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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 3, 2000
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TIPPERARY CORPORATION
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(Exact name of registrant as specified in its charter)
TEXAS
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(State or other jurisdiction of incorporation)
1-7796 75-1236955
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(Commission File Number) (IRS Employer Identification No.)
633 Seventeenth Street, Suite 1500
Denver, Colorado 80202
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 293-9379
Not Applicable
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(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets.
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As recently announced, Tipperary Corporation ("Tipperary" or the "Company")
has received to date net proceeds of approximately $12 million from domestic
asset sales in connection with its plan to divest its U.S. conventional oil and
gas properties and redirect its focus toward increasing reserves and production
from coalbed methane properties. The properties sold comprise slightly more
than half of the Company's domestic proved reserve volumes as of its fiscal year
ended September 30, 1999.
The most recent and largest sale, of various interests in producing oil and
natural gas mineral leases in the Williston Basin of Montana and North Dakota
(the "Williston Basin Sale"), took place on May 3, 2000 to Nance Petroleum
Corporation. Effective April 1, 2000, Tipperary sold various properties at
auction (the "Auction Sales"), and received the cash proceeds at various dates
thereafter through May 5, 2000. In addition, other properties have been sold on
various dates during the first and second quarters of the current fiscal year,
but primarily during the first quarter (the "Other Sales"). The properties sold
in the Auction Sales and Other Sales consisted of various interests in producing
oil and natural gas mineral leaseholds and equipment located primarily in the
Rocky Mountains, Oklahoma and Texas.
The approximate net cash proceeds, after selling expenses, received from
the sales were as follows:
- Williston Basin Sale: $7,383,000
- Auction Sales: $3,832,000
- Other Sales: $ 792,000
All of the foregoing sales were arms-length with unaffiliated third parties
and involved either a negotiated bid or auction process. There were no material
relationships between any person purchasing any of the properties and the
Company or any of its affiliates, any director or officer of the Company, or any
associate of any such director or officer.
Item 7. Financial Statements and Exhibits.
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(a) Financial statements of businesses acquired.
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Not applicable.
(b) Pro forma financial information.
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Not applicable.
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(c) Exhibits
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The following exhibit is filed herewith:
10.72 Purchase and Sale Agreement dated April 10, 2000 between
Tipperary Oil & Gas Corporation as Seller and Nance
Petroleum Corporation as Buyer.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
Dated: May 18, 2000
TIPPERARY CORPORATION
By:/s/ David L. Bradshaw
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David L. Bradshaw, President
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PURCHASE AND SALE AGREEMENT
between
TIPPERARY OIL & GAS CORPORATION
As Seller
And
NANCE PETROLEUM CORPORATION
As Buyer
DATED
APRIL 10, 2000
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TABLE OF CONTENTS
1. Assets to be Sold and Purchased; Reservation of Surface Estate 1
2. Purchase Price; and Taxes 2
3. Warranties, Representations, and Covenants 3
4. Seller's Disclaimer of Warranties, Representations, and
Covenants 5
5. Certain Covenants of Seller Pending Closing 6
6. Due Diligence and Environmental Reviews 7
7. Certain Purchase Price Adjustments 12
8. Record Retention Following Closing 13
9. Conditions Precedent to the Obligations of Buyer 13
10. Conditions Precedent to the Obligations of Seller 14
11. Termination of Agreement 14
12. The Closing 15
13. Certain Adjustments 17
14. Environmental Indemnity and Hazardous Substances 18
15. Commissions 20
16. Casualty Loss 20
17. Notices 21
18. Survival of Provisions 21
19. Operations 21
20. Confidentiality Agreement 22
21. Further Assurances 22
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22. Governing Law, and Venue 22
23. Costs 22
24. Entire Agreement; Amendment; and Waiver 22
25. Section and Other Headings; and Construction 22
26. Severability 23
27. Attorney's Fee 23
28. Restrictions on Assignment 23
29. Time of the Essence 23
30. Parties in Interest; Successors and Assigns 23
31. No Publicity 23
32. No Recording 24
EXHIBIT A - Leases
EXHIBIT B - Wells and Allocated Value
EXHIBIT C - Quitclaim Assignment and Bill of Sale
EXHIBIT D - Preferential Rights
EXHIBIT D-1 - Officer's Certificate
EXHIBIT D-2 - Officer's Certificate
EXHIBIT E - Non-Foreign Affidavit
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PURCHASE AND SALE AGREEMENT
This Purchase and Sale Agreement ("Agreement") is entered into this 10th
day of April, 2000, by and between Tipperary Oil & Gas Corporation, a Texas
corporation ("Seller"), the address of which is 633 17th Street, Suite 1550,
Denver, Colorado 80202, and Nance Petroleum Corporation, a Montana corporation
("Buyer"), the address of which is 550 North 31st Street, Suite 500, Billings,
Montana 59101.
RECITALS:
A. Seller has certain oil and gas interests that it wants to sell to
Buyer in accordance with the terms of this Agreement.
B. Buyer wants to buy all of Seller's right, title, and interest in said
oil and gas interests in accordance with the terms of this Agreement.
NOW THEREFORE, for and in consideration of the terms of this Agreement, the
adequacy of which is hereby acknowledged, the parties agree as follows:
1. ASSETS TO BE SOLD AND PURCHASED; RESERVATION OF SURFACE ESTATE. (a)
Subject to and in accordance with the terms hereof, Seller agrees to sell,
assign, and convey to Buyer, and Buyer agrees to purchase from Seller, all of
Seller's right, title, and interest, if any, in and to the following real
property, fixtures, and personal property, but only insofar as they are
attributable to the real property described in Exhibit A hereto (the
"Property"):
(i) any and all oil, gas and other mineral interests, including
Seller's right, title, and interest, if any, in all: (A) oil and gas leases and
any other mineral leases, (B) royalties and overriding royalties, (C) production
payments, (D) net profits interests, (E) reversionary mineral interests, (F)
unitization, pooling, and communitization agreements, and (G) declarations and
orders (including all units formed under orders, rules, regulations, or other
official acts of any federal, state, or other authority having jurisdiction, and
voluntary unitization agreements, designations and declarations), subject to any
exceptions and reservations contained in Exhibit A;
(ii) all fixtures, equipment, and other personal property, to the
extent relating to the wells described in Exhibit B and their appurtenant
production, storage, treating, gathering, and transportation facilities,
situated on the Property; and
(iii) all contracts; lease files; abstracts and title opinions;
production records; well files; permits and licenses; accounting records (but
excluding all general financial accounting or tax accounting records that do not
pertain exclusively to the Property); electric logs and geological, geophysical,
engineering, and other technical data and records (subject to any contractual or
other restrictions relating to the transfer of such data and records); and other
files, documents and records that directly relate to the Property; provided
however, Seller may retain copies of any or all of the
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foregoing. If Seller retains any such copies, they shall be treated as
confidential and may be disclosed only under conditions analogous to the
exclusions from confidentiality set forth in the Confidentiality Agreement dated
January 20, 2000 between Seller and Buyer ("Confidentiality Agreement").
Seller's interests, if any, in the real property, fixtures, and personal
property described in subsections (i) and (ii) are sometimes collectively
referred to as "Oil and Gas Properties," or as an "Oil and Gas Property".
Seller's interests, if any, in the Oil and Gas Properties and in the personal
property described in subsection (iii) are sometimes collectively called the
"Assets."
(b) Notwithstanding anything herein to the contrary, Seller will reserve
unto itself all of its right, title, and interest in and to the surface estate
of the Property (to the extent of any surface estate interests not created by
lease, easement, or right-of-way), and all rights of any nature whatsoever
appurtenant or otherwise associated therewith, and such right, title, and
interest will not constitute any part of the Assets; provided however, Seller
will grant Buyer the right to use the surface of the Oil and Gas Properties for
purposes reasonably necessary or incidental to oil and gas operations on the Oil
and Gas Properties, but Buyer shall protect, defend, indemnify, and hold Seller
harmless from and against any and all Claims (hereinafter defined) or Damages
(hereinafter defined) resulting from such use.
(c) Except for: (i) easements and rights-of-way of record, (ii) other third
party rights (if any) that could not reasonably be expected to have a materially
adverse effect on the use of the Assets, and (iii) liens for taxes and
assessments due but not yet payable, Seller warrants title to the Assets against
anyone claiming any interest therein arising by, through, or under Seller, but
Seller makes no other warranty, representation, or covenant, express or implied,
statutory or otherwise, as to title to the Assets.
2. PURCHASE PRICE; AND TAXES. (a) The purchase price for the Assets
("Purchase Price") shall be Seven Million Eight Hundred Twenty-Five Thousand
Dollars ($7,825,000) as adjusted as provided herein. The Purchase Price shall
be paid at the Closing (hereinafter defined) as hereinafter provided. Said
$7,825,000, without regard to any adjustments, however, is sometimes referred to
herein as the "Base Purchase Price."
(b) Upon execution of this Agreement, Buyer shall pay to Seller Seven
Hundred Eighty-Two Thousand Five Hundred Dollars ($782,500) ("Deposit") by check
drawn on a national bank in immediately available funds. If for any reason said
check should be dishonored, then at Seller's option, and in addition to any
other rights it may have, it may terminate this Agreement. If Buyer and Seller
consummate the purchase and sale of the Assets, the Deposit shall be credited
against the Purchase Price. The Deposit shall be returned to Buyer:
(i) only if:(A) Seller refuses to consummate the purchase and sale of
the Assets and (B) such refusal would constitute a breach hereof, or
(ii) only under the circumstances, if any, expressly set forth herein.
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If Buyer fails to consummate the transactions contemplated by this Agreement, or
if the transactions contemplated by this Agreement otherwise fail to close on
the Closing Date, Seller shall retain the Deposit as liquidated damages. The
parties agree that damages in such an event are uncertain in amount and cannot
be determined with reasonable certainty in advance, that the amount of the
Deposit constitutes a fair and reasonable estimate of (and is not
disproportionate to) actual Damages such a breach would cause, and is not a
penalty or an inducement to perform.
(c) Buyer shall pay any and all sales, use, documentary, and transfer taxes
and fees imposed on this transaction, and shall pay all recording and filing
fees.
3. WARRANTIES, REPRESENTATIONS, AND COVENANTS. (a) Each party, as to
itself only, warrants, represents, and covenants to the other party that:
(i) It is a corporation duly organized, legally existing and in good
standing under the laws of the state of its incorporation, as first set out
above.
(ii) It is qualified to do business and is, or at Closing will be, in
good standing in each state in which the Oil and Gas Properties are located
where the laws of such state require a corporation owning the Oil and Gas
Properties located in such state to qualify to do business.
(iii) It has full power to enter into and perform its obligations
under this Agreement; the execution, delivery, and performance of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all requisite corporate action; and this Agreement has been duly
executed and delivered.
(iv) This Agreement, and the Assignment (hereinafter defined) to be
delivered at Closing, will, when executed, delivered, and accepted, constitute
its legal, valid and binding obligation, enforceable in accordance with its
terms, except as limited by bankruptcy or other laws applicable generally to
creditor's rights and as limited by general equitable principles.
(v)(A) There are no pending or threatened material suits, actions, or
other proceedings to which it is a party that affect: (I) the Assets (including,
as to Seller, any actions challenging or pertaining to its title to any Assets),
or (II) the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby, and (B) it shall promptly notify the other
party of any such material suits, actions, or other proceedings as to which
after the date hereof it receives a written threat of assertion.
