SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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) November 19, 1996
Berry Petroleum Company
(Exact name of registrant as specified in its charter)
Delaware 1-9735 77-0079387
(State or other (Commission IRS Employer
jurisdiction of File Number) Identification No.
incorporation)
28700 Hovey Hills Road, P.O. Bin X, Taft, CA 93268
(Address of principal executive offices)
Registrant's telephone number, including area code (805) 769-8811
N/A
(Former name or former address, if changed since last report)
2
Item 2. Acquisition or Disposition of Assets.
On November 19, 1996, Berry Petroleum Company, a Delaware corporation (the
"Company"), purchased certain assets from, Tannehill Oil Company, Inc., a
California corporation, Tannehill Electric Company, Inc., a California
corporation, Tannehill Oil Company, a general partnership (the "Partnership"),
and the general partners of the Partnership, and acquired/paid off the related
ownership/security interest of Security Pacific Leasing Corporation for the
aggregate consideration of $25.5 million, payable $18.6 million in cash and
$6.9 million in unsecured promissory notes. In addition, the Partnership
received a Warrant to purchase 100,000 shares of the Class A Common Stock of
the Company. The cash consideration was paid from existing working capital of
the Company.
The assets purchased include oil producing properties, power cogeneration
assets, and equipment, machinery, fixtures and other assets associated with
heavy oil production activities. The primary Tannehill oil producing
properties, which are fee properties, are located between two of the Company's
producing South Midway-Sunset field properties. These Tannehill properties
currently produce approximately 1,300 barrels per day ("BPD") of heavy
(13 Degree API) crude oil from 169 wells and have estimated reserves of over
seven (7) million barrels. The 18 megawatt cogeneration facility supplies
approximately 5,500 BPD of steam to the oil producing properties.
Item 7. Financial Statements and Exhibits.
(a). Financial Statements. It is impracticable to provide the required
financial statements and pro forma financial information at this time and such
financial statements and pro forma financial information will be filed as soon
as they are available, but in no event later than 60 days after the date this
Form 8-K is required to be filed.
(b). Pro Forma Financial Information. See Item 7(a) above.
(c). Exhibits.
10.1 Purchase and Sale Agreement, dated as of November 8, 1996, by and between
the Registrant and Tannehill Oil Company, Inc., a California corporation.
10.2 Purchase and Sale Agreement, dated as of November 8, 1996, by and between
the Registrant and Tannehill Electric Company, Inc., a California corporation.
10.3 Purchase and Sale Agreement, dated as of November 8, 1996, by and between
the Registrant and Tannehill Oil Company, a California general partnership, and
Boyce Resource Development Company, a California corporation; Albert G.
Boyce, Jr., as Trustee of Trust "B" Under the Will of Albert G. Boyce, Sr.,
Deceased; William J. Boyce; Albert Gallatin Boyce V; Mary Katharine Boyce;
John T. Hinkle; Bettianne H. Bowen; Vernier Resources Corporation, a Texas
corporation; James L. Hinkle; General Western, Inc., a New Mexico corporation;
3
Delmar R. Archibald and Joy A. Archibald, Trustees of the Delmar R. Archibald
Family Trust, dated June 22, 1982; Lisle Q. Tannehill; John W. Tannehill;
Gail Kay Tannehill, as Trustee of the Gail Kay Tannehill Family Trust, dated
April 9, 1996; and Thomas H. Tannehill, all acting as partners of Tannehill Oil
Company and individually, jointly and severally.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: December 2, 1996 BERRY PETROLEUM COMPANY,
a Delaware corporation
By: /s/ Jerry V. Hoffman
Jerry V. Hoffman,
President and Chief Executive Officer
PURCHASE AND SALE AGREEMENT
By and Between
Berry Petroleum Company and
Tannehill Oil Company, Inc.
Dated November 8, 1996
i
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS. . . . . . . . . . . . . . . . . . . . . 1
1.1 "Affiliate". . . . . . . . . . . . . . . . . . . . . 1
1.2 "Agreement". . . . . . . . . . . . . . . . . . . . . 2
1.3 "Assets" . . . . . . . . . . . . . . . . . . . . . . 2
1.4 "Business Day" . . . . . . . . . . . . . . . . . . . 2
1.5 "Closing". . . . . . . . . . . . . . . . . . . . . . 2
1.6 "Code" . . . . . . . . . . . . . . . . . . . . . . . 2
1.7 "Default". . . . . . . . . . . . . . . . . . . . . . 2
1.8 "Effective Date" . . . . . . . . . . . . . . . . . . 2
1.9 "Encumbrance". . . . . . . . . . . . . . . . . . . . 2
1.10 "Environmental Laws" . . . . . . . . . . . . . . . . 2
1.11 "Escrow" . . . . . . . . . . . . . . . . . . . . . . 3
1.12 "Financial Statements" . . . . . . . . . . . . . . . 3
1.13 "Governmental Entity". . . . . . . . . . . . . . . . 3
1.14 "Indemnifying Party" . . . . . . . . . . . . . . . . 3
1.15 "Indemnitee" . . . . . . . . . . . . . . . . . . . . 3
1.16 "IRS". . . . . . . . . . . . . . . . . . . . . . . . 3
1.17 "Material" . . . . . . . . . . . . . . . . . . . . . 3
1.18 "Mineral Interest" . . . . . . . . . . . . . . . . . 3
1.19 "Partnership Purchase Agreement" . . . . . . . . . . 4
1.20 "Permitted Encumbrances" . . . . . . . . . . . . . . 4
1.21 "Person" . . . . . . . . . . . . . . . . . . . . . . 4
1.22 "Requisite Regulatory Approvals" . . . . . . . . . . 4
1.23 "Shareholders" . . . . . . . . . . . . . . . . . . . 4
1.24 "TEC Purchase Agreement" . . . . . . . . . . . . . . 4
ARTICLE II THE PURCHASE AND SALE . . . . . . . . . . . . . 4
2.1 Transfer to Berry. . . . . . . . . . . . . . . . . . 4
2.2 Purchase by Berry. . . . . . . . . . . . . . . . . . 4
2.3 Payment of the Purchase Price. . . . . . . . . . . . 4
2.4 Operating Adjustment.. . . . . . . . . . . . . . . . 5
2.5 Assets to be Conveyed to Berry.. . . . . . . . . . . 5
2.6 Allocation of Purchase Price . . . . . . . . . . . . 6
2.7 Closing. . . . . . . . . . . . . . . . . . . . . . . 6
2.8 Proration of Credits and Payment Obligations.. . . . 6
2.9 Real Estate and Other Taxes. . . . . . . . . . . . . 6
2.10 Documentation of Sale and Transfer of Ownership. . . 6
2.11 Approval of Title and Condition of the Section 32
Property . . . . . . . . . . . . . . . . . . . . . 7
2.12 Closing Procedure. . . . . . . . . . . . . . . . . . 7
2.13 Post Closing Access to Documents.. . . . . . . . . . 8
2.14 Escrow . . . . . . . . . . . . . . . . . . . . . . . 9
ii
ARTICLE III REPRESENTATIONS AND WARRANTIES OF TANNEHILL . . 9
3.1 Corporate Organization . . . . . . . . . . . . . . . 9
3.2 Effect of Agreement; Consents. . . . . . . . . . . . 9
3.3 Financial Statements . . . . . . . . . . . . . . . . 10
3.4 Taxes and Tax Returns. . . . . . . . . . . . . . . . 10
3.5 Absence of Adverse Change. . . . . . . . . . . . . . 10
3.6 No Misleading Statements . . . . . . . . . . . . . . 10
3.7 No Significant Transactions. . . . . . . . . . . . . 10
3.8 Properties, Title and Related Matters. . . . . . . . 11
3.9 Legal Proceedings. . . . . . . . . . . . . . . . . . 12
3.10 Records. . . . . . . . . . . . . . . . . . . . . . . 12
3.11 Contracts. . . . . . . . . . . . . . . . . . . . . . 12
3.12 Brokerage. . . . . . . . . . . . . . . . . . . . . . 12
3.13 Execution and Delivery . . . . . . . . . . . . . . . 13
3.14 Environmental Matters. . . . . . . . . . . . . . . . 13
3.15 Employees. . . . . . . . . . . . . . . . . . . . . . 14
3.16 Investigation. . . . . . . . . . . . . . . . . . . . 15
3.17 Operating Agreements . . . . . . . . . . . . . . . . 15
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BERRY . . . . 15
4.1 Corporate Organization . . . . . . . . . . . . . . . 15
4.2 Due Authorization, Execution and Delivery;
Effect of Agreement. . . . . . . . . . . . . . . . 15
4.3 Consents . . . . . . . . . . . . . . . . . . . . . . 16
4.4 Litigation . . . . . . . . . . . . . . . . . . . . . 16
4.5 Brokerage. . . . . . . . . . . . . . . . . . . . . . 16
4.6 Approvals. . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE V COVENANTS OF TANNEHILL . . . . . . . . . . . . . . . 16
5.1 Access to Tannehill. . . . . . . . . . . . . . . . . 16
5.2 Governmental Approvals; Consents . . . . . . . . . . 17
5.3 Litigation and Claims. . . . . . . . . . . . . . . . 17
5.4 Notice of Changes. . . . . . . . . . . . . . . . . . 17
5.5 Conduct of Business Operations . . . . . . . . . . . 18
5.6 Maintain Assets and Operations . . . . . . . . . . . 18
5.7 Exclusive Dealing. . . . . . . . . . . . . . . . . . 19
5.8 Termination Fee. . . . . . . . . . . . . . . . . . . 19
5.9 Taxes. . . . . . . . . . . . . . . . . . . . . . . . 20
iii
ARTICLE VI COVENANTS OF BERRY. . . . . . . . . . . . . . . 20
6.1 Cooperation. . . . . . . . . . . . . . . . . . . . . 20
6.2 Governmental Approvals . . . . . . . . . . . . . . . 20
6.3 Disclosure Responsibilities. . . . . . . . . . . . . 20
ARTICLE VII CONDITIONS TO OBLIGATIONS OF BERRY. . . . . . . 21
7.1 Accuracy of Representations and Warranties . . . . . 21
7.2 Performance of Covenants and Agreements. . . . . . . 21
7.3 Consents . . . . . . . . . . . . . . . . . . . . . . 21
7.4 Governmental Approvals . . . . . . . . . . . . . . . 21
7.5 Approval of Counsel. . . . . . . . . . . . . . . . . 21
7.6 Officers' Certificate. . . . . . . . . . . . . . . . 21
7.7 Resolutions. . . . . . . . . . . . . . . . . . . . . 21
7.8 Opinion of Counsel . . . . . . . . . . . . . . . . . 21
7.9 Closing of Agreements. . . . . . . . . . . . . . . . 22
7.10 Condition of Section 32 Property . . . . . . . . . . 22
7.11 Good Standing Certificate. . . . . . . . . . . . . . 23
ARTICLE VIII CONDITIONS TO OBLIGATIONS OF TANNEHILL. . . . . 24
8.1 Accuracy of Representations and Warranties . . . . . 24
8.2 Performance of Covenants and Agreements. . . . . . . 24
8.3 Resolutions. . . . . . . . . . . . . . . . . . . . . 24
8.4 Approval of Counsel. . . . . . . . . . . . . . . . . 24
8.5 Governmental Approvals . . . . . . . . . . . . . . . 24
8.6 Officers' Certificate. . . . . . . . . . . . . . . . 24
8.7 Opinion of Counsel . . . . . . . . . . . . . . . . . 24
8.8 Closing of Agreements. . . . . . . . . . . . . . . . 24
ARTICLE IX TERMINATION PRIOR TO CLOSING. . . . . . . . . . 25
9.1 Termination. . . . . . . . . . . . . . . . . . . . . 25
9.2 Effect on Obligations. . . . . . . . . . . . . . . . 25
ARTICLE X INDEMNIFICATION. . . . . . . . . . . . . . . . . . . 25
10.1 Indemnification by Berry . . . . . . . . . . . . . . 25
10.2 Indemnification by Tannehill and the Shareholders. . 25
10.3 Survival . . . . . . . . . . . . . . . . . . . . . . 26
10.4 Notice and Opportunity to Defend . . . . . . . . . . 26
10.5 General. . . . . . . . . . . . . . . . . . . . . . . 27
iv
ARTICLE XI MISCELLANEOUS . . . . . . . . . . . . . . . . . 27
11.1 Entire Agreement . . . . . . . . . . . . . . . . . . 27
11.2 Successors and Assigns . . . . . . . . . . . . . . . 28
11.3 Expenses . . . . . . . . . . . . . . . . . . . . . . 28
11.4 Taking of Necessary Action . . . . . . . . . . . . . 28
11.5 Invalidity . . . . . . . . . . . . . . . . . . . . . 28
11.6 Attorneys' Fees. . . . . . . . . . . . . . . . . . . 28
11.7 Counterparts . . . . . . . . . . . . . . . . . . . . 29
11.8 Headings . . . . . . . . . . . . . . . . . . . . . . 29
11.9 Construction and References. . . . . . . . . . . . . 29
11.10 Modification and Waiver . . . . . . . . . . . . 29
11.11 Notices . . . . . . . . . . . . . . . . . . . . 29
11.12 Public Announcements. . . . . . . . . . . . . . 31
11.13 Governing Law; Interpretation . . . . . . . . . 31
11.14 Jurisdiction. . . . . . . . . . . . . . . . . . 32
v
LIST OF EXHIBITS
Exhibit Number
Grant Deed . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Bill of Sale . . . . . . . . . . . . . . . . . . . . . . . . . 2
Assignment of Leases, Rights of Way, Easements,
and Contracts (Unrecorded Documents). . . . . . . . . . . 3
Assignment of Leases, Rights of Way, Easements,
and Contracts (Recorded Documents). . . . . . . . . . . . 4
Allocation of Purchase Price . . . . . . . . . . . . . . . . . 5
Certificate of Satisfaction. . . . . . . . . . . . . . . . . . 6
Escrow Instructions. . . . . . . . . . . . . . . . . . . . . . 7
Certificate of Compliance of Tannehill . . . . . . . . . . . . 8
Opinion of Counsel to Tannehill. . . . . . . . . . . . . . . . 9
Certificate of Compliance of Berry . . . . . . . . . . . . . . 10
Opinion of Counsel to Berry. . . . . . . . . . . . . . . . . . 11
1
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT ("Agreement") is dated, for the
convenience of the parties hereto, November 8, 1996, by and between Berry
Petroleum Company, a Delaware corporation ("Berry"), and Tannehill Oil
Company, Inc., a California corporation ("Tannehill").
RECITALS:
A. Berry and Tannehill have determined that it is in their
respective best interests for Berry to purchase substantially all of the assets
owned by Tannehill, upon the terms and subject to the conditions set forth
herein;
B. In furtherance thereof, it is proposed that Berry shall purchase
from Tannehill for Nine Hundred Thirty Thousand Dollars ($930,000) cash
substantially all of the assets of Tannehill in fee, and with clear title,
free of debt, subject to the reservation by Tannehill of a royalty interest of
four percent (4%) of all gas, oil and other hydrocarbon substances produced
from all zones lying below 4,500 feet below the surface of the Tannehill real
property purchased under the terms of this Agreement; and
C. Berry and Tannehill have entered into an Agreement in Principle
and Exclusive Dealing Agreement dated August 15, 1996 ("AIP"), and wish to set
forth the representations, warranties, agreements and conditions under which
the purchase and sale will occur in this Definitive Agreement, as defined in
Section 6 of the AIP, which upon execution will supersede the AIP.
NOW, THEREFORE, in consideration of the premises, representations,
warranties and agreements herein contained and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Berry and Tannehill and its Shareholders hereby agree as follows:
ARTICLE I
DEFINITIONS
Capitalized terms used in this Agreement shall have the meanings
given to them in this Article I, unless defined elsewhere in this Agreement.
1.1 "Affiliate" shall mean with respect to any Person, an individual
or entity that, directly or indirectly, controls, is controlled by or is under
common control with such Person.
2
1.2 "Agreement" shall have the meaning such term is given in the
introductory paragraph hereof.
1.3 "Assets" shall mean substantially all the tangible and
intangible, real, personal and mixed assets and properties of Tannehill,
including but not limited to the real property described in the Grant Deed
attached hereto as Exhibit 1 and made a part hereof ("Section 32 Property"),
excluding only cash, receivables and certain prepaid items, as described in
Section 2.5 hereof. "Asset" shall mean any such asset or property of Tannehill.
1.4 "Business Day" shall mean any day other than Saturday, Sunday or
other days on which federally chartered commercial banks in California are
authorized by law to close.
1.5 "Closing" shall have the meaning such term is given in Section
2.7 hereof.
1.6 "Code" shall mean the Internal Revenue Code of 1986, as amended.
1.7 "Default" shall mean, as to any party to this Agreement, (a) a
default by such party in the performance of any of its material obligations
hereunder and the continuation of such default for a period of five (5)
Business Days after written notice is delivered by the non-defaulting party to
the defaulting party that a default has occurred or (b) the breach of any
representation or warranty hereunder.
1.8 "Effective Date" shall have the meaning such term is given in
paragraph 2.4a hereof.
1.9 "Encumbrance" shall mean any security interest, mortgage,
pledge, claim, lien, charge, option, defect, encumbrance, or other right or
interest of any nature.
1.10 "Environmental Laws" shall be broadly construed to mean any and
all federal, state or local laws, statutes, ordinances, rules, regulations,
orders, or determinations of any Governmental Entity pertaining to the
environment heretofore or currently in effect in any and all jurisdictions in
which Tannehill is conducting or at any time has conducted business, or where
any of the Assets are located, or where any hazardous substances generated by
or disposed of by Tannehill are located. "Environmental Laws" shall include,
but shall not be limited to, the federal Clean Air Act, as amended; the
federal Comprehensive Environmental, Response, Compensation, and Liability Act
of 1980 ("CERCLA"), as amended; the federal Water Pollution Control Act, as
amended; the federal Resource Conservation and Recovery Act of 1976, as
amended ("RCRA"); the federal Safe Drinking Water Act, as amended; the federal
Toxic Substances Control Act, as amended; the federal Superfund Amendments and
Reauthorization Act of 1986, as amended; the federal Clean Water Act, as
amended; or any state laws or regulations similar or analogous to or in
implementation of these provisions; the California State Business Plan Law,
California Health and Safety Code Section 25500 et seq.; the Hazardous
Substance Account Act, Health and Safety Code Section 25300 et seq.; the
Hazardous Waste Control Law, Health and Safety Code Section 25100 et seq.;
Chapter 6.7 of Division 20 of the Health and Safety Code, Section 25280
et seq.; the Safe Drinking Water and
3
Toxic Enforcement Act of 1986 ("Proposition 65"); Health and Safety Code
Section 25249.5 et seq.; Division 26 of the Health and Safety Code, Section
39000 et seq.; the Porter-Cologne Act, Water Code Section 13000 et seq.; and
any other successor or amendments thereto, or implementing regulations thereof;
and all other laws, statutes, ordinances, rules, regulations, orders and
determinations of any Governmental Entity relating to (a) the control of any
potential pollutant or protection of the air, water or land; (b) solid, gaseous
or liquid waste generation, handling, treatment, storage, disposal or
transportation; and (c) exposure to hazardous, toxic or other substances
alleged to be harmful. The terms "hazardous substance," "release" and
"threatened release" have the meanings specified in CERCLA, and the terms
"solid waste" and "disposal" (or "disposed") have the meanings specified in
RCRA; provided, however, that, to the extent the laws of the state in which any
Assets are or were located currently or subsequently provide for a meaning for
"hazardous substance," "release," "solid waste" or "disposal" which is broader
than that specified in either CERCLA or RCRA, such broader meaning shall apply.
1.11 "Escrow" shall mean the escrow account established by Berry and
Tannehill with First American Title Insurance Company pursuant to Section 2.14
hereof.
1.12 "Financial Statements" shall have the meaning such term is given
in Section 3.3 hereof.
1.13 "Governmental Entity" shall mean the United States of America,
any state, county, city, municipality and any subdivision thereof, any court,
administrative or regulatory agency, commission, department or body or other
governmental authority or instrumentality or any entity or Person exercising
executive, legislative, judicial, regulatory or administrative functions of
or pertaining to government.
1.14 "Indemnifying Party" shall have the meaning such term is given
in paragraph 10.4a hereof.
1.15 "Indemnitee" shall have the meaning such term is given in
paragraph 10.4a hereof.
1.16 "IRS" shall mean the Internal Revenue Service.
1.17 "Material" means any condition, change or effect that,
individually or when taken together with all other such conditions, changes
or effects that existed or occurred prior to the date of determination of the
existence or occurrence of the material condition, change or effect, is or is
reasonably likely to be materially adverse to the business, assets (including
intangible assets), financial condition or results of operations of Berry or
Tannehill respectively, in each case taken as a whole.
1.18 "Mineral Interest" shall mean the right to extract oil, gas and
other hydrocarbons, unrestricted as to depth and with unlimited surface access
for such purpose.
4
1.19 "Partnership Purchase Agreement" shall have the meaning such
term is given in paragraph 2.12c hereof.
1.20 "Permitted Encumbrances" shall mean encumbrances which Berry
accepts, in writing, including, but not limited to, encumbrances revealed on
the preliminary title report approved by Berry as provided in this Agreement.
1.21 "Person" shall mean any individual, corporation, association,
partnership, joint venture, trust, estate, unincorporated organization or
Governmental Entity.
1.22 "Requisite Regulatory Approvals" shall have the meaning such
term is given in paragraph 5.2a hereof.
1.23 "Shareholders" shall mean the shareholders of Tannehill.
1.24 "TEC Purchase Agreement" shall have the meaning such term is
given in paragraph 2.12c hereof.
ARTICLE II
THE PURCHASE AND SALE
2.1 Transfer to Berry. In accordance with the provisions of this
Agreement, Tannehill shall transfer and convey the Assets to Berry free and
clear of all liens and encumbrances (other than Permitted Encumbrances)
pursuant to a Grant Deed, Bill of Sale, Assignment of Leases, Rights of Way,
Easements and Contracts (Unrecorded Documents), and Assignment of Leases,
Rights of Way, Easements and Contracts (Recorded Documents) in the forms
of Exhibits 1, 2, 3 and 4, respectively, attached hereto and made a part hereof
(collectively, the "Instruments of Transfer") to be delivered at the Closing
in accordance with the provisions relating to the Closing, and Berry will
acquire such Assets from Tannehill.
2.2 Purchase by Berry. Berry, in reliance upon the covenants,
representations, warranties and indemnities of Tannehill contained herein,
hereby agrees to purchase the Assets from Tannehill for the purchase price
(the "Purchase Price") stated in Section 2.3 hereof.
2.3 Payment of the Purchase Price. As payment for the transfer and
conveyance of the Assets by Tannehill to Berry, Berry shall deliver to Escrow
for the benefit of Tannehill or its nominees at the Closing, in accordance
with the provisions related to the Closing, a wire transfer with immediately
available funds in the amount of Nine Hundred Thirty Thousand Dollars
($930,000) to an account specified by the Escrow Agent (as herein defined)
prior to the Closing. The transaction shall be subject to a post-closing
operating adjustment as provided in Section 2.4 hereof ("Operating
Adjustment"). The Operating Adjustment shall not be handled through Escrow.
5
2.4 Operating Adjustment.
a. October 1, 1996, at 12:01 a.m. shall be considered the
"Effective Date" of this Agreement, and the oil and gas operations included in
the Assets shall be deemed to be for the account of Berry from and after that
date. The Operating Adjustment will occur after the Closing in an amount equal
to the difference between (i) the value of oil and gas produced by Tannehill
after the Effective Date and (ii) the normal cost of producing oil and gas
after the Effective Date, as determined by Tannehill's customary accounting
method adjusted to reflect only necessary operating revenues and expenses
which would have been credited to or incurred by Berry had this transaction
closed on the Effective Date. The oil tanks shall be gauged at 12:01 a.m. on
the Effective Date. The value of oil and gas produced by Tannehill after
the Effective Date shall be the net sales after royalties adjusted for the
change in inventory between the Effective Date and the Closing. If the value
of the oil and gas produced after the Effective Date is greater than said
cost, then Tannehill shall pay Berry an Operating Adjustment equal to the
amount of the difference. If the value of the oil and gas produced after
the Effective Date is less than said cost, then Berry shall pay Tannehill an
Operating Adjustment equal to the amount of the difference.
b. In the event Tannehill does not provide Berry with its
calculation of the Operating Adjustment (the "Calculation") prior to the
Closing, Tannehill shall provide Berry with the Calculation within sixty (60)
days after the Closing. Berry shall have immediate access at reasonable times
to such books, records and invoices of Tannehill as it deems necessary to
verify the Calculation. If Berry does not object to the Calculation within ten
(10) days after receipt thereof by Berry, it shall be deemed to be final and
binding upon the parties hereto. If Berry objects to the Calculation within
such ten (10) days by specifying the items to which it objects, then the
parties will attempt to mutually resolve any differences. If the differences
cannot be resolved within twenty (20) days after Berry's objection to the
Calculation, then all amounts agreed to shall be paid as provided below and
the difference shall be resolved by arbitration under the Commercial
Arbitration rules of the American Arbitration Association. The costs of
arbitration shall be shared equally by the parties. This Section 2.4 is the
only Section or part of this Agreement which is subject to arbitration
jurisdiction.
c. Within three (3) days of the final determination of the
Calculation, the party required to make the Operating Adjustment payment shall
pay, via wire if requested, the Operating Adjustment payment agreed upon to
the other party.
d. For managing Tannehill subsequent to September 30, 1996,
Tannehill shall only be entitled to be credited for management fees at the rate
of Ten Dollars ($10) per day and shall not be entitled to reimbursement of
overhead costs for legal expenses, accounting costs, loan fees and interest,
contributions, dues and assessments, 401K retirement costs or excessive travel
or entertainment costs or expenses.
2.5 Assets to be Conveyed to Berry. The Assets to be conveyed to
Berry by Tannehill are the following assets owned and/or operated by Tannehill:
(a) all of the Section 32 Property, all oil and gas leases, and interests,
easements and rights of way included in the
6
operations of Tannehill, including one hundred percent (100%) of the Mineral
Interests in the Section 32 Property (except a royalty interest of four percent
(4%)), all as more particularly described in the Instruments of Transfer
("the Real Property"); (b) all of the buildings, structures, tanks and
pipelines on or under the property owned and/or operated by Tannehill, as are
described in the Disclosure Letter from Tannehill delivered to Berry at or
prior to execution hereof, which shall refer to the Sections of this Agreement
(the "Tannehill Disclosure Letter"); and (c) all equipment and supplies related
to or utilized in operating the oil properties and facilities owned and/or
operated by Tannehill as described in the Tannehill Disclosure Letter. Any
asset of Tannehill not described in the Instruments of Transfer or the
Tannehill Disclosure Letter shall be conveyed to Berry subject to Berry's
right, in its sole discretion, to refuse to accept such asset by written
notice to Tannehill within thirty (30) days after Berry receives written
notice from Tannehill that the asset is included in the Assets.
2.6 Allocation of Purchase Price. The parties agree to allocate the
Purchase Price for the Assets acquired in accordance with the terms of Code
Section 1060 and the Treasury Regulations promulgated thereunder, and to report
this transaction for federal and state tax purposes in accordance with the
agreed-upon allocation in the form of Exhibit 5 attached hereto and made a part
hereof.
2.7 Closing. Subject to the provisions of Articles VII and VIII,
the closing (the "Closing") shall take place at 10 a.m., Pacific Standard Time,
at the offices of Berry Petroleum Company, 28700 Hovey Hills Road, Taft,
California, on such date prior to December 1, 1996, as to which Berry and
Tannehill shall mutually agree. By written notice to the other party, either
Berry or Tannehill shall have the right to extend the Closing an additional
forty-five (45) days in the event that either party is not in a position to
close by December 1, 1996.
2.8 Proration of Credits and Payment Obligations. All credits and
payment obligations associated with the Assets, including but not limited to
royalties, lease rentals and other forms of contractual payments, shall be
prorated between Tannehill and Berry as of the Effective Date. Tannehill shall
be responsible and shall pay for all such items due, incurred or attributable
to the period prior to the Effective Date and Berry shall be responsible and
shall pay for all such items due, incurred or attributable to the period after
such date.
2.9 Real Estate and Other Taxes. All real estate, occupation, ad
valorem, personal property and severance taxes and charges on any of the Assets
shall be prorated as of the Effective Date. Tannehill shall pay all such items
for all periods prior to such date, however, Berry shall be entitled to all
refunds and rebates with regard to such periods. In the event Berry pays
additional taxes or charges which are assessed upon or levied against any of
the Assets after the Closing with respect to any period prior to the Effective
Date, Tannehill shall promptly reimburse Berry the amount thereof upon
presentation of a receipt therefor. If Tannehill elects to challenge the
validity of such bill or any portion thereof, Berry shall extend reasonable
cooperation to Tannehill in such efforts, at no expense to Berry.
2.10 Documentation of Sale and Transfer of Ownership. Except as
otherwise provided herein, the Assets to be conveyed by Tannehill to Berry
shall be conveyed pursuant
7
to the Instruments of Transfer in such form or forms customary and necessary
to properly transfer the Assets according to the requirements of any applicable
federal, state or local agency.
a. Tannehill shall deliver the Assets to Berry at the Closing
subject to the reservations, limitations, conditions and restrictions contained
in this Agreement and the Instruments of Transfer.
b. Tannehill shall make available at Tannehill's offices or
such other place as deemed appropriate by Berry until the Closing, during
normal business hours, for examination by Berry, such title information
and abstracts as may then be available in Tannehill's files.
2.11 Approval of Title and Condition of the Section 32 Property.
Tannehill has provided a preliminary title report on the Section 32 Property
to Berry. Berry shall accept or reject title and condition of the Section
32 Property, as provided in Section 7.10 hereof.
2.12 Closing Procedure. At the Closing through Escrow, the
transactions listed below shall occur, all subject to and conditioned upon
the execution and delivery of a Certificate of Satisfaction described in
paragraph 2.12e hereof.
a. Tannehill shall deliver to Berry originals (unless
otherwise noted) of each of the following documents:
(1) Certified resolutions of the Board of Directors of
Tannehill authorizing the execution and delivery of this Agreement and the
transactions contemplated hereby.
(2) Good standing certificates for Tannehill from the
Secretary of State and Franchise Tax Board issued by appropriate state
officials for the State of California, certifying to the status as of a date
as close as practical to the Closing.
(3) Executed Instruments of Transfer.
(4) All leases, contracts, agreements, indentures and
other instruments described in or attached to the Tannehill Disclosure Letter.
(5) Executed Certificate of Compliance of Tannehill.
(6) Executed Opinion of Counsel to Tannehill.
(7) A CLTA Policy of Title Insurance on the Section 32
Property if Berry elects not to obtain an ALTA Policy.
(8) Tannehill Disclosure Letter.
8
b. Berry shall deliver to Tannehill originals (unless
otherwise noted) of each of the following documents:
(1) Certified resolutions of the Board of Directors of
Berry authorizing the execution and delivery of this Agreement and the
transactions contemplated hereby.
(2) Executed Certificate of Compliance of Berry.
(3) Executed Opinion of Counsel to Berry.
(4) Berry Disclosure Letter.
c. Berry and Tannehill will execute and mutually deliver
two (2) originals of a statement that the Purchase and Sale Agreement between
Berry and Tannehill Oil Company, a general partnership, et al., dated
November 8, 1996 (the "Partnership Purchase Agreement") and the Purchase and
Sale Agreement between Berry and Tannehill Electric Company, Inc., a
California corporation, dated November 8, 1996 (the "TEC Purchase Agreement")
are in a condition to close.
d. Berry will deliver to Tannehill the Purchase Price as
provided in Section 2.3 hereof.
e. Berry and Tannehill will execute and mutually deliver
two (2) originals of the Certificate of Satisfaction in the form of Exhibit 6
attached hereto and made a part hereof.
2.13 Post Closing Access to Documents. Tannehill has assigned its
interest in litigation with Baker Performance Chemicals, Inc. (the "Baker
Litigation"), involving the alleged use of ineffective, diluted or blended
chemicals in the treatment of oil and water on the Tannehill property, to
Tannehill Oil Company, a general partnership, but Tannehill remains obligated
to provide Tannehill Oil Company, a general partnership, with documents
necessary to support the litigation. Berry shall afford to Tannehill and to
the employees, agents and authorized representatives of Tannehill such
reasonable access to the files, agreements, documents and books and records of
Tannehill for periods prior to the Closing as may be requested by Tannehill in
order that Tannehill may have full opportunity to obtain information
reasonably necessary in connection with the Baker Litigation. Tannehill hereby
releases Berry from all liability arising out of the entry by Tannehill or its
employees, agents or authorized representatives onto the business premises of
Berry for purposes of obtaining such information. Tannehill hereby agrees to
indemnify, defend and hold Berry harmless against all liability, demands,
claims, costs, losses, damages, recoveries, settlements and expenses incurred
by Berry arising from or related to the conduct by Tannehill or its employees,
agents and authorized representatives in connection with obtaining such
information. Tannehill will cooperate with Berry and its agents on any
post-closing audit or financial review that is required of Berry due to the
transactions contemplated by this Agreement.
9
2.14 Escrow. First American Title Insurance Company, a California
corporation, whose address is 4540 California Avenue, Suite 100, P.O. Box 1945,
Bakersfield, California 93309, is hereby appointed to act as escrow agent
("Escrow Agent") to conduct the purchase and sale of the Assets. Berry and
Tannehill shall execute instructions to the Escrow Agent, substantially in the
form of Exhibit 7 attached hereto and made a part hereof, to provide for the
payment of liabilities secured by the Assets and the release of Encumbrances,
other than Permitted Encumbrances, against the Assets. Berry and Tannehill
further agree that Tannehill shall be responsible for and pay for all Escrow
fees and charges.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF TANNEHILL
Except as set forth in the Tannehill Disclosure Letter, Tannehill
hereby represents and warrants to and covenants with Berry as follows:
3.1 Corporate Organization. Tannehill is a corporation duly
organized, validly existing and in good standing under the laws of the State
of California and has full power and authority to conduct its business as
currently conducted and to own, operate and lease the Assets it now owns,
operates or holds under lease.
3.2 Effect of Agreement; Consents.
a. The execution, delivery and performance of this Agreement
by Tannehill and the consummation by Tannehill of the transactions contemplated
hereby (i) do not require the consent, approval, clearance, waiver, order or
authorization of any Person; (ii) do not violate any provision of the Articles
of Incorporation or Bylaws of Tannehill; (iii) do not conflict with or violate
any permit, concession, grant, franchise, statute, law, rule or regulation of
any Governmental Entity or any order, judgment, award or decree of any court
or other Governmental Entity to which Tannehill is subject or any of the Assets
are bound; and (iv) do not conflict with, or result in any breach of, or
default or loss of any right under (or an event or circumstance that, with
notice or the lapse of time, or both, would result in a default), or the
creation of any Encumbrance pursuant to, or cause or permit the acceleration
prior to maturity of any amounts owing under any indenture, mortgage, deed of
trust, lease or other agreement to which Tannehill is a party or to which any
of the Assets are subject, in each case, which failure, violation, conflict
or breach would, in the aggregate, materially hinder or impair the consummation
of the transactions contemplated by this Agreement.
b. The execution, delivery and performance of this Agreement
by Tannehill will not result in the loss of any governmental license, franchise
or permit possessed by Tannehill related to the Assets or give a right of
acceleration or termination to any party to any agreement or other instrument
to which Tannehill is a party and by which the Assets are bound, or result in
the loss of any right or benefit under such agreement or instrument.
10
3.3 Financial Statements. Tannehill has heretofore furnished to
Berry true and correct copies of the balance sheets of Tannehill as of December
31, 1994, December 31, 1995, and September 30, 1996, and the related
statements of revenue and expenses for the periods then ended (collectively,
the "Financial Statements"). The Financial Statements have been prepared in
accordance with the books and records of Tannehill and in conformity with
historical accounting principles applied, except as otherwise noted therein,
on a basis consistent with prior periods, and fairly present, in all material
respects, the financial position and results of operations of Tannehill as at
and for the periods specified therein. As of September 30, 1996, Tannehill
did not have any liability of any kind or manner, either direct, accrued,
absolute or otherwise, which was required to be disclosed by accepted
accounting principles and which was not reflected or disclosed in the
Financial Statements and there have been no changes in Tannehill's method of
accounting for tax purposes or other purposes, except as disclosed in the
Tannehill Disclosure Letter.
3.4 Taxes and Tax Returns. Tannehill has filed all federal, state,
local and foreign income and other tax returns required to be filed by it, and
each such return is complete and accurate in all material respects. The taxes
shown due on such returns have been paid and there are no taxes, interest,
penalties, assessments or deficiencies (any of the foregoing being referred
to herein as a "Tax") claimed to be due in respect of such tax returns or
claimed in writing to be due by any taxing authority. The tax returns of
Tannehill have not been audited by the IRS, nor has Tannehill received notice
of any examination being conducted by the IRS or any other taxing authority
for any fiscal year. All other taxes, including property taxes, imposed by the
United States and by any state, municipality, subdivision or instrumentality of
the United States, or other taxing authority, which are due and payable by
Tannehill have been paid in full or will be paid or provided for up to the
Closing date.
3.5 Absence of Adverse Change. Since December 31, 1995, there has
not been (a) any Material adverse change in the condition of the Assets to be
acquired by Berry; (b) any damage, destruction or loss adversely affecting the
Assets; (c) any incurrence by Tannehill of or entry into any liability,
mortgage, lien or transaction affecting the Assets; (d) any guarantee of or
grant of a security interest to secure a third Person's obligations by
Tannehill; (e) except as provided in the Tannehill Disclosure Letter, any
commitment by Tannehill relating to the Assets; or (f) any agreement, in
writing or otherwise, with respect to the foregoing. No event or condition has
occurred or exists and Tannehill is not aware of any event or condition that
has occurred or exists and that could result in a Material adverse change in
the Assets since December 31, 1995.
3.6 No Misleading Statements. This Agreement, the exhibits hereto
and the information referred to herein, when taken as a whole, do not include
any untrue statement of a material fact and do not omit any material fact
necessary to make the statements contained herein or therein not misleading.
3.7 No Significant Transactions. Except for the execution of this
Agreement, Tannehill has not engaged in any Material transactions and will not
engage in any Material transactions prior to the Closing.
11
3.8 Properties, Title and Related Matters.
a. Tannehill has good title to all of the personal property
included in the Assets free and clear of all Encumbrances, except for Permitted
Encumbrances.
b. Other than the Section 32 Property, there is no real
property owned by Tannehill. The Section 32 Property is not subject to any
governmental decree or is not being condemned, expropriated or otherwise
taken by any public authority, with or without payment of compensation
therefor, and no such condemnation, expropriation or taking has been proposed.
The Tannehill Disclosure Letter contains a description of all buildings,
structures, improvements, tanks and pipes or other fixtures located on or under
the Section 32 Property.
c. Other than as set forth in Exhibits 3 and 4, Tannehill has
no easements or rights of way and no real property is leased by Tannehill.
Tannehill has not breached any provision of and is not in default (and no
event or circumstance exists that with notice or the lapse of time, or both,
would constitute a default) under the terms of any easement, right of way or
other agreement pursuant to which the Real Property is held and all of such
easements, rights of way or other agreements are in full force and effect.
There are no pending or threatened disputes with respect to any easement,
right of way or other agreement pursuant to which the Real Property is held and
the lessor or grantor thereunder has not breached any provision of and is not
in default (and no event or circumstance exists that with notice or the lapse
of time, or both, would constitute a default) under the terms of any such
easement, right of way or other agreement. The Tannehill Disclosure Letter
contains a description of all structures, improvements, tanks and pipes or
other fixtures located on or under any easements or rights of way described in
Exhibits 3 and 4.
d. Since the physical inspection by Berry on September 5,
1996, the maintenance and operation of buildings, machinery, wells, pipelines
and equipment of Tannehill has been consistent with the past maintenance and
operation of such Assets, ordinary wear and tear excepted, and, except as
described in the Tannehill Disclosure Letter, all machinery, wells, pipelines
and equipment are operative in all material respects. Berry shall acquire
such Assets AS IS and WHERE IS. Tannehill makes no representations or
warranties as to the suitability of any Asset for any particular use.
e. Attached to the Tannehill Disclosure Letter is a correct
and complete list and copies of all policies of fire, liability and other forms
of insurance held by Tannehill and presently in force with respect to the
Assets. Such policies are in full force and effect and assignable and
Tannehill is not in default under any of them.
f. Tannehill is not in material violation of and, except as
disclosed in the Tannehill Disclosure Letter, Tannehill has not received any
written notice of any violation of any zoning regulation, ordinance, law,
rule, order, regulation or requirement relating to the Assets or operation of
its leased or owned properties which remains uncured or which has not been
dismissed where failure to comply therewith would have a Material adverse
effect on Tannehill or the Assets.
12
3.9 Legal Proceedings. Except as disclosed in the Tannehill
Disclosure Letter, there is no legal, judicial, administrative or governmental
arbitration or other action or proceeding or governmental investigation pending
or threatened against Tannehill or the Assets, or affecting any of the Assets
which, if adversely determined would have a Material adverse effect on the
Assets. Tannehill is not in violation of or default under any laws,
ordinances, regulations, judgments, injunctions, orders or decrees (including,
without limitation, any immigration laws or regulations) of any court or other
Governmental Entity applicable to its business, which violations or defaults
would have a Material adverse effect on the Assets. There are no Material
judgments, orders, injunctions or decrees of any Governmental Entity in which
Tannehill is a named party or any of the Assets are identified and subject.
Except for the SOCAL Litigation (as that term is defined in the TEC Purchase
Agreement), and the Baker Litigation, there is no pending litigation in or to
which Tannehill is a named party or any of the Assets of Tannehill are
identified and subject.
3.10 Records. Tannehill has records that accurately reflect its
transactions and transactions that affect the Assets in all Material respects.
3.11 Contracts.
a. All contracts, agreements, indentures and other instruments
to which Tannehill is a party are attached to the Tannehill Disclosure Letter.
Except for the agreements attached to the Tannehill Disclosure Letter,
Tannehill is not a party to or bound by (i) any agreement, contract or
commitment limiting the freedom of Tannehill or any Affiliate of Tannehill to
engage in any line of business, to own, operate, sell, transfer, pledge or
otherwise dispose of or encumber any Asset or to compete with any Person in any
geographical area; (ii) any agreement, contract or commitment relating to the
Assets; or (iii) any agreement, contract or commitment that will have a
Material adverse effect on the Assets.
b. Except as disclosed in the Tannehill Disclosure Letter,
Tannehill has not breached any provision of or is not in default (and no event
or circumstance exists that with notice or the lapse of time, or both, would
constitute a default) under the terms of any agreement attached to the
Tannehill Disclosure Letter. All contracts, agreements, indentures and other
instruments attached to the Tannehill Disclosure Letter are in full force and
effect. There are no pending or threatened disputes with respect to the
contracts, agreements, indentures or instruments attached to the Tannehill
Disclosure Letter. Tannehill is not obligated to pay any liquidated damages
under any of the agreements, indentures or other instruments attached to the
Tannehill Disclosure Letter and Tannehill is not aware of any facts or
circumstances that could reasonably be expected to result in an obligation of
Tannehill to pay such liquidated damages.
3.12 Brokerage. No investment banker, broker or finder has acted
directly or indirectly for Tannehill in connection with this Agreement or the
transactions contemplated hereby. No investment banker, broker, finder or
other Person is entitled to any brokerage or finder's fee or similar
commission in respect thereof based in any way on agreements, arrangements or
understandings made by or on behalf of Tannehill. Tannehill agrees to
indemnify, defend and hold Berry harmless from and against any and all claims,
liabilities or
13
obligations with respect to all fees, commissions or expenses asserted by any
Person on the basis of any act, statement, agreement or commitment alleged to
have been made by Tannehill with respect to any such fee, expense or
commission.
3.13 Execution and Delivery. Tannehill has full power and authority
to execute and deliver this Agreement and to perform its obligations hereunder.
The execution and delivery of this Agreement by Tannehill and the performance
of its obligations hereunder have been duly authorized by all necessary
corporate action on its part, including unanimous approval by the Shareholders.
This Agreement has been duly executed and delivered by Tannehill and
constitutes a legal, valid and binding obligation of Tannehill, enforceable
against it in accordance with its terms, except as such enforceability may be
limited by or subject to (a) any bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to creditors' rights generally and
(b) general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
3.14 Environmental Matters.
a. To the best of Tannehill's knowledge, Tannehill has at all
times operated in compliance with all applicable limitations, restrictions,
conditions, standards, prohibitions, requirements and obligations of
Environmental Laws and related orders of any court or other Governmental
Entity.
b. To the best of Tannehill's knowledge, Tannehill is not in
violation of or subject to (i) any existing, pending or threatened action,
suit, investigation, inquiry or proceeding by or before any court or other
Governmental Entity or (ii) any remedial obligations, in each case under any
applicable Environmental Law relating to the Assets or operations conducted
thereon by any Person at any time during which such Assets were owned, leased,
used or operated by or for the benefit of Tannehill, or by any Person prior to
such time to the extent Tannehill has knowledge of such matters.
c. To the best of Tannehill's knowledge, all notices, permits,
licenses or similar authorizations, if any, required to be obtained or filed by
Tannehill under all applicable Environmental Laws in connection with its past
or present operation or use of any and all Assets or the conduct of its
business, including but not limited to past or present treatment, storage,
disposal or release of a hazardous substance or solid waste into the
environment, have been duly obtained or filed.
d. To the best of Tannehill's knowledge, all hazardous
substances and solid wastes generated at any and all of the Assets or by any
Person in connection with the ownership, lease, use or operation of the
Assets have, at any time during which such Assets were owned, leased, used or
operated by or for the benefit of Tannehill or any Affiliate thereof, been
transported, stored, treated and disposed of by carriers or treatment, storage
and disposal facilities authorized or maintaining valid permits under all
applicable Environmental Laws.
14
e. To the best of Tannehill's knowledge, all hazardous
substances and solid wastes generated at any and all of the Assets or by any
prior owner or operator of the Assets were transported, stored, treated and
disposed of by carriers or treatment, storage and disposal facilities
authorized or maintaining valid permits under all applicable Environmental
Laws.
f. To the best of Tannehill's knowledge, no Person has, at any
time during which the Assets were owned, leased, used or operated by or for the
benefit of Tannehill, disposed of or released any hazardous substance or solid
waste on or under the Assets, except in compliance with all applicable
Environmental Laws.
g. To the best of Tannehill's knowledge, no Person has
disposed of or released any hazardous substance or solid waste on, under or
around the Assets, except in compliance with all applicable Environmental Laws.
h. To the best of Tannehill's knowledge, no facts or
circumstances exist which could reasonably be expected to result in any
liability to any Person with respect to the current or past business and
operations of Tannehill or the Assets in connection with any release,
transportation or disposal of any hazardous substance or solid waste or
action taken or omitted that was not in full compliance with or was in
violation of any applicable Environmental Law.
3.15 Employees.
a. Tannehill has no employees.
b. Officers of Tannehill shall not assert claims against Berry
based on employment by Tannehill for severance, retirement benefits, health
benefits, deferred compensation, violations of any federal, state or local
laws or statutes, wages or other benefits or compensation. Officers of
Tannehill not employed by Berry shall not assert any claim against Berry for
discriminatory hiring practices based on state or federal laws or statutes,
union contracts or for benefits based upon the Employee Retirement Income
Security Act of 1974, as Amended ("ERISA").
c. Tannehill is not currently nor has it ever been a party to
any officer or employee pension or welfare plan to which ERISA applies or to
which Tannehill was required to make contributions for the benefit of its
employees, officers or directors.
d. Neither Tannehill nor any of its Affiliates is a party to,
or bound by, any collective bargaining agreement, contract or other agreement
or understanding with a labor union or labor union organization. There is no
unfair labor practice or labor arbitration proceeding pending or threatened
against Tannehill or any of its Affiliates relating to their business which,
if determined adversely to Tannehill or the Affiliate would have a Material
adverse effect. There are no organizational efforts with respect to the
formation of a collective bargaining unit presently being made or threatened
involving Tannehill or any of its Affiliates.
15
3.16 Investigation. Tannehill and its agents, counsel and
accountants have had reasonable access to representatives of Berry to make such
investigations as they desired with respect to the business, operations and
affairs of Berry in connection with the transactions contemplated hereby. In
determining whether to consummate the transactions contemplated hereby,
Tannehill is relying solely on the terms, covenants, representations,
warranties and indemnities herein and on their own investigations into and
analysis of the business, operations and condition (financial or otherwise)
of Berry and have not relied on Berry, or its officers or directors, with
respect to the interpretation of data relating to the valuation of Tannehill,
the income tax ramifications of this purchase and sale, and/or the ability of
Berry to operate the Assets.
3.17 Operating Agreements. There are no agreements between Tannehill
and any Person or entity regarding the ownership or operation of the Section 32
Property.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BERRY
Except as set forth in the Disclosure Letter from Berry delivered to
Tannehill at or prior to the execution hereof, which shall refer to the
relevant Sections of this Agreement (the "Berry Disclosure Letter"), Berry
hereby represents and warrants to and covenants with Tannehill as follows:
4.1 Corporate Organization. Berry is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite corporate power and authority to carry on its business
as it is now being conducted, and to execute, deliver and perform this
Agreement and to consummate the transactions contemplated hereby.
4.2 Due Authorization, Execution and Delivery; Effect of Agreement.
The execution, delivery and performance by Berry of this Agreement and the
consummation by Berry of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Berry. This
Agreement has been duly and validly executed and delivered by Berry and
constitutes the legal, valid and binding obligation of Berry, enforceable
against it in accordance with its terms, except to the extent that such
enforceability (a) may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to creditors' rights generally; and
(b) is subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law). The
execution, delivery and performance by Berry of this Agreement and the
consummation by Berry of the transactions contemplated hereby (i) do not
require the consent, approval, clearance, waiver, order or authorization of
any Person, except as otherwise disclosed in the Berry Disclosure Letter;
(ii) do not violate any provision of the Certificate of Incorporation or Bylaws
of Berry; (iii) do not conflict with or violate any permit, concession, grant,
franchise, statute, law, rule or regulation of any Governmental Entity or any
order, judgment, award or decree of any court or other
16
Governmental Entity to which Berry is subject; and (iv) do not conflict with,
or result in any breach of, or default or loss of any right under (or an event
or circumstance that, with notice or the lapse of time, or both, would result
in a default), or the creation of an Encumbrance pursuant to, or cause or
permit the acceleration prior to maturity of any amounts owing under, any
indenture, mortgage, deed of trust, lease, or other agreement to which Berry
is a party, in each case, which failure, violation, conflict or breach would,
in the aggregate, materially hinder or impair the consummation of the
transactions contemplated by this Agreement.
4.3 Consents. Except as otherwise disclosed in the Berry Disclosure
Letter, no consent, approval or authorization of, or exemption by, or filing
with, any Governmental Entity or any Person is required in connection with
the execution, delivery or performance by Berry of this Agreement or the
taking of any other action contemplated hereby.
4.4 Litigation. There is no legal, judicial, administrative or
governmental arbitration or other action or proceeding or governmental
investigation pending against Berry, or threatened against Berry, which seeks
to enjoin or obtain damages in respect of the consummation of the transactions
contemplated hereby.
4.5 Brokerage. No investment banker, broker, finder or other Person
is entitled to any brokerage or finder's fee or similar commission in respect
of this Agreement or the transactions contemplated hereby based in any way on
agreements, arrangements or understandings made by or on behalf of Berry.
Berry agrees to indemnify and hold Tannehill and the Partners harmless from and
against any and all claims, liabilities or obligations with respect to all
fees, commissions or expenses asserted by any Person on the basis of any act,
statement, agreement or commitment alleged to have been made by Berry with
respect to any such fee, commission or expense.
4.6 Approvals. No approval of the stockholders of Berry is
necessary or required under the Delaware General Corporation Law, as currently
in effect, or Berry's Certificate of Incorporation or Bylaws for the
consummation of the transactions contemplated by this Agreement.
ARTICLE V
COVENANTS OF TANNEHILL
From and after the date of this Agreement until the Closing, except
as expressly authorized by this Agreement or expressly consented to in writing
by Berry, Tannehill covenants and agrees with Berry as follows:
5.1 Access to Tannehill. Tannehill shall afford to Berry and to the
employees, agents, lenders, investors and authorized representatives of Berry
and to their respective counsel and accountants such reasonable access to the
Assets, officers, offices, equipment, files, agreements, documents, and books
and records of Tannehill (including, without
17
limitation, engineering data and information, computer programs, tapes and
other records), and the opportunity to make notes, abstracts and copies
therefrom, as may be requested by Berry in order that Berry may have full
opportunity to make such reasonable investigations as it shall desire with
respect to the business, operations, Assets and affairs of Tannehill in
connection with the transactions contemplated hereby and Tannehill shall
furnish Berry with such additional financial and operating data and other
information as to the business, operations and Assets of Tannehill as Berry
shall, from time to time, reasonably request for such purpose. Berry hereby
releases Tannehill from all liability arising out of the entry by Berry or
its employees, agents, lenders, investors or authorized representatives onto
the business premises of Tannehill for purposes of conducting the investigation
contemplated by this Section 5.1. Berry hereby agrees to indemnify, defend
and hold harmless Tannehill against all liability, demands, claims, costs,
losses, damages, recoveries, settlements and expenses incurred by Tannehill
arising from or related to the conduct by Berry or its employees, agents,
lenders, investors or authorized representatives of the investigation.
