**Exhibit 10.3**

 

**TRANSITION SERVICES AGREEMENT**

 

THISTRANSITION SERVICES AGREEMENT, dated as of September 9, 2005, is between ForestOil Corporation, a New York corporation (“Forest”), and SML WellheadCorporation, a Delaware corporation and a wholly owned subsidiary of Forest (“Spinco”).

 

WHEREAS, Forest,Spinco, Mariner Energy, Inc., a Delaware corporation (the “Company”), andMEI Sub, Inc., a Delaware corporation and wholly owned subsidiary of theCompany (“Merger Sub”), have entered into an Agreement and Plan of Merger,dated as of September 9, 2005 (the “Merger Agreement”), pursuant to which,at the Effective Time (as such term and other capitalized terms not definedherein are defined in the Merger Agreement), Merger Sub will merge with andinto Spinco, with Spinco being the surviving corporation, and Spinco becoming awholly owned subsidiary of the Company (the “Merger”);

 

WHEREAS, thisAgreement and the other Transaction Agreements set forth certain transactionsthat are conditions to consummation of the Merger;

 

WHEREAS,Spinco and the Company have requested that Forest and one or more of Forest’sAffiliates continue to provide certain services to Spinco and Spinco’sAffiliates in order to assist it in the transition of the Spinco Business for aperiod described herein following the Effective Time, and Forest has agreed toprovide the services described in this Agreement according to its terms andconditions;

 

NOW,THEREFORE, in consideration of the representations, warranties, covenants andagreements set forth in this Agreement, and for other good and valuableconsideration, the receipt and sufficiency of which are hereby acknowledged,the parties, intending to be legally bound hereby, agree as follows:

 

***SECTION 1.  SERVICES PROVIDED BY FOREST TO SPINCO***

 

In order tocontinue the operation of the Spinco Business and to facilitate the orderly andeffective transition of the Spinco Business from Forest to Spinco, Forest andits Affiliates shall use commercially reasonable efforts to provide Spinco andits Affiliates with certain services (collectively, the “Services”) to theextent such Services may be requested by Spinco from time to time for the termof this Agreement.

 

The Servicesare set forth in Exhibit A, a copy of which is attached to and madea part of this Agreement.  The applicablerates, fees and charges associated with each Service are also set forth in Exhibit A.  The provision by Forest of services notspecifically detailed in Exhibit A shall be mutually agreed upon bythe parties.

 

***SECTION 2.  PERFORMANCE OF SERVICES***

 

2.1                                 ***Manner of Performance***.  Forest agrees that it shall use commerciallyreasonable efforts to cause its personnel who previously provided the servicesbeing requested herein to the Spinco Business prior to the Effective Time to performthe Services with the same degree of care, 

 

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skill,confidentiality and diligence with which such personnel perform similarservices for Forest and its Affiliates, but in no event less than inconformance with industry standards.  Forestshall insure that Forest’s personnel occupying positions related to the supportof the Spinco Business shall devote sufficient time and effort as reasonablyrequired to perform the Services.  If adispute arises over the nature or quality of the Services, the prior practiceof Forest with respect to the Services, as determined from the books andrecords of Forest relating to the Spinco Business, shall be conclusive as tothe nature and quality of the Services.

 

2.2                                 ***Provision of Information***.  Any data, information, equipment or generaldirections necessary for Forest or any of its Affiliates to perform theServices shall be submitted by Spinco or its Affiliates in a timely manner.

 

2.3                                 ***Termination of Any Service***.  The termination of any one or more of thespecific Services shall have no impact on Forest’s obligation to continue toprovide any other Services.

 

2.4                                 ***Laws and Regulations***.  Spinco represents and agrees that it and itsAffiliates will use the Services provided hereunder only in accordance with allapplicable federal, state and local laws and regulations, and in accordancewith the conditions, rules, regulations and specifications which may be setforth in any manuals, materials, documents or instructions provided to Spincoand the Company on or prior to the date of this Agreement.