(vi) It shall protect, defend, indemnify, and hold harmless the other
party and its affiliates, and their employees, agents, successors and assigns,
from and with respect to any and all rights, claims, demands, causes of action,
and legal, administrative, or arbitration proceedings, of any and every nature
(collectively, "Claims"), and injuries, deaths, damages, and obligations of any
and every nature resulting from or that gave rise to any Claim, including
liabilities, losses, costs, penalties, expenses, judgments, fines, settlements,
interest, reasonable attorney's fees, and other related expenses of any nature
(collectively, "Damages") resulting from a breach of its warranties,
representations, or covenants; provided however, that Damages shall not include
consequential, special, incidental, or punitive damages.
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(b) Seller warrants and represents to Buyer that:
(i) Other than:
(A) requirements (if any) that consents to assignment of Assets,
or waivers of preferential rights to purchase Oil and Gas Properties, be
obtained from third parties, or
(B) requirements to obtain consents or approvals from, or to
submit notices to or applications to, or actions that must be taken by,
governmental entities (in their capacity as lessors of oil and gas leases,
grantors of rights-of-way, or otherwise, whether similar to or different from
the foregoing) in connection with the sale or conveyance of oil and gas leases,
permits, or interests therein, or of rights or interests of the nature of any of
the Assets, if the same are customarily obtained contemporaneously with or
subsequent to such sale or conveyance, or
(C) neither its execution and delivery of this Agreement, nor its
consummation of the transactions contemplated hereby, nor its compliance with
the terms hereof, will violate or result in any default under its articles of
incorporation or by-laws, or under any agreement to which it is a party or by
which it is bound, or violate any Law (hereinafter defined) applicable to it or
to the Assets.
(ii) It has not received notice of any Claims (including Claims
regarding environmental matters) pending or threatened against it arising out of
its ownership of the Assets that is material as to any such Asset,
(iii) All wells on the property that were operated by Seller but that
were plugged and abandoned prior to the Effective Date were plugged and
abandoned in accordance with good industry practice and in compliance with all
Laws.
(iv) To the best of Seller's knowledge, and subject to the provisions
of this subsection (iv), the production and expense data, and any supplements
thereto, heretofore furnished or caused to be furnished by Seller to Buyer
(sometimes referred to herein as "P&E Information"), was substantially complete
and correct as of the date of such delivery; provided however, that the
foregoing applies only to matters of fact, and does not apply to any
information, data, printouts, extrapolations, projections, documentation, maps,
graphs, charts, or tables that reflect, depict, present, portray, or represent,
or which are based upon or derived from, in whole or in part, interpretation of
the P&E Information, including matters of geological, geophysical, engineering,
or scientific interpretation.
(v) To the best of Seller's knowledge: (A) it has all material
governmental licenses and permits, and has properly made all material filings
necessary to obtain the permits and licenses, to own and operate the Assets, (B)
such permits, licenses, and filings are in full force and effect, (C) no
material violations exist regarding any such permits, licenses or filings, and
(D) no proceeding to challenge, revoke, or limit any such permit, license, or
filing is pending or threatened.
(vi) To the best of Seller's knowledge: (A) it is not obligated by any
prepayment arrangement under any contract for the sale of hydrocarbons
(including take or pay obligations, hedging or forward sale or similar
agreements, or production payments or any other arrangements)
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to deliver hydrocarbons from the Assets at some future time without then or
thereafter receiving full payment therefor, (B) there are no production sales
agreements regarding the Assets currently in effect that require more than sixty
(60) days prior written notice to terminate, and (C) there are no calls on
production affecting the Assets.
(vii) To the best of Seller's knowledge, there are no surface use or
access agreements currently in force and effect that would materially interfere
with oil and gas operations on the Oil and Gas Properties.
(viii) To best of Seller's knowledge, no well listed on Exhibit B has
been represented by its operator, either in a pending authorization for
expenditures or other written proposal to other working interest owners in any
such well, as presently needing to be plugged and abandoned.
(c) Buyer warrants and represents to Seller that:
(i) It is a knowledgeable and experienced purchaser, owner and
operator of oil and gas properties, has the ability to evaluate oil and gas
properties, and, subject to its rights under Section 6, has been given the
opportunity to investigate and evaluate (and has investigated and evaluated) the
condition of the Assets to the extent it deems necessary or appropriate and is
acquiring the Assets based solely upon its own investigation and evaluation and
for its own account, and not with a view to or the intent to make a resale or
distribution within the meaning of the Securities Act of 1933 (and the rules and
regulations pertaining thereto) or a resale or distribution thereof in violation
of any other applicable securities laws.
(ii) With regard to those Assets that it seeks to operate, it is
qualified to operate such Assets under the applicable Laws of the jurisdiction
in which such Assets are located and under the Laws of all governing
authorities, or will become so qualified (and assumes the risk of becoming so
qualified) before operating such Assets.
(iii) Neither its execution and delivery of this Agreement, nor its
consummation of the transactions contemplated hereby, nor its compliance with
the terms hereof, will violate or result in any default under its articles of
incorporation or by-laws, or under any agreement to which it is a party or by
which it is bound, or violate any Law applicable to it or to the Assets.
4. SELLER'S DISCLAIMER OF WARRANTIES, REPRESENTATIONS, AND COVENANTS.
(a) WITH RESPECT TO THE ASSETS, THIS AGREEMENT, AND THE TRANSACTIONS
CONTEMPLATED HEREBY, SELLER'S WARRANTIES AND REPRESENTATIONS AS EXPRESSLY SET
OUT IN SECTIONS 1(c), 3, 5(a), and 5(c)(i) HEREOF AND IN THE ASSIGNMENT EXECUTED
PURSUANT HERETO ARE EXCLUSIVE AND IN LIEU OF ANY AND ALL OTHER WARRANTIES,
REPRESENTATIONS, AND COVENANTS, EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE, AND
SELLER DISCLAIMS ANY AND ALL OTHER WARRANTIES, REPRESENTATIONS, AND COVENANTS.
(b) CONSISTENT WITH AND NOT AS A LIMITATION ON SUBSECTION (a), THE ASSETS
SHALL BE PURCHASED, SOLD, AND CONVEYED "AS IS, WHERE IS",
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WITHOUT ANY WARRANTY, REPRESENTATION, OR COVENANT, EXPRESS OR IMPLIED, STATUTORY
OR OTHERWISE, RELATING TO:
(i) THE CONDITION, QUANTITY, QUALITY, FITNESS FOR A PARTICULAR PURPOSE
OR ANY PURPOSE, CONFORMITY TO THE MODELS OR SAMPLES OF MATERIALS, OR
MERCHANTABILITY OF ANY IMMOVABLE PROPERTY, MOVABLE PROPERTY, EQUIPMENT,
INVENTORY, MACHINERY, AND OTHER FIXTURES AND PERSONAL PROPERTY CONSTITUTING PART
OF THE ASSETS;
(ii) ANY IMPLIED OR EXPRESS WARRANTY OF FREEDOM FROM REDHIBITORY VICES
OR DEFECTS OR OTHER VICES OR DEFECTS, WHETHER KNOWN OR UNKNOWN;
(iii) ANY AND ALL IMPLIED WARRANTIES, REPRESENTATIONS, OR COVENANTS
EXISTING UNDER APPLICABLE LAW NOW OR HEREAFTER IN EFFECT; AND
(iv) EXCEPT AS PROVIDED OTHERWISE IN THE SUBSECTION (a), WITHOUT ANY
OTHER WARRANTY, REPRESENTATION, OR COVENANT, EXPRESS OR IMPLIED, STATUTORY OR
OTHERWISE.
(c) CONSISTENT WITH BUT NOT AS A LIMITATION ON SUBSECTIONS (a) AND (b),
SELLER IS SELLING AND BUYER IS BUYING THE ASSETS WITH ALL DEFECTS AND FAULTS
(LATENT OR APPARENT) AND IT ASSUMES THE RISK THAT ADVERSE PAST, PRESENT OR
FUTURE PHYSICAL CONDITIONS MAY NOT HAVE BEEN REVEALED BY ITS INVESTIGATIONS.
5. CERTAIN COVENANTS OF SELLER PENDING CLOSING. Between the date hereof
and the Closing Date:
(a) Seller will give Buyer, its attorneys and other representatives,
subject to the provisions of the Confidentiality Agreement and subject to any
restrictions on access to the Assets imposed by agreements by which Seller is
bound, access at all reasonable times to: (i) the Assets and (ii) Seller's
records and files relating to the Assets (which records and files include those
relating to title, division orders, wells, production, accounting, marketing,
equipment inventories, and production, severance and ad valorem taxes).
Notwithstanding the foregoing, Seller shall not be obligated to provide Buyer
with access to any files or records that Seller considers proprietary or
confidential to it or that it cannot legally provide to Buyer without, in
Seller's opinion, breaching or risking a breach of confidentiality agreements.
All such files and records are being made available to Buyer (whether pursuant
to this Section or otherwise) as an accommodation, and without warranty or
covenant, express or implied, statutory or otherwise, as to the accuracy and
completeness of such materials; provided however, that notwithstanding the
foregoing, Seller represents that to the best of its knowledge, all such files
and records are substantially complete.
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(b) To the extent Seller is the operator of any Oil and Gas Properties, it
will continue such operation in the ordinary course of its business; and where
it is not the operator of any Oil and Gas Properties, it will continue its
actions as a non-operator in the ordinary course of its business. Seller will
not sell or dispose of any portion of the Assets without Buyer's prior consent.
(c)(i) Seller represents that to the best of its knowledge, the only
preferential purchase rights that exist with respect to its interest in the
Assets are listed in Exhibit D. Seller will use reasonable efforts, consistent
with industry practices in transactions of this type, to identify all rights to
require that consents to assignment of any Assets be obtained, and the third
parties holding any of such rights. In attempting to identify the foregoing,
however, Seller shall not be obligated to review anything other than its own
records. Seller will request, from the third parties listed in Exhibit D and,
with respect to the aforementioned third parties so identified (and in
accordance with the documents creating such rights), waivers of the preferential
rights to purchase and requirements that consents to assignment be obtained
which were so identified. Seller shall have no obligation hereunder other than
to so attempt to identify such requirements for consents to assignment and to so
request waivers of such consents and of preferential purchase rights, but shall
have no obligation to obtain such waivers or consents.
(ii) If the holder of a preferential right to purchase an Asset fails
or refuses to give such waiver and instead exercises such right, Seller will
tender to such holder (at a price equal to the amount specified in Exhibit B
hereto for the wells located on such Asset and for the units in which such Asset
participates, reduced appropriately, as determined by Seller, if less than the
entire Asset should be tendered, unless it is determined that a greater or
lesser price is required) the interest in the Asset affected by such
preferential right. If such interest in such Asset is actually sold to such
holder, it will be excluded from the transaction contemplated hereby and the
Purchase Price will be reduced by the amount paid to Seller by the holder
exercising such right.