5.2 Governmental Approvals; Consents.
a. Tannehill shall use its best efforts, and shall cooperate
with Berry, to obtain all permits, approvals and consents, and to make all
filings, necessary or required to be obtained or made, and to begin and cause
all waiting periods required to lapse, for Berry to have full use and
enjoyment of the Assets subsequent to the purchase and sale and for the
consummation by Tannehill of the transactions contemplated by this Agreement
under any applicable federal law or the applicable laws of any state having
jurisdiction over the transactions contemplated hereby (all such permits,
approvals, filings and consents and the lapse of all such waiting periods
being referred to as the "Requisite Regulatory Approvals").
b. Tannehill shall use its best efforts to obtain all
consents, approvals, clearances, waivers, orders or authorizations of any
Person necessary to be obtained by Tannehill for Berry to have full use and
enjoyment of the Assets subsequent to the purchase and sale and for the
consummation of the transactions by Tannehill contemplated by this Agreement.
5.3 Litigation and Claims. Tannehill shall promptly inform Berry in
writing of any litigation, or of any claim or controversy or contingent
liability of which Tannehill becomes aware that might reasonably be expected
to become the subject of litigation, against Tannehill or affecting any of
the Assets.
5.4 Notice of Changes. Tannehill shall promptly inform Berry in
writing if Tannehill becomes aware of any change that shall have occurred or
that shall have been threatened (or any development that shall have occurred
or that shall have been threatened involving a prospective change) in the
financial condition, results of operations, business of the Assets or of
Tannehill that is or with the exercise of reasonable business judgment would be
expected to have an adverse effect on the Assets. Tannehill shall promptly
inform Berry in writing if any representation or warranty made by Tannehill in
this Agreement shall cease to be accurate or upon the occurrence of any breach
of any covenant or other agreement required by this Agreement to be performed
or complied with by Tannehill.
18
5.5 Conduct of Business Operations. Tannehill shall not, without
the prior written consent of Berry:
a. Other than in the ordinary course of business, sell, lease
or otherwise dispose of any Assets or any interests therein, or enter into, or
consent to the entering into of, any agreement granting to any third Person
a right to purchase, lease or otherwise acquire any Assets or interests
therein, except as otherwise provided for in this Agreement;
b. Enter into any agreement or incur any obligation, the terms
of which would be violated by the consummation of the transactions contemplated
by this Agreement;
c. (i) Enter into any new line of business with respect to the
Assets; (ii) change its investment, liability management and other material
policies in any respect; (iii) incur or commit to any capital expenditures or
financing; (iv) waive any right under or cancel any contract, debt or claim
listed in any exhibits hereto or the Tannehill Disclosure Letter, which waiver
or cancellation would have an adverse effect on the Assets;
d. Enter into any contract, commitment or arrangement to
amend, modify, supplement or otherwise alter the terms of any existing
contract, agreement or instrument attached to the Tannehill Disclosure Letter
with any Person;
e. Maintain its books of account other than in the usual,
regular and ordinary manner in accordance with good business practices or make
any change in any of its accounting methods or practices; or
f. Take any action that would or might reasonably be expected
to result in any of the conditions to Closing set forth in Article VII hereof
not being satisfied.
g. From the Effective Date to the Closing, fail to use its
best efforts to maintain the daily production over any calendar week during the
period below the average historical daily production from the Section 32
Property.
5.6 Maintain Assets and Operations. During the period from the date
hereof through the Closing, Tannehill shall (a) carry on its business in the
usual, regular and ordinary course in a good and diligent manner consistent
with sound business practices and in compliance with all applicable laws, rules
and regulations; (b) not introduce any new method of management or operation;
(c) preserve in full force and effect all leases, operating agreements,
easements, rights of way, permits, licenses, contracts and other agreements
which relate to the Assets (other than those expiring by their terms); (d) use
its best efforts to perform or cause to be performed all of its obligations in
or under any of such leases, agreements and contracts to be transferred to
Berry hereunder; (e) use its best efforts to safeguard and maintain secure all
reports and other confidential data in the possession of Tannehill relating to
the Assets; and (f) use its best efforts to operate its business and activities
in the same manner as they have been carried out and to
19
maintain the same level of expenditure as have previously been incurred in
connection with such business and activities.
5.7 Exclusive Dealing. Tannehill shall not directly or indirectly,
through any representative or otherwise, solicit or entertain offers from,
negotiate with or in any manner encourage, discuss, accept or consider any
proposal of any Person relating to the acquisition of the Assets or business,
in whole or in part, of Tannehill, whether through direct purchase,
consolidation or other business combination (other than sales of inventory or
in the ordinary course of business) so long as this Agreement has not been
terminated. Tannehill recognizes that Berry has and continues to incur
substantial time and expense in evaluating this transaction. Tannehill
acknowledges that Berry, in reliance on this Section 5.7, will continue to
incur additional time, effort and expense. Tannehill has agreed to this
provision due to the unique terms specified in the AIP and contemplated in this
transaction.
5.8 Termination Fee. In the event that Tannehill breaches Section
5.7 hereof and within twelve (12) months after such breach or termination,
Tannehill closes a transaction with an unrelated third party relating to the
acquisition of a Material portion of the Assets or the business of Tannehill,
in whole or part, whether through direct purchase, merger, consolidation or
other business combination (other than sales of inventory or immaterial
portions of Tannehill's Assets in the ordinary course), then, immediately upon
such closing, Tannehill shall pay to Berry the sum of One Hundred Thousand
Dollars ($100,000). Such payment shall constitute liquidated damages and, in
the absence of fraud or bad faith, shall be in lieu of any other penalty or
remedy Berry might otherwise seek, the parties having determined that the
20
actual damages resulting from the events for which such liquidated damages are
to be awarded would be extremely difficult and uncertain to calculate and that
liquidated damages above represent a good faith estimate of such actual
damages.
___________ __________
Tannehill initials Berry initials
___________ ___________ ___________ __________
___________ ___________ ___________ __________
___________ ___________ ___________ __________
Shareholders' initials
5.9 Taxes. Tannehill shall pay any documentary transfer tax due on
the purchase and sale of the Assets.
ARTICLE VI
COVENANTS OF BERRY
Berry hereby covenants and agrees with Tannehill as follows:
6.1 Cooperation. Subject to the terms and conditions of this
Agreement, Berry shall cooperate with Tannehill to use its best efforts to
secure all necessary consents, approvals, authorizations, exemptions and
waivers from all Persons and Governmental Entities as shall be required to be
obtained by Berry in order to enable Berry to consummate the transactions
contemplated hereby.
6.2 Governmental Approvals. Berry shall use its best efforts, and
shall cooperate with Tannehill, to obtain all Requisite Regulatory Approvals.
6.3 Disclosure Responsibilities. Berry, as a reporting company
under Section 12 of the Securities Exchange Act of 1934, as amended ("Exchange
Act"), and listed company under the New York Stock Exchange (the "NYSE"), is
required to comply with certain disclosure requirements regarding its business
activities, including, but not limited to, the issuance of press releases and
the preparation and filing of periodic reports with the Securities and
Exchange Commission. In order to comply with the disclosure requirements of
the Exchange Act and NYSE, as well as the timing of such disclosures, all
statements to the public, including press releases, shall be at the sole
discretion of Berry.
21
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF BERRY
The obligations of Berry to consummate the transactions contemplated
by this Agreement shall be subject to the satisfaction (or waiver by Berry) on
or prior to the Closing of all of the following conditions:
7.1 Accuracy of Representations and Warranties. The representations
and warranties of Tannehill set forth in this Agreement shall be true and
correct in all respects as of the date when made and at and as of the Closing.
7.2 Performance of Covenants and Agreements. Tannehill shall have
duly performed and complied in all respects with the covenants, agreements and
conditions required by this Agreement to be performed or complied with by it
prior to or at the Closing. None of the events or conditions entitling Berry
to terminate this Agreement under Article IX hereof shall have occurred and
be continuing.
7.3 Consents. Any consent required for the consummation of this
purchase and sale under any agreement, contract, license or other instrument
described in any exhibit hereto or referred to herein, or for the continued
enjoyment by Berry of any benefits of such agreement, contract, license or
other instrument after the Closing, which consent Tannehill is specifically
obligated to obtain pursuant to this Agreement, shall have been obtained and
be effective.
7.4 Governmental Approvals. All Requisite Regulatory Approvals
shall have been obtained, made or lapsed and shall be in full force and effect.
7.5 Approval of Counsel. The form and substance of all legal
matters contemplated hereby and all papers delivered hereunder shall be
reasonably acceptable to Nordman, Cormany, Hair & Compton, counsel to Berry.
7.6 Officers' Certificate. Berry shall have received a certificate
of Tannehill, substantially in the form of Exhibit 8 attached hereto and made a
part hereof, satisfactory in form and substance to Berry, executed on behalf
of Tannehill by its President and Secretary, as to compliance with the matters
set forth in Sections 7.1, 7.2, 7.3 and 7.4 of this Agreement.
7.7 Resolutions. Berry shall have received certified copies of
Resolutions of the Board of Directors of Tannehill and the written consent of
the Shareholders owning one hundred percent (100%) of the outstanding shares
of common stock of Tannehill approving this Agreement, and the transactions
contemplated hereby.
7.8 Opinion of Counsel. Berry shall have received the opinion of
Roger Coley, counsel to Tannehill and the Shareholders, in form and content
satisfactory to Berry, substantially in the form of Exhibit 9 attached
hereto and made a part hereof.
22
7.9 Closing of Agreements. The Closing shall not occur unless the
Closings contemplated by the Partnership Purchase Agreement and the TEC
Purchase Agreement have occurred or will occur concurrently with the Closing.
7.10 Condition of Section 32 Property. Berry shall have approved
title to and the condition of the Section 32 Property as follows:
a. A current CLTA Preliminary Title Report prepared by First
American Title Company covering the Section 32 Property, accompanied by legible
copies of all documents referred to as exceptions in the report to the extent
reasonably available through Tannehill's best efforts and a map plotting all
easements (the "PTR"), has been delivered to Berry by Tannehill.
b. If Berry elects to obtain an ALTA Policy, a survey of the
Section 32 Property shall have been prepared, at Berry's expense, by a licensed
surveyor or registered civil engineer, in sufficient detail to provide for the
policy of title insurance to be purchased by Berry, certified to Berry in a
form satisfactory to Berry, without boundary, encroachment or survey exceptions
and which shows the location of all easements and improvements. It shall
be Berry's sole responsibility to obtain such survey by the Title Approval
Date defined below. Berry's failure to do so will be deemed Berry's waiver of
this condition. If Berry does not elect to obtain an ALTA Policy, then
Tannehill shall provide Berry with a CLTA Policy at Tannehill's expense.
c. Title shall be free of Encumbrances not approved by Berry.
On or before November 8, 1996 (the "Title Approval Date"), Berry shall advise
Tannehill in writing of what exceptions to coverage, if any, are unacceptable
to Berry (the "Title Disapproval Notice"). Notwithstanding any other provision
of this Section 7.10, Berry hereby objects to all monetary Encumbrances, which
monetary Encumbrances (if any) Tannehill shall cause to be eliminated at the
Closing except for non-delinquent real property taxes and assessments, which
shall be one of the exceptions to coverage. Tannehill shall have ten (10)
business days after receipt of a Title Disapproval Notice to give Berry
notice either: (i) that Tannehill will remove, on or before the Closing, any
disapproved exceptions to coverage and provide Berry with evidence satisfactory
to Berry of such removal; or (ii) that Tannehill elects not to cause such
exceptions to coverage to be removed, in which case Berry shall have five (5)
business days thereafter to notify Tannehill in writing of Berry's election
(a) to waive any objectionable exceptions and to proceed with the purchase of
and to take the Section 32 Property subject to such exceptions, but otherwise
pursuant to the terms of this Agreement, or (b) to terminate this Agreement.
If Berry shall fail to give Tannehill notice of such election within said five
(5) business days, Berry shall be deemed to have elected to waive its objection
to the coverage and to proceed with this purchase. In the event that during
escrow any amended or supplemented PTR is issued disclosing new exceptions to
coverage, Berry shall again have the right to give a Title Disapproval Notice
as to such new exception, in which case all the foregoing rights of the parties
following the giving of such a notice shall again apply as stated above.
23
d. Berry shall not have given written notice of disapproval of
matters related to the Section 32 Property. Berry's failure to give written
notice of disapproval on or before November 8, 1996 (the "Property Approval
Date") of all aspects and matters related to the Section 32 Property, including
size, shape, configuration, access, easements (express, implied and by
prescription), geologic/subsidence and soil conditions, hydrologic conditions,
water supply quantity and quality, buildings, tanks, pipelines, oil and gas
wells, oils and gas surface equipment, and the condition of all other fixed
equipment shall be deemed to be approved. To facilitate Berry's review,
Tannehill shall deliver to Berry within fifteen (15) business days after the
date of this Agreement, (i) any environmental reports prepared by or for
Tannehill covering all or any portion of the Section 32 Property, without
representation or warranty as to their accuracy or validity; (ii) copies of
any service contracts now in effect, all of which are cancelable at any time,
or by the giving of not more than thirty (30) days' notice; and (iii) any well
logs and reports of water usage made to the Regional Water Quality Control
Board, the Division of Oil, Gas and Geothermal Resources and other agencies,
as applicable.
e. Berry shall be satisfied that there are no Hazardous
Materials, as that term is defined by all or any applicable laws, on the
Section 32 Property or in the groundwater thereunder and Berry's acceptance and
approval of an Environmental Audit and Assessment ("Phase I Report") as to the
Section 32 Property performed at Berry's direction and sole cost and expense.
Berry's failure to give notice of disapproval of the Phase I Report obtained
by Berry, if any, on or before the Property Approval Date shall be deemed as
Berry's approval thereof and acceptance of the Section 32 Property in its
present condition. In the event such Phase I Report or any Phase II Report
involving soil and/or groundwater tests, approved in advance by Tannehill,
discloses that the Section 32 Property or groundwater thereunder is
contaminated with Hazardous Materials in quantities requiring remediation or
removal under existing law, Berry shall have the right to terminate this
Agreement. Except as provided in the succeeding sentence, Berry agrees that
the Phase I Report and any other report, tests, and information and conclusions
stated therein shall be kept confidential and that any reporting requirements
to any governmental agency or any other third party arising therefrom shall be
the sole responsibility of Tannehill. Notwithstanding the foregoing, in the
event that any then applicable law, statute or ordinance requires Berry to
report or disclose the Report or Report findings to a governmental agency, then
and only then shall Berry disclose the Report findings. In no event shall
Berry be entitled to conduct any soil borings or groundwater tests without
Tannehill's prior written approval, which may be conditioned or denied in
Tannehill's sole discretion.
f. Berry shall have received an affidavit, certification or
notice required by Section 1445 of the Code and the Regulations pursuant
thereto. In addition, Tannehill shall have provided Berry with the
certification required to show that withholding is not required pursuant to
California Revenue and Taxation Code Section 18662(e).
7.11 Good Standing Certificates. Tannehill shall have delivered
valid Good Standing Certificates from the Secretary of State of California and
the California Franchise Tax Board showing Tannehill in good standing.
24
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF TANNEHILL
The obligations of Tannehill to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction (or waiver
by Tannehill) on or prior to the Closing of all of the following conditions:
8.1 Accuracy of Representations and Warranties. The representations
and warranties of Berry set forth in this Agreement shall be true and correct
in all material respects as of the date when made and at and as of the Closing.
8.2 Performance of Covenants and Agreements. Berry shall have duly
performed and complied in all respects with the covenants, agreements and
conditions required by this Agreement to be performed or complied with by it
prior to or at the Closing. None of the events or conditions entitling
Tannehill to terminate this Agreement under Article IX hereof shall have
occurred and be continuing.
8.3 Resolutions. Tannehill shall have received certified copies of
resolutions of the Board of Directors of Berry approving this Agreement and the
transactions contemplated hereby.
8.4 Approval of Counsel. The form and substance of all legal
matters contemplated hereby and all papers delivered hereunder shall be
reasonably acceptable to Roger Coley, counsel to Tannehill and the
Shareholders.
8.5 Governmental Approvals. All Requisite Regulatory Approvals
shall have been obtained, made or lapsed and shall be in full force and effect.
8.6 Officers' Certificate. Tannehill shall have received a
certificate of Berry, substantially in the form of Exhibit 10 attached hereto
and made a part hereof, satisfactory in form and substance to Tannehill,
executed on behalf of Berry by the President and Secretary of Berry, as to
compliance with the matters set forth in Sections 8.1, 8.2, 8.3 and 8.5 of
this Agreement.
8.7 Opinion of Counsel. Tannehill shall have received the opinion
of Nordman, Cormany, Hair & Compton, counsel to Berry, in form and content
reasonably satisfactory to Tannehill, substantially in the form of Exhibit 11
attached hereto and made a part hereof.
8.8 Closing of Agreements. The Closing shall not occur unless the
Closings contemplated by the Partnership Purchase Agreement and the TEC
Purchase Agreement have occurred or will occur concurrently with the Closing.
25
ARTICLE IX
TERMINATION PRIOR TO CLOSING
9.1 Termination. This Agreement may be terminated at any time prior
to the Closing:
a. By the mutual written consent of Berry and Tannehill;
b. Subject to the right of either party to extend the Closing
as provided in Section 2.7 hereof, upon written notice by either party to the
other party if Closing has not occurred forty-five (45) days after the
execution of this Agreement;
c. By Berry in writing if Tannehill or the Shareholders shall
be in Default;
d. By Tannehill in writing if Berry shall be in Default;
e. By Berry if, after the date of this Agreement, there shall
have occurred a Material adverse change (or any development or condition
involving a prospective Material adverse change) in the business, financial
condition or results of operations of Tannehill; or
f. By Berry if the transaction is not approved by all the
Shareholders.
9.2 Effect on Obligations. Termination of this Agreement pursuant
to this Article shall terminate all obligations of the parties hereunder,
except for the obligation under Sections 3.12 and 4.5; provided, however, that
termination pursuant to paragraphs 9.1c or d hereof shall not relieve any
defaulting party from any liability to the other parties hereto.
ARTICLE X
INDEMNIFICATION
10.1 Indemnification by Berry. Berry agrees to indemnify, defend and
hold Tannehill, and agents of Tannehill, harmless from and against any and all
loss, liability, damage, costs and expenses (including interest, penalties,
settlements, fines, costs and expenses incurred in connection with
investigating and defending any claims or causes of action, and reasonable
attorneys' fees) that Tannehill and its agents may incur or become subject to
arising out of or due to any inaccuracy of any representation or the breach of
any warranty, covenant, undertaking or other agreement of Berry contained in
this Agreement.
10.2 Indemnification by Tannehill and the Shareholders. Tannehill
and the Shareholders, jointly and severally, agree to indemnify, defend and
hold Berry, and the officers,
26
directors, employees and agents of Berry (collectively, the officers,
directors, employees and agents being referred to in each case as its
"Related Parties") harmless from and against any and all lawsuits, liability,
damage, costs and expenses (including interest, penalties, settlements, fines,
costs and expenses incurred in connection with investigating and defending
any claims or causes of action, and reasonable attorneys' fees) that Berry and
its Related Parties may incur or become subject to arising out of or due to any
inaccuracy of any representation or the breach of any warranty, covenant,
undertaking or other agreement of Tannehill or the Shareholders contained in
this Agreement. Tannehill and the Shareholders also jointly and severally
agree to indemnify, defend and hold Berry, and the Related Parties, harmless
from any and all lawsuits, liability, damage, cost and expenses (including
interest, penalties, settlements, fines, costs and expenses incurred in
connection with investigating and defending any claims or causes of action and
reasonable attorneys' fees) that Berry and its Related Parties may incur or
become subject to arising out of or due to the actions of Baker Chemical or the
Baker Litigation or attributable to environmental conditions created directly
or indirectly by or as a result of the actions of Baker Chemical and/or its
employees, officers and agents.
10.3 Survival. The several warranties, indemnities, representations,
covenants and agreements of the parties contained in this Agreement and in any
other instrument delivered pursuant hereto shall survive the Closing and shall
remain in full force and effect thereafter.
10.4 Notice and Opportunity to Defend.
a. If a party seeking indemnification (the "Indemnitee")
becomes aware of any matters that it believes may give rise to an
indemnifiable claim, or asserts any claim that it believes may be indemnifiable
pursuant to this Agreement, the Indemnitee shall give the party obligated to
provide indemnification (the "Indemnifying Party") prompt written notice of
such matter or claim, stating with particularity the nature of such matter or
the aforementioned claim and the amount thereof. Failure to provide such
notice shall not affect the right of the Indemnitee to indemnification
except to the extent such failure shall have resulted in liability to the
Indemnifying Party that could have been actually avoided had such notice been
provided within such required time period.
b. If the matter that the Indemnitee believes gives rise to an
indemnifiable claim does not involve a third party claim against an Indemnitee,
the Indemnifying Party shall have thirty (30) days from the date on which it
received notice of such claim pursuant to this Section to respond to such
notice. If such Indemnifying Party accepts responsibility or does not respond
within such thirty (30)-day period, the Indemnifying Party shall promptly pay
to the Indemnitee the full amount of such claim. If the Indemnifying Party
rejects any liability with respect to such claim, it shall give written notice
of such objection to the Indemnitee within such thirty (30)-day period and the
parties shall seek to resolve such claim by agreement. If the parties are
unable to resolve such claim by agreement within sixty (60) days following the
expiration of such thirty (30)-day period mentioned above, the parties shall be
entitled to pursue, without prejudice to any of their rights hereunder, such
remedies as may be available to the parties under applicable law.
27
c. In the event any action, suit, proceeding or investigation
is brought against the Indemnitee by a third party which the Indemnitee
believes may give rise to an indemnifiable claim, the Indemnitee shall give
the Indemnifying Party prompt written notice of the commencement of such
action, suit, proceeding or investigation as provided in paragraph a. of this
Section. Such Indemnifying Party shall have a period of thirty (30) days after
receipt of such notice within which to respond to such notice. If such
Indemnifying Party does not respond within such thirty (30)-day period or
rejects responsibility for such matter in whole or in part, the Indemnitee
shall be free to pursue, without prejudice to any of its rights hereunder,
such remedies as may be available to such party under applicable law. If such
Indemnifying Party accepts responsibility, such Indemnifying Party shall, as
between the Indemnitee and the Indemnifying Party, be obligated to compromise
or defend such matter, at its own expense. The Indemnitee shall employ counsel
of its choice and the Indemnifying Party shall reimburse the Indemnitee for
attorneys' fees and costs. The Indemnifying Party shall cooperate fully with
the Indemnitee and its counsel in the defense against any such asserted
liability. Any compromise of such asserted liability by the Indemnitee shall
require the prior written consent of the Indemnifying Party, which shall not
be unreasonably withheld. If, however, the Indemnitee refuses its consent to a
bona fide offer of settlement that involves solely the payment of cash that the
Indemnifying Party wishes to accept, the Indemnitee may continue to pursue such
matter, free of any participation by the Indemnifying Party, at the sole
expense of the Indemnitee. In such event, the obligation of the Indemnifying
Party to the Indemnitee shall be equal to the lesser of (i) the amount of the
offer of settlement that the Indemnitee refused to accept plus the costs and
expenses of the Indemnitee prior to the date the Indemnifying Party notified
the Indemnitee of the offer of settlement; and (ii) the actual out-of-pocket
amount the Indemnitee is obligated to pay as a result of such party's
continuing to pursue such matter. An Indemnifying Party shall be entitled to
recover from the Indemnitee any additional expenses incurred by such
Indemnifying Party as a result of the decision of the Indemnitee to pursue such
matter.
10.5 General. The indemnification provided in this Agreement shall
apply regardless of whether the matter subject to indemnification involved an
action taken or omitted that was negligent, grossly negligent or reckless by
the Person to be so indemnified. It is understood that such indemnification is
intended to be a means of compensating the parties for any damage or liability
directly or indirectly realized by them for matters subject to such
indemnification. To the extent the indemnification provided for herein may not
be provided to any Person under law, such indemnification shall be required to
be provided to any other Person for whom such indemnification may be
permissible as herein provided.
ARTICLE XI
MISCELLANEOUS
11.1 Entire Agreement. This Agreement and related documents executed
concurrently herewith constitute the sole understanding of the parties hereto
with respect to the matters provided for herein and supersedes the AIP and any
previous agreements and
28
understandings between the parties with respect to the subject matter hereof.
No amendment, modification or alteration of the terms or provisions of this
Agreement shall be binding unless the same shall be in writing and duly
executed by Berry and Tannehill.
11.2 Successors and Assigns. This Agreement will inure to the
benefit of and be binding upon Berry, Tannehill and the Shareholders and their
respective successors and permitted assigns. Neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any of
the parties hereto without the prior written consent of the other parties
hereto.
11.3 Expenses. Except as provided in Sections 10.1 and 10.2 hereof,
each party hereto shall be responsible for the payment of the fees and expenses
of their respective counsel, accountants and other experts.
11.4 Taking of Necessary Action. Subject to the terms and conditions
of this Agreement, each of the parties hereto agrees, subject to applicable
laws, to use all reasonable best efforts promptly to take or cause to be
taken all action and to promptly do or cause to be done all things necessary,
proper or advisable under applicable laws and regulations to consummate and
make effective the transactions contemplated by this Agreement. Without
limiting the foregoing and subject to the terms and conditions of this
Agreement, the parties shall use their reasonable best efforts to obtain and
make all consents, approvals, assurances and filings of or with third parties
and Governmental Entities necessary or advisable for the consummation of the
transactions contemplated by this Agreement. Each party shall cooperate with
the other in good faith to help the other satisfy its obligations hereunder.
11.5 Invalidity. Except for satisfaction of the conditions of
Article VII or VIII, and the provisions of Article X, if any term or other
provision of this Agreement is invalid, illegal or incapable of being enforced
by any rule of law, or public policy, all other conditions and provisions of
this Agreement shall nevertheless remain in full force and effect so long as
the economic and legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party. Upon such
determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good faith
to modify this Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner to the end that transactions
contemplated hereby are fulfilled to the extent possible.
11.6 Attorneys' Fees. In the event of any claim, dispute or
controversy arising out of or relating to this Agreement, including an action
for declaratory relief, the prevailing party in such action or proceeding shall
be entitled to recover its taxable costs or arbitration fees, and reasonable
out-of-pocket expenses, including, but not limited to, telephone calls,
photocopies, expert witnesses, travel, computer expenses related to litigation,
and attorneys' fees to be fixed by the court or the arbitrator. Such recovery
shall include court costs, out-of-pocket expenses and attorneys' fees on
appeal, if any. The court shall determine who is the "prevailing party,"
whether or not the dispute or controversy proceeds to final judgment.
29
11.7 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall constitute the same instrument.
11.8 Headings. The headings of the articles, sections and paragraphs
of this Agreement and of the exhibits hereto are included for convenience only
and shall not be deemed to constitute part of this Agreement or to affect the
construction hereof or thereof.
11.9 Construction and References. Words used in this Agreement,
regardless of the number or gender specifically used, shall be deemed and
construed to include any other number, singular or plural, and any other
gender, masculine, feminine or neuter, as the context shall require. Unless
otherwise specified, all references in this Agreement to articles, sections,
paragraphs or clauses are deemed references to the corresponding articles,
sections, paragraphs or clauses in this Agreement, and all references in this
Agreement to exhibits are references to the corresponding exhibits attached
to this Agreement.
11.10 Modification and Waiver. Any of the terms or conditions of
this Agreement may be waived in writing at any time by the party which is
entitled to the benefits thereof. No waiver of any of the provisions of this
Agreement shall be deemed to or shall constitute a waiver of any other
provisions hereof (whether or not similar).
11.11 Notices. Any notice, request, instruction or other
document to be given hereunder by any party hereto to any other party shall
be in writing and delivered personally, via telecopy (with receipt confirmed)
or by registered or certified mail, postage prepaid:
(a) if to Tannehill, to:
Tannehill Oil Company, Inc.
Attn: Mr. Albert G. Boyce, Jr.,
Treasurer and Chief Financial Officer
120 Manteca Avenue
P.O. Box 871
Manteca, California 95336
Facsimile No. (209) 239-7886
Confirmation No. (209) 239-4014
with copies to:
Roger Coley, Esq.
330 H Street, No. 7
Bakersfield, California 93304
Facsimile No. (805) 327-9120
Confirmation No. (805) 328-5575
29
(b) if to Berry, to:
Berry Petroleum Company
Attn: Jerry V. Hoffman
President and Chief Executive Officer
28700 Hovey Hills Road
Post Office Bin X
Taft, California 93268
Facsimile No. (805) 769-8960
Confirmation No. (805) 769-8811
with copies to:
Nordman, Cormany, Hair & Compton
Attn: Laura K. McAvoy, Esq.
1000 Town Center Drive, Sixth Floor
Post Office Box 9100
Oxnard, California 93031-9100
Facsimile No. (805) 988-8387
Confirmation No. (805) 485-1000
or at such other address for a party as shall be specified by like notice. Any
notice that is delivered personally in the manner provided herein shall be
deemed to have been duly given to the party to whom it is directed upon actual
receipt by such party (or its agents for notices hereunder). Any notice that
is addressed and mailed in the manner herein provided shall be conclusively
presumed to have been duly given to the party to which it is addressed at the
close of business, local time of the recipient, on the third day after the day
it is so placed in the mail. Any notice that is sent by telecopy shall be
deemed to have been duly given to the party to which it is addressed upon
telephonic confirmation of the same as provided herein. A copy of any notices
delivered by telecopy shall promptly be mailed in the manner herein provided
to the party to which such notice was given.
31
11.12 Public Announcements. Without the prior express consent of
Berry, neither Tannehill nor any Shareholder shall make any public statements,
including, without limitation, any press releases, with respect to this
Agreement and the transactions contemplated hereby.
11.13 Governing Law; Interpretation. This Agreement shall be
construed in accordance with and governed by the laws of the State of
California (regardless of the laws that might otherwise govern under applicable
California principles of conflict of laws) as to all matters, including, but
not limited to, matters of validity, construction, effect, performance and
remedies.
32
11.14 Jurisdiction. Any legal action or proceeding with respect
to this Agreement may be brought in the federal or state courts for the County
of Kern, in the State of California, and by execution and delivery of this
Agreement, Berry and Tannehill hereby accept the jurisdiction of the aforesaid
courts.
IN WITNESS WHEREOF, Berry and Tannehill have caused this Agreement to
be executed as of the date first above written.
BERRY PETROLEUM COMPANY, TANNEHILL OIL COMPANY, INC.,
a Delaware corporation a California corporation
By: _____________________________ By: ________________________________
Jerry V. Hoffman, President John W. Tannehill, President
and Chief Executive Officer
By: _____________________________ By: ________________________________
Kenneth A. Olson, Secretary James L. Hinkle, Secretary
The undersigned constitute all of the Shareholders of Tannehill and hereby
agree jointly and severally to be bound to the terms of this Agreement
including but not limited to the Agreement to Indemnify Berry Petroleum Company
under the terms of this Article X of this Agreement. By signing this
Agreement, the Shareholders of Tannehill hereby unanimously consent to the
transfer of the Assets from Tannehill to Berry.
BOYCE RESOURCE DEVELOPMENT
COMPANY, a California corporation
By: _____________________________ ______________________________________
Albert G. Boyce, Jr., President Albert G. Boyce, Jr., as Trustee
and Secretary of Trust "B" Under Will of
Albert G. Boyce, Sr., Deceased
___________________________________ ______________________________________
William J. Boyce Albert G. Boyce V
___________________________________ ______________________________________
Mary K. Boyce John T. Hinkle
33
___________________________________ ______________________________________
Bettianne H. Bowen James L. Hinkle
VERNIER RESOURCES CORPORATION, GENERAL WESTERN, INC.,
a Texas corporation a New Mexico corporation
By: _____________________________ By: ________________________________
Bettianne H. Bowen, President James L. Hinkle, President
and Secretary
By: ____________________________
Cheryl Bailey Harrison, Secretary
___________________________________ ______________________________________
Lisle Q. Tannehill Thomas H. Tannehill
___________________________________ ______________________________________
Gail Kay Tannehill, as Trustee of Delmar R. Archibald, as Trustee of the
the Gail Kay Tannehill Family Trust, Delmar R. Archibald Family Trust,
dated April 9, 1996 dated June 22, 1982
___________________________________ ____________________________________
John W. Tannehill Joy A. Archibald, as Trustee of the
Delmar R. Archibald Family Trust,
dated June 22, 1982
Spousal Consents
The undersigned, spouses of the Shareholders named in this Agreement,
hereby consent to the terms and conditions of this Agreement and agree that
their community property, if any, included in the Assets, as defined herein,
is subject to this Agreement.
___________________________________ ____________________________________
___________________________________ ____________________________________
___________________________________ ____________________________________
1
EXHIBIT 1 TO THAT CERTAIN PURCHASE AND SALE AGREEMENT BY AND
BETWEEN BERRY PETROLEUM COMPANY
AND TANNEHILL OIL COMPANY, INC.
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
NORDMAN, CORMANY, HAIR & COMPTON
Attn: Laura K. McAvoy
1000 Town Center Drive, 6th Floor
Post Office Box 9100
Oxnard, California 93031-9100
MAIL TAX STATEMENTS TO:
BERRY PETROLEUM COMPANY
Attn: Jerry V. Hoffman, President
28700 Hovey Hills Road
Post Office Bin X
Taft, California 93268
Order No. KER 1125444 A.P.N. 220-080-48-00-8
220-080-49-00-1
220-080-50-00-3
220-080-51-00-6
Escrow No. 1128321N
GRANT DEED
FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged,
TANNEHILL OIL COMPANY, INC., a California corporation, hereby GRANT(S) to BERRY
PETROLEUM COMPANY, a Delaware corporation, the following described real
property in the County of Kern, State of California:
2
PARCEL 1:
The North half of the Southwest quarter and the Southeast quarter of the
Southwest quarter of Section 32, Township 32 South, Range 24 East, M.D.B.M., in
the unincorporated area of the County of Kern, State of California, as per the
official plat thereof on file in the Office of the Surveyor General.
Excepting therefrom any vein or lode of quartz or other rock in place bearing
gold, silver, cinnabar, lead, tin, copper or other valuable deposits within
the land described above which may have been discovered or known prior to
November 1, 1901.
Excepting and reserving therefrom a royalty of four percent (4%) of all oil,
gas and other hydrocarbon substances produced from all zones lying below
4,500 feet below the surface of the above described parcel.
PARCEL 2:
The Southeast quarter of Section 32, Township 32 South, Range 24 East,
M.D.B.M., in the City of Taft, State of California, as per the official plat
thereof on file in the Office of the Surveyor General.
Excepting therefrom any vein or lode of quartz or other rock in place bearing
gold, silver, cinnabar, lead, tin, copper or other valuable deposits within
the land described above which may have been discovered or known prior to
June 10, 1910.
Excepting and reserving therefrom a royalty of four percent (4%) of all oil,
gas and other hydrocarbon substances produced from all zones lying below
4,500 feet below the surface of the above described parcel.
PARCEL 3:
The Northeast quarter of Section 32, Township 32 South, Range 24 East,
M.D.B.M., in the City of Taft, State of California, as per the official plat
thereof on file in the Office of the Surveyor General.
Excepting therefrom any vein or lode of quartz or other rock in place bearing
gold, silver, cinnabar, lead, tin, copper or other valuable deposits within
the land described above which may have been discovered or known prior to
October 26, 1910.
3
Excepting and reserving therefrom a royalty of four percent (4%) of all oil,
gas and other hydrocarbon substances produced from all zones lying below
4,500 feet below the surface of the above described parcel.
Dated: October 1, 1996 TANNEHILL OIL COMPANY, INC.,
a California corporation
_____________________________________
By: John W. Tannehill, President
_____________________________________
By: James L. Hinkle, Secretary
STATE OF CALIFORNIA )
)
COUNTY OF _____________ )
On ___________________, before me, , Notary Public,
personally appeared JOHN W. TANNEHILL, personally known to me (or proved to me
on the basis of satisfactory evidence) to be the person whose name is
subscribed to the within instrument and acknowledged to me that he executed
the same in his authorized capacities, and that by his signature on the
instruments the person, or the entity upon behalf of which the person acted,
executed the instrument.
WITNESS my hand and official seal.
__________________________________
STATE OF CALIFORNIA )
)
COUNTY OF _____________ )
On ___________________, before me, , Notary Public, personally
appeared JAMES L. HINKLE, personally known to me (or proved to me on the basis
of satisfactory evidence) to be the person whose name is subscribed to the
within instrument and acknowledged to me that he executed the same in his
authorized capacities, and that by his signature on the instruments the person,
or the entity upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
__________________________________
4
STATEMENT OF TAX DUE UNDER PROVISIONS OF THE
DOCUMENTARY STAMP ACT
and
REQUEST THAT STAMPS NOT BE MADE A PART OF THE PERMANENT RECORD
TO: Kern County Recorder
THE TAX DUE PURSUANT TO THE PROVISIONS OF THE DOCUMENTARY STAMP ACT ON THE
DEED, TRANSFER, OR CONVEYANCE FROM: Tannehill Oil Company, Inc.
[Name of Grantor(s) or Lessor(s)]
TO: Berry Petroleum Company
[Name of Grantee(s) or Lessee(s)]
OF THE FOLLOWING BRIEFLY DESCRIBED REAL PROPERTY: T 32 S, R 24 E, Section 321
APN 220-080-48-00-8; 220-080-49-00-1; 220-080-50-00-3; 220-080-51-00-6
Amounts to: $________________ Amounts to: $___________________
(X) Unincorporated Area (X) City of Taft
(X) Computed on full value (X) Computed on full value
( ) Computed on full value LESS liens ( ) Computed on full value
and encumbrances remaining LESS liens and
encumbrances remaining
Documentary Transfer Tax $____________
Computed on full value of property
conveyed
Tannehill Oil Company, Inc.
By: _________________________________
Affix transfer Tax Stamp Here Stamp Reserved for Recorder's Coding Stamp
Date: __________________________ By: _____________________________________
Title: _____________________________________
AFTER THE PERMANENT RECORD IS MADE, THIS DOCUMENT WILL BE ATTACHED TO THE
CONVEYING DOCUMENT AND RETURNED TO THE PARTY ENTITLED THERETO. A COPY WILL BE
MADE AND PLACED ON FILE FOR AUDITING PURPOSES.
1
EXHIBIT 2 TO THAT CERTAIN PURCHASE AND SALE AGREEMENT BY AND
BETWEEN BERRY PETROLEUM COMPANY
AND TANNEHILL OIL COMPANY, INC.
BILL OF SALE
FOR VALUABLE CONSIDERATION, TANNEHILL OIL COMPANY, INC., a California
corporation ("Seller"), hereby grants, bargains, transfers and sells to BERRY
PETROLEUM COMPANY, a Delaware corporation (hereinafter referred to as "Buyer"),
the personal property listed on Schedule A attached hereto and incorporated
herein by this reference as though set forth in full (the "Personal Property").
Seller represents and warrants to Buyer that it is the lawful owner of and
holds good and marketable title to the Personal Property, free and clear of
restrictions on or conditions to transfers or assignment, and free and clear of
all liens, pledges, charges or encumbrances of any nature whatsoever. Seller
and Seller's successors and assigns shall warrant and defend Seller's good and
marketable title to the Personal Property and Seller's right to sell the same
against the lawful claims and demands of all persons whomsoever.
Buyer acknowledges and agrees that it will purchase the Personal Property
AS IS and WHERE IS. Seller makes no representations or warranties regarding
the suitability of the Personal Property for any particular use.
DATED this 1st day of October, 1996.
BERRY PETROLEUM COMPANY, TANNEHILL OIL COMPANY, INC., a
a Delaware corporation California corporation
By: _____________________________ By: ______________________________
Jerry V. Hoffman, President John W. Tannehill, President
and Chief Executive Officer
By: _____________________________ By: ______________________________
Kenneth A. Olson, Secretary James L. Hinkle, Secretary
"Buyer" "Seller"
2
SCHEDULE A
TO EXHIBIT 2
BILL OF SALE ATTACHED TO AND MADE A PART OF THAT CERTAIN PURCHASE AND
SALE AGREEMENT DATED NOVEMBER 8, 1996, BY AND BETWEEN BERRY PETROLEUM
COMPANY AND TANNEHILL OIL COMPANY, INC.
3
Tannehill Oil Company, Inc.
Fixed Assets as of 10/1/96
Date in Service Division/Class Number Description
CLASS: 8O - LEASE/WELL GENERAL
01/01/93 00 80 93001 Test
01/01/93 00 80 93002 100 bbl. tank #31
01/01/93 00 80 93003 100 bbl. tank #52
01/01/93 00 80 93004 FWI/Simplex Pump
01/01/93 00 80 93005 100 bbl. Tank #231
01/01/93 00 80 93006 Gas Trap/Scrubbe
01/01/93 00 80 93007 1600 bbl. Prod TA
01/01/93 00 80 93008 1600 bbl. Prod TA
01/01/93 00 80 93009 LACT Unit
01/01/93 00 80 93010 Heater-Treater
01/01/93 00 80 93011 Shipping Pump
01/01/93 00 80 93012 500 bbl. wash tank
01/01/93 00 80 93013 Shipping Pump H1
01/01/93 00 80 93014 Pumping Unit (Nat
01/01/93 00 80 93015 Pumping Unit - Luf
01/01/93 00 80 93016 Pumping Unit - Bet
01/01/93 00 80 93017 Pumping Unit - Luf
01/01/93 00 80 93018 Pumping Unit - Luf
01/01/93 00 80 93019 Pumping Unit - Luf
01/01/93 00 80 93020 Pumping Unit - Nat
01/01/93 00 80 93021 Pumping Unit - Nat
01/01/93 00 80 93023 Valves/Fittings
1
EXHIBIT 3 TO THAT CERTAIN PURCHASE AND SALE AGREEMENT BY AND
BETWEEN BERRY PETROLEUM COMPANY
AND TANNEHILL OIL COMPANY, INC.
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
NORDMAN, CORMANY, HAIR & COMPTON
Attn: Laura K. McAvoy, Esq.
1000 Town Center Drive, 6th Floor
Post Office Box 9100
Oxnard, California 93031-9100
MAIL TAX STATEMENTS TO:
Berry Petroleum Company
Jerry V. Hoffman, President
28700 Hovey Hills Road
Post Office Bin X
Taft, California 93265
A.P.N. 220-080-48-00-8
220-080-49-00-1
220-080-50-00-3
220-080-51-00-6
ASSIGNMENT OF LEASES, RIGHTS OF WAY, EASEMENTS AND CONTRACTS
THIS ASSIGNMENT OF LEASES, RIGHTS OF WAY, EASEMENTS AND CONTRACTS
("Assignment"), dated and effective as of 12:01 a.m. Pacific Standard Time, on
October 1, 1996 (the "Effective Date"), is from TANNEHILL OIL COMPANY, INC., a
California corporation ("Assignor"), whose address is 29091 Highway 33
Maricopa, California 93252, P.O. Box 98, Taft, California 93268, to BERRY
PETROLEUM COMPANY, a Delaware corporation ("Assignee"), whose address is 28700
Hovey Hills Road, Post Office Bin X, Taft, California 93268.
1. Assignment. For the sum of Ten Dollars ($10) and other good and
valuable consideration, the receipt and sufficiency of which Assignor hereby
acknowledges, Assignor hereby transfers, grants, bargains, conveys and assigns
to Assignee, effective for all purposes as of the Effective Date, subject to
the terms and conditions set forth in that certain Purchase and Sale Agreement
dated November 8, 1996 by and between Berry Petroleum Company and Tannehill Oil
Company, Inc. ("Purchase and Sale Agreement"), and subject to all contracts,
agreements, encumbrances and other matters to which the following assets are
subject as of the Effective Date, all of Assignor's right, title and interest
in and to the interests and rights described in Schedule A to this Assignment
(hereinafter collectively called and referred to as the "Assets")
2
and all other rights, privileges, obligations, benefits and powers conferred
upon the owner or holder of the Assets.
2. Assumptions. Assignee hereby assumes and agrees to pay, perform and
discharge its obligations under the Assets, and the agreements, associated
contracts and other burdens pertaining thereto, which accrue and relate to, or
are based upon or arise out of, events occurring after the Effective Date, all
in accordance with the terms of the Purchase and Sale Agreement.
3. Further Assurances. The parties agree to take all such further
actions and execute, acknowledge and deliver all such further documents that
are necessary or useful in carrying out the purposes of this Assignment. So
long as authorized by applicable law so to do, Assignor hereby agrees to
execute, acknowledge and deliver to Assignee all such other additional
instruments, notices, division orders, transfer orders and other documents and
to do all such other and further acts and things as may be necessary to more
fully and effectively grant, convey, transfer and assign to Assignee the Assets
conveyed hereby or intended so to be.
4. Schedule. Reference is made to Schedule A attached hereto and made a
part hereof for all purposes. Reference in such Schedule A to instruments on
file or recorded in the public records are made for all purposes.
5. Headings. Headings are included in this Assignment for convenience
of reference and shall in no way define, limit, extend, or describe the scope
or intent of any provision of this Assignment.
6. Successors and Assigns. This Assignment shall bind and inure to the
benefit of Assignor and Assignee and their respective successors and assigns.
7. Multiple Counterparts. This Assignment may be executed in any number
of counterparts and each counterpart hereof shall be deemed to be an original
instrument but all of such counterparts shall constitute but one assignment.
8. Recordation. To facilitate recording or filing of this Assignment,
each counterpart filed with a federal or state agency or office may contain
only those portions of Schedule A that describe property under the jurisdiction
of that agency or office. Assignor and Assignee have each retained a
counterpart of this Assignment with a complete Schedule A. Another counterpart
of this Assignment with a complete Schedule A shall be recorded in the official
real property records of Kern County, California.
3
9. Governing Law. The provisions of this Assignment shall be governed
by and construed in accordance with the laws of the State of California,
excluding any conflicts of law, rule or principle that might refer same to the
laws of another jurisdiction.
TANNEHILL OIL COMPANY, INC. BERRY PETROLEUM COMPANY,
a California corporation a Delaware corporation
By: ____________________________ By: ___________________________
John W. Tannehill, President Jerry V. Hoffman, President
and Chief Executive Officer
By: ____________________________ By: ___________________________
James L. Hinkle, Secretary Kenneth A. Olson, Secretary
"Assignor" "Assignee"
4
STATE OF CALIFORNIA )
)
COUNTY OF _______________)
On ______________, 1996, before me, _______________, Notary Public, personally
appeared John W. Tannehill, personally known to me (or proved to me on the
basis of satisfactory evidence) to be the person whose name is subscribed to
the within instrument and acknowledged to me that he executed the same in his
authorized capacity, and that by his signature on the instrument the person,
or the entity upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
_________________________________
STATE OF CALIFORNIA )
)
COUNTY OF ______________ )
On ______________, 1996, before me, ________________, Notary Public, personally
appeared James L. Hinkle, personally known to me (or proved to me on the basis
of satisfactory evidence) to be the person whose name is subscribed to the
within instrument and acknowledged to me that he executed the same in his
authorized capacity, and that by his signature on the instrument the person,
or the entity upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
_________________________________
STATE OF CALIFORNIA )
)
COUNTY OF ______________ )
On ______________, 1996, before me, ________________, Notary Public, personally
appeared Jerry V. Hoffman and Kenneth A. Olson, personally known to me (or
proved to me on the basis of satisfactory evidence) to be the persons whose
names are subscribed to the within instrument and acknowledged to me that they
executed the same in their authorized capacities, and that by their signatures
on the instrument the persons, or the entity upon behalf of which the persons
acted, executed the instrument.
WITNESS my hand and official seal.
__________________________________
1
SCHEDULE A TO
EXHIBIT 3
ASSIGNMENT OF RIGHTS OF WAY, EASEMENTS AND CONTRACTS
ATTACHED TO AND MADE A PART OF THAT CERTAIN PURCHASE AND SALE AGREEMENT
DATED NOVEMBER 8, 1996
BY AND BETWEEN BERRY PETROLEUM COMPANY AND
TANNEHILL OIL COMPANY, INC.
(Unrecorded Documents)
1. Paved Road Maintenance Letter from Texaco to San Joaquin Valley Air
Pollution Control District dated 9-23-92.
2. Oil Sales Agreement between Texaco Trading & Transportation (purchase no.
16P85) and Tannehill Oil Company dated 6-13-88.
3. Oil Sales Agreement between Koch (lease no. 20390) and Tannehill Oil
Company dated 11-9-90 and Amended 2-2-96.
4. Oil Sales Agreement between Koch (lease no. 28572) and Tannehill Oil
Company, 90 day contract.
5. Waste Water Disposal Agreement between Oxy U.S.A., Inc. and Tannehill Oil
Company dated 6-1-90.
6. Water District Agreement No. 8 between West Kern Water District and
Tannehill Oil Company dated 5-17-83.
7. Water District Agreement No. 9 between West Kern Water District and
Tannehill Oil Company dated 1-13-87.
8. Easement and Right-of-Way Pipeline Agreement by and between Texaco Inc.,
as Grantor and Mobil Exploration and Production U.S. Inc., as Grantee dated
September 5, 1990. (CAMCL02221)
9. Private Road Easement and Right-of-Way Agreement by and between Texaco
Inc., as Grantor and Oxy U.S.A. Inc., as Grantee dated November 28, 1988.
(CAMCLO2225)
10. Private Road Easement and Right-of-Way by and between Texaco Inc., as
Grantor and Berry Petroleum Company, as Grantee dated January 3, 1989.
(CAMCLO1009)
11. Private Road Easement and Right-of-Way by and between Texaco Inc., as
Grantor and Berry Petroleum Company, as Grantee dated January 3, 1989.
(CAMCLO1010)
12. Roadway Easement by and between Texaco Inc., as Grantor and Chevron U.S.A.
Inc., as Grantee dated December 22, 1988. (CAMCLO2223)
13. Road Right-of-Way and Easement by and between Texaco Inc., as Grantor and
Chalk Cliff Ltd., as Grantee dated September 8, 1988.
14. Road Maintenance Agreement between Berry Petroleum Company, as Grantor and
Exxon Corporation, as Grantee dated September 8, 1988. (CAMCL01110)
2
15. Roadway Agreement by and between Texaco, as Grantor and Monarch
Cogeneration, as Grantee dated April 13, 1987.
16. Pipeline Lease Agreement from Texaco Inc., as Lessor to Tannehill Oil
Company, as Lessee dated June 16, 1993.
17. Road Right-of-Way for Cogeneration (from Hwy 33) between Oxy, as Grantor
and Tannehill Oil Company, as Grantee dated October 15, 1984.
18. Pipeline Right-of-Way between The Texas Company (Texaco), as Grantor, and
Union Oil Company of California, as Grantee dated May 15, 1953. (CAMCL02229)
19. Pipeline License Agreement between Shell Western E&P Inc., as Licensor,
and Tannehill Oil Company, as Licensee dated June 9, 1993.
20. Pipeline License Agreement between Mobil Exploration & Producing U.S.
Inc., as Licensor and Tannehill Oil Company, as Licensee dated May 11, 1993.
(CAMCL02153)
21. Pipeline License Agreement between Shell Western E&P Inc., as Licensor
and Tannehill Oil Company, as Licensee dated April 13, 1993.
22. Pipeline Easement between Oxy U.S.A. Inc., as Grantor and Tannehill Oil
Company, as Grantee dated June 1, 1993.
23. Consent to Pipeline Easement (BDT) between Oxy U.S.A. Inc., First Party
and South Midway BDT Service Pipeline System and Berry Petroleum Company, as
Operator dated July 23, 1992. (CAMCL02057)
24. Pipeline License Agreement (BDT) between Mobil Exploration & Producing
U.S. Inc., South Midway BDT Service Pipeline System and Berry Petroleum
Company, as Operator dated February 1, 1992. (CAMCL02057)
25. Pipeline License Agreement (BDT) between Texaco Exploration and Production
Inc., and South Midway BDT Service Pipeline System, and Berry Petroleum
Company, as Operator dated March 20, 1992. (CAMCL02058)
26. Pipeline License Agreement (BDT) between Fredric McCleery, as Grantor and
Berry Petroleum Company, Chalk Cliff Limited, and Tannehill Oil Company,
Grantee dated March 16, 1992. (CAMCL02060)
27. Consent to Pipeline Easement (BDT) between Oxy U.S.A. Inc., South Midway
BDT Service Pipeline System and Berry Petroleum Company dated July 23, 1992
for Nancy Snyder R-O-W dated March 11, 1992. (CAMCL01180)
28. Pipeline License Agreement (BDT) between Nancy M. Snyder, as Grantor and
Berry Petroleum Company, Chalk Cliff Limited, and Tannehill Oil Company, as
Grantee dated March 11, 1992. (CAMCL01180)
29. Consent to Pipeline Easement (BDT) between Oxy U.S.A. Inc., First Party
and South Midway BDT Service Pipeline System, and Berry Petroleum Company,
Operator dated July 23, 1992 for Masonic Homes of California R-O-W dated
March 13, 1992. (CAMCL02116)
30. Pipeline License Agreement (BDT) between Betsy M. Vetter, as Grantor and
Berry Petroleum Company, Chalk Cliff Limited, and Tannehill Oil Company, as
Grantee dated March 13, 1992. (CAMCL02116)
3
31. Consent to Pipeline Easement (BDT) between Oxy U.S.A. Inc., First Party
and South Midway BDT Service Pipeline System, and Berry Petroleum Company,
Operator dated July 23, 1992 for Betsy M. Vetter R-O-W dated March 3, 1992.
(CAMCL02117)
32. Pipeline License Agreement (BDT) between Masonic Homes of California, as
Grantor and Berry Petroleum Company, Chalk Cliff Limited, and Tannehill Oil
Company, as Grantee dated March 3, 1992. (CAMCL02117)
33. Pipeline License Agreement (BDT) between Oxy U.S.A. Inc, as Grantor and
Berry Petroleum Company, Chalk Cliff Limited, and Tannehill Oil Company, as
Grantee dated May 20, 1991. (CAMCL02149)
34. Pipeline License Agreement (BDT) between James F. Thacher, successor in
title to John L. Bradley, as Licensor and South Midway BDT Pipeline System,
as Licensee dated March 31, 1992. (CAMCL02056)
35. Pole Line Easement between Hinkle Resources, et al., as Grantor and
Pacific Gas and Electric Company, as Grantee dated September 15, 1984.
