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EXHIBIT 10.77
ASSET SALES AGREEMENT
This
Asset Sales Agreement (the "Agreement"), dated the 14th day of
February, 2007, is by and between FOREST ALASKA OPERATING LLC, a
Delaware
limited liability company ("Seller") on the one hand, and PIONEER
NATURAL
RESOURCES ALASKA, INC., a Delaware corporation ("Buyer") on the
other hand.
In
consideration of the mutual promises herein stated and the benefits
to
be derived to each party under this Agreement and other good and
valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged,
Seller and Buyer hereby agree as follows:
1.
Sale and Purchase. Seller agrees to sell and convey to Buyer and
Buyer
agrees to purchase and receive, on and subject to the terms,
provisions and
conditions hereof, the Assets. Seller and Buyer each acknowledge
that the sale
of assets documented hereby is being made pursuant to the exercise
of Buyer of a
preferential right to purchase, which election was made in the
correspondence
attached hereto as Annex I.
2.
The Assets. For purposes of this Agreement, the Assets shall mean
those
certain rights and interests set forth in Exhibit "A", attached
hereto and made
a part hereof for all purposes, in and to:
(a)
the undivided interests in the leases, licenses, permits,
farmouts
and
other agreements and documents described in Exhibit "A", together
with
identical undivided interests in and to all of the property and
rights
incident thereto, including all rights in, to and under all
agreements
covering said leases and lands insofar as and to the extent that
they cover
and
relate to the lands described or referred to in Exhibit "A" and to
the
extent same are valid, subsisting and enforceable, with the
exception of
the
overriding royalty interest described on Exhibit "B", that shall
be
retained by Seller (the "ORRI");
(b) to the extent they cover and relate to the lands described
or
referred to on Exhibit "A", all personal property, fixtures and
improvements now located on, appurtenant to or used or obtained
in
connection with the interests described in Section 2(a) above, or
with the
production, treatment, sale or disposal of hydrocarbons produced
therefrom
or
attributable thereto; and
(c) to the extent they cover and relate to the lands described
or
referred to on Exhibit "A", all other rights or other interests if
any
owned by Seller and held or used in connection with the interests
described
in
Section 2(a) above.
3.
Consideration. The consideration for the Interests to be
transferred at
Closing shall be:
(a) the cash payment from Buyer to Seller at Closing in the amount
of
One
Million Five Hundred Thousand Dollars ($1,500,000.00)
("Purchase
Price"), which amount shall be adjusted as provided in Section 5
below; and
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(b) THIS SECTION INTENTIONALLY LEFT BLANK;
(c) the assumption by Buyer of the obligations, liabilities and
costs
with
respect to the Interests from and after the Effective Date, subject
to
the
further provisions hereof.
4.
Effective Date. The "Effective Date" of the sale shall be as of
7:00
a.m., January 1, 2007.
5.
Allocation of Liability and Adjustments to Consideration.
(a) The transactions contemplated hereby shall be effective as of
the
Effective Date, and the ownership of the Assets shall be
transferred from
Seller to Buyer as of such date.
(b) The Purchase Price to be paid by Buyer to Seller for the
Assets
shall be adjusted as follows:
(i) upward by an amount equal to all costs and expenses
incurred
and paid by Seller attributable to the ongoing operation,
development
and maintenance of the Assets (including without limitation
lease
operating expenses and workover and other capital costs that
are
charged pursuant to the applicable operating agreements governing
the
Assets) for the
period of time on and after the Effective Date to the
date of Closing, provided however, there shall be no adjustment
for
capital expenditures between the Effective Date and Closing
unless
Seller has notified Buyer of such expenditures; and,
(ii) downward by an amount equal to all proceeds and revenues
received by Seller that are attributable to the Assets for the
period
of time on and after the Effective Date to the date of Closing,
including proceeds or receipts from the sale of oil or gas
production,
disposition of equipment or other revenues attributable to the
Assets.