(d) Notwithstanding anything in this Section to the contrary: (i) Seller
may take any action prohibited by this Section if reasonably necessary under
emergency conditions, provided that Buyer is notified as soon as practicable
thereafter; (ii) except to the extent a "Defect" ( hereinafter defined) may
result therefrom, Seller shall have no liability to Buyer for any incorrect
payment of delay rentals, royalties, shut-in royalties or similar payments or
for any failure to make such payments; and (iii) Seller's failure to comply with
any of the requirements of this Section shall not be deemed a default by Seller
hereunder or entitle Buyer to not close the transactions contemplated hereby,
unless such failure has a materially adverse impact on the value of the Assets
taken as a whole.
6. DUE DILIGENCE AND ENVIRONMENTAL REVIEWS. (a)(i) To the extent deemed
appropriate by Buyer, it may conduct, at its sole cost and risk, such title
examinations and, subject to any restrictions to which Seller is bound, any
other reasonable examinations and investigations as it may choose with respect
to the Assets; provided however, environmental examinations and investigations
shall be governed by subsection (b). If as a result of such examinations and
investigations Buyer identifies any matters that constitute Defects, and if
there are any Defects that Buyer is unwilling to waive, Buyer must notify Seller
of such Defects ("Defect Notice") promptly following its discovery of such
Defects, but in no event later than April 24, 2000 ("Defect Date"). Buyer may
not give notice of any Defects after the Defect Date, and must accept all
Defects, if any, discovered after the Defect Date.
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(ii) To be effective, a Defect Notice must include: (A) a description
of the Property affected, (B) a description of the particular matter
constituting the alleged Defect, (C) such supporting documents reasonably
necessary for Seller to determine if a Defect actually exists, and (D) Buyer's
good faith estimate of the amount by which the alleged Defect reduces the value
attributed to the Property. Alleged Defects for which Buyer provides a valid
Defect Notice prior to the Defect Date are herein called "Asserted Defects."
(iii) Except for Asserted Defects, all matters that might otherwise
constitute a Defect are waived for all purposes hereof. With respect to any
Asserted Defect, Seller shall have the right but not the obligation to: (A)
attempt to cure it prior to Closing, (B) require that the Closing take place,
deposit in an escrow account the portion of the Purchase Price paid by Buyer and
attributable to the Asset having the Asserted Defect, and attempt to cure such
Asserted Defect within sixty (60) days after the Closing, and Seller's right
under this clause (B) may be exercised at any time before the Closing Date; or
(C) elect not to cure the Asserted Defect and adjust the Purchase Price as
provided Section 7.
(iv) With respect to any Oil and Gas Property, if a title opinion or
any other materials reviewed by Buyer indicates Seller has a Net Revenue
Interest (hereinafter defined) greater than that specified on Exhibit B without
a corresponding proportionate increase in the Operating Interest (hereinafter
defined), then Buyer shall promptly inform Seller of the same, but in any event
at least five (5) days prior to the Closing. If Seller or Buyer determine that
Seller is entitled to a Net Revenue Interest in any Asset in excess of that set
forth on Exhibit B ("NRI Increase"), notice shall promptly be given to the other
party, and the adjustments to be made under Section 7 shall include adjustments
which are the subject of such notice.
(b)(i)(A) To the extent, if any, that Seller has the right to grant Buyer
the right to do so, Buyer may, upon at least four (4) day's notice to Seller,
enter upon the Oil and Gas Properties to conduct an environmental assessment of
the Assets at Buyer's sole cost and risk. (B) Consistent with but not as a
limitation on the foregoing, Buyer shall protect, defend, indemnify, and hold
Seller and anyone else owning an interest in the Oil and Gas Properties harmless
from and against any Claims and Damages resulting from the presence or
activities of Buyer or its agents on the Oil and Gas Properties in the course of
conducting its assessment activities.
(ii) In conducting its assessment, and subject to subsection (i),
Buyer may enter upon the Oil and Gas Properties, without disrupting operations
thereon, and inspect the same, conduct soil and water tests and borings, and
generally conduct such tests, examinations, investigations, and studies as may
be necessary or appropriate for the preparation of appropriate engineering and
other reports in relation to the Oil and Gas Properties, their condition, and
the presence of Hazardous Substances (hereinafter defined). Any such assessment
shall be concluded no later than April 24, 2000 ("Environmental Assessment
Date"). If there are any Oil and Gas Properties as to which Seller does not
have the right to grant Buyer the right to conduct an assessment, then no later
than the Environmental Assessment Date, or if as a result of Buyer's
environmental assessment any particular Oil and Gas Property is determined to be
in violation of environmental Laws, then Buyer may notify Seller that Buyer
wants to exclude such Asset from this Agreement (and such notice, if and to the
extent regarding a violation of environmental Laws, shall provide in reasonable
detail the Law that was violated, the manner in which such Law was violated, and
sufficient information to
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substantiate the violation), in which event said Oil and Gas Property shall be
excluded and the Purchase Price shall be reduced, with such reduction in the
Purchase Price being determined in the same manner as reductions for Asserted
Defects under Section 7. After the Environmental Assessment Date: (A) Buyer may
not request that any Oil and Gas Property be excluded from this Agreement, and
(B) Buyer shall be deemed to have inspected the Oil and Gas Properties or waived
its right to inspect the Assets for all purposes and satisfied itself as to
their physical and environmental condition, both surface and subsurface,
including, but not limited to, conditions specifically related to the presence,
release, or disposal of Hazardous Substances.
(iii)(A) Buyer shall provide Seller with a copy of any environmental
assessment and other reports, and all supporting data and other documentation,
promptly upon completion of the assessment. Buyer shall keep any data or
information acquired by such examinations and the results of all analyses of
such data and information strictly confidential and shall not disclose them to
anyone without Seller's prior written approval, which need not be given of
Seller.
(B) The consent required by subsection (A) shall not apply to a
disclosure to a governmental agency that Buyer believes upon written advice of
counsel is required by Law; provided however, that in such event, Buyer shall
give notice to Seller (which notice shall describe in a reasonably detailed
manner the legal grounds on which such advice is based) at least ten (10) days
prior to making such disclosure, and shall take into account any comments Buyer
may receive from Seller. Seller shall have the right to contest the need to
disclose any such information, and Buyer shall protect, defend, indemnify, and
hold Seller harmless from any Claims or Damages resulting from any disclosure
that was not required by Law.
(c) As used herein, "Defect" means any matter, other than a "Permitted
Encumbrance" (hereinafter defined), which causes one or more of the following to
be a correct statement:
(i) Seller's ownership of an Asset is such that, with respect to a
well or unit listed on Exhibit B, such ownership: (A) is insufficient to entitle
it to receive a decimal share of the oil, gas and other hydrocarbons produced
from, or allocated to, such well or unit that is at least equal to the decimal
share set forth on Exhibit B in the column "Net Revenue Interest" or (B)
obligates it to bear a decimal share of the cost of operating such well or unit
("Operating Interest") greater than the decimal share set forth on Exhibit B in
the column "Operating Interest" without a proportionate increase in the
corresponding Net Revenue Interest set forth on such Exhibit;
(ii) Seller's ownership of an Oil and Gas Property is subject to an
outstanding and valid mortgage, deed of trust, other lien or encumbrance, or
other adverse claim or imperfection in title, which if asserted would cause
either subsection (i)(A) or (i)(B) to be a correct statement; or
(iii) Seller's represented amount of any gas imbalances is materially
inaccurate.
(d) As used herein, "Permitted Encumbrance" shall mean any and all of the
following:
(i) The conditions, restriction, exceptions, reservations, limitations
and all other terms contained in the agreements and instruments in the chain of
title that creates or reserves to Seller its
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interest in any Asset, provided that the same do not reduce Seller's Net Revenue
Interest in the affected Asset to less than that set forth on Exhibit B;
(ii) Royalties, overriding royalties (including those specifically
described on Exhibit A), division orders, reversionary interests, production
payments, net profits interests and similar burdens affecting any Oil and Gas
Property if the net cumulative effect of such burdens does not reduce Seller's
Net Revenue Interest in the affected Asset to less than that set forth on
Exhibit B;
(iii) Preferential rights to purchase, requirements that third party
consents be obtained for assignments, and agreements of a similar nature, with
respect to which waivers or consents shall have been obtained from the
appropriate parties, or the appropriate time period for asserting such rights
shall have expired without an exercise of such rights;
(iv) Liens for taxes and assessments which are not yet delinquent or
which are being contested by Seller in good faith and for which Seller retains
responsibility;
(v) Rights existing under applicable Laws (including statutory liens)
or operating agreements or similar contracts, pursuant to which liens may be
asserted against the Assets, but excluding liens and other rights that have
actually been asserted unless Seller disputes the validity of such liens or the
amount claimed to be owed in connection therewith and for which Seller retains
responsibility, or such lien or other right is not enforceable against the
interest of Seller;
(vi) Conventional rights of reassignment requiring ninety (90) days or
less notice to the holder of such rights;
(vii) Easements, rights-of-way, servitudes, permits, surface leases
and other rights in respect to surface operations, pipelines, logging, canals,
ditches, reservoirs or the like; conditions, covenants or other restrictions;
easements for streets, alleys, highways, pipelines, telephone lines, power
lines, railways and other easements or rights-of-way on, over or with respect of
any Asset which do not materially and adversely affect the Asset affected
thereby or its current use;
(viii) Any obligations or duties affecting an Asset to any
municipality or public authority with respect to any franchise, grant, license
or permit and all applicable Laws of any governmental authority;
(ix) All requirements to obtain consents or approvals from, or to
submit notices to or applications to, or actions that must be taken by,
governmental entities (in their capacity as lessors of oil and gas leases,
grantors of rights-of-way, or otherwise, whether similar to or different from
the foregoing) in connection with the sale or conveyance of oil and gas leases,
permits, or interests therein, or of rights or interests of the nature of any of
the Assets, if the same are customarily obtained contemporaneously with or
subsequent to such sale or conveyance;
(x) Existing operating agreements, unit agreements, gas purchase
contracts and any and all other agreements that are typical in the oil and gas
exploration, development, production or extraction business or in the business
of processing of gas and gas condensate or production for the
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extraction of proper products therefrom, to the extent that the same do not: (A)
reduce Seller's Net Revenue Interest in the affected Asset to less than that set
forth on Exhibit B, or (B) increase Seller's Operating Interest in the affected
Asset to greater than set forth on Exhibit B without a proportionate increase in
the corresponding Net Revenue Interest set forth on such Exhibit;
(xi) Any other defect or imperfection in title which would customarily
be waived by a reasonable person engaged in the business of owning and operating
oil and gas properties; and
(xii) Any other matter waived or deemed to be waived by Buyer pursuant
to the provisions of subsection (a).
(e) With respect to all Assets conveyed to Buyer hereunder:
(i) BUYER SHALL BE DEEMED TO HAVE: (A) INSPECTED, OR TO HAVE WAIVED
ITS RIGHT TO INSPECT, THE ASSETS FOR ALL PURPOSES, AND (B) SATISFIED ITSELF AS
TO THEIR PHYSICAL AND ENVIRONMENTAL CONDITION, BOTH SURFACE AND SUBSURFACE,
INCLUDING CONDITIONS SPECIFICALLY RELATED TO THE PRESENCE, RELEASE, OR DISPOSAL
OF SOLID WASTES, ASBESTOS, OTHER MANMADE FIBERS, NATURALLY OCCURRING RADIOACTIVE
MATERIALS, AND OTHER HAZARDOUS SUBSTANCES IN, ON, OR UNDER THE OIL AND GAS
PROPERTIES AS OF THE DEFECT DATE.