36. Surface Lease Agreement between Tannehill Oil Company, as Lessor and Berry
Petroleum Company, as Lessee, dated June 23, 1993. (CAMCL02151)
37. Agreement for a 6" steam line and 4" water line between Shell Western
E&P Inc., as Grantor and Tannehill Oil Company, as Grantee dated May 14, 1990.
38. Letter regarding a right-of-way for a 3" water disposal line and a 6"
steam line, to Mobil Exploration & Producing Inc. from Tannehill Oil Company
(Russell Goff) dated April 12, 1990. (CAMCL01048)
39. Pipeline License Agreement between Mobil Exploration & Producing Inc., as
Grantor and Tannehill Oil Company, as Grantee with Berry Petroleum Company's
consent, dated May 29, 1990. (CAMCL01048)
40. Pipeline License Agreement between Tannehill Oil Company, as Licensor and
Berry Petroleum Company, as Licensee dated August 9, 1995. (CAMCL02187)
41. Pipeline License Agreement between Berry Petroleum Company, as Grantor to
Tannehill Oil Company, as Grantee dated June 23, 1993. (CAMCL02142)
42. Easement between Tannehill Oil Company, as Licensor and Mobil Exploration
& Producing, Inc. as Licensee dated September 1, 1993.
43. Temporary Access Agreement between Tannehill Oil Company, as Grantor and
Mobil Exploration & Producing, Inc., as Grantee dated June 27, 1991.
44. Phone Line Right-of-Way between Mobil Exploration & Production Inc., as
Grantor and Tannehill Oil Company, as Grantee dated August 1993.
45. Agreement (BDT) between Solar Cogeneration, Southwest Contractors and
Tannehill Oil, Dated February 1992.
46. License Agreement between Monarch Cogeneration 1986-1, as Licensor and
AWAM Petroleum Inc., and Albert G. Boyce, Jr., as Licensee and Southwest
Contractors, as Contractor, (unsigned draft only), dated February 19, 1993.
47. Lease Agreement between Texaco Trading & Transportation Inc., as Lessor
and Tannehill Oil Company, as Lessee dated June 16, 1993.
4
48. Waste Water Pipeline R-O-W between Texaco Producing Inc., as Grantor and
Chalk Cliff Cogeneration, as Grantee, not dated or signed, status unknown.
(CAMCL02222)
49. Road R-O-W Agreement by and between Texaco, Inc., as Grantor and Chalk
Cliff Limited, as Grantee, dated December 12, 1988. (CAMCL02224)
50. Pipeline R-O-W Agreement by and between Texaco, Inc., as Grantor and Berry
Holding Company, as Grantee dated May 24, 1982. (CAMCL01139)
51. Private Road by and between Texaco, Inc., as Grantor and Exxon
Corporation, as Grantee dated June 27, 1988. (CAMCL02228)
52. Pipeline R-O-W Agreement by and between Texaco, Inc., as Grantor and Berry
Holding Company, as Grantee dated October 27, 1966. (CAMCL01076)
53. Pipeline Agreement by and between Texaco, Inc., as Grantor and Socony
Mobil Oil Company, as Grantee dated April 28, 1965. (CAMCL02226)
54. Pole Line R-O-W by and between The Texas Company, as Grantor and Standard
Oil Company of California, as Grantee dated May 11, 1955. (CAMCL02227)
55. Power and Pole Line Agreement by and between the Texas Company, as Grantor
and Pacific Gas and Electric Company, as Grantee dated August 8, 1944.
(CAMCL02230)
56. Pipeline Agreement by and between the Texas Company, as Grantor and
Standard Oil Company of California, as Grantee dated January 23, 1939.
(CAMCL02231)
57. Pipeline Agreement by and between The Texas Company, as Grantor and
Standard Oil Company of California, as Grantee dated November 23, 1937.
(CAMCL02232)
58. Pipeline Agreement by and between The Texas Company, as Grantor and
Standard Gasoline Company, as Grantee dated August 14, 1936. (CAMCL02233)
59. Water Pipeline Agreement by and between The Texas Company, as Grantor and
Western Water Company, as Grantee dated January 13, 1936. (CAMCL02234)
60. Easement and Right of Way in favor of Union Oil Company.
61. Easement and Right of Way in favor of Union Oil Company.
62. Easement and Right of Way in favor of Tidewater Oil Company.
63. Easement and Right of Way in favor of Ethel D. Company.
64. A Right of Way between Albert G. Boyce, Jr., et al and Security Pacific
Leasing Corporation dated August 24, 1994.
65. A Right of Way between Tannehill Oil Company and Security Pacific Leasing
Corporation dated August 24, 1994.
66. An Easement between Tannehill Oil Company and Security Pacific Leasing
Corporation dated August 26, 1994.
5
67. An Agreement governing the joint venture for the Kern River - Mojave
Pipeline Lateral among Mobil Oil Corporation, Berry Petroleum Company, Chalk
Cliff Limited and Tannehill Oil Company date December 2, 1991.
68. An Agreement governing the joint venture for the South Midway BDT Service
Pipeline System among, Berry Petroleum Company, Chalk Cliff Limited and
Tannehill Oil Company dated January 8, 1992.
69. An interruptible transportation agreement between Mojave Pipeline
Operating Company, as transporter and Tannehill Oil Company, as shipper,
Dated March 1, 1995.
1
EXHIBIT 4 TO THAT CERTAIN PURCHASE AND SALE AGREEMENT BY AND
BETWEEN BERRY PETROLEUM COMPANY
AND TANNEHILL OIL COMPANY, INC.
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
NORDMAN, CORMANY, HAIR & COMPTON
Attn: Laura K. McAvoy, Esq.
1000 Town Center Drive, 6th Floor
Post Office Box 9100
Oxnard, California 93031-9100
MAIL TAX STATEMENTS TO:
Berry Petroleum Company
Jerry V. Hoffman, President
28700 Hovey Hills Road
Post Office Bin X
Taft, California 93265
A.P.N. 220-080-48-00-8
220-080-49-00-1
220-080-50-00-3
220-080-51-00-6
ASSIGNMENT OF LEASES, RIGHTS OF WAY, EASEMENTS AND CONTRACTS
THIS ASSIGNMENT OF LEASES, RIGHTS OF WAY, EASEMENTS AND CONTRACTS
("Assignment"), dated and effective as of 12:01 a.m. Pacific Standard Time, on
October 1, 1996 (the "Effective Date"), is from TANNEHILL OIL COMPANY, INC., a
California corporation ("Assignor"), whose address is 29091 Highway 33,
Maricopa, California 93252, P.O. Box 98, Taft, California 93268, to BERRY
PETROLEUM COMPANY, a Delaware corporation ("Assignee"), whose address is 28700
Hovey Hills Road, Post Office Bin X, Taft, California 93268.
1. Assignment. For the sum of Ten Dollars ($10) and other good and
valuable consideration, the receipt and sufficiency of which Assignor hereby
acknowledges, Assignor hereby transfers, grants, bargains, conveys and assigns
to Assignee, effective for all purposes as of the Effective Date, subject to
the terms and conditions set forth in that certain Purchase and Sale Agreement
dated November 8, 1996, by and between Berry Petroleum Company and Tannehill
Oil Company, Inc. ("Purchase and Sale Agreement"), and subject to all
contracts, agreements, encumbrances and other matters to which the following
assets are subject as of the Effective Date, all of Assignor's right, title
and interest in and to the interests and rights described in Schedule A to this
Assignment (hereinafter collectively called and referred to as the "Assets")
and all other rights, privileges, obligations, benefits and powers conferred
upon the owner or holder of the Assets.
2
2. Assumptions. Assignee hereby assumes and agrees to pay, perform and
discharge its obligations under the Assets, and the agreements, associated
contracts and other burdens pertaining thereto, which accrue and relate to, or
are based upon or arise out of, events occurring after the Effective Date, all
in accordance with the terms of the Purchase and Sale Agreement.
3. Further Assurances. The parties agree to take all such further
actions and execute, acknowledge and deliver all such further documents that
are necessary or useful in carrying out the purposes of this Assignment. So
long as authorized by applicable law so to do, Assignor hereby agrees to
execute, acknowledge and deliver to Assignee all such other additional
instruments, notices, division orders, transfer orders and other documents and
to do all such other and further acts and things as may be necessary to more
fully and effectively grant, convey, transfer and assign to Assignee the
Assets conveyed hereby or intended so to be.
4. Schedule. Reference is made to Schedule A attached hereto and made a
part hereof for all purposes. Reference in such Schedule A to instruments on
file or recorded in the public records are made for all purposes.
5. Headings. Headings are included in this Assignment for convenience
of reference and shall in no way define, limit, extend, or describe the scope
or intent of any provision of this Assignment.
6. Successors and Assigns. This Assignment shall bind and inure to the
benefit of Assignor and Assignee and their respective successors and assigns.
7. Multiple Counterparts. This Assignment may be executed in any number
of counterparts and each counterpart hereof shall be deemed to be an original
instrument but all of such counterparts shall constitute but one assignment.
8. Recordation. To facilitate recording or filing of this Assignment,
each counterpart filed with a federal or state agency or office may contain
only those portions of Schedule A that describe property under the jurisdiction
of that agency or office. Assignor and Assignee have each retained a
counterpart of this Assignment with a complete Schedule A. Another counterpart
of this Assignment with a complete Schedule A shall be recorded in the official
real property records of Kern County, California.
3
9. Governing Law. The provisions of this Assignment shall be governed
by and construed in accordance with the laws of the State of California,
excluding any conflicts of law, rule or principle that might refer same to the
laws of another jurisdiction.
TANNEHILL OIL COMPANY, INC. BERRY PETROLEUM COMPANY,
a California corporation a Delaware corporation
By: ____________________________ By: ___________________________
John W. Tannehill, President Jerry V. Hoffman, President
and Chief Executive Officer
By: ____________________________ By: ___________________________
James L. Hinkle, Secretary Kenneth A. Olson, Secretary
"Assignor" "Assignee"
4
STATE OF CALIFORNIA )
)
COUNTY OF _____________ )
On _______________, 1996, before me, _______________, Notary Public, personally
appeared John W. Tannehill, personally known to me (or proved to me on the
basis of satisfactory evidence) to be the person whose name is subscribed to
the within instrument and acknowledged to me that he executed the same in his
authorized capacity, and that by his signature on the instrument the person,
or the entity upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
_________________________________
STATE OF CALIFORNIA )
)
COUNTY OF _____________ )
On ________________, 1996, before me, ______________, Notary Public, personally
appeared James L. Hinkle, personally known to me (or proved to me on the basis
of satisfactory evidence) to be the person whose name is subscribed to the
within instrument and acknowledged to me that he executed the same in his
authorized capacity, and that by his signature on the instrument the person,
or the entity upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
_________________________________
5
STATE OF CALIFORNIA )
)
COUNTY OF ______________ )
On _______________, 1996, before me, _______________, Notary Public, personally
appeared Jerry V. Hoffman and Kenneth A. Olson, personally known to me (or
proved to me on the basis of satisfactory evidence) to be the persons whose
names are subscribed to the within instrument and acknowledged to me that they
executed the same in their authorized capacities, and that by their signatures
on the instrument the persons, or the entity upon behalf of which the persons
acted, executed the instrument.
WITNESS my hand and official seal.
__________________________________
6
SCHEDULE A TO
EXHIBIT 4
ASSIGNMENT OF RIGHTS OF WAY, EASEMENTS AND CONTRACTS
ATTACHED TO AND MADE A PART OF THAT CERTAIN PURCHASE AND SALE AGREEMENT
DATED NOVEMBER 8, 1996
BY AND BETWEEN BERRY PETROLEUM COMPANY AND
TANNEHILL OIL COMPANY, INC.
(Recorded Documents)
1. Road Agreement between Oxy U.S.A. Inc. and Tannehill Oil Company, recorded
December 27, 1988 in Book 6194, Page 1339, Official Records.
2. Road Right of Way Agreement between Oxy U.S.A. Inc. and Monarch
Co-Generation 1986-1, a California limited Partnership, recorded December 27,
1988 in Book 6194, Page 1351, Official Records.
3. Grant of Easement between Masonic Homes of California, a corporation and
Tannehill Oil Company, recorded March 6, 1985 in Book 5740, Page 170, Official
Records.
4. Agreement for the Sale and Delivery of Oil between Monte Cristo Oil and
Development Company and Standard Oil Company, recorded March 18, 1910 in Book
21, Page 139 of Agreements.
5. Memorandum of Operating Agreement between Tannehill Oil Company and Delmar
R. Archibald, et al. for the production of oil and gas, recorded August 18,
1992 in Book 6715, Page 661, Official Records.
7
STATEMENT OF TAX DUE UNDER PROVISIONS OF THE
DOCUMENTARY STAMP ACT
and
REQUEST THAT STAMPS NOT BE MADE A PART OF THE PERMANENT RECORD
TO: Kern County Recorder
THE TAX DUE PURSUANT TO THE PROVISIONS OF THE DOCUMENTARY STAMP ACT ON THE
DEED, TRANSFER, OR CONVEYANCE FROM: Tannehill Oil Company
[Name of Grantor(s) or Lessor(s)]
TO: Berry Petroleum Company
[Name of Grantee(s) or Lessee(s)]
OF THE FOLLOWING BRIEFLY DESCRIBED REAL PROPERTY: T 32 S, R 24 E, Section 32;
APN 220-080-48-00-8; 220-080-48-00-8; 220-080-49-00-1; 220-080-50-00-3
Amounts to: $________0_______ Amounts to: $__________0_______
(X) Unincorporated Area (X) City of ___________________
(X) Computed on full value (X) Computed on full value
( ) Computed on full value LESS liens ( ) Computed on full value LESS
and encumbrances remaining liens and encumbrances
remaining
Documentary Transfer Tax $_____0_______
Computed on full value of property
conveyed
Tannehill Oil Company, Inc.
By: _________________________________
Affix transfer Tax Stamp Here Stamp Reserved for Recorder's Coding Stamp
Date: ________________________ By: ____________________________________
Title: _________________________________
AFTER THE PERMANENT RECORD IS MADE, THIS DOCUMENT WILL BE ATTACHED TO THE
CONVEYING DOCUMENT AND RETURNED TO THE PARTY ENTITLED THERETO. A COPY WILL BE
MADE AND PLACED ON FILE FOR AUDITING PURPOSES.
1
EXHIBIT 5 TO THAT CERTAIN PURCHASE AND SALE AGREEMENT BY AND
BETWEEN BERRY PETROLEUM COMPANY
AND TANNEHILL OIL COMPANY, INC.
FORM 8594 ASSET ACQUISITION STATEMENT OMB No. 1545-1021
(Rev Jan 1996) UNDER SECTION 1060
Department of the Treasury Attachment
Internal Revenue Service Sequence No. 61
Attach to your Federal income tax return
Name as Shown on return Identification number as shown on return
Tannehill Oil Company, Inc. 77-0291688
Check the box that identifies you Buyer (X) Seller
Part 1 General Information - to be completed by all filers.
1. Name of other party to the transaction
Berry Petroleum Company
Other party's identification number
77-0079387
Address (number, street, and room or suite no.)
28700 Hovey Hills Road, P.O. Bin X
Taft, California 93268
2. Date of Sale 3. Total sales price
October 1, 1996 $930,000
Part II Assets Transferred - to be completed by all filers of an original
statement
4. Assets Aggregate Fair Market Value Allocation of Sales price
(Actual Amount for Class I)
Class I $ $
Class II $ $
Class III $ $ 930,000
Class IV $ $
Total $ $ 930,000
5. Did the buyer and seller provide for an allocation of the sales price in
the sales contract or in another written document signed by both parties?
(X) Yes No
If Yes, are the aggregate fair market values listed for each of asset
Classes I, II, III and IV the amounts agreed upon in your sales contract
or in a separate written document?
(X) Yes No
6. In connection with the purchase of the group of assets, did the buyer also
purchase a license or a covenant not to complete, or enter into a lease
agreement, employment contract, management contract, or similar
arrangement with the seller (or managers, directors, owners, or employees
of the seller)?
Yes (X) No
If Yes, specify (a) the type of agreement, and (b) the maximum amount of
consideration (not including interest) paid or to be paid under the
agreement. See the instructions for line 6.
For Paperwork Reduction Act Notice, see instructions.
Cat. No. 63768Z Form 8592 (Rev. 1-96)
2/19/96 Published by Tax Management Inc., a subsidiary of The Bureau of
National Affairs, Inc. 8594.I
2
Form 8594 (Rev. 1-96) Page 2
Part III Supplemental Statement - To be completed only if amending an
original statement or previously filed supplemental statement
because of an increase or decrease in consideration N/A
7. Assets Allocation of Sales Price Increase or Redetermined Allocation
as Previously Reported (Decrease) of Sales Price
Class I $ $ $
Class II $ $ $
Class III $ $ $
Class IV $ $ $
Totals $ $
8. Reason(s) for increase or decrease. Attach additional sheets if more
space is needed.
9. Tax year and tax return form number with which the original form 8594 and
any supplemental statements were filed.
1
FORM 8594 ASSET ACQUISITION STATEMENT OMB No. 1545-1021
(Rev Jan 1996) UNDER SECTION 1060
Department of the Treasury Attachment
Internal Revenue Service Sequence No. 61
Attach to your Federal income tax return
Name as Shown on return Identification number as shown on return
Berry Petroleum Company 77-0079387
Check the box that identifies you (X) Buyer ( ) Seller
Part 1 General Information - to be completed by all filers.
1. Name of other party to the transaction
Tannehill Oil Company, Inc.
Other party's identification number
77-0291688
Address (number, street, and room or suite no.)
P.O. Box 98
Taft, California 93268
2. Date of Sale 3. Total sales price
October 1, 1996 $930,000
Part II Assets Transferred - to be completed by all filers of an original
statement
4. Assets Aggregate Fair Market Value Allocation of Sales price
(Actual Amount for Class I)
Class I $ $
Class II $ $
Class III $ $ 930,000
Class IV $ $
Total $ $ 930,000
5. Did the buyer and seller provide for an allocation of the sales price in
the sales contract or in another written document signed by both parties?
(X) Yes No
If Yes, are the aggregate fair market values listed for each of asset
Classes I, II, III and IV the amounts agreed upon in your sales contract
or in a separate written document?
(X) Yes No
6. In connection with the purchase of the group of assets, did the buyer also
purchase a license or a covenant not to complete, or enter into a lease
agreement, employment contract, management contract, or similar
arrangement with the seller (or managers, directors, owners, or employees
of the seller)?
Yes (X) No
If Yes, specify (a) the type of agreement, and (b) the maximum amount of
consideration (not including interest) paid or to be paid under the
agreement. See the instructions for line 6.
For Paperwork Reduction Act Notice, see instructions.
Cat. No. 63768Z Form 8592 (Rev. 1-96)
2/19/96 Published by Tax Management Inc., a subsidiary of The Bureau of
National Affairs, Inc. 8594.I
2
Form 8594 (Rev. 1-96) Page 2
Part III Class III, Intangible Amortizable Assets Only - Complete if
applicable. The amounts shown below also must be included under
Class III assets in Part II. Attach additional sheets if more
space is needed.
Assets Fair Market Value Useful Life Allocation of Sales Price
$ $ None
$ $
$ $
$ $
$ $
Part IV Supplemental Statement - To be completed only if amending an
original statement or previously filed supplemental statement
because of an increase or decrease in consideration N/A
7. Assets Allocation of Sales Price Increase or Redetermined Allocation
as Previously Reported (Decrease) of Sales Price
Class I $ $ $
Class II $ $ $
Class III $ $ $
Class IV $ $ $
Totals $ $
8. Reason(s) for increase or decrease. Attach additional sheets if more
space is needed.
9. Tax year and tax return form number with which the original form 8594 and
any supplemental statements were filed.
1
EXHIBIT 6 TO THAT CERTAIN PURCHASE AND SALE AGREEMENT BY AND
BETWEEN BERRY PETROLEUM COMPANY
AND TANNEHILL OIL COMPANY, INC.
CERTIFICATE OF SATISFACTION
TO THE PURCHASE AND SALE AGREEMENT
ENTERED INTO BY AND BETWEEN TANNEHILL OIL COMPANY, INC.
AND BERRY PETROLEUM COMPANY
ON ____________, 1996
(PARAGRAPH 2.12(e) THEREOF)
The undersigned parties to that certain Purchase and Sale Agreement by and
between Berry Petroleum Company and Tannehill Oil Company, Inc., to be entered
into this ____ day of ____________, 1996, declare that all conditions to the
Closing have been satisfied and the transaction is Closed.
TANNEHILL OIL COMPANY, INC., BERRY PETROLEUM COMPANY,
a California corporation a Delaware corporation
By: ____________________________ By: _______________________________
John W. Tannehill, President Jerry V. Hoffman, President
and Chief Executive Officer
By: ____________________________ By: _______________________________
James L. Hinkle, Secretary Kenneth A. Olson, Secretary
1
EXHIBIT 7 TO THAT CERTAIN PURCHASE AND SALE AGREEMENT BY AND
BETWEEN BERRY PETROLEUM COMPANY
AND TANNEHILL OIL COMPANY, INC.
FIRST AMERICAN TITLE INSURANCE COMPANY
MAIN OFFICE: 4540 CALIFORNIA AVENUE, SUITE 100 (93309)
MAILING ADDRESS: P.O. BOX 1945, BAKERSFIELD, CA 93303
TELEPHONE (805) 327-5311
FACSIMILE (805) 327-8533
E S C R O W I N S T R U C T I O N S
FIRST AMERICAN TITLE INSURANCE COMPANY CONDUCTS ESCROW BUSINESS UNDER
CERTIFICATE OF AUTHORITY NO. 2787 ISSUED BY THE STATE OF CALIFORNIA
DEPARTMENT OF INSURANCE
FINAL DRAFT
Escrow Officer: NANCY J. SMITH Property: SECTION 32
PROPERTY AND
OILFIELD
EQUIP/PROD.FACILITIES,
TAFT, CA
Escrow Number: 1128321N
Date: November 4, 1996
To:FIRST AMERICAN TITLE INSURANCE COMPANY
THESE INSTRUCTIONS ARE ENTERED INTO PURSUANT TO THAT CERTAIN PURCHASE AND SALE
AGREEMENT DATED WHEN EXECUTED BY BERRY PETROLEUM COMPANY AND TANNEHILL OIL
COMPANY, INC. A COPY OF WHICH IS ATTACHED HERETO. AS ESCROW HOLDER YOU SHALL
BE CONCERNED ONLY WITH THOSE SPECIFIC PROVISIONS OF SAID CONTRACT SET FORTH AND
ENUMERATED THEREIN AS FOLLOWS:
#1.3, #1.11
#2.1, #2.2, #2.3, #2.6 #2.7 CLARIFICATION: DISTRIBUTION OF SALE PROCEEDS AND
RECORDATION OF DOCUMENTS WITH KERN COUNTY RECORDER WILL BE HANDLED AT THE
OFFICE OF ESCROW HOLDER, FIRST AMERICAN TITLE INSURANCE COMPANY, 4540
CALIFORNIA #100, BAKERSFIELD, CA. 93309. THIS ESCROW TO CLOSE CONCURRENTLY
WITH ESCROWS #1128321N AND #1125444N,
#2.8 AND #2.9 CLARIFICATION: PARTIES TO SUPPLY ESCROW HOLDER WITH INFORMATION
SO PRORATIONS CAN BE HANDLED THROUGH ESCROW OR NOTIFY ESCROW HOLDER BY MUTUAL
WRITTEN INSTRUCTIONS THAT PRORATIONS WILL BE HANDLED OUTSIDE OF THIS ESCROW;
#2.11, #2.12 CLARIFICATION: DOCUMENTS TO BE DEPOSITED INTO ESCROW OR PARTIES
TO NOTIFY ESCROW HOLDER BY MUTUAL WRITTEN INSTRUCTIONS THAT SAID DOCUMENTS HAVE
BEEN DELIVERED OUTSIDE OF ESCROW, #2.14, ARTICLES VII AND VIII, DOCUMENTS WILL
BE DEPOSITED AND APPROVED BY COUNSEL PRIOR TO CLOSE OF ESCROW.
ALL PARTIES AGREE THAT TRANSFER OF SAID PROPERTY IS NOT BEING HANDLED THROUGH
THE BULK SALE PROCESS. ESCROW HOLDER WILL NOT CONDUCT ANY UCC SEARCHES. NO
TITLE INSURANCE OR GUARANTEES OF TITLE WILL BE ISSUED BY ESCROW HOLDER WITH
REGARD TO PERSONAL PROPERTY BEING TRANSFERRED IN THIS ESCROW. A CLTA POLICY OF
TITLE INSURANCE WILL BE ISSUED BY FIRST AMERICAN TITLE INSURANCE COMPANY IN THE
AMOUNT AS SHOWN IN ALLOCATION FOR REAL PROPERTY AND COST FOR SAME WILL BE PAID
BY TANNEHILL OIL COMPANY, INC.
2
ANY AND ALL OTHER PROVISIONS OF SAID CONTRACT NOT ENUMERATED ABOVE IMPOSE NO
DUTIES ON YOU AS ESCROW HOLDER AND ARE MATTERS OF AGREEMENT AND UNDERSTANDING
BETWEEN THE PARTIES WITH WHICH YOU SHALL NOT BE CONCERNED.
THE ATTACHED GENERAL PROVISIONS AND PAGE #1B ARE HEREBY MADE A PART OF THESE
INSTRUCTIONS.
TANNEHILL OIL COMPANY, INC. BERRY PETROLEUM COMPANY
BY: ________________________ BY: __________________________
ITS: _______________________ ITS: _________________________
3
ESCROW INSTRUCTIONS - PAGE 1B
Escrow Number: 1128321N
NOTICE OF TAX REPORTING AND WITHHOLDING OBLIGATIONS OF THE PARTIES:
State Law
In accordance with Sections 18805 and 26131 of the Revenue and Taxation
Code, a buyer may be required to withhold an amount equal to three and
one-third percent of the sales price in the case of the disposition of
California real property interest by either:
1. A seller who is an individual with a last known street address outside of
California or when the disbursement instructions authorize the proceeds be sent
to a financial intermediary of the seller, OR
2. A corporate seller which has no permanent place of business in California.
The buyer may become subject to penalty for failure to withhold an amount equal
to the greater of 10 percent of the amount required to be withheld or five
hundred dollars ($500).
However, notwithstanding any other provision included in the California
statutes referenced above, no buyer will be required to withhold any amount or
be subject to penalty for failure to withhold if:
1. The sales price of the California real property conveyed does not exceed
one hundred thousand dollars ($100,000), OR
2. The seller executes a written certificate, under the penalty of perjury,
certifying that the seller is a resident of California, or if a corporation,
has a permanent place of business in California, OR
3. The seller, who is an individual, executes a written certificate, under
the penalty of perjury, that the California real property being conveyed is the
seller's principal residence (as defined in Section 1034 of the Internal
Revenue Code. The seller is subject to penalty for knowingly filing a
fraudulent certificant for the purpose of avoiding the withholding requirement.
The California statutes referenced above include provisions which authorize the
Franchise Tax Board to grant reduced withholding and waivers from withholding
on a case-by-cases basis. The parties to this transaction should seek an
attorney's, accountant's, or other tax specialist's opinion concerning the
effect of this law on this transaction and should not act on any statements
made or omitted by the escrow or closing officer.
4
Federal Law: See Item #16 of General Provisions
Federal 1099 Reporting for Resident Seller
The parties acknowledge that First American Title has an obligation to
provide information from this transaction to the Internal Revenue Service at
the close of the escrow. This information includes, but is not limited to, the
taxpayer identification and/or social security number(s) of the sellere(s) and
the gross sales price. First American Title can not authorize the recording
and closing of this transaction without receipt of information deemed adequate
by First American Title for complying with the IRS reporting requirements.
Failure to provide the requested information to escrow holder will result in a
delay in closing.
THE UNDERSIGNED HEREBY EXPRESSLY ACKNOWLEDGE RECEIPT OF THE ABOVE NOTICE.
TANNEHILL OIL COMPANY, INC.
BY:
BERRY PETROLEUM COMPANY
BY:
5
GENERAL PROVISIONS
1. Deposit of Funds and Disbursements
You shall deposit all funds received in this escrow in any bank insured by an
agency of the United States Government, including your affiliated bank, First
American Trust Company, in one or more of your general escrow demand accounts.
These funds may be transferred to any other general escrow demand account or
accounts, in the above named bank or banks, including those maintained in your
affiliated bank. All disbursements shall be made by your check. You are
authorized not to close escrow or disburse until good funds have been confirmed
in escrow.
2. Prorations and Adjustments
The expression "close of escrow" used in this escrow means the date of which
instruments referred to herein are recorded and related only to prorations
and/or adjustments unless otherwise specified.
3. Recordation of Instruments
You are authorized to record any documents delivered through this escrow, the
recording of which is necessary or proper in the issuance of the requested
policy of title insurance.
4. Authorization to Execute Assignment of Insurance Policies
You are to execute on behalf of the parties hereto form assignments of interest
in any insurance policies (other than title insurance) called for in this
escrow; forward assignments and policies upon close of escrow to the agent with
the request, first, that insurer consent to such transfer and/or attach a
loss-payable clause and/or make such other additions or corrections as may have
been specifically required herein, and second, that the agent there after
forward such policies to the parties entitled to them.
In all acts in this escrow relating to insurance, including adjustments,
if any, you shall be fully protected in assuming that each policy is in force
and that the necessary premium therefor has been paid.
5. Authorization to Furnish Copies
You are to furnish a copy of these instructions, amendments thereto, closing
statements and/or any other documents deposited in this escrow to the lender or
lenders, the real estate broker or brokers and/or the attorney or attorneys
involved in this transaction upon request of the lenders, brokers or attorneys.
6. Personal Property Taxes
No examination or insurance as to the amount or payment of personal property
taxes is required unless specifically requested.
7. Right of Cancellation
Any party instructing you to cancel this escrow shall file notice of
cancellation in your office, in writing. You shall within a reasonable time
thereafter mail, by certified mail, one copy of the notice to each of the other
parties at the addresses stated in this escrow. Unless written objection to
cancellation is filed in your office by a party within ten (10) days after
date of mailing, you are authorized at your option to comply with the notice
and demand payment of your cancellation charges as provided in this agreement.
If written objection is filed, you are authorized at your option to hold all
money and instruments in this escrow and take no further action until
otherwise directed, either by the parties' mutual written instructions, or
final order of a court of competent jurisdiction.
6
8. Action in Interpleader
The parties hereto expressly agree that you, as escrow holder, have the
absolute right at your election to file an action in interpleader requiring the
parties to answer and litigate their several claims and rights among themselves
and you are authorized to deposit with the clerk of the court all documents and
funds held in this escrow. In the event such action is filed, the parties
jointly and severally agree to pay your cancellation charges and costs,
expenses and reasonable attorney's fees which you are required to expend or
incur in the interpleader action, the amount thereof to be fixed and judgment
therefor to be rendered by the court. Upon the filing of the action, you
shall thereupon be fully released and discharged from all obligations to
further perform any duties or obligations otherwise imposed by the terms of
this escrow.
9. Termination of Agency Obligations
If there is no action taken on this escrow within six (6) months after the
"time limit date" as set forth in the escrow instructions or written extension
thereof, your agency obligation shall terminate at your option and all
documents, monies or other items held by you shall be returned to the parties
depositing same.
If the event of cancellation of this escrow, whether it be at the request of
any of the parties or otherwise, the fees and charges due First American Title
Insurance Company, including expenditures incurred and/or authorized shall be
borne equally by the parties hereto (unless otherwise agreed to specifically.)
10. Conflicting Instructions
Should you before or after close of escrow receive or become aware of any
conflicting demands or claims with respect to this escrow or the rights of any
of the parties hereto, or any money or property deposited herein or affected
hereby, you shall have the right to discontinue any or all further acts on your
part until the conflict is resolved to your satisfaction, and you shall have
the further right to commence or defend any action or proceedings for the
determination of the conflict as provided in paragraphs 7 and 8 or these
General Provisions.
11. Funds Retained in Escrow
If for any reason funds are retained in escrow, you may deduct therefrom $10.00
as a monthly charge as custodian thereof.
12. Usury
You are not to be concerned with any question of usury in any loan or
encumbrances involved in the processing of the escrow and you are hereby
released of any responsibility of liability therefor.
13. Indemnify for Attorneys Fees and Costs
In the event suit is brought by any party to this escrow, including the title
company or any other party, as against each other, or others, including the
title company, claiming any right they may have as against each other or
against the title company, then in that event, the parties hereto agree to
indemnify and hold harmless the title company against any attorney's fees and
costs incurred by it.
14. Amendments to Escrow Instructions
Any Amendment or supplement to these escrow instructions must be in writing.
These escrow instructions constitute the entire escrow between the escrow
holder and the parties hereto.
7
15. Supplemental taxes:
Seller and Buyer acknowledge that the subject property may be subject to
supplemental taxes due as a result of change of ownership taking place through
this escrow. Any necessary adjustment due either party on receipt of a
supplemental tax bill will be made by the parties outside of this escrow and
escrow holder is released of any liability in connection with same.
16. Foreign Investment in Real Property Tax Act
The Foreign Investment in Real Property Tax Act of 1980 as amended by the Tax
Reform Act of 1984 places special requirements for tax reporting and
withholding on the parties to a real estate transaction where the transferor
(seller) is a non-resident alien or non-domestic corporation or partnership or
is a domestic corporation or partnership controlled by non-residents or
non-resident corporations or partnerships. The parties to this transaction are
seeking an attorney's, accountant's, or other tax specialist's opinion
concerning the effect of this Act on this transaction and are not acting on
any statements made or omitted by the escrow or closing officer.
(INITIAL HERE: ___________________________)
17. Preliminary change of Ownership form:
Prior to close of escrow buyer will be sent a Preliminary Change of Ownership
Report, which is required by the County Recorder's office to accompany
documents called for herein at the time of recording, in accordance with
Section 480.3 of the Revenue and Taxation Code. Buyer is aware he must return
the form completed and signed prior to the close of escrow. If escrow holder
does not receive this report prior to close of escrow, buyer authorizes escrow
holder to charge his account the sum of $20.00 which is the fee the County
Recorder charges for recording the Deed without the completed form. Buyer is
hereby put on notice that the Assessor is required to mail out the form for
completion later on if it has not been filed at close of escrow.
18. Good Funds Law:
The parties understand that all funds to close escrow must be deposited
sufficient number of days prior to the close of escrow in order to comply with
Section 12413.1 of the California Insurance Code. Generally speaking, wire
transferred funds may be deposited into our escrow account any time prior to
the close of escrow. Cashier's checks and certified checks must be deposited
into our escrow account the business day before the close of escrow.
19. Escrow Trust Funds:
Buyer and seller acknowledge that escrow holder will be depositing all funds in
escrow in a NON-INTEREST bearing fiduciary account at one of the following
banks: Union Bank.
20. Disclosure of Taxpayer Identification Numbers
Internal Revenue Code Section 6109(h) imposes requirements for furnishing,
disclosing, and including taxpayer identification numbers in tax returnes on
the parties to a residential real estate transaction involving seller-provided
financing. The parties understand that the disclosure reporting requirements
are exclusive obligations between the parties to this transaction and that
First American Title Insurance Company is not obligated to transmit the
taxpayer identification numbers to the Internal Revenue Service or to the
parties. First American Title Insurance Company is not rendering an opinion
concerning the effect of this law on this transaction, and the parties are not
acting on any statements made or omitted by the escrow or closing officer. To
facilitate compliance with this law, the parties to this escrow hereby
authorize First American Title Insurance Company to release any party's
taxpayer identification number to any requesting party who is a party to this
transaction. The requesting party shall deliver a written request to escrow.
The parties hereto waive all rights of confidentiality regarding their
respective taxpayer identification numbers and agree to hold First
American Title Insurance Company harmless
8
against any fees, costs, or judgments incurred and/or awarded in connection
with the release of taxpayer identification numbers.
1
EXHIBIT 8 TO THAT CERTAIN PURCHASE AND SALE AGREEMENT BY AND
BETWEEN BERRY PETROLEUM COMPANY
AND TANNEHILL OIL COMPANY, INC.
CERTIFICATE OF COMPLIANCE
TO THE PURCHASE AND SALE AGREEMENT
ENTERED INTO BY AND BETWEEN TANNEHILL OIL COMPANY, INC.
AND BERRY PETROLEUM COMPANY
ON NOVEMBER 8, 1996
(PARAGRAPH 7.6 THEREOF)
The undersigned certify that Tannehill Oil Company, Inc., has complied
with the matters set forth in Sections 7.1, 7.2, 7.3, and 7.4 of that certain
Purchase and Sale Agreement by and between Berry Petroleum Company and
Tannehill Oil Company, Inc., entered into on November 8, 1996.
Date: ___________, 1996 TANNEHILL OIL COMPANY, INC.,
a California corporation
By: _____________________________
John W. Tannehill, President
By: _____________________________
James L. Hinkle, Secretary
1
EXHIBIT 9 TO THAT CERTAIN PURCHASE AND SALE AGREEMENT BY AND
BETWEEN BERRY PETROLEUM COMPANY
AND TANNEHILL OIL COMPANY, INC.
FORM OF OPINION OF COUNSEL
TO TANNEHILL OIL COMPANY, INC.
______________, 1996
Berry Petroleum Company
Attn: Jerry V. Hoffman
President and Chief Executive Officer
28700 Hovey Hills Road
Post Office Bin X
Taft, CA 93268
Re: Berry Petroleum Company / Tannehill Oil Company, Inc.
Asset Purchase and Sale Transaction
Gentlemen:
We have acted as counsel to Tannehill Oil Company, Inc., a California
corporation ("Tannehill"), in connection with the purchase of substantially
all the assets of Tannehill by Berry Petroleum Company, a Delaware corporation
("Berry"), pursuant to that certain Purchase and Sale Agreement, dated November
8, 1996, by and between Tannehill and Berry (the "Agreement").
In rendering the opinions set forth below, we have assumed the due
authorization, execution and delivery of the Agreement by Berry.
Based on the foregoing, and in reliance thereon, but subject to the
qualifications herein set forth, we are of the opinion that:
1. Tannehill is a corporation duly organized and validly existing under,
and by virtue of, the laws of the State of California and is in good standing
under such laws. Tannehill has requisite corporate power to own and operate
its properties and assets, and to carry on its business as presently conducted.
2. Tannehill has full corporate power and authority to execute and
deliver the Agreement and to perform its obligations under the terms of the
Agreement.
3. All corporate action on the part of Tannehill and its directors
and shareholders necessary for the authorization, execution, delivery and
performance of the Agreement and the consummation of the transactions
contemplated thereby has been taken.
2
The Agreement has been duly executed and delivered by Tannehill and constitutes
a legal, valid and binding obligation of Tannehill, enforceable against it in
accordance with its respective terms, except as such enforceability may be
limited by or subject to (a) any bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to creditor's rights generally and
(b) general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
4. The individuals and entities executing the Agreement as shareholders
of Tannehill are the beneficial owners of all the issued and outstanding shares
of Tannehill common stock (the "Shares"). There are no outstanding options,
warrants, rights of first refusal, or other rights calling for the issuance
of, or any security convertible into or exchangeable for, the Shares and no
other person or entity has any right in or to the Shares.
5. No consent, approval or authorization of or designation of Tannehill
is required in connection with the valid execution and delivery of the
Agreement, or the consummation of the transactions contemplated thereby on the
Closing thereof, except as such have been obtained or made prior to or upon the
date hereof.
6. To our best knowledge, no default exists and no event has occurred
which would constitute a default under, or violation in the due performance and
observance of any term, covenant or condition, or breach of, Tannehill's
Articles of Incorporation or Bylaws or any indenture, license, lease,
franchise, mortgage, instrument, or other agreement to which Tannehill is a
party, or by which it or its properties may be bound; or (a) an event that
would permit any party to any agreement or instrument to terminate it or to
accelerate the maturity of any indebtedness or other obligation of Tannehill;
(b) an event that would result in the creation or imposition of any lien,
charge, or encumbrance on any asset of Tannehill; or (c) an event that would
conflict with any order, rule, or regulation directed to Tannehill by any
court or governmental agency or body having jurisdiction over it.
7. Except as disclosed in the Tannehill Disclosure Letter (as defined in
the Agreement), to our best knowledge, there is no suit, action, arbitration,
or legal, administrative, or other proceeding or governmental investigation
pending or threatened against or affecting Tannehill or any of its businesses
or properties or financial or other condition.
8. Except as disclosed in the Tannehill Disclosure Letter, there are no
agreements, written or oral, between Tannehill and any other party that affect,
directly or indirectly, the Assets.
We are members of the bar of the State of California, and accordingly we
do not purport to be experts on, or to be qualified to express any opinion
herein concerning, nor do we express any opinions herein concerning, any law
other than Federal law and the laws of the State of California.
This opinion letter is limited to the matters expressly stated herein and
no opinion or other statement may be inferred or implied beyond the matters
expressly stated herein. This
3
opinion letter is addressed to Berry for the benefit of Berry and is only for
Berry's use in connection with the Agreement. This opinion letter may not be
relied upon by any other person or entity without prior written consent.
This opinion is as of this date, and we expressly decline any undertaking to
advise you of any matters arising subsequent to the date hereof which would
cause us to amend any portion of the foregoing in whole or in part.
Very truly yours,
Roger M. Coley, Esq.
cc: Nordman, Cormany, Hair & Compton
Attn: Laura K. McAvoy, Esq.
1
EXHIBIT 10 TO THAT CERTAIN PURCHASE AND SALE AGREEMENT BY AND
BETWEEN BERRY PETROLEUM COMPANY
AND TANNEHILL OIL COMPANY, INC.
CERTIFICATE OF COMPLIANCE
TO THE PURCHASE AND SALE AGREEMENT
ENTERED INTO BY AND BETWEEN TANNEHILL OIL COMPANY, INC.
AND BERRY PETROLEUM COMPANY
ON NOVEMBER 8, 1996
(PARAGRAPH 8.6 THEREOF)
The undersigned certify that Berry Petroleum Company has complied with the
matters set forth in Sections 8.1, 8.2, 8.3 and 8.5 of that certain Purchase
and Sale Agreement by and between Berry Petroleum Company and Tannehill Oil
Company, Inc., entered into on November 8, 1996.
Date: _____________, 1996 BERRY PETROLEUM COMPANY,
a Delaware corporation
By: ___________________________________
Jerry V. Hoffman, President
and Chief Executive Officer
By: ___________________________________
Kenneth A. Olson, Secretary
1
EXHIBIT 11 TO THAT CERTAIN PURCHASE AND SALE AGREEMENT BY AND
BETWEEN BERRY PETROLEUM COMPANY
AND TANNEHILL OIL COMPANY, INC.
FORM OF OPINION OF COUNSEL
TO BERRY PETROLEUM COMPANY
__________________, 1996
Tannehill Oil Company, Inc.
Attn: Mr. Albert G. Boyce, Jr.
Treasurer and Chief Financial Officer
120 Manteca Avenue
P.O. Box 871
Manteca, CA 95336
Re: Berry Petroleum Company / Tannehill Oil Company, Inc.
Asset Purchase and Sale Transaction
Gentlemen:
We have acted as counsel to Berry Petroleum Company, a Delaware
corporation ("Berry"), in connection with the purchase of substantially all the
assets of Tannehill Oil Company, Inc., a California corporation ("Tannehill"),
by Berry, pursuant to that certain Purchase and Sale Agreement, dated November
8, 1996, by and between Tannehill and Berry (the "Agreement").
In rendering the opinions set forth below, we have assumed the due
authorization, execution and delivery of the Agreement by Tannehill.
1. Berry is a corporation duly organized and validly existing under, and
by virtue of, the laws of the State of Delaware and is in good standing under
such laws. Berry has requisite corporate power to own and operate its
properties and assets, and to carry on its business as presently conducted.
2. Berry has full corporate power and authority to execute and deliver
the Agreement and to perform its obligations under the terms of the Agreement.
3. All corporate action on the part of Berry necessary for the
authorization, execution, delivery and performance of the Agreement and the
consummation of the transactions contemplated thereby, has been taken. The
Agreement has been duly executed and delivered by Berry and constitutes a
legal, valid and binding obligation of Berry, enforceable against it in
accordance with its respective terms, except as such enforceability may be
limited by or subject
2
to (a) any bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to creditor's rights generally and (b) general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
4. No consent, approval or authorization of or designation of Berry is
required in connection with the valid execution and delivery of the Agreement
by Berry, or the consummation by Berry of the transactions contemplated thereby
on the Closing thereof, except as such have been obtained or made prior to or
upon the date hereof.
5. To our best knowledge, there is no suit, action, arbitration, or
legal, administrative, or other proceeding or governmental investigation that
is material to the transactions contemplated by this Agreement, pending or
threatened against or affecting Berry or any of its businesses or properties
or financial or other condition.
We are members of the bar of the State of California, and except for our
opinion set forth in Paragraph 1 above, we do not purport to be experts on, or
to be qualified to express any opinion herein concerning, nor do we express any
opinions herein concerning, any law other than federal law and the laws of the
State of California.
This opinion letter is limited to the matters expressly stated herein and
no opinion or other statement may be inferred or implied beyond the matters
expressly stated herein. This opinion letter is addressed to Tannehill for the
benefit of Tannehill and is only for Tannehill's use in connection with the
Agreement. This opinion letter may not be relied upon by any other person or
entity without prior written consent. This opinion is as of this date, and we
expressly decline any undertaking to advise you of any matters arising
subsequent to the date hereof which would cause us to amend any portion of the
foregoing in whole or in part.
Very truly yours,
NORDMAN, CORMANY, HAIR & COMPTON
cc: Roger Coley, Esq.
PURCHASE AND SALE AGREEMENT
By and Between
Berry Petroleum Company and
Tannehill Electric Company, Inc.
Dated November 8, 1996
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS. . . . . . . . . . . . . . . . . . . . 1
1.1 "Affiliate". . . . . . . . . . . . . . . . . . . . 1
1.2 "Agreement". . . . . . . . . . . . . . . . . . . . 1
1.3 "Business Day" . . . . . . . . . . . . . . . . . . 1
1.4 "Closing". . . . . . . . . . . . . . . . . . . . . 2
1.5 "Code" . . . . . . . . . . . . . . . . . . . . . . 2
1.6 "Cogeneration Assets". . . . . . . . . . . . . . . 2
1.7 "Cogeneration Lease" . . . . . . . . . . . . . . . 2
1.8 "Cogeneration Premises Lease". . . . . . . . . . . 2
1.9 "Default". . . . . . . . . . . . . . . . . . . . . 2
1.10 "Effective Date" . . . . . . . . . . . . . . . . . 2
1.11 "Encumbrance". . . . . . . . . . . . . . . . . . . 2
1.12 "Environmental Laws" . . . . . . . . . . . . . . . 2
1.13 "Escrow" . . . . . . . . . . . . . . . . . . . . . 3
1.14 "Financial Statements" . . . . . . . . . . . . . . 3
1.15 "Governmental Entity". . . . . . . . . . . . . . . 3
1.16 "Indemnifying Party" . . . . . . . . . . . . . . . 3
1.17 "Indemnitee" . . . . . . . . . . . . . . . . . . . 3
1.18 "IRS". . . . . . . . . . . . . . . . . . . . . . . 3
1.19 "Material" . . . . . . . . . . . . . . . . . . . . 4
1.20 "Operations and Maintenance Agreement" . . . . . . 4
1.21 "P.G.&E. S. O. #2 Contract". . . . . . . . . . . . 4
1.22 "Partnership Purchase Agreement" . . . . . . . . . 4
1.23 "Permitted Encumbrances" . . . . . . . . . . . . . 4
1.24 "Person" . . . . . . . . . . . . . . . . . . . . . 4
1.25 "Requisite Regulatory Approvals" . . . . . . . . . 4
1.26 "Right to Purchase Contract" . . . . . . . . . . . 4
1.27 "Shareholders" . . . . . . . . . . . . . . . . . . 4
1.28 "SOCAL Contract" . . . . . . . . . . . . . . . . . 5
1.29 "SOCAL Litigation" . . . . . . . . . . . . . . . . 5
1.30 "TOC Purchase Agreement" . . . . . . . . . . . . . 5
ARTICLE II THE PURCHASE AND SALE. . . . . . . . . . . . . . . 5
2.1 Transfer to Berry. . . . . . . . . . . . . . . . . 5
2.2 Purchase by Berry. . . . . . . . . . . . . . . . . 5
2.3 Payment of the Purchase Price. . . . . . . . . . . 5
2.4 Operating Adjustment.. . . . . . . . . . . . . . . 6
2.5 Allocation of Purchase Price . . . . . . . . . . . 7
2.6 Closing. . . . . . . . . . . . . . . . . . . . . . 7
2.7 Proration of Credits and Payment Obligations.. . . 7
2.8 Real Estate and Other Taxes. . . . . . . . . . . . 7
2.9 Documentation of Sale and Transfer of Ownership. . 7
2.10 Closing Procedure. . . . . . . . . . . . . . . . . 8
2.11 Post Closing Access to Documents . . . . . . . . . 9
2.12 Escrow . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE III REPRESENTATIONS AND WARRANTIES OF TANNEHILL. . . . 10
3.1 Corporate Organization . . . . . . . . . . . . . . 10
3.2 Effect of Agreement; Consents. . . . . . . . . . . 10
3.3 Financial Statements . . . . . . . . . . . . . . . 10
3.4 Taxes and Tax Returns. . . . . . . . . . . . . . . 11
3.5 Absence of Adverse Change. . . . . . . . . . . . . 11
3.6 No Misleading Statements . . . . . . . . . . . . . 11
3.7 No Significant Transactions. . . . . . . . . . . . 11
3.8 Properties, Title and Related Matters. . . . . . . 12
3.9 Legal Proceedings. . . . . . . . . . . . . . . . . 13
3.10 Records. . . . . . . . . . . . . . . . . . . . . . 13
3.11 Contracts. . . . . . . . . . . . . . . . . . . . . 13
3.12 Brokerage. . . . . . . . . . . . . . . . . . . . . 14
3.13 Execution and Delivery . . . . . . . . . . . . . . 14
3.14 Environmental Matters. . . . . . . . . . . . . . . 14
3.15 Employees. . . . . . . . . . . . . . . . . . . . . 16
3.16 Investigation. . . . . . . . . . . . . . . . . . . 16
3.17 Consent of Public Utilities Commission
Not Required . . . . . . . . . . . . . . . . . . 16
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BERRY. . . . . . 16
4.1 Corporate Organization . . . . . . . . . . . . . . 17
4.2 Due Authorization, Execution and Delivery; Effect of
Agreement. . . . . . . . . . . . . . . . . . . . 17
4.3 Consents . . . . . . . . . . . . . . . . . . . . . 17
4.4 Litigation . . . . . . . . . . . . . . . . . . . . 17
4.5 Brokerage. . . . . . . . . . . . . . . . . . . . . 17
4.6 Approvals. . . . . . . . . . . . . . . . . . . . . 18
ARTICLE V COVENANTS OF TANNEHILL . . . . . . . . . . . . . . 18
5.1 Access to Tannehill. . . . . . . . . . . . . . . . 18
5.2 Governmental Approvals; Consents . . . . . . . . . 18
5.3 Litigation and Claims. . . . . . . . . . . . . . . 19
5.4 Notice of Changes. . . . . . . . . . . . . . . . . 19
5.5 Conduct of Business Operations . . . . . . . . . . 19
5.6 Maintain Cogeneration Assets and Operations. . . . 20
5.7 Exclusive Dealing. . . . . . . . . . . . . . . . . 20
5.8 Termination Fee. . . . . . . . . . . . . . . . . . 21
5.9 Maintenance of Books and Records . . . . . . . . . 22
5.10 Lease of the Cogeneration Assets and
Right to Purchase. . . . . . . . . . . . . . . . 22
5.11 Taxes. . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE VI COVENANTS OF BERRY . . . . . . . . . . . . . . . . 23
6.1 Cooperation. . . . . . . . . . . . . . . . . . . . 23
6.2 Governmental Approvals . . . . . . . . . . . . . . 23
6.3 Disclosure Responsibilities. . . . . . . . . . . . 23
ARTICLE VII CONDITIONS TO OBLIGATIONS OF BERRY . . . . . . . . 23
7.1 Accuracy of Representations and Warranties . . . . 23
7.2 Performance of Covenants and Agreements. . . . . . 23
7.3 Consents . . . . . . . . . . . . . . . . . . . . . 24
7.4 Governmental Approvals . . . . . . . . . . . . . . 24
7.5 Approval of Counsel. . . . . . . . . . . . . . . . 24
7.6 Officers' Certificate. . . . . . . . . . . . . . . 24
7.7 Resolutions. . . . . . . . . . . . . . . . . . . . 24
7.8 Opinions of Counsel. . . . . . . . . . . . . . . . 24
7.9 Closing of Agreements. . . . . . . . . . . . . . . 24
7.10 Termination of Operations and
Maintenance Agreement. . . . . . . . . . . . . . 24
7.11 PG&E Consent . . . . . . . . . . . . . . . . . . . 24
7.12 Good Standing Certificates . . . . . . . . . . . . 25
7.13 Sunset Investment Indemnity. . . . . . . . . . . . 25
ARTICLE VIII CONDITIONS TO OBLIGATIONS OF TANNEHILL. . . . . 25
8.1 Accuracy of Representations and Warranties . . . . 25
8.2 Performance of Covenants and Agreements. . . . . . 25
8.3 Resolutions. . . . . . . . . . . . . . . . . . . . 25
8.4 Approval of Counsel. . . . . . . . . . . . . . . . 25
8.5 Governmental Approvals . . . . . . . . . . . . . . 26
8.6 Officers' Certificate. . . . . . . . . . . . . . . 26
8.7 Opinion of Counsel . . . . . . . . . . . . . . . . 26
8.8 Closing of Agreements. . . . . . . . . . . . . . . 26
ARTICLE IX TERMINATION PRIOR TO CLOSING . . . . . . . . . . . 26
9.1 Termination. . . . . . . . . . . . . . . . . . . . 26
9.2 Effect on Obligations. . . . . . . . . . . . . . . 27
ARTICLE X INDEMNIFICATION. . . . . . . . . . . . . . . . . . 27
10.1 Indemnification by Berry . . . . . . . . . . . . . 27
10.2 Indemnification by Tannehill and the Shareholders. 27
10.3 Survival . . . . . . . . . . . . . . . . . . . . . 27
10.4 Notice and Opportunity to Defend . . . . . . . . . 27
10.5 General. . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE XI MISCELLANEOUS. . . . . . . . . . . . . . . . . . . 29
11.1 Entire Agreement . . . . . . . . . . . . . . . . . 29
11.2 Successors and Assigns . . . . . . . . . . . . . . 29
11.3 Expenses . . . . . . . . . . . . . . . . . . . . . 29
11.4 Taking of Necessary Action . . . . . . . . . . . . 29
11.5 Invalidity . . . . . . . . . . . . . . . . . . . . 29
11.6 Attorneys' Fees. . . . . . . . . . . . . . . . . . 30
11.7 Counterparts . . . . . . . . . . . . . . . . . . . 30
11.8 Headings . . . . . . . . . . . . . . . . . . . . . 30
11.9 Construction and References. . . . . . . . . . . . 30
11.10 Modification and Waiver. . . . . . . . . . . . . . 30
11.11 Notices. . . . . . . . . . . . . . . . . . . . . . 31
11.12 Public Announcements . . . . . . . . . . . . . . . 32
11.13 Governing Law; Interpretation. . . . . . . . . . . 32
11.14 Jurisdiction . . . . . . . . . . . . . . . . . . . 32
LIST OF EXHIBITS
Exhibit Number
Right to Purchase Contract . . . . . . . . . . . . . . . . . . 1
Assignments of Leases, Rights of Way, Easements
and Contracts . . . . . . . . . . . . . . . . . . . . . . 2A, 2B
Allocation of Purchase Price . . . . . . . . . . . . . . . . . 3
Certificate of Satisfaction. . . . . . . . . . . . . . . . . . 4
Escrow Instructions. . . . . . . . . . . . . . . . . . . . . . 5
Certificate of Compliance of Tannehill . . . . . . . . . . . . 6
Opinions of Counsel to Tannehill . . . . . . . . . . . . . 7A, 7B
Sunset Investment Company LLC Indemnity. . . . . . . . . . . . 8
Certificate of Compliance of Berry . . . . . . . . . . . . . . 9
Opinion of Counsel to Berry. . . . . . . . . . . . . . . . . . 10
1
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT ("Agreement") is dated, for the
convenience of the parties hereto, November 8, 1996, by and between Berry
Petroleum Company, a Delaware corporation ("Berry"), and Tannehill Electric
Company, Inc., a California corporation ("Tannehill").