 

2.5                                 ***Modification of Service Levels***.  Prior to the end of the first calendar monthfollowing the Effective Time and prior to the end of every other calendar monththereafter, the parties will review the Services provided to discuss whetherthe Services will remain at the same level or decrease during the nextimmediately succeeding month.  Spincowill notify Forest in writing of any Service reduction or termination ofServices pursuant to Section 8.

 

***SECTION 3.  CHARGES FOR SERVICES***

 

From and afterthe date of this Agreement and throughout the term of this Agreement, Spincoagrees to pay to Forest on a monthly basis the service fees set forth on Exhibit A.  The parties agree that the amounts to be paidfor Services rendered hereunder are intended to both reasonably cover Forest’sand its Affiliates’ costs in providing the Servicesand be competitive with the amount charged by third parties for similarservices.  Monthly charges for a monththat includes the Effective Time or the termination date for this Agreement orany individual Service shall be prorated, based on the number of days suchServices are provided in such partial month.

 

***SECTION 4.  PAYMENT OF CHARGES AND REIMBURSEMENTS***

 

On or beforethe 15th day of each month during the term of this Agreement, Forest shallsubmit to Spinco (or its designee) an invoice for the Services providedhereunder during the immediately preceding calendar month representing amountsdetermined in accordance with Section 3 above, if any.  Subject to Section 5.2, Spinco shallremit payment within fifteen days after its receipt of such invoice.  Unless otherwise agreed to in writing, Spincoshall remit all funds due under this Agreement to Forest (or its designee) bywire transfer in immediately available 

 

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funds based onthe instructions set forth in Exhibit B, a copy of which isattached to and made a part of this Agreement.

 

***SECTION 5.  RECORDS AND AUDITS***

 

5.1                                 ***Records Maintenance and Audits***.  All records and other information generated,gathered or maintained by Forest in connection with its provision of theServices pursuant to this Agreement shall be the proprietary material ofSpinco.  Forest shall provide Spinco theoriginals of such records and other information, and any copies kept by Forestwith Spinco’s consent shall remain subject to the Confidentiality Agreement,without regard to the termination or expiration date thereof.  Forest shall, for two years after thetermination of this Agreement, maintain records and other evidence sufficientto accurately and properly calculate the amounts due determined in accordancewith Section 3 hereof.  Spinco orits representatives shall have reasonable access, after requesting such accessin writing, during normal business hours to such records for the purpose ofauditing and verifying the accuracy of the invoices submitted regarding suchamounts due.  Any such audits performedby or on behalf of Spinco shall be at Spinco’s sole cost and expense.  Forest shall fully cooperate with theauditing party’s representatives to accomplish the audit.  Spinco shall have the right to audit Forest’sbooks for a period of two years after the month in which the Services wererendered.

 

5.2                                 ***Disputed Amounts***.  In the event of a good-faith dispute as tothe amount and/or propriety of any invoices or any portions thereof submittedpursuant to Sections 3 and 4, Spinco shall pay all charges on such invoice andshall promptly notify Forest in writing of such disputed amounts.  So long as the parties are attempting in goodfaith to resolve the dispute, neither party shall be entitled to terminate theServices related to, or that are the cause of, the disputed amounts.

 

5.3                                 ***Undisputed Amounts***.  Any statement or payment not disputed inwriting by Spinco within six months of the date of such statement shall beconsidered final and no longer subject to adjustment.

 

***SECTION 6.  CONFIDENTIALITY***

 

Each partyacknowledges that in connection with its performance under this Agreement, itmay gain access to confidential material and information that is of aproprietary, technical or business nature to the other party.  Therefore, each party agrees that the termsof the Confidentiality Agreement shall apply, without regard to the terminationor expiration date thereof, to all such confidential material and information.

 

Followingtermination of the Services hereunder, upon written request at any time byeither party, the parties shall account for and return to the other party ordestroy all papers, books, records and electronic records containing any suchconfidential, technical, business or proprietary information.