(ii) BUYER SHALL BE DEEMED TO HAVE RELIED SOLELY ON ITS OWN INSPECTION
OF THE ASSETS, AND AS PROVIDED IN SECTION 4, SELLER IS SELLING AND BUYER IS
BUYING ALL ASSETS "AS IS, WHERE IS." CONSISTENT WITH BUT NOT AS A LIMITATION ON
THE FOREGOING, EXCEPT AS MAY OTHERWISE BE EXPRESSLY PROVIDED HEREIN, SELLER
MAKES NO WARRANTY REPRESENTATION, OR COVENANT, EXPRESS OR IMPLIED, STATUTORY OR
OTHERWISE, AS TO THE ACCURACY OR COMPLETENESS OF ANY DATA, REPORTS, RECORDS,
PROJECTIONS, INFORMATION, OR OTHER MATERIALS NOW, HERETOFORE, OR HEREAFTER
FURNISHED OR MADE AVAILABLE TO BUYER IN CONNECTION WITH THIS AGREEMENT,
INCLUDING PRICING ASSUMPTIONS OR QUALITY OR QUANTITY OF HYDROCARBON RESERVES (IF
ANY) ATTRIBUTABLE TO THE ASSETS OR THE ABILITY OR POTENTIAL OF THE ASSETS TO
PRODUCE HYDROCARBONS OR THE ENVIRONMENTAL CONDITION OF THE ASSETS OR ANY OTHER
MATERIALS FURNISHED OR MADE AVAILABLE TO BUYER BY OR ON BEHALF OF SELLER. ANY
AND ALL SUCH DATA, REPORTS, RECORDS, PROJECTIONS, INFORMATION, AND OTHER
MATERIALS FURNISHED BY OR ON BEHALF OF SELLER TO BUYER ARE PROVIDED TO BUYER AS
A CONVENIENCE AND SHALL NOT CREATE OR GIVE RISE TO ANY LIABILITY OF OR AGAINST
SELLER; ANY CONCLUSIONS, IMPLICATIONS, OR INFERENCES DRAWN THEREFROM SHALL BE
THE RESULT OF BUYER'S OWN INDEPENDENT REVIEW; AND ANY RELIANCE ON OR USE OF THE
SAME SHALL BE AT BUYER'S SOLE RISK.
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7. CERTAIN PURCHASE PRICE ADJUSTMENTS. (a) If in connection with the due
diligence review under Section 6 either: Asserted Defects are presented to
Seller and Seller is unable or unwilling to cure such Asserted Defects prior to
the Closing, Buyer has elected to treat an Oil and Gas Property affected by a
casualty loss as if it was an Oil and Gas Property affected by an Asserted
Defect, or an NRI Increase occurs, then:
(i) Buyer and Seller shall, with respect to each Oil and Gas Property
affected by such matters, attempt to agree upon an appropriate adjustment to the
Purchase Price to account for such matters; and
(ii) With respect to each Oil and Gas Property as to which Buyer and
Seller are unable to agree upon appropriate adjustment with respect to all such
matters affecting such Oil and Gas Property:
(A) If the Asserted Defect is a mortgage, deed of trust, lien,
encumbrance or other charge which is undisputed and liquidated in amount, then
the adjustment shall be the amount necessary to be paid to remove the Asserted
Defect from the affected Asset;
(B) If there is: (I) an Asserted Defect or NRI Increase that
represents a discrepancy between the Net Revenue Interest that Seller is
entitled to receive from any Asset and the Net Revenue Interest stated on
Exhibit B, and (II) an Operating Interest change proportionate to the change in
the Net Revenue Interest resulting from the Asserted Defect or NRI Increase,
then the amount of the adjustment shall be the product of the value allocated to
such Asset as set forth on Exhibit B ("Allocated Value") multiplied by a
fraction, the numerator of which shall be the change in the Net Revenue Interest
and the denominator of which shall be the Net Revenue Interest set forth on
Exhibit B;
(C) If the Asserted Defect represents an obligation, encumbrance,
burden, discrepancy or charge upon or other defect in title to the affected
Asset of a type not described in subsections (A) or (B), the adjustment amount
shall be determined by taking into account the Allocated Value of the Asset so
affected, the portion of the Asset affected by the Asserted Defect, the legal
effect of the Asserted Defect, the potential economic effect of the Asserted
Defect over the life of the affected Asset and such other factors as are
necessary to make a proper evaluation of the value of the Asserted Defect;
(D) Notwithstanding any other provision contained herein: (I) the
aggregate reduction attributable to the effect of all Asserted Defects related
to a given Asset shall not exceed the Allocated Value of such Asset unless the
Asserted Defect is of the nature described in subsections (A) or (C), in which
event the reduction shall be of the nature described in subsections (A) or (C),
even if it exceeds the Allocated Value of such Asset; and (II) no reduction
shall be made with respect to an Asserted Defect if the diminution in the
Allocated Value regarding such Asset resulting therefrom regarding said asset
will not exceed One Thousand Dollars ($1,000.00); and
(E) If the parties cannot agree upon an appropriate adjustment in
light of the factors set forth above, then, subject to subsection (b)(ii),
Seller may elect to exclude such Oil and Gas Property from the transaction
contemplated hereby, and the Purchase Price will be reduced by
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the Allocated Value of the wells located on such Oil and Gas Property and the
units in which such Oil and Gas Property participates.
(b)(i) If the aggregate Purchase Price reduction which would result under
subsection (a) does not exceed One Hundred Thousand Dollars ($100,000), then the
Purchase Price shall not be adjusted, and none of the Oil and Gas Properties
which would be excluded by such procedure shall be excluded.
(ii) If the aggregate Purchase Price reduction exceeds $100,000, the
Purchase Price shall be adjusted by the total amount of such reduction. If the
Purchase Price increase which would result under subsection (a) exceeds
$100,000, the Purchase Price shall be adjusted by the total amount of such
increase.
(c) If the aggregate amount of all Purchase Price reductions under this
Agreement, regardless of the reason for such reductions, exceeds ten percent
(10%) of the Base Purchase Price, either party may terminate this Agreement by
giving notice to the other party within ten (10) days of the date it was
determined that the Purchase Price would exceed said 10%, in which event this
Agreement shall terminate and the Deposit shall be returned to Buyer. Upon such
termination, the parties shall have no further obligations to one another
hereunder (other than the indemnification obligations under Sections 3(a)(vi)
and 6(b), and the obligations under Sections 11(c), 15 and 20 - 27, which will
survive such termination).
8. RECORD RETENTION FOLLOWING CLOSING. If the purchase and sale of the
Assets is consummated, then for a period of seven (7) years from the closing,
Buyer shall save and retain, and give Seller access at all reasonable times upon
reasonable notice, to all files and records (including all computer records)
delivered by or on behalf of Seller in connection with the transaction
contemplated hereby, and shall permit Seller to make copies of any such files
and records. Consistent with but not as a limitation on Section 30, if the
Assets are subsequently transferred by Buyer, Buyer shall take all action in its
contractual arrangements relating to such transfer necessary to allow Seller to
have continued access to all such files and records.
9. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER. Buyer's obligation
to purchase the Assets is subject to each of the following conditions being met:
(a) Each and every warranty and representation of Seller under this
Agreement shall be true and accurate in all material respects as of Closing, the
same as if made at Closing, except as to changes specifically contemplated by
this Agreement or waived by Buyer.
(b) Seller shall have complied in all material respects (or compliance
shall have been waived by Buyer) with each and every covenant required by this
Agreement to be performed by Seller prior to or at the Closing.
(c) No suit, action or other proceedings shall, on the date of Closing, be
pending, or threatened in writing, before any court or governmental agency
seeking to restrain, prohibit, or obtain damages or other relief in connection
with the consummation of the transactions contemplated by this Agreement.
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(d) Any and all other conditions precedent in Buyer's favor have been
satisfied or waived.
10. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER. Seller's
obligation to sell the Assets is subject to each of the following conditions
being met:
(a) Each and every warranty and representation of Buyer under this
Agreement shall be true and accurate in all material respects as of Closing, the
same as if made at Closing, except as to changes specifically contemplated by
this Agreement or waived by Seller.
(b) Buyer shall have complied in all material respects (or compliance shall
have been waived by Seller) with each and every covenant required by this
Agreement to be performed by Buyer prior to or at the Closing.
(c) No suit, action or other proceedings shall, on the date of Closing, be
pending, or threatened in writing, before any court or governmental agency
seeking to restrain, prohibit, or obtain damages or other relief in connection
with the consummation of the transactions contemplated by this Agreement.
(d) Any and all other conditions precedent in Seller's favor have been
satisfied or waived.
11. TERMINATION OF AGREEMENT. (a) If: (i) any condition precedent set
forth in Section 9 to Buyer's obligation to purchase the Assets is not satisfied
or waived as of the Closing Date, or if the Closing does not occur on or before
May 9, 2000 ("Termination Date"), and (ii) Buyer is not in breach of its
obligations hereunder, then Buyer may terminate this Agreement upon seven (7)
days notice to Seller, and Seller shall promptly return the Deposit to Buyer.
Upon such termination, the parties shall have no further obligations to one
another hereunder (other than the indemnification obligations under Sections
3(a)(vi) and 6(b), and the obligations under subsection (c) and Sections 15 and
20 - 27, which will survive such termination).
(b) If: (i) any condition precedent set forth in Section 10 to Seller's
obligation to sell the Assets is not satisfied or waived as of the Closing Date,
or if the Closing does not occur on or before the Termination Date, and (ii)
Seller is not in breach of its obligations hereunder (unless Buyer shall also be
in breach of its Obligations hereunder), then Seller may terminate this
Agreement upon seven (7) days notice to Buyer, and Seller shall return the
Deposit to Buyer only if the termination was based solely on Section 10(c). Upon
such termination, the parties shall have no further obligations to one another
hereunder (other than the indemnification obligations under Sections 3(a)(vi)
and 6(b), and the obligations under subsection (c) and Sections 15 and 20 - 27,
which will survive such termination).
(c) Upon termination of this Agreement under subsection (a) or (b), or
under Section 7(c), Seller may sell the Assets (or any portion thereof) to any
other party without any limitation under or by reason of this Agreement, and
Buyer may not seek to enjoin any such sale. Promptly following Seller's
request, Buyer shall: (i) execute any instrument requested by Seller to evidence
the termination of Buyer's right to acquire the Assets, and (ii) return to
Seller all data and other information (and all copies thereof) furnished to
Buyer by or on behalf of Seller in connection with this transaction.
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12. CLOSING; AND POST-CLOSING MATTERS. (a)(i) The closing ("Closing") of
the transaction contemplated hereby shall take place in the offices of Seller,
in Denver, Colorado, on May 3, 2000, at 10:00 a.m. Mountain Time, or at such
other date and time as Buyer and Seller may agree ("Closing Date").
(ii) At least five (5) business days before the Closing Date, Seller
shall submit to Buyer a proposed statement ("Closing Statement") setting forth
the proposed Purchase Price, based on the adjustments for which this Agreement
provides. At least two (2) business days before the Closing Date, Buyer shall
deliver to Seller a written report proposing and explaining any changes to the
Closing Statement; provided however, if Buyer fails to timely deliver such
report, Seller's Closing Statement shall be the basis for the Purchase Price.