RECITALS:
A. Berry and Tannehill have determined that it is in their
respective best interests for Berry to purchase from Tannehill the Cogeneration
Assets (as defined in Section 1.7 hereof) for Two Hundred Thousand Dollars
($200,000) cash, upon the terms and subject to the conditions set forth herein;
B. Berry and Tannehill have entered into an Agreement in Principle
and Exclusive Dealing Agreement dated August 15, 1996 ("AIP"), and wish to set
forth the representations, warranties, agreements and conditions under which
the purchase and sale will occur in this Definitive Agreement, as defined in
Section 6 of the AIP, which upon execution will supersede the AIP.
NOW, THEREFORE, in consideration of the premises, representations,
warranties and agreements herein contained and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Berry and Tannehill and its shareholders hereby agree as follows:
ARTICLE I
DEFINITIONS
Capitalized terms used in this Agreement shall have the meanings
given to them in this Article I, unless defined elsewhere in this Agreement.
1.1 "Affiliate" shall mean with respect to any Person, an
individual or entity that, directly or indirectly, controls, is controlled by or
is under common control with such Person.
1.2 "Agreement" shall have the meaning such term is given in the
introductory paragraph hereof.
1.3 "Business Day" shall mean any day other than Saturday, Sunday
or other days on which federally chartered commercial banks in California are
authorized by law to close.
2
1.4 "Closing" shall have the meaning such term is given in Section
2.6 hereof.
1.5 "Code" shall mean the Internal Revenue Code of 1986, as
amended.
1.6 "Cogeneration Assets" shall mean Tannehill's rights relative
to the operational cogeneration plant described in the Disclosure Letter from
Tannehill delivered to Berry at or prior to execution hereof, which shall refer
to the relevant Sections of this Agreement (the "Tannehill Disclosure Letter"),
and all tangible and intangible assets related to such plant, including but not
limited to the P.G.&E. S. O. #2 Contract as defined in Section 1.21 hereof, the
Operations and Maintenance Agreement as defined in Section 1.20 hereof, the
Cogeneration Lease as defined in Section 1.7 hereof, the Cogeneration Premises
Lease as defined in Section 1.8 hereof and the Right to Purchase Contract as
defined in Section 1.26 hereof, excluding only the SOCAL Contract as defined in
Section 1.28 hereof and the SOCAL Litigation as defined in Section 1.29 hereof.
1.7 "Cogeneration Lease" shall mean that Lease Agreement dated as
of August 15, 1994, between Security Pacific Leasing Corporation, a Delaware
corporation ("Security Pacific"), as lessor, and Tannehill, as lessee, a copy of
which is attached to the Tannehill Disclosure Letter.
1.8 "Cogeneration Premises Lease" shall mean that Premises Lease
dated as of August 15, 1994, between the persons and entities listed in Exhibit
A of such Lease, collectively the "Premises Lessors," and Security Pacific, the
"Premises Lessee," Security Pacific's interest in which was subleased to
Tannehill pursuant to the Cogeneration Lease, a copy of which is attached to
the Tannehill Disclosure Letter.
1.9 "Default" shall mean, as to any party to this Agreement, (a)
a default by such party in the performance of any of its material obligations
hereunder and the continuation of such default for a period of five (5)
Business Days after written notice is delivered by the non-defaulting party to
the defaulting party that a default has occurred or (b) the breach of any
representation or warranty hereunder.
1.10 "Effective Date" shall have the meaning such term is given in
paragraph 2.4a hereof.
1.11 "Encumbrance" shall mean any security interest, mortgage,
pledge, claim, lien, charge, option, defect, encumbrance, or other right or
interest of any nature.
1.12 "Environmental Laws" shall be broadly construed to mean any and
all federal, state or local laws, statutes, ordinances, rules, regulations,
orders, or determinations of any Governmental Entity pertaining to the
environment heretofore or currently in effect in any and all jurisdictions in
which Tannehill is conducting or at any time has conducted business, or where
any of the Cogeneration Assets are located, or where any hazardous substances
generated by or disposed of by Tannehill are located. "Environmental Laws"
shall include, but shall not be limited to, the federal Clean Air Act, as
amended; the federal Comprehensive Environmental,
3
Response, Compensation, and Liability Act of 1980 ("CERCLA"), as amended; the
federal Water Pollution Control Act, as amended; the federal Resource
Conservation and Recovery Act of 1976, as amended ("RCRA"); the federal Safe
Drinking Water Act, as amended; the federal Toxic Substances Control Act, as
amended; the federal Superfund Amendments and Reauthorization Act of 1986, as
amended; the federal Clean Water Act, as amended; or any state laws or
regulations similar or analogous to or in implementation of these provisions;
the California State Business Plan Law, California Health and Safety Code
Section 25500 et seq.; the Hazardous Substance Account Act, Health and Safety
Code Section 25300 et seq.; the Hazardous Waste Control Law, Health and Safety
Code Section 25100 et seq.; Chapter 6.7 of Division 20 of the Health and Safety
Code, Section 25280 et seq.; the Safe Drinking Water and Toxic Enforcement Act
of 1986 ("Proposition 65"); Health and Safety Code Section 25249.5 et seq.;
Division 26 of the Health and Safety Code, Section 39000 et seq.; the Porter-
Cologne Act, Water Code Section 13000 et seq.; and any other successor or
amendments thereto, or implementing regulations thereof; and all other laws,
statutes, ordinances, rules, regulations, orders and determinations of any
Governmental Entity relating to (a) the control of any potential pollutant
or protection of the air, water or land; (b) solid, gaseous or liquid waste
generation, handling, treatment, storage, disposal or transportation; and (c)
exposure to hazardous, toxic or other substances alleged to be harmful. The
terms "hazardous substance," "release" and "threatened release" have the
meanings specified in CERCLA, and the terms "solid waste" and "disposal"
(or "disposed") have the meanings specified in RCRA; provided, however, that,
to the extent the laws of the state in which any Cogeneration Assets are or
were located currently or subsequently provide for a meaning for "hazardous
substance," "release," "solid waste" or "disposal" which is broader than that
specified in either CERCLA or RCRA, such broader meaning shall apply.
1.13 "Escrow" shall mean the escrow account established by Berry and
Tannehill with First American Title Insurance Company pursuant to Section 2.12
hereof.
1.14 "Financial Statements" shall have the meaning such term is
given in Section 3.3 hereof.
1.15 "Governmental Entity" shall mean the United States of America,
any state, county, city, municipality and any subdivision thereof, any court,
administrative or regulatory agency, commission, department or body or other
governmental authority or instrumentality or any entity or Person exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
1.16 "Indemnifying Party" shall have the meaning such term is given
in paragraph 10.4a hereof.
1.17 "Indemnitee" shall have the meaning such term is given in
paragraph 10.4a hereof.
1.18 "IRS" shall mean the Internal Revenue Service.
4
1.19 "Material" means any condition, change or effect that,
individually or when taken together with all other such conditions, changes or
effects that existed or occurred prior to the date of determination of the
existence or occurrence of the material condition, change or effect, is or is
reasonably likely to be materially adverse to the business, assets (including
intangible assets), financial condition or results of operations of Berry or
Tannehill respectively, in each case taken as a whole.
1.20 "Operations and Maintenance Agreement" shall mean that
agreement entitled Operations and Maintenance Agreement between Solar Turbines
Incorporated ("Solar") and Tannehill dated as of August 15, 1994, as amended, a
copy of which is attached to the Tannehill Disclosure Letter.
1.21 "P.G.&E. S. O. #2 Contract" refers to the California Public
Utilities Commission Standard Offer #2 Power Purchase Agreement for Firm
Capacity and Energy between Solar and Pacific Gas and Electric Company
("PG&E"), executed by Solar on November 14, 1985, and by PG&E on November 20,
1985, and assigned by Solar to Monarch Cogeneration 1986-1, a California
limited partnership ("Monarch"), effective upon PG&E's consent thereto executed
by PG&E on February 13, 1987, and further assigned by Monarch to Tannehill and
Security Pacific by Consent to Assignment and Agreement dated as of August 15,
1994, and the Agreement for Installation or Allocation of Special Facilities
executed by PG&E on September 17, 1986, assigned by Solar to Monarch, effective
on PG&E's consent thereto executed by PG&E on February 13, 1987, and assigned
by Monarch to Tannehill and Security Pacific by Consent to Assignment and
Agreement dated as of August 15, 1994, copies of which documents are attached
to the Tannehill Disclosure Letter.
1.22 "Partnership Purchase Agreement" shall have the meaning such
term is given in paragraph 2.10c hereof.
1.23 "Permitted Encumbrances" shall mean encumbrances which Berry
accepts, in writing.
1.24 "Person" shall mean any individual, corporation, association,
partnership, joint venture, trust, estate, unincorporated organization or
Governmental Entity.
1.25 "Requisite Regulatory Approvals" shall have the meaning such
term is given in paragraph 5.2a hereof.
1.26 "Right to Purchase Contract" shall mean an agreement to be
entered into between Tannehill, Berry and Security Pacific, in which Tannehill
and Berry have the right to purchase Security Pacific's interest in the
Cogeneration Assets under the terms and in the format of Exhibit 1 attached
hereto and made a part hereof and all exhibits attached to Exhibit 1.
1.27 "Shareholders" shall mean the Shareholders of Tannehill.
5
1.28 "SOCAL Contract" shall mean that Gas Transmission Service
Contract between Southern California Gas Company ("SOCAL") and Caterpillar
Capital Company dated February 25, 1988, amended March 1, 1992, and assigned by
Caterpillar Capital Company to Tannehill by Consent to Assignment and Agreement,
dated August 19, 1994, copies of which are attached to the Tannehill Disclosure
Letter.
1.29 "SOCAL Litigation" shall mean that lawsuit originally filed in
the United States District Court for the Southern District of Texas, Houston
Division, entitled Tannehill Electric Company, Inc., v. Southern California Gas
Company, on or about July 17, 1995, Case No. H95-3752, transferred to the
Central District of California and docketed in such district as Case No.
CV96-2502, together with any amendments thereto and any counter-claims or
cross-complaints presently or hereafter filed therein whether by SOCAL or
others; that lawsuit filed October 7, 1996, in the Superior Court of the State
of California for the County of Kern, entitled Tannehill Electric Company, Inc.
v. Southern California Gas Company, Case No. CV96-2502, together with any
amendments thereto and any cross-complaints presently or hereafter filed
therein by SOCAL or others; that lawsuit filed in the Superior Court for the
County of Los Angeles entitled Southern California Gas Company v. Tannehill
Electric Company, Inc., Case No. BC158128, together with any amendments thereto
and any cross-complaints presently or hereinafter filed by Tannehill or others;
and any lawsuits presently or hereafter filed by SOCAL or its assignee against
Tannehill or the Shareholders, or their successors, or Berry, based wholly or
in part on the SOCAL Contract.
1.30 "TOC Purchase Agreement" shall have the meaning such terms is
given in paragraph 2.10c hereof.
ARTICLE II
THE PURCHASE AND SALE
2.1 Transfer to Berry. In accordance with the provisions of this
Agreement, Tannehill shall transfer and convey the Cogeneration Assets to Berry
free and clear of liens and Encumbrances (other than Permitted Encumbrances)
pursuant to Assignments of Leases, Rights of Way, Easements and Contracts in
the forms of Exhibits 2A and 2B attached hereto and made a part hereof (the
"Instruments of Transfer"), to be delivered at the Closing, in accordance with
the provisions relating to the Closing, and Berry will acquire the Cogeneration
Assets from Tannehill.
2.2 Purchase by Berry. Berry, in reliance upon the covenants,
representations, warranties and indemnities of Tannehill contained herein,
hereby agrees to purchase the Cogeneration Assets from Tannehill for the
purchase price (the "Purchase Price") stated in Section 2.3 hereof.
2.3 Payment of the Purchase Price. As payment for the transfer and
conveyance of the Cogeneration Assets by Tannehill to Berry, Berry shall
deliver to Escrow for
6
the benefit of Tannehill or its nominees at the Closing, in accordance with the
provisions related to the Closing, a wire transfer with immediately available
funds in the amount of Two Hundred Thousand Dollars ($200,000) to an account
specified by the Escrow Agent (as herein defined) prior to the Closing. The
transaction shall be subject to post-closing operating adjustment as provided
in Section 2.4 hereof ("Operating Adjustment"). The Operating Adjustment shall
not be handled through Escrow.
2.4 Operating Adjustment.
a. October 1, 1996, at 12:01 a.m. shall be considered the
"Effective Date" of this Agreement, and the operations of Tannehill and the
Cogeneration Assets, including income derived from the P.G.&E. S.O. #2 Contract,
shall be for the account of Berry from and after that date, conducted in the
ordinary course of business as described in Section 5.5 hereof; provided,
however, that the application of such an Effective Date shall not be deemed to
make Berry liable for any costs or charges related to the SOCAL Contract. For
all other purposes, and without limiting the generality of the foregoing, the
representations, warranties, covenants and indemnities herein, and the delivery
of the Purchase Price, shall occur and be effective at the Closing. The
Operating Adjustment will occur at or after the Closing with a cash payment in
an amount equal to the net income or loss of the Cogeneration Assets after the
Effective Date, adjusted to reflect only necessary operating revenues and
expenses which would have been credited to or incurred by Berry had both this
Agreement and the acquisition of the Cogeneration Assets under the Right to
Purchase Contract been concluded and closed on the Effective Date. The
operating revenues shall specifically include, but not be limited to, revenue
from power and steam sales. Operating expenses shall exclude any payments made
pursuant to the Cogeneration Lease or the Cogeneration Premises Lease, any
SOCAL charges, legal fees, interest, amortization, unreasonable travel and
entertainment and management fees in excess of Fifty Dollars ($50) per day. If
the Cogeneration Assets produce a net income after the Effective Date, then
Tannehill shall pay Berry an Operating Adjustment equal to such net income.
If the Cogeneration Assets produce a net loss after the Effective Date, then
Berry shall pay Tannehill an Operating Adjustment equal to the amount of the
net loss.
b. In the event Tannehill does not provide Berry with its
calculation of the Operating Adjustment (the "Calculation") prior to the
Closing, Tannehill shall provide Berry with the Calculation within sixty (60)
days after the Closing. Berry shall have immediate access at reasonable times
to such books, records and invoices as it deems necessary to verify the
Calculation. If Berry does not object to the Calculation within ten (10) days
after receipt thereof by Berry, it shall be deemed to be final and binding upon
the parties hereto. If Berry objects to the Calculation within such ten (10)
days by specifying the items to which it objects, then the parties will attempt
to mutually resolve any differences. If the differences cannot be resolved
within twenty (20) days after Berry's objection to the Calculation, then all
amounts agreed to shall be paid as provided below and the difference shall be
resolved by arbitration under the Commercial Arbitration Rules of the American
Arbitration Association. The costs of arbitration shall be shared equally by
the parties. This Section 2.4 is the only Section or part of this Agreement
which is subject to arbitration jurisdiction.
7
c. Within three (3) days after the final determination of
the Operating Adjustment, the party required to make the Operating Adjustment
payment shall pay, via wire if requested, the other party the Operating
Adjustment payment agreed upon.
2.5 Allocation of Purchase Price. The parties agree to allocate
the Purchase Price in accordance with the terms of Code Section 1060 and the
Treasury Regulations promulgated thereunder, and to report this transaction for
federal and state tax purposes in accordance with the agreed-upon allocation in
the form of Exhibit 3 attached hereto and made a part hereof.
2.6 Closing. Subject to the provisions of Articles VII and VIII,
the closing (the "Closing") shall take place at 10 a.m., Pacific Standard Time,
at the offices of Berry Petroleum Company, 28700 Hovey Hills Road, Taft,
California, on such date prior to December 1, 1996, as to which Berry and
Tannehill shall mutually agree. By written notice to the other party, either
Berry or Tannehill shall have the right to extend the Closing an additional
forty-five (45) days in the event that either party is not in a position to
close by December 1, 1996.
2.7 Proration of Credits and Payment Obligations. All credits and
payment obligations associated with the Cogeneration Assets, excluding the
leases described in Sections 1.7 and 1.8, including but not limited to lease
rentals and other forms of contractual payments, shall be prorated between
Tannehill and Berry as of the Effective Date. Tannehill shall be responsible
and shall pay for all such items due, incurred or attributable to the period
prior to the Effective Date and Berry shall be responsible and shall pay for
all such items due, incurred or attributable to the period after such date.
2.8 Real Estate and Other Taxes. All real estate, occupation, ad
valorem, personal property and severance taxes and charges on the Cogeneration
Assets shall be prorated as of the Effective Date. Tannehill shall pay all
such items for all periods prior to such date, however, Berry shall be entitled
to all refunds and rebates with regard to such periods. In the event Berry
pays additional taxes or charges which are assessed upon or levied against the
Cogeneration Assets after Closing with respect to any period prior to the
Effective Date, Tannehill shall promptly reimburse Berry the amount thereof
upon presentation of a receipt therefor. If Tannehill elects to challenge the
validity of such bill or any portion thereof, Berry shall extend reasonable
cooperation to Tannehill in such efforts, at no expense to Berry.
2.9 Documentation of Sale and Transfer of Ownership. Except as
otherwise provided herein, the Cogeneration Assets shall be conveyed pursuant to
the Instruments of Transfer in such form or forms customary and necessary to
properly transfer the tangible and intangible assets included in the
Cogeneration Assets according to the requirements of any applicable federal,
state or local agency.
a. Tannehill shall deliver control of the Cogeneration
Assets to Berry at the Closing subject to the reservations, limitations,
conditions and restrictions contained in this Agreement and the Instruments of
Transfer.
8
b. Tannehill shall make available at Tannehill's offices or
such other place as deemed appropriate by Berry until the Closing, during
normal business hours, for examination by Berry, such title information and
abstracts as may then be available in Tannehill's files.
2.10 Closing Procedure. At the Closing through Escrow, the
transactions listed below shall occur, all subject to and conditioned upon the
execution and delivery of a Certificate of Satisfaction described in paragraph
2.10e hereof.
a. Tannehill shall deliver to Berry originals (unless
otherwise noted) of each of the following documents:
(1) Certified resolutions of the Board of Directors of
Tannehill authorizing the execution and delivery of this Agreement and the
transactions contemplated hereby.
(2) The Cogeneration Lease, Cogeneration Premises
Lease, Operations and Maintenance Agreement, P.G.&E. S.O. #2 Contract, all
insurance policies presently in force with respect to the Cogeneration Assets,
and all leases, contracts, agreements, indentures and other instruments
described in the Tannehill Disclosure Letter.
(3) Assignment of the P.G.&E. S.O. #2 Contract from
Tannehill to Berry, executed by Berry and Tannehill and Consent to Assignment of
the P.G.&E. S.0. #2 Contract from Tannehill to Berry, executed by Berry,
Tannehill and P.G.&E.
(4) Assignment of the Cogeneration Lease from Tannehill
to Berry, executed by Berry and Tannehill, consented to by Security Pacific in
the Right to Purchase Contract.
(5) Assignment of the Cogeneration Premises Lease from
the Premises Lessors to Berry, executed by Berry, Tannehill and the Premises
Lessors under such Premises Lease, consented to by Security Pacific in the
Right to Purchase Contract.
(6) The Right to Purchase Contract, executed by
Tannehill, Security Pacific and Berry.
(7) Amendment and Consent to Assignment of the
Operations and Maintenance Agreement as provided in Section 7.10 from Tannehill
to Berry, executed by Berry, Tannehill and Solar (the "Amended Operations &
Maintenance Agreement"), (which document contains a representation by Solar
that Tannehill has not breached any provision of, and is not in default under,
the terms of the Operations and Maintenance Agreement) and the Berry Indemnity
and the Reserve Security Instruments (as those terms are defined in the Amended
Operations & Maintenance Agreement).
(8) Executed Instruments of Transfer.
9
(9) Executed Certificate of Compliance of Tannehill.
(10) Executed Opinion of Counsel to Tannehill.
(11) Tannehill Disclosure Letter.
(12) Written notice from Sunset (as defined in Section
7.13) meeting the requirements of Section 7.13 hereof.
b. Berry shall deliver to Tannehill originals (unless
otherwise noted) of each of the following documents:
(1) Certified resolutions of the Board of Directors of
Berry authorizing the execution and delivery of this Agreement and the
transactions contemplated hereby.
(2) Executed Certificate of Compliance of Berry.
(3) Executed Opinion of Counsel to Berry.
(4) Berry Disclosure Letter.
c. Berry and Tannehill will execute and mutually deliver two
(2) originals of a statement that the respective transactions contemplated by
the Purchase and Sale Agreement between Berry and Tannehill Oil Company, a
general partnership, et al., dated November 8, 1996 (the "Partnership Purchase
Agreement"), and the Purchase and Sale Agreement between Berry and Tannehill
Oil Company, Inc., a California corporation, dated November 8, 1996 (the "TOC
Purchase Agreement"), are in condition to close.
d. Berry will deliver to Tannehill the Purchase Price as
provided in Section 2.3 hereof.
e. Berry and Tannehill will execute and mutually deliver two
(2) originals of the Certificate of Satisfaction in the form of Exhibit 4
attached hereto and made a part hereof.
2.11 Post Closing Access to Documents. Tannehill will cooperate
with Berry and its agents on any post-closing audit or financial review that is
required by Berry due to the transactions contemplated by this Agreement.
2.12 Escrow. First American Title Insurance Company, a California
corporation, whose address is 4540 California Avenue, Suite 100, P.O. Box 1945,
Bakersfield, California 93309, is hereby appointed to act as escrow agent
("Escrow Agent") to conduct the purchase and sale of the Cogeneration Assets.
Berry and Tannehill shall execute instructions to the Escrow Agent,
substantially in the form of Exhibit 5 and attached hereto and made a part
10
hereof, to provide for the payment of liabilities secured by the Cogeneration
Assets and the release of Encumbrances, other than Permitted Encumbrances,
against the Cogeneration Assets. Berry and Tannehill further agree that
Tannehill shall be responsible for and pay for all escrow fees and charges.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF TANNEHILL
Except as set forth in the Tannehill Disclosure Letter, Tannehill
hereby represents and warrants to and covenants with Berry as follows:
3.1 Corporate Organization. Tannehill is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California and has full power and authority to conduct its business as
currently conducted and to own, operate and lease the Cogeneration Assets it
now owns, operates or holds under lease.
3.2 Effect of Agreement; Consents.
a. The execution, delivery and performance of this Agreement
by Tannehill and the consummation by Tannehill of the transactions contemplated
hereby (i) do not require the consent, approval, clearance, waiver, order or
authorization of any Person except PG&E, Security Pacific and Solar; (ii) do
not violate any provision of the Articles of Incorporation or Bylaws of
Tannehill; (iii) do not conflict with or violate any permit, concession, grant,
franchise, statute, law, rule or regulation of any Governmental Entity or any
order, judgment, award or decree of any court or other Governmental Entity to
which Tannehill is subject or any of the Cogeneration Assets are bound; and
(iv) do not conflict with, or result in any breach of, or default or loss of
any right under (or an event or circumstance that, with notice or the lapse of
time, or both, would result in a default), or the creation of any Encumbrance
pursuant to, or cause or permit the acceleration prior to maturity of any
amounts owing under any indenture, mortgage, deed of trust, lease or other
agreement to which Tannehill is a party or to which any of the Cogeneration
Assets are subject, in each case, which failure, violation, conflict or breach
would, in the aggregate, materially hinder or impair the consummation of the
transactions contemplated by this Agreement.
b. The execution, delivery and performance of this Agreement
by Tannehill will not result in the loss of any governmental license, franchise
or permit possessed by Tannehill related to the Cogeneration Assets or give a
right of acceleration or termination to any party to any agreement or other
instrument to which Tannehill is a party and by which the Cogeneration Assets
are bound, or result in the loss of any right or benefit under such agreement
or instrument.
3.3 Financial Statements. Tannehill has heretofore furnished to
Berry true and correct copies of the balance sheets of Tannehill as of December
31, 1995, April 30, 1996,
11
and September 30, 1996, and the related statements of revenues and expenses
for the periods then ended (collectively, the "Financial Statements"). The
Financial Statements have been prepared in accordance with the books and
records of Tannehill and in conformity with generally accepted accounting
principles applied, except as otherwise noted therein, on a basis consistent
with prior periods, and fairly present, in all material respects, the
financial position and results of operations of Tannehill as at and for the
periods specified therein. As of September 30, 1996, Tannehill did not have
any liability of any kind or manner, either direct, accrued, absolute or
otherwise, which was required to be disclosed by generally accepted accounting
principles and which was not reflected or disclosed in the Financial Statements
and there have been no changes in Tannehill's method of accounting for tax
purposes or other purposes except as disclosed in the Tannehill Disclosure
Letter.
3.4 Taxes and Tax Returns. Tannehill has filed all federal, state,
local and foreign income and other tax returns required to be filed by it, and
each such return is complete and accurate in all material respects. The taxes
shown due on such returns have been paid and there are no taxes, interest,
penalties, assessments or deficiencies (any of the foregoing being referred to
herein as a "Tax") claimed to be due in respect of such tax returns or claimed
in writing to be due by any taxing authority. The tax returns of Tannehill
have not been audited by the IRS, nor has Tannehill received notice of any
examination being conducted by the IRS or any other taxing authority for any
fiscal year. All other taxes, including property taxes, imposed by the United
States and by any state, municipality, subdivision or instrumentality of the
United States, or other taxing authority, which are due and payable by
Tannehill have been paid in full or will be paid or provided for up to the
Closing date.
3.5 Absence of Adverse Change. Since April 30, 1996, there has not
been (a) any Material adverse change in the condition of the Cogeneration
Assets; (b) any damage, destruction or loss adversely affecting the
Cogeneration Assets; (c) any incurrence by Tannehill or by the Shareholders of
or entry into any liability, mortgage, lien or transaction affecting the
Cogeneration Assets; (d) any guarantee of or grant of a security interest to
secure a third Person's obligations by Tannehill; (e) except as provided in the
Tannehill Disclosure Letter, any commitment by Tannehill relating to the
Cogeneration Assets; or (f) any agreement, in writing or otherwise, or any
corporate action with respect to the foregoing. No event or condition has
occurred or exists and Tannehill is not aware of any event or condition that
has occurred or exists and that could result in a Material adverse change in
the Cogeneration Assets since April 30, 1996.
3.6 No Misleading Statements. This Agreement, the exhibits hereto
and the information referred to herein, when taken as a whole, do not include
any untrue statement of a material fact and do not omit any material fact
necessary to make the statements contained herein or therein not misleading.
3.7 No Significant Transactions. Except for the execution of this
Agreement, since December 31, 1995, Tannehill has not engaged in any Material
transactions and will not engage in any Material transactions prior to the
Closing.
12
3.8 Properties, Title and Related Matters.
a. Tannehill's interest, as Lessee of the Cogeneration
Lease, in the personal property and fixtures included in the Cogeneration
Assets and the personal property and fixtures included in the Cogeneration
Lease is free and clear of all Encumbrances except for Permitted Encumbrances.
Tannehill has not breached any provision of and is not in default (and no event
or circumstance exists that written notice or the lapse of time, or both, would
constitute a default) under the terms of the Cogeneration Lease.
b. Other than Tannehill's interest, as sublessee of the
Cogeneration Premises Lease, in the real property upon which the Cogeneration
Assets are located (the "Cogeneration Premises"), Tannehill has no easements or
rights of way and no real property is leased by Tannehill. Tannehill has good
title to all the leasehold estates pursuant to which the real property
described in the previous sentence is leased, free and clear of all
Encumbrances, except for Permitted Encumbrances. Except as described in the
Tannehill Disclosure Letter, Tannehill has not breached any provision of and is
not in default (and no event or circumstance exists that with notice or the
lapse of time, or both, would constitute a default) under the terms of any
lease, easement, right of way or other agreement pursuant to which the
Cogeneration Premises are leased or held and all of such leases, easements,
rights of way or other agreements are in full force and effect. There are no
pending or threatened disputes with respect to any lease, easement, right of
way or other agreement pursuant to which the Cogeneration Premises are leased
or held and the lessor or grantor thereunder has not breached any provision of
and is not in default (and no event or circumstance exists that with notice or
the lapse of time, or both, would constitute a default) under the terms of any
such lease, easement, right of way or other agreement. The Tannehill
Disclosure Letter contains a description of all structures, improvements, tanks
and pipes or other fixtures located on or under any leases, easements or rights
of way included in or affecting the Cogeneration Premises.
c. Since the physical inspection by Berry on September 5,
1996, the maintenance and operation of the machinery and equipment of the
Cogeneration Assets listed in the Tannehill Disclosure Letter have been
consistent with the past maintenance and operation of such machinery and
equipment, ordinary wear and tear excepted, and, except as described in the
Tannehill Disclosure Letter, all machinery, pipelines and equipment are
operative in all material respects.
d. Tannehill is not in material violation of and, except as
disclosed in the Tannehill Disclosure Letter, Tannehill has not received any
written notice of any violation of any zoning regulation, ordinance, law, rule,
order, regulation or requirement relating to the Cogeneration Assets, or
operation of or on its properties which remains uncured or which has not been
dismissed where failure to comply therewith would have a Material adverse
effect on Tannehill or the Cogeneration Assets.
e. Attached to the Tannehill Disclosure Letter is a correct
and complete list and copies of all policies of fire, liability and other forms
of insurance held by
13
Tannehill presently in force with respect to the Cogeneration Assets. Such
policies are in full force and effect and assignable and Tannehill is not in
default under any of them.
f. The Operations and Maintenance Agreement shall be subject
to cancellation by Berry after the Closing without any requirement for the
posting of a letter of credit or any other penalty other than an acceptable
period of time to elapse for notice, except as such requirement may relate to
the required Adjustment of Capacity Payments in the event of termination or
reduction as required by the P.G.&E. S.O. #2 Contract.
3.9 Legal Proceedings. Except as disclosed in the Tannehill
Disclosure Letter, there is no legal, judicial, administrative or governmental
arbitration or other action or proceeding or governmental investigation pending
or threatened against Tannehill or any director or officer of Tannehill, or
affecting any of the Cogeneration Assets, which if adversely determined would
have a Material adverse effect on the Cogeneration Assets. Tannehill is not in
violation of or default under any laws, ordinances, regulations, judgments,
injunctions, orders or decrees (including, without limitation, any immigration
laws or regulations) of any court or other Governmental Entity applicable to
its business, which violations or defaults would have a Material adverse effect
on the business, results of operations, financial condition,Cogeneration Assets
or prospects of Tannehill. There are no Material judgments, orders,
injunctions or decrees of any Governmental Entity regarding any agreement in
which Tannehill is a named party or any of the Cogeneration Assets are
identified or subject. Except for the SOCAL Litigation, there is no pending
litigation in or to which Tannehill is a named party or any of the Cogeneration
Assets of Tannehill are identified and subject.
3.10 Records. Tannehill has records that accurately reflect its
transactions and transactions that affect the Cogeneration Assets in all
material respects.
3.11 Contracts.
a. All contracts, agreements, indentures and other
instruments to which Tannehill is a party are attached to the Tannehill
Disclosure Letter. Except for the agreements attached to the Tannehill
Disclosure Letter, Tannehill is not a party to or bound by (i) any agreement,
indenture or other instrument which contains restrictions with respect to the
sale of the Cogeneration Assets; (ii) any contract, agreement, indenture, note
or other instrument relating to (A) the granting of any Material Encumbrance or
(B) any guarantee or other contingent liability (identifying the primary
contract or agreement to which such guarantee or contingent liability relates
or the agreement pursuant to which such guarantee was delivered) affecting or
in respect of the Cogeneration Assets; (iii) any management service, consulting
or any other similar type of contract; (iv) any other agreement, contract or
commitment limiting the freedom of Tannehill or any Affiliate of Tannehill to
engage in any line of business, to own, operate, sell, transfer, pledge or
otherwise dispose of or encumber any Asset or to compete with any Person or in
any geographic area; or (v) any other agreement, contract or commitment which
relates to the Cogeneration Assets. The Tannehill Disclosure Letter sets forth
with respect to each mortgage, security agreement, letter of credit or
guaranty, a cross reference to the principal agreement, instrument or document
referred to in the Tannehill Disclosure Letter
14
pursuant to which such mortgage, security agreement, letter of credit or
guaranty was executed or to which such mortgage, security agreement, letter of
credit or guaranty relates.
b. Except as disclosed in the Tannehill Disclosure Letter,
Tannehill has not breached any provision of or is not in default (and no event
or circumstance exists that with notice or the lapse of time, or both, would
constitute a default) under the terms of any agreement attached to the
Tannehill Disclosure Letter. All contracts, agreements, indentures and other
instruments attached to the Tannehill Disclosure Letter are in full force and
effect. There are no pending or threatened disputes with respect to the
contracts, agreements, indentures or instruments attached to the Tannehill
Disclosure Letter. Tannehill is not obligated to pay any liquidated damages
under any of the contracts, agreements, indentures or other instruments
attached to the Tannehill Disclosure Letter and Tannehill is not aware of any
facts or circumstances that could reasonably be expected to result in an
obligation of Tannehill to pay such liquidated damages.
3.12 Brokerage. No investment banker, broker or finder has acted
directly or indirectly for Tannehill in connection with this Agreement or the
transactions contemplated hereby. No investment banker, broker, finder or
other Person is entitled to any brokerage or finder's fee or similar
commission in respect thereof based in any way on agreements, arrangements or
understandings made by or on behalf of Tannehill. Tannehill agrees to
indemnify, defend and hold Berry harmless from and against any and all claims,
liabilities or obligations with respect to all fees, commissions or expenses
asserted by any Person on the basis of any act, statement, agreement or
commitment alleged to have been made by Tannehill with respect to any such fee,
expense or commission.
3.13 Execution and Delivery. Tannehill has full power and authority
to execute and deliver this Agreement and to perform its obligations hereunder.
The execution and delivery of this Agreement by Tannehill and the performance
of its obligations hereunder have been duly authorized by all necessary
corporate action on its part, including unanimous approval by the Shareholders.
This Agreement has been duly executed and delivered by Tannehill and
constitutes a legal, valid and binding obligation of Tannehill, enforceable
against it in accordance with its terms, except as such enforceability may be
limited by or subject to (a) any bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to creditors' rights generally and
(b) general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
3.14 Environmental Matters.
a. To the best of Tannehill's knowledge, Tannehill has at
all times operated in compliance with all applicable limitations, restrictions,
conditions, standards, prohibitions, requirements and obligations of
Environmental Laws and related orders of any court or other Governmental
Entity.
b. To the best of Tannehill's knowledge, Tannehill is not
in violation of or subject to (i) any existing, pending or threatened action,
suit, investigation, inquiry or
15
proceeding by or before any court or other Governmental Entity or (ii) any
remedial obligations, in each case under any applicable Environmental Law
relating to the Cogeneration Assets or operations conducted thereon by any
Person at any time during which such Cogeneration Assets were owned, leased,
used or operated by or for the benefit of Tannehill, or by any Person prior to
such time to the extent Tannehill has knowledge of such matters.
c. To the best of Tannehill's knowledge, all notices,
permits, licenses or similar authorizations, if any, required to be obtained or
filed by Tannehill under all applicable Environmental Laws in connection with
its past or present operation or use of any and all Cogeneration Assets or the
conduct of its business, including but not limited to past or present
treatment, storage, disposal or release of a hazardous substance or solid waste
into the environment, have been duly obtained or filed.
d. To the best of Tannehill's knowledge, all hazardous
substances and solid wastes generated at any and all of the Cogeneration Assets
or by any Person in connection with the ownership, lease, use or operation of
the Cogeneration Assets have, at any time during which such Cogeneration Assets
were owned, leased, used or operated by or for the benefit of Tannehill or any
Affiliate thereof, been transported, stored, treated and disposed of by carriers
or treatment, storage and disposal facilities authorized or maintaining valid
permits under all applicable Environmental Laws.
e. To the best of Tannehill's knowledge, all hazardous
substances and solid wastes generated at any and all of the Cogeneration Assets
or by any prior owner or operator of the Cogeneration Assets were transported,
stored, treated and disposed of by carriers or treatment, storage and disposal
facilities authorized or maintaining valid permits under all applicable
Environmental Laws.
f. To the best of Tannehill's knowledge, no Person has, at
any time during which the Cogeneration Assets were owned, leased, used or
operated by or for the benefit of Tannehill, disposed of or released any
hazardous substance or solid waste on or under the Cogeneration Assets, except
in compliance with all applicable Environmental Laws.
g. To the best of Tannehill's knowledge, no Person has
disposed of or released any hazardous substance or solid waste on, under or
around the Cogeneration Assets, except in compliance with all applicable
Environmental Laws.
h. To the best of Tannehill's knowledge, no facts or
circumstances exist which could reasonably be expected to result in any
liability to any Person with respect to the current or past business and
operations of Tannehill or the Cogeneration Assets in connection with any
release, transportation or disposal of any hazardous substance or solid waste
or action taken or omitted that was not in full compliance with or was in
violation of any applicable Environmental Law.
16
3.15 Employees.
a. Tannehill has no employees.
b. Officers of Tannehill shall not assert claims against
Berry based on employment by Tannehill for severance, retirement benefits,
health benefits, deferred compensation, violations of any federal, state or
local laws or statutes, wages or other benefits or compensation. Officers of
Tannehill shall not assert any claim against Berry for discriminatory hiring
practices based on state or federal laws or statutes, union contracts or for
benefits based upon the Employee Retirement Income Security Act of 1974, as
Amended ("ERISA").
c. Tannehill is not currently nor has it ever been a party
to any officer or employee pension or welfare plan to which ERISA applies or to
which Tannehill was required to make contributions for the benefit of its
employees, officers or directors.
d. Neither Tannehill nor any of its Affiliates is a party
to, or bound by, any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor union organization.
There is no unfair labor practice or labor arbitration proceeding pending or
threatened against Tannehill or any of its Affiliates relating to their
business which, if determined adversely to Tannehill or the Affiliate would
have a Material adverse effect. There are no organizational efforts with
respect to the formation of a collective bargaining unit presently being made
or threatened involving Tannehill or any of its Affiliates.
3.16 Investigation. Tannehill and its agents, counsel and
accountants have had reasonable access to representatives of Berry to make such
investigations as they desired with respect to the business, operations and
affairs of Berry in connection with the transactions contemplated hereby. In
determining whether to consummate the transactions contemplated hereby,
Tannehill is relying solely on the terms, covenants, representations,
warranties and indemnities herein and on their own investigations into and
analysis of the business, operations and condition (financial or otherwise) of
Berry and have not relied on Berry, or its officers or directors, with respect
to the interpretation of data relating to the valuation of Tannehill, the
income tax ramifications of this purchase and sale, and/or the ability of Berry
to operate the Cogeneration Assets.
3.17 Consent of Public Utilities Commission Not Required. The
consent of the California Public Utilities Commission to the transfer of the
P.G.&E. S.O. #2 Contract from Tannehill to Berry is not required.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BERRY
Except as set forth in the Disclosure Letter from Berry delivered to
Tannehill at or prior to the execution hereof, which shall refer to the
relevant Sections of this Agreement (the
17
"Berry Disclosure Letter"), Berry hereby represents and warrants to and
covenants with Tannehill as follows:
4.1 Corporate Organization. Berry is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite corporate power and authority to carry on its business as
it is now being conducted, and to execute, deliver and perform this Agreement
and to consummate the transactions contemplated hereby.
4.2 Due Authorization, Execution and Delivery; Effect of Agreement.
The execution, delivery and performance by Berry of this Agreement and the
consummation by Berry of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Berry. This
Agreement has been duly and validly executed and delivered by Berry and
constitutes the legal, valid and binding obligation of Berry, enforceable
against it in accordance with its terms, except to the extent that such
enforceability (a) may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to creditors' rights generally; and
(b) is subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law). The
execution, delivery and performance by Berry of this Agreement and the
consummation by Berry of the transactions contemplated hereby (i) do not
require the consent, approval, clearance, waiver, order or authorization of any
Person, except as otherwise disclosed in the Berry Disclosure Letter; (ii) do
not violate any provision of the Certificate of Incorporation or Bylaws of
Berry; (iii) do not conflict with or violate any permit, concession, grant,
franchise, statute, law, rule or regulation of any Governmental Entity or any
order, judgment, award or decree of any court or other Governmental Entity to
which Berry is subject; and (iv) do not conflict with, or result in any breach
of, or default or loss of any right under (or an event or circumstance that,
with notice or the lapse of time, or both, would result in a default), or the
creation of an Encumbrance pursuant to, or cause or permit the acceleration
prior to maturity of any amounts owing under, any indenture, mortgage, deed of
trust, lease, or other agreement to which Berry is a party, in each case, which
failure, violation, conflict or breach would, in the aggregate, materially
hinder or impair the consummation of the transactions contemplated by this
Agreement.
4.3 Consents. Except as otherwise disclosed in the Berry
Disclosure Letter, no consent, approval or authorization of, or exemption by,
or filing with, any Governmental Entity or any Person is required in
connection with the execution, delivery or performance by Berry of this
Agreement or the taking of any other action contemplated hereby.
4.4 Litigation. There is no legal, judicial, administrative or
governmental arbitration or other action or proceeding or governmental
investigation pending against Berry, or threatened against Berry, which seeks to
enjoin or obtain damages in respect of the consummation of the transactions
contemplated hereby.
4.5 Brokerage. No investment banker, broker, finder or other
Person is entitled to any brokerage or finder's fee or similar commission in
respect of this Agreement or the transactions contemplated hereby based in any
way on agreements, arrangements or
18
understandings made by or on behalf of Berry. Berry agrees to indemnify and
hold Tannehill and the Partners harmless from and against any and all claims,
liabilities or obligations with respect to all fees, commissions or expenses
asserted by any Person on the basis of any act, statement, agreement or
commitment alleged to have been made by Berry with respect to any such fee,
commission or expense.
4.6 Approvals. No approval of the stockholders of Berry is
necessary or required under the Delaware General Corporation Law, as currently
in effect, or Berry's Certificate of Incorporation or Bylaws for the
consummation of the transactions contemplated by this Agreement.
ARTICLE V
COVENANTS OF TANNEHILL
From and after the date of this Agreement until the Closing, except
as expressly authorized by this Agreement or expressly consented to in writing
by Berry, Tannehill covenants and agrees with Berry as follows:
5.1 Access to Tannehill. Tannehill shall afford to Berry and to
the employees, agents, lenders, investors and authorized representatives of
Berry and to their respective counsel and accountants such reasonable access to
the Cogeneration Assets, officers, offices, equipment, files, agreements,
documents, and books and records of Tannehill (including, without limitation,
engineering data and information, computer programs, tapes and other records),
and the opportunity to make notes, abstracts and copies therefrom, as may be
requested by Berry in order that Berry may have full opportunity to make such
reasonable investigations as it shall desire with respect to the business,
operations, Cogeneration Assets and affairs of Tannehill in connection with the
transactions contemplated hereby and Tannehill shall furnish Berry with such
additional financial and operating data and other information as to the
business, operations and Cogeneration Assets of Tannehill as Berry shall, from
time to time, reasonably request for such purpose. Berry hereby releases
Tannehill from all liability arising out of the entry by Berry or its
employees, agents, lenders, investors or authorized representatives onto the
business premises of Tannehill for purposes of conducting the investigation
contemplated by this Section 5.1. Berry hereby agrees to indemnify, defend and
hold harmless Tannehill against all liability, demands, claims, costs, losses,
damages, recoveries, settlements and expenses incurred by Tannehill arising
from or related to the conduct by Berry or its employees, agents, lenders,
investors or authorized representatives of the investigation.
5.2 Governmental Approvals; Consents.
a. Tannehill shall use its best efforts, and shall cooperate
with Berry, to obtain all permits, approvals and consents, and to make all
filings, necessary or required to be obtained or made, and to begin and cause
all waiting periods required to lapse, for Berry to have full use and
enjoyment of the Cogeneration Assets subsequent to the purchase and sale and
19
for the consummation by Tannehill of the transactions contemplated by this
Agreement under any applicable federal law or the applicable laws of any state
having jurisdiction over the transactions contemplated hereby (all such
permits, approvals, filings and consents and the lapse of all such waiting
periods being referred to as the "Requisite Regulatory Approvals").
b. Tannehill shall use its best efforts to obtain all
consents, approvals, clearances, waivers, orders or authorizations of any
Person necessary to be obtained by Tannehill for Berry to have full use and
enjoyment of the Cogeneration Assets subsequent to the purchase and sale and
for the consummation of the transactions by Tannehill contemplated by this
Agreement.
5.3 Litigation and Claims. Tannehill shall promptly inform Berry
in writing of any litigation, or of any claim or controversy or contingent
liability of which Tannehill becomes aware that might reasonably be expected to
become the subject of litigation, against Tannehill or affecting any of the
Cogeneration Assets.
5.4 Notice of Changes. Tannehill shall promptly inform Berry in
writing if Tannehill becomes aware of any change that shall have occurred or
that shall have been threatened (or any development that shall have occurred or
that shall have been threatened involving a prospective change) in the
financial condition, results of operations, business of the Cogeneration Assets
or of Tannehill that is or with the exercise of reasonable business judgment
would be expected to have an adverse effect on the Cogeneration Assets.
Tannehill shall promptly inform Berry in writing if any representation or
warranty made by Tannehill in this Agreement shall cease to be accurate or upon
the occurrence of any breach of any covenant or other agreement required by
this Agreement to be performed or complied with by Tannehill.
5.5 Conduct of Business Operations. Tannehill shall not, without
the prior written consent of Berry:
a. Except as a result of damages to the Cogeneration Assets
as a result of a force majeure, fail to use its best efforts to operate the
Cogeneration Assets in the same manner as they have been historically operated
and Tannehill shall avoid experiencing a loss in electrical generation output
below 14.2 megawatts per day, except for reductions due to scheduled
maintenance.
b. Other than in the ordinary course of business, sell,
lease or otherwise dispose of any Cogeneration Assets or any interests therein,
or enter into, or consent to the entering into of, any agreement granting to
any third Person a right to purchase, lease or otherwise acquire any
Cogeneration Assets or interests therein, except as otherwise provided for in
this Agreement;
c. Enter into any agreement or incur any obligation, the
terms of which would be violated by the consummation of the transactions
contemplated by this Agreement;
20
d. (i) Enter into any new line of business with respect to
the Cogeneration Assets; (ii) change its investment, liability management and
other material policies in any respect; (iii) incur or commit to any capital
expenditures or financing relative to the Cogeneration Assets; (iv) otherwise
acquire or agree to acquire any assets for a total consideration in the
aggregate in excess of Five Thousand Dollars ($5,000); or (v) waive any right
under or cancel any contract, debt or claim listed in any exhibits hereto or
the Tannehill Disclosure Letter, which waiver or cancellation would have an
adverse effect on the Cogeneration Assets;
e. Maintain books of account relative to the Cogeneration
Assets other than in the usual, regular and ordinary manner in accordance with
good business practices or make any change in any of its accounting methods or
practices; or
f. Take any action that would or might reasonably be
expected to result in any of the conditions to Closing set forth in Article VII
hereof not being satisfied.
5.6 Maintain Cogeneration Assets and Operations. Except for
entering into the Right to Purchase Contract for acquisition of the
Cogeneration Assets as provided in Sections 1.26 and 5.10 hereof, during the
period from the date hereof through the Closing, Tannehill shall (a) carry on
its business in the usual, regular and ordinary course in a good and diligent
manner consistent with sound business practices and in compliance with all
applicable laws, rules and regulations; (b) not introduce any new method of
management or operation; (c) use its best efforts to preserve its business
organization, maintain its rights and franchises, keep available the services
of its officers and employees and preserve the goodwill and its relationships
with customers, suppliers and others having business dealings with it;
(d) preserve in full force and effect all leases, operating agreements,
easements, rights of way, permits, licenses, contracts and other agreements
which relate to the Cogeneration Assets (other than those expiring by their
terms); (e) use its best efforts to perform or cause to be performed all of its
obligations in or under any of such leases, agreements and contracts to be
transferred as part of the Cogeneration Assets; (f) use its best efforts to
safeguard and maintain secure all reports and other confidential data in the
possession of Tannehill relating to the Cogeneration Assets; and (g) use its
best efforts to operate its business and activities in the same manner as they
have been carried out and to maintain the same level of expenditure as have
previously been incurred in connection with such business and activities.
5.7 Exclusive Dealing. Tannehill shall not directly or indirectly,
through any representative or otherwise, solicit or entertain offers from,
negotiate with or in any manner encourage, discuss, accept or consider any
proposal of any Person relating to the acquisition of the assets or business,
in whole or in part of Tannehill, whether through direct purchase,
consolidation or other business combination (other than sales of inventory or
in the ordinary course of business) so long as this Agreement has not been
terminated. Tannehill recognizes that Berry has and continues to incur
substantial time and expense in evaluating this transaction. Tannehill
acknowledges that Berry, in reliance on this Section 5.7, will continue to
incur additional time, effort and expense. Tannehill has agreed to this
provision due to the unique terms specified in the AIP and contemplated in
this transaction.
21
5.8 Termination Fee. In the event that Tannehill breaches Section
5.7 hereof and within twelve (12) months after such breach or termination,
Tannehill closes a transaction with an unrelated third party relating to the
acquisition of a Material portion of the Cogeneration Assets or the business of
Tannehill, in whole or part, whether through direct purchase, merger,
consolidation or other business combination (other than sales of inventory or
immaterial portions of Tannehill's Cogeneration Assets in the ordinary course),
then, immediately upon such closing, Tannehill shall pay to Berry the sum of
Twenty Thousand Dollars ($20,000). Such payment shall constitute liquidated
damages and, in the absence of fraud or bad faith, shall be in lieu of any
other penalty or remedy Berry might otherwise seek, the parties having
determined that the
22
actual damages resulting from the events for which such liquidated damages are
to be awarded would be extremely difficult and uncertain to calculate and that
liquidated damages above represent a good faith estimate of such actual
damages.
___________ __________
Tannehill initials Berry initials
___________ ___________ ___________ __________
___________ ___________ ___________ __________
___________ ___________ ___________ __________
___________ ___________ ___________ __________
Shareholders' initials
5.9 Maintenance of Books and Records. Tannehill will possess and
maintain the complete books and records of the Cogeneration Assets.
5.10 Lease of the Cogeneration Assets and Right to Purchase. At the
Closing, Tannehill will hold the lessee's interest in the Cogeneration Lease
and the right to purchase the Cogeneration Assets from Security Pacific, free
of debt or encumbrances, including without limitation the following executed
agreements, assignments and consents: (a) Cogeneration Lease Assignment;
(b) Assignment and Consent to Assignment by PG&E of the P.G.&E. S.O. #2
Contract from Tannehill to Berry, without modification; (c) Assignment and
Consent to Assignment by Solar of the Operations and Maintenance Agreement from
Tannehill to Berry, modified as provided in Section 7.10 hereof;
(d) Certificates of Non-default effective at the Closing as to Solar; (e) to
the extent available through the best efforts of Tannehill, all books, data
sheets, logs, maintenance manuals and other records relating to the
Cogeneration Assets from the date of its construction to the Closing; (f) to
the extent available through the best efforts of Tannehill, originals or copies
of all insurance policies issued to Monarch, Solar or Tannehill covering or
relating to the Cogeneration Assets from the date of its construction to the
Closing; and (g) executed Right to Purchase Contract.