 

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***SECTION 7.  TERM OF AGREEMENT***

 

Unless soonerterminated pursuant to Section 8 hereof, this Agreement shall be for aterm commencing on the date on which the Effective Time occurs and ending onthe last day of the sixth calendar month following the month in which theEffective Time occurs.

 

***SECTION 8.  TERMINATION***

 

8.1                                 ***Termination of Agreement***.  At any time, Spinco may terminate thisAgreement for any reason whatsoever by giving Forest at least thirty days’prior written notice to that effect. Spinco shall pay Forest for all charges determined pursuant to Section 3and incurred up to the date of such termination.  Subject to Section 5, Forest may alsoterminate this Agreement if Spinco does not tender payment for the Serviceswithin fifteen days after Spinco is given written notice of a failure to pay.

 

8.2                                 ***Termination of Services***.  At any time or from time to time, Spinco mayterminate any one or more of the specific Services provided hereunder by givingForest at least thirty days’ prior written notice to that effect.  Either party may terminate any one or more ofthe specific Services if the providing of such Service would violate anyapplicable regulation, statute, ordinance or other law; *provided,however*, that Forest shall give Spinco at least thirty businessdays’ prior written notice when it intends to terminate any specific Servicesfor this reason.

 

***SECTION 9.  MISCELLANEOUS***

 

9.1                                 ***Force Majeure***.  Forest shall not have any obligation toperform any specific Service hereunder if its failure to do so is caused by orresults from any act of God, governmental action, natural disaster, strike,terrorism, war, insurrection or other cause or circumstances beyond itscontrol, which acts or occurrences make it impossible for Forest to carry outits obligations under this Agreement. During the term of the force majeure, Spinco shall not have anobligation to pay for the specific Service that Forest does not provide as aresult of the force majeure.

 

9.2                                 ***Limitation of Liability***.  EXCEPT FOR FAILURE TO COMPLY WITH THECONFIDENTIALITY PROVISIONS HEREIN AND FOR FRAUD, GROSS NEGLIGENCE, WILLFUL MISCONDUCTOR INTENTIONAL BREACH, NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANYINCIDENTAL, INDIRECT, SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL LOSSES ORDAMAGES OF ANY KIND OR NATURE WHATSOEVER, INCLUDING LOST PROFITS AND GOODWILL.  IN NO EVENT SHALL FOREST’S LIABILITYHEREUNDER EXCEED THE TOTAL AMOUNT OF CASH COMPENSATION THAT FOREST IS PAIDUNDER THIS AGREEMENT.

 

9.3                                 ***Indemnification***.  Each party shall release, defend (upon theother party’s request), protect, indemnify and save the other party, its employees,contractors, subcontractors (of any tier) and agents harmless from and againstall liability, claims, costs, expenses, demands, suits and causes of action ofevery kind and character arising in favor of or against the first party, itsemployees, contractors, subcontractors (of any tier) or agents, on account ofpersonal injuries to or death of any person, or damages to or the loss ordestruction of property, in anywise incident to or 

 

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in connectionwith or arising out of:  (a) thepresence of any of such party’s employees, contractors, subcontractors (of anytier) or agents on the other party’s premises or (b) the negligent act oromission of such party or its employees, contractors, subcontractors (of anytier) or agents.  The foregoing shall notbe interpreted to require either party to indemnify the other party against thegross negligence or willful misconduct of a party, its employees, contractorsor agents.

 

9.4                                 ***Independent Contractor***:  The parties hereto agree that the Servicesrendered by Forest or any of its Affiliates in the fulfillment of the terms andobligations of this Agreement shall be as an independent contractor and not asan employee, and with respect thereto, Forest, Forest’s Affiliates and theirrespective employees, contractors or agents are not entitled to the benefitsprovided by Spinco to its employees including, but not limited to, its groupinsurance and participation in any employee benefit and pension plansmaintained by Spinco or any of its Affiliates. Further, nothing stated in thisAgreement shall be construed to make Forest or any of its Affiliates an agent,partner or joint venturer of or with Spinco or any of its Affiliates.  No employee, contractor or agent of either Forestor any of its Affiliates shall represent himself to third persons to be otherthan an independent contractor of Spinco or any of its Affiliates, nor shall hepermit himself to offer or agree to incur or assume any obligations orcommitments in the name of Spinco or for Spinco without the prior consent andauthorization of Spinco.

