purchased Information Technology
1. All business systems located in the Long Beach offce, including Petroware
(Accounting), Paychex (Payroll), Microsoft Exchange (Em
hosting services and File/Print services, except for those licenses and business systems on
Schedule 1.1 that are not marked with an asterisk.
2
1 1
Edgemark 4500
C1S0C PIX slsE
Switches
Cisco Catalyst 2950 Cisco Catalyst 2960
Cisco Catalyst 3s00XL
Cisco Catalyst Express sOOG
40
1
Video Projectors
Toshiba TDP-T4s Toshiba Portable
-19-
3. Computer Hardware:
Servers
Dell PowerEdge 2950 Dell PowerEdge 2900 Dell PowerEdge 1950
PowerVault TL-2000
4
1 1 1 1
PowerVault iiOT
Desktops
Dell Optiplex 330 Dell Optiplex 320
30
Printers
HP LaserJet 4600
HP DesignJet 500
1 1 1
12
5 6
3
1
Toshiba/Gateway
Included with the above hardware list are various monitors, keyboards and mice for desktops and laptops; UPS units for routers, switches and servers; miscellaneous cables (power, video, patch cords); spare parts (memory, hard drives, CD-ROM/DVD); server and network racks; wireless access points.
2283/023353-0034
1055818,09 a i 2/2 1/09
-20-
4. Computer Software:
Description Microsoft Office 2007 Apps Microsoft Office 2007 Suites Microsoft Visio Pro 2007 Microsoft Office 2003 Apps Microsoft Office 2003 Suites
Microsoft Office XP Suites
Type of License
Quantity
SO
Windows Server 2003, x64 Ed. Windows Server 2008, x64 Ed. Windows XP Pro Adobe Acrobat 8 Pro
Symantec Antivirus
Symantec Backup
Symantec Ghost
Petroware ASP
Corporate Corporate Corporate Corporate Corporate Corporate Corporate Corporate Corporate Corporate Corporate
Individual Individual Individual Server Individual
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2283/023353-0034 1055818,09012/21/09
-21-
Schedule 1.86
(Beta)
a. 3.575% overriding royalty interest in favor of Rise Energy Partners, L.P., a Texas limited partnership.
b. 1.925% overriding royalty interest, collectively, in favor of SPCP Group, L.L.c.,
a Delaware limited liability company, and SPCP Group II LLC, a Delaware limited liability company.
c. .97529% overriding royalty interest in favor of SPCP Group, L.L.c., a Delaware limited liability company.
d. .0247% overriding royalty interest in favor of SPCP Group II LLC, a Delaware limited liability company.
e. i .00% overriding royalty interest in favor ofRse Energy Partners, L.P., a Texas
limited partnership.
2283/023353-0034 1055818,09.12/21109
-22-
Schedule 1.89
to
Purchase and Sale Agreement
(Beta)
business.
3. The Lien of
the United States Minerals Management Service, and the second Liens of Aera, SWEPI and Noble in that certain U.S. Treasury Note in an original principal amount of$90,000,000, as more fully described in the Supplemental Bond For Decommissioning Liabilities Trust Agreement, dated March 1,2007, among U.S. Bank National Association, Seller., and The United States of America acting by and through
the Minerals Management Service United States Department of
the Interior.
4. Any Liens for taxes that are not yet due and payable subject to the obligations of Seller to pay taxes pursuant to the Purchase and Sale Agreement to which these disclosure schedules are attached and any reservation specified in the Wind-Down Budget.
5. Any Liens for taxes which are being contested in good faith subject to the obligations of Seller to pay taxes pursuant to the Purchase and Sale Agreement to which these disclosure schedules are attached and any reservation specified in the Wind-Down Budget.
-23-
Schedule 1.90
(Beta)
-24-
Schedule 1.111
(Beta)
San Pedro Bay Pipeline
A 16" diameter 17.4 mile pipeline from Platform Elly to onshore tank and pumping facilities located in the Port of Long Beach at 170 North Pico Ave. The onshore pump facilities (Beta Station) include one 10,000 barrel storage tank, shipping pumps, custody transfer meters, and
three shipping lines from the onshore pump facilities to the Thums manifold.
2283/023353-0034 1055818,09.12/21/09
-25-
Schedule 1.120(m)
(Beta)
SPBP Contracts
The disclosure on Exhibit D to the Purchase and Sale Agreeement to which these disclosure schedules are attached is incorporated herein by reference.
2283/023353-0034 105581809012/21109
-26-
Schedule 4.l(a) to
Purchase and Sale Agreement
(Beta)
Seller has access pursuant to Paychex payroll software license dated January 27, 2007
between Paychex, Inc. and Seller.
2. Software trade secrets and confidential information owned by Avatar Systems Inc. to
which Seller has access pursuant to Avatar Subscriber Agreement, dated December 19, 2007, between Avatar Systems Inc. and Seller.
3. Confidential information, including order terms and conditions, owned by Charter
Communications to which Seller has access pursuant to the Business Video and Music Service Agreement between Seller and Charter Communications, dated April 3, 2007.
2283/023353-0034
1055818,09 aI2/21/09
-27-
Schedule 6.2(a)(v)
Capital Expenditures
Schedule 12.1 (g) is incorporated herein by reference.
22831023353-0034
1055818,09 a12121/09
-28-
Schedule 6.2(a)(vi)
(Beta)
Post-Closing Obligations
Schedule 12.1 (g) is incorporated herein by reference.
2283/023353-0034 1055818,09012/21/09
-29-
Schedule 6.2(a)(viii) to
Purchase and Sale Agreement
(Beta)
subsidiaries' operating, investing and financing activities. Intercompany equity investments are excluded from the balances below.
58
2,077,228 167,055,932
Seller will cancel or forgive the indebtedness referenced above as being owed by SPBP to Seller.
-30-
Schedule 6.2(a)(xyi)
to
Purchase and Sale Agreement (Beta)
2. Changes in benefits
a. 401k match reinstituted to 6% maximum beginning Jan. 15,2009.
3. Health care costs as follows:
20-250ADMIT
(current plan)
None
(renewal plan)
None
$20 $20
No Charge
$25 $25
No Charge
20% / 40%
20%
20% / 40%
20%
Facilty Copay
Prescription CopayRetail
Out of Pocket Maximum
$20/$60/$100)
$3,000/ $6,000 (2x)
name deductble)
$3,000/ $6,000 (2x)
$20/$60/$100)
$1,500 (2x)
deductible)
$2,000 (2x)
'-
Lifetime Maximum
Benefi
$6,000,000
$6,000,000
Unlimited
Unlimited
Coverage
Employee only
Total Premium
$562,62 $1,125,24 $1,016,82 $1,687,80
Employee + Spouse
Employee + Child(ren)
Employer Contribution
$393,83 $787,67 $711,77 $1,181.46
2010 ER Monthly Total 2009 ER Monthly Total $1,575,34 $1,216,76 $1,575,34 $1,216,78 $0,00 $0,00 $4,725,84 $3,650,16 $7,876.51 $6,083.70 2010 ER Monthly Total 2009 ER Monthly Total $5,37254 $5,155,76 $6,952,70 $6,67216 $2,856,00 $2,740,70 $18,014.43 $17,287,34 $33,195.68 $31,855,96
Coverage
Employee only
Total Premium
$395,04 $790,08 $714,00 $1,185,16
Employee Portion
$79,01 $158,02 $142,80 $237,03
Employer Contribution
$316,03 $632,06 $571,20 $948,13
Employee + Spouse
Employee + Child(ren)
Employee + Family
Total
2283/023353-0034
1055818,09 aI2/21/09
-31-
Schedule 6.2(a)(xx)
(Beta)
Contractual Matters
Schedule 12.1 (g) is incorporated herein by reference.
2283/023353-0034
1055818,09 a i 2/2 1/09
-32-
Schedule 6.2(a)(xxx)
to
Purchase and Sale Agreement
(Beta)
reference.
-33-
Schedule 6.2(a)(xxxyiii) to
Purchase and Sale Agreement
(Beta)
2283/023353-0034
1055818,09 a i 2/21/09
-34-
Schedule 12.l(e)
to
Purchase and Sale Agreement (Beta)
Consents
1. MMS Approvals.
a. Prior written approval ofMMS regarding assignment of
Pipeline Right-Of-Way
2. CSLC Approvals.
a. Prior written approval ofCSLC regarding assignment of
Pipeline Right-Of-Way
3. Prior written approval of Long Beach Harbor Department, Port of Long Beach, regarding assignment of Pipeline License, Document Number HD-7149.
4. Prior written notice to City of assignment of Long Beach, Department of
Stock.
5. Written notice to Federal Energy Regulatory Commission regarding transfer of
Beta
Interests to Buyer.
6. To the extent required and requested by either Buyer, the consent of Aera, Noble and
SWEPI with respect to the transfer of
U.S.
U.S.
Commission Coastal Development to transfer Permit A - 154-79 (issued on May 24, 1979) from Shell Oil Company to Buyer.
10. To the extent required, the consent of Paychex, Inc. to assign the Paychex payroll software license dated January 27, 2007.
-35-
11. To the extent required, the consent of A vatar Systems Inc. to assign the Avatar
Subscriber Agreement, dated December 19, 2007, between Avatar Systems Inc. and Seller.
12. To the extent required, the consent of
Charter Communications to assign the Business Video and Music Service Agreement between Seller and Charter Communications, dated April 3, 2007.
2283/023353-0034
i 0558 i 8,09 a 12/21/09
-36-
Schedule 12.1(0
(Beta)
Proceedings
1. All following actions filed with the Bankruptcy Court:
a. Noble Energy v. Seller; Petrocal Acquisition Corp.; Pacific Energy Alaska
Alaska Holdings, LLC; Carneros Acquisition Corp.; Pacific Energy Alaska Operating LLC; SPBP; Cameros Energy, Inc.; AP-09-52825-KJC fied November 25, 2009
2283/023353-0034
1055818,09 al2/21/09
-37-
Schedule 12.1(2)
Commitments
See the Seller's budget below, which budget has been approved under Amendment No.8 to Senior Secured Super Priority Priming Debtor in Possession Credit and Guaranty Agreement, dated as of November 13, 2009, by and among Seller, certain of its Subsidiaries, certain the financial institutions as lenders, J. Aron & Company and Silver Point Finance, LLC.
AFE Number
DIP
Total 2
Project
Totai2 ($)
($)
300
125 100 55 125
310 822
150
440
179 125 231
Eureka RTP #5
Eureka RTP #6
Annual Inspection 6" & 10" Lines Edith!Elly Power Cable (Prelim.)
Centaur Heat Box #2
245 290
189
S-02 A/B Roof Repair Ellen Marine Growth Removal Elly Saturn Turbine Repair #2
Elly Sulfa Treat Changeout # 1
297 250
135
600 1,213
Eureka East Crane Repairs Filter Media Changeout # 1 Wemco A Repairs Re-inspection of 6" & 10" Lines
268
83 113
TBD
1100 1087
400
175
66
2283/023353-0034
1 055818,09 a 12/2 1/09
-38-
2016 2017
1101
60 60 80
1083 1097
146 118
100 150
Total
Footnotes:
1. Inclusion of
7,193
9,096
the project in the list above means commitments are being made; payments may continue beyond the budget period from March 8 to December 31.
2. $ in thousands.
2283/023353-0034
10558 i 8,09 a 12/21/09
-39-
Schedule 12.l(h)
to Purchase and Sale Agreement
(Beta)
2. Marketing Agreement, dated March 30, 2009, between DMC Oil Marketing and Seller
(contract # 0902).
2283/023353-0034 1055818,09812/21/09
-40-
Schedule 12.1(i)
to
Purchase and Sale Agreement
(Beta)
Payment of Expenses
Amount
($)
3E Company
3,250.00 8,922.58 17,405.47 422.00 180.00 750.58 3,845.00 1,694.78 299.00 75,796.00 1,066,359.10 636.50 6,378.59 23,191.73
26,515. i 5
Boardmarker Group
37,360.18 3,554.96 1,170.00 7,928.66 794.57 88,941.60 2,051.11 510.00 5,933.33 10,653.98 13,046.17
2283/023353-0034
1055818,09 aI2/21/09
-41-
Coordinated Equipment Co. D. Katic (Car Allowance) DeGolyer and MacNaughton De Lage Landen Dick Munns Company
Dion & Sons
Direct TV
Diversified Project
Edco
Ed's Stinger Crane Srv. Energy Capital Solutions Evans-Hydro, Inc.
Greenberg Traurig LLP GT Analytical Service,lnc Guess & Rudd Hagemeyer North America Hartig Rhodes Hoge HD Industries Heitzman Drill-Site Servo Hurley Company
Hyster Capital Instrument Service Inc.
Konica Minolta
725.00 983,903.00 6,950.00 3,382.81 192.04 622.17 167.95 58.24 1,707.22 258,828.53 400.00 2,459.00 275.00 3,925.72 907.50 6,191.72 668.25 680.00 393.84 4,975.00 3,150.00 1,534.54 28,280.22 1,871.00 67,672.50 3,960.00 12.60 304,463.55 1,175.74 2,735.50 6,736.29 404.45
2283/023353-0034 1055818,09.12/21/09
-42-
Landmark Square Co. LLC Law Offces of Ralph Long Beach Hose & Long Beach, City of Lovell Corporation LS 111 West Ocean Co. LLC
L TS Environmental, Inc.
Shane Manning Mcjunkin Red Man Corp. McMaster Carr Supply Co Memorial Maritime Clinic
Mercedes-Benz Financial
Merril Communications
Minerals Revenue Munger Oil Information NIXON EGI. EQUIPMENT CO. No Rush Charge Enterprise Occidental - Thums Long Beach Co. Occidental of Elk Hills
Offce Depot
OneSource Distributors OPIS Pacific Seatec Paladin Principle, LLC PC Mall Sales, Inc. Petroleum Club ofLB Petros PFT / Alexander Service Pipeline Engineering & Pitney Bowes Postage
Pitney Bowes Global
PumaSoft Puretec
Quality Refrigeration Inc
2,555.00 321.50 1,241,694.45 144,712.00 243.77 -57.63 345.86 945.00 1,187.50 322.22 325.00 23,345.15 783.86 1,160.00 842.17 312.30 2,009.49 5,066.78 105.00
194.10 5,384.51
R & S Whitson, Inc. R&T Pacific Associates Robert Half Management Royalty Distributors Inc
2283/023353-0034
10558 i 8,09 a 12/21/09
-43-
Solar Turbines South Coast Air Quality Sprint Staples Business Advantag Staples
Star Custom Displays
The Industrial Company TNT USA Inc. Toshiba Financial Service TSX Inc
Turk's Kern Copy, Inc.
Total
(\)
Royalty D1stributor Inc. payable is amounts due to the MMS for unpaid Beta royalties for
the period from January 1, 2009 to March 8, 2009.
2283/023353-0034 1055818,09.12/21/09
-44-
Other Claims:
Amount
($)
Darren Katic
Gerald Tywoniuk
Vladimir Katic
Total
$ 3,473,289.20
$ 10,363,070.30 I
2283/023353-0034 1055818,09.12/21109
-45-
Schedule 12.l(k) to
Purchase and Sale Agreement (Beta)
Imbalances
None.
2283/023353-0034
1055818,09 a 12/21/09
-46-
Schedule 12.l(m) to
Purchase and Sale Agreement
(Beta)
Taxes
1. An outstanding balance due the Franchise Tax Board of
California for tax year 2007 of approximately $1,800 (including penalties and interest) for Seller.
2283/023353-0034 1055818,09.12/21/09
-47-
Schedule 12.1(n)
to
Purchase and Sale Agreement
(Beta)
minimum fee of $500,000; finalization of fee is in progress as of Dec. 16, 2009; final fee subject to be inclusion in the sale order and the subsequent fee application).
2. Albrecht and Associates, Inc. (pursuant to that certain court order dated May 14, 2009 $1,250,000, verbally agreed but subject to inclusion in the sale order and the subsequent fee application)
3. Millstream Energy, LLC. (pursuant to that certain court order dated May 14,2009 $50,000, subject to a fee application after closing).
2283/023353-0034
1055818,09 a 12/21/09
-48-
Schedule 12.1(0)
to
Purchase and Sale Agreement
(Beta)
2283/023353-0034
1055818,09 a 12/21/09
-49-
Schedule 12.l(p)(i)
to Purchase and Sale Agreement
(Beta)
OCS LEASE
CURE AMOUNT
(Estimated AS OF December 7, 2009)
Pre-Petition
($)
Federal Oil & Gas Leases of Submerged
Post- Petition
Total
($)
(Estimated)
($)
443,275
1,100,000
1,543,275
775,719
1,300,000
2,075,719
-50-
Schedule 12.l(p)(ii)
to
Purchase and Sale Agreement
(Beta)
2283/023353-0034
1055818,09 aI2/21/09
-51-
Schedule 12.l(p)(iii) to
Purchase and Sale Agreement
(Beta)
Long Beach.
2. The Port of Long Beach is owed $2,009.49 for pre-petition rent on the pump station surface lease.
2283/023353-0034 1055818,09.12/21/09
-52-
Schedule 12.l(q)(i
to
Purchase and Sale Agreement
(Beta)
Permits
1. South Coast Air Quality Management District RECLAIM Facility Permit issued to Seller.
2. South Coast Air Quality Management District Beta Station Permit to Operate (Permit No. F92646) issued to Seller.
3. EPA NPDES General Permit No. CAG280000 (authorizes various discharges from oil
production platforms into federal waters off southern California) issued to owners of offshore leases and platforms located in federal waters offthe coast of Southern California, including leases OCS-P-0300, OCS-P-0301, OCS-P-0306, and platforms Elly, Ellen and Eureka.
4. California EPA ID for Hazardous Waste - No. CAL000318314 issued by the California Department of Toxic Substances Control to Seller's Beta Unit.
5. Certified Unified Program Agencies of
the state Hazardous Materials Program (has an annual fee for oversight and requires the submittal of a Hazardous Materials Business Plan indicating what chemicals are used and where they are stored).
submitted July 6, 2009 by Seller to the Los Angeles County Fire Department. Part of 6. Pipeline License, Document Number HD-7149, dated effective as of granted by the City of Long Beach, acting through its Board of
issued to SPBP.
7. Facility/Pipeline Permit by and between the City of Long Beach and Shell California
Production Inc., effective September 18, 1984, Permit Number P-147-84; currently Permit Number P-188-96.
8. Certificate of Financial Responsibility No. 22412-01-001 dated May 1, 2009 issued by the State of California, Department of Fish & Game, Offce of Spill Prevention & Response to Seller.
9. State of
California - California Coastal Commission Coastal Development Permit A:154-79, by and between the California Coastal Commission and Shell Oil Company, issued on May 24, 1979.
2283/023353-0034 1055818,09012/21/09
-53-
Schedule 12.l(Q)(ii)
to
Purchase and Sale Agreement
(Beta)
Permit Issue
1. Call Sign - WXY983 License. Licensee: Aera. License is used for marine communications from Platform Elly to marine vessels and onshore facilities including the U.S. Coast Guard. Expiration: September 24,2011. Registered with the U.S. Federal Communications Commission and licensed to Aera. The license is necessary for the communications on the platforms as well as the communication from the platform to U.S. Coast Guard, marine vessels and onshore support facilities. The license may not have been fully transferred to Seller from Aera. Seller will take all commercially reasonable steps to ensure that the license is fully transferred to Buyer from Aera.
2. Call Sign - KPD249 License. Licensee: Aera. License is used for communications
between individuals located on Platforms Elly, Ellen and Eureka. Expiration: January 26, 2015. Registered with the U.S. Federal Communications Commission and licensed to Aera. The license is necessary for the communications on the platforms as well as the communication from the platform to U.S. Coast Guard, marine vessels and onshore support facilities. The license may not have been fully transferred to Seller from Aera. Seller will take all commercially reasonable steps to ensure that the license is fully transferred to Buyer from Aera.
3. Seller cannot locate proof of
the transfer of State of California - California Coastal Commission Coastal Development Permit A - 154-79, issued on May 24, 1979, Shell Oil Company. To the extent the permit has not been transferred to Seller, Seller will take all commercially reasonable steps to ensure that the permit is fully transferred to Buyer.
2283/023353-0034 1055818,09.12/21/09
-54-
Schedule 12.l(r)
to Purchase and Sale Agreement
(Beta)
Suspense Amounts
None.
-55-
Schedule 12.1(s)
P&A
I. Approximately $ 126.7 million in decommissioning costs for the Beta Interests, as estimated by MMS's 'Offshore Facility Decommissioning Costs - Pacific OCS Region'
report issued the September 17, 2004. The report estimates the abandonment obligation
ofthe Beta Interests located in the OCS waters and regulated by the MMS.