5.11 Taxes. Tannehill shall pay any documentary transfer, sales or
use taxes that may become due on the purchase and sale of the Cogeneration
Assets under the terms of this Agreement and/or the purchase of Security
Pacific's interest in the Cogeneration Assets under the Right to Purchase
Contract, plus any penalty or interest thereon.
23
ARTICLE VI
COVENANTS OF BERRY
Berry hereby covenants and agrees with Tannehill as follows:
6.1 Cooperation. Subject to the terms and conditions of this
Agreement, Berry shall cooperate with Tannehill to use its best efforts to
secure all necessary consents, approvals, authorizations, exemptions and
waivers from all Persons and Governmental Entities as shall be required to be
obtained by Berry in order to enable Berry to consummate the transactions
contemplated hereby; provided, however, that under no circumstances shall Berry
be required to pay any money or obligate itself to such a person beyond the
terms of this Agreement.
6.2 Governmental Approvals. Berry shall use its best efforts, and
shall cooperate with Tannehill, to obtain all Requisite Regulatory Approvals.
6.3 Disclosure Responsibilities. Berry, as a reporting company
under Section 12 of the Securities Exchange Act of 1934, as amended ("Exchange
Act"), and listed company under the New York Stock Exchange (the "NYSE"), is
required to comply with certain disclosure requirements regarding its business
activities, including, but not limited to, the issuance of press releases and
the preparation and filing of periodic reports with the Securities and Exchange
Commission. In order to comply with the disclosure requirements of the
Exchange Act and NYSE, as well as the timing of such disclosures, all
statements to the public, including press releases, shall be at the sole
discretion of Berry.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF BERRY
The obligations of Berry to consummate the transactions contemplated
by this Agreement shall be subject to the satisfaction (or waiver by Berry) on
or prior to the Closing of all of the following conditions:
7.1 Accuracy of Representations and Warranties. The
representations and warranties of Tannehill set forth in this Agreement shall be
true and correct in all respects as of the date when made and at and as of the
Closing.
7.2 Performance of Covenants and Agreements. Tannehill shall have
duly performed and complied in all respects with the covenants, agreements and
conditions required by this Agreement to be performed or complied with by it
prior to or at the Closing. None of the events or conditions entitling Berry to
terminate this Agreement under Article IX hereof shall have occurred and be
continuing.
24
7.3 Consents. Any consent required for the consummation of this
purchase and sale under any agreement, contract, license or other instrument
described in any exhibit hereto or referred to herein, or for the continued
enjoyment by Berry of any benefits of such agreement, contract, license or
other instrument after the Closing, which consent Tannehill is specifically
obligated to obtain pursuant to this Agreement, shall have been obtained and
be effective.
7.4 Governmental Approvals. All Requisite Regulatory Approvals
shall have been obtained, made or lapsed and shall be in full force and effect.
7.5 Approval of Counsel. The form and substance of all legal
matters contemplated hereby and all papers delivered hereunder shall be
reasonably acceptable to Nordman, Cormany, Hair & Compton, counsel to Berry.
7.6 Officers' Certificate. Berry shall have received a certificate
of Tannehill, substantially in the form of Exhibit 6 attached hereto and made a
part hereof, satisfactory in form and substance to Berry, executed on behalf of
Tannehill by its President and Secretary, as to compliance with the matters set
forth in Sections 7.1, 7.2, 7.3 and 7.4 of this Agreement.
7.7 Resolutions. Berry shall have received certified copies of
resolutions of the Board of Directors of Tannehill and the written consents of
the Shareholders owning one hundred percent (100%) of the outstanding shares of
common stock of Tannehill approving this Agreement, and the transactions
contemplated hereby.
7.8 Opinions of Counsel. Berry shall have received the opinions
of Roger Coley and William Alexander, counsel to Tannehill and the
Shareholders, in form and content satisfactory to Berry, substantially in the
form of Exhibit 7 attached hereto and made a part hereof.
7.9 Closing of Agreements. The Closing shall not occur unless the
Closings contemplated by the Partnership Purchase Agreement and the TOC
Purchase Agreement have occurred or will occur concurrently with the Closing.
7.10 Termination of Operations and Maintenance Agreement. The
Operations and Maintenance Agreement shall be modified to provide that it is
subject to cancellation by Berry after the Closing without any requirement for
the posting of a letter of credit or any other penalty other than an acceptable
period of time to elapse for notice, except as such requirement may relate to
the Required Adjustment of Capacity Payments in the event of termination as
required by the P.G.&E. S.O. #2 Contract. Berry shall have received the duly
executed Amended Operations & Maintenance Agreement, the Berry Indemnity and
the Reserve Security Instruments (as those terms are defined in the Amended
Operations & Maintenance Agreement).
7.11 PG&E Consent. PG&E will have consented to the transfer of the
P.G.&E. S.O. #2 Contract from Tannehill to Berry without amendment to such
contract.
25
7.12 Good Standing Certificates. Tannehill shall have delivered
valid Good Standing Certificates from the Secretary of the State of California
and the California Franchise Tax Board showing Tannehill in good standing.
7.13 Sunset Investment Indemnity. Berry shall have received an
indemnity from Sunset Investment Company, LLC, a California limited liability
company ("Sunset"), in form and content satisfactory to Berry substantially in
the form of Exhibit 8 attached hereto and made a part hereof. Berry shall also
have received written confirmation from Sunset in a form acceptable to Berry
that Sunset has established a reserve fund, in an amount of not less than Five
Million Dollars ($5,000,000) to be held for the benefit of Berry (and others)
to indemnify Berry (and others) from and against any and all costs, claims,
judgments, settlements and liabilities arising out of the SOCAL Contract and
the SOCAL Litigation and that all terms and conditions of the Amended
Operations & Maintenance Agreement by and among Berry, Tannehill and other
parties, have been satisfied.
7.14 Tannehill shall have delivered the duly executed Right to
Purchase Contract.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF TANNEHILL
The obligations of Tannehill to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction (or waiver
by Tannehill) on or prior to the Closing of all of the following conditions:
8.1 Accuracy of Representations and Warranties. The
representations and warranties of Berry set forth in this Agreement shall be
true and correct in all material respects as of the date when made and at and
as of the Closing.
8.2 Performance of Covenants and Agreements. Berry shall have duly
performed and complied in all respects with the covenants, agreements and
conditions required by this Agreement to be performed or complied with by it
prior to or at the Closing. None of the events or conditions entitling
Tannehill to terminate this Agreement under Article IX hereof shall have
occurred and be continuing.
8.3 Resolutions. Tannehill shall have received certified copies
of resolutions of the Board of Directors of Berry approving this Agreement and
the transactions contemplated hereby.
8.4 Approval of Counsel. The form and substance of all legal
matters contemplated hereby and all papers delivered hereunder shall be
reasonably acceptable to Roger Coley, counsel to Tannehill and the
Shareholders.
26
8.5 Governmental Approvals. All Requisite Regulatory Approvals
shall have been obtained, made or lapsed and shall be in full force and effect.
8.6 Officers' Certificate. Tannehill shall have received a
certificate of Berry, substantially in the form of Exhibit 9 attached hereto
and made a part hereof, satisfactory in form and substance to Tannehill,
executed on behalf of Berry by the President and Secretary of Berry, as to
compliance with the matters set forth in Sections 8.1, 8.2, 8.3 and 8.5 of this
Agreement.
8.7 Opinion of Counsel. Tannehill shall have received the opinion
of Nordman, Cormany, Hair & Compton, counsel to Berry, in form and content
reasonably satisfactory to Tannehill, substantially in the form of Exhibit 10
attached hereto and made a part hereof.
8.8 Closing of Agreements. The Closing shall not occur unless the
Closings contemplated by the Partnership Purchase Agreement and the TOC
Purchase Agreement have occurred or will occur concurrently with the Closing.
ARTICLE IX
TERMINATION PRIOR TO CLOSING
9.1 Termination. This Agreement may be terminated at any time
prior to the Closing:
a. By the mutual written consent of Berry and Tannehill;
b. Subject to the right of either party to extend the
Closing as provided in Section 2.6 hereof, upon written notice by either party
to the other party if the Closing has not occurred forty-five (45) days after
the execution of this Agreement;
c. By Berry in writing if Tannehill or the Shareholders
shall be in Default;
d. By Tannehill in writing if Berry shall be in Default;
e. By Berry if, after the date of this Agreement, there
shall have occurred a Material adverse change (or any development or condition
involving a prospective Material adverse change) in the business, financial
condition or results of operations of Tannehill; or
f. By Berry, if the transaction is not approved by all of
the Shareholders.
27
9.2 Effect on Obligations. Termination of this Agreement pursuant
to this Article shall terminate all obligations of the parties hereunder,
except for the obligation under Sections 3.12 and 4.5; provided, however, that
termination pursuant to paragraphs 9.1c or d hereof shall not relieve any
defaulting party from any liability to the other parties hereto.
ARTICLE X
INDEMNIFICATION
10.1 Indemnification by Berry. Berry agrees to indemnify, defend
and hold Tannehill, and agents of Tannehill, harmless from and against any and
all loss, liability, damage, costs and expenses (including interest, penalties,
settlements, fines, costs and expenses incurred in connection with
investigating and defending any claims or causes of action, and reasonable
attorneys' fees) that Tannehill and its agents may incur or become subject to
arising out of or due to any inaccuracy of any representation or the breach of
any warranty, covenant, undertaking or other agreement of Berry contained in
this Agreement.
10.2 Indemnification by Tannehill and the Shareholders. Tannehill
and the Shareholders, jointly and severally, agree to indemnify, defend and
hold Berry, and the officers, directors, employees and agents of Berry
(collectively, the officers, directors, employees and agents being referred to
in each case as its "Related Parties") harmless from and against any and all
lawsuits, liability, damages, costs and expenses (including interest,
penalties, settlements, fines, costs and expenses incurred in connection with
investigating and defending any claims or causes of action, and reasonable
attorneys' fees) that Berry and its Related Parties may incur or become subject
to or arising out of or due to (a) any inaccuracy of any representation or the
breach of any warranty, covenant, undertaking or other agreement of Tannehill
or the Shareholders contained in this Agreement, or (b) any claim by SOCAL,
PG&E, Solar, or any other creditor of Tannehill or the Shareholders against
Berry based upon or related to, in whole or in part, the SOCAL Contract, the
SOCAL Litigation or the transfer of the Cogeneration Assets to Berry.
10.3 Survival. The several warranties, indemnities,
representations, covenants and agreements of the parties contained in this
Agreement and in any other instrument delivered pursuant hereto shall survive
the Closing and shall remain in full force and effect thereafter.
10.4 Notice and Opportunity to Defend.
a. If a party seeking indemnification (the "Indemnitee")
becomes aware of any matters that it believes may give rise to an indemnifiable
claim, or asserts any claim that it believes may be indemnifiable pursuant to
this Agreement, the Indemnitee shall give the party obligated to provide
indemnification (the "Indemnifying Party") prompt written notice of such matter
or claim, stating with particularity the nature of such matter or the
aforementioned claim and the amount thereof. Failure to provide such notice
shall not affect the right of the Indemnitee to indemnification except to the
extent such failure shall have resulted in
28
liability to the Indemnifying Party that could have been actually avoided had
such notice been provided within such required time period.
b. If the matter that the Indemnitee believes gives rise to
an indemnifiable claim does not involve a third party claim against an
Indemnitee, the Indemnifying Party shall have thirty (30) days from the date on
which it received notice of such claim pursuant to this Section to respond to
such notice. If such Indemnifying Party accepts responsibility or does not
respond within such thirty (30)-day period, the Indemnifying Party shall
promptly pay to the Indemnitee the full amount of such claim. If the
Indemnifying Party rejects any liability with respect to such claim, it shall
give written notice of such objection to the Indemnitee within such thirty
(30)-day period and the parties shall seek to resolve such claim by agreement.
If the parties are unable to resolve such claim by agreement within sixty (60)
days following the expiration of such thirty (30)-day period mentioned above,
the parties shall be entitled to pursue, without prejudice to any of their
rights hereunder, such remedies as may be available to the parties under
applicable law.
c. In the event any action, suit, proceeding or
investigation is brought against the Indemnitee by a third party which the
Indemnitee believes may give rise to an indemnifiable claim, the Indemnitee
shall give the Indemnifying Party prompt written notice of the commencement of
such action, suit, proceeding or investigation as provided in paragraph a. of
this Section. Such Indemnifying Party shall have a period of thirty (30) days
after receipt of such notice within which to respond to such notice. If such
Indemnifying Party does not respond within such thirty (30)-day period or
rejects responsibility for such matter in whole or in part, the Indemnitee
shall be free to pursue, without prejudice to any of its rights hereunder, such
remedies as may be available to such party under applicable law. If such
Indemnifying Party accepts responsibility, such Indemnifying Party shall, as
between the Indemnitee and the Indemnifying Party, be obligated to compromise
or defend such matter, at its own expense. The Indemnitee shall employ counsel
of its choice and the Indemnifying Party shall reimburse the Indemnitee for
attorneys' fees and costs. The Indemnifying Party shall cooperate fully with
the Indemnitee and its counsel in the defense against any such asserted
liability. Any compromise of such asserted liability by the Indemnitee shall
require the prior written consent of the Indemnifying Party, which shall not be
unreasonably withheld. If, however, the Indemnitee refuses its consent to a
bona fide offer of settlement that involves solely the payment of cash that the
Indemnifying Party wishes to accept, the Indemnitee may continue to pursue such
matter, free of any participation by the Indemnifying Party, at the sole
expense of the Indemnitee. In such event, the obligation of the Indemnifying
Party to the Indemnitee shall be equal to the lesser of (i) the amount of the
offer of settlement that the Indemnitee refused to accept plus the costs and
expenses of the Indemnitee prior to the date the Indemnifying Party notified
the Indemnitee of the offer of settlement; and (ii) the actual out-of-pocket
amount the Indemnitee is obligated to pay as a result of such party's
continuing to pursue such matter. An Indemnifying Party shall be entitled to
recover from the Indemnitee any additional expenses incurred by such
Indemnifying Party as a result of the decision of the Indemnitee to pursue
such matter.
29
10.5 General. The indemnification provided in this Agreement shall
apply regardless of whether the matter subject to indemnification involved an
action taken or omitted that was negligent, grossly negligent or reckless by
the Person to be so indemnified. It is understood that such indemnification is
intended to be a means of compensating the parties for any damage or liability
directly or indirectly realized by them for matters subject to such
indemnification. To the extent the indemnification provided for herein may not
be provided to any Person under law, such indemnification shall be required to
be provided to any other Person for whom such indemnification may be
permissible as herein provided.
ARTICLE XI
MISCELLANEOUS
11.1 Entire Agreement. This Agreement and related documents
executed concurrently herewith constitute the sole understanding of the parties
hereto with respect to the matters provided for herein and supersedes the AIP
and any previous agreements and understandings between the parties with respect
to the subject matter hereof. No amendment, modification or alteration of the
terms or provisions of this Agreement shall be binding unless the same shall be
in writing and duly executed by Berry and Tannehill.
11.2 Successors and Assigns. This Agreement will inure to the
benefit of and be binding upon Berry, Tannehill and the Shareholders and their
respective successors and permitted assigns. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by any of the
parties hereto without the prior written consent of the other parties hereto.
11.3 Expenses. Except as provided in Sections 10.1 and 10.2 hereof,
each party hereto shall be responsible for the payment of the fees and expenses
of their respective counsel, accountants and other experts.
11.4 Taking of Necessary Action. Subject to the terms and
conditions of this Agreement, each of the parties hereto agrees, subject to
applicable laws, to use all reasonable best efforts promptly to take or cause
to be taken all action and to promptly do or cause to be done all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement.
Without limiting the foregoing and subject to the terms and conditions of this
Agreement, the parties shall use their reasonable best efforts to obtain and
make all consents, approvals, assurances and filings of or with third parties
and Governmental Entities necessary or advisable for the consummation of the
transactions contemplated by this Agreement. Each party shall cooperate with
the other in good faith to help the other satisfy its obligations hereunder.
11.5 Invalidity. Except for satisfaction of the conditions of
Article VII or VIII, and the provisions of Article X, if any term or other
provision of this Agreement is invalid, illegal or incapable of being enforced
by any rule of law, or public policy, all other conditions
30
and provisions of this Agreement shall nevertheless remain in full force and
effect so long as the economic and legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the extent possible.
11.6 Attorneys' Fees. In the event of any claim, dispute or
controversy arising out of or relating to this Agreement, including an action
for declaratory relief, the prevailing party in such action or proceeding shall
be entitled to recover its taxable costs or arbitration fees, and reasonable
out-of-pocket expenses, including, but not limited to, telephone calls,
photocopies, expert witnesses, travel, computer expenses related to litigation,
and attorneys' fees to be fixed by the court or the arbitrator. Such recovery
shall include court costs, out-of-pocket expenses and attorneys' fees on
appeal, if any. The court shall determine who is the "prevailing party,"
whether or not the dispute or controversy proceeds to final judgment.
11.7 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall constitute the same instrument.
11.8 Headings. The headings of the articles, sections and
paragraphs of this Agreement and of the exhibits hereto are included for
convenience only and shall not be deemed to constitute part of this Agreement or
to affect the construction hereof or thereof.
11.9 Construction and References. Words used in this Agreement,
regardless of the number or gender specifically used, shall be deemed and
construed to include any other number, singular or plural, and any other
gender, masculine, feminine or neuter, as the context shall require. Unless
otherwise specified, all references in this Agreement to articles, sections,
paragraphs or clauses are deemed references to the corresponding articles,
sections, paragraphs or clauses in this Agreement, and all references in this
Agreement to exhibits are references to the corresponding exhibits attached to
this Agreement.
11.10 Modification and Waiver. Any of the terms or conditions of
this Agreement may be waived in writing at any time by the party which is
entitled to the benefits thereof. No waiver of any of the provisions of this
Agreement shall be deemed to or shall constitute a waiver of any other
provisions hereof (whether or not similar).
31
11.11 Notices. Any notice, request, instruction or other
document to be given hereunder by any party hereto to any other party shall be
in writing and delivered personally, via telecopy (with receipt confirmed) or
by registered or certified mail, postage prepaid:
(a) if to Tannehill, to:
Tannehill Electric Company, Inc.
Attn: Mr. Albert G. Boyce, Jr., President
120 Manteca Avenue
P.O. Box 871
Manteca, California 95336
Facsimile No. (209) 239-7886
Confirmation No. (209) 239-4014
with copies to:
Roger Coley, Esq.
330 H Street, No. 7
Bakersfield, California 93304
Facsimile No. (805) 327-9120
Confirmation No. (805) 328-5575
(b) if to Berry, to:
Berry Petroleum Company
Attn: Jerry V. Hoffman, President and Chief Executive
Officer
28700 Hovey Hills Road
Post Office Bin X
Taft, California 93268
Facsimile No. (805) 769-8960
Confirmation No. (805) 769-8811
with copies to:
Nordman, Cormany, Hair & Compton
Attn: Laura K. McAvoy, Esq.
1000 Town Center Drive, Sixth Floor
Post Office Box 9100
Oxnard, California 93031-9100
Facsimile No. (805) 988-8387
Confirmation No. (805) 485-1000
32
or at such other address for a party as shall be specified by like notice. Any
notice that is delivered personally in the manner provided herein shall be
deemed to have been duly given to the party to whom it is directed upon
actual receipt by such party (or its agents for notices hereunder). Any notice
that is addressed and mailed in the manner herein provided shall be
conclusively presumed to have been duly given to the party to which it is
addressed at the close of business, local time of the recipient, on the third
day after the day it is so placed in the mail. Any notice that is sent by
telecopy shall be deemed to have been duly given to the party to which it is
addressed upon telephonic confirmation of the same as provided herein. A copy
of any notices delivered by telecopy shall promptly be mailed in the manner
herein provided to the party to which such notice was given.
11.12 Public Announcements. Without the prior express consent of
Berry, neither Tannehill nor any Shareholder shall make any public statements,
including, without limitation, any press releases, with respect to this
Agreement and the transactions contemplated hereby.
11.13 Governing Law; Interpretation. This Agreement shall be
construed in accordance with and governed by the laws of the State of
California (regardless of the laws that might otherwise govern under applicable
California principles of conflict of laws) as to all matters, including, but
not limited to, matters of validity, construction, effect, performance and
remedies.
11.14 Jurisdiction. Any legal action or proceeding with respect
to this Agreement may be brought in the federal or state courts for the County
of Kern, in the State of California, and by execution and delivery of this
Agreement, Berry and Tannehill hereby accept the jurisdiction of the aforesaid
courts.
33
IN WITNESS WHEREOF, Berry and Tannehill have caused this Agreement
to be executed as of the date first above written.
BERRY PETROLEUM COMPANY, TANNEHILL ELECTRIC COMPANY, INC., a Delaware
corporation a California corporation
By: ___________________________ By: ________________________________
Jerry V. Hoffman, President Albert G. Boyce, Jr., President
and Chief Executive Officer
By: ___________________________ By: ________________________________
Kenneth A. Olson, Secretary John W. Tannehill, Secretary
The undersigned constitute all of the Shareholders of Tannehill and hereby
agree jointly and severally to be bound to the terms of this Agreement,
including but not limited to, the agreement to indemnify Berry Petroleum
Company under the terms of Article X of this Agreement. By signing this
Agreement, the Shareholders of Tannehill hereby unanimously consent to the
transfer of the Cogeneration Assets from Tannehill to Berry.
BOYCE RESOURCE DEVELOPMENT
COMPANY, a California corporation
By: ____________________________ ____________________________________
Albert G. Boyce, Jr., President Albert G. Boyce, Jr., as Trustee
and Secretary of Trust "B" Under Will of
Albert G. Boyce, Sr., Deceased
_________________________________ ___________________________________
William J. Boyce Albert G. Boyce V
_________________________________ ____________________________________
Mary K. Boyce John T. Hinkle
_________________________________ ____________________________________
Bettianne H. Bowen James L. Hinkle
34
VERNIER RESOURCES CORPORATION, GENERAL WESTERN, INC.,
a Texas corporation a New Mexico corporation
By: _____________________________ By: _______________________________
Bettianne H. Bowen, President James L. Hinkle, President
and Secretary
By: _____________________________
Cheryl Bailey Harrison, Secretary
__________________________________ ________________________________
Lisle Q. Tannehill Thomas H. Tannehill
__________________________________ ________________________________
Gail Kay Tannehill, as Trustee John W. Tannehill
of the Gail Kay Tannehill
Family Trust dated April 9, 1996
__________________________________ ________________________________
Delmar R. Archibald, as Trustee Joy A. Archibald, as Trustee of
of the Delmar R. Archibald the Delmar R. Archibald Family
Family Trust dated June 22, 1982 Trust dated June 22, 1982
Spousal Consents
The undersigned, spouses of the Shareholders named in this Agreement,
hereby consent to the terms and conditions of this Agreement and agree that
their community property, if any, included in the Cogeneration Assets, as
defined herein, is subject to this Agreement.
_________________________________ _________________________________
_________________________________ _________________________________
_________________________________ _________________________________
1
RIGHT TO PURCHASE CONTRACT
This Right to Purchase Contract ("Agreement") dated as of November 8,
1996, among Tannehill Electric Company, Inc., a California corporation
("Tannehill"), Berry Petroleum Company, a Delaware corporation ("Berry"), and
Security Pacific Leasing Corporation, a Delaware corporation ("SPLC"), with
reference to the following facts:
RECITALS
A. Tannehill and SPLC, and certain other entities and individuals, are
parties to a Participation Agreement dated as of August 15, 1994 (the
"Participation Agreement") relating to SPLC's purchase of the Plant, the lease
of the Premises from the Premises Lessors to SPLC, the sublease of the
Premises to Tannehill, and the lease of the Facility to Tannehill.
B. Concurrent with the execution and delivery of the Participation
Agreement, and in accordance therewith, the parties thereto entered into the
following agreements, among others:
1. The Premises Lease, which provides, inter alia, for the lease
of the Premises by the Premises Lessors to SPLC;
2. The Lease dated as of August 15, 1994, among SPLC and
Tannehill, which provides, inter alia, for the lease of the Plant by SPLC to
Tannehill and the sublease of the Premises by SPLC to Tannehill (capitalized
terms herein not otherwise defined herein being used as defined therein);
C. The Lease provides, inter alia, that Tannehill has the option to
purchase the Facility which option cannot be exercised before December 31,
2000;
D. SPLC is willing to grant to Tannehill the immediate right to purchase
the Facility, and to consent to Tannehill's assigning such right to Berry, and
to the simultaneous termination of the Lease, all on the terms and conditions
set forth herein; and
E. Tannehill and Berry have entered into a Purchase and Sale Agreement
dated as of November 8, 1996 ("Purchase and Sale Agreement"), which provides,
inter alia, for Berry to acquire the Facility from SPLC.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements as
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. GRANT OF RIGHT TO PURCHASE
1.1 Grant of Right to Purchase Facility. Subject to and upon the
terms and conditions set forth in this Agreement, and in reliance on the
representations, warranties, indemnities and other assurances contained herein,
SPLC hereby grants to Tannehill, its successors and assigns,
2
the right to purchase ("Right to Purchase"), effective for all purposes as of
October 1, 1996, all of SPLC's right, title and interests in the Facility, and
the other property described in Paragraph 1 of the Bill of Sale and Assignment
referred to in Section 3.2, and to the extent assignable by SPLC all rights,
privileges, benefits and powers conferred upon or owned by SPLC under the
documents described in Exhibit "A" to the Quitclaim referred to in Section 3.2
for $6,282,586.47 ("the "Purchase Price"). The parties hereto acknowledge and
agree that the Purchase Price represents full and fair consideration for the
Facility, and that no party hereto will seek any adjustment of the Purchase
Price for any reason whatsoever. Such Right to Purchase shall terminate on
November 30, 1996, if not exercised before such date. The Right to Purchase
may be exercised upon 24 hours prior written notice (the "Closing Notice") by
the holder of such right to SPLC on a Business Day or upon such shorter written
notice as the parties may agree to specifying the date (which shall be a
Business Day) on which the documents are to be recorded and the funds are to
be delivered from escrow (the "Closing Date").
1.2 Purchase Price. The Purchase Price shall be due on the Closing
Date. Tannehill shall pay any sales, use or transfer tax in connection with
the Right to Purchase and the exercise of the Right to Purchase whether such
taxes are assessed on the Closing Date or thereafter.
1.3 Acceptance by Tannehill. Tannehill hereby accepts SPLC's grant
of the Right to Purchase, and assumes, and agrees to fully comply with, any
and all rights and obligations of SPLC relating to the Facility, and all other
agreements relating thereto.
2. ASSIGNMENT OF RIGHT TO PURCHASE
2.1 Assignment by Tannehill. Tannehill hereby assigns to Berry,
its successors and assigns, effective for all purposes as of October 1, 1996,
all of its right, title and interest in the Right to Purchase.
2.2 Acceptance by Berry. Berry hereby accepts the assignment from
Tannehill of the Right to Purchase the Facility, effective October 1, 1996, and
agrees to pay the Purchase Price directly to SPLC; provided, however, that (a)
Tannehill's obligations to pay any sales, use or transfer taxes on the sale of
the Facility from SPLC to Berry shall not be assumed by Berry, and Tannehill
shall remain obligated to pay such taxes on the Closing Date and/or thereafter,
and (b) Berry does not assume any of Tannehill's obligations under the
Participation Agreement, or otherwise, unless expressly assumed herein or by
separate written agreement.
2.3 Purchase Price to be Paid by Berry. Berry agrees that, in
accordance with its acceptance herein of the assignment of Right to Purchase
from Tannehill, it will, subject to satisfaction of the conditions in Section
4, purchase the Facility and will pay the Purchase Price directly to SPLC on
the Closing Date.
2.4 Execution of Further Documents. The parties agree to execute
all other documents necessary to consummate the transfer by which SPLC will
release any security interests it may have arising out of or relating to its
ownership of the Facility.
2.5 Consent by SPLC. SPLC hereby consents to Tannehill's
assignment to
3
Berry of the Right to Purchase (effective for all purposes as of October 1,
1996), and Tannehill's rights under the Lease, and all related documents, and
SPLC hereby consents to the assignment by Premises Lessors of the Premises
Lease to Berry.
3. CLOSING OF PURCHASE OF FACILITY
The sale of the Facility pursuant to the exercise of the Right to
Purchase shall be accomplished through an escrow (the "Escrow") with First
American Title Insurance Company (the "Escrow Agent") under an Escrow Agreement
in the form of Exhibit A (the "Escrow Agreement") as follows:
3.1 Concurrently herewith, the parties hereto shall execute and
deliver the Escrow Agreement to the Escrow Agent.
3.2 Upon execution and delivery of the Escrow Agreement by the
Escrow Agent, SPLC shall execute and deliver to the Escrow Agent a Bill of Sale
and Assignment in the form of Exhibit B, a Quitclaim in the form of Exhibit C,
a Termination and Release of Security Interests in the form of Exhibit D, and
UCC 2's in the form of Exhibits E-1, E-2 and E-3.
3.3 Not later than 2:00 p.m. Pacific Time on the scheduled Closing
Date specified in the Closing Notice, Berry shall deliver to the Escrow Agent
the Funds described in Section 1(e) of the Escrow Agreement.
3.4 On the Closing Date, upon satisfaction or waiver in writing of
the conditions precedent set forth in Section 4, the parties hereto shall cause
their counsel to deliver to the Escrow Agent Closing Instructions in the form
of Annex I to the Escrow Agreement (the "Closing Instructions").
4. CONDITIONS PRECEDENT
The respective obligations of the parties hereto to consummate the
sale of the Facility as contemplated herein (the "Closing") are subject to the
satisfaction or waiver in writing of the following conditions precedent:
4.1 All conditions to the closing of the transactions contemplated
under the Purchase and Sale Agreement shall have been satisfied.
4.2 Escrows, Nos. 1125444N, 1128320N and 1128321N among Escrow
Agent, Berry and Tannehill (the "Other Escrows") shall close simultaneously
with the closing of the Escrow.
4.3 The representations and warranties of each party hereto shall
be true and correct at the time of the Closing, and by delivery of the Closing
Instructions each party shall be deemed to have confirmed that such is the
case.
4.4. Berry and Tannehill shall have received a Termination and
Release of Security Interests in the form of Exhibit D, duly executed and
delivered by Tannehill, Tannehill Oil
4
Company, a California general partnership ("TOC"), and SPLC, and Tannehill
shall have given notice thereof to PG&E and Solar (as defined in Exhibit D) and
requested their execution and delivery of the acknowledgment of such notice
provided therein.
4.5 SPLC shall have received from TOC and each Premises Lessor
acknowledgments of their awareness of the transactions contemplated hereby and
their confirmation that (i) the indemnity obligations of Tannehill under
Sections 11, 16 and 17 of the Lease, and their respective Guarantees, continue
in full force and effect notwithstanding the Closing of the transactions
contemplated hereby and (ii) the obligations of Tannehill to SPLC hereunder and
under all documents executed and delivered in connection herewith are
guaranteed under the Guarantees.
4.6 SPLC shall have received an opinion of counsel for Tannehill
in form and substance satisfactory to SPLC.
4.7 SPLC shall have received evidence of the insurance required
by Section 5.3.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS
5.1 SPLC represents and warrants to Tannehill and any assignee
of the Right to Purchase that:
5.1.1 LIMITATION OF REPRESENTATIONS. THE FACILITY AND ANY
OTHER RIGHTS SUBJECT TO THE RIGHT TO PURCHASE WILL BE CONVEYED, QUITCLAIMED OR
RELEASED "AS IS" AND "WHERE IS", AND SPLC MAKES NO REPRESENTATIONS OR
WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT THERETO OR WITH RESPECT TO ITS
RIGHT, TITLE AND INTEREST THEREIN OR WITH RESPECT TO THE VALUE,
MERCHANTABILITY, COMPLIANCE WITH SPECIFICATIONS, CONDITION, DESIGN, OPERATION,
FREEDOM FROM PATENT OR TRADEMARK INFRINGEMENT, ABSENCE OF LATENT DEFECTS,
SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR FITNESS FOR USE OF THE PLANT
OR ANY PART THEREOF, OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER,
EXPRESS OR IMPLIED, WITH RESPECT TO SUCH PROPERTY OR ANY PART THEREOF, except
that SPLC has received and presently has whatever right, title and interest in
and to the Facility and each and every item of the Facility and other rights
described above as was conveyed to it, and SPLC has not made any prior sale,
assignment, or transfer of such right, title and interest in and to any item
of the Facility to any person, firm or corporation; and SPLC's right, title and
interest therein are free and clear of all claims, liens, encumbrances of any
kind whatsoever arising by, through or under SPLC.
5.1.2. Tannehill's Good Standing. SPLC has not given
or received any notice of any default to or by the Lessee under the Lease.
5.1.3. No Notice of Violations. SPLC has not received
any written notice of any violation of any zoning regulation, ordinance, law,
rule, order, regulation or requirement relating to the Facility, or assets or
operation of or on its properties which remains uncured or which has not been
dismissed.
5.2 Consent. Tannehill and Berry represent and warrant that no
consent, approval or authorization of, or exemption by, or filing with, any
governmental entity or any other person is required in connection with the
execution and delivery of this Agreement or the taking of any other action
contemplated hereby by either of them or SPLC; and SPLC represents and
warrants
5
that no consent, approval or authorization of, or exemption by, or filing with,
any bank regulatory authority is required in connection with its execution and
delivery of this Agreement or the taking of any other action contemplated
hereby.
5.3 Insurance. The purchaser of the Facility will, at its sole
costs and expense, include SPLC and Tannehill as additional insured under a
general liability policy on the Facility for a period of one year after the
date of recordation of the Bill of Sale and Assignment.
5.4 Title. Tannehill represents that the Prior Bill of Sale as
defined in paragraph 1.b of the Bill of Sale and Assignment conveyed good and
marketable title to the Facility to SPLC free and clear of all liens, except
Permitted Liens, and the Premises Lease conveyed a valid leasehold interest in
the Premises.
6. INDEMNIFICATIONS BY TANNEHILL AND BERRY
6.1 Indemnification by Tannehill. Tannehill agrees to indemnify,
defend and hold SPLC and its officers, directors, employees and agents
(collectively, "Indemnitees") harmless from and against any and all lawsuits,
liability, damages, costs and expenses (including, without limitation,
reasonable attorneys' fees and costs, including allocated time charges of
internal counsel) that any Indemnitee may incur or become subject to arising
out of or due to any inaccuracy of any representation, or the breach of any
warranty or covenant by Tannehill contained in this Agreement.
6.2 Indemnification by Berry. Berry agrees to indemnify, defend
and hold each Indemnitee harmless from and against any and all lawsuits,
liability, damages, costs and expenses (including, without limitation,
reasonable attorneys' fees and costs) that any Indemnitee may incur or become
subject to or arising out of or due to any inaccuracy of any representation, or
the breach of any warranty or covenant by Berry contained in this Agreement.
7. MISCELLANEOUS
7.1 Successor and Assigns. This Agreement will inure to the
benefit of and be binding upon the parties hereto, and their respective
successors and assigns.
7.2 Expenses. Except as otherwise provided herein, Tannehill and
Berry shall be responsible for the payment of the fees and expenses of their
respective counsel, accountants and other experts, and Tannehill shall be
responsible for the payment of fees and expenses of counsel (including
allocated time charges of internal counsel) of SPLC and accountants and other
experts incurred by SPLC.
7.3 Modification and Waiver. Any of the terms or conditions of
this Agreement may be waived in writing at any time by the party which is
entitled to the benefits thereof. No waiver of any of the provisions of this
Agreement shall be deemed to or shall constitute a waiver of any other
provisions hereof (whether or not similar).
7.4 Further Assurances. The parties agree to take all such further
actions and execute, acknowledge and deliver all such further documents that
are necessary or useful in carrying out the purpose and intent of this
Agreement, to the extent permitted by applicable law.
6
7.5 Invalidity. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law, or
public policy, all other provisions of this Agreement shall remain in full
force and effect.
7.6 Attorneys' Fees. In the event of any claim, dispute or
controversy arising out of or relating to this Agreement, the prevailing party
in such action or proceeding shall be entitled to recover its reasonable
attorneys' fees and costs (including allocated time charges of internal
counsel). The court shall determine who is the "prevailing party," whether or
not the dispute or controversy proceeds to final judgment.
7.7 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall constitute the same instrument.
7.8 Notices. Any notice, request, instruction or other document
to be delivered hereunder by any party hereto to any other party shall be in
writing and delivered personally, via telecopy (with receipt confirmed) or by
registered or certified mail, postage prepaid:
if to Tannehill, to:
Tannehill Electric Company, Inc.
Attn: Albert G. Boyce, Jr., President
120 Manteca Avenue
Post Office Box 871
Manteca, California 95336
Facsimile No.: (209) 239-7886
Confirmation No.: (209) 239-4014
with copies to:
Noriega Alexander & Bradshaw
Attn: William L. Alexander, Esq.
1801 - 18th Street
Bakersfield, California 93301
Facsimile No.: (805) 327-5492
Confirmation No.: (805) 327-5363
if to Berry, to:
Berry Petroleum Company
Attn: Jerry V. Hoffman, President
& Chief Executive Officer
28700 Hovey Hills Road
Post Office Bin X
Taft, California 93268
7
Facsimile No.: (805) 769-8960
Confirmation No.: (805) 769-8811
with copies to:
Nordman, Cormany, Hair & Compton
Attn: Laura K. McAvoy, Esq.
1000 Town Center Drive, Sixth Floor
Post Of fice Box 9100
Oxnard, California 93031-9100
Facsimile No.: (805) 988-8387
Confirmation No.: (805) 485-1000
If to Security Pacific:
Security Pacific Leasing Corporation
Attn: Albert Norona
Contract Administration
555 California Street, 4th Floor
San Francisco, California 94104
Facsimile No.: (415) 765-7373
Confirmation No.: (415) 765-7449
or at such other address for a party as shall be specified by like notice. Any
notice that is delivered personally in the manner provided herein shall be
deemed to have been duly given to the party to whom it is directed upon actual
receipt by such party (or its agents for notices hereunder). Any notice that
is addressed and mailed in the manner herein provided shall be conclusively
presumed to have been duly given to the party to which it is addressed at the
close of business, local time of the recipient, on the third day after the day
it is so placed in the mail. Any notice that is sent by telecopy shall be
deemed to have been duly given to the party to which it is addressed upon
telephonic confirmation of the same as provided herein. A copy of any notice
delivered by telecopy shall promptly be mailed in the manner herein provided to
the party to which such notice was given.
7.9 Headings. Headings used in this Agreement are included for
convenience only and shall not be deemed to constitute part of this Agreement or
to affect its construction.
7.10 Governing Law; Interpretation. This Agreement shall be
construed in accordance with and governed by the laws of California as to all
matters relating hereto.
7.11 Survival. The warranties, representations and indemnities
contained in this Agreement, and in any other instrument delivered pursuant
hereto, shall survive the Closing Date and shall remain in full force and
effect thereafter. In addition, notwithstanding the sale of the Facility and
termination of the Lease or the Lease Term, whether by operation of law, or
otherwise, Tannehill shall remain obligated under Sections 11, 16 and 17 of the
Lease after termination thereof.
8
7.12 Entire Agreement. This Agreement and related documents
executed concurrently herewith constitute the sole understanding of the parties
hereto with respect to the matters provided for herein and supersede any
previous agreements and understandings between the parties with respect to the
subject matter hereof. No amendment, modification or alteration of this
Agreement shall be binding unless in writing and duly executed by all parties
hereto.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date first above written.
TANNEHILL ELECTRIC COMPANY, BERRY PETROLEUM COMPANY,
INC., a California corporation a Delaware corporation
By: By:
Albert G. Boyce, Jr., President Jerry V. Hoffman, President
By: By:
John W. Tannehill, Secretary Kenneth A. Olson, Secretary
SECURITY PACIFIC LEASING CORPORATION,
a Delaware corporation
By:
Philip H. Benner
Vice President
9
EXHIBIT A TO RIGHT TO PURCHASE CONTRACT
ESCROW AGREEMENT
This Escrow Agreement ("Agreement") is entered into as of November 8,
1996, among Tannehill Electric Company, Inc., a California corporation
("Tannehill"), Security Pacific Leasing Corporation, a Delaware corporation
("SPLC"), Berry Petroleum Company, a Delaware corporation ("Berry"), and First
American Title Insurance Company, a California corporation (in its capacity as
escrow agent hereunder, "Escrow Agent").
RECITALS
A. Tannehill and Berry have entered into that certain Purchase and Sale
Agreement dated as of November 8, 1996 ("Purchase and Sale Agreement"), whereby
Berry agreed to acquire from Tannehill or SPLC and Tannehill agreed to convey
or cause SPLC to convey to Berry, inter alia, all of Tannehill's right, title
and interest in and to certain cogeneration assets, including, without
limitation, its lease rights to a natural-gas fired cogeneration facility, and
all equipment and facilities relating thereto (collectively, the "Cogeneration
Assets") as more particularly described in the Purchase and Sale Agreement
(the "Property").
B. SPLC, Tannehill and Berry have entered into that certain Right to
Purchase Contract dated November 8, 1996, pursuant to which SPLC granted to
Tannehill an assignable option to purchase the Property, and SPLC has consented
to the assignment of such option to Berry.
C. The parties hereto desire to enter into a written agreement outlining
the actions to be taken in connection with the delivery of certain documents
and instruments into and out of escrow.
NOW, THEREFORE, in consideration of the agreements and the mutual
covenants set forth herein, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. On or before the Closing Date, Tannehill, SPLC and Berry, as the case
may be, shall deliver to Escrow Agent the following original documents
(attached as Exhibits to the Right to Purchase Contract) described in clauses
(a) through (d) below (the "Escrow Documents"), Berry shall wire transfer to
Escrow Agent the funds described in clause (e) below (the "Funds") and
Tannehill shall wire transfer the funds described in clause (f) below
(the "Additional Funds"):
(a) Bill of Sale and Assignment, dated as of November _____, 1996,
executed by SPLC, in recordable form, conveying the Property to Berry.
(b) Termination and Release of Security Interests, dated as of
November _____, 1996, executed by Tannehill, Tannehill Oil Company, a
California general partnership, and SPLC.
(c) Quitclaim, dated as of November ______, 1996, executed by SPLC,
in recordable form.
10
(d) UCC 2's dated November _____, 1996, executed by SPLC.
(e) Federal funds bank wire transfer to account no. _______ of
Escrow Agent at Union, Bank located at 5400 Stockdale Highway, Bakersfield, CA
(ABA #122000496) referring to "First American Title Insurance Company Escrow
No. _______," from Berry in the amount of $6,282,586.47 (the "Funds") to be
used to pay the purchase price of the Property, plus an amount from Berry
sufficient to cover all recording fees (but not any sales, use or transfer tax)
relating to the Escrow Documents and the transfer and conveyance to be effected
thereby.
(f) Federal funds bank wire transfer in account no. _______ of
Escrow Agent at Union Bank, located at 5400 Stockdale Highway, Bakersfield, CA
(ABA #122000496) referring to "First American Title Insurance Company Escrow
No. ______," from Tannehill in the amount of $4,500.00 (the "Additional Funds")
to be used to pay all of the fees incurred by SPLC's legal counsel in
connection with the preparation of the Escrow Documents and the closing.
2. Escrow Agent hereby agrees to hold and distribute the Escrow
Documents and the Funds pursuant to the terms hereof, for the fee hereinafter
described. If the Funds are not disbursed pursuant to these instructions on
the date received, the Funds shall be invested overnight in interest bearing
accounts or money market accounts for Berry's account, at the risk of and at
the instruction of Berry.
3. When, but only when, on or before November 30, 1996, or such later
date as Tannehill, SPLC and Berry may designate in writing (the "Closing Date")
as (a) Escrow Agent receives facsimile authorization, in the form of Annex I,
from William L. Alexander, Esq. on behalf of Tannehill, Peter Leiter, Esq. on
behalf of SPLC, and Laura K. McAvoy, Esq., on behalf of Berry (the "Closing
Instructions"), (b) Escrow Agent is authorized to close the escrows described
in Section 14, and (c) Escrow Agent holds the Funds and the Additional Funds
and is prepared to disburse or apply the Funds and the Additional Funds in
accordance with Paragraph 6, Escrow Agent shall cause all necessary or
appropriate actions to be taken with respect to the Escrow Documents and the
Funds and the Additional Funds such that the Escrow Documents, other than
documents 1(b) and 1(d) listed above, can be recorded and the Funds and the
Additional Funds disbursed on the Closing Date. Such actions shall include,
without limitation, the following:
(a) Escrow Agent shall record or cause to be recorded the executed
original of the Bill of Sale and Assignment and, if required by applicable law,
any transfer tax declaration corresponding thereto, in the appropriate records
of Kern County, California, and in connection therewith shall insert the
recording date of the recorded document in the appropriate place in each of the
Escrow Documents;
(b) Escrow Agent shall record or cause to be recorded the executed
original of the Quitclaim and, if required by applicable law, any transfer tax
declaration corresponding thereto, in the appropriate records of Kern County,
California, and in connection therewith shall insert the recording date of the
recorded document in the appropriate place in each of the Escrow Documents; and
11
(c) Escrow Agent shall send the UCC-2 Financing Statements for
filing with the California Secretary of State's Office together with
appropriate filing fees, and concurrently record, or cause to be recorded,
executed original counterparts of such UCC 2's which need to be filed in the
appropriate records of Kern County, California to effect the release any UCC-1
Financing Statements previously filed of record.
(d) All documents filed for recording shall be distributed to
Berry upon Escrow Agent's receipt of such documents back from recording.
Escrow Agent shall also distribute executed counterparts of all other Escrow
Documents to each of Tannehill and SPLC, and the original of the document
described in 1(b) above shall be delivered to Berry.
4. Upon completion of the actions described in Paragraphs 3(a) and (b),
Escrow Agent shall give notice of such fact (the "Closing Confirmation
Notice"), via facsimile, to Tannehill, SPLC and Berry, and their respective
counsel, at the Confirmation Nos. provided in paragraph 8 below.
5. If Escrow Agent, through no fault of its own, is unable to complete
the transaction contemplated by this Agreement prior to 4:00 p.m., Pacific
Time, on the Closing Date, Escrow Agent shall give notice of such fact, via
facsimile, to Tannehill, SPLC and Berry, and their respective counsel at the
Confirmation numbers provided in paragraph 8 below, and at SPLC's request,
shall return the Escrow Documents to SPLC and, at Berry's request shall return
the Funds to Berry by federal funds bank wire, and shall forward the Additional
Funds to SPLC. The return of Funds to Berry shall be by federal funds bank
wire to:
Wells Fargo Bank
Located at: Taft, CA 93268
Account No.: 4893-027706
ABA No.: 121000248
Account Name: Berry Petroleum Company
provided, however, that such requests shall not terminate this escrow, and such
documents and the Funds shall be redelivered by the parties, as the case may
be, upon 24-hour notice from Escrow Agent that escrow will be able to close on
or before November 30, 1996.
6. On the Closing Date delivery of the Closing Confirmation Notice and
telephonic confirmation of receipt by the recipients thereof, Escrow Agent
shall disburse the Funds as follows:
First, to SPLC $6,282,586.47 plus $4,500.00 by federal funds bank
wire to the account of SPLC, Acct. #14995-50439, ABA #121-000-358, at Bank of
America NT&SA, SF-RCBO #1499, San Francisco, CA 94104, Attn: Controller, Re:
Tannehill Electric.
Second, to and for Escrow Agent's own account a portion thereof
corresponding to recording fees (but not any sales, use or transfer taxes,
which shall be the sole obligation of Tannehill as hereinafter provided)
relating to the Escrow Documents and the transfer and conveyance to be effected
thereby.
12
Third, to Berry, by federal funds bank wire to the account of Berry
described in Paragraph 5, any interest earned on any overnight investment of
the Funds.
In addition to the above disbursements, Escrow Agent shall provide
Tannehill with a written calculation of the amount of any transfer taxes
relating to the Escrow Documents, and Tannehill shall pay such amount on or
before the Closing Date.
Escrow Agent shall thereupon issue a statement of receipts and
disbursements to Tannehill, SPLC and Berry.
7. SPLC shall not incur any expense in connection with the issuance of
these instructions or the fulfillment of the requirements contained herein.
All escrow and recording fees in connection herewith shall be the sole
obligation of Berry. Any sales, use or transfer taxes shall be the sole
obligation of Tannehill.
8. Any notice, request, instruction or other document to be given
hereunder by any party hereto to any other party shall be in writing and
delivered personally, via telecopy (with receipt confirmed) or by registered or
certified mail, postage prepaid:
if to Tannehill, to:
Tannehill Electric Company, Inc.
Attn: Albert G. Boyce, Jr., President
120 Manteca Avenue
Post Office Box 871
Manteca, California 95336
Facsimile No. (209) 239-7886
Confirmation No. (209) 239-4014
with copies to:
Noriega Alexander & Bradshaw
Attn: William L. Alexander, Esq.
1801 - 18th Street
Bakersfield, California 93301
Facsimile No. (805) 327-5492
Confirmation No. (805) 327-5363
13
if to Berry, to:
Berry Petroleum Company
Attn: Jerry V. Hoffman, President and Chief Executive
Officer
28700 Hovey Hills Road
Post Office Bin X
Taft, California 93268
Facsimile No. (805) 769-8960
Confirmation No. (805) 769-8811
with copies to:
Nordman, Cormany, Hair & Compton
Attn: Laura K. McAvoy, Esq.
1000 Town Center Drive, Sixth Floor
Post Of fice Box 9100
Oxnard, California 93031-9100
Facsimile No. (805) 988-8387
Confirmation No. (805) 485-1000
if to Security Pacific, to:
Security Pacific Leasing Corporation
Attn: Peter Leiter, Esq., Senior Counsel
Bank of America Legal Department
555 California Street, 4th Floor
San Francisco, CA 94101
Facsimile No. (415) 765-7428
Confirmation No. (415) 765-7424
if to Escrow Agent, to:
First American Title Insurance Company
Attn: Nancy J. Smith, Escrow Officer
4540 California Avenue, Suite 100
Bakersfield, CA 93309
Facsimile No. (805) 327-5311
Confirmation No. (805) 327-8533
or at such other address for a party as shall be specified by like notice. Any
notice that is delivered personally in the manner provided herein shall be
deemed to have been duly given to the party to whom it is directed upon actual
receipt by such party (or its agents for notices hereunder). Any
14
notice that is addressed and mailed in the manner herein provided shall be
conclusively presumed to have been duly given to the party to which it is
addressed at the close of business, local time of the recipient, on the third
day after the day it is so placed in the mail. Any notice that is sent by
telecopy shall be deemed to have been duly given to the party to which it is
addressed upon telephonic confirmation of the same as provided herein. A copy
of any notice delivered by telecopy shall promptly be mailed in the manner
herein provided to the party to which such notice was given.
9. This Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective heirs, executors, administrators,
personal representatives, successors and assigns. Any and all rights granted to
any of the parties hereto may be exercised by their agents or personal
representatives.
10. Time is of the essence of this Agreement.
11. This Agreement is governed by and is to be construed under the laws
of the State of California.
12. This Agreement may be executed in several counterparts, each of which
shall be deemed an original and all such counterparts together shall constitute
one and the same instrument.
13. This Agreement may be amended only by a written instrument similarly
executed by all of the parties hereto.
14. The parties hereto understand and acknowledge that the transaction
contemplated by this Agreement is being handled by the Escrow Agent in
conjunction with three other escrows (i.e., Escrow Nos. 1125444N, 1128320N and
1128321N) involving the overall purchase and sale transaction between Tannehill
and Berry.
IN WITNESS WHEREOF, each of the parties hereto has signed this Agreement
as of the date and year first above written.
TANNEHILL ELECTRIC COMPANY, BERRY PETROLEUM COMPANY,
INC., a California corporation a Delaware corporation
By: By:
Albert G. Boyce, Jr., President Jerry V. Hoffman, President
By: By:
John W. Tannehill, Secretary Kenneth A. Olson, Secretary
15
SECURITY PACIFIC LEASING FIRST AMERICAN TITLE
CORPORATION, a Delaware corporation INSURANCE COMPANY,
a California corporation
By: By:
Philip H. Benner, Vice President
16
EXHIBIT B TO RIGHT TO PURCHASE CONTRACT
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
NORDMAN, CORMANY, HAIR &
COMPTON
Attn: Laura K. McAvoy, Esq.
1000 Town Center Drive, 6th Floor
Post Office Box 9100
Oxnard, California 93031-9100
BILL OF SALE AND ASSIGNMENT
1. KNOW ALL MEN BY THESE PRESENTS that SECURITY PACIFIC LEASING
CORPORATION, a Delaware corporation ("Seller"), for good and valuable
consideration to it paid by BERRY PETROLEUM COMPANY, a Delaware corporation
("Buyer"), hereby grants, conveys, bargains, sells, transfers and delivers unto
Buyer, its successors and assigns, all of Seller's right, title and interest in
and to:
a. each and every item of the machinery, equipment, and other
goods described in Exhibit A (the "Plant") and located on the real property
near the city of Taft, Kern County, California (the "Site") described in
Exhibit B;
b. the Bill of Sale dated as of August 23, 1994, by Signal Capital
Projects, Inc., as Seller, to Security Pacific Leasing Corporation, as Buyer
(the "Prior Bill of Sale");
c. all licenses and other rights of Seller required, necessary or
convenient for the use of all patented and unpatented inventions, devises,
equipment, apparatuses and processes included in or constituting part of the
Plant or useful in the operation thereof;
d. all plans and specifications for the construction and
installation of the Plant and the Site improvements (collectively, the
"Facility"), together with all operating manuals, process descriptions, process
flow sheets, piping, wiring and instrumentation drawings, equipment
descriptions and lists, operating instructions, maintenance records, and all
other technical information relating to the construction, installation,
operation and maintenance of the Facility; and
e. to the extent the following have not expired or been terminated
on or before the date hereof, all representations, indemnities, warranties,
guaranties and agreements, if any, made to or for the benefit of Seller and
Seller's predecessors in interest under all contracts for the design,
acquisition, construction and installation of the Facility, including, without
limitation, warranties as to operation and performance of the components of the
Facility and indemnities as to patent infringement. But Buyer shall not be
liable for any of the obligations or duties of Seller or Seller's predecessor in
interest thereunder.