If Buyer timely delivers such report, Seller and Buyer shall make every
reasonable effort to agree upon an acceptable Purchase Price prior to Closing,
but if the parties fail to reach such Agreement, then at Seller's election:
Seller's estimation of the adjustments shall be employed for the purpose of
Closing, the Closing shall occur, and differences shall be resolved after the
Closing.
(b) At the Closing, Seller shall:
(i) execute, acknowledge and deliver to Buyer an Assignment and Bill
of Sale ("Assignment") of the Assets, in the form attached hereto as Exhibit C
(with Exhibits A and B hereto being attached thereto), effective as to runs of
oil and deliveries of gas as of 7:00 a.m., Mountain Standard Time on March 1,
2000 ("Effective Date");
(ii) execute and deliver to Buyer letters in lieu of transfer orders
(or similar documents), in form acceptable to both parties;
(iii) execute and deliver to Buyer an affidavit or other certification
(as permitted by the Internal Revenue Code of 1986) having the form and language
as Exhibit E attached hereto, to the effect that Seller is not a "foreign
person" within the meaning of Section 1445 (or similar provisions) of the
Internal Revenue Code of 1986; and
(iv) provide Buyer with Seller's Officer Certificate having the form
and language of Exhibit D-1 attached hereto.
(c) At the Closing, Buyer shall:
(i) deliver to the Seller by wire transfer in immediately available
funds, to an account designated by Seller in a bank located in the United
States, an amount equal to the Purchase Price minus the Deposit, as such amount
may be adjusted in accordance with the terms hereof;
(ii) with respect to Assets operated by Seller, execute and deliver to
Seller appropriate evidence reflecting change of operator as required by
applicable authorities and such evidence as Seller may require that Buyer is
qualified with such authorities to succeed Seller as operator; and
(iii) provide Seller with Buyer's Officer Certificate having the form
and language of Exhibit D-2 attached hereto.
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(d) Within five (5) days after Closing, Seller will deliver to Buyer the
records and other materials described in Section 1(a).
(e) Following the Closing, with respect to each Oil and Gas Property as to
which Seller is disbursing proceeds of production attributable to other parties
entitled thereto, Seller shall:
(i) continue to collect proceeds of production during the month in
which Closing occurs and be responsible for making disbursements, in accordance
with its normal procedures (and at normal times), of such proceeds from
production so collected to the parties entitled to same, with any proceeds from
production thereafter collected by Seller to be promptly forwarded to Buyer (who
shall thereafter account for same to the parties entitled thereto), and
(ii) deliver to Buyer: (A) a copy of its proceeds distribution list
(but Seller makes no warranties or representations, express or implied, as to
the accuracy of such list) for each such Asset (which list shall include the
name, address, social security or tax number, and applicable share of proceeds
from production for each party to whom Seller is disbursing such proceeds with
respect to such Asset), (B) a list of all parties for whom it is holding in
suspense proceeds from production, (C) a list of all parties for whom it is
holding in any advance payments made by other working interest owners for
operations to be conducted on the Assets, and (D) a check (which shall be
delivered within 30 days after the end of the month in which Closing occurs) in
an amount equal to all suspended funds and advance payments. Following delivery
of the materials referred to in this subsection, Buyer shall be responsible for
all disbursements of proceeds from production (including suspense and other
disbursements attributable to periods prior to the Effective Date) and such
disbursement activities shall be included in the matters which Buyer assumes,
and indemnifies Seller with respect to, hereunder, except that Buyer shall
neither assume responsibility, nor indemnify Seller, for any penalties,
interest, or attorney's fees attributable to such suspense funds insofar as such
relate to periods prior to the Effective Date.
(f) All production attributable to Seller's interest in the Oil and Gas
Properties, and all proceeds from the sale thereof, including proceeds from the
sale of any oil in storage above the pipeline connection, and any accounts
receivable balances and any related Claims and Damages, any of which are
attributable to production prior to the Effective Date, shall be and remain
Seller's property. All such production therefrom, and all proceeds from the sale
thereof, attributable to production after the Effective Date shall be Buyer's
property.
(g) Buyer shall execute, acknowledge and file the Assignment for record
immediately upon receipt thereof and will furnish to Seller a copy of the
recorded document promptly after Buyer's receipt of such recorded instrument
from the clerk in each county or parish in which the Assignment is recorded. In
addition, where applicable, Buyer and Seller shall execute any forms required to
effect a change of operator for all wells conveyed herein.
(h)(i) Following the Closing, Buyer shall:
(A) Promptly take all actions necessary to succeed Seller as the
party to any leases, rights-of-way, contracts, bonds, permits, licenses, and any
other instrument, and to all duties,
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obligations, and liabilities to individuals, private entities, or governmental
authorities, with respect to the Assets to which Seller was a party or by which
it was bound,
(B) Assume and fully perform all of Seller's duties, obligations,
and liabilities to individuals, private entities, or governmental authorities,
with respect to the Assets to which Seller was a party or by which it was bound
on and after the Effective Date, including duties, liabilities, and other
obligations imposed by any leases, rights-of-way, contracts, bonds, permits,
licenses, and any other instrument to which Seller was a party or by which it
was bound to the extent such accrued on or after the effective date, and
(C) Protect, defend, indemnify, and hold Seller harmless from any
and all Claims and Damages with respect to the foregoing provisions of this
subsection (i) except to the extent such Claims or Damages arise from: (I)
actions taken by Seller prior to the Effective Date, or (II) a failure of Seller
to take actions required by Law or contract prior to the Effective Date;
provided further, that consistent with but not as a limitation on the foregoing,
any and all obligations regarding the plugging and abandonment of any wells on
the Oil and Gas Properties shall be Buyer's rather than Seller's obligation.
(ii) At Seller's request, which may be made subsequent to the Closing,
Buyer shall promptly execute a document confirming Buyer's assumption of such
duties, liabilities, and other obligations under subsection (i), but Seller's
failure to request such a document shall not affect Buyer's assumption of such
duties, liabilities, and obligations.
(iii) Notwithstanding subsections (i) or any other provision hereof to
the contrary, responsibility for all Claims and Damages regarding environmental
matters shall be governed by Sections 6 and 14.
13. CERTAIN ADJUSTMENTS. (a) Appropriate adjustments shall be made
between Buyer and Seller so that:
(i) all expenses (including royalty, overriding royalty, and other
payments based on production) attributable to Seller's interest in the Assets
that are incurred in the ownership and operation of the Assets before the
Effective Date will be borne by Seller and all proceeds payable to Seller for
its interest in the Assets (net of applicable production, severance, and similar
taxes) from the sale of oil, gas and other minerals produced therefrom before
the Effective Date will be received by Seller, and
(ii) all expenses attributable to Seller's interest in the Assets
which are incurred in the ownership and operation of the Assets on and after the
Effective Date will be borne by Buyer and all proceeds payable to Seller for its
interest in the Assets (net of applicable production, severance, and similar
taxes) from the sale of oil, gas and other minerals produced therefrom on and
after the Effective Date will be received by Buyer.
(b) In making the adjustments under subsection (a): (i) oil which was
produced from the Oil and Gas Properties and which was, on the Effective Date,
stored in tanks located on the Oil and Gas Properties (or located elsewhere but
used by Seller to store oil produced from the Oil and Gas Properties prior to
delivery to oil purchasers) and above pipeline connections shall be deemed to
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have been produced before the Effective Date, and (ii) ad valorem taxes assessed
with respect to the taxing period in which the Effective Date falls, regardless
of the basis on which such taxes are computed, shall be prorated based on the
number of days in such period which fall on each side of the Effective Date
(with the day on which the Effective Date falls being counted in the period
after the Effective Date), and shall, where the current year's taxes are not yet
known, be based on the previous year's taxes. Each party shall bear its own
local, state or federal income tax liabilities.
(c) As soon as practicable after Closing, but in any event within ninety
(90) days thereafter, Seller shall prepare and submit to Buyer a proposed
statement ("Final Statement"), which shall show the final calculation of the
Purchase Price ("Final Settlement Price"), based on the adjustments for which
this Agreement provides. As soon as possible after receipt of the Final
Statement, but in any event within thirty (30) days after receipt thereof, Buyer
shall deliver to Seller a written report containing the changes, if any, which
Buyer proposes being made to the Final Statement; provided however, if Buyer
fails to timely deliver such report, Seller's Final Statement and Final
Settlement Price shall conclusively be deemed accurate, and such Final Statement
shall be the basis for the Final Settlement Price. In the event that Buyer
submits a response, the parties shall exercise all reasonable efforts to agree
with respect to the amounts due not later than ninety (90) days after the
Closing, but in any event prior to September 1, 2000. After agreement upon a
Final Settlement Price setting forth the amount by which the Purchase Price
shall be adjusted (either upward or downward), the amount due shall be paid
within five (5) business days thereafter by the party owing the same in
immediately available funds. Amounts due and payable hereunder, but which are
not paid when due, shall bear interest at the rate of one and one-half percent
per month, compounded monthly, or the maximum amount permitted by law, whichever
is less.
14. ENVIRONMENTAL INDEMNITY AND HAZARDOUS SUBSTANCES. (a) Notwithstanding
anything herein to the contrary except subsection (c), with respect to the Oil
and Gas Properties, upon Closing, Buyer: (i) waives, releases, remises, acquits
and forever discharges, (ii) releases and relinquishes any right of
contribution, reimbursement, indemnification, or other rights of a similar
nature, (iii) assumes all liability for, and (iv) shall protect, defend,
indemnify, and hold harmless, Seller and its affiliates, and their employees,
agents, successors and assigns, from and with respect to any and all Claims and
Damages (including Corrective Action Costs (hereinafter defined), monitoring
costs (including reasonable capital and operating costs), remediation studies,
and natural resource damages) that may at any time arise on account of, or in
any way arising out of, or in connection with: (I) the known or unknown
environmental condition of the Oil and Gas Properties, including any Releases
(hereinafter defined), and (II) any violation of any federal, state, or local
law (including statutory and case law), rule, regulation, ordinance, permit,
license, order, judgment, injunction, writ, or decree of any nature
(collectively "Law") relating to the protection of health or the environment,
whether or not attributable to Seller's activities or the activities of third
parties, regardless of whether or not Seller was or is aware of such activities,
and regardless of whether or not the condition (including any Release) or
violation occurred before or after the Effective Date.
(b) As used in this Agreement, the following definitions shall apply:
(i) "Hazardous Substances" means any substance or material defined or
designated as hazardous or toxic waste, hazardous or toxic material, hazardous
or toxic substance, or other similar term, by any Law relating to the
environment (which Laws include the Federal Resource
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Conservation and Recovery Act of 1976; Federal Comprehensive Environmental
Response, Compensation, and Liability Act of 1980; Federal Clean Air Act;
Federal Clean Water Act; Federal Water Pollution Control Act; Federal
Insecticide, Fungicide, and Rodenticide Act; and similar state Laws in effect as
of the relevant dates, as such Laws were or are amended from time to time).
(ii) "Releases" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, depositing, releasing, escaping,
leaching, dumping or disposing of Hazardous Substances or non-hazardous
substances (to the extent the Law requires the removal of the same) into the
atmosphere, soil, surface water, subsurface strata, groundwater, or otherwise
into the environment, including the abandonment or discarding of barrels,
containers, tanks, or other receptacles containing or previously containing
Hazardous Substances.