 

9.5                                 ***Complete Agreement***.  This Agreement and the Exhibits hereto, theother Transaction Agreements and other documents referred to herein and thereinshall constitute the entire agreement between the parties hereto with respectto the subject matter hereof and shall supersede all previous negotiations,commitments and writings with respect to such subject matter.

 

9.6                                 ***Governing Law***.  This Agreement shall be governed by andconstrued in accordance with the laws of the State of Delaware, withoutreference to its conflicts of laws principles.

 

9.7                                 ***Notices***.  All notices and other communications requiredor permitted to be given hereunder shall be in writing and shall be deemed givenupon (a) a transmitter’s confirmation of a receipt of a facsimiletransmission (but only if followed by confirmed delivery of a standardovernight courier the following business day or if delivered by hand thefollowing business day), (b) confirmed delivery of a standard overnightcourier or when delivered by hand or (c) the expiration of fivebusiness days after the date mailed by certified or registered mail(return receipt requested), postage prepaid, to the parties at the followingaddresses (or at such other addresses for a party as shall be specified by likenotice):

 

If to Forestor any member of the Forest Group, to:

 

Forest Oil Corporation

1600 Broadway, Suite 2200

Denver, Colorado 80202Attention:  General CounselFacsimile:  (303) 812-1510

 

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with a copy(which shall not constitute effective notice) to:

 

Vinson & Elkins L.L.P.

666 Fifth Avenue, 26th FloorNew York, NY 10103-0040Attention:  Alan P. BadenFacsimile:  (917) 849-5337

 

If to Spincoor any member of the Spinco Group prior to the Distribution Date, to:

 

SML Wellhead Corporation

c/o Forest Oil Corporation

1600 Broadway, Suite 2200

Denver, Colorado 80202Attention:  General CounselFacsimile:  (303) 812-1510

 

If to Spincoor any member of the Spinco Group after the Distribution Date, to:

 

SML Wellhead Corporation

c/o Mariner Energy, Inc.

2101 CityWest Blvd.

Building 4, Suite 900

Houston, TX 77042Attention:  General CounselFacsimile:  (713) 954-5555

 

with a copy(which shall not constitute effective notice) to:

 

Baker Botts L.L.P.

910 Louisiana Street

Houston, Texas 77002Attn:  Kelly B. RoseFacsimile:  (713) 229-7996

 

or to such other addressas any party hereto may have furnished to the other parties by a notice inwriting in accordance with this Section.

 

9.8                                 ***Amendment and Modification***.  This Agreement may be amended, modified orsupplemented only by a written agreement signed by all of the parties hereto,with a Company Consent.

 

9.9                                 ***Successors and Assigns; No Third-Party Beneficiaries***.  This Agreement and all of the provisionshereof shall be binding upon and inure to the benefit of the parties hereto andtheir successors and permitted assigns, but neither this Agreement nor any ofthe rights, interests and obligations hereunder shall be assigned by any partyhereto without the prior written consent of the other party and CompanyConsent.  Except for the provisions of Section 9.3,which are also for the benefit of the indemnitees, this Agreement is solely forthe benefit of Forest, Spinco 

 

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and theCompany and their respective Subsidiaries, Affiliates, successors and assigns,and is not intended to confer upon any other Persons any rights or remedieshereunder.  For the avoidance of doubt,the parties agree that the Company shall be a third party beneficiary of thisAgreement.

 

9.10                           ***Counterparts***.  This Agreement may be executed incounterparts, each of which shall be deemed an original, but all of whichtogether shall constitute one and the same instrument.