17
TO HAVE AND TO HOLD the same unto Buyer, its successors and assigns, forever.
2. THE PLANT IS SOLD "AS IS" AND "WHERE IS" AND SELLER MAKES NO
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT THERETO OR WITH
RESPECT TO ITS RIGHT, TITLE AND INTEREST THEREIN OR IN THE PRIOR BILL OF SALE
OR WITH RESPECT TO THE VALUE, MERCHANTABILITY, COMPLIANCE WITH SPECIFICATIONS,
CONDITION, DESIGN, OPERATION, FREEDOM FROM PATENT OR TRADEMARK INFRINGEMENT,
ABSENCE OF LATENT DEFECTS, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR
FITNESS FOR USE OF THE PLANT OR ANY PART THEREOF, OR ANY OTHER REPRESENTATION
OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE PLANT OR ANY
PART THEREOF, except Seller covenants and warrants that:
a. Each and every item of the Plant and other rights described
above and Seller's rights, title and interest therein are free and clear of all
claims, liens, encumbrances of any kind whatsoever arising by, through or under
Seller;
b. Seller has received and presently has whatever title in and to
the Plant as was conveyed to it by the Prior Bill of Sale, and Seller has not
made any prior sale, assignment, or transfer of such right, title and interest
in and to any item of the Plant or in and to the Prior Bill of Sale to any
person, firm or corporation; and
c. Seller has the present power and authority and good and lawful
right to sell, assign, and transfer its right, title and interest in and to the
Plant and in and to the Bill of Sale to Buyer and Seller will defend such
right, title and interest forever against all claims and demands whatsoever.
3. This Bill of Sale and Assignment is binding on the successors and
assigns of Seller and inures to the benefit of the successors and assigns of
Buyer.
Seller acknowledges that the payment of the purchase price for the Plant
has been made to it and, accordingly, this is a fully executed Bill of Sale and
Assignment and Buyer's title to the Plant is in no way subject to defeasance or
forfeiture by reason of any alleged failure of consideration to be received by
Seller hereunder.
This Bill of Sale and Assignment is executed and delivered on November
____, 1996, at San Francisco, California, and is governed by the laws of
California.
18
IN WITNESS WHEREOF, Seller has caused this Bill of Sale and Assignment to
be executed by its duly authorized officer.
SECURITY PACIFIC LEASING CORPORATION
a Delaware corporation
By:
Philip H. Benner,
Vice President
19
STATE OF CALIFORNIA }
}
COUNTY OF ________________ }
On __________________, before me, ________________________, Notary Public,
personally appeared _______________________, personally known to me (or proved
to me on the basis of satisfactory evidence) to be the person whose name{s}
{is/are} subscribed to the within instrument and acknowledged to me that
{he/she/they} executed the same in {his/her/their} authorized capacity{y/ies},
and that by {his/her/their} signature{s} on the instrument the person{s}, or
the entity upon behalf of which the person{s} acted, executed the instrument.
WITNESS my hand and official seal.
_________________________________
20
EXHIBIT A TO BILL OF SALE AND ASSIGNMENT
PLANT DESCRIPTION
All equipment constituting a natural gas-fueled gas turbine cogeneration
plant providing steam for enhanced oil recovery, with a 13.3 megawatt licensed
capacity and a 15.63 net megawatt design capacity, comprised of, among other
things, (a) two Solar "Mars" model gas turbine generators, (b) two Struthers
Thermo-Flood heat recovery steam generators (each complete with diverter
valves, stacks and a Johnson-Matthey selective catalytic reduction system),
(c) a Bruner water softener system, (d) a water storage tank, (e) an ammonia
storage tank, (f) two common 100% capacity Howden natural gas compressors,
(g) two Ingersoll-Rand feedwater pumping systems, (h) an emission control
system, (i) a fuel supply system, (j) water and steam systems, (k) an
electrical system, (l) a turbine-generator fire suppression system and
(m) various other support systems, control equipment, wiring and piping,
together with any and all components attached thereto, installed thereon or
incorporated therein, or otherwise belonging thereto, excluding all land,
building, foundations, footings, concrete pads or similar supports,
above-grade concrete structures which are an integral part of the foundations,
concrete floors, paving, roads, trenches, sumps, earthen dams, below-grade
concrete pits, underground piping, sewers and drains and grounding.
21
EXHIBIT B TO BILL OF SALE AND ASSIGNMENT
SITE DESCRIPTION
That certain portion of the east half of the northeast quarter of Section
33, Township 12 North, Range 24 West, San Bernardino Meridian, in the
unincorporated area of Kern County, California, described as Parcel 1 of Parcel
Map No. 8297, as per map recorded in the Office of the County Recorder of Kern
County on January 20, 1989, in Book 37 of Parcel Maps, at pages 134 and 135.
22
BERRY PETROLEUM COMPANY
28700 Hovey Hills Road
P.O. Bin X
Taft, CA 93268
STATEMENT OF TAX DUE UNDER PROVISIONS OF THE
DOCUMENTARY STAMP ACT
and
REQUEST THAT STAMPS NOT BE MADE A PART OF THE
PERMANENT RECORD
TO: County Recorder
THE TAX DUE PURSUANT TO THE PROVISIONS OF THE DOCUMENTARY STAMP ACT ON THE
DEED TRANSFER, OR CONVEYANCE FROM:
[Name of Grantee(s) or Lessee(s)]
TO:
[Name of Grantee(s) or Lessee(s)]
OF THE FOLLOWING BRIEFLY DESCRIBED REAL PROPERTY:
Amounts to: $ Amounts to: $
( ) Unincorporated Area ( ) City of
( ) Computed on full value ( ) Computed on full value
( ) Computed on full value LESS liens ( ) Computed on full value
and encumbrances remaining LESS liens and encumbrances
remaining
Documentary Transfer Tax $
Computed on full value of property
conveyed
23
Berry Petroleum Company
By:
Affix transfer Tax Stamp Here Stamp Reserved for Recorder's Coding
Stamp
Date: By:
Title :
AFTER THE PERMANENT RECORD IS MADE, THIS DOCUMENT WILL BE ATTACHED TO THE
CONVEYING DOCUMENT AND RETURNED TO THE PARTY ENTITLED THERETO. A COPY WILL BE
MADE AND PLACED ON FILE FOR AUDITING PURPOSES.
24
EXHIBIT C TO THE RIGHT TO PURCHASE CONTRACT
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
NORDMAN, CORMANY, HAIR &
COMPTON
Attn: Laura K. McAvoy, Esq.
1000 Town Center Drive, 6th Floor
Post Office Box 9100
Oxnard, California 93031-9100
A.P.N. 220-181-17-00-4
220-181-18-00-7
220-191-03-00-6
QUITCLAIM DEED
FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged,
Security Pacific Leasing Corporation, a Delaware corporation ("SPLC"), hereby
REMISES, RELEASES, AND FOREVER QUITCLAIMS to Berry Petroleum Company, a
Delaware corporation, any right, title and interest SPLC may have in the
property described in Exhibit A attached hereto and by this reference made a
part hereof. Any property conveyed hereby is conveyed "as is" and "where is"
and SPLC makes no representations or warranties, express or implied, with
respect thereto or with respect to its right, title and interest therein or
with respect to the value, merchantability, compliance with specifications,
condition, design, operation, freedom from patent or trademark infringement,
absence of latent defects, suitability or fitness for a particular purpose or
fitness for use of the plant or any part thereof, or any other representation
or warranty whatsoever, express or implied, with respect to such property or
any part thereof.
Dated: SECURITY PACIFIC LEASING CORPORATION
a Delaware corporation
By:
Philip H. Benner,
Vice President
25
STATE OF CALIFORNIA }
}
COUNTY OF ___________ }
On ________________, before me, ______________________, Notary Public,
personally appeared ___________________, personally known to me (or proved
to me on the basis of satisfactory evidence) to be the person whose name{s}
{is/are} subscribed to the within instrument and acknowledged to
me that {he/she/they} executed the same in {his/her/their} authorized
capacity{y/ies}, and that by {his/her/their} signature{s} on the instrument the
person{s}, or the entity upon behalf of which the person{s} acted, executed the
instrument.
WITNESS my hand and official seal.
________________________________
26
EXHIBIT A TO QUITCLAIM DEED
1. Premises Lease dated as of August 15, 1994, between the persons
listed in Exhibit "A" as Premises Lessor, and Security Pacific Leasing
Corporation as Premises Lessee, recorded in Book 7079, page 2007, Kern County
Recorded on August 26, 1994, document number 127331.
2. Right of Way dated August 23, 1994, between Tannehill Oil Company,
Inc., a California corporation, Grantor, and Security Pacific Leasing
Corporation, Grantee, recorded in Book 7079, page 2110, Kern County Recorder
on August 26, 1994, document number 127333.
3. Right of Way, Right of Use, Right to Discharge and Right of
Encroachment, dated August 23, 1994, between the persons and entities listed
in Exhibit "A" thereof, collectively Grantor, and Security Pacific Leasing
Corporation, Grantee, recorded in Book 7079, page 2077, Kern County Recorder,
on August 26, 1994, document number 127332.
4. The following described real property in the County of Kern, State
of California:
PARCEL 1:
That certain portion of the East half of the Northeast quarter of
Section 33, Township 12 North, Range 24 West, S.B.B.M., described
as Parcel 1 of Parcel Map 8297 in the unincorporated area of the
County of Kern, State of California, as per Map recorded January
20, 1989 in Book 37, pages 134 and 135 of Parcel Maps, in the
Office of the County Recorder of said County.
EXCEPTING therefrom any vein or lode of quartz or other rock in
place bearing gold, silver, cinnabar, lead, tin, copper or other
valuable deposits within the land above described which may have
been discovered or known to exist on or prior to November 11,
1902.
PARCEL 2:
The East half of the Northeast quarter of Section 33, Township 12
North, Range 24 West, S.B.B.M., in the unincorporated area of the
County of Kern, State of California, as per the official plat
thereof on file in the Office of the Surveyor General.
27
EXCEPTING therefrom any vein or lode of quartz or other rock in
place bearing gold, silver, cinnabar, lead, tin, copper or other
valuable deposits within the land above described which may have
been discovered or known to exist on or prior to November 11,
1902.
EXCEPTING therefrom a portion of said land now known as Parcel 1
of Parcel Map no. 8297 recorded January 20, 1989 in Book 37, page
134 and 135 of Parcel Maps.
PARCEL 3:
The Northwest quarter of the Northwest quarter of Section 34,
Township 12 North, Range 24 West, S.B.B.M., in the unincorporated
area of the County of Kern, State of California, as per the
official plat thereof on file in the Office of the Surveyor General.
EXCEPTING therefrom any vein or lode of quartz or other rock in
place bearing gold, silver, cinnabar, lead, tin, copper or other
valuable deposits within the land above-described which may have
been discovered or known to exist on or prior to May 13, 1901.
5. The following described real property in the County of Kern, State
of California:
PARCEL 1:
The North half of the Southwest quarter and the Southeast quarter of
the Southwest quarter of Section 32, Township 32 South, Range 24
East, M.D.B.M., in the unincorporated area of the County of Kern,
State of California, as per the official plat thereof on file in the
Office of the Surveyor General.
Excepting therefrom any vein or lode of quartz or other rock in
place bearing gold, silver, cinnabar, lead, tin, copper or other
valuable deposits within the land described above which may have
been discovered or known prior to November 1, 1901.
PARCEL 2:
The Southeast quarter of Section 32, Township 32 South, Range 24
East, M.D.B.M., in the City of Taft, State of California, as per the
official plat thereof on file in the Office of the Surveyor General.
Excepting therefrom any vein or lode of quartz or other rock in
place bearing gold, silver, cinnabar, lead, tin, copper or other
valuable deposits within the land described above which may have
been discovered or known before June 10, 1910.
28
PARCEL 3:
The Northeast quarter of Section 32, Township 32 South, Range 24
East, M.D.B.M., in the City of Taft, State of California, as per the
official plat thereof on file in the Office of the Surveyor General.
Excepting therefrom any vein or lode of quartz or other rock in
place bearing gold, silver, cinnabar, lead, tin, copper or other
valuable deposits within the land described above which may have
been discovered or known prior to October 26, 1910.
6. Any right, title or interest, as security or outright, of Security
Pacific Leasing Corporation, a Delaware corporation, in any property
conveyed to Security Pacific Leasing Corporation by, under or
pursuant to that certain Participation Agreement dated as of August
15, 1994, among Tannehill Electric Company, Inc., as Lessee,
Tannehill Oil Company, as Guarantor, the persons listed in Annex II
thereto, as Guarantors and Premises Lessors, and Security Pacific
Leasing Corporation, as Lessor.
7. Any right, title or interest of Security Pacific Leasing
Corporation, a Delaware corporation, under that certain Cogeneration
Facility Lease between Security Pacific Leasing Corporation and
Tannehill Electric Company, Inc., dated August 15, 1994, and Lease
Supplement #1, dated August 26, 1994, relating to the above-described
real property described as Parcel 1 in paragraph 4 above;
EXCEPT, however, that the indemnity obligations of Tannehill
Electric Company, Inc. under Sections 11, 16 and 17 of said
Cogeneration Facility Lease, shall continue in full force and
effect, notwithstanding the Quitclaim Deed to which this Exhibit A
is attached, or the termination of said Cogeneration Facility Lease.
29
BERRY PETROLEUM COMPANY
28700 Hovey Hills Road
P.O. Bin X
Taft, CA 93268
STATEMENT OF TAX DUE UNDER PROVISIONS OF THE
DOCUMENTARY STAMP ACT
and
REQUEST THAT STAMPS NOT BE MADE A PART OF THE
PERMANENT RECORD
TO: County Recorder
THE TAX DUE PURSUANT TO THE PROVISIONS OF THE DOCUMENTARY STAMP ACT ON THE
DEED, TRANSFER, OR CONVEYANCE FROM:
[Name of Grantee(s) or Lessee(s)]
TO:
[Name of Grantee(s) or Lessee(s)]
OF THE FOLLOWING BRIEFLY DESCRIBED REAL PROPERTY:
Amounts to: $ Amounts to: $
( ) Unincorporated Area ( ) City of
( ) Computed on full value ( ) Computed on full value
( ) Computed on full value LESS liens ( ) Computed on full value LESS
and encumbrances remaining liens and encumbrances
remaining
Documentary Transfer Tax $
Computed on full value of property
conveyed
30
Berry Petroleum Company
By:
Affix transfer Tax Stamp Here Stamp Reserved for Recorder's Coding
Stamp
Date: By:
Title :
AFTER THE PERMANENT RECORD IS MADE, THIS DOCUMENT WILL BE ATTACHED TO THE
CONVEYING DOCUMENT AND RETURNED TO THE PARTY ENTITLED THERETO. A COPY WILL BE
MADE AND PLACED ON FILE FOR AUDITING PURPOSES.
31
EXHIBIT D TO RIGHT TO PURCHASE CONTRACT
TERMINATION AND RELEASE OF SECURITY INTERESTS
This Termination and Release of Security Interests (this "Agreement"), is
dated as of November _____, 1996, between Tannehill Electric Company, Inc., a
California corporation ("TEC"), Tannehill Oil Company, a California general
partnership ("TOC"), and Security Pacific Leasing Corporation, a Delaware
corporation ("SPLC").
RECITALS
A. TEC and SPLC entered into a Security Agreement ("TEC Security
Agreement") as of August 15, 1994, by which TEC granted SPLC a security
interest, among other things, in agreements with Pacific Gas & Electric Company
("PG&E") and Solar Turbines Incorporated ("Solar"), respectively, described in
Exhibit A and Exhibit B attached hereto ("Exhibit A Agreements" and "Exhibit B
Agreement," respectively).
B. TEC, SPLC and PG&E entered into a Consent to Assignment and Agreement
dated as of August 15, 1994, in which PG&E, among other things, consented to
the assignment of a security interest to SPLC in the Exhibit A Agreements.
C. TEC, SPLC and Solar entered into a Consent to Assignment of Contract
Rights dated as of August 25, 1994, in which Solar, among other things,
consented to the assignment of a security interest to SPLC in the Exhibit B
Agreement.
D. TOC and SPLC entered into a Security Agreement ("TOC Security
Agreement") as of August 15, 1994, by which TOC granted SPLC a security
interest in certain Collateral therein described; TOC and SPLC entered into a
Pledge Account Security Agreement ("Pledge Agreement") as of August 15, 1994,
by which TOC granted SPLC a security interest in all money on deposit in a
certain Pledged Account; and certain individuals and entities ("Pledgors") and
SPLC entered into a Stock Pledge Agreement ("Stock Agreement") as of August 15,
1994, by which each of the Pledgors pledged and delivered to SPLC all of their
stock of TEC (the "Pledged Stock").
E. SPLC, TEC and Berry Petroleum Company, a Delaware corporation
("Berry"), have entered into a Right to Purchase Contract, dated November 8,
1996, by which SPLC has granted TEC the right to purchase the Facility (the
"Cogeneration Facility") which is the subject of the Exhibit "A" Agreements,
and TEC has assigned such right to Berry. The parties intend by this Agreement
to provide for release by SPLC of its security interests in the collateral
under the TEC Security Agreement, the TOC Security Agreement, the Pledge
Agreement and the Stock Agreement, including, without limitation, the security
interests in the Exhibit A Agreements, the Exhibit B Agreement, the Pledged
Account and the Pledged Stock (collectively, the "Security Interests"),
effective upon SPLC's delivery of title to the Facility to Berry ("Title
Delivery").
32
NOW THEREFORE, the parties hereto agree as follows:
1. Effective upon Title Delivery:
a. The Security Interests are hereby terminated and all security
interests of SPLC thereunder, and the other collateral therein, are hereby
released.
b. SPLC quitclaims any remaining interest it has in the Exhibit
A Agreements and Exhibit B Agreement to Berry.
c. SPLC and TEC shall give PG&E and Solar written notice of
termination of the Security Interests in the Exhibit A Agreements and Exhibit B
Agreement, with proof of service (i.e., affidavit) to Berry and shall provide
Berry with the original signed acknowledgments from PG&E and Solar, with copies
to SPLC, when available .
2. This Agreement shall be governed by and construed in accordance with
the law of California.
3. This Agreement may be executed in any number of counterparts, all of
which together shall constitute a single instrument, and it shall not be
necessary that any counterpart be signed by all of the parties hereto.
WHEREOF, the undersigned caused this Agreement to be duly executed as of
the day and year first above written.
TANNEHILL ELECTRIC COMPANY, INC.
a California corporation
By:
Albert G. Boyce, Jr.
President
TANNEHILL OIL COMPANY,
a California general partnership
By: Boyce Resource Development
Company, its Managing General
Partner
By:
Albert G. Boyce, Jr.
President
33
By: Paso Energy, Inc., its Managing
General Partner
By:
John W. Tannehill
President
By: HHB, Inc., its Managing General
Partner
By:
James L. Hinkle
President
Address:
Tannehill Electric Company, Inc. and
Tannehill Oil Company
c/o Boyce Resource Development Co.
120 Manteca Avenue
Manteca, California 95336
Attn: Albert G. Boyce, Jr.
Telecopy: (209) 239-7886
SECURITY PACIFIC LEASING CORPORATION
a Delaware corporation
By:
Philip H. Benner
Vice President
Address:
Security Pacific Leasing Corporation
555 California Street, 4th Floor
San Francisco, California 94104
Attn: Contract Administrator
Telecopy: (415) 765-7373
34
EXHIBIT A TO TERMINATION AND RELEASE OF SECURITY INTERESTS
(1) The California Public Utilities Commission Standard Offer #2
Power Purchase Agreement for Firm Capacity and Energy between Solar Turbines
Incorporated ("Solar") and Pacific Gas and Electric Company ("PG&E"), executed
by Solar on November 14, 1985, and by PG&E on November 20, 1985, and assigned
by Solar to Monarch Cogeneration 1986-1, a California Limited Partnership
("Monarch"), effective upon PG&E's consent thereto executed by PG&E on February
13, 1987; which agreement was further assigned by Monarch to Tannehill Electric
Company, Inc., a California corporation ("TEC"), effective upon PG&E's consent
thereto executed by PG&E on August 25, 1994.
(2) The Agreement for Installation or Allocation of Special
Facilities executed by PG&E on September 17, 1986, and assigned by Solar to
Monarch, effective on PG&E's consent thereto executed by PG&E on February 13,
1987; which agreement was further assigned by Monarch to TEC, effective upon
PG&E's consent thereto executed by PG&E on August 25, 1994.
35
EXHIBIT B TO TERMINATION AND RELEASE OF SECURITY INTERESTS
Operation and Maintenance Agreement dated as of August 15, 1994,
between Solar and TEC.
36
STATE OF CALIFORNIA
UNIFORM COMMERCIAL CODE - FINANCING STATEMENT CHANGE - FORM UCC-2
IMPORTANT - Read instructions on back before completing form
EXHIBIT E-1
This STATEMENT is presented for filing pursuant to the California Uniform
Commercial Code
1. File No.of Orig. Fin. Stmt. 1A. Date of Filing of Orig. Fin. Stmt.
94175339 8/29/94
1B. Date of Orig. Fin. Stmt. 1C. Place of Filing Orig. Fin. Stmt.
8/25/94 Secretary of State Office
2. Debtor (Last Name First) 2A. Social Security or Federal Tax No.
Tannehill Electric Company, Inc.
2B. Mailing Address 2C. City, State 2D. Zip Code
120 Manteca Avenue/P.0. Box 871 Manteca, California 95336
3. Additional Debtor (if any)(Last Name First)
3A. Social Security or Federal Tax No.
3B. Mailing Address 3C. City, State 3D. Zip Code
4. Secured Party
Name Security Pacific Leasing Corporation
Mailing Address 555 California Street, 4th Floor
City San Francisco State California Zip Code 94104
4A. Social Security No., Federal Tax No.
or Bank Transit and A.B.A. No.
5. Assignee of Secured Party (if any)
Name
Mailing Address
City State Zip Code
5A. Social Security No., Federal Tax No.
or Bank Transit and A.B.A. No.
6. A ( ) Continuation - The original Financing Statement between the
foregoing Debtor and Secured Party bearing the file number and date
shown above is continued. If collateral is crops or timber, check
here and insert description of real property on which growing or to
be grown in Item 7 below.
B (X) Release - From the collateral described in the Financing Statement
bearing the file number shown above, the Secured Party releases the
collateral described in Item 7 below.
C ( ) Assignment - The Secured Party certifies that the Secured Party has
assigned to the Assignee above named, all the Secured Party's rights
under the Financing Statement bearing the file number shown above in
the collateral described in item 7 below.
D ( ) Termination - The Secured Party certifies that the Secured Party no
longer claims a security interest under the Financing Statement
bearing the file number shown above.
E ( ) Amendment - The Financing Statement bearing the file number shown
above is amended as set forth in Item 7 below. (Signature of debtor
required on all amendments.)
F ( ) Other -
7. Any and all collateral described in the Financing Statement bearing the
file number shown above.
8. C 9. This space for
O use of Filing
(Date)November 1996 D Officer (Date,
E Time, Filing
Office)
1
By:
Signature of Debtor(s) (Title) 2
3
4
By: Signature(s) of Secured Party(ies) (Title)
5
6
10. Return Copy To 7
8
Name
Address 9
City, State
and Zip
37
STATE OF CALIFORNIA
UNIFORM COMMERCIAL CODE - FINANCING STATEMENT CHANGE - FORM UCC-2
IMPORTANT - Read instructions on back before completing form
EXHIBIT E-2
This STATEMENT is presented for filing pursuant to the California Uniform
Commercial Code
1. File No.of Orig. Fin. Stmt. 1A. Date of Filing of Orig. Fin. Stmt.
94175364 8/29/94
1B. Date of Orig. Fin. Stmt. 1C. Place of Filing Orig. Fin. Stmt.
8/25/94 Secretary of State Office
2. Debtor (Last Name First) 2A. Social Security or Federal Tax No.
Tannehill Electric Company, Inc.
2B. Mailing Address 2C. City, State 2D. Zip Code
120 Manteca Avenue/P.0. Box 871 Manteca, California 95336
3. Additional Debtor (if any)(Last Name First)
3A. Social Security or Federal Tax No.
3B. Mailing Address 3C. City, State 3D. Zip Code
4. Secured Party
Name Security Pacific Leasing Corporation
Mailing Address 555 California Street, 4th Floor
City San Francisco State California Zip Code 94104
4A. Social Security No., Federal Tax No.
or Bank Transit and A.B.A. No.
5. Assignee of Secured Party (if any)
Name
Mailing Address
City State Zip Code
5A. Social Security No., Federal Tax No.
or Bank Transit and A.B.A. No.
6. A ( ) Continuation - The original Financing Statement between the
foregoing Debtor and Secured Party bearing the file number and date
shown above is continued. If collateral is crops or timber, check
here and insert description of real property on which growing or to
be grown in Item 7 below.
B (X) Release - From the collateral described in the Financing Statement
bearing the file number shown above, the Secured Party releases the
collateral described in Item 7 below.
C ( ) Assignment - The Secured Party certifies that the Secured Party has
assigned to the Assignee above named, all the Secured Party's rights
under the Financing Statement bearing the file number shown above in
the collateral described in item 7 below.
D ( ) Termination - The Secured Party certifies that the Secured Party no
longer claims a security interest under the Financing Statement
bearing the file number shown above.
E ( ) Amendment - The Financing Statement bearing the file number shown
above is amended as set forth in Item 7 below. (Signature of debtor
required on all amendments.)
F ( ) Other -
7. Any and all collateral described in the Financing Statement bearing the
file number shown above.
8. C 9. This space for
O use of Filing
(Date)November 1996 D Officer (Date,
E Time, Filing
Office)
1
By:
Signature of Debtor(s) (Title) 2
3
4
By: Signature(s) of Secured Party(ies) (Title)
5
6
10. Return Copy To 7
8
Name
Address 9
City, State
and Zip
38
STATE OF CALIFORNIA
UNIFORM COMMERCIAL CODE - FINANCING STATEMENT CHANGE - FORM UCC-2
IMPORTANT - Read instructions on back before completing form
EXHIBIT E-3
This STATEMENT is presented for filing pursuant to the California Uniform
Commercial Code
1. File No.of Orig. Fin. Stmt. 1A. Date of Filing of Orig. Fin. Stmt.
94175348 8/29/94
1B. Date of Orig. Fin. Stmt. 1C. Place of Filing Orig. Fin. Stmt.
8/25/94 Secretary of State Office
2. Debtor (Last Name First) 2A. Social Security or Federal Tax No.
Tannehill Oil Company
2B. Mailing Address 2C. City, State 2D. Zip Code
120 Manteca Avenue/P.0. Box 871 Manteca, California 95336
3. Additional Debtor (if any)(Last Name First)
3A. Social Security or Federal Tax No.
3B. Mailing Address 3C. City, State 3D. Zip Code
4. Secured Party
Name Security Pacific Leasing Corporation
Mailing Address 555 California Street, 4th Floor
City San Francisco State California Zip Code 94104
4A. Social Security No., Federal Tax No.
or Bank Transit and A.B.A. No.
5. Assignee of Secured Party (if any)
Name
Mailing Address
City State Zip Code
5A. Social Security No., Federal Tax No.
or Bank Transit and A.B.A. No.
6. A ( ) Continuation - The original Financing Statement between the
foregoing Debtor and Secured Party bearing the file number and date
shown above is continued. If collateral is crops or timber, check
here and insert description of real property on which growing or to
be grown in Item 7 below.
B (X) Release - From the collateral described in the Financing Statement
bearing the file number shown above, the Secured Party releases the
collateral described in Item 7 below.
C ( ) Assignment - The Secured Party certifies that the Secured Party has
assigned to the Assignee above named, all the Secured Party's rights
under the Financing Statement bearing the file number shown above in
the collateral described in item 7 below.
D ( ) Termination - The Secured Party certifies that the Secured Party no
longer claims a security interest under the Financing Statement
bearing the file number shown above.
E ( ) Amendment - The Financing Statement bearing the file number shown
above is amended as set forth in Item 7 below. (Signature of debtor
required on all amendments.)
F ( ) Other -
7. Any and all collateral described in the Financing Statement bearing the
file number shown above.
8. C 9. This space for
O use of Filing
(Date)November 1996 D Officer (Date,
E Time, Filing
Office)
1
By:
Signature of Debtor(s) (Title) 2
3
4
By: Signature(s) of Secured Party(ies) (Title)
5
6
10. Return Copy To 7
8
Name
Address 9
City, State
and Zip
1
EXHIBIT 2A TO THAT CERTAIN PURCHASE AND SALE AGREEMENT BY AND
BETWEEN BERRY PETROLEUM COMPANY
AND TANNEHILL ELECTRIC COMPANY, INC.
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
NORDMAN, CORMANY, HAIR & COMPTON
Attn: Laura K. McAvoy, Esq.
1000 Town Center Drive, 6th Floor
Post Office Box 9100
Oxnard, California 93031-9100
MAIL TAX STATEMENTS TO:
Berry Petroleum Company
Jerry V. Hoffman, President
28700 Hovey Hills Road
Post Office Bin X
Taft, California 93265
A.P.N. 220-181-17-00-4
220-181-24-00-4
220-181-18-00-7
ASSIGNMENT OF LEASES, RIGHTS OF WAY, EASEMENTS AND CONTRACTS
THIS ASSIGNMENT OF LEASES, RIGHTS OF WAY, EASEMENTS AND CONTRACTS
("Assignment") dated and effective as of 12:01 a.m. Pacific Standard Time, on
October 1, 1996 (the "Effective Date"), is from TANNEHILL ELECTRIC COMPANY,
INC., a California corporation ("Assignor"), whose address is 120 Manteca
Avenue, Post Office Box 871, Manteca, California 95336, to BERRY PETROLEUM
COMPANY, a Delaware corporation ("Assignee"), whose address is 28700 Hovey
Hills Road, Post Office Bin X, Taft, California 93268.
a. Assignment. For the sum of Ten Dollars ($10) and other good and
valuable consideration, the receipt and sufficiency of which Assignor hereby
acknowledges, Assignor hereby transfers, grants, bargains, conveys and assigns
to Assignee, effective for all purposes as of the Effective Date, subject to
the terms and conditions set forth in that certain Purchase and Sale Agreement
dated November 8, 1996, by and between Berry Petroleum Company and Tannehill
Electric Company, Inc. ("Purchase and Sale Agreement"), and subject to all
contracts, agreements, encumbrances and other matters to which the following
assets are subject as of the Effective Date, all of Assignor's right, title and
interest in and to the interests and rights described in Schedule A to this
Assignment (hereinafter collectively called and referred to as the
"Cogeneration Assets") and all other rights, privileges, obligations, benefits
and powers conferred upon the owner or holder of the Cogeneration Assets.
2
b. Assumptions. Assignee hereby assumes and agrees to pay, perform and
discharge its obligations under the Cogeneration Assets, and the agreements,
associated contracts and other burdens pertaining thereto, which accrue and
relate to, or are based upon or arise out of, events occurring after the
Effective Date, all in accordance with the terms of the Purchase and Sale
Agreement.
c. Further Assurances. The parties agree to take all such further
actions and execute, acknowledge and deliver all such further documents that
are necessary or useful in carrying out the purposes of this Assignment. So
long as authorized by applicable law so to do, Assignor hereby agrees to
execute, acknowledge and deliver to Assignee all such other additional
instruments, notices, division orders, transfer orders and other documents and
to do all such other and further acts and things as may be necessary to more
fully and effectively grant, convey, transfer and assign to Assignee the
Cogeneration Assets conveyed hereby or intended so to be.
d. Schedule. Reference is made to Schedule A attached hereto and made
a part hereof for all purposes. Reference in such Schedule A to instruments on
file or recorded in the public records are made for all purposes.
e. Headings. Headings are included in this Assignment for convenience
of reference and shall in no way define, limit, extend, or describe the scope or
intent of any provision of this Assignment.
f. Successors and Assigns. This Assignment shall bind and inure to the
benefit of Assignor and Assignee and their respective successors and assigns.
g. Multiple Counterparts. This Assignment may be executed in any number
of counterparts and each counterpart hereof shall be deemed to be an original
instrument but all of such counterparts shall constitute but one assignment.
h. Recordation. To facilitate recording or filing of this Assignment,
each counterpart filed with a federal or state agency or office may contain only
those portions of Schedule A that describe property under the jurisdiction of
that agency or office. Assignor and Assignee have each retained a counterpart
of this Assignment with a complete Schedule A. Another counterpart of this
Assignment with a complete Schedule A shall be recorded in the official real
property records of Kern County, California.
3
i. Governing Law. The provisions of this Assignment shall be governed
by and construed in accordance with the laws of the State of California,
excluding any conflicts of law, rule or principle that might refer same to the
laws of another jurisdiction.
TANNEHILL ELECTRIC COMPANY, INC., BERRY PETROLEUM COMPANY,
a California corporation a Delaware corporation
By: __________________________ By: ______________________________
Albert G. Boyce, Jr., President Jerry V. Hoffman, President
and Chief Executive Officer
By: __________________________ By: ______________________________
John W. Tannehill, Secretary Kenneth A. Olson, Secretary
"Assignor" "Assignee"
4
STATE OF CALIFORNIA )
)
COUNTY OF ____________ )
On _______________, 1996, before me, _____________________, Notary Public,
personally appeared Albert G. Boyce, Jr., personally known to me (or proved to
me on the basis of satisfactory evidence) to be the person whose name is
subscribed to the within instrument and acknowledged to me that he executed the
same in his authorized capacity, and that by his signature on the instrument
the person, or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
________________________________
STATE OF CALIFORNIA )
)
COUNTY OF _____________ )
On ________________, 1996, before me, ______________________, Notary Public,
personally appeared John W. Tannehill, personally known to me (or proved to me
on the basis of satisfactory evidence) to be the person whose name is
subscribed to the within instrument and acknowledged to me that he executed
the same in his authorized capacity, and that by his signature on the
instrument the person, or the entity upon behalf of which the person acted,
executed the instrument.
WITNESS my hand and official seal.
__________________________________
STATE OF CALIFORNIA )
)
COUNTY OF _____________ )
On ________________, 1996, before me, ______________________, Notary Public,
personally appeared Jerry V. Hoffman and Kenneth A. Olson, personally known to
me (or proved to me on the basis of satisfactory evidence) to be the persons
whose names are subscribed to the within instrument and acknowledged to me that
they executed the same in their authorized capacity, and that by their
signatures on the instrument the persons, or the entities upon behalf of which
the persons acted, executed the instrument.
WITNESS my hand and official seal.
__________________________________
5
SCHEDULE A TO
EXHIBIT 2A
ASSIGNMENT OF RIGHTS OF WAY, EASEMENTS AND CONTRACTS
ATTACHED TO AND MADE A PART OF THAT CERTAIN PURCHASE AND SALE AGREEMENT
DATED NOVEMBER 8, 1996,
BY AND BETWEEN BERRY PETROLEUM COMPANY AND
TANNEHILL ELECTRIC COMPANY, INC.
(Unrecorded Documents)
1. PG&E S.O. #2 Contract between Solar, signed November 15, 1985, and Pacific
Gas & Electric Company, signed November 20, 1985; and assigned by Solar to
Monarch Cogeneration 1986-1, and further assigned by Monarch to Tannehill
Electric Company, Inc., and Security Pacific, effective by PG&E's consent
on August 25, 1994.
2. Operation & Maintenance Agreement between Solar Turbines Incorporated and
Tannehill Electric Company, Inc., dated August 15, 1994.
3. Right to Purchase Contract, dated November 8, 1996, by and among Tannehill
Electric Company, Berry Petroleum Company and Security Pacific Leasing
Corporation and all Exhibits thereto.
1
EXHIBIT 2B TO THAT CERTAIN PURCHASE AND SALE AGREEMENT BY AND
BETWEEN BERRY PETROLEUM COMPANY
AND TANNEHILL ELECTRIC COMPANY, INC.
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
NORDMAN, CORMANY, HAIR & COMPTON
Attn: Laura K. McAvoy, Esq.
1000 Town Center Drive, 6th Floor
Post Office Box 9100
Oxnard, California 93031-9100
MAIL TAX STATEMENTS TO:
Berry Petroleum Company
Jerry V. Hoffman, President
28700 Hovey Hills Road
Post Office Bin X
Taft, California 93265
A.P.N. 220-181-17-00-4
220-181-24-00-4
220-181-18-00-7
ASSIGNMENT OF LEASES, RIGHTS OF WAY, EASEMENTS AND CONTRACTS
THIS ASSIGNMENT OF LEASES, RIGHTS OF WAY, EASEMENTS AND CONTRACTS
("Assignment") dated and effective as of 12:01 a.m. Pacific Standard Time, on
October 1, 1996 (the "Effective Date"), is from TANNEHILL ELECTRIC COMPANY,
INC., a California corporation ("Assignor"), whose address is 120 Manteca
Avenue, Post Office Box 871, Manteca, California 95336, to BERRY PETROLEUM
COMPANY, a Delaware corporation ("Assignee"), whose address is 28700 Hovey
Hills Road, Post Office Bin X, Taft, California 93268.
j. Assignment. For the sum of Ten Dollars ($10) and other good and
valuable consideration, the receipt and sufficiency of which Assignor hereby
acknowledges, Assignor hereby transfers, grants, bargains, conveys and assigns
to Assignee, effective for all purposes as of the Effective Date, subject to
the terms and conditions set forth in that certain Purchase and Sale Agreement
dated November 8, 1996, by and between Berry Petroleum Company and Tannehill
Electric Company, Inc. ("Purchase and Sale Agreement"), and subject to all
contracts, agreements, encumbrances and other matters to which the following
assets are subject as of the Effective Date, all of Assignor's right, title and
interest in and to the interests and rights described in Schedule A to this
Assignment (hereinafter collectively called and referred to as the
"Cogeneration Assets") and all other rights, privileges, obligations, benefits
and powers conferred upon the owner or holder of the Cogeneration Assets.
2
k. Assumptions. Assignee hereby assumes and agrees to pay, perform and
discharge its obligations under the Cogeneration Assets, and the agreements,
associated contracts and other burdens pertaining thereto, which accrue and
relate to, or are based upon or arise out of, events occurring after the
Effective Date, all in accordance with the terms of the Purchase and Sale
Agreement.
l. Further Assurances. The parties agree to take all such further
actions and execute, acknowledge and deliver all such further documents that
are necessary or useful in carrying out the purposes of this Assignment. So
long as authorized by applicable law so to do, Assignor hereby agrees to
execute, acknowledge and deliver to Assignee all such other additional
instruments, notices, division orders, transfer orders and other documents and
to do all such other and further acts and things as may be necessary to more
fully and effectively grant, convey, transfer and assign to Assignee the
Cogeneration Assets conveyed hereby or intended so to be.
m. Schedule. Reference is made to Schedule A attached hereto and made
a part hereof for all purposes. Reference in such Schedule A to instruments on
file or recorded in the public records are made for all purposes.
n. Headings. Headings are included in this Assignment for convenience
of reference and shall in no way define, limit, extend, or describe the scope or
intent of any provision of this Assignment.
o. Successors and Assigns. This Assignment shall bind and inure to the
benefit of Assignor and Assignee and their respective successors and assigns.
p. Multiple Counterparts. This Assignment may be executed in any number
of counterparts and each counterpart hereof shall be deemed to be an original
instrument but all of such counterparts shall constitute but one assignment.
q. Recordation. To facilitate recording or filing of this Assignment,
each counterpart filed with a federal or state agency or office may contain
only those portions of Schedule A that describe property under the jurisdiction
of that agency or office. Assignor and Assignee have each retained a
counterpart of this Assignment with a complete Schedule A. Another counterpart
of this Assignment with a complete Schedule A shall be recorded in the official
real property records of Kern County, California.
3
r. Governing Law. The provisions of this Assignment shall be governed
by and construed in accordance with the laws of the State of California,
excluding any conflicts of law, rule or principle that might refer same to the
laws of another jurisdiction.
TANNEHILL ELECTRIC COMPANY, INC., BERRY PETROLEUM COMPANY,
a California corporation a Delaware corporation
By: ____________________________ By: ______________________________
Albert G. Boyce, Jr., President Jerry V. Hoffman, President
and Chief Executive Officer
By: ____________________________ By: ______________________________
John W. Tannehill, Secretary Kenneth A. Olson, Secretary
"Assignor" "Assignee"
4
STATE OF CALIFORNIA )
)
COUNTY OF _____________ )
On ________________, 1996, before me, ______________________, Notary Public,
personally appeared Albert G. Boyce, Jr., personally known to me (or proved to
me on the basis of satisfactory evidence) to be the person whose name is
subscribed to the within instrument and acknowledged to me that he executed the
same in his authorized capacity, and that by his signature on the instrument
the person, or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
_______________________________
STATE OF CALIFORNIA )
)
COUNTY OF _____________ )
On ________________, 1996, before me, _______________________, Notary Public,
personally appeared John W. Tannehill, personally known to me (or proved to me
on the basis of satisfactory evidence) to be the person whose name is
subscribed to the within instrument and acknowledged to me that he executed the
same in his authorized capacity, and that by his signature on the instrument
the person, or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
_______________________________
STATE OF CALIFORNIA )
)
COUNTY OF _____________ )
On ________________, 1996, before me, ______________________, Notary Public,
personally appeared Jerry V. Hoffman and Kenneth A. Olson, personally known to
me (or proved to me on the basis of satisfactory evidence) to be the persons
whose names are subscribed to the within instrument and acknowledged to me that
they executed the same in their authorized capacity, and that by their
signatures on the instrument the persons, or the entities upon behalf of which
the persons acted, executed the instrument.
WITNESS my hand and official seal.
_______________________________
5
SCHEDULE A TO
EXHIBIT 2B
ASSIGNMENT OF RIGHTS OF WAY, EASEMENTS AND CONTRACTS
ATTACHED TO AND MADE A PART OF THAT CERTAIN PURCHASE AND SALE AGREEMENT
DATED NOVEMBER 8, 1996,
BY AND BETWEEN BERRY PETROLEUM COMPANY AND
TANNEHILL ELECTRIC COMPANY, INC.
(Recorded Documents)
1. Cogeneration Facility Lease between Security Pacific Leasing Corporation
and Tannehill Electric Company, dated August 15, 1994, and Lease
Supplement #1, dated August 26, 1994, relating to the following described
real property:
That certain portion of the East half of the Northeast quarter
of Section 33, Township 12, North, Range 24 West, S.B.B.M.,
described as Parcel 1 of Parcel Map 8297 in the unincorporated
area of the County of Kern, State of California, as per Map
recorded January 20, 1989 in Book 37, pages 134 and 135 of
Parcel Maps, in the Office of the County Recorder of said
County.
EXCEPTING therefrom any vein or lode of quartz or other rock
in place bearing gold, cinnabar, lead, tin, copper or other
valuable deposits within the land above described which may
have been discovered or known to exist prior to November 11,
1902.
6
STATEMENT OF TAX DUE UNDER PROVISIONS OF THE
DOCUMENTARY STAMP ACT
and
REQUEST THAT STAMPS NOT BE MADE A PART OF THE PERMANENT RECORD
TO: Kern County Recorder
THE TAX DUE PURSUANT TO THE PROVISIONS OF THE DOCUMENTARY STAMP ACT ON THE
DEED, TRANSFER, OR CONVEYANCE FROM: Tannehill Electric Company, Inc.
[Name of Grantor(s) or
Lessor(s)]
TO: Berry Petroleum Company
[Name of Grantee(s) or Lessee(s)]
OF THE FOLLOWING BRIEFLY DESCRIBED REAL PROPERTY: T12N, R24W, Section 33;
APNs 220-181-17-00-4; 220-181-24-00-4; 220-181-18-00-7
Amounts to: $________________ Amounts to: $________________
(X) Unincorporated Area ( ) City of ___________________
( ) Computed on full value ( ) Computed on full value
( ) Computed on full value LESS liens ( ) Computed on full value LESS
and encumbrances remaining liens and encumbrances
remaining
Documentary Transfer Tax $____________
Computed on full value of property
conveyed
Tannehill Electric Company, Inc.
By: _________________________________
Affix transfer Tax Stamp Here Stamp Reserved for Recorder's Coding Stamp
Date: _____________________________ By:__________________________
Title: ______________________
AFTER THE PERMANENT RECORD IS MADE, THIS DOCUMENT WILL BE ATTACHED TO THE
CONVEYING DOCUMENT AND RETURNED TO THE PARTY ENTITLED THERETO. A COPY WILL
BE MADE AND PLACED ON FILE FOR AUDITING PURPOSES.
EXHIBIT 3 TO THAT CERTAIN PURCHASE AND SALE AGREEMENT BY AND
BETWEEN BERRY PETROLEUM COMPANY
AND TANNEHILL ELECTRIC COMPANY, INC.
ALLOCATION OF PURCHASE PRICE
The parties agree to the allocation of purchase price as represented on
IRS Form 8594 attached hereto.
1
FORM 8594 ASSET ACQUISITION STATEMENT OMB No. 1545-1021
(Rev Jan 1996) UNDER SECTION 1060
Department of the Treasury Attachment
Internal Revenue Service Sequence No. 61
Attach to your Federal income tax return
Name as Shown on return Identification number as shown on return
Tannehill Electric Company, Inc. 77-0377799
Check the box that identifies you Buyer (X) Seller
Part 1 General Information - to be completed by all filers.
1. Name of other party to the transaction
Berry Petroleum Company
Other party's identification number
77-0079387
Address (number, street, and room or suite no.)
28700 Hovey Hills Road, P.O. Bin X
Taft, California 93268
2. Date of Sale 3. Total sales price
October 1, 1996 $200,000
Part II Assets Transferred - to be completed by all filers of an original
statement
4. Assets Aggregate Fair Market Value Allocation of Sales price
(Actual Amount for Class I)
Class I $ $
Class II $ $
Class III $ $ 200,000
Class IV $ $
Total $ $ 200,000
5. Did the buyer and seller provide for an allocation of the sales price in
the sales contract or in another written document signed by both parties?
(X) Yes No
If Yes, are the aggregate fair market values listed for each of asset
Classes I, II, III and IV the amounts agreed upon in your sales contract
or in a separate written document?
(X) Yes No
6. In connection with the purchase of the group of assets, did the buyer also
purchase a license or a covenant not to complete, or enter into a lease
agreement, employment contract, management contract, or similar
arrangement with the seller (or managers, directors, owners, or employees
of the seller)?
Yes (X) No
If Yes, specify (a) the type of agreement, and (b) the maximum amount of
consideration (not including interest) paid or to be paid under the
agreement. See the instructions for line 6.
For Paperwork Reduction Act Notice, see instructions.
Cat. No. 63768Z Form 8592 (Rev. 1-96)
2
[THIS PAGE INTENTIALLY BLANK]
2/19/96 Published by Tax Management Inc., a subsidiary of The Bureau of
National Affairs, Inc. 8594.I
1
Form 8594 Asset Acquisition Statement OMB No 1545-1021
(Rev January 1993) Under Section 1060 Expires 2-29-96
Department of the Treasury
Internal Revenue Service Attachment
Attach to your Federal income tax return Sequence No 61
Name as shown on return Identification number as shown on return
Berry Petroleum Company 77-0079387
Check the box that identifies you X Buyer Seller
Part I General Information - to be completed by filers
1 Name of other party to the transaction
Tannehill Electric Company, Inc.
Other party's identification number
77-0377799
Address (number, street, and room or suite no.)
P.O. Box 871
City, State, and Zip Code
Manteca, California 95336
2 Date of Sale 3 Total Sales Price
10/1/96 $200,000
Part II Assets Transferred - to be completed by all filers of an original
statement
4 Assets Aggregate Fair Market Value Allocation of Sales Price
(Actual Amount for Class 1)
Class I $ $
Class II $ $
Class III $ $ 200,000
Class IV $
Total $ 200,000
5 Did the buyer and seller provide for an allocation of the sales price in
the sales contrct or in another written document signed by both parties?
X Yes No
If "yes," are the aggregate fair market values listed for each of asset
Classes I, II, and III the amounts agreed upon in your sales contract or
in a separate written document?
X Yes No
6 In connection with the purchase of the group of assets, did the buyer also
purchase a license or a covenant not to compete, or enter into a lease
agreement, employment contract, management contract, or similar arrangement
with the seller (or managers, directors, owners, or employees of the
seller)?
Yes X No
If "yes," specify (a) the type of agreement, and (b) the maximum amount of
consideration (not including interest) paid or to be paid under the
agreement. See the instructions for line 6.
Form 8594 (Rev. 1-96) Page 2
2
Part III Class III, Intangible Amortizable Assets Only - Complete if
applicable. The amounts shown below also must be included under
Class III assets in Part II. Attach additional sheets if more
space is needed.
Assets Fair Market Value Useful Life Allocation of Sales Price
Contracts $ 200,000 5 $ 200,000
$ $
$ $
$ $
$ $
$ $
Part IV Supplemental Statement - To be completed only if amending an
original statement or previously filed supplemental statement
because of anincrease or decrease in consideration N/A
7. Assets Allocation of Sales Price Increase or Redetermined Allocation
as Previously Reported (Decrease) of Sales Price
Class I $ $ $
Class II $ $ $
Class III $ $ $
Class IV $ $ $
Totals $ $
8. Reason(s) for increase or decrease. Attach additional sheets if more
space is needed.
9. Tax year and tax return form number with which the original form 8594 and
any supplemental statements were filed.
1
EXHIBIT 4 TO THAT CERTAIN PURCHASE AND SALE AGREEMENT BY AND
BETWEEN BERRY PETROLEUM COMPANY
AND TANNEHILL ELECTRIC COMPANY, INC.
CERTIFICATE OF SATISFACTION
TO THE PURCHASE AND SALE AGREEMENT
ENTERED INTO BY AND BETWEEN TANNEHILL ELECTRIC COMPANY, INC. AND BERRY
PETROLEUM COMPANY
ON NOVEMBER 8, 1996
(PARAGRAPH 2.10(e) THEREOF)
The undersigned parties to that certain Purchase and Sale Agreement by and
between Berry Petroleum Company and Tannehill Electric Company, Inc., to be
entered into on this 8th day of November, 1996, declare that all conditions to
the Closing have been satisfied and the transaction is Closed.
BERRY PETROLEUM COMPANY, TANNEHILL ELECTRIC COMPANY, INC.,
a Delaware corporation a California corporation
By: _______________________ By: _______________________________
Jerry V. Hoffman, President Albert G. Boyce, Jr., President
and Chief Executive Officer
By: __________________________ By: _______________________________
Kenneth A. Olson, Secretary John W. Tannehill, Secretary
1
EXHIBIT 5 TO THAT CERTAIN PURCHASE AND SALE AGREEMENT BY AND
BETWEEN BERRY PETROLEUM COMPANY
AND TANNEHILL ELECTRIC COMPANY, INC.
ESCROW INSTRUCTIONS
FIRST AMERICAN TITLE INSURANCE COMPANY
MAIN OFFICE: 4540 CALIFORNIA AVENUE, SUITE 100 (93309)
MAILING ADDRESS: P.O. BOX 1945, BAKERSFIELD, CA 93303
TELEPHONE (805) 327-5311
FACSIMILE (805) 327-8533
E S C R O W I N S T R U C T I O N S
FIRST AMERICAN TITLE INSURANCE COMPANY CONDUCTS ESCROW BUSINESS UNDER
CERTIFICATE OF AUTHORITY NO. 2787 ISSUED BY THE STATE OF CALIFORNIA DEPARTMENT
OF INSURANCE.
FINAL DRAFT
Escrow Officer: NANCY J. SMITH Property: COGENERATION
ASSETS,
TAFT, CA
Escrow Number: 1128320N
Date: November 4, 1996
To:FIRST AMERICAN TITLE INSURANCE COMPANY
THESE INSTRUCTIONS ARE ENTERED INTO PURSUANT TO THAT CERTAIN PURCHASE AND SALE
AGREEMENT DATED WHEN EXECUTED BY BERRY PETROLEUM COMPANY AND TANNEHILL ELECTRIC
COMPANY, INC. A COPY OF WHICH IS ATTACHED HERETO. AS ESCROW HOLDER YOU SHALL\
BE CONCERNED ONLY WITH THOSE SPECIFIC PROVISIONS OF SAID CONTRACT SET FORTH AND
ENUMERATED THEREIN AS FOLLOWS:
#1.6, #1.13, #2.1, #2.2, #2.3, #2.5, #2.6 CLARIFICATION: DISTRIBUTION OF SALE
PROCEEDS AND RECORDATION OF DOCUMENTS WITH KERN COUNTY RECORDER WILL BE HANDLED
AT THE OFFICE OF ESCROW HOLDER, FIRST AMERICAN TITLE INSURANCE COMPANY, 4540
CALIFORNIA #100, BAKERSFIELD, CA. 93309. THIS ESCROW TO CLOSE CONCURRENTLY
WITH ESCROWS #1128321N AND #1125444N,
#2.7 AND #2.8 CLARIFICATION: PARTIES TO SUPPLY ESCROW HOLDER WITH INFORMATION
SO PRORATIONS CAN BE HANDLED THROUGH ESCROW OR NOTIFY ESCROW HOLDER BY MUTUAL
WRITTEN INSTRUCTIONS THAT PRORATIONS WILL BE HANDLED OUTSIDE OF THIS ESCROW;
#2.10 CLARIFICATION: DOCUMENTS TO BE DEPOSITED INTO ESCROW OR PARTIES TO NOTIFY
ESCROW HOLDER BY MUTUAL WRITTEN INSTRUCTIONS THAT SAID DOCUMENTS HAVE BEEN
DELIVERED OUTSIDE OF ESCROW, #2.12, ARTICLES VII AND VIII, DOCUMENTS WILL BE
DEPOSITED AND APPROVED BY COUNSEL PRIOR TO CLOSE OF ESCROW.