(iii) "Corrective Action" means, to the extent required by Law, any
expenditures or activities taken to monitor and, if required, abate, clean up,
remove, treat, cover or in any other way remediate a Release at, from, or
emanating to the Oil and Gas Properties.
(iv) "Corrective Action Costs" includes any and all: (A) costs or
expenses that arise directly from or in connection with the performance of
Corrective Action, including removal, remediation or cleanup costs, site
investigation and assessment costs, consultants costs, attorneys fees and expert
fees, government oversight and response costs, penalties, liens, interests,
fines, assessments, and charges, and (B) any payment of any third party Claims
or Damages (including any federal, state or local government agency) arising out
of or relating to a Release at or from the Oil and Gas Properties.
(c)(i) If Buyer within one (1) year after the Closing: (A) discovers a
violation of an environmental Law that occurred prior to the Effective Date with
respect to any Oil and Gas Property and such violation was not disclosed by
Seller to Buyer prior to the Closing, (B) notifies Seller (such that notice is
actually received by Seller within said one (1) year period) in reasonable
detail of the Law that was violated and the manner in which such Law was
violated, (C) includes with such notice sufficient information to substantiate
the violation of such Law, and (D) includes in such notice a reasonable range of
alternative dates and times for scheduling a meeting in Denver, Colorado, to
take place within two weeks after the notice was given, to discuss how to
address the violation, then the provisions of subsections (ii) and (iii) shall
apply. No notice shall be effective unless it complies with clauses (A) - (D) of
this subsection. Buyer shall have the burden of proving that such violation
occurred prior to the Effective Date and was not disclosed by Seller to Buyer
prior to the Closing.
(ii) At the meeting referenced in subsection (i), the parties shall
discuss how to remedy the violation. Such approaches may include: (A) the
performance by Seller of Corrective Action, and the payment by Seller of
Corrective Action Costs, to remedy the violation, or (B) the performance by
Buyer of Corrective Action, and the payment by Buyer of Corrective Action Costs,
coupled with an adjustment in the Purchase Price, and with Buyer otherwise being
responsible for the violation in accordance with subsection (a) without regard
to this subsection (c).
(iii)(A) If within sixty (60) days following Seller's receipt of
Buyer's notice the parties cannot agree on how to remedy the violation specified
in the notice, this Agreement shall be rescinded as to each Oil and Gas Property
as to which the parties were unable to so agree. Consistent
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with but not as a limitation on the foregoing, in such event, and within said 60
day period: (I) Buyer shall reconvey each such Oil and Gas Property to Seller by
a special warranty conveyance, with such conveyance to be effective as of the
Effective Date, (II) Buyer shall account for and pay to Seller all proceeds from
production (net of reasonable expenses) attributable to the period subsequent to
the Effective Date, provided however, if and to the extent any such production
was not sold in an arm's length transaction at generally prevailing prices for
like production from the Williston Basin, the amount to be paid by Buyer to
Seller shall be an amount equal to that which would have been received in such a
transaction, and (III) Seller shall pay Buyer an amount equal to the Allocated
Value. Notwithstanding the rescission, however, Seller shall not be required to
pay Buyer for any capital improvements made by or on behalf of Buyer to the Oil
and Gas Property. Neither party shall be obligated to pay the other party
interest (which shall be at the rate specified in Section 13) on amounts owed to
the other party, if such amounts owed are paid within said 60 days.
(B) As to any Oil and Gas Property reconveyed under this
subsection, Buyer shall grant Seller, without any further consideration, any and
all easements and rights-of-way that may be necessary or reasonably convenient
for Seller to access or perform Corrective Action with regard to such property.
(d) Nothing herein shall limit a party's right to seek contribution or
reimbursement from any non-affiliated third party who may be responsible for
Corrective Action or Corrective Action Costs, or for any other Claims or
Damages.
15. COMMISSIONS. Seller shall indemnify and hold Buyer harmless from and
against any and all Claims and Damages arising out of or resulting from any
agreement, arrangement or understanding alleged to have been made by, or on
behalf of, Seller with any broker or finder in connection with this Agreement or
the transaction contemplated hereby, and (b). Buyer shall indemnify and hold
harmless Seller from and against any and all Claims and Damages arising out of
or resulting from any agreement, arrangement or understanding alleged to have
been made by, or on behalf of, Buyer with any broker or finder in connection
with this Agreement or the transaction contemplated hereby.
16. CASUALTY LOSS. In the event of damage by fire or other casualty to
the Assets prior to the Closing, this Agreement shall remain in full force and
effect, and in such event, unless Buyer and Seller shall otherwise agree:
(a) as to each such Asset so damaged that is an Oil and Gas Property, at
Buyer's election either: (i) such Asset shall be treated as if it were subject
to an Asserted Defect, and the procedure provided for in Section 6 shall be
applicable thereto, or (ii) the Purchase Price will not be adjusted, but if
Seller is entitled to make any claims under any insurance policy with respect to
such damage, Seller shall, at Seller's election, either collect (and when
collected, or at the Closing, whichever last occurs, pay over to Buyer), or
assign to Buyer (at the Closing) (subject to Buyer's review of Seller's
insurance policy relating to the loss), such claims, and
(b) as to each such Asset so damaged that is not an Oil and Gas Property,
at Seller's election it shall either collect for (and when collected, or at the
Closing, whichever last occurs, pay over to Buyer), or assign to Buyer (at the
Closing), subject to Buyer's review of Seller's insurance policy that
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relates to the loss, any and all insurance claims relating to such loss, and
Buyer shall take title to the Asset affected by such loss without reduction of
the Purchase Price.
17. NOTICES. All notices, demands or communications ("Notices") under this
Agreement shall be in writing and shall be addressed to the party as set forth
below. All Notices shall be given by: (i) personal delivery, (ii) electronic
communication, provided the transmitting device used by the Party provides
documentary confirmation of receipt, (iii) first class mail, postage prepaid, or
(iv) a nationally recognized overnight courier service. All Notices shall be
effective and shall be deemed delivered (i) if by personal delivery or by
overnight courier, on the date of delivery if delivered on or before 4:30 p.m.
on such day; otherwise, it shall be deemed to have been delivered on the next
business day following delivery, (ii) if by electronic communication, on the day
of receipt unless received after 4:30 p.m., in which event it shall be deemed to
have been received on the next business day following receipt of the electronic
communication, and (iii) if solely by mail, on the first to occur or actual
receipt. A party may change its address by Notice to the other party.
If to Seller:
Tipperary Oil & Gas Corporation
633 17th Street, Suite 1550
Denver, Colorado 80202
Attention: Jeff T. Obourn
Telephone No: (303) 293-9379
Facsimile No.: (303) 292-3428
If to Buyer:
Nance Petroleum
P.O. Box 7168
Billings, Montana 59103
Attention: Ron Santi
Telephone No: (406) 245-6248
Facsimile No.: (406) 245-9106
18. SURVIVAL OF PROVISIONS. The parties' respective covenants (including
indemnification obligations) that are to be performed after the Closing or that
may otherwise be applicable following the Closing, and the parties' respective
warranties and representations (and disclaimers of warranties, representations,
and covenants), shall survive the Closing and shall not merge into the
Assignment or into any other documents or other instruments executed in
connection herewith. Consistent with, but not as a limitation on the foregoing,
the parties' respective obligations under Sections 6(a)(iii) and 7(a)(ii)(E) (to
the extent the same are, by mutual agreement, not performed at Closing), and
Sections 2(c), 3, 4, 5(c)(ii), 6(b)(i)(A), 6(e), 8, 11(c), 12(d), 12(e), 12(h),
13(c), 14, 15, 17, 18, 20 - 27, 30, and 32 shall survive the Closing and the
delivery of the Assignment.
19. OPERATIONS. Subject to the terms and provisions of any existing
agreements covering the Assets, Seller agrees to turn over to Buyer, at Closing,
the operations of those Assets for which
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it is currently serving as operator. Seller shall take all reasonable actions
necessary to attempt to cause Buyer to become successor operator as contemplated
herein.
20. CONFIDENTIALITY AGREEMENT. The Confidentiality Agreement shall
terminate only if and after Closing occurs and the Assignment is executed and
delivered.
21. FURTHER ASSURANCES. Without further consideration, each party shall
take such further actions and execute such further documents as may be
reasonably requested by the other party in order to effectuate the purpose and
intent of this Agreement, including (if Closing occurs) division orders,
transfer orders and other documents.
22. GOVERNING LAW, AND VENUE. (a) This Agreement shall be: (i) deemed to
have been negotiated, executed, and performed in Colorado, and (ii) governed by
and interpreted in accordance with the laws of Colorado, except to the extent
its laws would otherwise apply the laws of another jurisdiction.
(b) Exclusive venue for the resolution of any disputes regarding this
Agreement shall be in a state or federal court of competent jurisdiction
sitting in Colorado. If and to the extent Buyer does not have a registered
agent for service of process in Colorado, then for purposes hereof, service of
process may be accomplished in the manner of service upon the Colorado Secretary
of State or in such other manner as may be provided by law for service upon
corporations that are required to have a registered agent in Colorado but that
do not have a registered agent.
23. COSTS. Except as may be expressly provided otherwise herein, each
party shall bear its own costs and expenses in connection with the negotiation
and performance of this Agreement.
24. ENTIRE AGREEMENT; AMENDMENT; AND WAIVER. (a) This Agreement, which
includes any and all exhibits, contains the entire understanding and agreement
of the parties and supersedes all prior agreements and understandings between
the parties relating to the subject matter hereof.
(b) No amendment or modification to this Agreement shall be effective
unless be in writing and signed by all parties.
(c) No waiver by a party of any breach by the other party of any provision
of this Agreement shall be deemed a waiver of any preceding or succeeding breach
of the same or any other provisions hereof. No such waiver shall be effective
unless in writing and then only to the extent expressly set forth in writing.
25. SECTION AND OTHER HEADINGS; AND CONSTRUCTION. The section and other
headings contained in this Agreement are for reference only and have no legal
significance. The use of pronouns is generic and they shall mean any gender as
appropriate. The terms "include", "including," or similar terminology shall be
construed as meaning without limitation as to the nature or scope of the
referenced matters. The terms "herein" or "hereof," or similar terminology,
shall be construed as referring to this Agreement rather than only the section
in which such term appears. References to subsections shall refer to the section
or subsection in which they appear, unless otherwise noted.
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This Agreement shall be deemed to have been drafted by both parties, and
therefore the rule against construing ambiguities against the party drafting a
contract shall be inapplicable to this Agreement.
26. SEVERABILITY. If any provision of this Agreement is held to be invalid
or unenforceable in whole or in part in any relevant jurisdiction, such
provision, only to the extent invalid or unenforceable, shall be severable from
this Agreement, and the other provisions of this Agreement (along with the
provision at issue, to the extent that it would be valid and enforceable, and
such provision shall be deemed to be so reformed) shall remain in full force and
effect in such jurisdiction and the remaining provisions hereof shall be
liberally construed to carry out the purpose and intent of this Agreement. The
invalidity or unenforceability, in whole or in part, of any provision of this
Agreement in any relevant jurisdiction shall not affect the validity or
enforceability of such provision in any other jurisdiction, nor shall the
invalidity or unenforceability of any provision of this Agreement with respect
to any Person affect the validity or enforceability of such provision with
respect to any other Person.