 

9.11                           ***Interpretation***.  The Article and Section headingscontained in this Agreement are solely for the purpose of reference, are notpart of the agreement of the parties hereto and shall not in any way affect themeaning or interpretation of this Agreement.

 

9.12                           ***Severability***.  If any provision of this Agreement or theapplication thereof to any person or circumstance is determined by a court ofcompetent jurisdiction to be invalid, void or unenforceable, the remainingprovisions hereof, or the application of such provision to persons orcircumstances other than those as to which it has been held invalid orunenforceable, shall remain in full force and effect and shall in no way beaffected, impaired or invalidated thereby, so long as the economic or legalsubstance of the transactions contemplated hereby is not affected in any manneradverse to any party.

 

9.13                           ***References; Construction***.  References to any “Article,” “Exhibit,” “Schedule”or “Section,” without more, are to Articles, Exhibits, Schedules andSections to or of this Agreement. Unless otherwise expressly stated, clauses beginning with the term “including”or similar words set forth examples only and in no way limit the generality ofthe matters thus exemplified.

 

9.14                           ***Termination***.  Notwithstanding any provision hereof,following termination of the Merger Agreement, this Agreement may be terminatedat any time prior to the Distribution Date by and in the sole discretion of theBoard of Directors of Forest.  In theevent of such termination, no party hereto or to any other TransactionAgreement (other than the Merger Agreement) shall have any Liability to anyPerson by reason of this Agreement or any other Transaction Agreement (otherthan the Merger Agreement).

 

9.15                           ***Consent to Jurisdiction and Service of Process***.  Each of the parties to this Agreement herebyirrevocably and unconditionally (i) agrees to be subject to, and herebyconsent and submits to, the jurisdiction of the courts of the State of Delawareand of the federal courts sitting in the State of Delaware, (ii) to theextent such party is not otherwise subject to service of process in the Stateof Delaware, hereby appoints the Corporation Trust Company as such party’sagent in the State of Delaware for acceptance of legal process and (iii) agreesthat service made on any such agent set forth in (ii) above shall have thesame legal force and effect as if served upon such party personally within theState of Delaware.

 

9.16                           ***Waivers***.  Except as provided in this Agreement, noaction taken pursuant to this Agreement, including, without limitation, anyinvestigation by or on behalf of any party, shall be deemed to constitute awaiver by the party taking such action of compliance with any representations,warranties, covenants or agreements contained in this Agreement.  The waiver 

 

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by any partyhereto of a breach of any provision hereunder shall not operate or be construedas a waiver of any prior or subsequent breach of the same or any otherprovision hereunder.

 

9.17                           ***Specific Performance***.  The parties hereto agree that irreparabledamage would occur in the event any provision of this Agreement was notperformed in accordance with the terms hereof and that the parties shall be entitledto specific performance of the terms hereof, in addition to any other remedy atlaw or in equity.

 

9.18                           ***Waiver of Jury Trial***.  Each of the parties hereto irrevocably andunconditionally waives all right to trial by jury in any litigation, claim, action,suit, arbitration, inquiry, proceeding, investigation or counterclaim (whetherbased in contract, tort or otherwise) arising out of or relating to thisAgreement or the actions of the parties hereto in the negotiation,administration, performance and enforcement thereof.

 

*[Signature page follows]*

 

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The partieshereto have executed this Agreement on the date first above written, to beeffective as of the Effective Time.

