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EXHIBIT 10.50
INTERCOMPANY SERVICES AGREEMENT
This INTERCOMPANY OPERATING AGREEMENT ("Agreement") is entered into
as
of November 1, 2006, and is by and between FOREST OIL CORPROATION,
a New York
corporation ("Forest"), and FOREST ALASKA OPERATING LLC, a Delaware
limited
liability company (the "Company"). Forest and the Company are
sometimes
hereinafter referred to individually as "Party" or collectively as
"Parties".
WITNESSETH
WHEREAS, Forest holds one hundred percent (100%) of the interests
in
Forest Alaska Holding LLC ("Forest Holding") and Forest Holding
holds 100% of
the Membership Interest in the Company;
WHEREAS, Forest has transferred, assigned and conveyed to the
Company
certain producing oil and gas properties located in the State of
Alaska along
with certain assets used in the operation and conduct of such
properties and
related oil and gas exploration and production business activities
(the "Alaska
Operations"), including the oil and gas leases related to the
Alaska Operations
and other assets and certain liabilities related to the Alaska
Operations (the
"Properties");
WHEREAS, Forest currently serves as the operator of certain of
the
Properties and will continue as the operator of such Properties
until Forest and
the Company determine otherwise;
WHEREAS, the Company desires to obtain from Forest operational
and
administrative and staff support services necessary for the
continued conduct of
the Alaska Operations and to appoint Forest to serve as the
Company's agent to
perform certain functions necessary for the continued operation of
the
Properties; and
WHEREAS, Forest has the expertise and resources and is willing and
able
to provide services, personnel, and equipment to the Company and to
act as the
Company's agent;
NOW, THEREFORE, for and in consideration of the mutual promises
and agreements contained herein, and for other good and valuable
consideration,
the receipt and sufficiency of which are hereby acknowledged, the
parties agree
as follows:
ARTICLE I
SERVICES AND PERSONNEL
1.1 SERVICES. During the term of this Agreement, Forest agrees
to perform for the Company the services described in Section 1.2
and SCHEDULE A
attached hereto (collectively, the "Services") and to provide all
necessary
support personnel and operational equipment in the performance of
the Services
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in exchange for the fees described in Article II. Forest shall
perform the
Services in a good and workmanlike manner as would a prudent
service provider
under the same or similar circumstances.
1.2 OPERATOR SUPPORT SERVICES. From and after November 1,
2006, the Company hereby designates and appoints Forest as its
agent and grants
Forest all power and authority to perform management,
administrative and
technical support activities with respect to the operation of the
Properties.
Specifically, during the term of this Agreement, Forest shall have
the power and
authority to undertake the following activities in the name and on
behalf of the
Company:
(i) open, close and operate bank accounts in the name
of and for the benefit of the Company;
(ii) process, record and make payments to working
interest holders, overriding royalty interest owners, royalty
owners (including
but not limited to the State of Alaska and the Minerals Management
Service of
the U.S. Department of Interior), vendors, suppliers, and other
third parties,
including without limitation processing and making payments to
third parties in
connection with day-to-day operations and approved capital
expenditures;
(iii) invoice, collect and deposit in the Company's
bank accounts all amounts received from third parties; and
(iv) prepare and maintain accounting books and
records and other financial support information.
1.3 BANK ACCOUNTS; LIENS AND ENCUMBRANCES. Forest agrees that,
in the course of performing the Services, it shall establish,
maintain and
operate separate bank accounts in the name of the Company and
deposit in such
bank accounts all funds collected or received on behalf of the
Company and the
Properties. Forest shall keep all bank accounts opened or
maintained for and on
behalf of the Company free from all liens, security interests and
other
encumbrances, other than liens and security interests in favor of
creditors of
the Company.
1.4 CASH DISBURSEMENTS. As soon as reasonably practicable
after the end of each month during which Forest provides Services
under this
Agreement, Forest will prepare a summary showing amounts remitted
by Forest on
behalf of the Company in connection with the Alaska Operations and
Properties
("cash disbursements") during the preceding month. The Company
agrees to pay
Forest an amount representing the total cash disbursements within
30 days
following the receipt of the cash disbursements summary. If the
Parties mutually
agree, any remittance under this paragraph may be accomplished by
an accounting
entry to an intercompany
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account as provided in Section 2, which amount shall bear interest
at the rate
described in paragraph 2.3.
ARTICLE II
FEES FOR SERVICES AND PAYMENT
2.1 FEES. In consideration of the Services performed by Forest
pursuant to this Agreement and of Forest making itself available to
perform the
Services, the Company agrees to pay Forest the fees and amounts
described in
SCHEDULE B attached hereto (the "Fees").
2.2 MONTHLY INVOICES. Each month Forest agrees to prepare an
invoice for the Services provided during the preceding month, which
shall be
issued as soon as reasonably practicable after the end of the
month. Each
invoice shall be for an amount equal to the total Fees for all
Services
performed during the preceding month. Fees are intended to cover
the value of
the Services provided. All invoices shall be issued and payable in
U.S. dollars.
The intercompany billing may be reflected by an intercompany
accounting entry
with an offsetting entry to the "intercompany" accounts of Forest
and the
Company, so long as mutually agreed upon by the parties.
2.3 PAYMENT OF FEES: INTEREST. The Company agrees to pay all
invoices in U.S. dollars within 30 days following the receipt of
the monthly
invoice described in paragraph 2.2. Payment of the amounts detailed
in invoices
may be made in cash, by offset of intercompany accounts or any
combination
thereof. Offsets may be accomplished through electronic entries in
the Company's
and Forest's respective company ledgers. Unless otherwise stated,
payments or
credits to the intercompany account will be considered to be
applied against
outstanding amounts on a first-in, first-out (FIFO) order. Interest
shall accrue
at a rate of 12% per annum on the aggregate monthly average amount
of
indebtedness, as represented by the intercompany account.
ARTICLE III
TERM AND TERMINATION
3.1 TERM; TERMINATION. (a) This Agreement shall have a term of
twelve months, ending on August 31, 2007, and shall continue in
successive three
month terms until terminated in accordance with this Article III;
provided that
this Agreement shall automatically terminate without further
notice, on the date
a Disposition (as defined below) is completed. For purposes of this
Agreement, a
Disposition means the sale by Forest Holding of all ownership
interests in the
Company or the sale of all or substantially all assets of the
Company, or the
sale or other disposition by Forest of all ownership interests in
Forest Holding
or the sale of all or substantially all assets of Forest
Holding.
(b) On termination of this Agreement: (i) all intercompany
amounts payable, including any interest on such amounts, between
Forest and the
Company shall become immediately due and payable; (ii) Forest shall
ensure the
full and complete transfer of all accrued liabilities and accounts
payable that
may have been recorded on Forest's books on behalf of the Company
during the
term of this Agreement; and (iii) Forest shall immediately transfer
to the
Company all books and records related to activities undertaken on
the Company's
behalf during the term of this Agreement.
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(c) In the event of a termination of the Services as provided
under this Article In, the Company shall pay and remain obligated
for: (i) the
reasonable costs and expenses, directly related to this Agreement,
incurred or
to be incurred by Forest as a resu