2283/023353-0034 1055818,09.12/21/09
-56-
Schedule 12.l(t) to
Purchase and Sale Agreement
(Beta)
Calls or Options
None.
2283/023353-0034
1055818,09 a 12/21/09
-57-
Schedule 12.l(u)
to Purchase and Sale Agreement (Beta)
Capital Commitments
Schedule 12.1 (g) is incorporated herein by reference.
2283/023353-0034 1055818,09.12/21/09
-58-
Schedule 12.l(v)
to Purchase and Sale Agreement
(Beta)
Payout
The status of
November 30,2009 with regard to the Production the "payout" balance as of Payments, setting out both monies the Seller has placed in segregated accounts'as well as the accrued amounts owing, is as follows:
Pacific Energy Resources Ltd Beta Production Payments - Segregated Accounts and Accrued Balances as of NOl.mber 30, 2009
Production
Production
Interest
Proceeds,a)
Fees
Total
Proceeds(b)
$ 5,800,000 $
Interest(C)
211,559 $
Total
AeraSWEPI
Noble
$ 6,300,000,00 $
$ 1,286,631.0 $
$ 7,586,631,70 $
20,001,62 3,669,00
23,670,62 $
1,133,333
$ 6,933,333 $
41,339
252,898 $
6,011,559 1,174,672
7,186,231
Notes
(a) Total amount funded by US Bankruptcy Final Order dated June 4,2009 (Docket #415), (b) Payout production proceeds full eamed as of July 31,2009,
-59-
Schedule 12.l(x)(i
to Purchase and Sale Agreement
(Beta)
Non-Assumed Beta Contracts
2283/023353-0034 105581809.12/21109
-60-
Schedule 12.l(x)(ii) to
Purchase and Sale Agreement (Beta)
SPBP Contracts
Schedule 1.120(m) is incorporated herein by reference.
-61-
Schedule 12.l(x)(ii)
to Purchase and Sale Agreement
(Beta)
Breach or Default of Contracts
P ayment
de f; Its au
on t e
tt
Outstanding Amount
(as ofDec 8, 2009) ($)
COUNTERP ARTY
Aera Energy LLC
63,711.64
422.00
750.58
PO Box 856158
Louisville, KY 402856158
Conoco Phillips Company 600 N. Diary Ashford Houston, TX 77079 De Lage Landen Financial Svcs P.O. Box 41602 Pittsburgh, P A 191011602 Hyster Capital
13,046.17
766.03
393.84
PO Box 643749
Pittsburgh, P A 15264
Landmark Square Co. LLC P.O. Box 56798 Los Angeles, CA 900746798 MMS
Offce Lease
8,094.66
Submerged
443,275.00
2283/023353-0034 1055818,09.12/21/09
-62-
Pacific OCS Region eo Camarilo Camarilo, CA 93010 MMS Pacific OCS Region 770 Paseo Camarillo Camarillo, CA 93010 Tab Answer Network PO Box 1 0440 Santa Ana, CA 92711 Verizon PO Box 4836 Trenton, NJ 08650-4836
770 Pas
Lands off
the Coast of
California: OCS-P-
300 (Eureka)
Lands off
Federal Oil & Gas Leases of Submerged the Coast of California: OCS-P301 (Ellen)
775,719.00
84.77
273.03
Verizon Business
616.00
PO Box 371355
Pittsburgh, P A 15250-
382.86
190.54
Total
1,308,880.59
2283/023353-0034
10558 i 8,09 a 12/21/09
-63-
Schedule 12.l(x)(iv)
to
Purchase and Sale Agreement
(Beta)
Required Contracts
1. Spill Response Membership Agreement, dated October 4, 2006, between Seller and Marine Preservation Corporation (an organization that exists exclusively to promote the welfare and interests of the petroleum and petroleum transportation industries with regard to minimizing the impact of these industries on the marine environment).
2. Master Service Agreement, dated September 27, 1996, between Marine Spill Response
Corporation and Seller (governs access if required to equipment, vessels and personnel on standby, ready to respond to a spill at any time within a specified timeframe; MSRC also conducts drills and training in conjunction with Seller's facility spill response drills for facility-specific readiness).
2283/023353-0034
1055818,09 aI2/21/09
-64-
Schedule 12.1(z)
which wells
Producer Producer Producer Producer Producer Producer Producer Producer Producer Producer Producer Producer Producer Producer Producer Producer
Producer Producer Producer Producer Producer
(-54 Gas
(-02 Injector (-03 Injector (-07 Injector (-10 Injector (-12 Injector (-14 Injector (-17 Injector (-25 Injector (-26 Injector (-28 Injector
Wells planned for Re-drill III
-21 Producer -34 Producer -47 Producer
2. 10" line to be reinspected December 2009. In July 2009 a routine bi-annual inspection of
the 10" pipeline that connects platforms Elly and Eureka revealed wall loss slightly beyond acceptable tolerances, as determined by the MMS, in three separate locations on the pipeline. Because the measured wall loss was only marginally out oftolerance and re-
2283/023353-0034
1055818,09 a i 2/21/09
-65-
analysis of
the data by the pipeline inspection contractor indicated that actual wall loss was within MMS guidelines, the MMS continues to allow Seller to operate the pipeline
pending are-inspection of the line. If the re-inspection reveals out of tolerance wall
loss,
2283/023353-0034
10558 i 8,09 a i 2/21/09
-66-
Exhibit 12.100
..
~ Project
Apr-tO
Mav-IO
Au~-IO
Project Description 11 i
Nov-09
Dec-09
Jan-IO
Feb-IO
Mar-tO
Jun-tO
Jul-tO
Sep-IO
Nov-IO
Oct-tO
Dec-lO
Total
Total
J\bintenance
250 250 220
125
ll5
725
1,200
660
125
660
125
Centaur Heat Box #3 Satum Injection Pump Overhaul #2 Ellen Center Crane Repairs Elly Crane Repai rs
145 100
100
150
100
300
300 400
196
200
150 100
250
Filter Media Changeout #2 Filter Media Chaiigeut #3 Filter Media Changeout #4 Elly Sulfa Treat Changeout #2 Eureka Pipeline Inspections (current & uew)
63 63
175
12
150
150
125
300
500 325
575
500
325
2,650
82
3,000
321
75
80
Wemoo A Repai rs
I" "
45
I" "
450
225
1,000
500
I" "
100
267
100
400 320
3,125
RegulatorylEnvironmental
450
500
Pier F Relocation
3,125
250
250
500
500
MaintenanC
566
383
648
483
500 983
1,720
750 500
2,LLO
600
425
450
250
750
125
100
6,930
12,614
Regulatorynvironmenial Total
45
450
1,000
1,383
450
L131
ll5
873
250
850 675
264
1,088 1,016
450
12
100
~~
10,555 18.964
2283/023353-0034 1055818,09.12/21/09
Schedule 12.l(aa)
to Purchase and Sale Agreement (Beta)
AFE's
The disclosure on each of
the rows ofthe table on Schedule 12.1 (g) with an AFE Number listed
2283/023353-0034
1055818,09 a 12/2 1109
Sched ule 12.1 (bb )(ii to Purchase and Sale Agreement (Beta)
Environmental
None.
2283/023353-0034 1055818,09012/21/09
-69-
Schedule 12.l(bb)(iv)
to Purchase and Sale Agreement (Beta)
Environmental Permits
The Permits listed as items 1 to 5 and 8 to 9 on Schedule 12.1(q)(i) are incorporated herein by
reference.
-70-
Schedule 12.l(ee)
(Beta)
Financial Statements
Attached hereto.
2283/023353-0034
1055818,09 aI2/21/09
-71-
October 31,
2009
(Unaudited)
ASSETS
CURRENT ASSETS Cash Restricted cash Accounts receivable Other receivables
Inventory Prepaids and other current assets Intercompany receivable Total current assets
LONG-TERM ASSETS
$
Total assets
412,086
Accrued interest
Debtor-in-possession financing Other liabilities Liabilities subject to compromise Total current liabilities
9,871 525
52,049 52,049
21
Warrants
Additional paid in capital Accumulated other comprehensive income
Deficit Total shareholders' equity
(158,648) 138,653
$
412,086
2283/023353-0034
1055818,09 a12/21109
-72-
(Unaudited)
56,480 (16,749) 3,005 733
(38)
$
Interest
Other revenue
43,430
98 48,994
4,028 11,619
2,061 40
6,623
16,504 73,600
Impairment
Reorganization expenses Total expenses
(30,170)
(57,716)
(30,170)
(57,716)
2283/023353-0034
1055818,09 a 12/21/09
-73-
October 31,
2009
(Unaudited)
ASSETS
CURRENT ASSETS
Cash
Prepaids and other current assets Total current assets
140 140
LONG-TERM ASSETS
Petroleum and natural gas properties and equipment, net of accumulated depreciation Total long-term assets
Total assets
$
4,520 4,520
4,660
Intercompany payable
Total current liabilities
2,099 2,099
Total
4,660
2283/023353-0034 1055818,09812/21/09
-74-
(Unaudited)
REVENUES
(Unaudited)
2,117
58
1,590 1,590
2,175
1,243 65
321
1,629
(39)
407
407
(39)
2283/023353-0034 1055818,09.12/21/09
-75-
Schedule 12.1(22)
Attached hereto.
2283/023353-0034
1055818,09 a 12/21/09
-76-
Claims not reflected on the books of Pacific Energy Resources LId, (these claims are as filed, and have not been agreed to)
Creditor
Forest Alaska Holding LLC Joseph Kilchrist
Claim Number
313 72 332 333 438 465
$
$
Claim Amount
Comments
$
$ $ $ $
568,204,05 Forest Note and DNR Deposit' 228,516,74 Employment Contract Claim 119,140,26 Spurr Platform - Alaska 3,120,286,97 Fuel Gas Purchases - Alaska 27,557,669,68 Unfunded Beta abandonment liability2 5,707,809.40 Unfunded Redoubt Escrow Amount - Alaska
37,301,627,10
Claims in excess of (or less than) amounts recorded on the books of Pacific Energy Resources LId, (these claims are as filed, and have not been agreed to)
Creditor
A&G Compressor Parts Alice Ann Calvert Alta Offce Servce Brandy Danielle Donkel DAB Enterprises LLC
Darrl Donkel
Claim Number
47 67 134 308 390 402 355 224 398
261 148
$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $
Claim Amount
Comments
Desiree J, Justus
(57,00) ORRI Claim -Alaska (60,00) Vendor Claim (570,00) ORRI Claim -Alaska
9,374,32 Unpaid investment banking fees
Jillian M, Gloris Jolene Kenyon Kem County Treasurer - Tax Collector Kreielsheimer Remainer Foundation Long Beach Hose & Coupling Co" Inc,
Nixon Egi. Equipment Co,
(14,791,59) ORRI Claim -Alaska 151,04 ORRI Claim -Alaska (2,911,21) Vendor Claim 70,00 ORRI Claim -Alaska (68,00) ORRI Claim -Alaska (100,974,55) Property Tax (43,910,54) ORRI Claim -Aiaska
150,50 Vendor Claim 127,00 Vendor Claim
167
13
$
$
Praxair Distribution Inc, Quinn Power Systems Rim Alaska Archives Robert F, Kenyon
Rod Scribner
State of Alaska - DOG Sunmark ii TW Telecom Inc,
Wilson Supply
462
3
$ $ $ $ $ $ $ $ $ $ $
8,327,64 Equipment Rental Contract 44,957,79 Beta Production Payment (43,00) ORRI Claim -Alaska (86,06) Vendor Claim
150,36 Vendor Claim
(41,00) ORRI Claim -Alaska 39,04 ORRI Claim -Alaska (3,080,79) Government Fees -Alaska 202,44 ORRI Claim -Alaska
934,85 Vendor Claim 243,55 Vendor Claim
(104,064,90)
22831023353-0034
\055818,09.12/21/09
-77-
Schedule 12.l(ii) to
Purchase and Sale Agreement
(Beta)
Bank Accounts
None.
2283/023353-0034 1055818,09.12/21/09
-78-
Schedule 12.1(ii
to
Purchase and Sale Agreement
(Beta)
Offcers/Directors/ Agents
Directors: Gerry Tywoniuk and Steve Liles.
Officers:
Name
Gerry Tywoniuk
Steve Liles
Offce
Acting Chief Executive Offcer and Chief Financial Officer
Vice President and General Manager, Beta Operations
Treasurer and Assistant Secretary
Controller and Secretary
Jennifer Kuritz
William Lyng
Scott Winn
Schully, Roberts, Slattery & Marino, and Anthony Marino, are authorized to file documents on behalf of SPBP with the MMS.
-79-
Schedule 12.1(kk)
Affiiated Agreements
1. Pipeline Operating Agreement, dated as of March 12, 2008, by and between Seller and
SPBP.
2. Petroleum Pipeline Transportation Agreement, dated November 1, 2006, between Seller
and SPBP.
3. The bonds, which are held by Seller for the benefit of SPBP, are marked with an asterisk
2283/023353-0034
i 0558 1 809 a 12/2 1109
-80-
Schedule 12.l(mm)
to Purchase and Sale Agreement (Beta)
Royalty Obligations
The disclosure in the column labeled "Pre-Petition" Schedule 12.1 (p)(i) is incorporated herein by reference.
2283/023353-0034
10558 i 8,09 a 12/21/09
-81-
Schedule 12.l(QQ)
(Beta)
Bonds
Schedule 1.63 is incorporated herein by reference.
2283/023353-0034 1055818,09.12/21/09
-82-
EXHmIT A
to
Purchase and Sale Agreement (Beta)
PLATFORM ELLEN Oil and gas well platform located on Federal OCS Lease P-0300, 8 Pile, 80 Conductor, 40,000
square foot deck area. Platform Ellen Coordinates: Latitude 33 degrees - 34 minutes - 57 Seconds North Longitude 118 degrees - 07 minutes - 42 seconds West
PLATFORM ELL Y Oil and gas processing platform located on Federal OCS Lease P-0300, 12 pile, 55,000 square
foot deck area. Platform Elly Coordinates: Latitude 33 degrees - 35 minutes - 00 Seconds North
Longi tude 118 degrees - 07 minutes - 40 seconds West
PLATFORM EUREKA Oil and gas well platform located on Federal OCS Lease P-0301, 24 Pile, 60 Conductor, 65,000
square foot deck area.
Platform Eureka Coordinates:
Latitude 33 degrees - 33 minutes - 49 Seconds North Longitude 118 degrees - 06 minutes - 59 seconds West
OTHER
Two 34.5 KV A power cables from Platform Elly to Platform Eureka
Two gathering lines (one 6" diameter and one 10" diameter) from Platform Eureka to
Platform EUy
Idle 12" diameter line between Platform Eureka and Platform Elly
EXHIBIT B to
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EXHIBIT C to
Purchase and Sale Agreement (Beta)
Non-Foreign Affdavit
Section 1445 of the Internal Revenue Code provides that a transferee of a u.s. real the transferor is a foreign person. To inform the transferee that withholding of tax is not required upon disposition of a u.s. real property interest by Pacific Energy Resources Ltd., a Delaware corporation ("PERL"), PERL hereby certifies the following:
property interest must withhold tax if
1. PERL is not a foreign corporation, foreign partnership, foreign trust, or foreign estate (as those terms are defined in the Internal Revenue Code and Income Tax Regulations);
2. PERL's U.S. taxpayer identification number is 05-0563442; and
3. The address of
The undersigned understands that this certification may be disclosed to the Internal
Revenue Service by the transferee and that any false statement contained herein could be punished by fine, imprisonment, or both.
Under penalty of perjury, I declare that I have examined this affidavit and to the best of my knowledge and belief it is true, correct, and complete, and I further declare that I have
authority to sign this document on behalf of PERL.
Date:
Name: Title:
EXHIBIT D
to Purchase and Sale Agreement
(Beta)
4. United States Department of the Interior - Geological Survey right of use and easement dated January 8, 1980 to Shell Oil Company.
5. Pipeline License (no. HD-7149) between the City of
Long Beach and SPBP dated effective May 24, 2007 (supersedes permit HD-3121 dated November 1, 1979).
8. Federal Energy Regulatory Commission Oil Pipeline Tariff Filing dated September 23,
2008.
EXHIBIT E to
APN: 7436-015-912
Report Date: 11/30/2009
This map is provided for convenience only to show the approximate location of the Properly and is not based on a field survey.
NOTE TO READER: High-resolution aerial photographs are obtained through periodic surveys by low-altitude aircraft. Surveys are repeated at intervals of several years, and their coverage is limited to populated areas. On rare occasions, the air photo on this page wil display a black area, or vacant land where buildings now exist. In these cases, the photo happens to be at the edge of the survey coverage area, or it shows land that has been developed since the time of the latest aerial survey. We apologize for these rare instances, which are beyond our control.
(\2008 - JCP-LGS Property Disclosure Reports - 200 Commerce Irvne, CA 92602 Phone: (800) 748 5233 Fax; (800) 329 9527
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APN: 7436-015-912
Report Date: 11/30/2009
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l!i ii': ,ii Area of Potential Flooding, Dam Failure h1" :-',:1 Very High Fira Hazard Severfty lone
i= \Ildland Area. Substantial Forest Fre Risk
0,125
miles
This map is provided for convenience only to show the approximate location of the Property and is not based on a field survey.
This COMMERCIAL PROPERTY DISCLOSURE REPORT contains only the Commercial Natural Hazard Disclosure Report. If you would like to also order (a) the Commarcial Tax Report, and/or (b) a Commercial Environmental Report, please contact Customer Service at (800)748-5233
THIS REPORT PROVIDES THE STATUTORY DISCLOSURES MANDATED BY CALIFORNIA LAWS SPECIFIED HEREIN AND DELIVERY OF THIS REPORT AND THE EXECUTED STATUTORY FORM IS SUFFICIENT TO MEET THE SAFE HARBOR FOR THE SELLER AND SELLER'S AGENT. THIS REPORT ALSO CONTAINS OTHER IMPORTANT DISCLOSURES AND INFORMATION. SELLER AND SELLER'S AGENT MAY HAVE ADDITIONAL RESPONSIBILITIES FOR CERTAIN DISCLOSURES WITHIN THEIR ACTUAL KNOWLEDGE.
C!)200B JCP-LGS Property DisclosureReports - 200 Commerce IrvinG, CA 92602 Phone: (BOO) 74B 5233 Fax: (BOO) 329 9527
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Property Address: 170 PIca AV ,
on lhls information In deciding whelher and on what term to purchase the Property. Transferor hereby authorizes any agent(s) representing any principal(s) In this
aclion to provide a copy of this statement to any person or entity In connection with any actual or anticipated sale of the Property,
The following are representations made by the transferor and his or her agent(s) based on their knowledge and maps drawn by the State, This information Is a disclosure and is not Intended to be part of any contract between the transferee and the transferor, THIS REAL PROPERTY LIES WITHIN THE FOLLOWING HAZARDOUS AREA(S):
A SPECIAL FLOOD HAZARD AREA (Any type Zone "N or V) designated by the Federal Emergency Management Agency,
Yes -- No _ Do not know and information not available from local
jurisdiction _
AN AREA OF POTENTIAL FLOODING shown on a dam failure inundation map pursuant to Section 8589,5 of the Government Code,
Yes -- No Do not know and Information not available from local jurisdlctlon_
A VERY HIGH FIRE HAZARD SEVERITY ZONE pursuant to Section 51178 or 51179 of the Government Code, The owner of this Propert is subjecl to the
maintenance requirements of Section 51182 of the
Yes No--
Government Code,
A WILDLAND AREA THAT MAY CONTAIN SUBSTANTIAL FOREST FIRE RISK AND HAZARDS pursuant to Section 4125 of the Public Resources Code, The owner of this Property Is subject to the maintenance requirements of Section 4291 of the Public Resources Code. Additionally, it Is not the slate's responslblllly to provide lire protection services to any building or structure located wllhln the wildlands unless the Department of Foresliy and Fire Protection has entered Into a cooperative agreement with a local agency for those purpses pursuant to Section 4142 of the Public Resources Code,
AN EARTHQUAKE FAULT ZONE pursuant to Section 2622 of the Public Resources Code,
A SEISMIC HAZARD ZONE pursuant to Section 2696 of the Public Resources Code,
Date
Date
Date
the date as of o Transferor(s) and their agent(s) represent that the Infonnation herein is true and correct to the best of their knowledge signed and agent(s),
by the transferor(s)
the representations 00 Transferor(s) and their agent(s) acknowledge that they have exercised good faith in the selection of a third-party report provider, and that
made in this Natural Hazard Disclosure Statement are based upon information provided by the Independent thirdparty disclosure provider as a substituted
disclosure, Neither transferor(s) nor their agent(s) (1) has independently verilled the Infonnation contained In this statement and Report or (2) Is personally aware of any errors or Inaccuracies In the Infonnation contained 0ihe statement This statement was prepared by the provider below:
Date Date
Page 1 of 25
r2008 - JCP-LGS Property Disclosure Reports - 200 Commerce Irvine, CA 92602 Phone: (800) 7485233 Fax: (800) 329 9527
~dsclosures.com
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ACKNOWLEDGEMENT OF RECEIPT
APN: 7436-015-912
Report Date: 11/30/2009
, Mold Advisory
, Radon Advisory
, Endangered Species Act Advisory
Transferor (Seller)
Date
Transferor (Seller)
Date
Transferee (Buyer)
Date
Transferee (Buyer)
Date
Agent
Date
Agent
Date
Page 2 of 25
112008 - JCP-LGS Propert Disclosure Reports - 200 Commerce Irvine. CA 92602 Phone: (BOO) 7485233 Fax: (800) 329 9527
~iSCIOSUreS.com
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American Natural Hazard Disclosures LLC and a member of The First American Family of
Companies, hereby declares that Recipients of a natural hazard disclosure report issued by a
Member Company ("Report") pursuant to those California laws, underlying statutes, and Public Records cited on the NHDS and herein for a transaction are provided the following assurances
and protections.