27. ATTORNEY'S FEES. If litigation is commenced between the parties, the
prevailing party shall be entitled to recover from the other party all
reasonable attorney fees and costs. The prevailing party shall include: a party
who dismisses an action in exchange for sums allegedly due; the party who
received performance from the other party for an alleged breach of contract or a
desired remedy where the performance is substantially equal to the relief sought
in an action; or the party determined to be the prevailing party by a court of
law.
28. RESTRICTIONS ON ASSIGNMENT. Neither party may assign its rights under
this Agreement and any such assignment in violation of this provision shall be
void; provided however, that notwithstanding the foregoing, Seller may assign
its rights under this Agreement to a subsidiary or other affiliate subject to
Buyer's approval, which may not be unreasonably withheld.
29. TIME OF THE ESSENCE. Time is of the essence of this Agreement. If
the last day permitted for the performance of any act required or permitted
under this Agreement falls on a Saturday, Sunday, or holiday, the time for such
performance shall be extended to the next succeeding business day.
30. PARTIES IN INTEREST; SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the successors
and permitted assigns of Seller or Buyer. Nothing in this Agreement is intended
to confer upon any other person or entity any rights or remedies under or by
reason of this Agreement.
31. NO PUBLICITY. Prior to closing, neither Buyer nor Seller shall issue
any publicity or press release concerning this Agreement or the transaction
contemplated hereby without the other party's prior written consent unless, in
the written opinion of a party's legal counsel, such disclosure is required by
applicable law or other applicable rules or regulations of any governmental
authority or stock exchange and such publicity or press release contains no more
than the minimum information necessary to comply therewith. This provision
shall not replace or restrict any provision in any prior agreement between the
parties affecting confidentiality or the disclosure of information about the
Assets.
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32. NO RECORDING. This Agreement shall not be recorded by either party
without the prior consent of the other party.
IN WITNESS WHEREOF, this Agreement is executed by the parties hereto on the
date set forth above.
SELLER: BUYER:
TIPPERARY OIL & GAS CORPORATION NANCE PETROLEUM CORPORATION
By: /s/ David L. Bradshaw By: /s/ Robert L. Nance
---------------------------- ----------------------------------------
Name: David L. Bradshaw Name: Robert L. Nance
Title: President & CEO Title: President & CEO
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Purchase and Sale Agreement
Between TIPPERARY OIL & GAS CORPORATION
and NANCE PETROLEUM CORPORATION
EXHIBIT "C"
ASSIGNMENT AND BILL OF SALE
THIS ASSIGNMENT AND BILL OF SALE ("Assignment"), dated _______, 2000, is
between Tipperary Oil & Gas Corporation, a Texas corporation ("Assignor"), the
address of which is 633 17th Street, Suite 1550, Denver, Colorado 80202, and
Nance Petroleum Corporation, a Montana corporation ("Assignee"), the address of
which is 550 North 31st Street, Suite 500, Billings, Montana 59101.
RECITALS:
A. The parties entered into that certain Purchase and Sale Agreement
dated __________, 2000 ("Agreement"), pursuant to which Assignor agreed to sell,
assign, and convey, and Assignee agreed to purchase the hereinafter described
Assets.
B. The parties have consummated the purchase and sale of the Assets
pursuant to the Agreement, and this Assignment is being executed and delivered
pursuant thereto.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Conveyance and Reservation. (a) Assignor does hereby sell, assign,
and convey unto Assignee the following described properties, rights and
interests, but only to the extent related to the real property described in
Exhibit A ("Property"):
(i) All of Assignor's right, title, and interest, if any, in all oil,
gas and other mineral interests, including Assignor's right, title, and
interest, if any, in all: (A) oil and gas leases and any other mineral leases,
(B) royalties and overriding royalties, (C) production payments, (D) net profits
interests, (E) reversionary mineral interests, (F) unitization, pooling, and
communitization agreements, and (G) declarations and orders (including all units
formed under orders, rules, regulations, or other official acts of any federal,
state, or other authority having jurisdiction, and voluntary unitization
agreements, designations and declarations), subject to any exceptions and
reservations contained in Exhibit A;
(ii) All of Assignor's right, title, and interest, if any, in all
fixtures, equipment, and other personal property, to the extent relating to the
wells described in Exhibit B and their appurtenant production, storage,
treating, gathering, and transportation facilities, situated on the Property;
and
(iii) all contracts; lease files; abstracts and title opinions;
production records; well files; permits and licenses; accounting records (but
excluding all general financial accounting or tax accounting records that do not
pertain exclusively to the Property); electric logs and geological,
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engineering, and other technical data and records (subject to any contractual or
other restrictions relating to the transfer of such data and records); and other
files, documents and records that directly relate to the Property.
(b) Assignor's interest, if any, in the assets described in subsection (a)
is herein sometimes collectively called the "Assets."
(c) Assignor excepts and reserves from this Assignment, and reserves unto
itself, all of its right, title, and interest in and to the surface estate of
the Property (to the extent of any surface estate interests not created by
lease, easement, or right-of-way) and all rights of any nature whatsoever
appurtenant or otherwise associated therewith, and such right, title, and
interest does not constitute any part of the Assets; provided however, Assignor
grants Assignee the right to use the surface of the Property for purposes
reasonably necessary or incidental to oil and gas operations on the Property,
but Assignee shall protect, defend, indemnify, and hold Assignor harmless from
and against any and all Claims (hereinafter defined) or Damages (hereinafter
defined) resulting from such use.
(d) Except for: (i) easements and rights-of-way of record, (ii) other third
party rights (if any) that could not reasonably be expected to have a materially
adverse affect on the use of the Assets, and (iii) liens for taxes and
assessments due but not yet payable, Assignor warrants title to the Assets
against anyone claiming any interest therein arising by, through, or under
Assignor, but Assignor makes no other warranty, representation, or covenant,
express or implied, statutory or otherwise, as to title to the Assets.
(e) As of the effective date hereof, Assignee assumes all of Assignor's
duties, liabilities and obligations relating to the Assets to which Assignor was
a party or by which it was bound on and after the date hereof, and shall
protect, defend, indemnify, and hold Assignor harmless from any and all Claims
and Damages with respect thereto, except to the extent such Claims or Damages
arise from: (i) actions taken by Assignor prior to the effective date hereof, or
(ii) a failure of Assignor to take actions required by Law (hereinafter defined)
or contract prior to the effective date hereof.
2. Disclaimer of Warranties. (a) Except as provided in Section 1(d)
hereof, Assignor makes no warranty, representation, or covenant, express or
implied, as to its title to the Assets, and Assignor makes no other warranty,
representation, or covenant, express or implied, with respect to the Assets.
(b) CONSISTENT WITH AND NOT AS A LIMITATION ON SUBSECTION (a), THE ASSETS
ARE HEREBY PURCHASED, SOLD, AND CONVEYED "AS IS, WHERE IS", WITHOUT ANY
WARRANTY, REPRESENTATION, OR COVENANT, EXPRESS OR IMPLIED, STATUTORY OR
OTHERWISE, RELATING TO:
(i) THE CONDITION, QUANTITY, QUALITY, FITNESS FOR A PARTICULAR PURPOSE
OR ANY PURPOSE, CONFORMITY TO THE MODELS OR SAMPLES OF MATERIALS, OR
MERCHANTABILITY OF ANY IMMOVABLE PROPERTY, MOVABLE PROPERTY, EQUIPMENT,
INVENTORY, MACHINERY, AND OTHER FIXTURES AND PERSONAL PROPERTY CONSTITUTING PART
OF THE ASSETS;
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(ii) ANY IMPLIED OR EXPRESS WARRANTY OF FREEDOM FROM REDHIBITORY VICES
OR DEFECTS OR OTHER VICES OR DEFECTS, WHETHER KNOWN OR UNKNOWN; AND
(iii) ANY AND ALL IMPLIED WARRANTIES, REPRESENTATIONS, OR COVENANTS
EXISTING UNDER APPLICABLE LAW NOW OR HEREAFTER IN EFFECT.
(c) CONSISTENT WITH BUT NOT AS A LIMITATION ON SUBSECTIONS (a) AND (b):
(i) ASSIGNOR IS SELLING AND ASSIGNEE IS BUYING THE ASSETS WITH ALL
DEFECTS AND FAULTS (LATENT OR APPARENT) AND IT ASSUMES THE RISK THAT ADVERSE
PAST, PRESENT OR FUTURE PHYSICAL CONDITIONS MAY NOT HAVE BEEN REVEALED BY ITS
INVESTIGATIONS, AND
(ii) ASSIGNOR MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED,
STATUTORY OR OTHERWISE, AS TO THE ACCURACY OR COMPLETENESS OF ANY DATA, REPORTS,
RECORDS, PROJECTIONS, INFORMATION, OR OTHER MATERIALS NOW HERETOFORE, OR
HEREAFTER FURNISHED OR MADE AVAILABLE TO ASSIGNEE IN CONNECTION HEREWITH,
INCLUDING PRICING ASSUMPTIONS OR QUALITY OR QUANTITY OF HYDROCARBON RESERVES (IF
ANY) ATTRIBUTABLE TO THE ASSETS OR THE ABILITY OR POTENTIAL OF THE ASSETS TO
PRODUCE HYDROCARBONS OR THE ENVIRONMENTAL CONDITION OF THE ASSETS OR ANY OTHER
MATERIALS FURNISHED OR MADE AVAILABLE TO ASSIGNEE BY OR ON BEHALF OF ASSIGNOR.
3. Environmental Indemnity and Hazardous Substances. (a) Notwithstanding
anything herein to the contrary, with respect to the Assets, Assignee: (i)
waives, releases, remises, acquits and forever discharges, (ii) releases and
relinquishes any right of contribution, reimbursement, indemnification, or other
rights of a similar nature, (iii) assumes all liability for, and (iv) shall
protect, defend, indemnify, and hold harmless, Assignor and its affiliates, and
their employees, agents, successors and assigns, from and with respect to any
and all rights, claims, demands, causes of action, and legal, administrative, or
arbitration proceedings, of any and every nature (collectively, "Claims"), and
injuries, deaths, damages, or obligations of any and every nature resulting from
or that gave rise to any Claim, including liabilities, losses, costs, penalties,
expenses, judgments, fines, settlements, interest, reasonable attorney's fees,
Corrective Action Costs (hereinafter defined), monitoring costs (including
reasonable capital and operating costs), remediation studies, and natural
resource damages and other related expenses of any nature (collectively,
"Damages") (provided however, that Damages shall not include consequential,
special, incidental, or punitive damages) that may at any time arise on account
of, or in any way arising out of, or in connection with: (I) the known or
unknown environmental condition of the Assets, including any Releases
(hereinafter defined), and (II) any violation of any federal, state, or local
law (including statutory and case law), rule, regulation, ordinance, permit,
license, order, judgment, injunction, writ, or decree of any nature
(collectively "Law") relating to the protection of health or the environment,
whether or not attributable to Assignor's activities or the activities of third
parties,
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regardless of whether or not Assignor was or is aware of such activities, and
regardless of whether or not the condition (including any Release) or violation
occurred before or after the effective date hereof.
(b) As used herein, the following definitions shall apply:
(i) "Hazardous Substances" means any substance or material defined or
designated as hazardous or toxic waste, hazardous or toxic material, hazardous
or toxic substance, or other similar term, by any Law relating to the
environment (which Laws include the Federal Resource Conservation and Recovery
Act of 1976; Federal Comprehensive Environmental Response, Compensation, and
Liability Act of 1980; Federal Clean Air Act; Federal Clean Water Act; Federal
Water Pollution Control Act; Federal Insecticide, Fungicide, and Rodenticide
Act; and similar state Laws in effect as of the relevant dates, as such Laws
were or are amended from time to time).