 

 
|   | **FOREST OIL CORPORATION**   |
|--------|------------------------------|
|   |                         |
|   |                         |
|   |                         | By: |   |   |
|   |                         |
|   | ** **                   |
|   | **SML WELLHEAD CORPORATION** |
|   |                         |   |
|   |                         |   |
|   |                         | By: |   |   |

 

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**EXHIBIT A**

 

**SERVICESPROVIDED BY FOREST TO SPINCO**

**AND**

**APPLICABLERATES, FEES AND CHARGES**

 

Forest shall perform or assist Spinco in performing, under thedirection of Spinco or the Company, any services requested by Spinco related tothe transition of the Spinco Business from Forest and its Affiliates to Spinco,including but not limited to the following functions (the “Services”):

 

***Accounting***

 

•                  Forest agrees to provide thenecessary manpower, systems and other resources necessary to account for theSpinco assets in the same manner and with the same level of diligence as whenthe Spinco assets were owned by Forest.  Forestshall perform all accounting responsibilities necessary to provide monthlylease operating statements (LOS) by field (or lower classification down to thewell level if currently available) and summarized at the Spinco level both byaccounting date (Accounting Date LOS), activity date (Activity Date LOS).  Specifically, the accounting services to beprovided by Forest shall include, but not be limited to:

 

•                  General

 

•                  Assist in the transfer of allpertinent electronic or computer system files, master files and historicalrecords as well as related physical files and source documents from Forest tothe Company

 

•                  Provide accounting output informationand reports (Accounting Date LOS, Activity Date LOS and related reports) in atimely manner but no later than [the 25th day following the end of the calendarmonth]

 

•                  Revenue Accounting

 

•                  Calculation and recording of monthlyaccrued revenues to the well level and/or field level as appropriate

 

•                  Calculation and recording of monthlyaccrued severance/production taxes as appropriate

 

•                  Calculation and recording ofassociated state and federal royalty obligations and reconciliation of royaltypayable accounts

 

•                  Filing of all state and federalregulatory reports, including MMS 2014 reports, OGAR reports, etc.

 

•                  Recording of actual revenue receiptsfrom purchasers against accounts receivables and reconciliation of allreceivables accounts

 

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•                  Update gas imbalance and pay-outschedules every other month

 

•                  Maintenance of all revenue, royaltyand division of interest master files

 

•                  Property and Joint InterestAccounting

 

•                  Calculation and recording of monthlyaccrued net lease operating expenses, work over costs, and ad valorem taxes tothe appropriate account code and well level and/or field level as appropriate

 

•                  Calculation and recording of monthlyaccrued capital costs to the appropriate account code and well level and/orfield level as appropriate

 

•                  Preparation and transmission of jointinterest billings to partners on operated properties

 

•                  Recording of actual payments tovendors and partners against accounts payable and reconciliation of allpayables accounts

 

•                  Handle and reconcile cash calls,prepayments, JIB netting, AFE reporting and ancillaryaccounting tasks associated with the Spinco Assets

 

•                  Maintenance of all working interest masterfiles

 

•                  Marketing

 

•                  Prepare and invoice purchasers forsale of product

 

•                  Make gas nominations to purchasers

 

***Information Technology***

 

•                  Provide telecommunications and scadasupport to remote sites (e.g., platforms)

 

•                  Provide network / systemssupport to Metairie and Lafayette field offices

 

•                  Provide network / systemssupport to corporate personnel supporting Gulf operations (e.g., accounting,G&G, engineering, drilling, land, etc.)

 

•                  Provide electronic data files forGulf related data (e.g., production, A/P, A/R, suspense, DOI’s, G&G, etc.)

 

***Real Property***

 

•                  Maintenance and management of feeproperty/lease file system, and administration of leasepayment/expiration/renewal system

 

•                  Document recordation

 

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•                  MMS coordination, correspondence andreporting

 

•                  Preparation of division orders

 

•                  List of pending transactions (e.g.,Unocal)

 

***Legal***

 

•                  Investigation, negotiation,settlement, preparation of releases and drafts relating to operations, environmental,personal injury and other claims

 

•                  Coordination of property damage basedsmall claims actions resulting from operations

 

•                  Contract review and preparation

 

•                  Assistance with land, title andregulatory matters

 

***Operations/Reservoir Engineering***

 

•                  Assistance in transitioning drillingand workover operations and contracts

 

•                  Assistance with year end reserveevaluation for purposes of preparation of Ryder Scott reserve report