Recipients
Buyers, Sellers and their respective real estate agents and brokers involved in the sale of the
Property for which the Report was issued.
Member Companies
First American Natural Hazard Disclosures, LLC.
. JCP-LGS Disclosures,com
Protections
All Recipients of a Report shall enjoy the following assurances and protections if their Report
contains an error which results in damages as defined in the Report ("Error") upon proper tender of the claim: (1) JCP-LGS will resolve the claim promptly and in good faith. legal action brought against that Recipient as a result (2) JCP-LGS will defend a Recipient against of the Error or otherwise resolve the Error without economic loss to the Recipient.
(3) Recipients wil enjoy the benefis of amounts received by JCP-LGS from its errors and
omissions ("E&O") insurance carrier as a result of the Error. proceeds, JCP-LGS shall be liable for any remaining loss.
(4) To the extent that economic loss resulting from the Error is not paid by the E&O insurance
Recipients are entitled to rely on the provisions of the Report as of the close of escrow for the
transaction for which said Report was issued.
By: JCP-LGS Disclosure Reports
GreQ Rufe, Chief Operatina Offcer
Date: 11/30/2009
I HI~ i~ UNL Y: i nlS Kepoii oniy provlues iniormaiion coni.t:rning li ie r roper iy ueriveu om ir
Public Records identified in this Report, While JCP-LGS has made good faith efforts to report from the Public Records as
accurately as possible, the quality, accuracy, and currency of the information contained in these Public Records can vary
greatly. For more information regarding a specific disclosure and the related Public Record, please read Sections 1 through 3,
Inclusive, of this Report,
NOT AN INSPECTION REPORT: This Report is not the same thing as a physical inspection report nor a full environmental or
geological assessment report. JCP-LGS has not physically inspected the Property, This Report only summarizes the
information from the specified Public Records,
LIABILITY PROTECTIONS: Upon consummation of the sale of the Property to Buyer ("Sale Date"), the Parties involved in that sale are protected against loss caused by any error in this Report as specified in the section below entitled "Methods and Limitations."
NOT AN INSURANCE POLICY: This Report is a binding contract but is not an insurance policy, The price charged for the Report does not cover the costs that would be necessary to provide all of the protections of an insurance policy
Page 3 of 25
(12008 - JCP-LGS Property Disclosure Reports - 200 Commerce Irvine, CA 92602 Phone: (800) 748 5233 Fax: (800) 329 9527
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Sections PAGE
SIGNATURE SECTION
The statutory disclosures applicable to the Property as required by specified California
Statutory Form
Acknowledgement A document summarizing all of the disclosures and advisories containeeJ in the Report
Summary Declaration of Explains the liability protection offered in relying on this report........,.................. 3
Liability Provisions
Determinations
A summary of the Statutory (State level) natural hazard disclosures and additional "Local" natural hazard disclosures offcially adopted by the County and/or City wherein the Property is located, Not all Counties or Cities have offcially adopted maps of sufficient scale to make determinations specific to the Property............................
A summary of some of the additional disclosures that could affect the value of the property that the State of California along with the California Association of Realtors
5-6
Summary of Additonal
Property Specific
Disclosures & Advisories
have required.,.., ...... ...... ...... ,..,.... ....".."... ...... ....,..,.....,'.. ....... ................ .....'
DISCLOSURE EXPLANATION SECTION
7-8
Explanation of Mandatory
State Level Disciosures
State Level Disclosures are defined and explained, and official Public Records used
for the determinations as well as the reporting standards are identified........,............. 9 - 11
Explanation of County
and City Disclosures (if applicable)
"Local" County and City Level Disclosures are defined and explained, and offcial Public Records used for the determinations as well as the reporting standards are
identified. Any and all disclosures made in this section are based on the local jurisdictions' offcially adopted, publicly available hazard maps that are of useable
The State of California along with the California Association of Realtors have required
that various propert specific disclosures be made that could affect the value of the
Disclosures
Advisories & Notices
propert. Some of these disclosures are made in this section. . ...........' ................... 16 - 18
Important advisories and notices dealing with potential general concerns related to real property ownership in California but not specific to the Property. These advisories
are not mandated. ,......... ..,.. ,...........' ........ ................. ..............,............' ......... 19 - 22
Methods and Limitations (IMPORTANT)
Page 4 of 25
~)200B - JCP-LGS Property Disclosure Reports - 200 Commerce Irvine. CA 92602 Phone: (800) 748 5233 Fax: (800) 329 9527
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.r
.r
.r
.r
Dam Very High Fire Hazard Severity Wildland Fire Area Fault
NOT IN a
.r
Landslide
Liquefaction
./
Hazard Mappingct.' ,
IN an area of potential
liquefaction designated 11
./
./
Landslide
Liquefaction
, Dam Inundation
eighth of one mile of a mapped fault trace NOT WITHIN for County Landslide hazard
13
13
area.
IN Liquefiable or Potentially Liquefiable for
./ ./ ./ ./
basin Inundation
13
13 13 13
area
Tsunami
Fire
IN a mapped tsunami inundation area NOT IN a mapped Fire Zone 4 or Additional Areas of High Fire Hazard NOT IN a mapped area of known shallow methane accumulation NOT IN a mapped hillside area NOT IN a mapped general area within or adjacent to the Los Angeles Basin impacted by historic mud and debris flooding
Methane
Hillside Debris Flow
./
.r
13
13
Page 5 of 25
~2008 - JCP-LGS Property Disclosure Reports - 200 Commerce Irvine, CA 92602 Phone: (800) 748 5233 Fax: (800) 329 9527
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Page 6 of 25
('2008 - JCp.LGS Property Disclosure Reports - 200 Commerce Irvine, CA 92602 Plione: (800) 748 5233 Fax: (800) 329 9527
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page: ' 16
..
..
Airport Influence Area IN an airport influence area: Queen Mary Heliport Airport Noise Area for NOT IN a delineated 65 dB CNEL or greater
17 18
Page 7 of 25
('2006 - JCp.LGS Property Dlsclnsure Reports. 200 Commerce Irvine, CA 92602 Phone: (800) 748 5233 Fax: (800) 329 9527
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SUMMARY OF ADVISORIES
ADVISORIES
purchasers of 19
damage
resldentlal.andcommerclal property should thoroughly Inspect the sUbjecfproperty for mold and sources for
additional Information on the origins of and the
caused by mold.
locales of,
abandoned mines,
Oil and Gas Wells Provides an advisory on the potential existence of oil
and 22
gas wells and sources for additional general and/or specific Information.
Page 8 of 25
~12008 - JCP.LGS Property Disclosure Reports - 200 Commerce Irvine, CA 92602 Phone' (800l 748 5233 Fax: (800) 329 9527
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is shallow and fil was placed on the site, appropriate flood control measures were taken, or only the lot and no part of the
structure is in the zone, Contact FEMA directly for more information, Flood insurance for properties in Zones B, C, X or D is available but is not required.
Zones A, AO. AE, AH. A1-A30: Area ofU100-year" flooding - a 1% or greater chance of annual flooding,
Zones V, V1-V30: Area of "100-year" flooding in coastal (shore front) areas subject to wave action, Zone B: Area of moderate flood risk. These are areas between the "100" and "500" year flood-risk levels. Zones X: An area of moderate to minimal flood risk, Zones C, 0: NOT IN an area of "1 DO-year' flooding. Area of minimal (Zone C) or undetennined (Zone D) flood hazard.
Note: If the Property is subject to a Letter of Map Amendment ("LOMAU) or a Letter of Map Revision ("LOMRU) issued by FEMA, a copy of the LOMA or LOMR must be attached to the Natural Hazard Disclosure Statement (UNHDS") or appropriate disclosure
statement. The Company is not always able to determine if the Property is subject to a LOMA or a LOMR. Even if such
information is available to the Company, the Company is unable to attach a copy of the LOMA or LOMR to the NHDS. If Seller is aware that the Property is subject to a LOMR or a LOMA, the Seller shall attach a copy to the NHDS and notify the Company,
For more information about flood zones, visit hllp:/Iww,floodsmart,QovlfoodsmarVpaCles/aboullflood zones explained,lsP
PUBLIC RECORD: Offcial Flood Insurance Rate Maps (UFIRMU) compiled and issued by the Federal Emergency Management Agency (UFEMAU) pursuant to 42 United States Code 4001, et seq,
PUBLIC RECORD: Official dam inundation maps or digital data thereof made publicly available by the State of California Office of Emergency Services ("OES") pursuant to California Government Code 8589.5.
Page 9 of 25
~2008 - JCP-LGS Property Olsclosure Reports - 200 Commerce Irvine, CA 92602 Phone: (800) 748 5233 Fax: (800) 329 9527
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fire authorities within "Local Responsibilty Areas" where fire suppression is the responsibilty of a local fire department.
Properties located within VHFHS Zones may have a higher risk for fire damage and, therefore, may be subject to (i) additional construction requirements such as a "Class AU roof for new construction or replacement of existing roofs; and (ii) additional maintenance responsibilities such as adequate vegetation clearance near the structure, spark screens on chimneys and stovepipes, leaf removal from roofs, and other basic fire-safety practices.Contact the local fire department for a complete list of requirements and exceptions.
PUBLIC RECORD: Official maps issued by the California Department of Forestry and Fire Protection ("CDF") pursuant to
California Public Resources Code 51178.
For property located within a WSRA, please note that (1) there may be substantial forest fire risks and hazards; (2) except for property located within a county which has assumed responsibilty for prevention and suppression of all fires, it is NOT the
state's responsibility to provide fire protection services to any building or structure located within a WSRA unless the
Department has entered into a cooperative agreement with a local agency: and (3) the property owner may be is subject to (I) additional construction requirements such as a "Class AU roof for new construction or replacement of existing roofs; and (Ii) additional maintenance responsibilities such as adequate vegetation clearance near the structure, spark screens on chimneys and stovepipes, leaf removal from roofs, and other basic fire-safety practices,
The existence of local agreements for fire service is not available in the Public Record and, therefore, is not included in this disclosure. For very isolated properties with no local fire services or only seasonal fire services there may be significant fire risk, If the Property is located within a WSRA, please contact the local fire department for more detailed information.
PUBLIC RECORD: Offcial maps issued by the California Department of Forestry and Fire Protection ("CDF") pursuant to
California Public Resources Code 4125,
Page 10 of 25
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trace. The potential for "fault rupture" damage (ground cracking along the fault trace) is relatively high only if a structure is located directly on a fault trace, If a structure is not on a fault trace, shaking wil be the primary effect of an earthquake, During a major earthquake, shaking will be strong in the vicinity of the fault and may be strong at some distance from the fault depending to shaking on soil and bedrock conditions, It is generally accepted that properly constructed wood-frame houses are resistant
damage,
PUBLIC RECORD: Oficial earthquake fault zone or special study zone maps approved by the State Geologist and issued by
the California Department of Conservation, California Geological Survey pursuant to California Public Resources Code 2622.
DISCUSSION: Official Seismic Hazard Zone ("SH Zone") maps delineate Areas of Potential Liquefaction and Areas of
Earthquake-Induced Landsliding, A property that lies partially or entirely within a designated SH Zone may be subject to
requirements for site-specific geologic studies and mitigation before any new or additional construction may take place,
Earthquake-Induced Landslide Hazard Zones are areas where the potential for earthquake-induced landslides is relatively high. Areas most susceptible to these landslides are steep slopes in poorly cemented or highly fractured rocks, areas underlain by loose, weak soils, and areas on or adjacent to existing landslide deposits. The CGS cautions these maps do not capture a/l potential earthquake-induced landslide hazards and that earthquake-induced ground failures are not addressed by these maps. Furthermore, no effort has been made to map potential run-out areas of triggered landslides. It is possible that such run-out areas may extend beyond the zone boundaries. An earthquake capable of causing liquefaction or triggering a landslide may not uniformly affect all areas within a SH Zone.
Liquefaction Hazard Zones are areas where there is a potential for, or an historic occurrence of liquefaction. Liquefaction is a
soil phenomenon that can occur when loose, water saturated granular sediment within 40 feet of the ground surface, are
shaken in a significant earthquake, The soil temporarily becomes liquid-like and structures may settle unevenly. The Public Record is intended to identify areas with a relatively high potential for liquefaction but not to predict the amount or direction of liquefaction-related ground displacement, nor the amount of damage caused by liquefaction. The many factors that control ground failure resulting from liquefaction must be evaluated on a site specific basis.
PUBLIC RECORD: Official seismic hazard maps or digital data thereof approved by the State Geologist and issued by the California Department of Conservation, California Geological Survey pursuant to California Public Resources Code 2696,
STATUTORY NATURAL HAZARD DISCLOSURE REPORTING STANDARD: "IN" shall be reported if any portion of the
Property is located within any of the above zones as delineated in the Public Record. "NOT IN" shall be reported if no portion of the Property is located within any of the above zones as delineated in the Public Record. "Map Not Available" shall be reported in areas not yet evaluated by the governing agency according to the Public Record. Please note that "Map Not Available" wil be applicable to most portions of the state Oficial Seismic Hazard Zone ("SH Zone") maps delineate Areas of Potential Liquefaction and Areas of Earthquake-Induced Landsliding.
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("Propert")
HAZARD MAPS IN THE LOCAL GENERAL PLAN: In addition to those federal and state maps associated with
disclosures specified under the Law, counties and cities have additional maps which depict various geologic and seismic hazards that local agencies consider when approving land use and development permit applications. These may include maps contained in the Safety Element and/or Seismic Safety Element of a General Plan that has been offcially adopted by a city of county,
Unless otherwise specified, only those offcially adopted Safety Element or Seismic Safety Element maps (or digital data
thereof) which are publicly available, are of a scale, resolution, and quality that readily enable parcel-specific hazard
determinations, and are consistent in character with those statutory federal or state disclosures wil be considered for eligible for use as the basis for county- or city-level disclosures set forth in this Report. Please also note:
. If an offcially adopted Safety Element or Seismic Safety Element map relies on data which is redundant of that used for state-level disclosures, this Report will indicate so and advise Report recipients to refer to the state-level hazard discussion
section for more information,
. If an offcially adopted Safety Element or Seismic Safety Element cites underlying maps created by another agency, those
maps may be regarded as incorporated by reference and may be used as the basis for parcel-specific determinations if those maps meet the criteria set forth in this section, . Because county- and city-level maps are developed independently and do not necessarily define or delineate a given hazard the same way, the boundaries for the "same" hazard may be different.
If one or more maps contained in the Safety Element and/or Seismic Safety Element of an officially adopted General Plan are used as the basis for local disclosure, those maps will appear under the "Public Record(s) Searched" for that county or city.
REPORTING STANDARDS
A good faith effort has been made to disclose all hazard features on pertinent Safety Element and Seismic Safety Element
maps with well-defined boundaries; however, those hazards with boundaries that are not delineated will be deemed not suitable for parcel-specific hazard determinations. Some map features, such as lines drawn to represent the location of a fault trace, may be buffered to create a zone to faciltate disclosure. Those map features which can not be readily distinguished from those representing hazards may be included to prevent an omission of a hazard feature. If the width of a hazard zone boundary is in
question. "IN" wil be reported if that boundary impacts any portion of a property. Further explanations concerning specific map
features peculiar to a given county or city will appear under the "Reporting Standards" for that jurisdiction.
Mapped hazard zones represent evaluations of generalized hazard information. Any specific site within a mapped zone could
be at less or more relative risk than is indicated by the zone designation. A site-specific evaluation conducted by a
geotechnical consultant or other qualified professional may provide more detailed and definitive information about the Property and any conditions which mayor do affect it.
PROPERTY USE AND PERMITTING
No maps beyond those identified as "Public Record(s)" have been consulted for the purpose of these local disclosures. These disclosures are intended solely to make Report reclpient(s) aware of the presence of mapped hazards. For this reason - and because local authorities may use on these or additional maps or data differently to determine propertyspecific land use and permittng approvals - Report recipients are advised to contact the appropriate local agency, usually Community Development. Planning, and/or Building, prior to the transaction to ascertain if these or any other conditions or related regulations may impct the Property use or improvement.
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County Board of
Supervisors in 1990, are utilized for those county-level disclosures below: "Fault Rupture Hazards and Historic Seismicity," Landslide Inventory," "Liquefaction Susceptibility," "Engineering Geologic Materials," "Flood and Inundation Hazards," and
"Wildland and Urban Fire Hazards," FAULT
. Active Faults: Several faults and fault segments not included as part of the Earthquake Fault Zone Act are considered
active by the County. Zones from 1000 feet to 1.2 miles wide have been defined by the County around these faults.
Properties in these zones are at some risk for fault rupture (surface cracking along the fault).
. Potentially Active Faults: Faults active In the last 750,000 years but with no historical activity (past 11,000 years) are
considered "potentially active" by the County, Zones from 1000 feet to 1.2 miles wide have been defined by the County around these faults. Properties within a Potentially Active Faull Zone may be at some risk for fault rupture, but the risk is probably lower than that for active faults.
. Conditionally Active Faults: Faults active between 750,000 and 2,000,000 years ago are considered "conditionally
active" by the County. Properties located directly on one of these faults are at an undetermined but relatively small risk of rupture. ReportinQ Standards: If any portion of the Property is within either a faull zone or one-eighth of one mile (660 feet) of a fault not contained within such a fault zone as delineated in the Public Record, 'WITHIN" shall be reported,
LANDSLIDE INVENTORY . Slope Stabilty Zones The County Safety Element inventories landslides and slope stabilty hazards, The minimum size of
a slide is five acres, but clusters of slides may be shown as a single landslide. Bedrock landslides are categorized as
definite and probable. They are also distinguished as 5 to 100 acres in size and greater than 100 acres in size. A
delineated landslide is not a definitive statement of a site's stabilty, either now or in the future. Many slides are mitigated
during development. For detailed stability information, a geotechnical consultant should be retained,
. Area Impacted by Storm-Induced Landsliding: Areas that experienced storm-induced shallow landsliding during the
particularly wet years of 1969, 1978, and 1980 have been delineated on the maps.
. Area of Shallow Surficial Landslides: These areas include regions in the Santa Monica and San Gabriel Mountains and
the Puente Hils where abundant shallow landslides may occur. Reportin~ Standards: Mapped "Definite" and "Probable" Bedrock Landslides 5-100 acres in size, as well as mapped StormInduced Landslide Areas, are mapped uniformly and do not effectively take into account either size or direction; therefore, if any portion of the Propert is within a Landslide or Slope Stability Zone as delineated in the Public Record, or is within onequarter of one mile (1,320 feet) of either, "IN" shall be reported,
LIQUEFACTION Liquefaction is a liquid-like soil condition which may occur during strong earthquake shaking if the groundwater is shallow and
. Low Liquefaction Susceptibilty (Zone LL): Flat to gently sloping areas of relatively low liquefaction potential. Very Low liquefaction Susceptibilty (Zone VL): Areas not normally susceptible to liquefaction.