ALL PARTIES AGREE THAT TRANSFER OF SAID PROPERTY IS NOT BEING HANDLED THROUGH
THE BULK SALE PROCESS. ESCROW HOLDER WILL NOT CONDUCT ANY UCC SEARCHES. NO
TITLE INSURANCE OR GUARANTEES OF TITLE WILL BE ISSUED BY ESCROW HOLDER WITH
REGARD TO PROPERTY BEING TRANSFERRED IN THIS ESCROW.
1A
ANY AND ALL OTHER PROVISIONS OF SAID CONTRACT NOT ENUMERATED ABOVE IMPOSE NO
DUTIES ON YOU AS ESCROW HOLDER AND ARE MATTERS OF AGREEMENT AND UNDERSTANDING
BETWEEN THE PARTIES WITH WHICH YOU SHALL NOT BE CONCERNED.
THE ATTACHED GENERAL PROVISIONS AND PAGE #1B ARE HEREBY MADE A PART OF THESE
INSTRUCTIONS.
TANNEHILL ELECTRIC COMPANY, INC
BY:
ITS:
BERRY PETROLEUM COMPANY
BY:
ITS:
1B
ESCROW INSTRUCTIONS - PAGE 1B
Escrow Number: 1128320N
NOTICE OF TAX REPORTING AND WITHHOLDING OBLIGATIONS OF THE PARTIES:
State Law
In accordance with Sections 18805 and 26131 of the Revenue and Taxation
Code, a buyer may be required to withhold an amount equal to three and
one-third percent of the sales price in the case of the disposition of
California real property interest by either:
1. A seller who is an individual with a last known street address outside of
California or when the disbursement instructions authorize the proceeds be sent
to a financial intermediary of the seller, OR
2. A corporate seller which has no permanent place of business in California.
The buyer may become subject to penalty for failure to withhold an amount equal
to the greater of 10 percent of the amount required to be withheld or five
hundred dollars ($500).
However, notwithstanding any other provision included in the California
statutes referenced above, no buyer will be required to withhold any amount or
be subject to penalty for failure to withhold if:
1. The sales price of the California real property conveyed does not exceed
one hundred thousand dollars ($100,000), OR
2. The seller executes a written certificate, under the penalty of
perjury,certifying that the seller is a resident of California, or if a
corporation, has a permanent place of business in California, OR
3. The seller, who is an individual, executes a written certificate, under
the penalty of perjury, that the California real property being conveyed is the
seller's principal residence (as defined in Section 1034 of the Internal
Revenue Code.The seller is subject to penalty for knowingly filing a fraudulent
certificate for the purpose of avoiding the withholding requirement.
The California statues referenced above include provisions which authorize the
Franchise Tax Board to grant reduced withholding and waivers from withholding
on a case-by-case basis.
The parties to this transaction should seek an attorney's, accountant's, or
other tax specialists's opinion concerning the effect of this law on this
transaction and should not act on any statements made or omitted by the escrow
or closing officer.
2B
Federal Law:See Item #16 of General Provisions
Federal 1099 Reporting for Resident Seller
The parties acknowledge that First American Title has an obligation to
provide information from this transaction to the Internal Revenue Service at
the close of the escrow. This information includes, but is not limited to, the
taxpayer identification and/or social security number(s) of the seller(s) and
the gross sales price. First American Title can not authorize the recording
and closing of this transaction without receipt of information deemed adequate
by First American Title for complying with the IRS reporting requirements.
Failure to provide the requested information to escrow holder will result in
a delay in closing.
THE UNDERSIGNED HEREBY EXPRESSLY ACKNOWLEDGE RECEIPT OF THE ABOVE NOTICE.
TANNEHILL ELECTIC COMPANY, INC
BY:
ITS:
BERRY PETROLEUM COMPANY
BY:
ITS:
3B
GENERAL PROVISIONS
1. Deposit of Funds & Disbursements
You shall deposit all funds received in this escrow in any bank
insured by an agency of the United States Government, including your
affiliated bank, First American Trust Company, in one or more of your
general escrow demand accounts. These funds may be transferred to any
other general escrow demand account or accounts, in the above named bank
or banks, including those maintained in your affiliated bank. All
disbursements shall be made by your check. You are authorized not to
close escrow or disburse until good funds have been confirmed in escrow.
2. Prorations and Adjustments
The expression "close of escrow" used in this escrow means the date
of which instruments referred to herein are recorded and relates only to
prorations and/or adjustments unless otherwise specified.
3. Recordation of Instruments
You are authorized to record any documents delivered through this
escrow, the recording of which is necessary or proper in the issuance of
the requested policy of title insurance.
4. Authorization to Execute Assignment of Insurance Policies
You are to execute on behalf of the parties hereto form assignments
of interest in any insurance policies (other than title insurance) called
for in this escrow; forward assignments and policies upon close of escrow
to the agent with the request, first, that insurer consent to such
transfer and/or attach a loss payable clause and/or make such other
additions or corrections as may have been specifically required herein,
and second, that the agent there after forward such policies to the
parties entitled to them.
In all acts in this escrow relating to insurance, including
adjustments, if any, you shall be fully protected in assuming that each
policy is in force and that the necessary premium therefor has been paid.
5. Authorization to Furnish Copies
You are to furnish a copy of these instructions, amendments
thereto, closing statements and/or any other documents deposited in this
escrow to the lender or lenders, the real estate broker or brokers and/or
the attorney or attorneys involved in this transaction upon request of the
lenders, brokers or attorneys.
6. Personal Property Taxes
No examination or insurance as to the amount or payment of personal
property taxes is required unless specifically requested.
7. Right of Cancellation
Any party instructing you to cancel this escrow shall file notice of
cancellation in your office, in writing. You shall within a reasonable
time thereafter mail, by certified mail, one copy of the notice to each of
the other parties at the addresses stated in this escrow. Unless written
objection to cancellation is filed in your office by a party within ten
(10)days after date of mailing, you are authorized at your option to
comply with the notice and demand payment of your cancellation charges as
provided in this agreement. If written objection is filed, you are
authorized at your option to hold all money and instruments in this escrow
and take no further action until otherwise directed, either by the
parties' mutual written instructions, or final order of
4B
a court of competent jurisdiction.
8. Action in Interpleader
The parties hereto expressly agree that you, as escrow holder, have
the absolute right at your election to file an action in interpleader
requiring the parties to answer and litigate their several claims and
rights among themselves and you are authorized to deposit with the clerk
of the court all documents and funds held in this escrow. In the event
such action is filed,the parties jointly and severally agree to pay your
cancellation charges and costs, expenses and reasonable attorney's fees
which you are required to expend or incur in the interpleader action, the
amount thereof to be fixed and judgment therefor to be rendered by the
court. Upon the filing of the action, you shall thereupon be fully
released and discharged from all obligations to further perform any duties
or obligations otherwise imposed by the terms of this escrow.
9. Termination of Agency Obligations
If there is no action taken on this escrow within six (6) months
after the "time limit date" as set forth in the escrow instructions or
written extension thereof, your agency obligation shall terminate at your
option and all documents, monies or other items held by you shall be
returned to the parties depositing same.
If the event of cancellation of this escrow, whether it be at the
request of any of the parties or otherwise, the fees and charges due First
American Title Insurance Company, including expenditures incurred and/or
authorized shall be borne equally by the parties hereto (unless otherwise
agreed to specifically.)
10. Conflicting Instructions
Should you before or after close of escrow receive or become aware
of any conflicting demands or claims with respect to this escrow or the
rights of any of the parties hereto, or any money or property deposited
herein or affected hereby, you shall have the right to discontinue any or
all further acts on your part until the conflict is resolved to your
satisfaction, and you shall have the further right to commence or defend
any action or proceedings for the determination of the conflict as
provided in paragraphs 7 and 8 or these General Provisions.
11. Funds Retained in Escrow
If for any reason funds are retained in escrow, you may deduct
therefrom $10.00 as a monthly charge as custodian thereof.
12. Usury
You are not to be concerned with any question of usury in any loan
or encumbrances involved in the processing of the escrow and you are
hereby released of any responsibility of liability therefor.
13. Indemnify for Attorneys Fees and Costs
In the event suit is brought by any party to this escrow, including
the title company or any other party, as against each other, or
others,including the title company, claiming any right they may have as
against each other or against the title company, then in that event, the
parties hereto agree to indemnify and hold harmless the title company
against any attorney's fees and costs incurred by it.
14. Amendments to Escrow Instructions
Any Amendment or supplement to these escrow instructions must be in
writing. These escrow instructions constitute the entire escrow between
the escrow holder and the parties hereto.
5B
15. Supplemental taxes:
Seller and Buyer acknowledge that the subject property may be
subject to supplemental taxes due as a result of change of ownership
taking place through this escrow. Any necessary adjustment due either
party on receipt of a supplemental tax bill will be made by the parties
outside of this escrow and escrow holder is released of any liability in
connection with same.
16. Foreign Investment in Real Property Tax Act
The Foreign Investment in Real Property Tax Act of 1980 as amended
by the Tax Reform Act of 1984 places special requirements for tax
reporting and withholding on the parties to a real estate transaction
where the transferor(seller) is a non resident alien or non domestic
corporation or partnership or is a domestic corporation or partnership
controlled by non residents or non resident corporations or partnerships.
The parties to this transaction are seeking an attorney's, accountant's,
or other tax specialist's opinion concerning the effect of this Act on
this transaction and are not acting on any statements made or omitted by
the escrow or closing officer. (INITIAL HERE: )
17. Preliminary change of Ownership form:
Prior to close of escrow buyer will be sent a Preliminary Change of
Ownership Report, which is required by the County Recorder's office to
accompany documents called for herein at the time of recording, in
accordance with Section 480.3 of the Revenue and Taxation Code. Buyer is
aware he must return the form completed and signed prior to the close of
escrow. If escrow holder does not receive this report prior to close of
escrow, buyer authorizes escrow holder to charge his account the sum
of$20.00 which is the fee the County Recorder charges for recording the
Deed without the completed form. Buyer is hereby put on notice that the
Assessor is required to mail out the form for completion later on if it
has not been filed at close of escrow.
18. Good Funds Law:
The parties understand that all funds to close escrow must be
deposited sufficient number of days prior to the close of escrow in order
to comply with Section 12413.1 of the California Insurance Code.
Generally speaking,wire transferred funds may be deposited into our escrow
account any time prior to the close of escrow. Cashier's checks and
certified checks must be deposited into our escrow account the business
day before the close of escrow.
19. Escrow Trust Funds:
Buyer and seller acknowledge that escrow holder will be depositing
all funds in escrow in a NON INTEREST bearing fiduciary account at one of
the following banks: Union Bank.
20. Disclosure of Taxpayer Identification Numbers
Internal Revenue Code Section 6109(h) imposes requirements for
furnishing, disclosing, and including taxpayer identification numbers in
tax returns on the parties to a residential real estate transaction
involving seller provided financing. The parties understand that the
disclosure reporting requirements are exclusive obligations between the
parties to this transaction and that First American Title Insurance
Company is not obligated to transmit the taxpayer identification numbers
to the Internal Revenue Service or to the parties. First American Title
Insurance Company is not rendering an opinion concerning the effect of
this law on this transaction,and the parties are not acting on any
statements made or omitted by the escrow or closing officer.
To facilitate compliance with this law, the parties to this escrow hereby
authorize First American Title Insurance Company to release any party's
taxpayer identification number to any requesting party who is a party to
this transaction. The requesting party shall deliver a written request to
escrow. The parties hereto waive all rights of confidentiality regarding
their respective taxpayer identification numbers and agree to hold First
American Title Insurance Company harmless
6B
against any fees, costs, or judgments incurred and/or awarded in
connection with the release of taxpayer identification numbers.
1
EXHIBIT 6 TO THAT CERTAIN PURCHASE AND SALE AGREEMENT BY AND
BETWEEN BERRY PETROLEUM COMPANY
AND TANNEHILL ELECTRIC COMPANY, INC.
CERTIFICATE OF COMPLIANCE
TO THE PURCHASE AND SALE AGREEMENT
ENTERED INTO BY AND BETWEEN TANNEHILL ELECTRIC COMPANY, INC.
AND BERRY PETROLEUM COMPANY
ON NOVEMBER 8, 1996
(PARAGRAPH 7.6 THEREOF)
The undersigned certify that Tannehill Electric Company, Inc., has
complied with the matters set forth in Sections 7.1, 7.2, 7.3, and 7.4 of that
certain Purchase and Sale Agreement by and between Berry Petroleum Company and
Tannehill Electric Company, Inc., entered into on November 8, 1996.
Date: _____________, 1996 TANNEHILL ELECTRIC COMPANY, INC.,
a California corporation
By: ______________________________
Albert G. Boyce, Jr. President
By: ______________________________
John W. Tannehill, Secretary
1
EXHIBIT 7A TO THAT CERTAIN PURCHASE AND SALE AGREEMENT BY AND
BETWEEN BERRY PETROLEUM COMPANY
AND TANNEHILL ELECTRIC COMPANY, INC.
FORM OF OPINION OF COUNSEL
TO TANNEHILL ELECTRIC COMPANY, INC.
November ___, 1996
Berry Petroleum Company
Attn: Jerry V. Hoffman
President and Chief Executive Officer
28700 Hovey Hills Road
Post Office Bin X
Taft, CA 93268
Re: Berry Petroleum Company / Tannehill Electric Company, Inc.
Asset Purchase and Sale Transaction
Gentlemen:
We have acted as counsel to Tannehill Electric Company, Inc., a California
corporation ("Tannehill"), in connection with the purchase of substantially all
the assets of Tannehill by Berry Petroleum Company, a Delaware corporation
("Berry"), pursuant to that certain Purchase and Sale Agreement, dated November
8, 1996, by and between Tannehill and Berry (the "Agreement"). Capitalized
terms used in this letter without definition have the meanings given such terms
in the Agreement.
In rendering the opinions set forth below, we have assumed the due
authorization, execution and delivery of the Agreement by Berry.
Based on the foregoing, and in reliance thereon, but subject to the
qualifications herein set forth, we are of the opinion that:
1. Tannehill is a corporation duly organized and validly existing under,
and by virtue of, the laws of the State of California and is in good standing
under such laws. Tannehill has requisite corporate power to own and operate
its properties and assets, and to carry on its business as presently conducted.
2. Tannehill has full corporate power and authority to execute and
deliver the Agreement and to perform its obligations under the terms of the
Agreement.
3. All corporate action on the part of Tannehill and its directors and
shareholders necessary for the authorization, execution, delivery and
performance of the Agreement and the consummation of the transactions
contemplated thereby, has been taken. The Agreement has
2
been duly executed and delivered by Tannehill and constitutes a legal, valid
and binding obligation of Tannehill, enforceable against it in accordance with
its respective terms, except as such enforceability may be limited by or
subject to (a) any bankruptcy, insolvency, reorganization, moratorium or
similar laws relating to creditor's rights generally and (b) general principles
of equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
4. The individuals and entities executing the Agreement as shareholders
of Tannehill are the beneficial owners of all the issued and outstanding shares
of Tannehill common stock (the "Shares"). There are no outstanding options,
warrants, rights of first refusal, or other rights calling for the issuance of,
or any security convertible into or exchangeable for, the Shares and no other
person or entity has any right in or to the Shares.
5. No consent, approval or authorization of or designation of Tannehill
is required in connection with the valid execution and delivery of the
Agreement, or the consummation of the transactions contemplated thereby on the
Closing thereof, except as such have been obtained or made prior to or upon the
date hereof.
6. To our best knowledge, no default exists and no event has occurred
which would constitute a default under, or violation in the due performance and
observance of any term, covenant or condition, or breach of, Tannehill's
Articles of Incorporation or Bylaws or any indenture, license, lease,
franchise, mortgage, instrument, or other agreement to which Tannehill is a
party, or by which it or its properties may be bound; or (a) an event that
would permit any party to any agreement or instrument to terminate it or to
accelerate the maturity of any indebtedness or other obligation of Tannehill;
(b) an event that would result in the creation or imposition of any lien,
charge, or encumbrance on any asset of Tannehill; or (c) an event that would
conflict with any order, rule, or regulation directed to Tannehill by any court
or governmental agency or body having jurisdiction over it.
7. Except as disclosed in the Tannehill Disclosure Letter (as defined
in the Agreement), to our best knowledge, there is no suit, action,
arbitration, or legal, administrative, or other proceeding or governmental
investigation pending or threatened against or affecting Tannehill or any of
its businesses or properties or financial or other condition.
8. Except as disclosed in the Tannehill Disclosure Letter, there are no
agreements, written or oral, between Tannehill and any other party that affect,
directly or indirectly, the Cogeneration Assets.
We are members of the bar of the State of California, and accordingly we
do not purport to be experts on, or to be qualified to express any opinion
herein concerning, nor do we express any opinions herein concerning, any law
other than Federal law and the laws of the State of California.
This opinion letter is limited to the matters expressly stated herein and
no opinion or other statement may be inferred or implied beyond the matters
expressly stated herein. This
3
opinion letter is addressed to Berry for the benefit of Berry and is only for
Berry's use in connection with the Agreement. This opinion letter may not be
relied upon by any other person or entity without prior written consent. This
opinion is as of this date, and we expressly decline any undertaking to advise
you of any matters arising subsequent to the date hereof which would cause us
to amend any portion of the foregoing in whole or in part.
Very truly yours,
Roger Coley, Esq.
cc: Nordman, Cormany, Hair & Compton
Attn: Laura K. McAvoy, Esq.
1
EXHIBIT 7B TO THAT CERTAIN PURCHASE AND SALE AGREEMENT BY AND
BETWEEN BERRY PETROLEUM COMPANY
AND TANNEHILL ELECTRIC COMPANY, INC.
FORM OF OPINION OF COUNSEL
TO TANNEHILL ELECTRIC COMPANY, INC.
November ___, 1996
Berry Petroleum Company
Attn: Jerry V. Hoffman
President and Chief Executive Officer
28700 Hovey Hills Road
Post Office Bin X
Taft, CA 93268
Re: Berry Petroleum Company / Tannehill Electric Company, Inc.
Asset Purchase and Sale Transaction
Gentlemen:
We have acted as counsel to Tannehill Electric Company, Inc., a California
corporation ("Tannehill") and Sunset Investment Company, LLC, a California
limited liability company ("Sunset LLC"), in connection with the purchase of
substantially all the assets of Tannehill by Berry Petroleum Company, a Delaware
corporation ("Berry"), pursuant to that certain Purchase and Sale Agreement,
dated November 8, 1996, by and between Tannehill and Berry (the "Agreement").
In connection with the Agreement, Sunset LLC, has entered into an agreement to
indemnify Berry (and other parties) against certain claims and losses (the
"Indemnity").
In rendering the opinions set forth below, we have assumed the due
authorization, execution and delivery of the Agreement by Berry.
Based on the foregoing, and in reliance thereon, but subject to the
qualifications herein set forth, we are of the opinion that:
1. Tannehill is a corporation duly organized and validly existing under,
and by virtue of, the laws of the State of California and is in good standing
under such laws. Tannehill has requisite corporate power to own and operate
its properties and assets, and to carry on its business as presently conducted.
2
2. Sunset LLC is a limited liability company duly organized and validly
existing under, and by virtue of, the laws of the State of California and is in
good standing under such laws. Sunset LLC has requisite power to own and
operate its properties and assets, and to carry on its business as presently
conducted.
3. Tannehill has full corporate power and authority to execute and
deliver the Agreement and to perform its obligations under the terms of the
Agreement.
4. Sunset LLC has full corporate power and authority to execute and
deliver the Indemnity and to perform its obligations under the terms of the
Indemnity.
5. All corporate action on the part of Tannehill and its directors and
shareholders necessary for the authorization, execution, delivery and
performance of the Agreement and the consummation of the transactions
contemplated thereby, has been taken. The Agreement has been duly executed and
delivered by Tannehill and constitutes a legal, valid and binding obligation of
Tannehill, enforceable against it in accordance with its respective terms,
except as such enforceability may be limited by or subject to (a) any
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
creditor's rights generally and (b) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
6. All action on the part of Sunset LLC and its members necessary for
the authorization, execution, delivery and performance of the Indemnity and the
consummation of the transactions contemplated thereby, has been taken. The
Indemnity has been duly executed and delivered by Sunset LLC and constitutes a
legal, valid and binding obligation of Sunset LLC enforceable against it in
accordance with its respective terms, except as such enforceability may be
limited by or subject to (a) any bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to creditor's rights generally and (b)
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
7. The individuals and entities executing the Agreement as shareholders
of Tannehill are the beneficial owners of all the issued and outstanding shares
of Tannehill common stock (the "Shares"). There are no outstanding options,
warrants, rights of first refusal, or other rights calling for the issuance of,
or any security convertible into or exchangeable for, the Shares and no other
person or entity has any right in or to the Shares.
8. The individuals and entities executing the Indemnity as members of
Sunset LLC are the beneficial owners of all the ownership interests in
Sunset LLC (the "Interests"). There are no outstanding options, warrants,
rights of first refusal, or other rights calling for the issuance of, or any
security convertible into or exchangeable for, the Interests and no other
person or entity has any right in or to the Interests.
3
9. No consent, approval or authorization of or designation of Tannehill
is required in connection with the valid execution and delivery of the
Agreement, or the consummation of the transactions contemplated thereby on the
Closing thereof, except as such have been obtained or made prior to or upon the
date hereof.
10. No consent, approval or authorization of or designation of Sunset LLC
is required in connection with the valid execution and delivery of the
Agreement, or the consummation of the transactions contemplated thereby on the
Closing thereof, except as such have been obtained or made prior to or upon the
date hereof.
11. To our best knowledge, no default exists and no event has occurred
which would constitute a default under, or violation in the due performance and
observance of any term, covenant or condition, or breach of, Tannehill's
Articles of Incorporation or Bylaws, Sunset LLC's Article of Organization or
Operating Agreement, or any indenture, license, lease, franchise, mortgage,
instrument, or other agreement to which Tannehill is a party, or by which it or
its properties may be bound; or (a) an event that would permit any party to any
agreement or instrument to terminate it or to accelerate the maturity of any
indebtedness or other obligation of Tannehill; (b) an event that would result
in the creation or imposition of any lien, charge, or encumbrance on any asset
of Tannehill; or (c) an event that would conflict with any order, rule, or
regulation directed to Tannehill by any court or governmental agency or body
having jurisdiction over it.
12. Except as disclosed in the Tannehill Disclosure Letter (as defined
in the Agreement), to our best knowledge, there is no suit, action,
arbitration, or legal, administrative, or other proceeding or governmental
investigation pending or threatened against or affecting Tannehill, Sunset LLC
or any of their businesses or properties or financial or other condition.
13. Except as disclosed in the Tannehill Disclosure Letter, there are no
agreements, written or oral, between Tannehill, Sunset LLC and any other party
that affect, directly or indirectly, the Cogeneration Assets.
14. The transfer of the Cogeneration Assets to Berry will not violate the
terms of any agreement, document, or court order entered into or issued in
connection with the SOCAL Litigation.
We are members of the bar of the State of California, and accordingly we
do not purport to be experts on, or to be qualified to express any opinion
herein concerning, nor do we express any opinions herein concerning, any law
other than Federal law and the laws of the State of California.
This opinion letter is limited to the matters expressly stated herein and
no opinion or other statement may be inferred or implied beyond the matters
expressly stated herein. This opinion letter is addressed to Berry for the
benefit of Berry and is only for Berry's use in connection with the Agreement.
This opinion letter may not be relied upon by any other person
4
or entity without prior written consent. This opinion is as of this date, and
we expressly decline any undertaking to advise you of any matters arising
subsequent to the date hereof which would cause us to amend any portion of the
foregoing in whole or in part.
Very truly yours,
Noriega, Alexander & Bradshaw
cc: Nordman, Cormany, Hair & Compton
Attn: Laura K. McAvoy, Esq.
1
EXHIBIT 8 TO THAT CERTAIN PURCHASE AND SALE AGREEMENT BY AND
BETWEEN BERRY PETROLEUM COMPANY
AND TANNEHILL ELECTRIC COMPANY, INC.
INDEMNIFICATION
THIS INDEMNIFICATION ("Agreement") is entered into on
_________________, 1996, by and between Berry Petroleum Company, a Delaware
corporation ("Berry"), and Sunset Investment Company, LLC, a California limited
liability company ("Sunset LLC"), Boyce Resource Development Company, a
California corporation; Albert G. Boyce, Jr., as Trustee of Trust "B" Under the
Will of Albert G. Boyce, Sr., Deceased; William J. Boyce; Albert G. Boyce V;
Mary K. Boyce; John T. Hinkle; Bettianne H. Bowen; Vernier Resources
Corporation, a Texas corporation; James L. Hinkle; General Western, Inc., a
New Mexico corporation; Delmar R. Archibald and Joy A. Archibald, Trustees of
the Delmar R. Archibald Family Trust, dated June 22, 1982; Lisle Q. Tannehill;
John W. Tannehill; Gail Kay Tannehill, as Trustee of the Gail Kay Tannehill
Family Trust, dated April 9, 1996; and Thomas H. Tannehill, all acting
individually, jointly and severally ("Members"), with Sunset LLC and the
Members collectively referred to herein as "Sunset."
RECITALS
A. On November 8, 1996, Berry entered into separate Purchase and Sale
Agreements with Tannehill Electric Company, Inc., a California corporation
("TEC"), certain provisions of which were agreed to by the TEC Shareholders
("TEC Agreement"), Tannehill Oil Company, Inc., a California corporation
("TOCI"), certain provisions of which were agreed to by the TOCI Shareholders
("TOCI Agreement"), and Tannehill Oil Company, a California general
partnership ("TOC"), and its Partners individually and as Partners of TOC,
("TOC Partners") ("TOC Agreement"), pursuant to which Berry has agreed to
purchase certain assets of TEC, TOCI, TOC and the TOC Partners.
B. TEC, TOCI and TOC are involved in litigation with Southern California
Gas Company ("SOCAL"), the "SOCAL Litigation", as defined below. Under the
terms of the TEC Agreement, TEC and the Shareholders of TEC have indemnified
Berry against certain liabilities, including liabilities related to the SOCAL
Litigation, the SOCAL Contract and litigation by certain parties related to
the transfer of assets to Berry under the terms of the TEC Agreement.
C. As further consideration for Berry entering into the agreements
described in Recital A hereof, TEC, TOCI, TOC and the TOC Partners have agreed
that $5 million of the cash proceeds from the TOC Agreement described in
Recital A hereof will be invested in Sunset LLC as capital to be retained and
invested as provided in the Articles of Organization and the Operating
Agreement of Sunset LLC and held as a reserve fund (the "Reserve") under the
terms of the Amendment and Consent to Assignment of O & M Agreement dated as of
November ___, 1996, among Sunset LLC, Monarch Cogeneration 1986-1, a California
Limited Partnership
2
("Monarch"), Caterpillar Capital Company, Inc., a Delaware corporation, Solar
Turbines Incorporated, a Delaware Corporation, TEC, TOC and Berry
(the "Consent") to be used in support of the Indemnification by Sunset LLC of
Berry from costs, judgments, liabilities and claims with respect to the SOCAL
Contract, defined below, SOCAL Litigation and the SOCAL Liabilities from and
after the effective date of the Consent.
D. The Consent provides that Sunset LLC shall grant Berry a security
interest in the Reserve which shall serve as security for Sunset LLC's
obligations under this Agreement (the "Security Agreement"). There shall be a
continuing lien on the Reserve for the term of this Agreement.
E. It is intended hereby to provide for such indemnity by Sunset to
Berry.
NOW, THEREFORE, in consideration of the premises, representations,
warranties and agreements herein contained and contained in the TEC Agreement,
and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, Berry and Sunset hereby agree as follows:
ARTICLE I
DEFINITIONS
Capitalized terms used in this Agreement shall have the meanings given to
them in this Article I, unless defined elsewhere in this Agreement.
1.1 "SOCAL Contract" shall mean that Gas Transmission Service Contract
between Southern California Gas Company ("SOCAL") and Caterpillar Capital
Company dated February 25, 1988, amended March 1, 1992, and assigned by
Caterpillar Capital Company to TEC by Consent to Assignment and Agreement,
dated August 19, 1994.
1.2 "SOCAL Litigation" shall mean that lawsuit originally filed in the
United States District Court for the Southern District of Texas, Houston
Division, entitled Tannehill Electric Company, Inc., versus Southern California
Gas Company, on or about July 17, 1995, Case No. H95-3752, transferred to the
Central District of California and docketed in such district as Case No.
CV96-2502, together with any amendments thereto and any counter-claims or
cross-complaints presently or hereafter filed therein whether by SOCAL or
others; that lawsuit filed October 7, 1996, in the Superior Court of the State
of California for the County of Kern, entitled Tannehill Electric Company, Inc.
v. Southern California Gas Company, Case No. CV96-2502, together with any
amendments thereto and any cross-complaints presently or hereafter filed
therein by SOCAL or others; that lawsuit filed in the Superior Court for the
County of Los Angeles entitled Southern California Gas Company v. Tannehill
Electric Company, Inc., Case No. BC158128, together with any amendments thereto
and any cross-complaints presently or hereinafter filed by TEC or others; and
any lawsuits presently or hereafter filed by SOCAL or its assignee against TEC,
TOCI, TOC or the TOC Partners or Sunset LLC or the Members or Shareholders, or
their successors, or Berry, based wholly or in part on the SOCAL Contract.
3
1.3 Unless otherwise expressly indicated herein, all defined terms used
in this Agreement shall have the meanings ascribed to them in the Consent.
ARTICLE II
INDEMNITY
2.1 Indemnification by Sunset. Sunset LLC and the Members, jointly and
severally, hereby agree to indemnify, defend (with counsel reasonably acceptable
to Berry) and hold Berry, and the officers, directors, employees and agents of
Berry (collectively, the officers, directors, employees and agents being
referred to in each case as its "Related Parties") harmless from and against
any and all lawsuits, liability, damages, costs and expenses (including
interest, penalties, settlements, fines, costs and expenses incurred in
connection with investigating and defending any claims or causes of action, and
reasonable attorneys' fees) that Berry and/or its Related Parties may incur or
become subject to or arising out of or due to (a) any inaccuracy of any
representation or the breach of any warranty, covenant, undertaking or other
agreement contained in this Agreement, or (b) any claim by SOCAL against Berry
based upon or related to, in whole or in part, the SOCAL Contract, the SOCAL
Litigation, the Facility or the transfer of the Cogeneration Assets (as that
term is defined in the TEC Agreement) to Berry. In no event, shall the
indemnity contained in this Agreement modify the terms of any other indemnify
in favor of Berry from TEC, TOCI, TOC or the TOC Partners in whatever capacity.
All such indemnities shall continue to be in full force and effect and are not
modified or supplemented as a result of this Agreement. Berry shall have full
discretion to proceed against any and all indemnitors with respect to any
claims, liabilities, costs, judgments or settlements for which indemnity is
expressly provided under the terms of any such other agreement or undertaking.
2.2 Obligations Absolute. The obligations of Sunset hereunder shall
remain in full force and effect without regard to, and shall not be affected or
impaired by the following, nor shall any of the following give Sunset any
recourse or right of action against Berry:
(a) Any breach or termination by any party of its obligations under
the O&M Agreement;
(b) Any express or implied amendment, modification, renewal,
addition, supplement, extension of the Consent or the O&M Agreement;
(c) Any exercise or non-exercise or waiver by Berry of any right
or privilege under the O&M Agreement or the Consent and any instruments
delivered in connection therewith;
(d) Any bankruptcy, insolvency, reorganization, composition,
adjustment, dissolution, liquidation or other like proceeding relating to
Sunset or Berry, or any entity or individual comprising same, or any action
taken with respect to this Agreement by any trustee or receiver, or by any
court, in any such proceeding, whether or not Sunset shall have had notice or
knowledge of any of the foregoing;
4
(e) Any release or discharge of any other party at any time
directly or contingently liable for obligations evidenced by, or referenced in,
the O&M Agreement or the Consent or in connection therewith;
(f) Any assignment or other transfer of this Agreement in whole or
in part;
(g) Any acceptance of partial performance by SOCAL (or its
successors or assigns) of the SOCAL Contract or with respect to the SOCAL
Litigation or the existence of any claims, disputes or allegations by or
between SOCAL on the one hand, and TEC or Sunset LLC, or any of them, on the
other hand, arising out of, relating to, or in connection with, the SOCAL
Contract, the SOCAL Litigation, the O&M Agreement or the Facility from and
after the date on which the O&M Agreement is assigned by TEC to Berry as
contemplated under the Consent; and/or
(h) Any concurrent and/or contributory negligence (whether active
or passive or of any kind or description) or fault of Berry.
2.3 Evidence of Satisfactory Condition. Sunset LLC acknowledges that,
in agreeing to consummate the transactions contemplated under the Consent,
Berry is relying upon Sunset LLC's financial ability to support this Agreement.
In order to provide assurances to Berry of Sunset LLC's continuing ability to
meet its obligations under this Agreement, Sunset LLC shall provide Berry with
financial statements for Sunset LLC upon written request from Berry, given in
the manner required with respect to any notice provided under this Agreement,
in addition to all other financial information required under the Consent or
Security Agreement.
2.4 Sunset LLC's Affirmative Duty. Sunset shall have an affirmative duty
to monitor, on a best-efforts basis, the existence of any facts, course of
conduct or actions taken which could lead to or result in any Claims by SOCAL
against Berry which give rise to Sunset LLC's obligations hereunder, and shall
forthwith give Berry notice of such Claims. Sunset shall have a further duty to
perform each and every obligation set forth in this Agreement with regard to
any Claim of SOCAL of which it knew or should have known, even in the absence
of written notice by Berry. It is the express intention of the parties that
Berry shall have no duty and bear no burden with respect to any Claim by or on
behalf of SOCAL.
2.5 Payments and Performance. Sunset agrees that whenever it shall make
any payment to Berry or otherwise perform any of the obligations under this
Agreement on account of the liability hereunder, it will deliver such payment or
tender such performance to Berry at the address therefor specified hereinbelow,
or at such other address as may be required by Berry, or any entity comprising
Berry, and notify Berry, in writing that such payment is made or performance
tendered under this Agreement for such purpose. No payment made hereunder by
Sunset LLC to Berry shall constitute Sunset LLC as a creditor of Berry.
2.6 Presumptions and Effect of Certain Proceedings. Upon making a
request for indemnification, for a Claim covered hereunder, it shall be
presumed that such indemnification is not prohibited by law and Sunset shall
have the burden of proof to show that such
5
indemnification is expressly prohibited by applicable law in order to overcome
that presumption in reaching any contrary determination. If the person or
persons so empowered to make the determination shall have failed to make the
requested indemnification within sixty (60) days after any judgment, order,
settlement, dismissal, arbitration award, conviction, acceptance of a plea of
nolo contendere or its equivalent, or other disposition or partial disposition
of any proceeding or any other event which could enable Sunset to determine
Berry's entitlement to indemnification, the requisite determination of
entitlement to indemnification shall be deemed to have been made and Berry
shall be absolutely entitled to indemnification under this Agreement, absent
(a) misrepresentation or omission by Berry of a material fact in the request
for indemnification or (b) a specific finding (which has become final) that
all or any part of such indemnification is expressly prohibited by law. The
termination of any proceeding by judgment, order, settlement, arbitration award
or conviction, or upon a plea of nolo contendere or its equivalent, shall not
of itself (i) adversely affect the rights of Berry to indemnification except as
may be provided herein, (ii) create a presumption that Berry did not act in
good faith and in a manner which it reasonably believed to be in or not opposed
to the best interests of Sunset, or (c) with respect to any criminal action or
proceeding, create a presumption that Berry had reasonable cause to believe
that its conduct was unlawful.
2.7 Remedies of Berry in Cases of Determination Not to Indemnify or to
Advance Expenses.
(a) Determination. In the event that (i) an initial determination
is made that Berry is not entitled to indemnification, (ii) advances are not
made pursuant to this Agreement, (iii) payment has not been timely made
following a determination of entitlement to indemnification pursuant to this
Agreement or (iv) Berry otherwise seeks enforcement of this Agreement, Berry
shall be entitled to a final adjudication in an appropriate court of the State
of California of its entitlement to such indemnification or advance. Sunset
shall not oppose Berry's right to seek any such adjudication. In any such
proceeding Berry shall be presumed to be entitled to indemnification under this
Agreement and Sunset shall have the burden of proof to overcome that
presumption.
(b) No Prejudice. In the event an initial determination has been
made, in whole or in part, that Berry is not entitled to indemnification, the
decision in the judicial proceeding provided in paragraph (a) of this Section
2.7 shall be made de novo and Berry shall not be prejudiced by reason of a
determination that it is not entitled to indemnification.
(c) Effect of Determination. If an initial determination is made
or deemed to have been made pursuant to the terms of this Agreement that
indemnification of Berry provided hereunder is not expressly prohibited by law,
Berry shall be entitled to such indemnification and Sunset shall be bound by
such determination in the absence of (i) a misrepresentation or omission of a
material fact by Berry or (ii) a specific finding (which has become final) that
all or any part of such indemnification is expressly prohibited by law.
(d) Stipulation. Sunset shall be precluded from asserting that the
procedures and presumptions of this Agreement are not valid, binding and
enforceable. Sunset LLC shall
6
stipulate in any such court that Sunset is bound by all the provisions of this
Agreement and is precluded from making any assertion to the contrary.
(e) Expenses. Expenses incurred by Berry in good faith in
connection with its request for indemnification under, seeking enforcement of,
or to recover damages for breach of, this Agreement shall be borne by Sunset.
2.8 Grant of Security Interest. Sunset LLC shall grant a security
interest in the assets of Sunset LLC pursuant to the Reserve Security
Instruments and the Security Agreement which shall serve as security for Sunset
LLC's due and punctual performance of all obligations under the Consent and
this Agreement and shall be a continuing lien on the assets of Sunset LLC for
the term of this Agreement. Sunset LLC shall promptly execute and deliver all
Reserve Security Instruments as contemplated under the Consent and this
Agreement.
2.9 Retention of Reserve by Members. In the event the Reserve, or any
part of it, is distributed to the Members due to dissolution of Sunset LLC, or
otherwise, the Members shall hold, invest, retain and pay out such Reserve
under the terms of the Consent, this Agreement, the Sunset LLC Operating
Agreement and any Reserve Security Instruments.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties. Sunset makes the following
representations and warranties which shall be continuing representations and
warranties:
(a) Organization, Standing and Power. Sunset LLC is validly
existing and in good standing under the laws of the States of the United States
in which it does business and has full power and authority to execute, deliver
and perform its obligations under this Agreement.
(b) Binding Effect. This Agreement has been duly authorized,
executed and delivered by Sunset, and is the valid, legal and binding
obligation of Sunset, enforceable against it in accordance with its terms.
(c) No Consents. To Sunset's knowledge, after due and diligent
investigation, no registration with, consent or approval of, or any other
action by, any federal, state or other governmental agency, authority or
regulatory body, foreign or domestic, is required as a condition to, or
otherwise in connection with, the execution, delivery and performance of this
Agreement by Sunset LLC. Neither the execution, delivery or performance of
this Agreement has resulted or will result in any breach of any provision of,
or constitute a default (or an event which with or without notice and/or lapse
of time would constitute a default), or result in the creation of any lien,
charge or other encumbrance upon any of the assets of Sunset LLC, under Sunset
LLC's organizational documents, or any agreement or instrument to which Sunset
LLC is a party or by which it is bound or any statute, rule, judgment, order or
regulation of any court or governmental authority applicable to it.
7
(d) Purpose of Organization. Sunset LLC hereby acknowledges and
warrants that it has been established and is organized, for the primary purpose
of providing to Berry the indemnities and agreements set forth in this
Agreement, and to provide similar indemnities and agreements for the benefit of
other parties in connection with the SoCal Gas Litigation and the SoCal
Liabilities, all as more particularly described in the Consent. The Members
have determined that it is in the best interests of Sunset LLC to execute,
deliver and perform this Agreement for the benefit of Berry and to enter into
the arrangements and undertakings set forth herein.
(e) Insolvency. The execution and delivery of this Agreement will
not (i) render Sunset LLC insolvent under generally accepted accounting
principles nor render it Insolvent (as defined below), (ii) leave Sunset LLC
with remaining assets which constitute unreasonably small capital given the
nature of its business, or (iii) result in the incurrence of Debts (as defined
below) beyond the ability of Sunset LLC to pay them when and as they mature.
For the purposes of this Section (e), "Debts" includes any legal liability for
indebtedness, whether matured or unmatured, liquidated or unliquidated,
absolute, fixed or contingent.
(f) Consent. Sunset LLC has read and examined, or is otherwise
familiar with, the Consent and is aware and has full knowledge of Sunset LLC's
obligations and duties thereunder.
ARTICLE IV
GENERAL PROVISIONS
4.1 Complete Agreement; Interpretation. This Agreement, together with
the Consent, and all instruments or other documents to be executed and
delivered thereunder, supersede any prior negotiations, discussions or
communications between Sunset LLC and Berry and constitute the entire
agreement of such parties with respect to the subject matter of this Agreement.
Each party to this Agreement has substantial experience with the subject matter
of this Agreement and each has fully participated in the negotiation and
drafting of this Agreement and has been advised by counsel of its choice with
respect to the subject matter hereof. Accordingly, this Agreement shall be
construed without regard to the rule that ambiguities in a document are to be
construed against the drafter.
4.2 Exercise of Remedies; Successors; Etc. No delay or failure by Berry
to exercise any remedy against Sunset will be construed as a waiver of that
right or remedy. All remedies of Berry are cumulative. Any claim for
performance under this Agreement, or exercise of any right or remedy accruing
under this Agreement to the benefit of Berry may be made or exercised by each
entity comprising Berry as if Berry collectively has made such claim or
exercised such right or remedy. When the context in which the words are used
in this Agreement indicates that such is the intent, words in the singular
number shall include the plural and vice-versa. If any one or more of the
provisions of this Agreement should be determined to be illegal or
unenforceable, all other provisions shall remain effective. Sunset shall not
have the right to assign any of its rights or obligations under this Agreement
without the prior written consent of
8
Berry, or its successors or assigns, which consent may be withheld in such
party's sole discretion.
4.3 Demands. Except as set forth in Section 2.4 above, each demand by
Berry for performance or payment hereunder shall be in writing and shall be
made in the manner set forth in Section 4.10 below.
4.4 Invalidity. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic and legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner to the end that transactions contemplated hereby are fulfilled to the
extent possible.
4.5 Attorneys' Fees. In the event of any claim, dispute or controversy
arising out of or relating to this Agreement, including an action for
declaratory relief, the prevailing party in such action or proceeding shall be
entitled to recover its taxable costs or arbitration fees, and reasonable
out-of-pocket expenses, including, but not limited to, telephone calls,
photocopies, expert witnesses, travel, computer expenses related to litigation,
and attorneys' fees to be fixed by the court or the arbitrator. Such recovery
shall include court costs, out-of-pocket expenses and attorneys' fees on
appeal, if any. The court shall determine who is the "prevailing party,"
whether or not the dispute or controversy proceeds to final judgment.
4.6 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall constitute the same instrument.
4.7 Headings. The headings of the articles, sections and paragraphs of
this Agreement and of the exhibits hereto are included for convenience only and
shall not be deemed to constitute part of this Agreement or to affect the
construction hereof or thereof.
4.8 Construction and References. Words used in this Agreement,
regardless of the number or gender specifically used, shall be deemed and
construed to include any other number, singular or plural, and any other
gender, masculine, feminine or neuter, as the context shall require. Unless
otherwise specified, all references in this Agreement to articles, sections,
paragraphs or clauses are deemed references to the corresponding articles,
sections, paragraphs or clauses in this Agreement.
4.9 Modification and Waiver. Any of the terms or conditions of this
Agreement may be waived in writing at any time by the party which is entitled
to the benefits thereof. No waiver of any of the provisions of this Agreement
shall be deemed to or shall constitute a waiver of any other provisions hereof
(whether or not similar).
9
4.10 Notices. Any notice, request, instruction or other document to be
given hereunder by any party hereto to any other party shall be in writing and
delivered personally, via telecopy (with receipt confirmed) or by registered or
certified mail, postage prepaid:
(a) if to Sunset LLC and/or the Members, to:
Sunset Investment Company, LLC
120 Manteca Avenue
P.O. Box 871
Manteca, California 95336
Attn: Managing Member
Facsimile No. (209) 239-7886
Confirmation No. (209) 239-4014
with copies to:
Noriega, Alexander and Bradshaw
1801 - 18th Street
Bakersfield, California 93301
Attn: William Alexander, Esq.
Facsimile No. (805) 327-5492
Confirmation No. (805) 327-5363
(b) if to Berry, to:
Berry Petroleum Company
Attn: Jerry V. Hoffman
President and Chief Executive Officer
28700 Hovey Hills Road
Post Office Bin X
Taft, California 93268
Facsimile No. (805) 769-8960
Confirmation No. (805) 769-8811
10
with copies to:
Nordman, Cormany, Hair & Compton
Attn: Laura K. McAvoy, Esq.
1000 Town Center Drive, Sixth Floor
Post Office Box 9100
Oxnard, California 93031-9100
Facsimile No. (805) 988-8387
Confirmation No. (805) 485-1000
or at such other address for a party as shall be specified by like notice. Any
notice that is delivered personally in the manner provided herein shall be
deemed to have been duly given to the party to whom it is directed upon actual
receipt by such party (or its agents for notices hereunder). Any notice that
is addressed and mailed in the manner herein provided shall be conclusively
presumed to have been duly given to the party to which it is addressed at the
close of business, local time of the recipient, on the third day after the day
it is so placed in the mail. Any notice that is sent by telecopy shall be
deemed to have been duly given to the party to which it is addressed upon
telephonic confirmation of the same as provided herein. A copy of any notices
delivered by telecopy shall promptly be mailed in the manner herein provided to
the party to which such notice was given.
4.11 Governing Law; Interpretation. This Agreement shall be construed in
accordance with and governed by the laws of the State of California (regardless
of the laws that might otherwise govern under applicable California principles
of conflict of laws) as to all matters, including, but not limited to, matters
of validity, construction, effect, performance and remedies.
4.12 Jury Trial Waiver. To the fullest extent permitted by law, and as
separately bargained-for consideration, Sunset hereby waives any right to trial
by jury in any action, suit, proceeding or counterclaims of any kind arising
out of or relating to this Agreement. Sunset hereby expressly acknowledges the
inclusion of this jury trial waiver through its execution of this Agreement.
11
IN WITNESS WHEREOF, Berry and Sunset have caused this Agreement to
be executed as of the date first above written.
BERRY PETROLEUM COMPANY SUNSET INVESTMENT COMPANY, LLC
a Delaware corporation a California limited liability
company
By: By:
Jerry V. Hoffman, Albert G. Boyce, Jr.
President Its Managing Member
By: By:
Kenneth A. Olson, John W. Tannehill
Secretary Its Managing Member
By:
James L. Hinkle
Its Managing Member
Members
BOYCE RESOURCE DEVELOPMENT
COMPANY, a California corporation
By:
Albert G. Boyce, Jr., Albert G. Boyce, Jr., as Trustee
President of Trust "B" Under Will of
Albert G. Boyce, Sr., Deceased
William J. Boyce Albert G. Boyce V
Mary K. Boyce John T. Hinkle
Bettianne H. Bowen James L. Hinkle
12
VERNIER RESOURCES CORPORATION, GENERAL WESTERN, INC.,
a Texas corporation a New Mexico corporation
By: By:
Bettianne H. Bowen, President James L. Hinkle, President
and Secretary
By:
Cheryl Bailey Harrison,
Secretary
Lisle Q. Tannehill Thomas H. Tannehill
Gail Kay Tannehill, as Trustee Delmar R. Archibald, as
of the Gail Kay Tannehill Trustee of the Delmar R.
Family Trust, dated April 9, Archibald Family Trust, dated
1996 June 22, 1982
John W. Tannehill Joy A. Archibald, as Trustee
of the Delmar R. Archibald
Family Trust, dated June 22,
1982
Spousal Consents
The undersigned, spouses of the Members named in this Agreement, hereby
consent to the terms and conditions of this Agreement and agree that their
community property, if any, included in the Assets, as defined herein, is
subject to this Agreement.
1
EXHIBIT 9 TO THAT CERTAIN PURCHASE AND SALE AGREEMENT BY AND
BETWEEN BERRY PETROLEUM COMPANY
AND TANNEHILL ELECTRIC COMPANY, INC.
CERTIFICATE OF COMPLIANCE
TO THE PURCHASE AND SALE AGREEMENT
ENTERED INTO BY AND BETWEEN TANNEHILL ELECTRIC COMPANY, INC.
AND BERRY PETROLEUM COMPANY
ON NOVEMBER 8, 1996
(PARAGRAPH 8.6 THEREOF)
The undersigned certify that Berry Petroleum Company has complied with the
matters set forth in Sections 8.1, 8.2, 8.3 and 8.5 of that certain Purchase
and Sale Agreement by and between Berry Petroleum Company and Tannehill
Electric Company, Inc., entered into on November 8, 1996.
Date: _____________, 1996 BERRY PETROLEUM COMPANY,
a Delaware corporation
By: _____________________________
Jerry V. Hoffman, President
and Chief Executive Officer
By: _____________________________
Kenneth A. Olson, Secretary
1
EXHIBIT 10 TO THAT CERTAIN PURCHASE AND SALE AGREEMENT BY AND
BETWEEN BERRY PETROLEUM COMPANY
AND TANNEHILL ELECTRIC COMPANY, INC.
FORM OF OPINION OF COUNSEL
TO BERRY PETROLEUM COMPANY
November ___, 1996
Tannehill Electric Company, Inc.
Attn: Mr. Albert G. Boyce, Jr.
President
120 Manteca Avenue
P.O. Box 871
Manteca, CA 95336
Re: Berry Petroleum Company / Tannehill Electric Company, Inc.
Asset Purchase and Sale Transaction
Gentlemen:
We have acted as counsel to Berry Petroleum Company, a Delaware
corporation ("Berry"), in connection with the purchase of substantially all the
assets of Tannehill Electric Company, Inc., a California corporation
("Tannehill"), by Berry, pursuant to that certain Purchase and Sale Agreement,
dated November 8, 1996, by and between Tannehill and Berry (the "Agreement").
In rendering the opinions set forth below, we have assumed the due
authorization, execution and delivery of the Agreement by Tannehill.
1. Berry is a corporation duly organized and validly existing under, and
by virtue of, the laws of the State of Delaware and is in good standing under
such laws. Berry has requisite corporate power to own and operate its
properties and assets, and to carry on its business as presently conducted.
2. Berry has full corporate power and authority to execute and deliver
the Agreement and to perform its obligations under the terms of the Agreement.
3. All corporate action on the part of Berry necessary for the
authorization, execution, delivery and performance of the Agreement and the
consummation of the transactions contemplated thereby, has been taken. The
Agreement has been duly executed and delivered by Berry and constitutes a
legal, valid and binding obligation of Berry, enforceable against it in
accordance with its respective terms, except as such enforceability may be
limited by or subject to (a) any bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to
2
creditor's rights generally and (b) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
4. No consent, approval or authorization of or designation of Berry is
required in connection with the valid execution and delivery of the Agreement
by Berry, or the consummation by Berry of the transactions contemplated thereby
on the Closing thereof, except as such have been obtained or made prior to or
upon the date hereof.
5. To our best knowledge, there is no suit, action, arbitration, or
legal, administrative, or other proceeding or governmental investigation that
is material to the transactions contemplated by the Agreement pending or
threatened against or affecting Berry or any of its businesses or properties or
financial or other condition.
We are members of the bar of the State of California, and except for our
opinion set forth in Paragraph 1 above, we do not purport to be experts on, or
to be qualified to express any opinion herein concerning, nor do we express any
opinions herein concerning, any law other than Federal law and the laws of the
State of California.
This opinion letter is limited to the matters expressly stated herein and
no opinion or other statement may be inferred or implied beyond the matters
expressly stated herein. This opinion letter is addressed to Tannehill for the
benefit of Tannehill and is only for Tannehill's use in connection with the
Agreement. This opinion letter may not be relied upon by any other person or
entity without prior written consent. This opinion is as of this date, and we
expressly decline any undertaking to advise you of any matters arising
subsequent to the date hereof which would cause us to amend any portion of the
foregoing in whole or in part.
Very truly yours,
NORDMAN, CORMANY, HAIR & COMPTON
cc: Roger Coley, Esq.