(c) An estimate of the adjusted cash payment (the "Preliminary
Sum")
shall be determined by
Seller at Closing and shall be the basis for the
payment to be made by Buyer to Seller at Closing as provided in
Section 6
below. Following Closing, Seller shall prepare a final
statement
("Settlement Statement") setting forth all final adjustments to the
cash
portion of the consideration, and Seller shall deliver such
statement, with
such
other information as may be necessary to substantiate the
Settlement
Statement, to Buyer within 90 days after Closing. If the
Settlement
Statement reflects that the final adjusted cash portion of the
consideration is more than the Preliminary Sum, Buyer shall pay to
Seller,
within 15 days after the receipt of the Settlement Statement,
the
difference between the final adjusted cash amount and the
Preliminary Sum;
and
if the final adjusted amount is less than the Preliminary Sum,
Seller
shall pay to Buyer, within 15 days after the delivery of the
final
Settlement Statement, an amount equal to such difference.
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(d) Subject to the terms hereof and except to the extent same
have
already been taken into account as an adjustment to the Purchase
Price, all
monies, proceeds, receipts, credits and income attributable to
the
ownership and operation of the Assets (a) for all periods of time
from and
subsequent to the Effective Date, shall be the sole property
and
entitlement of Buyer, and to the extent received by Seller, Seller
shall
within ten (10) business days after such receipt, fully disclose,
account
for
and transmit same to Buyer and (b) for all periods of time prior to
the
Effective Date, shall be the sole property and entitlement of
Seller and,
to
the extent received by Buyer, Buyer shall fully disclose, account
for
and
transmit same to Seller within ten (10) business days after
such
receipt. Subject to the terms hereof and except to the extent same
have
already been taken into account as an adjustment to the Purchase
Price, all
costs, expenses, disbursements, obligations and liabilities
attributable to
the
Assets (i) for periods of time prior to the Effective Date,
regardless
of
when due or payable, shall be the sole obligation of Seller and
Seller
shall promptly pay, or if paid by Buyer, promptly reimburse Buyer
for and
hold
Buyer harmless from and against same and (ii) for periods of time
from
and
subsequent to the Effective Date, regardless of when due or
payable,
shall be the sole obligation of Buyer and Buyer shall promptly pay,
or if
paid
by Seller, promptly reimburse Seller for and hold Seller harmless
from
and
against same.
6.
Closing or Termination.
(a) The closing of the transactions contemplated hereby (the
"Closing") shall occur at the office of Seller in Denver, Colorado
or such
other place as the parties shall mutually agree in writing on
February 16,
2007. At the Closing, the following shall occur:
(i) Buyer shall deliver to the Seller the Preliminary Sum.
(ii) Seller shall deliver an assignment of the Assets to Buyer
on
a form reasonably satisfactory to Seller and Buyer whereby
Seller
warrants the
title to the Assets covered by this Agreement by, through
and under it, but not otherwise, subject to the remaining
provisions
hereof.
(iii) Buyer and Seller shall execute an Overriding Royalty
Agreement defining the terms of the ORRI.
(iv) Buyer shall deliver to Seller evidence that all state and
local bonding requirements for the assumption of working interest
have
been satisfied.
7.
THIS SECTION INTENTIONALLY LEFT BLANK
8.
Title.
8.1
Review of Title Records. Seller has made and shall continue to
make
available to
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Buyer, during reasonable business hours, records in Seller's
possession
relating to the title to the Assets. Buyer shall be entitled to
review said
title records. Buyer shall have the right to reasonably request
copies of
any
and all such title records and upon such request, Seller shall
provide
the
requested copies to Buyer at Buyer's expense.