ReoortinQ Standards: This Report discloses if any portion of the Propert is in either (1) a Liquefiable Area or a Potentially Liquefiable Area OR (2) a Low Liquefaction Susceptibilty Zone or a Very Low Liquefaction Susceptibilty Zone as delineated in the Public Record. If a Property is situated within a Liquefiable or Potential Liquefiable Area AND a Low of Very Low
Liquefaction Susceptibilty Zone, only the former wil be reported,
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"Hilside Areas" are subject to slope instabilty, particularly if slope gradients exceed 25 percent. If a Property is in a
designated Hillside Area it does not necessarily mean that landslides exist on the property or that landsliding is imminent or
probable. "Debris Flow Areas" are those identified in the Public Record impacted by historic mud and debris flooding in the years 1969, 1978, and 1980; however, these are restricted to areas within and adjacent to the Los Angeles Basin only. Furthermore, the public record advises that historical damage does not predict, nor preclude, Impact of these or other hilside areas in future storms. Reportina Standards: If any portion of the Property is within a Hillside Area or a Debris Flow as delineated in the Public Record, "IN" shall be reported, respectively.
DAM INUNDATION
Dam inundation areas may be subject to flooding in the event of dam failure, They are defined assuming an
instantaneous dam failure with a full reservoir, However, dams rarely fail instantaneously and reservoirs are not always filed to capacity, Reportina Standards: If any portion of the Property is within a Dam or Debris Basin Inundation Area as delineated in the
Public Record, "IN" shall be reported.
TSUNAMI
INUNDATION
Tsunami inundation areas have been designated as a zone of moderate risk for tsunami (seismic sea wave or "tidal
wave") run-up. The tsunami zone may be inundated by waves which recur on average of once every 500 years. Reportina Standards: If any portion of the Property is within a Tsunami Inundation Area as delineated in the Public Record, "IN" shall be reported,
FIRE HAZARDS
. Fire Zone 4 encompasses most of the areas having a potential for woodland and brush fires, These areas require
strategies to enforce stringent fire enforcement measures including fire-resistant construction materials, brush clearance, load management requirements. . Areas of High Fire Hazard represents areas outside Fire Zone 4 but having features similar to those included in Fire Zone 4. Within wildland areas, fires are most likely to start in areas of man's activity such as roads, campgrounds, cabins, wood cullng areas, power lines, and the urban-wildland interface, Reportina Standards: If any portion of the Property is within either a Fire Zone 4 or Area of High Fire Hazard as delineated in the Public Record, "IN" shall be reported,
fire breaks, and fuel
AREAS OF KNOWN SHALLOW METHANE ACCUMULATION Several areas in the County are known to be the sites of shallow methane gas accumulations, The absence of methane gas areas on the map Is not a guarantee of the absence of gas in the soil, Most of the shallow methane found to date seems to be spatially associated with shallow oil and gas fields, ReportinQ Standards: If any portion of the Property is within an Area of Known Shallow Methane Accumulate as delineated in the Public Record, "IN" shall be reported.
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reviews the offcially adopted geologic hazard maps in the Safety Element that each city in California is required to include in its General Plan. The city the subject property is located in has either not offcially adopted hazard zonation maps in its General Plan at an appropriate scale to delineate where hazards may exist on a single parcel basis or will not make such maps available outside city offces. However, all Parties should be California is "earthquake country." Faults that may exist in this city or in neighboring regions could cause earthquake shaking or other fault related-phenomena on the Property, Other geologic hazards
such as, but not limited to liquefaction (a type of soil setting that can occur when loose, water-saturated sediments are shaken
significantly in an earthquake) may occur in certain valley floor areas and landslides are a possibility In any hillside area, Such potential natural hazards may exist and be delineated on other sources used by the city in its Planning, Engineering, or Building Departments. Such potential sources are not reviewed in this report,
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DISCUSSION: Former Military Ordnance (FUD) sites can include siles with common industrial waste (such as fuels), ordnance or
other warfare materiel, unsafe structures to be demolished, or debris for removaL. California Civil Code 1102.15 requires
disclosure of those sites containing unexploded ordnance. "Military ordnance" is any kind of munitions, explosive device/material or chemical agent used in miltary weapons. Unexploded ordnance are munitions that did not detonate, NOTE: most FUD sites do not contain unexploded ordnance. Only those FUD sites that the U,S, Army Corps of Engineers (USACE) has identified to contain Military Ordnance or have mitigation projects planned for them are disclosed in this report, Additional sites may be added as military installations are released under the Federal Base Realignment and Closure (BRAC) Act. Active military sites are NOT included on the FUD site list.
PUBLIC RECORD: Data contained in Inventory Project Reports, Archives Search Reports, and related materials produced for, and made publicly available in conjunction with, the Defense Environmental Restoration Program for Formerly Used Defense
Sites by the U.S, Army Corps of Engineers, Sites for which no map has been made publicly available shall not be disclosed.
REPORTING STANDARD: If one or more facilly identified in the Public Record is situated within a one (1) mile radius of the
Property, "WITHIN" shall be reported, The name of that facility or facilities shall also be reported.
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within what is known as an airport Influence area...the property may be subject to some of the annoyances or
inconveniences associated with proximity to airport operations (for example: noise, vibration, or odors). Individual sensitivities to those annoyances can vary from person to person. In that case, you may wish to consider what airport annoyances, If any. are associated with the propert before you complete your purchase and determine whether they
are acceptable
Certain airports are not disclosed In this report. JCP-LGS has made a good faith effort to identify the airports covered under land use maps and/or digital data California Business and Professions Code, Section 11010, Sources consulted include offcial made available by a governing Airport Land Use Commission (ALUC) or other designated government body. Most facilities for which an Airport Influence Area has been designated are included on the "California Airports List" maintained by the California Department of Transportation's Division of Aeronautics. Not disclosed in this report are public use airports that are not in the "California Airports List", airports that are physically located outside California, heliports and seaplane bases that do not have regularly scheduled commercial service, and private airports or military air faciliies unless specifically identified in the "California Airports List". If the seller has actual knowledge of an airport In the vicinity of the subject propert that is not disclosed in this report, and that Is material to the transaction, the seller should disclose this actual knowledge in writing to the buyer.
Most facilities for which an Airport Influence Area has been designated are included on the "California Airports List" maintained by
the California Department of Transportation's Division of Aeronautics. The inclusion of miltary and private airports varies by County, and heliports and seaplane bases are not included, therefore, airports In these categories mayor may not be included in
this disclosure.
NOTE: Proximity to an airport does not necessarily mean that the property is exposed to significant aviation noise levels.
Alternatively, there may be properties exposed to aviation noise that are greater than two miles from an airport. Factors that affect the level of aviation noise include weather, aircraft type and size, frequency of aircraft operations, airport layout, flight patterns or nighttime operations, Buyer should be aware that aviation noise levels can vary seasonally or change if airport usage changes.
PUBLIC RECORD: Based on offcially adopted land use maps and/or digital data made publicly available by the governing ALUC or other designated government body. If the ALUC or other designated government body has not made publicly available a current offcially adopted airport influence area map, then California law states that "a written disclosure of an airport within two (2) statute miles shall be deemed to satisfy any city or county requirements for the disclosure of airports in connection with transfers of real property."
REPORTING STANDARD: "IN" shall be reported along with the facilty name(s) and the "Notice of Airport in Vicinity' if any portion of the Property is situated within either (a) an Airport Influence Area as designated on officially adopted maps or digital data or (b) a two (2) mile radius of a qualifying facility for which an official Airport Influence Area map or digital data has not been made publicly available by the ALUC or other designated governing body. "NOT IN" shall be reported if no portion of the Property is within either
area.
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DISCUSSION: California Civil Code 1102.17 requires the seller(s) of real property who has/have actual knowledge that
property in the transaction is affected by airport use must give written notice of that knowledge, as soon as practicable, before
transfer of title.
Under the Federal Aviation Administration's Airport Noise Compatibilty Planning Program Part 150, certain 65 decibel (dB) Community Noise Equivalent Level (CNEL) contour maps have been produced for some airports. Not all airports have produced
noise exposure maps. A propert may be near or at some distance from an airport and not be within a delineated noise exposure area, but stil experience aviation noise. Unless 65dB CNEL contour maps are published, hellpads and miltary
sites are not Included In this section of
the Report.
The Airport Noise Compatibilty Planning Program is voluntary and not all airports have elected to participate. Furthermore, not all
property in the vicinity of an airport is exposed to 65dB CNEL or greater average aviation noise levels. Conversely a property may be at some distance from an airport and still experience aviation noise, Buyer should be aware that aviation noise levels can vary seasonally or change if airport usage changes after a map is published or after JCP-LGS receives the updated maps within the schedule set by JCP-LGS, JCP-LGS uses the most seasonally conservative noise exposures provided.
Federal funding may be available to help airports implement noise reduction programs. Such programs vary and may include purchasing properties, rezoning, and insulating buildings for sound within 65dB areas delineated on CNEL maps, Airport owners have also cooperated by imposing airport use restrictions that include curfews, modifying flght paths, and aircraft limitations,
PUBLIC RECORD: Certain 65 decibel (dB) Community Noise Equivalent Level (CNEL) contour maps produced under the
Federal Aviation Administration's Airport Noise Compatibility Planning Program Part 150.
REPORTING STANDARD: "IN" shall be reported if any portion of the Property is situated within a 65 decibel Community Noise Equivalent Level contour identified in the Public Record, "NOT IN" shall be reported if no portin of the Property is situated within a 65 decibel Community Noise Equivalent Level contour identified in the Public Record,
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ADVISORIES
DISCUSSION: According to the "Methamphetamine Contaminated Property Cleanup Act of 2005" a property owner must
disclose in writing to a prospective buyer if local health officials have issued an order prohibiting the use or occupancy of a propert contaminated by meth lab activity. The owner must also give a copy of the pending order to the buyer to acknowledge receipt in writing. Failure to comply with these requirements may subject an owner to, among other things, a civil penalty up to $5,000. Aside from disclosure requirements, this new law also sets forth procedures for local authorities to deal with methcontaminated properties, including the fiing of a lien against a property unti the owner cleans up the contamination or pays for
MOLD ADVISORY
DISCUSSION: The Buyer is hereby advised that naturally occurring molds may exist both inside and outside of any building
and may not be visible to casual inspection, Persons exposed to extensive mold levels can become sensitized and develop
allergies to the mold or other health problems, Extensive mold growth can damage a structure and its contents. All prospective purchasers of residential and commercial propert are advised to thoroughly inspect the Property for mold. Be sure to inspect the Property inside and out for sources of excess moisture, current water leaks and evidence of past water damage,
As part of a buyer's physical inspection of the condition of a property, the buyer should consider engaging an appropriate and qualified professional to inspect and test for the presence of harmful molds and to advise the buyer of any potential risk and options available. This advisorv is not a disclosure of whether harmful mold conditions exist at a propertv or not. No testina or
inspections of any kind have been performed by The Company. Any use of this form is acknowledgement and acceptance
that The Company does not disclose, warrant or indemnify mold conditions at a property in any way and is not responsible in any way for mold conditions that may exist. Information is available from the California Department of Health Services Indoor Air Qualiy Section fact sheet entitled, "Mold in My Home: What Do I Do?" The fact sheet is available at ww.cal-iao.ora or by
The Toxic Mold Protection Act of 2001 requires that information be developed regarding the potential issues surrounding
naturally occurring molds within a home. Information was written by environmental authorities for Inclusion in the
Environmental Hazards: A Guide for Homeowners, Buyers, Landlords and Tenants booklet developed by the
California Environmental Protection Agency and the Department of Health Services. It is found in Chapter Vi of that booklet, and includes Information. This booklet is available online at: references to sourCes for additional
htto://ww.dhs.ca.i;ov/chlldlead/odfs/ResEnviroHaz2005.odf
For local assistance, contact your county or city Department of Health, Housing, or Environmental Health.
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RADON ADVISORY
DISCUSSION: For its Radon Advisory, JCP-LGS uses the updated assessment of radon exposure published in 1999 by the
Lawrence Berkeley National Laboratory (LBNL) and Columbia University, under support from the U.S, Environmental Protection Agency (EPA), the National Science Foundation, and the US Department of Energy (published online at
http://eetd.lbl.govIlEP/high-radon/USgm,htm), Based on this recent assessment, JCP-LGS's radon advisory is as follows:
All of California's 58 counties have a predicted median annual-average living-area concentration of radon below 2.0
pCl/L (picocuries per liter of indoor air) .. which Is well below the EPA's guideline level of 4 pCi/L and equivalent to
the lowest hazard zone (Zone 3) on the 1993 EPA Map of Radon Zones
The "median concentration" means that half of the buildings in a county are expected to be below this value and half to be above it, All houses contain some radon, and a few houses will contain much more than the median concentration. The onlv way to accurately assess lana-term eXlJosure to radon in a specific house is throuClh lana-term testim:i (samplina the
indoor air for a year or more). The EPA recommends that all bulldlnCls be tested for radon. Columbia University's
"Radon Project" website offers help to homeowners in assessing the cost vs, benefit of testing a specific house for radon or modifying it for radon reduction (see http://ww,stat.columbia.edu/radon/).
NOTE: JCP-LGS does not use the EPA's 1993 map for advisory purposes because that map shows "short-term" radon exposure averaged by county, It was based on "screening measurements" that were intentionally designed to sample the worst-case conditions for indoor air in US homes--using spot checks (sampling for just a few days), in the poorest air quality (with sealed doors and windows), at the worst time of the year (winter), in the worst part of the house (the basement, if one was available). These short-term, winter, basement measurements are both biased and variable compared to long-term radon concentrations (averaged over a year) in the living area of a house. Long-term concentrations are a more accurate way to judge the long-term health risk from radon. For the above reasons, the EPA expressly disclaims the use of its 1993 map for determining whether any house should be tested for radon, and authorizes no other use of its map for property-specific purposes, For additional information about EPA guidelines and radon testing, see "Chapter VII--Radon", in the California
Department of Real Estate's Residential Environmental Hazards: A Guide for Homeowners, Homebuyers, Landlords and Tenants -- available online at http://ww.dhs.ca.aov/chlIdlead/pdfs/ResEnviroHaz2005.pdf
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DISCUSSION: The Federal Endangered Species Act of 1973 ("ESA"), as amended, requires that plant and animal species
identified and classified ("listed") by the Federal government as "threatened" or "endangered" be protected under U.S. law. Areas of habitat considered essential to the conservation of a listed species may be designated as "critical habitat" and may require
special management considerations or protection. All threatened and endangered species -- even if critical habitat is not
designated for them -- are equally afforded the full range of protections available under the ESA.
In California alone, over 300 species of plants and animals have been designated under the ESA as threatened or endangered. and over 80 species have critical habitats designated for them. Most California counties are host to a dozen or more protected species and, in many cases. 10 or more species have desiQnated critcal habitats within a countv.
ADVISORY: An awareness of threatened and endangered species and/or critical habitats is not reasonably expected to be within the actual knowledge of a seller.
No federal or state law or regulation requires a seller or sellets agent to disclose threatened or endangered species or critical habitats, or to otherwise investigate their possible existence on real propert. Therefore. Buyer is advised that, prior to purchasing a vacant land parcel or other real property, Buyer should consider investigating the existence of threatened or endangered species, or designated critical habitats, on or in the vicinity of the Property which could affect the use of the Property or the success of any proposed (re)development.
FOR MORE INFORMATION: Complete and current information about the threatened and endangered species in Califorria that
are Federally listed in each county -- including il critical habitats designated there -- is available on the website of the U.S. Fish &
Wildlife Service, the Federal authority which has enforcement responsibility for the ESA.
htlp:/Iww.fws.Qov/carlsbad/CFWOSpeciesList.htm
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DISCUSSION: According to the California Department of Conservation, Ofce of Mine Reclamation, since the Gold Rush of
1849, tens of thousands of mines have been dug in California. Many were abandoned when they became unproductive or unprofitable. The result is that California's landscape contains many thousands of abandoned mines, which can pose health,
safety, or environmental hazards on and around the mine propert. Mines can present serious physical safety hazards, such
as open shafts or ad its (mine tunnel), and they may create the potential to contaminate surface water, groundwater, or air qualiy. Some abandoned mines are such massive problems as to earn a spot on the Federal Superfund environmental hazard
list.
No California law requires the disclosure of abandoned mines in a real estate transaction, unless the existence of an
abandoned mine Is within the actual knowledge of the Seller and is deemed to be a fact material to the transaction,
The Ofice of Mine Reclamation (OMR) and the U.S, Geological Survey maintain a database of abandoned mines -- however,
it is known to be incomplete and based on maps that are often decades out of date. Many mines are not mapped because they
are on private land, The OMR warns that the State's abandoned mines database "should NOT be relied upon for...the
obligations of sellers of real propert and their disclosure obligations under California law. .. (See reference below.)
This Report does not contain an abandoned mines disclosure from any government database or map or any other source.
Parties concerned about the possible existence or impact of abandoned mines In the vicinity of the Property are advised to retain a State-licensed geotechnical consultant to study the site and issue a report. Other sources of information include, but
are not limited to, the State Office of Mine Reclamation at (916) 323-9198 (website: htto:llww.conservation.ca.Qov/OMR). and
the Engineering, Planning or Building Departments in the subject City and County.
FOR MORE INFORMATION: For more information visit the State Offce of Mine Reclamation's website at:
California is currently ranked fourth In the nation among oil producing states. Surface 011 production is concentrated
mainly in the Los Angeles Basin and Kern County, and in districts elsewhere in the state. In recent decades, real estate development has rapidly encroached into areas where oil production has occurred. Because the state's oil production has been in decline since the 1980's, thousands of oil and gas wells have been shut down or abandoned, and many of those wells are in areas where residential neighborhoods now exist.
According to the California Department of Conservation ("DOC"), to date, about 187,000 oil, gas, and geothermal
wells have been driled In California and around 88,000 are stil in use. The remaining wells (1) are used
intermittently ("shut-in" wells), (2) have been sealed ("capped") under the supervision of the DOC's Division of Oil. Gas and Geothermal Resources, or (3) have been abandoned and have no known responsible operator -- these are called "orphan" wells. The state has a special fund that pays the cost of safely capping orphan wells, however, that program Is limited in its scope and progress.
Buyer should be aware that the DOC database lists oil and gas wells in LOS ANGELES County, and those gas wells, whether may include orphan wells. Health and safety hazards may be associated with oil and
orphan, capped or active, Including, but not limited to, soil and groundwater contamination, oil and methane
seeps, fire hazards, air quality problems, and physical safety hazards to humans and animals.
For More Information
For general information, visit the California Department of Conservation, Division of Oil, Gas, and Geothermal
Resources at http://w.consrv.ca.qov/doQ/
Page 22 of 25
ii'Z008 - JCP-LGS Property Disclosure Reports - 200 Commerce IlVine. CA 92602 Phone: (800) 748 5233 Fax: (800) 329 9527
~iSclOSUreS.com
~"l:"L
Property Address: 170 pica AV,
~.J
the Public Record, and (c) the responsibilties and liabilties of JCP-LGS under this Report, Please read this section to fully
understand the limitations of this Report and JCP-LGS's responsibilities.
A. LIMITATIONS ON PUBLIC RECORD INFORMATION AND THIS REPORT
JCP-LGS has accurately reported the information in the Public Records with respect to the Property as of the Report Date, With respect to the Public Records, it is important to understand that:
. The Public Records may not be accurate, current, fully detailed, or complete.
. A parcel of real property may be affected by hazards that have not been identified in the Public Records.
. There may be other governmental Public Records with relevant information which are not included in this Report,
The Reporting Standards utiized by JCP-LGS in making each determination are specified in the Disclosure Explanations (Sections 1 through 3, inclusive) of this Report. If the Propert Is near the state border, hazards which may be in the adjoining
state or nation are not disclosed in this Report, Where appropriate, JCP-LGS may use the assessor's rolls, cadastral-type maps,
photographic enlargements of maps and various cartographic techniques to locate the site on the appropriate map, The
respective determination is made as accurately as reasonably possible using these maps. For purposes of defining property lines,
the assessor's parcel number and parcel maps are used, Any errors in the assessots rolls may affect the determination
procedures. If the Public Record is not of suffcient accuracy or scale that a reasonable person can determine if the Property is within a delineated hazard area or zone, "IN" or "YES" will be reported for the corresponding disclosure,
C. NOT AN INSPECTION REPORT
JCP-LGS does not perform a physical examination or any testing of the Property, This Report only provides information electronically derived from the specific Public Record identified for each disclosure in the Disclosure Explanation (Sections 1 through 3, inclusive) of this Report. This Report should not be considered a substitute for an on-site environmental and/or geological or engineering assessment. If additonal information is desired, the Parties are encouraged to investigate other sources and to consult an environmental expert, a geologist, an engineer or other expert.