 

•                  Assistance in reconciliation ofreserves for quarterly and bank reports

 

•                  Assistance with reconciliation ofreserves

 

**The applicable rates, fees and charges to be paid to Forest shall be asfollows:**

 

Spinco shall pay Forest for services provided under this Agreementbased on the time-writing of the Forest employees who perform theservices.  Time-writing shall be doneaccording to the hourly rates stated below. In addition to the hourly charges, Spinco shall reimburse Forest for allout-of-pocket expenses (including without limitation reasonable travelexpenses) that Forest incurs in performing under this Agreement.

 

**Accounting:**

Clerk – Clerks and other administrative personnel will be billed at abase rate of $19.28/hour plus a burden of 46.8% or $28.30/hour.  

Accountant – Accountantswill be billed at a base rate of $29.24/hour plus a burden of 52.0% or$44.45/hour

Accounting Manager –Accounting managers will be billed at a base rate of $38.11/hour plus a burdenof 54.7% or $58.95/hour.

Control Management – Control management will be billed at a base rateof $55.53/hour plus a burden of 65% or $91.65/hour.

 

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**Marketing:**

Clerk – Clerks and other administrative personnel will be billed at abase rate of $24.33/hour plus a burden of 48.0% or $36.00/hour.

Marketing Representative– Marketing representatives will be billed at a base rate of $69.74/hour plus aburden of 64.4% or $114.70/hour.

 

**Information Technology:**

Support Specialist/Network Administrator – Support specialists andnetwork administrators will be billed at a base rate of $36.00/hour plus aburden of 50.3% or $54.10/hour. 

Programmer – Programmers will be billed at a base rate of $41.80/hourplus a burden of 50.8% or $63.05/hour. 

IT Manager – IT managers will be billed at a base rate of $58.08/hourplus a burden of 65.4% or $96.05/hour. 

Records Management – will be billed at a base rate of $24.08/hour plusa burden of 49.1% or $35.90/hour.  

 

**Real Property:**

Analyst – Analysts and administrative personnel will be billed at abase rate of $29.44/hour plus a burden of 49.1% or $43.90/hour.

Landman – Landmen will be billed at a base rate of $57.53/hour plus aburden of 70.0% or $97.80/hour. 

Land Manager – Land Managers will be billed at a base rate of$77.74/hour plus a burden of 70.0% or $132.15/hour. 

 

**Legal:**

Paralegal – Paralegals will be billed at a base rate of $29.85/hourplus a burden of 50.0% or $44.80/hour.  

Lawyer – Lawyers will be billed at a base rate of $83.04/hour plus aburden of 70.2% or $141.35/hour. 

 

**Operations/Reservoir Engineering:**

Clerk – Clerks and other administrative personnel will be billed at abase rate of $23.00/hour plus a burden of 46.9% or $33.78/hour. 

Engineering Technician – Engineering technicians will be billed at abase rate of $36.06/hour plus a burden of 49.5% or $53.90/hour. 

Engineer – Engineers will be billed at a base rate of $64.90/hour plusa burden of 64.6% or $106.80/hour. 

Engineering Manager – Engineering Managers will be billed at a baserate of $83.29/hour plus a burden of 71.3% or $142.65/hour.

 

**Executives:**  All Functional Areas:  Base of $115.00/hour plus burden of 82.6% or$210.00/hour.

 

In all instances, but subject to the availability of particularemployees and Forest’s need to conduct its own business in a prudent andcost-effective manner, Forest shall utilize among 

 

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personnel who are competent to perform the transition service inquestion those employees who bill at the lowest rate.

 

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**EXHIBIT B**

 

**PAYMENTINSTRUCTIONS**

 

Until further notice, the following are wire transfer/ACH paymentinstructions for payment to Forest (or its designee) owing under the terms ofthe Transition Services Agreement:

 

Bank Name: 

Bank ABA #:

Account Name: 

Account #:  

Reference:  

 

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