(ii) "Releases" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, depositing, releasing, escaping,
leaching, dumping or disposing of Hazardous Substances or non-hazardous
substances (to the extent the Law requires the removal of the same) into the
atmosphere, soil, surface water, subsurface strata, groundwater, or otherwise
into the environment, including the abandonment or discarding of barrels,
containers, tanks, or other receptacles containing or previously containing
Hazardous Substances.
(iii) "Corrective Action" means, to the extent required by Law, any
expenditures or activities taken to monitor and, if required, abate, clean up,
remove, treat, cover or in any other way remediate a Release at, from, or
emanating to the Assets.
(iv) "Corrective Action Costs" includes any and all: (A) costs or
expenses that arise directly from or in connection with the performance of
Corrective Action, including removal, remediation or cleanup costs, site
investigation and assessment costs, consultants costs, attorneys fees and expert
fees, government oversight and response costs, penalties, liens, interests,
fines, assessments, and charges, and (B) any payment of any third party Claims
or Damages (including any federal, state or local government agency) arising out
of or relating to a Release at or from the Assets.
(c)(i) If Assignee within one (1) year after the date hereof: (A) discovers
a violation of an environmental Law that occurred prior to the Effective Date
hereof with respect to any Property and such violation was not disclosed by
Assignor to Assignee prior to the date hereof, (B) notifies Assignor (such that
notice is actually received by Assignor within said one (1) year period) in
reasonable detail of the Law that was violated and the manner in which such Law
was violated, (C) includes with such notice sufficient information to
substantiate the violation of such Law, and (D) includes in such notice a
reasonable range of alternative dates and times for scheduling a meeting in
Denver, Colorado, to take place within two weeks after the notice was given, to
discuss how to address the violation, then the provisions of subsections (ii)
and (iii) shall apply. No notice shall be effective unless it complies with
clauses (A) - (D) of this subsection. Assignee shall have the burden of proving
that such violation occurred prior to the Effective Date hereof and was not
disclosed by Assignor to Assignee prior to the date hereof.
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(ii) At the meeting referenced in subsection (i), the parties shall
discuss how to remedy the violation. Such approaches may include: (A) the
performance by Assignor of Corrective Action, and the payment by Assignor of
Corrective Action Costs, to remedy the violation, or (B) the performance by
Assignee of Corrective Action, and the payment by Assignee of Corrective Action
Costs, coupled with an adjustment in the purchase price, and with Assignee
otherwise being responsible for the violation in accordance with subsection (a)
without regard to this subsection (c).
(iii)(A) If within sixty (60) days following Assignor's receipt of
Assignee's notice the parties cannot agree on how to remedy the violation
specified in the notice, this Agreement shall be rescinded as to each Property
as to which the parties were unable to so agree. Consistent with but not as a
limitation on the foregoing, in such event, and within said 60 day period: (I)
Assignee shall reconvey each such Property to Assignor by a special warranty
conveyance, with such conveyance to be effective as of the effective time
hereof, (II) Assignee shall account for and pay to Assignor all proceeds from
production (net of reasonable expenses) attributable to the period subsequent to
the effective time hereof, provided however, if and to the extent any such
production was not sold in an arm's length transaction at generally prevailing
prices for like production from the Williston Basin, the amount to be paid by
Assignee to Assignor shall be an amount equal to that which would have been
received in such a transaction, and (III) Assignor shall pay Assignee an amount
equal to the Allocated Value, as defined in the Agreement. Notwithstanding the
rescission, however, Assignor shall not be required to pay Assignee for any
capital improvements made by or on behalf of Assignee to the Property. Neither
party shall be obligated to pay the other party interest on amounts owed to the
other party, if such amounts owed are paid within said 60 days.
(B) As to any Property reconveyed under this subsection, Assignee
shall grant Assignor, without any further consideration, any and all easements
and rights-of-way that may be necessary or reasonably convenient for Assignor to
access or perform Corrective Action with regard to such property.
(d) Nothing herein shall limit a party's right to seek contribution or
reimbursement from any non-affiliated third party who may be responsible for
Corrective Action or Corrective Action Costs, or for any other Claims or
Damages.
4. Subject to Agreement. This Assignment is subject to the terms of the
Agreement, which terms are incorporated herein by this reference, survive the
execution and delivery of this Agreement, and are binding on Assignor and
Assignee and their respective successors and assigns.
5. Counterparts. This Assignment may be executed in several counterparts
all of which are identical, except that, to facilitate recordation, in certain
counterparts hereof, only that portion of Exhibit A that contains specific
descriptions of assets located in the recording jurisdiction in which the
particular counterpart is to be recorded are included, and other portions of
Exhibit A are included by reference only. All such counterparts together shall
constitute one and the same instrument. Complete copies of this Assignment
containing the entire Exhibit A have been retained by Assignor and Assignee.
5
<PAGE>
IN WITNESS WHEREOF, this Assignment has been executed and delivered on the
date first set out above, but effective as to runs of oil and deliveries of gas,
and for all other purposes, as of 7:00 a.m., local time at the locations of the
Assets, on March 1, 2000.
ASSIGNOR: ASSIGNEE:
TIPPERARY OIL & GAS CORPORATION NANCE PETROLEUM CORPORATION
By: By:
---------------------------- ----------------------------------------
Name: David L. Bradshaw Name: Robert L. Nance
Title: President & CEO Title: President & CEO
6
<PAGE>
ACKNOWLEDGMENTS
STATE OF COLORADO )
) ss
City and County of Denver )
On this ______ day of April, 2000, before me, a Notary Public of said
state, duly commissioned and sworn, appeared David L. Bradshaw, known to me to
be the person whose name is subscribed to the within instrument as President and
Chief Executive Officer of TIPPERARY OIL & GAS CORPORATION, a Texas corporation,
and acknowledged to me that such corporation executed the same.
Witness my hand and official seal.
-------------------------------------------
Notary Public, State of Colorado
My commission expires:
STATE OF COLORADO )
) ss
City and County of Denver )
On this _____ day of April, 2000, before me, a Notary Public of said state,
duly commissioned and sworn, appeared Robert L. Nance, known to me to be the
person whose name is subscribed to the within instrument as President and Chief
Executive Officer of NANCE PETROLEUM CORPORATION, a Montana corporation, and
acknowledged to me that such corporation executed the same.
Witness my hand and official seal.
-------------------------------------------
Notary Public, State of
-------------------
My commission expires:
7
<PAGE>
Purchase and Sale Agreement
Between TIPPERARY OIL & GAS CORPORATION
and NANCE PETROLEUM CORPORATION
EXHIBIT "D"
PREFERENTIAL RIGHTS
NEGOTIATED WELLS WITH PREF RIGHTS IN THE JOA
MONTANA
BIDEGARAY B, C3 WSW
NORBY 2
RIDGELAWN DUPEROW UNIT
SHINY 30-42
SORENSEN B 1, C2, D3
STEINBEISSER A 3
WHITNEY A1, B2, C3
NORTH DAKOTA
FELLAND, HELLEN E 1-30
GREEN, B A #1-5
LINDVIG 10-21
NORBY, HENRY 1-20
SULLIVAN 3-29
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<PAGE>
Purchase and Sale Agreement
Between TIPPERARY OIL & GAS CORPORATION
and NANCE PETROLEUM CORPORATION
EXHIBIT "D-1"
OFFICER'S CERTIFICATE
TIPPERARY OIL & GAS CORPORATION, a Texas corporation ("Seller"), the address of
which is 633 17th Street, Suite 1550, Denver, Colorado 80202, with respect to
that certain Purchase and Sale Agreement dated April 10, 2000 ("Agreement"),
between Seller and Nance Petroleum Corporation, a Montana corporation ("Buyer"),
hereby certifies that: (i) Seller has materially complied with and performed all
obligations pertaining to Seller, to be performed prior to the Closing, except
for those waived by Buyer, and (ii) all of Seller's warranties and
representations in the Agreement remain true and correct as of the date hereof,
the same as if made as of the date hereof.
Executed as of this __________ day of May, 2000.
SELLER:
TIPPERARY OIL & GAS CORPORATION
By:
---------------------------------------
David L. Bradshaw
President & Chief Executive Officer
1
<PAGE>
Purchase and Sale Agreement
Between TIPPERARY OIL & GAS CORPORATION
and NANCE PETROLEUM CORPORATION
EXHIBIT "D-2"
OFFICER'S CERTIFICATE
NANCE PETROLEUM CORPORATION, a Montana corporation ("Buyer"), the address
of which is 550 North 31st Street, Suite 500, Billings, Montana 59101,with
respect to that certain Purchase and Sale Agreement dated April 10, 2000 (
"Agreement"), between Buyer and TIPPERARY OIL & GAS CORPORATION, a Texas
corporation ("Seller"), the address of which is 633 17th Street, Suite 1550,
Denver, Colorado 80202, hereby certifies that: (i) Buyer has materially
complied with and performed all obligations pertaining to Buyer, to be performed
prior to the Closing, except for those waived by Seller, and (ii) all of Buyer's
warranties and representations in the Agreement remain true and correct as of
the date hereof, the same as if made as of the date hereof.
Executed as of this _____ day of May, 2000.
BUYER:
NANCE PETROLEUM CORPORATION
By:
----------------------------------------
Robert L. Nance
President & Chief Executive Officer
1
<PAGE>
Purchase and Sale Agreement
Between TIPPERARY OIL & GAS CORPORATION
and NANCE PETROLEUM CORPORATION
EXHIBIT "E"
NON-FOREIGN AFFIDAVIT
Exemption from Withholding of Tax
for
Dispositions of U.S. Real Property Interests
Section 1445 of the Internal Revenue Code provides that a transferee of a
U.S. real property interest must withhold tax if the transferor is a foreign
person. To inform Nance Petroleum Corporation that withholding tax is not
required upon the disposition of U.S. real property interests by Tipperary Oil &
Gas Corporation, the undersigned hereby certifies the following:
1. Tipperary Oil & Gas Corporation is not a nonresident alien, foreign
corporation, foreign partnership, foreign trust, or foreign estate for
purposes of U.S. income tax;
2. That taxpayer identifying number of Tipperary Oil & Gas Corporation is 75-
446759; and
3. The office address of the financial headquarters of Tipperary Oil & Gas
Corporation is 633 17th Street, Suite 1550, Denver, Colorado 80202.
Tipperary Oil & Gas Corporation understands that this certification may be
disclosed to the Internal Revenue Service by Nance Petroleum Corporation or its
affiliates or parent, and that any false statement contained herein could be
punished by fine, imprisonment, or both.
Under penalties of perjury, I declare that I have examined this
certification and, to the best of my knowledge and belief, it is true, correct,
complete, and further declare I have authority to sign this document.
TIPPERARY OIL & GAS CORPORATION
By:
-------------------------------------
David L. Bradshaw
President & Chief Executive Officer
SUBSCRIBED AND SWORN TO by said David L. Bradshaw before me this _____ day
of May, 2000, to certify which witness my hand and seal of office.
--------------------------------------------
Notary Public in and for the State of
Colorado
1