D. CHANGES TO PUBLIC RECORD AFTER REPORT DATE
The Parties are advised that the Public Records may change after the Report Date and JCP-LGS is not responsible for advising
the Parties of any changes to the determinations that may occur after the Report Date. As a courtesy, JCP-LGS wil update this
Report at no cost during the transaction process for which this Report was issued, if requested.
Page 23 of 25
1G'2008 - JCP.LGS Property Disclosure Reports. 200 CommeG Irvine, CA 92602 Phone: (800) 748 5233 Fax: (600) 329 9527
~4) .J ~~iSCIOSUreS.com
V,i. L
ON THIS REPORT
This Report is valid, the Parties may rely on the Report, and a contract is formed with JCP-LGS, only upon receipt by JCP-LGS
of payment of the full price of the Report. This Report may be relied upon only by the Parties to the transaction for which it has been purchased. This Report cannot be relied upon (a) by any persons other than the Seller, the Buyer and their Agents, (b) for any other real property, or (c) for any future transactions involving the Property. The price paid for the Report does not include any
JCP-LGS maintains errors and omissions insurance. As of the Report Date, JCP-LGS has $20M aggregate In errors
JCP-LGS is not responsible for: Any inaccuracies or incompleteness of the information in the Public Records, Inaccurate address information provided for the Property. Any other information not contained in the specified Public Records as of the Report Date,
The health or risk to humans or animals that may be associated with any of the disclosed hazards. The costs of investigating or remediating any of the disclosed hazards.
This Report is not an insurance policy and does not provide the same protections as an insurance policy. The price of this
Report has been established with the understandings of the responsibilties of JCP-LGS as set forth in this Section. The premium
for an insurance policy would be significantly greater than the cost of this Report. The Parties acknowledge that claims for
damages beyond actual
losses can significantly increase the costs of Reports and make prompt resolution of claims more diffcult.
In order to induce JCP-LGS to provide this Report for the price charged, and to help streamline the process of resolving any
disputes between the Parties and JCP-LGS, the Buyer, Seller and Agents agree that if there is a material error or omission in this Report:
The Party who suffers damages as a result of such error or omission shall be entiled at most to recover from JCP-LGS the actual proved damages measured by the difference In the fair market value of the Property as of
the Report Date, caused by the error or omission but not in excess of One Millon Dollars ($1,000,000)
cumulatively, whichever is less, shall be paid under this Report. The Party making such claIm must notify JCP-
LGS promptly of such claim, take no action which wil adversely affect JCP-LGS's lIabilty or defenses to such claim and the Party must fully cooperate with JCP-LGS in the defense of such claim. The Party shall cooperate
with providing reasonable
JCP-LGS shall not be liable for indirect, consequential, personal Injury, physical damage or punitive damages (including, but not limited to, emotional distress or pain and suffering). JCP-LGS wil defend the Parties regarding a claim made in accordance with the foregoing provisions. JCPLGS shall have the right to choose the legal counsel and control the defense of such claim as It reasonably determInes.
JCP-LGS shall be subrogated to all rights of the claiming Party against anyone including, but not limited to, another Part who had actual knowledge of a matter and failed to disclose it to the other Parties In writing prior to the Sale Date.
Page 24 of 25
(s'2008 - JCP-LGS Property Disclosure Reports - 200 Commerce Irvine, CA 92602 Phone: (800) 7485233 Fax: (800) 329 9527
~l)i~ v .J
~,~
Sellers of real property and their agents should always fully disclose all material facts regarding the real property which they are sellng, Regardless of the information in this Report, if Seller or Seller's Agent has any actual knowledge of hazards potentially affecting the Property, that information should be,promplly disclosed in writng to the Buyer and the Buyer's Agent.
I. OTHER AGREEMENTS
This Report sets forth the complete, integrated agreement between JCP-LGS and the Parties. Evidence of prior or
contemporaneous statements, representations, promises or agreements shall not be admissible to vary the terms of this written
agreement. This agreement may not be changed or amended except by a written document signed by an authorized
representative of JCP-LGS and the Parties. In the event that any dispute arises between JCP-LGS and any Parties arising out of or relating to this Report or its subject matter, or any act or omission of JCP-LGS, the prevailing party shall be entiied to
recover his, her or its reasonable costs, including attorneys' fees, from the losing party.
Page 25 of 25
(1200B - JCP-LGS Property DISClosure Reports - 200 Commee 1ivine, CA 92602 Phone: (800) 748 5233 Fax: (800) 329 9527
I i
EXHIBIT F
to
YEAR
CALIFORNIA FORM
593.C
Return this form to your escrow company.
SSN or ITIN
, , , ,
Name
, , ,
FEIN
o CA Corp no,
,
City
, , ,
OwnershiP Percentage
. %
,
Properly address (if no street address, provide parcel number and county)
, , , , , , , , , ,
To determine whether you qually lor a lull or partial withholding exempllon, check all boxes that apply to the propert being sold or transferred. (See line-by-Iine notes in the Instructions)
Part II - Certifications which fully exempt the sale from withholding:
1..0 The propert qualifies as the seller's (or decedent's, if being sold by the decedent's estate) principal residence within the meaning of Internal Revenue
2. . 0 The seller (or decedent, if being sold by the decedent's estate) last used the propert as the seller's (decedent's) principal residence within the meaning
of IRC Section 121 without regard to the two-year time period.
3. . 0 The seller has a loss or zero gain for California income tax purposes on this sale, To check this box you must complete Form 593-E, Real Estate
Witholding-Computation of Estimated Gain or Loss, and have a loss or zero gain on line 16,
4. . 0 The property is being compulsorily or involuntarily converted and the seller intends to acquire propert that is similar or related in service or use to
qualify for nonrecognition of gain for Caliornia Income tax purposes under IRC Section 1033,
5, .0 The transfer qualifies for nonrecognition treatment under IRC Section 351 (transfer to a corporation controlled by the transferor) or IRC Section 721
(contribution to a partnership in exchange for a partnership interest), 6. .0 The seller is a corporation (or a limited liabilty company (LLC) classified as a corporation for federal and California income tax purposes) that is either
qualiied through the California Secretary of State or has a permanent place of business in California,
7..0 The seller is a Caliornia partnership, or qualified to do business in California (or an LLC that is classified as a partnership for federal and Caliornia
income tax purposes and is not a single member LLC) that is not disregarded for federal and California income tax purposes, If this box Is checked, the
law,
g. . 0 The seller is an Insurance company, individual retirement account, qualiied pension/profit sharing plan, or charitable remainder trust.
Part II - Certifications that may partially or fully exempt the sale from withholding:
Real Estate Escrow Person (REEP): See instructions for amounts to withhold. 10, . DThe transfer qualifies as a simultaneous like-kind exchange within the meaning oflRC Section 1031.
11. . 0 The transfer qualifies as a deferred like-kind exchange within the meaning of IRe Section 1031.
12. DThe transfer of this property is an installment sale where the buyer is required to withhold on the principal portion of each installment payment. Copies
of Form 593-1, Real Estate Withholding Sale Acknowiedgement, and the promissory note are attached,
Part IV - Seller's Sionature
Under penalties of perjury, I hereby certify that the Information provided above is, to the best of my knowledge, true and correct. If conditions change, I wil
promptly inform the withholding agent. I understand that the Franchise Tax Board may review relevant escrow documents to ensure withholding compliance and thaI completing this form does nol exempt me from fiing a California income or franchise tax return to report this sale,
Seller: If you checked any box in Part ii, you are exempt from real estate withholding.
If you checked any box in Part Iii, you may qualify for a partial or complete withholding exemption, If you did not check any box in Part ii or Part Iii, the withholding will be 3 1/3% (,0333) of the total sales price or the optional gain on sale Withholding amount certified by seller on Form 593, Real Estate Withholding Tax Statement.
If you are withheld upon, the withholding agent should give you one copy of Form 593, Attach a copy to the lower front of your California income tax
--
7131093
i-
EXHIBIT G to
Purchase and Sale Agreement
(Beta)
(a) Any owner of nonresidential real property who knows, or has reasonable cause to believe, that any release of hazardous substance has come to be located on or beneath that real property shall, prior to the sale, lease, or rental of the real property by that owner, give written notice of that condition to the buyer, lessee, or renter of the real propert.
In compliance with the above provision, Pacific Energy Resources Ltd. is providing the following notice:
Routine Releases:
In the course of Pacific Energy Resources Ltd.'s or third party's routine agricultural,
industrial, or oil field operations and activities, including without limitation, operations for the
exploration, production, development, treatment, storage and transportation of oil and gas,
hazardous substances are handled, used, processed and temporarly stored on the property. In
connection with these operations and activities, surface spils and other releases of these substances, in less than reportable quantities, have occurred in the past and will occur in the normal course of future operations and activities. For example, some solvents and common oil and produced water treatment chemicals are hazardous substances and are routinely present and occasionally released in normal oil field operations on the property. As an additional example, some agrcultural pesticides and herbicides are hazardous substances and are routinely present
and occasionally released in normal agrcultural operations on the property.
such substances used or injected beneath the surface of the property has exceeded and wil
exceed reportable quantities and, depending on the circumstances involved, some or all of such
substances remain beneath the surface of
the propert.
Reportable Releases
In addition to the routine releases described above, Pacific Energy Resources Ltd. knows
or has reasonable causc to believe that the releases of hazardous substances shown on
Attachment 1 to this Exhibit G in reportable quantities have come to be located on or beneath the
property. Each such release that occured during Pacific Energy Resources Ltd.'s ownership or
operation of the lease or property to which the release relates and, to the Knowledge of Pacific Energy Resources Ltd., that occured prior to Pacific Energy Resources Ltd.'s ownership or operation of the lease or,property to which the release relates, has been reported to the MMS
and/or the National Response Center, as applicable.
For the purposes of this notice, the terms "hazardous substance" and "release" shall be defined as provided in California Health and Safety Code Sections 25316, 25317, 25320 and 25321, and the term "reportable quantities" shall be defined as provided in applicable federal and
state laws and regulations for any hazardous substances involved. '
, ~,
;..;
01/04/1991 ELLY
m ::.
~1
ATTACHMENT 1 TO EXHIBIT G
."',..;,..,,'" ;:,,,"-;'t" _ :;"..'"..,',.., ;"..:,:-.. '; ;"'e''';'''('':'" ,:; I.., ::NR"C"" ::J+' ',,?'..' '.". ' co.' ,. ",; ,..",..,"' ...'.. ",' ;;; ';'. ,,"
".;":,~_.: .:--.~;"_'~:,:,,'_'-'r:~ ,'.'; .." . ." '~.,;:.t:'~"':..i:;';,.;.': l"-. ',. ',k;'~"..,' -. _....,' '. -"_ ,'" _ __;::'~
09/12/1991 ELLY
09/15/1991 ELLY 09/16/1991 ELLY
DRIP PAN OVERFILLED ON EAST CRANE INTO CUP OCEAN ~1 0.1 AN OIL/WATER MIXTURE FR. WET/DRY OIL TANK SPIL T OVERBOARD CUP 1 0.1 VALVE ON PRESSURE MED SYSTEM HAD TBSP. SLOW LEAK-MECH, FAILURE ,-0.67 0 PILOT GAS LINE LADEN W/OIL, SPILL TO OCEAN - HUMAN ERROR 0.03 0 SAMPLE VALVE LEFT OPEN - HUMAN ERROR 0.214 0 FAILED CHECK VALVE - MECH. FAILURE
,
0.01
~1
0
--
HIGH PRESSURE MUD LINE PULLED APARTMECH. FAILURE SOURCE UNCONFIRMED-POSSIBLY FR.
CUP 0.03
SOLIDS LOOSEN AT EMERG. PUMP 1.5 HOLE IN DRAIN SYSTEM PIPING-INT. CORR.
0
0
0 0
0
CUP
3
TBSP
2
BELIEVED DRILL CUTTINGS LOOSEN FR EMERG. SUMP BY EARTHQUAKE FAILURE OF PRESSURE GAUGE, OIL SPILLED, WIND SWEPT IT AWAY RESIDUE OIL LEFT ON EMERG. PUMP LEAKED
LEAKY SEAL ON PUMP - MECH FAILURE
CUPS 0.03
2
0
0
TBSP
2
CUPS 1 CUP
~1
0
0
11/04/1995 ELLEN
11114/1995 EUREKA
CRANE DRAIN PAN CONNECTION LOOSEN. DRIPPING OIL-MECH FAIL. INCORRECT PRESSURE ON TUBING CAUSED VALVE TO BLOW OFF-HUM ERROR SHEEN OCCURRED ON SUMP DUE TO TIMER FAILURE-MECH FAILURE OIL COMING FR. DRILLING MUD CUTTINGS
LEAK IN DIESEL TRANSFER HOSE-EQUIP,
MALFU-"~TION
CUP
1 TSP
1
0
0
TBSP
2
0
0
CUPS
~1
CUP
7
338565
---
TBSP.
1 TSP.
1 PT.
.25 Bbl c:1
04/28/1996 ELLY
0 0
0 0
GAL.
c: 1
CUP
4" LINE, PRESSURE ELIMINATED BY SHUTDOWN OF TURBINE 6" DRAINUNE, TEMP CONTAINMENT FAILED DURING LINE REPLACEMENT DIESEL RINSE WATER OVER PRESSUREITEMP OF HEAT MEDIA SYSTEM - HUMAN ERROR STRIPPING RUBBERS ON SANDLlNE, WIND CAUSE OIL OUT OF CONTAIN. AREA
--------
03/23/1997 EUREKA
381257 OIL DRIPPED OFF OILY EQUIP WHEN TRANSPORTING TO WORK BOAT TBSP, 383365 2 0 BAD SEAL ON DECK DRAIN ALLOWED SPILL, 04/11/1997 ELLY EQUIP. MALFUNCTION TBSP, None 0 0,8 HEAT/PRES IN HEAT EXCHG. SYSTEM, OS/21/1997 ELLY DISCHRG TO PRESS RELIEF VALVE 400764 1 QRT. 0.1 SYSTEM OVERHEATED/OVERPRESSURED & 08/24/1997 ELLY RELIEVED-HUM. ERROR 406237 0 DISCHARGE FR. EMERGENCY SUMP- DUE TO 10/04/1997 EUREKA 0.12 SEA GROWTH n__ _._ 410862 0 LEAK IN SEAWATER EXCHANGER1 11/10/1997 ELLEN MECHANICAL FAILURE TBSP 415660 2 OZ. 0 FUEL TRANSFER FROM PUMP DISHARGED12/12/1997 ELLY EQUIP MALFUNCTION 417140 50l. 0 FUEL DIESEL RAN OUT OF DUMPSTER 12/24/1997 PIERD
3 0
,
c:1
10
~~~~~t
06/25/1998 EUREKA
80l.
20
OILY RESIDUE IN OVERBOARD LINE FR. PRIOR OPERATION 0 PICO & OCEAN, 2" LINE BLEW OUT (did not reach water) N/A 8 OZ. DIESEL FROM RIG EXHAUST INTO OCEAN
0
432329
443249
474118 477112
477551
0
0
DROPS
80Z.
1/2
SEAWATER-EQUIPMENT MALFUNCTION
0.5 PIN HOLE LEAK IN DISCHARGE PIPING
0
CUP 30 drops
1bbl _._--
3-4
drops
c:1
CUP
-----.._--c: 1
10/27/1999 EUREKA
.-. --
481789 DIESEL SPLASHED INTO OCEAN WHILE PULLING DIESEL FILTERS FROM THEIR HOUSING. 486321 0.5 HOLES IN EUREKA GROSS PRODUCTION LINE 0 CONDENSATION FROM CRUDECONTAMINATED HEAT MEDIUM VAPOR. 0 OVER PRESSURED PIPELINE & PUMP WHICH ALLOWED SEAL TO LIFT IN THE SEA - WATER COOLING EXCHANGER ON THE 500056 SHIPPING PUMP . - --503881 "OLD" 12" EUREKA BULK LINE TO ELL Y
0
09/15/2000 ELLEN
11/06/2000 ELLY
._-~
GAL
PRESSURE GAUGE O-RING BLEW OUT SPRAYING FLUID OUT 2 GAi-: ." 0., ENGINE LUBE OIL LINE FAILURES
Yo PT.
542289
547396
-- _.--
1 PT.
60Z,
XCUP
4 OZ.
0 0 0
- ---
4" HOSE BLEW OUT OF SWACO UNIT DIESEL TRANSFER HOSE LEAK DIESEL LEAKED WHILE REMOVING
TRANSFER HOSE
TUGGER TIPPED OVER ON +15 SPILLING GEAR OIL DIESEL TANK DRAIN PAN OVERFLOWED WHILE TAKING ON DIESEL FUEL
..
0 0
1-,.".-
09/03/2001 ELLEN
12 OZ.
06/29/2002 ELLEN
10/14/2002 ELLEN 12/21/2002 ELLY
1 GAL.
.- -
?
0 2
2 DRPS
3TBS
RIG ENGINE #2 EXHAUST LEAK. (lUBE OIL?) INSECURED NEEDLE VALVE DIESEL FUEL TBS CAUSE LEAK
0 0
CONDENSATE DRIPPINGS FROM VENT LINE CRANE LOAD CELL LINE WAS CUT RELEASING HYDRAULIC FLUID 10/13/2003 EUREKA Yi TSP Yi HEATED LUBE GREASE ON CRANE LIVE TSP MAST BRIDLE SHEAVES DRIPS INTO WATER 12/07/2003 ELLEN 0:1 GAL. 0:1 OILY WATER ESCAPES CLAMP/PACKING AND GAL. RUNS DOWN CONDUCTOR WHILE CLEANING 0:1 0 LEAK IN 3" DIESEL SUPPLY LINE ON THE +45 12/09/2003 ELLY DECK TBSP.
.',
,.
646875 701933
702349 707354
.-
707616
772Z10
.'.
'--
BLEW HOLE IN DRAIN LINE WHILE SANDBLASTING CAUSING DIESEL LEAK 10/22/2005 ELLEN 0:1 CUP 0 PIN HOLE LEAK IN DRAIN LINE 10/25/2005 EUREKA 0:1 GAL. 0:1 PAINT OVERSPRAY FROM MIANTENANCE GAL. OPERATION AT THE +15 DECK 0 NOTSPECIFIED ($500.00 FINE) 1 CUP 06/01/2006 ELLEN
09/12/2005 ELLEN
1 CUP
777148 777440
799201
06/11/2007 ELLY
SHEEN
;:20 FT.
DIA.
07/20/2007 ELLEN
0:5 GAL.
DIESEL DRIPS FROM EMERGENCY GENERATOR DRAIN PAN ORIGINATING FROM A FLANGE TEMPORARY DRAIN PLUG FAILED ON ELLEN DRAIN SYSTEM
,.-
----_.
SUMP DRAIN VALVE KICKED OPEN, LEAK IN CONTAINMENT VESSEL 0 HYDRAULIC LINE ON UNDERSIDE OF WEST .05 05/12/2008 ELLY CRANE BROKE GAL. 12/03/2008 EUREKA 0:2 GAL. .2 OILY WATER DISCHARGE FROM WHITAKER WHILE LOADING ONTO WORKBOAT LRG NA CONDUCTED A SYSTEM CHECK AND FOUND 12/11/2008 ELLEN SHEEN NO PROBLEMS 06/01/2009 EUREKA 0.4 OZ. 2 HYDRAULIC LEAK ON EUREKA DRILLING RIG QT. CAUSED DISCHARGE INTO OCEAN
02/25/2008 EUREKA
1 QT.
EXHIBIT H to
Purchase and Sale Agreement
(Beta)
Per the State of California Board of Equalization Sales and Use Tax Regulation 1620, the tangible personal property purchased under the Purchase and Sale Agreement by and between (INSERT BUYER) and Pacific Energy Resources Ltd. is being sent out of state for use and/or
consumption in offshore federal waters and is not subject to sales/use taxes. In the event any of such property is used for any taxable purpose, it is understood that (INSERT BUYER) is required by the Sales and Use Tax Law to report and pay tax, measured by the purchase price of such property.