8.2
Alleged Title Defects. As soon as reasonably practicable (and on
an
ongoing basis), but in no event later than three (3) business days
prior to
Closing, Buyer shall notify Seller of any Assets which are subject
to
Alleged Title Defect(s). As used herein, Alleged Title Defect shall
mean a
deficiency in title with respect to an Interest such that Seller
owns less
than
the Net Revenue Interest shown on Exhibit A or such that Seller
owns
more
than the Working Interest shown on Exhibit A without a
corresponding
increase in the Net Revenue Interest. Buyer's notice asserting
Alleged
Title Defect(s) shall include a description and full explanation
(including
any
and all supporting documentation associated therewith) of each
Alleged
Title Defect being claimed and a value which Buyer in good faith
attributes
to
curing the same. Seller shall have the right to notify Buyer of
any
increases in Net Revenue Interest or decreases in Working Interest
in the
Assets and request a corresponding adjustment. Buyer and Seller
shall meet
from
time to time as necessary in an attempt to mutually agree on a
proposed resolution with respect to the Alleged Title Defect(s)
raised by
Buyer and increases in Net Revenue Interest or decreases in
Working
Interest raised by Seller. It is recognized that good faith
differences of
opinion may exist between Buyer and Seller in connection with the
Alleged
Title Defect(s) raised by
Buyer and adjustments to the Net Revenue
Interests or Working Interests raised by Seller, including
without
limitation, disputes as to: (a) whether or not the alleged
defect
constitutes an Alleged Title Defect within the meaning of this
Agreement,
(b)
whether or not the Alleged Title Defect raised by Buyer was
properly
and
timely asserted by Buyer pursuant to this Article, or (c) the
appropriate upward or downward adjustment, if any, on account of a
change
in
the Net Revenue Interest or Working Interest from those set forth
in
Exhibit "A". If any such differences of opinion are not resolved by
mutual
agreement of Buyer and Seller, either party shall have the
right,
exercisable prior to Closing, to submit all information relating to
the
Alleged Title Defect to a mutually agreeable attorney licensed in
the state
where the property at issue is located and who shall have at least
ten (10)
years oil and gas title experience for resolution of the difference
of
opinion. If such dispute is not resolved prior to Closing, Closing
shall
proceed on the basis of Seller's valuation, subject to an
obligation to
refund any amount, determined under the process outlined above, of
any
Title Defect that has been so determined.
8.3
Waiver. All title objections not raised within the time period
provided
in
Article 8.2 shall be waived by Buyer for all purposes.
9.
Indemnification. Buyer shall assume full responsibility for the
Assets
on and after the Effective Date and shall fully defend, compensate,
protect,
indemnify and hold Seller, its officers, directors, employees and
agents,
harmless from and against any and all losses, claims, demands,
damages, suits,
expenses, causes of action, and any sanctions of every kind and
character
(including reasonable attorneys' fees, court costs, and costs of
investigation)
which may
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be made or asserted by Buyer, Buyer's assigns, Buyer's employees,
agents,
contractors, and subcontractors and employees thereof, or by any
third parties
(including governmental agencies) on account of personal injury,
death or
property damage (including claims for taxes, pollution,
environmental damage,
and regulatory compliance, any fines or penalties assessed on
account of such
damage, and causes of action alleging statutory liability) caused
by, arising
out of, or in any way incidental to operations conducted on the
Assets on and
after the Effective Date or in any way connected with the
conditions of the
equipment or facilities located on the Assets (including
maintenance, repair and
abandonment operations), and whether or not such losses, claims,
demands, suits,
causes of action, damages and sanctions are occasioned by, are
incident to or
are the result of the negligence or fault in whole or in part of
Seller, its
agents, representatives or employees or any other person or entity,
or are
occasioned by, are incident to or emanate from the unseaworthiness
of vessels or
alleged defects in lease equipment, facilities or pipelines; except
however this
indemnity shall not apply to losses sustained or liabilities
arising out of
Seller's gross negligence or willful misconduct.
For
a period of six (6) months after the Effective Date, Seller shall
fully
defend, compensate, protect, indemnify and hold Buyer, its
officers, directors,
employees and agents, harmless from and against any and all losses,
claims,
demands, damages, suits, expenses, causes of action, and any
sanctions of every
kind and character (including reasonable attorneys' fees, court
costs, and costs
of investigation) which may be made or asserted by Seller, Seller's
assignors,
Seller's employees, agents, contractors, and subcontractors and
employees
thereof, or by any third parties (including governmental agencies)
on account of
personal injury, death or property damage (including claims for
taxes,
environmental damage, and regulatory compliance, any fines or
penalties assessed
on account of such damage or regulatory non-compliance, and causes
of action
alleging statutory liability) caused by, arising out of, or in any
way
incidental to operations conducted on the Assets before the
Effective Date, and
whether or not such losses, claims, demands, suits, causes of
action, damages
and sanctions are occasioned by, are incident to or are the result
of the
negligence or fault in whole or in part of Buyer, its agents,
representatives or
employees or any other person or entity; except however this
indemnity shall not
apply to losses s