(BUYER)
By: Name: Title:
EXHIBIT I
to
Purchase and Sale Agreement (Beta)
In re
) Chaptt: 11
i
)
) Re: Docket No. 478
ORDER (A) APPROVING PROCEDURES FOR SALE OF THE DEBTORS' BETA ASSETS; (8) SCHEDULING AUCTION AND HEARING TO
CONSIDER APPROVAL OF SALE (C) APPROVING NOTICE OF RESPECTI,YE DATES, TIMES, AND Pl.ACES FOR AUCTION AND FOR HEARING ON APPROVAL OF (1) SALE AND (II) ASSUMPTION AND ASSIGNMENT OF CERTAIN EXECUTORY CONTRACTS AND UNEXPIRD LEASES; (D) APPROVING FORMS OF NOTICE; AND (El GRANTING RELATED RELIEF
This matter coming before the Court on the Motion/or an Order (A) Approving
Procedures
for Sale o/the Debtors' Beta Assets,' (D) Scheduling Auction and Hearing to Consider
Approvalo/Sale; (C) Approving Notice ofRespective Dates, Times, and Plcesfor Auction andfor
Hearing on Approval of (1) Sale and (II) Assumptlon and assignment of Certain Excutory
Contracts and Unexpired Leases; (D) Approving Form afNotice; and (E) Granting Related Relief
(the "Sale Procedures Motion")2. filed on June 19,2009 by the above-captioned debtors and debtors
in possession (collectively, the "Debtors"); the Court having reviewed the Sale Procedures Motion
and having heard the statements of counsel regarding the relief
The Debtors in these cases, along with the 11Ist four digits oreaoh Debtor's federal ta identification number, ar:
Pacific Energy Resoures Ltd. (3442); Petrcal Acquisition Corp. (6249); Pacific Energy Alaska Holdigs LLC (tax. 1.0.
# not available); Cameros Acquisition Corp. (S866); Pacific Energy A1ii Opratig LLC (7021); San Ped Bay
Pipel:le Company (1234); Cameros Energy, Inc. (9487); and Gotland Oil, Inc. (5463). ih address for all or
the Debtors
Unless otherwise noted, capitalized terms used hrein have the mearungii iisciibed in the Sale Procedurs Motion and
the Sale Procedures (as such tenn~ lire defined herein).
IxS_LA:203878A
...:
Motion at ll hearng before the Court (the "Sale Procedures Hearing"); the Cour finding that (a) the
Court has jurisdiction over this matter pursuant to 28 V.S.C. 157 and 1334. (b) this is a core
proceeding purstUt to 28 V.S.C. lS7(b)(2), (c) venue of
the Sale Procedures Hearing was suffcient under the circumstances, the Court having detennined
that the legal and factual bases set forth in the Sale Procedures Motion and at the Sale Procedures
Hearing establish just cause for the relief granted herein and it appenrng that the relief requested is
in the best interest of the Debtors and their estates;
2. The fonn of
Exhibit A to the Sale Procedure Motion (as revised and to be attched to the motion to approve
sale of
3. The Sale Procedures for Beta Assets, substantially in the form attached
substantially in the form of Exhibit C to the Sale Procedures Motion (the "Sale Procedures
Notice"). is approved and shall be served with the Sale Motion on the persons that had been
sered with the Sale Procedure Motion.
Exhibit D to the Sale Procedures Motion (the "Creditor Notice"), is approved and shall be served
2
DOS _ LA:203R1RA
on the creditors ofthe Debtors and alJ persons assertng a right to an oil and/or gas royalty
related to the Beta Assets.
6. The Notice to Counterpartes to Executory Contracts and Unexpired
Leases That May be Assumed and Assigned, substantially in the fonn of Exhibit E to the Sale
Procedures Motion (as revised consistent with this Order, the "Cure Notice"), is approved and
shall be served on each Debtors' contract counterparies and lessors with executory contracts and
unexpired leases that a Debtor may seek to assume and/or assign in conjunction with the sale of
the Beta Assets (the "Assumed Executory Contracts"); provided, hweve,., the relevant Debtor or
Debtors may withdraw any Cur Notice by filing such a withdrawal with ths Cour up to the
time of any relevant Closing (as such term is defined in the Agreement, as executed and
delivered by the relevant Debtors(s)).
7. The deadline for submittng bids pursuant to the Sale Propedures shall be
9. The hearg to consider the Sale Motion shall be held on Augut 4,2009
at 10:00 a.m. prevailing Eastern time (the "Sale Heang") before the Honorable Kevin J. Carey,
United States Bankruptcy Judge. at the United States District Couit for the Distrct of Delaware,
824 Market Street, 5th Floor, Courtroom 5, Wilmngton, Delaware 19801. The deadline to
object to (a) the relief sought by the Sale Motion; (b) the Debtors' conduct of
(c) other than as expressly set forth below, the assumption and/or assigment of, or cure amount
for, any executory contract or wiexpired lease identified in a Cue Notice, is July 28, 2009 at
3
DOS_LA:20387&.4
4:00 p.m. prevailng Easter Time. The Sale Hearing may be adjowned from time to time
the
JVi J'i
10. The Debtors shall serve the Sale Motion and the Cure Notice upon each 'lD'l
e tJoo,,
Cunterparty to the Assumed Executory Contracts. The Cure Notice shall state the date, time and ~\."".
place of
the Sale Hearing as well as the date by which any objection to the asswnption and
assignment of Assumed Executory Contracts must be filed and sered. The Cure
Notice also
shall identify the amounts, if any, that the Debtors believe are owed to each counterarty to an
Assumed Executory Contract in order to cure any defaults that exist under such contract (the
"Cure Amounts"). If a contract or lease is assumed and assigned pursuant to this Court's order
approving sae, then unless the Assumed Executc?ry Contract counterpar properly and timely
files and seres ~n objection to the Cure Amount contained in the Cure Notice, the Assumed
Executory Contrct counterparty shall receive at the time of the closing of the sale of
the Beta
Assets (or as soon as reasonably practicable thereafter), the Cure Amount as set fort in the Cure
Notice, if any, with payment made pursuant to the ters of
in any exectory contract or unexpired lease and claim a specific monetary amount that differs
from the amount, if any, specified by the Debtors in the Cure Notice.
11. If any counterparty objects for any reason to the assuption and
assigment of an Assumed Executory Contract, the counterary must file the objecton by no
later than (i) 4:00 p.m. prevailng Easter time on July 28, 2009, or (ii) the date otherwse
4
DOCS_LA:2D3878,4
specified in the Cue Notice (or, alternatively, the date set fort in the motion to assume such
Asswncd Executory Contract ifsuch contract is to be assumed and assigned after the,SaJe
Hearng); provided, however. that any counterar may raise at the Sale Hearng an objection to
the ussiimption and assignment otan Assumed Executory Contract solely with respect to the
Successful Bidder's abilty to provide adequate assurance of
12. The Succesful Bidder shall be responsible for satisfyng any requirements
regarding adequate assurance of futue perormance that may be imposed under section 365(b) of
the Bankrptcy Code in connection with the proposed assignent of any Assumed Executory
Contract, as wil be provided in the Sale Motion. The Cour shall make its determinatons
concering adequate assurance offutuTe performance under the Assued Executory Contracts
pursuant to section 365(b) of the Bankptcy Code at the Sale Heaiig. Cute Amounts disputed
by
the Debtors or any ofthem to select a Stalking Horse Bidder, after consultation
5
PQiU,A:203878.4
EXHIBIT 1
IN THE UNITED STATES BANKRUPTCY COURT FOR THE DlSTRlCT OF DELA WARE
Tn re:
Chapte 11
) )
) )
Debtors.
Deadline for Submitting Bids: July 24, 2009 at 12;00 noon Auction Date: July 3 i, 2009 at 10:00 a.m. Deadline for Objectiort to Sale Motion: July 28, 2009 at 4:00 p.m. Heag Date on Approval of Sale: August 4,2009 at 10:00 lI.m.
by filing voluntar petitions with the United States Banptcy CO\.rt for the Distrct of Delaware (the "Bantcy Coure') on March 9, 2009, Such cases are jointly administered for
procedural proposes under Case No. 09- 1 0785 (KJC).
By motion dated June 19, 2009 (the "Motion"), the Debtors sought, among other things, the process and procedures set forth below (the "Sale Procedures") though which they wil identify the highest and best offer for PERL's (a) interests in leased oil and gas production assets located offshore near Huntington Beach. Californa and related assets and contracts (the "Beta Interests") and (b) stock ("Stock") in the San Pedo Bay Pipeline Company ("SPBPCo"), one oftle Debtors. which owns a pipeline that rus from the Beta Interests to
approval of
shore (the Beta Interests and Stock are collectively referr to here in as the "Beta Assets"). On
July l, 2009, the Banptcy Court entered its orner (the "Sale Proceures Order"), which,
On August 4, 2009 at 1 0:00 a.m. (preVailng Eastern time), as fuer described below,
the Bankruptcy Court shall conduct a hearng (the "Sale Hearng") to consider approval of the
i The Debtors in these cases, along with tho last four digiti of tach Debtor's federal tax identifiClItion numbe, are;
Pacific Energy Re~oufCes Ltd. (3442); Petrooal Acquisition Corp. (6249); Paoific Energy AJaak Holdings, LLC (tax 1.D. ll not available); ClImeros Acquisition Corp. (5866); Pacific energy Alask Operating LLC (7021); San Ped Bay Pipeline Company (1234); Cameros Energy, Inc. (9487); and Gotland Oil, Inc. (5463). The iiddrss for all of the Debtors Is 1 i i w. Ocean Boulevard, Suite i 240, Long Beach, CA.
68773-n02\OQS_LA :203767.9
sale ofthe Beta Assets to the Successful Bdder(s) (defined below), ifany. At the Sale Hearing,
the Debtors shall seek entr of an order (the "Sale Order") authorizing and approving the
The Debtors are seeking offers for the Beta Assets. The Debtors propose to sell the Beta
Assets in an Auction (defined below). The sales wil be on an "as is," ''where is," and ''with all
faults" basis.
Bidding Process
As more fully discussed below, all bids shall be made by a letter or other wrting ("Offer Letter") RECEIVED by the Notice Partes (defined below) on or before July 24, 2009 at 12:00 Non (prevailing Eastern time) (the "Bid Deadline") by mail, deliver serice, fax or email summarzing the materal ters of the bid. Each Offer Letter must be accompanied by a
proposed Purchase and Sale Agreement (the "Agreement") in a ronn prepar by the Debtors,
which is available from the Debtors' sale agent, Albrecht & Associates, Inc., Pennoil Plaza-
South Tower, 711 Louisiana, Suite 1600, Houston, Texas 70022, Att: Harson Wiliam (email: hwi1iams~albrechtai.com). Each bidder must submit a clean copy and a redlined copy
of the Agreement that is marked for any changes proposed by the bidder.
Participation Requirements
In order to participate in the bidding process and otherwise be considered for any purpse
hereunder, a person (a "Potential Bidder") interested in the Beta Assets must first deliver (unless
previously delivered) t the Debtors and the other Notice Paries (defied below), not later than
substance acceptable to the Debtors 'and their counsel (8 "Confidentiality Agreement"), a form of which is available from the Debtors' sale agent, Albrecht & Associates, Inc.,
Pennzoil Plaza - South Tower, 71 i Louisiana, Suite 1600. Houston, Texas 70022, Attn:
Otfer Letter accompanied by a proposed Agreement, as set fort above, and evidence of equity holders', boar of directorsl, or other relevant authority for the Potential Bidder to make the Bid, execute the Agreement and close the proposed purchase. The Offer Letter must, in substance:
(a) state that the Potential Bidder's offer is IREVOCABLE witit the closing of the purchase of the Beta Assets if such Potential Bidder is the Successfu Bidder or a
(b) that the Good Faith Deposit (defined below) is NONREFUNDABLE ifthe
Potential Bidder is designated the Successful Bidder;
2
68773-002\DOCS _l.;203767.9
(c) state that the Potential Bidder shall be ready, wiling and able to close the
purchase of
shall not contain any due dilgence or other contingencies. The clean copy ofthe Agreement accompanying the Offer Lettet shall be executed by the Potential Bidder and evidence of due authority of the signtory shall also be provided with the Offer Letter.
The Offer Letter
An Offer Letter may not request a "break-up fee," "overbid too" or simlar payment or any payment or reimbursement of any fee to its advisor(s) but the Debtors reserve the
right, after consultation with the Lender and the Committee, to enter into a searate
agreement, which could be initiated by correspondence from a Potential Bidder that is separate from an Offer Letter, with a "stalking horse" bidder or bidders (collectively, a
"Stalg Horse Biddetl) under which the Stalking Horse Bidder's Qualified Bid
(defined below) would be deemed the Baseline Bid (defined below) for the Auction the Beta Assets and for which the Stalking Horse Bidder wou,d be (dened below) of entitled to payment, at any closing ofthe sale of such assets to a Successful Bidder that is not the Stalkng Horse Bidder, of a break-up fee (the "Break-Up Fee") that would not exceed thee percet of the Stalking Horse Bidder's Baseline Bid. Any Break-Up Fee may be credit bid in an Overbid by the Stalking Horse Bidder, ifany.
3. Good Faith Depsit. Each Bid must be accompanied by
a cash deposit (the "Good Faith Deposit") received by the Debtors at or prior to the Bid Deadline by a wi tranfer or ban check payable to the order of "Pacific Energy Resources Ltd." in an amount equal to at least five percent of the proposed purchase price for the Beta Assets contained in such Bid. The Good Faith Deposit is NONREFUNDABLE if the Potential Bidder is designated the Successful Bidder (whether initially or after being previously designated a Back-Up Bidder) unless the Debtors default under any executed and delivered
Agreement.
4 Proof of Ooerational and Financial Abilty to Perfonn. By the time of presentation of a
Bid, each Potential Bidder shall prOvide wrtten evidence that the Debtors reasonably conclude demonstrates it has the necessar financial abilty to close the contemplated transaction and provide adequate assurance of futue perormance under all contracts to be assumed in such contemplated transaction. Such infonnation should, include, among
other things, the follOWing:
(a) the Potential Bidder's current financial statements (audited if
they exist);
the Potential Bidder's operating abilty (which may be through an identified proposed third-party operator or temporitly by PERL for the Beta
3
68773-002\DOCS _LA:203 767.9
Assets until such Potential Bidder or its designated third-party operator has obtained all necessary govermental approvals); and
(d) proofofintemal financial resources and any debt or equity funding commitments
Each Potential Bidder shall deliver written copies ofits Bid by the Bid Deadline to the Debtors c/o Pacitic Energy Resources Ltd., 111 W. Ocean Boulevar, Suite 1240, Long Beach, CA, Att: Gerald A. Tywoniuk, Chief Financial Offcer (emaH: gtywoniuk~pacenergy.com), with a copy to: (a) the Debtors' financial advisor, Zolfo Cooper LLC, 1166 Avenue orthe Americas, 24th Floor, New York, NY, Attn: Scott W. Win, Senior Managing Director (erail:
Floor, Wilmington, Delaware: 19801, Attn: James A. O'Neil (email: joneiii~pszjlaw.com); (ii) Rutan & Tucker, LLP, 611 Anton Blvd.) 14th Floor, Costa Mesa, CA 92626, Attn: Gregg
Amber (e:mail: gamber~rutan.com) and Garet Sleichter (emai1: gsleichter(gtan.com); and
(ii) Schully, Roberts, Slattery & Marno, PLC, 1100 Poydras Street, Suite i 800, New Orleans, LA 70163, Attn: Anthony C. Maro (email: amarino~schuliyrberts.com); (e) counel to the
Offcial Commttee of
fagusti~steptoe.com); and (f) counsel to the Debtors' secured lenders (the "Lnders"): (i) Bingham McCutchen LLP, 399 Park Avenue, New York, NY 10022, Attn: Jeffey S. Sabin & Flom LLP, 333 (email: jeffey.sabin(qbingham.com); and (ii) Skadd~, Ars, Slate, Meagher West Wacker Drive, Chicago, Ilinois 60606, Att: Seth E. Jacobson (email:, seth,jacobson~skadden.com), (collectively, the "Notice Paries"). Bids received by any of the
Notice Parties may be shared with any of
Potential Bidder.
United States Code and any such bid shall constitute a Qualified Bid and an allowed claim for bidding purposes only.
the
Debtors deterine that a Potential Bidder that has satisfied the Parlcipa.tion Requirements does not constitute a Qualified Bidder, then such Potential Bidder's right to receive due dilgence
4
68773-O2\DOCS _ LA,203767.9
access or additional non-public information shall teminate and such Potential Bidder shall promptly retrn all confidential and non-public information to the Debtors without retaiing any copies. The Debtors shall not be obligated to furnish any due dilgence information afer the Bid Deadline. The Debtors are not responsible for, and shall bea no liabilty with respect to, any nfonnation obtained by Qualified Bidders in connection with the sale of any of the Beta Assets (whether such information is provided by the Debtors or their professionals or omitted by them). The Debtors shall exercise their sole discreion in providing or witholding confidential infomiation to Potential Bidders that have executed and delivered to the Debtors a Confidentiality Agreement but have not yet qualified as Qualified Bidders.
Due Diligence From Bidders
Each Potential Bidder and Qualified Bidder (each, a "Biddet') shall comply with all reasonable requests for additional information and due dlgence access by the Debtors or their
advisors regarding such Bidder and its contemplated transaction and operational and financial
abilty to timely close a sale. Failure by a Potential Bidder to comply with requests for additonal information and due diJgence access will be a basis for the Debtors to determine that the Potential Bidder is not Or nO longer is a Qualified Bidder. Failure by a Qualified Bidder to comply with such requests for additional information and due dilgence access wi1 be a basis for the Debtors to determine that a bid made by n Qualified Bidder is not a Qualified Bid.
Bidder.
A Bid received after the Bid Deadline shall not constitute a Quified Bid unless the Debtors designate such Bid as a Qualified Bid after consultation with the Lenders and the Committee.
The Debtors shall have the right to reject any and all Bids that they believe, in their reasonable discretion after consultation with the Lenders and the Committee, do not comply with
the Sale Procedures
or tor any reason or no reasn. In the event that any Potential Bidder is
determined by the Debtors not to be a Qualified Bidder, the Potential Bidder shall be refunded its Good Faith Depsit without interest thereon, within three business days after that detennination.
The Debtors shall not be obligated to deposit the funds constituting a Bidder's Good Faith
Deposit in an interest-bearng account or investment.
The Debtors, as soon as is practicable after receipt of each Bid but not later than 24 hours before the beginning ofthe Auction, shall notify each Potential Bidder whether it is a Qualified Bidder.
5
6H773-W2\DOS_I.A:203767.9
Auctions
Ifno tiely, confonning Qualifying Bids are submitted by th Bid Deadline, the Debtors
shall not hold the Auction and may withdraw any Sale Motion for the Beta Assets without
prejudice. If only one timely Qualifyng Bid is submitted for the Beta Assets, the
Debtors shall
not hold the Auction, but may designate the sole Qualifyng Bidder to be the Successful Bidder with respect to the Beta Assets and proceed with the Sale Hearing or reject the Bid or withdraw the proposed sale after consultation with the Lenders and the Committee.
If the Debtors have received more than one Qualifying Bid for the Beta Assets they may conduct an auction (the "Auction") for the Beta Assets to determine the higbest and best bid with respect to the Beta Assets.
At leat 24 hours prior to the Auction, after consltation with the Lenders and the Committee, the Debtors shall determine in their reasonable discretion which Qualified Bid, if
any, constitutes the IIBaseHne Bid," if any, for the Beta Assets. In makng such deterination,
the Debtors may take into account, among other things, (a) the number, type and nature of any changes to the Agrement requested by each Qualified Bidder; (b) the extent to which such
modifications are likely to delay closing of the sale of
or any of them of such modifications or delay; (c) the consideration ,(in type and amount) to be the Qualified Bidder to close a received by the Debtors or any ofthei; (d) the likely abilty of transction and the timing thereof; (e) the net benefit to the estate or estates, taking into account any Brea-Up Fee (the "Bid Assessment Critera"),
The Debtors shall provide al1 Qualified Bidder (a) notice of
Bidder that has bee selected by the Debtors to make the Baseline Bid for the Beta Assets and
(b) copies of aU Qualified Bids at least 24 hours prior to the Auction, which may exclude any confdential financial infonnation, as determined by the Debtors in their sole reasonable discretion or which has been so designated by a Qualified Bidder in writing.
The Auction shall commence at 10:00 a.m. (prevailing Eastern tinte) on July 31, 2009,
at the offces of
the Debtors' banptcy counel, Pachulski, Stang, Ziehl & Jones LLPi 780
Urness the Debtors in their reasonable discreton after consltation with the Lenders and
the Commttee agree with another party in interest that it may attend the Auction, only the
Committee and the otfice of
authorized representatives of each of the Qualified Bidders, the Debtor, the Lenders, the United States Trustee shallbe pertted to attend the Auction.
6
~773~oi\DOS _ LA:10311.9
The Debtors and/or their professionals shall direct and preside over the Auction. The
Debtors may conduct the Auction in the manner they deterine in their reasonable discretion
after consultation with the Lenders and Committee could result in the highest and bet offer for the Beta Assets.
At the start of the Aucton, the Debtors shall descrbe the material business terms of
the
Baseline Bid. All Bids made therfter shall be Overbids (as defined below) and shall be made
and received on an open basis, and all materal non-confidential ters of each Overbid shall be
t'ully disclosed to all other Qualified Bidder. The Debtors shall maintain a list or other
compilation ofthe Baseline Bid and Overbids, or may have a trancrpt made of
the Auction
An "Overbid" is any bid made before or at an Auction subsequent to the Debtors' aiouncement of the Bitseline Bid. To submit an Overbid for purpses of an Aucton, a Qualified Bidder must comply with the following conditions:
(a) l\.nimum Overbid Increments
At the Auction, the bidding shall begin with a minimum Overbidt if any,' that iSt at a minmum, equal to the Baseline Bid plus an initial overbid incremental amount, in cash, equal to the sum of (i) any Break-Up Fee and (ii) $500,000, itnd contiue in subsequent mium overbid incremental amounts of at least $500~OOO in cash. Any Break- Up Fee may be credit bid in an Overbid by the Stalkng Horse Bidder, if any.
Qualified Bid set fort above. Any Overbid made by a Qualified Bidder must remai open and binding on the Quifed Bidder until and uness (i) the Debtors accept a higher Quified Bid as
an Overbid and (ii) suoh Overbid is not seleced as a Back-Up Bid (as defined below).
To the extent not previously provided (which shall be deterined by the Debtors in their
reasonable discretion after consultation with the Leders and Committee), a QUalified Bidder
submitting an Overbid must submit at the Debtors' request, as par of its Overbid, wrtten evidence (in the fonn of financial disclosure or credit-quality support information Or operational abilty information, or qualification for govermental approval or any enhancement reasonably acceptable to the Debtors) demonstrating such Qualified Bidder's abilty to timely close the transaction proposed by such Overbid.
7
68773~02\DOS _ LA:203767,9
The Debtors shall 3nllunce at the Auction the materal terms of each Overbid, which
may include the basis for calculating the total consideration offere in each such Overbid and the resulting benefit to the Debtors' estates based on, inter alia, the Bid Assessment Criteria.
4. Additional Procedures
The Debtors, as appropriate and in their reasonable discretion after consultation with the Lenders and Committee may adopt rules for the Auction at r prior to the Auction that should the Auction and that are not materally inconsistent with any of promote the goats of better the provisions ofthe Sale Procedures Order. Such rules shall provide that at the Aucton all Bids shull be made and received in one room, on an open basis, and all other Qualified Bidders shall
be entitled to be present for all bidding with the understading that the tre identity of each
Qualified Bidder (i.e., the principals submitting the Bid) shall be fully disclosed to atl other Qualified Bidders and that all material terms of each Qualified Bid shiil be fully disclosed (subject to any confidentiality restrctions) to all other Qualified Bidders throughout the entire Auction. The Debtors, as appropriate and in their reasonable discretion after consultation with le Lender and the Committee, shall have the abilty to incree or decrease the Minimum
Overbid Increments during an Auction.
The Debtors in their reasonable discretion after consultation with the Lenders and Committee may, subject to the ters of the final DIP financing order entered in the Debtors' chapter Ll cases, extend the Bid Deadline or the Auction Date beyond le dates provided herein.
In the event of such an extension, the Debtors shall provide notice to the Notice Paries and any
Qualified Bidders of such extension, any related time and location details with respect to same, and any consequent continuance ofle Sale Hearng.
5. Consent to .lurisdictJon as Condition to Biddbia:
All Qualified Bidders at the Auction shall be deemed to have consented to the exclusive core jursdicton of the Banptcy Cour and waived any right to a jur tral or alterative dispute resolution in connection with any disputes relatig to the Auction or any Bid, and the constrction and enforcement of each Qualified Bidder's Agrent and related documents.
6. Closin2 the Auction
the bidding (as deteimined by the Debtors in: their reasonable shall be closed, and the Debtors, after consltation with the Lenders and Committee with resect thereto, shall immediately identify the highest and best offer (i.e., providing the greatest value for the relevant Debtors' estates) for the Beta Assets (which may be an aggregate of bids for less than all of the Beta Assets) (the uSuccessful Bid") and the entity submitting such Successful Bid (the "Successful Bidder), and the next highest and best offer after the Successful Bid (the uBack-up Bid") and the entity -submitting the Back-Up Bid (the "Back-Up Bidder"), and advise the Qualified Bidders of such determination.
Upon conclusion of discretion after consultation with the Lenders and Committee), the Auotion,
8
68773-Q2\DS_LA:203767,t)
until closing of
and best offer and (b) reject at any time before entr of an order of
approving a Qualified Bid, any Bid for no reason or any reason including because it is (i)
inadequate or insuffcient; (i) not in confonnity with the reuirements of these Sale Procedures, or
any other ters and conditions of sale; or (Hi) contrar to the best
Interests of the Debtors, their estates (or uny of them) and their creditors.
The Debtors shall be deemed to have accepted a Qualified Bid only when: (a) the
Debtors have received the prior wrtten consent of
the Senior Secured Super Priority Priming Debtor in Possession Credit and Guaranty Agreement,
as amended, approved by order of the Bankruptcy Court), which may be granted or witheld in
their sole discretion, and (b) the Qualified Bid has been approved by the Banruptcy Court by an order thut has become final and, at the Oebtors' discretioJl'after consulting with the Lenders and
Committee, no longer subject to rehearig, appeal or certiorar.
The rights of all paries in interest to objec to the Debtors' selection of
the Successful
Bidder, including the assignent of any of such objector's assued exectory contracts or
unexpired leases (the "Assumed Contrct") therto, ar preserved, and the Debtors resere the
right to contest any such objection including (without limitation) because the objector lacks standing, provided i however, that any objection to such assignment on the basis of undisputed amounts necessary, pursuant to Section 365 of the Banruptcy Code, to cure all defaults under
such objector's Assumed Contracts must be made and/or resered in accordance with any
the Assets shall be on an "as is," "where is,'" and 'with all faults" basis and
without representations or warties of any kind, nature, or description by the Debtors, their
agents or their estates excet to the extent set fort in the executed iud deliverd Agreement with
the Successful Bidder. Each Quified Bidder shall be deeed to acknowledge and represent
that it has had an opportunity to conduct any and all due dilgence regarding the Beta Assets prior to making its offer, that it has relied solely upon its own independent revew, investigation and/or ins.pection of any docuents. and/or the Beta Assets in making its bid, and that it did not rely upon any wrtten or oral statements, representations, promises, walimties or guarties whatsoever, whether e;ipress, implied, by operation oflaw or otherwise, regarding the Assets, or Uie completeness of any information provided in connection therewith, its Bid or any Overbids or the Auction, except as expresly stated in these Sale Procedures or the executed and delivered Agreement with the Successful Bidder.
9
68773..02\DS_LA:203761.9
liens) sccunty interests, encumbrances, claims, charges, options and interests thereon and there against (collectively, the "Interests") other than claims, labitties and obligations of one or more of the Debtors expressly assumed by the Successful Bidder in its Agreement and third pary property interests to which the Beta Assets are subject (such as royalty, overding royalty, production payment and similar oil and gas interests), in accordance with Bankniptcy Code 363(f), with such Interest!l to attach to the net proceeds of the sale of the Beta. Assets.
Sale Hearing
The Sale Hearng shall be conducted by the Bankrptcy Cour on August 4, 2009 at i 0:00
a.m. (prevailng Easter time), or on such other date and time as may be established or continued
by the Bankruptcy Court. Any continuation of
the Beta Assets to the Successful The Debtors shall endeavor to close the sale of Bidders) promptly after the entry of an order of the Banptcy Court after the Sale Hearng
District of
approving such sale unless the Banptcy Court or the United States Distrct Cour for the Delaware enters a stay of such sale. The Debtors' presentation of a partcular
Qualified Bid to the 'Bankruptcy Court for approval does not constitute the Debtors' acceptance of such Qualified Bid.
If a Successful Bidder fails to consummate an approved sale in accordance with the applicable Agreeent or,such Agreement is terinated, the Debtors shall be authonzed but not
required, to deem the Back-up Bid, as disclosed at the Sale Heang, the Successful Bid, and the
Debtors shall be authorized, but not required, to consunate the sale with the Qualified Bidder the Banptcy Cour. Any Back-Up Bidder that is submitting such Bid without fuer order of notified by the Debtors that it has becme the Successful Bidder shall be the "Successful Biddef'
as that defined ter is used herei.
of
the Successful Bidder and any Back-Up Bidder) shall be retued to the respective Qualified
Bidders with any accumulated interest thereon, if
conclusion of the Auction. The Good Faith Deposit of any Back-Up Bidder shall be retied to
the Back-Up Bidder with any accumulated interest thereon, ifany, withn thr business days
atler the closing of the relevant sale with the Successful Bidder. If a Successful Bidder (including any Back;'Up Bidder that has become the Successful Bidder) fails to conswnmate an approved sale because of a breach or failure to perform on the par of such Succssful Bidder, the the Debtors shalt be entitled to retain such Successful Bidder's Good Faith Deposit as par of damages resulting from such Successful Bidder's breach or failure to perform.
10
~77H)02\DOS_LA:203767.9
Exhibit J
to Purchase and Sale Agreement (Beta)
LTD., a Delaware corporation ("PERL"), and BETA OPERATING COMPANY, LLC, a Delaware limited liability company ("Beta," and collectively with PERL, the "Partes," and each,
a "lm").
RECITALS:
A. 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 December 15,2009, by and between made a part thereof, the "Purchase Agreement"), dated as of PERL, Rise Energy Beta, LLC, a Delaware limited liability company ("Rise") and SP Beta Properties, LLC, a Delaware limited liability company ("Silver Point," and collectively with
Rise, "Buyers").
B. Buyers have entered into agreements under which Rise wil operate the Beta
Interests and manage SPBP and Rise has subcontracted with Beta to provide those services and, on approval of the MMS, to become operator of the Beta Interests.
C. Pursuant to the Purchase Agreement, Beta (as designee of Rise) acquired the
Operating Interests, including the Operating Tangible Assets, and Beta desires to transfer
possession of the Operating Tangible Assets to PERL for use in connection with the services to be provided as described herein.
D. In connection with the purchase and sale of the Beta Interests and SPBP Stock
pursuant to the Purchase Agreement, PERL has agreed to provide certain transition services with respect to the Beta Interests and the SPBP Interests (collectively, the "Assets") for a limited time period following Closing, upon the terms and conditions set forth herein.
NOW, THEREFORE, for a good and valuable consideration, the receipt and suffciency of which are hereby acknowledged, the Partes agree as follows:
ARTICLE I
SERVICES
Section 1.1 PERL Services. Subject to Section 1.2, PERL shall provide or cause to be provided the transition services described on Schedule 1.1 (collectively, the "PERL Services")
at the levels those services have been provided with respect to the Assets durig the period
immediately preceding the Effective Date, including continuing to serve as operator of the Beta
Interests and, with respect to the SPBP Interests, those services provided in accordance with that
certain Pipeline Operating Agreement between PERL and San Pedro Bay Pipeline Company,
dated as of March 12, 2008 (the "SPBP Service Contract") for the period commencing as of the Effective Date and ending upon discontinuation of services in accordance with Section 5.1 (the
"PERL Services Term"). PERL shall alter or modify the PERL Services to accommodate changes in the commercial or physical operation of the Assets, uness any such alteration or
modification to the PERL Services is material, in which event, that alteration or modification
shall be made only with the express written consent of Beta. PERL shall not be required to
provide any particular PERL Service if the provision of that service would violate any
Applicable Laws or Assumed Contracts. To the extent required, PERL shall use commercially
reasonable efforts to secure consents and/or approvals of vendors, lessors and licensors rc1ating
Section 1.2 Manaeement. Notwithstanding anyting herein to the contrary, Beta shall provide general oversight and direction to PERL with respect to the PERL Services, including directing all personnel decisions, including the hiring and termination of PERL employees and contractors participating in the PERL Services. PERL shall follow the
instrctions of Beta in providing the PERL Services, except to the extent that would cause PERL to violate any Applicable Law or unreasonably endanger any Person or any material propert interest.
Section 1.3 Emplovees. At all ties durig the performance of PERL Services, and
subject to Section 1.2, all persons performing the PERL Services (a) shall be in the employ of
PERL (including agents, contractors, temporary employees and consultants); (b) shall be
independent from Beta and not employees of Beta or Beta's representatives; and (c) shall not be entitled to any payment, benefit (including pursuant to any benefit plans) or perquisite directly or indirectly from Beta or from Beta's representatives on account of the PERL Services; provided, however, Beta and Affiiates thereof shaIl have the right, but shall not be obligated, to solicit the employment of, hire and employ any PERL personnel at any time prior to, during or after the PERL Services Term at its sole option and on terms it deems appropriate. In ths regard, Beta
shall have the right to, directly or indirectly, (a) attempt to hire and/or employ any PERL
personnel, or (b) encourage any PERL personnel to terminate his or her relationship or
employment with PERL or any of its Affiiates. In order to perform the PERL Services and retain the PERL personnel required to perform those PERL Services, PERL hereby agrees to continue all existing benefits and benefit plans during the PERL Services Term.
Section 1.4 Standard of Performance. PERL shall perform or cause to be performed the PERL Services as a reasonably prudent operator would perform such services, in a good and workmanlike manner, with due diligence and dispatch, in accordance with good oilfield practice and in compliance with Applicable Law and in compliance with the Assumed Contracts, but in no event shall it have any liability for losses sustained or liabilities incurred except such as may result from its or any Affliates' gross negligence or wilful misconduct and, with respect to the SPBP Interests, with that degree of care, skill and prudence required under the SPBP Service Contract.
Section 1.5 Records. PERL shaIl maintain or cause to be maintained true, complete and correct records of all receipts, invoices, reports and those other documents as are customarily
maintained by it for its own operations relating to the PERL Services rendered hereunder. Beta shall have the right to inspect those records during regular offce hours.
Section 1.6 Representatives of PERL. PERL shall, at all times, twenty-four hours a PERL available either by telephone the PERL Services Term, keep representatives of or pager or in person, to receive communications from Beta regarding the PERL Services and to respond to inquires concerng the performance of the PERL Services. PERL shall provide Beta with a list of designated representatives.
day, during
Beta shall otherwise consent in writing, PERL shall not incur any capital expenditures for an individual project or matter included within the foregoing as part of the Beta Interests or San Pedro Bay Pipeline in excess of $25,000 individually or in the aggregate except in case of emergency or as may otherwise be required to prevent injury or damage to Persons, propert or the environment or except for capital expenditues that have been approved prior to the date of this Agreement or are covered by the authorizations for expenditures listed on Schedule 12.1(aa)
to the Purchase Agreement.
Section 1.8 Use of Qperatiue Taueible Assets. PERL acknowledgcs that the
Operating Tangible Assets have been transferred to Beta in connection with the Purchase
Agreement as of the date hereof. Beta hereby grants PERL the right to use the Operating Tangible Assets at no cost during the PERL Services Term in connection with providing the PERL Services, and, with respect to certain network and accounting softare, Beta hereby grants PERL the right to use such assets in connection with the winding-up and dissolution of PERL and its subsidiaries in exchange for compensation as set forth in Section 5.5; provided, however, in no event shall PERL use the Operating Tangible Assets for any other reason without the
express written consent of Beta. PERL shall maintain all Operating Tangible Assets in good
working condition, ordinary wear and tear excepted.
Section 1.9 Bonds. During the PERL Services Term, PERL shall take all action necessary to maintain in full force and effect and hold in trst for the benefit of Buyers and Beta,
the MMS Supplemental Bond, and any other bonds posted by or at the request of PERL (collectively, the "Bonds"), including surety bonds and bonds for plugging, abandonment,
decommissioning, removal and restoration obligations, together with any U.S. Treasury notes or other investment securities, trust accounts, cash or other collateral that may be posted, held or pledged pursuant thereto, whether by PERL or its predecessors in interest, and whether held
directly by PERL or by a Governental Entity or other Third Part, including those listed on Schedule 1.62 of the Purchase Agreement. Following the discontinuation or termination of the
PERL Services, PERL shall deliver to Beta, at Beta's sole cost and expense, (i) each such Bond and all such underlying security or other collateral or (ii) to the extent PERL is not permtted to transfer a Bond, all underlying security or other collateral with respect to such Bond so that Beta may obtain a replacement Bond.
6),DOC 3
ARTICLE II COMPENSATION
Section 2. i Compensation for PERL Services. Beta shall payor cause to be paid to
PERL an amount equal to all actual out-of-pocket expenses incurred in connection with providing the PERL Services, 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, attorneys, independent reserve engineers and accountants that PERL may engage to advise on PERL matters; capital costs attributable to the operation of the Assets; costs associated with changing systems or fulfillng other changes
requested by Beta; costs and expenses (including reasonable attorneys' fees) in obtaining any
consents or approvals, or providing any notices, necessary or advisable in connection with the transactions hereunder and under the Purchase Agreement; and all fees and expenses for payroll, insurance, offce and other supplies, and equipment and materials that may be required in connection with the operation and conduct of the Assets; provided, however, any amounts covered by the Wind-Down Budget, and any amounts, including payroll and other benefits, payable to or for the benefit of certain employees during the wind-down and dissolution of PERL and its subsidiaries and the disposition of assets and liabilities not directly associated with the
Assets shall be expressly excluded from this payment obligation (the "Excluded Employees").
Beta wil designate the Excluded Employees and said designation may be subject to change by Beta from time-to-time in its sole discretion. With respect to the Excluded Employees, PERL
shall instead charge an hourly rate, which shall be preapproved by Beta, for time the Excluded
Employees actually spend providing the PERL Services. Payments shall be made as provided in
Article II.
Section 2.2 Advances. PERL shall advance any funds needed to make any payments required in connection with providing the PERL Services, and Beta shall reimburse PERL or cause PERL to be reimbursed for all those advances. Those advances shall be reflected in an invoice from PERL to Beta, as provided under Article II.
ARTICLE III
PAYMENT AN DEFAULT
Section 3. i Initial Advance. PERL shall prepare and deliver to Beta for Beta's
approval, which approval shall be given in Beta's sale and absolute discretion, an initial budget covering the first thirty (30) to sixty (60) days of costs and expenses required to be remitted in connection with the PERL Services (the "Initial Budget"). After Beta has approved this Initial Budget, Beta shall transfer or cause to be transferred to PERL by wire transfer in immediately available funds to the bank account designated by PERL the amount required to cover the costs
and expenses as set forth in the Initial Budget. In no event shall the Initial Budget include
6).DOC 4
Section 3.2 Submission of PERL Invoice. On or before the tenth (10th) calendar day
of each month, PERL
share (based on the Buyer's relative Buyer Percentages) of amounts due PERL hereunder for the PERL Services and any advances made by PERL pursuant to Section 2.2 for the
preceding month.
Section 3.3 Payment of PERL Invoices. Absent manifest error in calculations contained in an Invoice (if there is a manifest error, that error wil be corrected promptly) and amounts that Beta has disputed as provided in Section 3.4, Beta shall pay the Invoice or cause the Invoice to be paid on or before the last Business Day of each month in which Beta receives an Invoice by wire transfer of immediately available funds to the ban account designated by
PERL. Interest wil accrue on any invoiced amounts that are not timely paid at the rate of
interest per annum stated from time to time in The Wall Street Journal (or any successor
publication thereto) as the base rate on corporate loans for at least seventy-five percent (75%) of
the thirt (30) largest banks in the United States (the "U.S. Prime Rate") from the date due,
compounded quarterly, until those amounts, together with all accrued and unpaid interest
thereon, are paid in fulL. Any preexisting obligation to make payments for the PERL Services provided hereunder shall survive the tennination of this Agreement.
PERL receives Beta's written report, Beta and PERL shall meet and undertake to agree on the adjustments (if any) to the Invoice. If Beta and PERL fail to agree on the adjustments (if any)
withi the fifteen (l5)-day period, either of them may submit the disputed items to a qualified
accounting referee acceptable to Beta and PERL for resolution. Beta and PERL shall direct the
accounting referee to resolve the dispute within twenty (20) days after having the relevant materials submitted for review. The decision of the accounting referee shall be binding on and non-appealable by the Parties. The fees and expenses associated with the accounting referee wil be borne equally by Beta and PERL. Any amounts owed to PERL as a result of the final Invoice amount wil be paid withn five (5) Business Days after the date when the amounts are agreed upon by Beta and PERL or when Beta and PERL receive a. decision of the accounting referee, and the adjustments included in the final Invoice wil be fmal and binding and not subject to
further audit or arbitration.
Section 3.5 Default.
(i) PERL shall be in default under this Agreement (a "PERL Default") if PERL fails to provide a PERL Service in accordance with the tenns and conditions of this Agreement, which failure continues for at least seven (7) Business Days following receipt of written notice to PERL; provided, however, if PERL cannot reasonably cure that failure within that seven (7)-Business Day period, no PERL Default shall be deemed to occur provided PERL
demonstrates that it has taken steps to cure that failure within that seven (7)-Business Day period and diligently prosecutes that cure to completion, so long as the PERL Default does not have a
material adverse effect or cause irreparable harm to Beta, the Buyers or the Operating Tangible
Assets.
(ii) Upon the occurrence of a PERL Default, Beta may, at its option
and as its sole remedy, (A) secure the PERL Services from any Person qualified to provide the
PERL Services (a "Third Part Provider") and (B) for the minimum remaining term PERL is obligated to provide the PERL Services under the terms of this Agreement, receive from PERL concurrently on the date payment is due to a Third Party Provider, payment of the positive difference, if any, between the cost of purchasing the substitute PERL Services and the amount that would have been paid to PERL under the terms of this Agreement for the PERL Services if
no PERL Default with respect to the PERL Services had occurred. 'Beta wil use all
commercially reasonable efforts to minimize any such positive difference.
(b) Beta Default.
(i) Beta shall be in default under this Agreement (a "Beta Default") if
:.
Beta fails to timely payor cause to be paid to PERL any amounts due hereunder, which failure written notice from PERL to Beta. continues for at least thirt (30) days following receipt of
(ii) In the event of a Beta Default, PERL may suspend providing any
or all PERL Services until all such amounts are paid, and the failure to provide any PERL
Services so suspended shall not be deemed to be a PERL Default; provided, however, in no event
shall PERL suspend the PERL Services to the extent such suspension would unreasonably
endanger any Person or any material propert interest.
Section 3.6 Taxes. Any sales or similar taxes imposed on PERL for PERL Services
that PERL is required to payor incur shall be passed on as an explicit surcharge, and Beta shall
payor cause to be paid those amounts in addition to any PERL Service fee payment, whether
included in the applicable Invoice or added retroactively. The Parties wil cooperate to minimize the imposition of any taxes.
Section 3.7 Transition Accountini:. Not later than the fifteenth (l5Ih) Business Day following each month, PERL shall prepare or cause to be prepared a detailed settlement
statement of the previous month's oil and natural gas production detailing the production volumes and corresponding revenues and wil disburse said receipts to the appropriate beneficiaries on or before the 25th of each month. All remittances to those recipients shall be made by wire transfer to the accounts as designated by Beta on behalf of such recipients.
Section 3.8 Final Service Settlement Statement. No later than sixty (60) days after the, end of the PERL Services Term, PERL wil deliver to Beta a final settlement statement (the "Final Service Settlement Statement") setting forth the actual amount of net production, revenue and expenditures and the resulting adjustment to the estimated amounts remitted to PERL (including the advance made in accordance with Section 3.1) or disbursed in accordance with Section 3.7. As soon as reasonably practicable, but in no event later than twenty (20) days after Beta receives the Final Services Settlement Statement, Beta may deliver to PERL a written
report containing any changes that Beta proposes to be made to that statement. As soon as
reasonably practicable, but in no event later than fifteen (15) days after PERL receives Beta's written report, Beta and PERL shall meet and undertake to agree on the final adjustments to the Final Service Settlement Statement. If Beta and PERL fail to agree on the final adjustments within the fifteen (i 5)-day period, either Beta or PERL may submit the disputed items to the accounting referee for resolution, Beta and PERL shall direct the accounting referee to resolve the disputes withi twenty (20) days after having the relevant materials submitted for review.
by Beta and PERL. The fees and expenses associated with the accounting referee will be borne equally by Beta and
The decision ofthe accounting referee wil be binding on and non-appealable,
PERL. Any amounts owed by one Par to another as a result of the Final Service Settlement Statement, together with interest on that amount from (and including) the Closing Date to (and
excluding) the date of
payment at the U.S. Prime Rate, wil be paid within five (5) Business Days after the date when'the amounts are agreed upon by Beta and PERL or when Beta and PERL receive a deCision ofthe accounting referee, and the adjustments included in the Final Service Settlement Statement wil be final and binding between the Parties and not subject to further
audit or arbitration.
ARTICLE V
CESSATION OF SERVICES
Section 5.1 Discontinuation of Services. At any time after the date hereof, Beta may, without cause and in accordance with the terms hereunder, request the discontinuation of the PERL Services by giving PERL at least fourteen (14) days' prior notice; provided, however: (a) PERL shall continue to be entitled to receive all costs and expenses PERL remains obligated to pay under any existing contract or arangement related to the PERL Services that has been approved by Beta, and (b) PERL shall use commercially reasonable efforts to minimize all such costs and expenses; provided, further, that Beta shall provide PERL at least 28 days' prior written notice of any discontinuation of PERL Services that would result in the termination of any PERL employees, unless such discontinuation of PERL Services is as a result of PERL's breach of this Agreement. Beta may request partial discontinuation of the PERL Services and
PERL shall use commercially reasonable efforts to accommodate that request.
Section 5.2 Procedures Upon Discontinuation or Termination of Services. Upon the discontinuation or termination of the PERL Services hereunder, this Agreement shall be of no further force and effect, except as to obligations accrued prior to the date of discontinuation or termination; provided however, Article II, Article II, Article V, Article VI, Article VII and Sections 8.2, 8.3, 8.5, 8.9, 8.12 and 8.13 shall survive that discontinuation or termination. PERL shall, within thirt (30) days after discontinuation or termination of the PERL Services, deliver to Beta at Beta's sole cost and expense the Operating Tangible Assets, all assets posted, held or
pledged in connection with or required for the maintenance of the Bonds (including U.S.
Treasury notes or other investment securities, trst accounts, cash or other collateral), and all other propert in its possession or in the possession of its Affliates acquired or produced during the PERL Services Term that (i) would have been an Operating Tangible Asset under the Purchase Agreement if owned by PERL or its Affliates as of the Closing Date, or (ii) is
otherwise used or useful in connection with pedormance of the PERL Services, including all softare, hardware, books, records, contracts, receipts for deposits, papers or documents, but
excluding any items that would have been Excluded Items under the Purchase Agreement if owned by PERL or its Affiiates as of the Closing Date; provided, however, PERL may retain archival copies of materials provided to Beta pursuant to this Section 5.2, subject to the confidentiality provisions of Article VI.
Section 5.3 Continuation of PERL Services Post PERL Services Term. The
Parties acknowledge and agree that the PERL Services wil continue (and PERL shall continue to perform and be compensated) past the PERL Services Term as necessary to complete the 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.
Section 5.4 Release. PERL hereby agrees that upon the expiration of the PERL Services Term, the discontinuation of all PERL Services and the final payment of any amounts in
connection with the Final Service Settlement Statement, PERL shall be deemed to
unconditionally, irrevocably, and completely, fully and forever, waive and relinquish any and all
actions, causes of action, suits, debts, controversies, agreements, promises, rights, variances,
trespasses, judgments, executions, claims, and demands whatsoever in law, equity, or otherwise, that PERL or its agents or Affiliates, ever had, then has, or thereafter can, shall, or may have against Beta or the Buyers, and/or their respective agents or Affliates by reason of, arising from, or in connection with, or directly or indirectly attbutable to this Agreement.
Section 5.5 Wind-Down Services. After the expiration of the PERL Services Term, if PERL requires reasonable assistance in connection with the wind-down and dissolution of
PERL and its subsidiaries, Beta shall provide that assistance (the "Wind-Down Services") on
terms reasonably approved by Beta and PERL and in exchange for reasonable compensation, provided that requisite approval for those Wind-Down Services and the related compensation has
been approved by the Bankptcy Court such that Beta is assured that PERL has available
resources to pay that compensation.
Section 5.6 Offce Space. Durig the PERL Services Term, and for a period of three
years thereafter or for such shorter period of time during which Beta maintains an offce in Long Beach, California, Beta shall provide PERL with access to no less than one offce (the "Office Space") to be used in connection with the wind-down and dissolution of PERL. PERL hereby agrees to release, indemnify, defend and hold harmless Beta and its Affiliates from all Claims caused by or arising out of or resulting from PERL's use of the Offce Space. The indemnity PERL pursuant to the preceding sentence shall apply to any Claim asserted against obligations of PERL'S USE OF THE OFFICE SPACE, INCLUDING Beta in connection with or as a result of ANY CLAIM ACTUALLY OR ALLEGEDLY RESULTING FROM THE SOLE, JOINT OR
809345_1
6),DOC 8
Claim actually resulting on the account of the fraud, wilful misconduct or gross negligence of
Beta.
ARTICLE VI
CONFIDENTIALITY
Section 6. i Generally. PERL agrees: (a) to hold in trust and maintain confidential;
(b) not to disclose to others (other than the Buyers, Affiliates, prospective lenders or investors,
and the advisors of the foregoing, all to the extent those parties are bound by similar obligations of confidentiality) without prior written approval from Beta; (c) not to use for any purpose, other than those purposes as may be authorized in writing by Beta; and (d) to prevent duplication of
and disclosure to any other part, any information received from Beta or developed, presently
held or continued to be held, or otherwise obtained by PERL under this Agreement. That information includes all results of any PERL Services provided hereunder, information disclosed
by Beta orally, visually, in writing or in other tangible form, and includes all nonpublic or proprietar information of any nature (including prices, trade secrets, technological know-how, data and all other nonpublic or proprietary concepts, methods of doing business, ideas, materials or information), and all information derived from any nonpublic or proprietary information.
Section 6.2 Exceptions. 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; (b) enters the public domain though no fault of Beta; (c) was communicated to
PERL by someone other than Beta free of any obligation of confidence known to the recipient;
or (d) was developed by offcers, employees or agents of or consultants to PERL independently of and without reference to the proprietary information of Beta. Specific information shall not be
deemed to come under the above exceptions merely because it is embraced by more general
Section 6.3 Required Disclosure. PERL may disclose Beta's information to the extent necessary or convenient and appropriate to attorneys of litigants or to Governental
Entities to comply with any obligation imposed on PERL in connection with a proceeding in a
court or other Governental Entity of competent jurisdiction, provided that PERL gives
reasonably prompt notice to Beta, of the need for that disclosure, together with other information
about the proceeding as wil enable Beta, to evaluate the obligation and the need and to elect
either to intervene or otherwise appear or act in the proceeding to protect directly Beta's information, at the expense of Beta. Alternatively, Beta may request PERL to, and if so requested, PERL shall, make a reasonable and diligent effort at the expense of Beta, to obtain a protective order or otherwise to protect the confidentiality of information sought to be obtained in said proceeding.
Section 6.4 Lenl!tb of Confidentialitv Oblil!ation. PERL agrees to maintain and
protect the confidentiality of tbe information of Beta as set forth in this Aricle VI for a period of two (2) years from the date of expiration of the PERL Services Term.
ARTICLE VII
INEMNITY
Section 7.1 Beta's Indemnifcation of PERL for Non-Party Claims. Beta shall, to
the fullest extent permitted by Applicable Law, release, indemnify, defend and hold harmless PERL and its subsidiaries against and from all Claims asserted by non-Parties caused by or arising out of or resulting from the provision of PERL Services pursuant to this Agreement. Beta shall periodically reimburse or cause to bc reimbursed any Person entitled to indemnity under this Article VII for its legal and other expenses incurred in coiiection with defending any such Claim. THE INDEMNITY OBLIGATIONS OF BETA PURSUANT TO THIS SECTION 7.1 SHALL APPLY TO ANY CLAIM ASSERTED AGAINST PERL IN CONNECTION WITH OR AS A RESULT OF THE PERFORMANCE OF PERL SERVICES, INCLUDING ANY
believes it may have an obligation of indemity under this Agreement, Beta shall, 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 Beta, and PERL shall cooperate in all reasonable respects. In all instances, PERL may
employ separate counsel and paricipate in the defense of any such Claim; provided, if Beta 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 that Claim shall be borne solely by PERL. With respect to any such Claim: (a) Beta shall defend PERL against that Claim, (b) Bcta shall pay any judgment entered or settlement, (c) Beta shall not consent to the entr of any judgment or enter into any settlement that (i) does not include a provision whereby
liability with respect to that Claim, and (ii) would restrict PERL's ability to conduct its business in the ordinary course, and (d) PERL shall not consent to the entr of any judgment or enter into any settlement with respect to that
the plaintiff or claimant in the matter releases PERL from all
Claim without Beta's prior written consent. If Beta has not elected to undertake the defense
of any such Claim, or if Beta assumes the defense of any such Claim pursuant to this Section 7.2
but fails to dilgently defend against the Claim withi thirt (30) days following any written notice
from PERL asserting that failure, then PERL shall have the right to defend, at the sole cost and expense of Beta (to the extent PERL is entitled to indemification hereunder), that Claim by all appropriate proceedings. In those instances, PERL shall have full control of that defense and proceedings; provided, PERL shall not settle that Claim without the written consent of Beta; provided further, if Beta fails to notify PERL in writing as to whether or not it consents to that settlement within thirt (30) days following its receipt of notice of that settlement from PERL,
D-Rise Transition Services Agreement (I-B Draft)(1809345_16),DOC 10
then that consent shall be deemed given. Beta may participate in, but not control, any defense or settlement controlled by PERL puruant to ths Section 7.2, and Beta shall bear its own costs and
expenses with respect to that participation. Notwithstanding the other provisions of this Section liabilty to PERL under this Section 7.2 and if that dispute is 7.2, if Beta disputes its potential resolved in favor of Beta, Beta shall not be required to bear the costs and expenses of PERL's defense pursuant to this Section 7.2.
Section 7.3 PERL's Indemnifcation of Beta for Employee Claims. PERL shall, to
the fullest extent permitted by Applicable Law, release, indemnify, defend and hold harless
Beta, Buyers and their respective Affliates against and from all Claims asserted by current or former employees of PERL caused by or arising out of or resulting from this Agreement. THE INDEMNITY OBLIGATIONS OF PERL PURSUANT TO THE PRECEDING SENTENCE SHALL APPLY TO ANY CLAIM ASSERTED AGAINST BETA, ANY BUYER OR ANY OF THEIR RESPECTIVE AFFILIATES IN CONNECTION WITH OR AS A RESULT OF THIS AGREEMENT, INCLUDING ANY CLAIM ACTUALLY OR ALLEGEDLY RESULTING FROM THE SOLE, JOINT OR CONCURNT NEGLIGENCE, OR OTHER FAULT OF BETA, AS WELL AS ANY STRICT LIABILITY CLAIM THAT MAY BE ASSERTED OR IMPOSED AGAINST BETA; PROVIDED, HOWEVER, THE INDEMNTY OBLIGATIONS SET FORTH IN THIS SECTION 7.3 SHALL NOT APPLY TO ANY CLAIM ACTUALLY RESULTING ON THE ACCOUNT OF THE FRAUD, WILLFUL MISCONDUCT OR GROSS NEGLIGENCE OF THE INDEMNIFIED PERSON.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Connterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original instrment, but all those counterparts together shall constitute but one agreement.
Section 8.2 Notices. All notices that are required or may be given pursuant to this
Agreement shall be sufficient 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 that electronic mail is sent); (c) facsimile transmission; (d) hand delivery; or
to Beta:
Haynes and Boone, LLP 2323 Victory Avenue, Suite 700 Dallas, Texas 75219 Facsimile: 214-200-0442 Attention: Richard M. Fijolek, Esq.
Email: rick.fijolekhaynesboone.com
If to PERL:
Email: gtyoniukpacenergy.com
with a copy to:
611 Anton Blvd., Suite 1400 Costa Mesa, California 92626 Facsimile: (714) 546-9035 Emil: gamberrutan.com
Any Part may change its address by notifying the other Part in writing of that 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 machie
confirmation ofreceipt) or ifby electronic mail, on the date received (as evidenced by computer generated confirmation of receipt); or hand delivery on the date received or overnight delivery on the date received, provided, if that date is not a Business Day, then the date of receipt shall be on
the next date that is a Business Day.
Section 8.3 Governinl! Law: Jurisdiction; Venue, (a) This Agreement and the legal
relations between the Parties shall be governed by and construed in accordance with the internal laws of the State of Texas, without regard to principles of conflcts of laws that would direct the application of the laws of another jurisdiction.
(b) Any and all disputes between the Parties relating to, arising out of, in
connection with, or attbutable to this Agreement shall be submitted to the Bankptcy Court for
resolution. Any decision of the Banptcy Court regarding this Agreement shall be conclusive
and wil be binding on the Parties and their respective successors and assigns, subject to rights of
rehearig, appeal or certioriari. Each of the Parties hereby irrevocably consents to the exclusive
jurisdiction and venue of that court (and of the appropriate appellate courts therefrom) in any
such suit, action or proceeding and irrevocably waives, to the fullest extent permitted 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 that court or that any such suit, action or proceeding brought in that court has been brought in an inconvenient forum. Process in any such suit, action or proceeding may be served on any part anywhere in the world, whether withi or without the jursdiction of that court. The
Parties hereby waive tral by jury in any action, proceeding or counterclaim brought by any Part
against another in any matter whatsoever arising 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 part of or affect the construction or interpretation of any provision of this Agreement.
Section 8.5 Waivers. Any failure by any Part to comply with any of its obligations, agreements or conditions herein contained may be waived by the Part to whom that compliance
is owed by an instrment signed by the Part 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 that waiver constitute a continuing waiver unless otherwise expressly provided.
Section 8.6 Assi2nment. PERL shall not assign or otherwise transfer all or any part
of this Agreement, nor shall PERL delegate any of its rights or duties hereunder, without the prior express written consent of Beta, and any transfer or delegation made without that consent
shall be void. Beta shall be permtted to transfer or assign all or any part of this Agreement without thc consent of any Person. Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and assigns.
Section 8.7 Entire A2reement. This Agreement and the Schedules attached hereto
and the Purchase Agreement constitute the entire agreement among the Parties pertaining to the
subject matter hereof, and supersede all prior agreements, understandings, negotiations and
discussions, whether oral or written, of the Parties pertaining to the subject matter hereof.
Section 8.8 Amendment. This Agreement may be amended or modified only by an
any Person, other than the Parties and, in the case of Article VII, the other Persons entitled to indemnfication under Aricle VII, to any claim, cause of action, remedy or right of any kind,
Agreement;
this Agreement;
and 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. Each Part has had the opportity to exercise business
discretion in relation to the negotiation of the details of the transaction contemplated hereby,
This Agreement is the result of arm's-length negotiations from equal bargaining positions. It is expressly agreed that this Agreement shall not be construed against any Part, and no consideration shall be given or presumption made, on the basis of who drafted this Agreement or any particular provision thereof.
Section 8.12 Limitation on Damaees. Notwithstanding anything to the contrary contained herein, no Part nor 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 Parties pursuant to the terms of this Agreement) and each Part, for itself and on behalf of its Affiiates, hereby expressly waives any right 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 Parties pursuant to the terms of
this Agreement).
Section 8.13 No Fiduciarv Duty. It is expressly understood and agreed that this
Agreement is a purely commercial transaction between the Parties and that nothing stated herein
shall operate to create any fiduciary duty that a Part shall owe to the other Part.
the Parties as of
the
Name:
Title:
PERL:
Name:
Title:
By:
Name:
Title:
Signaiure Page
SCHEDULE 1.1
to
The PERL Services to be provided pursuant to the Transition Services Agreement shall include, but not be limited to, the following:
1. Acting as Operator on behalf of Beta and serving as operator of the Beta Interests
authority that authorized PERL to serve as Operator prior to the Effective Date
2. Filing appropriate notices and forms with the appropriate regulatory authority
described in paragraph 1 above 3. Bookkeeping, accounting, financial reporting services, including the preparation of monthly and quarterly fmancial statements.
4. Joint interest biling and collection services.
9. Computer hardware and softare and support services, data processing and
storage, computer backup and maintenance services, help desk services, and
telecommunication services.
10. Oil and gas marketing services including the distribution (payment) of revenues
and royalties.
11. Engineering services. 12. Drillng and support services.
13. On-site field services, including without limitation foremen, pumpers and field
technicians.
14. Purchasing and logistics services.
15. Land and lease administration and general contract administration services.
16. Environmental, health and safety compliance resources and personnel, including,
but not limited to, conducting oil spil responses using PERL-owned equipment,
as needed.
17. Insurance support and insurance coverage under PERL's policies or policies
19. Management and administrative support services and personnel, offce supplies
and equipment, and offce space and records retention space in California, including utilties. 20. Human resources support services, payroll agent activities, and benefit plan administration support services, as needed.
21. Support required to obtain the consents required under the Purchase Agreement.