PURCHASE AND SALE AGREEMENT
By and Between
Berry Petroleum Company and
Tannehill Oil Company, a California general partnership, and
Boyce Resource Development Company, a California corporation;
Albert G. Boyce, Jr., as Trustee of Trust "B" Under
the Will of Albert G. Boyce, Sr., Deceased;
William J. Boyce; Albert G. Boyce V;
Mary K. Boyce; John T. Hinkle; Bettianne H. Bowen;
Vernier Resources Corporation, a Texas corporation;
James L. Hinkle; General Western, Inc., a New Mexico corporation;
Delmar R. Archibald and Joy A. Archibald, Trustees of the
Delmar R. Archibald Family Trust, Dated June 22, 1982;
Lisle Q. Tannehill; John W. Tannehill;
Gail Kay Tannehill, as Trustee of the Gail Kay Tannehill Family
Trust, Dated April 9, 1996; and Thomas H. Tannehill,
as partners of Tannehill Oil Company, and individually
Dated November 8, 1996
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 "Affiliate" . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 "Agreement". . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 "Assets" . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 "Business Day" . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 "Closing". . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.6 "Code" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.7 "Default". . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.8 "Effective Date" . . . . . . . . . . . . . . . . . . . . . . . 2
1.9 "Encumbrance". . . . . . . . . . . . . . . . . . . . . . . . . 2
1.10 "Environmental Laws" . . . . . . . . . . . . . . . . . . . . . 2
1.11 "Escrow" . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.12 "Financial Statements" . . . . . . . . . . . . . . . . . . . . 3
1.13 "Governmental Entity". . . . . . . . . . . . . . . . . . . . . 3
1.14 "Indemnifying Party" . . . . . . . . . . . . . . . . . . . . . 3
1.15 "Indemnitee" . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.16 "IRS". . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.17 "Material" . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.18 "Mineral Interest" . . . . . . . . . . . . . . . . . . . . . . 4
1.19 "Permitted Encumbrances" . . . . . . . . . . . . . . . . . . . 4
1.20 "Person" . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.21 "Purchase Price" . . . . . . . . . . . . . . . . . . . . . . . 4
1.22 "Requisite Regulatory Approvals" . . . . . . . . . . . . . . . 4
1.23 "TEC Purchase Agreement" . . . . . . . . . . . . . . . . . . . 4
1.24 "TOC Purchase Agreement" . . . . . . . . . . . . . . . . . . . 4
1.25 "Warrant". . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE II THE PURCHASE AND SALE. . . . . . . . . . . . . . . . . . . . . 4
2.1 Transfer to Berry. . . . . . . . . . . . . . . . . . . . . . . 4
2.2 Purchase by Berry. . . . . . . . . . . . . . . . . . . . . . . 5
2.3 Payment of the Purchase Price. . . . . . . . . . . . . . . . . 5
2.4 Operating Adjustment.. . . . . . . . . . . . . . . . . . . . . 5
2.5 Assets to be Conveyed to Berry.. . . . . . . . . . . . . . . . 6
2.6 Allocation of Purchase Price . . . . . . . . . . . . . . . . . 7
2.7 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.8 Proration of Credits and Payment Obligations . . . . . . . . . 7
2.9 Real Estate and Other Taxes. . . . . . . . . . . . . . . . . . 8
2.10 Documentation of Sale and Transfer of Ownership. . . . . . . . 8
2.11 Approval of Title and Condition of the Real Property . . . . . 8
2.12 Closing Procedure. . . . . . . . . . . . . . . . . . . . . . . 8
2.13 Post Closing Access to Documents . . . . . . . . . . . . . . . 9
2.14 Escrow . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE III REPRESENTATIONS AND WARRANTIES OF
TANNEHILL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.1 Partnership Organization . . . . . . . . . . . . . . . . . . 10
3.2 Effect of Agreement; Consents. . . . . . . . . . . . . . . . 10
3.3 Financial Statements . . . . . . . . . . . . . . . . . . . . 11
3.4 Taxes and Tax Returns. . . . . . . . . . . . . . . . . . . . 11
3.5 Absence of Adverse Change. . . . . . . . . . . . . . . . . . 11
3.6 No Misleading Statements . . . . . . . . . . . . . . . . . . 11
3.7 No Significant Transactions. . . . . . . . . . . . . . . . . 12
3.8 Properties, Title and Related Matters. . . . . . . . . . . . 12
3.9 Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . 13
3.10 Records. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.11 No Undisclosed Material Liabilities. . . . . . . . . . . . . 13
3.12 Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.13 Brokerage. . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.14 Execution and Delivery . . . . . . . . . . . . . . . . . . . 14
3.15 Environmental Matters. . . . . . . . . . . . . . . . . . . . 14
3.16 Employees. . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.17 Investigation. . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE IV REPRESENTATIONS AND WARRANTIES
OF BERRY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.1 Corporate Organization . . . . . . . . . . . . . . . . . . . 17
4.2 Due Authorization, Execution and Delivery; Effect of
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.3 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.4 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.5 Brokerage. . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.6 Approvals. . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE V COVENANTS OF TANNEHILL. . . . . . . . . . . . . . . . . . . 19
5.1 Access to Tannehill. . . . . . . . . . . . . . . . . . . . . 19
5.2 Governmental Approvals; Consents . . . . . . . . . . . . . . 19
5.3 Litigation and Claims. . . . . . . . . . . . . . . . . . . . 19
5.4 Notice of Changes. . . . . . . . . . . . . . . . . . . . . . 20
5.5 Conduct of Business Operations . . . . . . . . . . . . . . . 20
5.6 Maintain Assets and Operations . . . . . . . . . . . . . . . 21
5.7 Exclusive Dealing. . . . . . . . . . . . . . . . . . . . . . 21
5.8 Termination Fee. . . . . . . . . . . . . . . . . . . . . . . 22
5.9 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.10 Approval of Transaction. . . . . . . . . . . . . . . . . . . 22
ARTICLE VI COVENANTS OF BERRY . . . . . . . . . . . . . . . . . . . . . 22
6.1 Cooperation. . . . . . . . . . . . . . . . . . . . . . . . . 22
6.2 Governmental Approvals . . . . . . . . . . . . . . . . . . . 22
6.3 Disclosure Responsibilities. . . . . . . . . . . . . . . . . 22
6.4 Authorization of Warrant . . . . . . . . . . . . . . . . . . 23
6.5 Cooperation in Exchange. . . . . . . . . . . . . . . . . . . 23
ARTICLE VII CONDITIONS TO OBLIGATIONS OF BERRY . . . . . . . . . . . . . 23
7.1 Accuracy of Representations and Warranties . . . . . . . . . 23
7.2 Performance of Covenants and Agreements. . . . . . . . . . . 23
7.3 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.4 Governmental Approvals . . . . . . . . . . . . . . . . . . . 23
7.5 Approval of Counsel. . . . . . . . . . . . . . . . . . . . . 23
7.6 Partners' Certificate. . . . . . . . . . . . . . . . . . . . 24
7.7 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . 24
7.8 Closing of TEC and TOC Purchase Agreements . . . . . . . . . 24
7.9 Condition of Real Property . . . . . . . . . . . . . . . . . 24
7.10 Termination of Operating Agreement . . . . . . . . . . . . . 26
ARTICLE VIII CONDITIONS TO OBLIGATIONS OF TANNEHILL. . . . . . . . . . 26
8.1 Accuracy of Representations and Warranties . . . . . . . . . 26
8.2 Performance of Covenants and Agreements. . . . . . . . . . . 26
8.3 Resolutions. . . . . . . . . . . . . . . . . . . . . . . . . 26
8.4 Approval of Counsel. . . . . . . . . . . . . . . . . . . . . 26
8.5 Governmental Approvals . . . . . . . . . . . . . . . . . . . 26
8.6 Officers' Certificate. . . . . . . . . . . . . . . . . . . . 27
8.7 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . 27
8.8 Closing of TEC and TOC Purchase Agreements . . . . . . . . . 27
ARTICLE IX TERMINATION PRIOR TO CLOSING . . . . . . . . . . . . . . . . 27
9.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . . 27
9.2 Effect on Obligations. . . . . . . . . . . . . . . . . . . . 27
ARTICLE X INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . 28
10.1 Indemnification by Berry . . . . . . . . . . . . . . . . . . 28
10.2 Indemnification by Tannehill.. . . . . . . . . . . . . . . . 28
10.3 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.4 Notice and Opportunity to Defend . . . . . . . . . . . . . . 28
10.5 General. . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE XI MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . 30
11.1 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . 30
11.2 Successors and Assigns . . . . . . . . . . . . . . . . . . . 30
11.3 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.4 Taking of Necessary Action . . . . . . . . . . . . . . . . . 30
11.5 Invalidity . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.6 Attorneys' Fees. . . . . . . . . . . . . . . . . . . . . . . 31
11.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 31
11.8 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . 31
11.9 Construction and References. . . . . . . . . . . . . . . . . 31
11.10 Modification and Waiver. . . . . . . . . . . . . . . . . . . 31
11.11 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.12 Public Announcements . . . . . . . . . . . . . . . . . . . . 33
11.13 Governing Law; Interpretation. . . . . . . . . . . . . . . . 33
11.14 Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . 33
LIST OF EXHIBITS
Exhibit Number
Warrant Certificate. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Grant Deed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Bill of Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Assignment of Leases, Rights of Way, Easements
and Contracts (Unrecorded Documents). . . . . . . . . . . . . . . . 4
Assignment of Leases, Rights of Way, Easements
and Contracts (Recorded Documents). . . . . . . . . . . . . . . . . 5
Assignment of Oil and Gas Leases . . . . . . . . . . . . . . . . . . . . 6
Promissory Note 1. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Promissory Note 2. . . . . . . . . . . . . . . . . . . . . . . . . . 8A-8F
Description of Real Property . . . . . . . . . . . . . . . . . . . . . . 9
Allocation of Purchase Price . . . . . . . . . . . . . . . . . . . . . . 10
Certificate of Satisfaction. . . . . . . . . . . . . . . . . . . . . . . 11
Escrow Instructions. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Certificate of Compliance of Tannehill . . . . . . . . . . . . . . . . . 13
Opinion of Counsel to Tannehill. . . . . . . . . . . . . . . . . . . . . 14
Certificate of Compliance of Berry . . . . . . . . . . . . . . . . . . . 15
Opinion of Counsel to Berry. . . . . . . . . . . . . . . . . . . . . . . 16
1
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT ("Agreement") is
dated, for the convenience of the parties hereto, November 8, 1996, by and
between Berry Petroleum Company, a Delaware corporation ("Berry"), and
Tannehill Oil Company, a California general partnership ("Tannehill Oil"),
and Boyce Resource Development Company, a California corporation; Albert
G. Boyce, Jr., as Trustee of Trust "B" Under the Will of Albert G. Boyce, Sr.,
Deceased; William J. Boyce; Albert G. Boyce V; Mary K. Boyce; John T.
Hinkle; Bettianne H. Bowen; Vernier Resources Corporation, a Texas
corporation; James L. Hinkle; General Western, Inc., a New Mexico corporation;
Delmar R. Archibald and Joy A. Archibald, Trustees of the Delmar R. Archibald
Family Trust, dated June 22, 1982; Lisle Q. Tannehill; John W. Tannehill; Gail
Kay Tannehill, as Trustee of the Gail Kay Tannehill Family Trust, dated April
9, 1996; and Thomas H. Tannehill, all acting as partners of Tannehill Oil and
individually, jointly and severally ("Partners"), with Tannehill Oil and the
Partners collectively referred to herein as "Tannehill."
RECITALS:
A. Berry and Tannehill have all determined that it is in their
respective best interests for Berry to purchase substantially all of the assets
owned by Tannehill Oil or the Partners and utilized in or related to the oil
and gas operations of Tannehill Oil, upon the terms and subject to the
conditions set forth herein;
B. In furtherance thereof, it is proposed that Berry shall
purchase from Tannehill for the Purchase Price set forth in Section 2.3 hereof
substantially all of the assets of Tannehill Oil and substantially all assets
of the Partners that are utilized in the operations of Tannehill Oil in fee,
and with clear title, free of debt, subject to the reservation by the Partners
of a royalty interest of four percent (4%) of all gas, oil and other
hydrocarbon substances produced from all zones lying below 4,500 feet below the
surface of the Tannehill property (excluding the Geiger Lease as defined
herein) purchased under the terms of this Agreement; and
C. Berry and Tannehill have entered into an Agreement in
Principle and Exclusive Dealing Agreement dated August 15, 1996 ("AIP"),
and wish to set forth the representations, warranties, agreements and
conditions under which the purchase and sale will occur in this Definitive
Agreement, as defined in Section 6 of the AIP, which upon execution will
supersede the AIP.
NOW, THEREFORE, in consideration of the premises,
representations, warranties and agreements herein contained and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Berry and Tannehill hereby agree as follows:
ARTICLE I
DEFINITIONS
Capitalized terms used in this Agreement shall have the
meanings given to them in this Article I, unless defined elsewhere in this
Agreement.
1.1 "Affiliate" shall mean with respect to any Person, an
individual or entity that, directly or indirectly, controls, is controlled by or
is under common control with such Person.
1.2 "Agreement" shall have the meaning such term is given in
the introductory paragraph hereof.
1.3 "Assets" shall mean substantially all the tangible and
intangible, real, personal and mixed assets and properties of Tannehill
Oil and substantially all the individual assets of the Partners utilized in the
oil and gas operations of Tannehill Oil, including but not limited to the oil
and gas leases, easements, rights of way, inventory, supplies and equipment of
Tannehill Oil and the oil and gas interests, wells, pipelines, surface
equipment and real property owned individually by the Partners, excluding
only cash, receivables and specific items of personal property, as described
in Section 2.5 hereof. Assets shall also include the Partners' interests as
Premises Lessors under the Cogeneration Premises Lease (as defined in
Section 2.5 hereof).
1.4 "Business Day" shall mean any day other than Saturday,
Sunday or other days on which federally chartered commercial banks in
California are authorized by law to close.
1.5 "Closing" shall have the meaning such term is given in Section
2.7 hereof.
1.6 "Code" shall mean the Internal Revenue Code of 1986, as
amended.
1.7 "Default" shall mean, as to any party to this Agreement,
(a) a default by such party in the performance of any of its material
obligationshereunder and the continuation of such default for a period of five
(5) Business Days after written notice is delivered by the non-defaulting party
to the defaulting party that a default has occurred or (b) the breach of any
representation or warranty hereunder.
1.8 "Effective Date" shall have the meaning such term is given in
paragraph 2.4a hereof.
1.9 "Encumbrance" shall mean any security interest, mortgage,
pledge, claim, lien, charge, option, defect, encumbrance, or other right
or interest of any nature.
1.10 "Environmental Laws" shall be broadly construed to mean any
and all federal, state or local laws, statutes, ordinances, rules, regulations,
orders, or determinations of
any Governmental Entity pertaining to the environment heretofore or currently
in effect in any and all jurisdictions in which Tannehill is conducting or at
any time has conducted business, or where any of the Assets are located, or
where any hazardous substances generated by or disposed of by Tannehill
are located. "Environmental Laws" shall include, but shall not be limited to,
the federal Clean Air Act, as amended; the federal Comprehensive
Environmental, Response, Compensation, and Liability Act of 1980 ("CERCLA"),
as amended; the federal Water Pollution Control Act, as amended; the federal
Resource Conservation and Recovery Act of 1976, as amended ("RCRA"); the
ederal Safe Drinking Water Act, as amended; the federal Toxic Substances
Control Act, as amended; the federal Superfund Amendments and
Reauthorization Act of 1986, as amended; the federal Clean Water Act, as
amended; or any state laws or regulations similar or analogous to or in
implementation of these provisions; the California State Business Plan Law,
California Health and Safety Code Section 25500 et seq.; the Hazardous
Substance Account Act, Health and Safety Code Section 25300 et seq.; the
Hazardous Waste Control Law, Health and Safety Code Section 25100 et seq.;
Chapter 6.7 of Division 20 of the Health and Safety Code, Section 25280
et seq.; the Safe Drinking Water and Toxic Enforcement Act of 1986
("Proposition 65"); Health and Safety Code Section 25249.5 et seq.; Division
26 of the Health and Safety Code, Section 39000 et seq.; the Porter-Cologne
Act, Water Code Section 13000 et seq.; and any other successor or amendments
thereto, or implementing regulations thereof; and all other laws, statutes,
ordinances, rules, regulations, orders and determinations of any Governmental
Entity relating to (a) the control of any potential pollutant or protection of
the air, water or land; (b) solid, gaseous or liquid waste generation,
handling, treatment, storage, disposal or transportation; and (c) exposure to
hazardous, toxic or other substances alleged to be harmful. The terms
"hazardous substance," "release" and "threatened release" have the meanings
specified in CERCLA, and the terms "solid waste" and "disposal" (or "disposed")
have the meanings specified in RCRA; provided, however, that, to the extent
the laws of the state in which any Assets are or were located currently or
subsequently provide for a meaning for "hazardous substance," "release," "solid
waste" or "disposal" which is broader than that specified in either CERCLA or
RCRA, such broader meaning shall apply.
1.11 "Escrow" shall mean the escrow to be established by Berry and
Tannehill with First American Title Insurance Company pursuant to Section 2.14
hereof.
1.12 "Financial Statements" shall have the meaning such term is
given in Section 3.3 hereof.
1.13 "Governmental Entity" shall mean the United States of America,
any state, county, city, municipality and any subdivision thereof, any court,
administrative or regulatory agency, commission, department or body or other
governmental authority or instrumentality or any entity or Person exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
1.14 "Indemnifying Party" shall have the meaning such term is
given in paragraph 10.4a hereof.
4
1.15 "Indemnitee" shall have the meaning such term is given in
paragraph 10.4a hereof.
1.16 "IRS" shall mean the Internal Revenue Service.
1.17 "Material" means any condition, change or effect that,
individually or when taken together with all other such conditions,
changes or effects that existed or occurred prior to the date of determination
of the existence or occurrence of the material condition, change or effect, is
or is reasonably likely to be materially adverse to the business, assets
(including intangible assets), financial condition or results of operations
of Berry or Tannehill respectively, in each case taken as a whole.
1.18 "Mineral Interest" shall mean the right to extract oil, gas
and other hydrocarbons, unrestricted as to depth and with unlimited surface
access for such purpose.
1.19 "Permitted Encumbrances" shall mean encumbrances which Berry
accepts, in writing, including, but not limited to, encumbrances revealed on
the preliminary title report approved by Berry as provided in this Agreement.
1.20 "Person" shall mean any individual, corporation, association,
partnership, joint venture, trust, estate, unincorporated organization or
Governmental Entity.
1.21 "Purchase Price" shall have the meaning such term is given in
Section 2.2 hereof.
1.22 "Requisite Regulatory Approvals" shall have the meaning such
term is given in paragraph 5.2a hereof.
1.23 "TEC Purchase Agreement" shall have the meaning such term is
given in paragraph 2.12c hereof.
1.24 "TOC Purchase Agreement" shall have the meaning such term is
given in paragraph 2.12c hereof.
1.25 "Warrant" shall have the meaning such term is given in the
form of Exhibit 1 attached hereto and made a part hereof.
ARTICLE II
THE PURCHASE AND SALE
2.1 Transfer to Berry. In accordance with the provisions of this
Agreement, Tannehill shall transfer and convey the Assets to Berry pursuant to
a Grant Deed, Bill of Sale, Assignment of Leases, Rights of Way, Easements and
Contracts (Unrecorded Documents),
5
Assignment of Leases, Rights of Way, Easements and Contracts (Recorded
Documents), and Assignment of Oil and Gas Leases in the forms of Exhibits 2, 3,
4, 5 and 6 attached hereto and made a part hereof, respectively (collectively,
the "Instruments of Transfer"), to be delivered at the Closing , in accordance
with the provisions relating to the Closing, and Berry will acquire such Assets
from Tannehill.
2.2 Purchase by Berry. Berry, in reliance upon the covenants,
representations, warranties and indemnities of Tannehill contained herein,
hereby agrees to purchase the Assets from Tannehill at the purchase price (the
"Purchase Price") stated in Section 2.3 hereof.
2.3 Payment of the Purchase Price. As payment for the transfer
and conveyance of the Assets by Tannehill to Berry, Berry shall deliver to
Escrow for the benefit of Tannehill or its nominees at the Closing, in
accordance with the provisions related to the Closing, a purchase price of
Eighteen Million, Eighty-Seven Thousand, Four Hundred Thirteen Dollars and
Fifty-Three Cents ($18,087,413.53) which shall be payable in the form of two
(2) wire transfers with immediately available funds in the amounts of Two
Million, Two Hundred Eighty-Five Thousand Dollars ($2,285,000) and Seven
Million, Six Hundred Two Thousand, Four Hundred Thirteen Dollars and
Fifty-Three Cents ($7,602,413.53) to an account specified by the Escrow Agent
(as herein defined) prior to the Closing and a wire transfer in the amount of
One Million Three Hundred Thousand Dollars ($1,300,000) to an account for the
benefit of Sunset Investment Company, LLC, a California limited liability
company ("Sunset") established pursuant to that certain Security Agreement,
dated as of November 8, 1996, by and among Sunset, Solar Turbines, Inc., a
Delaware corporation, et al. ("Monarch") and Berry (the "Sunset Security
Agreement"); and seven (7) promissory notes, one (1) note in the amount of
Three Million, Seven Hundred Thousand Dollars ($3,700,000) ("Note 1")
and six (6) notes aggregating Three Million, Two Hundred Thousand Dollars
($3,200,000) (collectively, "Note 2") in substantially the same form as in
Exhibits 7, 8A, 8B, 8C, 8D, 8E and 8F respectively, attached hereto and made a
part hereof. At Closing, Note 2 shall be delivered to Tannehill or its
assignee. Note 1 shall be delivered to the Secured Party (as that term is
defined in the Sunset Security Agreement) pursuant to the terms of the Sunset
Security Agreement. The Purchase Price shall be subject to the post-closing
operating adjustment as provided in Section 2.4 hereof ("Operating
Adjustment"). The Operating Adjustment shall not be handled through Escrow.
Allocation of the Purchase Price among Tannehill Oil and the Partners shall be
the responsibility of Tannehill Oil and the Partners after payment of the
Purchase Price, subject to Section 2.6 hereof, and any adjustment pursuant to
Section 2.4, and Berry shall be and is hereby held harmless by Tannehill Oil
and the Partners from any claims or loss arising from disputes among Tannehill
Oil and any of the Partners regarding the allocation of such Purchase Price
among themselves. In addition, Tannehill Oil shall receive, at the Closing,
a Warrant to acquire one hundred thousand (100,000) shares of Common Stock of
Berry.
2.4 Operating Adjustment.
a. October 1, 1996, at 12:01 a.m. shall be considered the
"Effective Date" of this Agreement, and the oil and gas operations included in
the Assets shall be deemed to be for the account of Berry from and after that
date. The Operating Adjustment will occur
6
after the Closing in an amount equal to the difference between (i) the value of
oil and gas produced by Tannehill Oil after the Effective Date and (ii) the
normal cost of producing oil and gas after the Effective Date, as determined by
Tannehill's customary accounting method adjusted to reflect only necessary
operating revenues and expenses which would have been credited to or incurred
by Berry had this transaction closed on the Effective Date. The oil tanks
shall be gauged at 12:01 a.m. on the Effective Date. The value of oil and gas
produced by Tannehill after the Effective Date shall be the net sales after
royalties adjusted for the change in inventory between the Effective Date and
the Closing. If the value of the oil and gas produced after the Effective Date
is greater than said cost, then Tannehill shall pay Berry an Operating
Adjustment equal to the amount of the difference. If the value of the oil and
gas produced after the Effective Date is less than said cost, then Berry shall
pay Tannehill an Operating Adjustment equal to the amount of the difference.
b. In the event Tannehill does not provide Berry with its
calculation of the Operating Adjustment (the "Calculation") prior to the
Closing, Tannehill shall provide Berry with the Calculation within sixty (60)
days after the Closing. Berry shall have immediate access at reasonable times
to such books, records and invoices as it deems necessary to verify the
Calculation. If Berry does not object to the Calculation within ten (10) days
after receipt thereof by Berry, it shall be deemed to be final and binding upon
the parties hereto. If Berry objects to the Calculation within such ten (10)
days by specifying the items to which it objects, then the parties will attempt
to mutually resolve any differences. If the differences cannot be resolved
within twenty (20) days after Berry's objection to the Calculation, then all
amounts agreed to shall be paid as provided below and the difference shall be
resolved by arbitration under the Commercial Arbitration Rules of the American
Arbitration Association. The costs of arbitration shall be shared equally by
the parties. This Section 2.4 is the only Section or part of this Agreement
which is subject to arbitration jurisdiction.
c. Within three (3) days of the final determination of the
Calculation, the party required to make the Operating Adjustment payment
shall pay, via wire if requested, the Operating Adjustment payment agreed upon
to the other party.
d. For managing Tannehill Oil subsequent to September 30,
1996, Tannehill shall only be entitled to be credited for management fees at
the rate of One Hundred Fifty Dollars ($150) per day and shall not be entitled
to reimbursement of overhead costs including, but not limited to, legal
expenses, accounting costs, loan fees and interest, contributions, dues and
assessments, 401K retirement costs, severance payments, payments of accrued
vacation pay, payments in lieu of compensatory time off or excessive travel or
entertainment costs or expenses. Distributions to Partners subsequent to
September 30, 1996, shall not be included in the costs.
2.5 Assets to be Conveyed to Berry. The Assets to be conveyed
to Berry by Tannehill are the following assets owned and/or operated by
Tannehill Oil: (a) all of the fee real property, oil and gas leases (including
all of Tannehill's interest in that certain oil and gas lease known as the
Geiger Lease (the "Geiger Lease")), and interests, easements and rights of way
included in the operations of Tannehill Oil, including one hundred percent
(100%) of the
7
Mineral Interests in such property, all as more particularly described in
Exhibit 9 attached hereto and made a part hereof ("Real Property"); (b) all of
the buildings, structures, tanks and pipelines on or under the property owned
and/or operated by Tannehill Oil, as are described in the Disclosure Letter
from Tannehill delivered to Berry at or prior to execution hereof, which shall
refer to the Sections of this Agreement (the "Tannehill Disclosure Letter");
(c) all equipment and supplies related to or utilized in operating the oil
properties and facilities owned and/or operated by Tannehill as described in
the Tannehill Disclosure Letter, excluding only that portion of the "yellow
iron," rolling stock, pulling rigs, drilling rig and miscellaneous office
equipment and furnishings described in the Tannehill Disclosure Letter.
Tannehill shall convey the Assets to Berry free and clear of all liens and
Encumbrances (other than Permitted Encumbrances). Any asset of Tannehill Oil
not described in Exhibit 9 or the Tannehill Disclosure Letter shall be conveyed
to Berry subject to Berry's right, in its sole discretion, to refuse to accept
such asset by written notice to Tannehill Oil within thirty (30) days after
Berry has received written notice from Tannehill Oil that the asset is included
in the Assets. Subject to paragraph 3.16a hereof, Tannehill Oil employees will
not be employed by Berry. In addition, the Partners shall convey to Berry all
their right, title and interest as Premises Lessor under that certain
Cogeneration Premises Lease, dated as of August 15, 1994, between the Partners
and Security Pacific Leasing Corporation, a Delaware corporation (the
"Cogeneration Premises Lease"), free and clear of all Encumbrances, excluding
Permitted Encumbrances. Tannehill shall convey to Berry all of its right,
title and interest as Lessee under the Geiger Lease free and clear of all
Encumbrances, except Permitted Encumbrances.
2.6 Allocation of Purchase Price. The parties agree to allocate
the Purchase Price in accordance with the terms of Code Section 1060 and the
Treasury Regulations promulgated thereunder, and to report this transaction for
federal and state tax purposes in accordance with the agreed-upon allocation
in the form of Exhibit 10 attached hereto and made a part hereof.
2.7 Closing. Subject to the provisions of Articles VII and VIII,
the closing (the "Closing") shall take place at 10 a.m., Pacific Standard Time,
at the offices of Berry Petroleum Company, 28700 Hovey Hills Road, Taft,
California, at such date prior to December 1, 1996, as to which Berry and
Tannehill may mutually agree. By written notice to the other party, either
Berry or Tannehill shall have the right to extend the Closing an additional
forty-five (45) days in the event that either party is not in a position to
close by December 1, 1996.
2.8 Proration of Credits and Payment Obligations. All credits and
payment obligations associated with the Assets, including but not limited to
royalties, lease rentals and other forms of contractual payment shall be
prorated between Tannehill and Berry as of the Effective Date. Tannehill shall
be responsible and shall pay for all such items due, incurred or attributable
to the period prior to the Effective Date and Berry shall be responsible and
shall pay for all such items due, incurred or attributable to the period after
such date. However, Berry shall not be responsible for any severance payments,
vacation payments or payments in lieu of compensatory time off made to
Tannehill Oil employees after the Effective Date.
8
2.9 Real Estate and Other Taxes. All real estate, occupation, ad
valorem, personal property and severance taxes and charges on any of the Assets
shall be prorated as of the Effective Date. Tannehill shall pay all such items
for all periods prior to such date, however, Berry shall be entitled to all
refunds and rebates with regard to such periods. In the event Berry pays
additional taxes or charges which are assessed upon or levied against any of
the Assets after the Closing with respect to any period prior to the Effective
Date, Tannehill shall promptly reimburse Berry the amount thereof upon
presentation of a receipt therefor. If Tannehill elects to challenge the
validity of such bill or any portion thereof, Berry shall extend reasonable
cooperation to Tannehill in such efforts, at no expense to Berry.
2.10 Documentation of Sale and Transfer of Ownership. Except as
otherwise provided herein, the Assets to be conveyed by Tannehill to Berry
shall be conveyed pursuant to the Instruments of Transfer in such form or forms
customary and necessary to properly transfer the Assets according to the
requirements of any applicable federal, state or local agency.
a. Tannehill shall deliver the Assets to Berry at the
Closing subject to the reservations, limitations, conditions and restrictions
contained in this Agreement and the Instruments of Transfer.
b. Tannehill shall make available at Tannehill's offices or
such other place as deemed appropriate by Berry until the Closing, during
normal business hours, for examination by Berry, such title information and
abstracts as may then be available in Tannehill's files.
2.11 Approval of Title and Condition of the Real Property.
Tannehill has provided a preliminary title report to Berry regarding the Real
Property. Berry shall accept or reject title and condition of the Real
Property as provided in Section 7.9 hereof.
2.12 Closing Procedure. At the Closing, through Escrow, the
transactions listed below shall occur, all subject to and conditioned upon the
execution and delivery of a Certificate of Satisfaction described in paragraph
2.12e hereof.
a. Tannehill shall deliver to Berry originals (unless
otherwise noted) of each of the following documents:
(1) Executed Instruments of Transfer.
(2) All leases, contracts, agreements, indentures and
other instruments described in or attached to the Tannehill Disclosure Letter.
(3) Executed Certificate of Compliance of Tannehill Oil.
(4) Executed Opinion of Counsel to Tannehill.
9
(5) A CLTA Policy of Title Insurance on the Real
Property described in Exhibit 9 if Berry elects not to obtain an ALTA Policy.
(6) Tannehill Disclosure Letter.
b. Berry shall deliver to Tannehill originals (unless
otherwise noted) of each of the following documents:
(1) Executed Certificate of Compliance of Berry.
(2) Executed Opinion of Counsel to Berry.
(3) Berry Disclosure Letter.
c. Berry and Tannehill Oil will execute and mutually
deliver two (2) originals of a statement that the Purchase and Sale Agreement
between Berry and Tannehill Oil Company, Inc., a California corporation, dated
November 8, 1996 ("TOC Purchase Agreement") and the Purchase and Sale Agreement
between Berry and Tannehill Electric Company, Inc., a California corporation,
dated November 8, 1996 ("TEC Purchase Agreement") are in condition to close.
d. Berry will deliver to Tannehill the Purchase Price and
the Warrant as provided in Section 2.3 hereof.
e. Berry and Tannehill Oil will execute and mutually deliver
two (2) originals of the Certificate of Satisfaction in the form of Exhibit 11
attached hereto and made a part hereof. By signing this Agreement, each of the
Partners hereby authorizes Tannehill Oil to execute the Certificate of
Satisfaction.
2.13 Post Closing Access to Documents. Tannehill is currently
involved in litigation with Baker Performance Chemicals, Inc. (the "Baker
Litigation") involving the alleged use of ineffective, diluted or blended
chemicals in the treatment of oil and water on the Tannehill property. Berry
shall afford to Tannehill and to the employees, agents and authorized
representatives of Tannehill such reasonable access to the files, agreements,
documents and books and records of Tannehill for periods prior to the Closing
as may be requested by Tannehill in order that Tannehill may have full
opportunity to obtain information reasonably necessary in connection with the
Baker Litigation. Tannehill hereby releases Berry from all liability arising
out of the entry by Tannehill or its employees, agents or authorized
representatives onto the business premises of Berry for purposes of obtaining
such information. Tannehill hereby agrees to indemnify, defend and hold
harmless Berry against all liability, demands, claims, costs, losses, damages,
recoveries, settlements and expenses incurred by Berry arising from or related
to the conduct by Tannehill or its employees, agents and authorized
representatives in connection with obtaining such information.
10
Tannehill will cooperate with Berry and its agent on any
post-closing audit or financial review that is required of Berry due to this
transaction.
2.14 Escrow. First American Title Insurance Company, a California
corporation, whose address is 4540 California Avenue, Suite 100, P.O. Box 1945,
Bakersfield, California 93309, is hereby appointed to act as escrow agent
("Escrow Agent") to conduct the purchase and sale of the Assets. Berry and
Tannehill shall execute written instructions to the Escrow Agent, substantially
in the form of Exhibit 12 attached hereto and made a part hereof, to provide
for the payment of liabilities secured by the Assets and the release of
Encumbrances, other than Permitted Encumbrances, against the Assets. Berry and
Tannehill further agree that Tannehill shall be responsible for and pay for all
Escrow fees and charges.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF TANNEHILL
Except as set forth in the Tannehill Disclosure Letter, Tannehill
hereby represents and warrants to and covenants with Berry as follows:
3.1 Partnership Organization. Tannehill Oil is a general
partnership duly organized, validly existing and in good standing under the
laws of the State of California and has full power and authority to conduct
its business as currently conducted and to own, operate and lease the Assets
it now owns, operates or holds under lease. Tannehill Oil has previously
delivered to Berry true and correct copies of the Agreement of Partnership, any
amendments thereto, the Fictitious Business Name Statement, and the Statement
of Partnership, all as in effect on the date hereof.
3.2 Effect of Agreement; Consents.
a. The execution, delivery and performance of this Agreement
by Tannehill and the consummation by Tannehill of the transactions contemplated
hereby (i) do not require the consent, approval, clearance, waiver, order or
authorization of any Person; (ii) do not violate any provision of the Agreement
of Partnership of Tannehill Oil; (iii) do not conflict with or violate any
permit, concession, grant, franchise, statute, law, rule or regulation of any
Governmental Entity or any order, judgment, award or decree of any court or
other Governmental Entity to which Tannehill is subject or any of the Assets
are bound; and (iv) do not conflict with, or result in any breach of, or
default or loss of any right under (or an event or circumstance that, with
notice or the lapse of time, or both, would result in a default), of any
agreement to which Tannehill is a party or to which any of the Assets are
subject, in each case, which failure, violation, conflict or breach would, in
the aggregate, materially hinder or impair the consummation of the transactions
contemplated by this Agreement. By signing this Agreement, each of the
Partners hereby consents to the sale of the Assets by Tannehill Oil to Berry.
11
b. The execution, delivery and performance of this Agreement
by Tannehill will not result in the loss of any governmental license, franchise
or permit possessed by Tannehill related to the Assets or give a right of
acceleration or termination to any party to any agreement or other instrument
to which Tannehill is a party and by which the Assets are bound, or result
in the loss of any right or benefit under such agreement or instrument.
3.3 Financial Statements. Tannehill has heretofore furnished to
Berry true and correct copies of the balance sheets of Tannehill Oil as of
December 31, 1994, December 31, 1995, and September 30, 1996, and the related
statements of revenues and expenses for the periods then ended (collectively,
the "Financial Statements"). The Financial Statements have been prepared in
accordance with the books and records of Tannehill Oil and in conformity with
generally accepted accounting principles applied, except as otherwise noted
therein, on a basis consistent with prior periods, and fairly present, in all
material respects, the financial position and results of operations of
Tannehill Oil as at and for the periods specified therein. As of September 30,
1996, Tannehill Oil did not have any liability of any kind or manner, either
direct, accrued, absolute or otherwise, which was required to be disclosed by
generally accepted accounting principles and which was not reflected or
disclosed in the Financial Statements and there have been no changes in
Tannehill Oil's method of accounting for tax purposes or other purposes except
as disclosed in the Tannehill Disclosure Letter.
3.4 Taxes and Tax Returns. Tannehill Oil has filed all federal,
state, local and foreign income and other tax returns required to be filed by
it, and each such return is complete and accurate in all material respects. The
taxes shown due on such returns have been paid and there are no taxes,
interest, penalties, assessments or deficiencies (any of the foregoing being
referred to herein as a "Tax") claimed to be due in respect of such tax returns
or claimed in writing to be due by any taxing authority. The tax returns of
Tannehill Oil have not been audited by the IRS, nor has Tannehill Oil received
notice of any examination being conducted by the IRS or any other taxing
authority for any fiscal year. All other taxes, including property taxes,
imposed by the United States and by any state, municipality, subdivision or
instrumentality of the United States, or other taxing authority, which are due
and payable by Tannehill Oil have been paid in full or will be paid or provided
for up to the Closing date.
3.5 Absence of Adverse Change. Since December 31, 1995, there has
not been (a) any Material adverse change in the condition of the Assets to be
acquired by Berry; (b) any damage, destruction or loss adversely affecting the
Assets; (c) any incurrence by Tannehill Oil or by Partners of or entry into any
liability, mortgage, lien or transaction affecting the Assets; (d) any
guarantee of or grant of a security interest to secure a third Person's
obligations by Tannehill; (e) except as provided in the Tannehill Disclosure
Letter, any commitment by Tannehill Oil relating to the Assets; or (f) any
agreement, in writing or otherwise, or any partnership action with respect to
the foregoing. No event or condition has occurred or exists and Tannehill is
not aware of any event or condition that has occurred or exists and that could
result in a Material adverse change in the Assets since December 31, 1995.
3.6 No Misleading Statements. This Agreement, the exhibits hereto
and the information referred to herein, when taken as a whole, do not include
any untrue statement of
12
a material fact and do not omit any material fact necessary to make the
statements contained herein or therein not misleading.
3.7 No Significant Transactions. Except for the execution of this
Agreement, since December 31, 1995, Tannehill Oil has not engaged in any
Material transactions and will not engage in any Material transactions prior to
the Closing.
3.8 Properties, Title and Related Matters.
a. Tannehill has good title to all of the personal property
included in the Assets free and clear of all Encumbrances, except for Permitted
Encumbrances.
b. Other than as set forth on Exhibit 9, there is no real
property owned by Tannehill. Tannehill has title to all of the Real Property
(except the Geiger Lease), in fee simple absolute, including one hundred
percent (100%) of the Mineral Interests therein, free and clear of all
Encumbrances. Tannehill holds its interest as Lessee under the Geiger Lease
free and clear of all Encumbrances (other than Permitted Encumbrances). No
parcel of Real Property is subject to any governmental decree or is being
condemned, expropriated or otherwise taken by any public authority, with or
without payment of compensation therefor, and no such condemnation,
expropriation or taking has been proposed. The Tannehill Disclosure Letter
contains a description of all buildings, structures, improvements, tanks and
pipes or other fixtures located on or under the fee Real Property. Each
Partner will transfer all of its right, title and interest, whether held
directly or indirectly, in and to the Geiger Lease to Berry.
c. Other than as set forth in Exhibits 4, 5 and 9, Tannehill
has no easements or rights of way and no real property is leased by Tannehill.
Tannehill has good title to all the leasehold estates pursuant to which the
real property described in the Tannehill Disclosure Letter is leased, free and
clear of all Encumbrances, except for Permitted Encumbrances. Tannehill has
not breached any provision of and is not in default (and no event or
circumstance exists that with notice or the lapse of time, or both, would
constitute a default) under the terms of any lease, easement, right of way or
other agreement pursuant to which the Real Property is leased or held and all
of such leases, easements, rights of way or other agreements are in full force
and effect. There are no pending or threatened disputes with respect to any
lease, easement, right of way or other agreement pursuant to which the Real
Property is leased or held and the lessor or grantor thereunder has not
breached any provision of and is not in default (and no event or circumstance
exists that with notice or the lapse of time, or both, would constitute a
default) under the terms of any such lease, easement, right of way or other
agreement. The Tannehill Disclosure Letter contains a description of all
structures, improvements, tanks and pipes or other fixtures located on or under
any leases, easements or rights of way described in Exhibits 4, 5 and 9.
d. Since the physical inspection by Berry on September 5,
1996, the maintenance and operation of buildings, machinery, wells, pipelines
and equipment of Tannehill Oil have been consistent with the past maintenance
and operation of such Assets, ordinary wear and tear excepted, and, except as
described in the Tannehill Disclosure Letter, all machinery,
13
wells, pipelines and equipment are operative in all Material respects. Berry
shall acquire such Assets AS IS and WHERE IS. Tannehill makes no
representations or warranties as to the suitability of any Asset for any
particular use.
e. Tannehill is not in Material violation of and, except as
disclosed in the Tannehill Disclosure Letter, Tannehill has not received any
written notice of any violation of any zoning regulation, ordinance, law, rule,
order, regulation or requirement relating to the Assets or operation of its
leased or owned properties which remains uncured or which has not been
dismissed where failure to comply therewith would have a Material adverse
effect on Tannehill Oil or the Assets.
f. Attached to the Tannehill Disclosure Letter is a correct
and complete list and copies of all policies of fire, liability and other forms
of insurance held by Tannehill presently in force with respect to the Assets.
Such policies are in full force and effect and assignable and Tannehill is not
in default under any of them.
3.9 Legal Proceedings. Except as disclosed in the Tannehill
Disclosure Letter, there is no legal, judicial, administrative or governmental
arbitration or other action or proceeding or governmental investigation pending
or threatened against Tannehill Oil or the Assets, or affecting any of the
Assets, which if adversely determined would have a Material adverse effect on
the Assets. Tannehill is not in violation of or default under any laws,
ordinances, regulations, judgments, injunctions, orders or decrees (including,
without limitation, any immigration laws or regulations) of any court or other
Governmental Entity applicable to its business, which violations or defaults
would have a Material adverse effect on the Assets. There are no Material
judgments, orders, injunctions or decrees of any Governmental Entity regarding
any agreement in which Tannehill is a named party or any of the Assets are
identified and subject. Except for the Baker Litigation, there is no pending
litigation in or to which Tannehill is a named party or any of the Assets of
Tannehill are identified and subject.
3.10 Records. Tannehill Oil has records that accurately reflect
its transactions in all material respects.
3.11 No Undisclosed Material Liabilities. There are no Material
liabilities of Tannehill, whether or not accrued and whether or not contingent
or absolute, or any existing condition, situation or set of circumstances that
it expects, or could expect, to result in such liability, other than
liabilities disclosed in the Financial Statements, except liens vested by deeds
of trust as set forth in the Tannehill Disclosure Letter. All such liens shall
be removed prior to the Closing.
3.12 Contracts.
a. All contracts, agreements, indentures and other
instruments to which Tannehill is a party are attached to the Tannehill
Disclosure Letter. Except for the agreements attached to the Tannehill
Disclosure Letter, Tannehill is not a party to or bound by (i) any agreement,
contract or commitment limiting the freedom of Tannehill or any Affiliate
14
of Tannehill to engage in any line of business, to own, operate, sell,
transfer, pledge or otherwise dispose of or encumber any Asset or to compete
with any Person in any geographical area; (ii) any agreement, contract or
commitment relating to the Assets; or (iii) any agreement, contract or
commitment that will have a Material adverse effect on the Assets.
b. Except as disclosed in the Tannehill Disclosure Letter,
Tannehill Oil and the Partners with respect to the Assets have not breached any
provision of or are not in default (and no event or circumstance exists that
with notice or the lapse of time, or both, would constitute a default) under
the terms of any agreement (including the Cogeneration Premises Lease) attached
to the Tannehill Disclosure Letter. All contracts, agreements, indentures and
other instruments attached to the Tannehill Disclosure Letter are in full force
and effect. There are no pending or threatened disputes with respect to the
contracts, agreements, indentures or instruments attached to the Tannehill
Disclosure Letter.
3.13 Brokerage. No investment banker, broker or finder has acted
directly or indirectly for Tannehill in connection with this Agreement or the
transactions contemplated hereby. No investment banker, broker, finder or
other Person is entitled to any brokerage or finder's fee or similar commission
in respect thereof based in any way on agreements, arrangements or
understandings made by or on behalf of Tannehill. Tannehill agrees to
indemnify, defend and hold Berry harmless from and against any and all claims,
liabilities or obligations with respect to all fees, commissions or expenses
asserted by any Person on the basis of any act, statement, agreement or
commitment alleged to have been made by Tannehill with respect to any such fee,
expense or commission.
3.14 Execution and Delivery. Tannehill Oil has full power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. The execution and delivery of this Agreement by Tannehill Oil and
the performance of its obligations hereunder have been duly authorized by all
Partners. This Agreement has been duly executed and delivered by Tannehill and
constitutes a legal, valid and binding obligation of Tannehill, enforceable
against it in accordance with its terms, except as such enforceability may be
limited by or subject to (a) any bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to creditors' rights generally and
(b) general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
3.15 Environmental Matters.
a. To the best of Tannehill's knowledge, Tannehill has at
all times operated in compliance with all applicable limitations, restrictions,
conditions, standards, prohibitions, requirements and obligations of
Environmental Laws and related orders of any court or other Governmental
Entity.
b. To the best of Tannehill's knowledge, Tannehill is not
in violation of or subject to (i) any existing, pending or threatened action,
suit, investigation, inquiry or proceeding by or before any court or other
Governmental Entity or (ii) any remedial obligations, in each case under any
applicable Environmental Law relating to the Assets or operations
15
conducted thereon by any Person at any time during which such Assets were
owned, leased, used or operated by or for the benefit of Tannehill, or by any
Person prior to such time to the extent Tannehill has knowledge of such
matters.
c. To the best of Tannehill's knowledge, all notices,
permits, licenses or similar authorizations, if any, required to be obtained or
filed by Tannehill under all applicable Environmental Laws in connection with
its past or present operation or use of any and all Assets or the conduct of
its business, including but not limited to past or present treatment, storage,
disposal or release of a hazardous substance or solid waste into the
environment, have been duly obtained or filed.
d. To the best of Tannehill's knowledge, all hazardous
substances and solid wastes generated at any and all of the Assets or by any
Person in connection with the ownership, lease, use or operation of the Assets
have, at any time during which such Assets were owned, leased, used or operated
by or for the benefit of Tannehill or any Affiliate thereof, been transported,
stored, treated and disposed of by carriers or treatment, storage and disposal
facilities authorized or maintaining valid permits under all applicable
Environmental Laws.
e. To the best of Tannehill's knowledge, all hazardous
substances and solid wastes generated at any and all of the Assets or by any
prior owner or operator of the Assets were transported, stored, treated and
disposed of by carriers or treatment, storage and disposal facilities
authorized or maintaining valid permits under all applicable Environmental
Laws.
f. To the best of Tannehill's knowledge, no Person has, at
any time during which the Assets were owned, leased, used or operated by or for
the benefit of Tannehill, disposed of or released any hazardous substance or
solid waste on or under the Assets, except in compliance with all applicable
Environmental Laws.
g. To the best of Tannehill's knowledge, no Person has
disposed of or released any hazardous substance or solid waste on, under or
around the Assets, except in compliance with all applicable Environmental Laws.
h. To the best of Tannehill's knowledge, no facts or
circumstances exist which could reasonably be expected to result in any
liability to any Person with respect to the current or past business and
operations of Tannehill or the Assets in connection with any release,
transportation or disposal of any hazardous substance or solid waste or action
taken or omitted that was not in full compliance with or was in violation of
any applicable Environmental Law.
3.16 Employees.
a. The Tannehill Disclosure Letter lists all employees,
their addresses, job titles, job descriptions and number of years employed by
Tannehill Oil. Berry shall be
16
provided the opportunity to interview, and if desired, may offer employment to
any of Tannehill's employees as selected in Berry's sole discretion.
b. Employees of Tannehill Oil shall not assert claims
against Berry based on employment by Tannehill Oil for severance, retirement
benefits, health benefits, deferred compensation, violations of any federal,
state or local laws or statutes, wages or other benefits or compensation.
Employees of Tannehill Oil not employed by Berry shall not assert any claim
against Berry for discriminatory hiring practices based on state or federal
laws or statutes, union contracts or for benefits based upon the Employee
Retirement Income Security Act of 1974, as Amended ("ERISA").
c. The Tannehill Disclosure Letter sets forth a list of all
plans and other arrangements involving direct or indirect compensation or
benefits to Partners, consultants or providing employee benefits to employees of
Tannehill Oil, including, without limitation, all "employee benefit plans" as
defined in Section 3(3) of ERISA, and all bonus, incentive, deferred
compensation, supplemental retirement, severance and other similar fringe or
employee benefit plans, and all employment or executive compensation agreements
(collectively, the "Benefit Plans"). True and complete copies of the Benefit
Plans have been made available to Berry. To the extent applicable, the Benefit
Plans comply, in all material respects, with the requirements of ERISA and the
Code, and any Benefit Plan intended to be qualified under Section 401(a) of the
Code has been determined by the IRS to be so qualified. No Benefit Plan is
covered by Title IV of ERISA or Section 4112 of the Code. No Benefit Plan has
incurred any liability or penalty under Section 4975 of the Code or Section
502(i) of ERISA. Each Benefit Plan has been maintained and administered in all
material respects in compliance with its terms and with ERISA and the Code to
the extent applicable thereto. There are no pending or anticipated claims
against or otherwise involving any of the Benefit Plans and no suit, action or
other litigation (excluding claims for benefits incurred in the ordinary course
of Benefit Plan activities) has been brought against or with respect to any
such Benefit Plan, except for any of the foregoing which would not have a
Material adverse effect. Neither Tannehill Oil nor any entity under "common
control" within the meaning of ERISA Section 4001 with Tannehill Oil or its
Affiliates has contributed to, or been required to contribute to, any
"multiemployer plan" (as defined in Sections 3(37) and 4001(a)(3) of ERISA).
Except as may be required by law, Tannehill Oil does not maintain or contribute
to any plan or arrangement which provides or has any liability to provide life
insurance, medical or other employee welfare benefits to any employee or former
employee upon his retirement or termination of employment, and Tannehill has
never represented, promised or contracted (whether in oral or written form) to
any employee or former employee that such benefits would be provided.
d. Except as disclosed in the Tannehill Disclosure Letter,
Tannehill Oil is not currently nor has it ever been a party to any employee
pension or welfare plan to which ERISA applies or to which Tannehill Oil was
required to make contributions for the benefit of its employees.
e. Neither Tannehill Oil nor any of its Affiliates is a
party to, or bound by, any collective bargaining agreement, contract or other
agreement or understanding
17
with a labor union or labor union organization. There is no unfair labor
practice or labor arbitration proceeding pending or threatened against
Tannehill Oil or any of its Affiliates relating to their business which,
if determined adversely to Tannehill Oil or the Affiliate would have a
Material adverse effect. There are no organizational efforts with respect to
the formation of a collective bargaining unit presently being made or
threatened involving employees of Tannehill Oil or any of its Affiliates.
3.17 Investigation. Tannehill and its agents, counsel and
accountants have had reasonable access to representatives of Berry to make such
investigations as they desired with respect to the business, operations and
affairs of Berry in connection with the transactions contemplated hereby. In
determining whether to consummate the transactions contemplated hereby,
Tannehill is relying solely on the terms, covenants, representations,
warranties and indemnities herein and on their own investigations into and
analysis of the business, operations and condition (financial or otherwise) of
Berry and have not relied on Berry, or its officers or directors, with respect
to the interpretation of data relating to the valuation of Tannehill, the
income tax ramifications of this purchase and sale, and/or the ability of Berry
to operate the Assets.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BERRY
Except as set forth in the Disclosure Letter from Berry delivered
to Tannehill at or prior to the execution hereof, which shall refer to the
relevant Sections of this Agreement (the "Berry Disclosure Letter"), Berry
hereby represents and warrants to and covenants with Tannehill as follows:
4.1 Corporate Organization. Berry is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to carry on its
business as it is now being conducted, and to execute, deliver and perform this
Agreement and to consummate the transactions contemplated hereby.
4.2 Due Authorization, Execution and Delivery; Effect of
Agreement. The execution, delivery and performance by Berry of this Agreement
and the consummation by Berry of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of Berry. This
Agreement has been duly and validly executed and delivered by Berry and
constitutes the legal, valid and binding obligation of Berry, enforceable
against it in accordance with its terms, except to the extent that such
enforceability (a) may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to creditors' rights generally; and
(b) is subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law). The
execution, delivery and performance by Berry of this Agreement and the
consummation by Berry of the transactions contemplated hereby (i) do not
require the consent, approval, clearance, waiver, order or
18
authorization of any Person, except as otherwise disclosed in the Berry
Disclosure Letter; (ii) do not violate any provision of the Certificate of
Incorporation or Bylaws of Berry; (iii) do not conflict with or violate any
permit, concession, grant, franchise, statute, law, rule or regulation of any
Governmental Entity or any order, judgment, award or decree of any court or
other Governmental Entity to which Berry is subject; and (iv) do not conflict
with, or result in any breach of, or default or loss of any right under (or
an event or circumstance that, with notice or the lapse of time, or both, would
result in a default), or the creation of an Encumbrance pursuant to, or cause
or permit the acceleration prior to maturity of any amounts owing under, any
indenture, mortgage, deed of trust, lease, or other agreement to which Berry
is a party, in each case, which failure, violation, conflict or breach would,
in the aggregate, materially hinder or impair the consummation of the
transactions contemplated by this Agreement. The issuance of the Warrants in
accordance with this Agreement has been duly authorized by all necessary
corporate action on the part of Berry.
4.3 Consents. Except as otherwise disclosed in the Berry
Disclosure Letter, no consent, approval or authorization of, or exemption by,
or filing with, any Governmental Entity or any Person is required in
connection with the execution, delivery or performance by Berry of this
Agreement or the taking of any other action contemplated hereby.
4.4 Litigation. There is no legal, judicial, administrative or
governmental arbitration or other action or proceeding or governmental
investigation pending against Berry, or threatened against Berry, which seeks
to enjoin or obtain damages in respect of the consummation of the transactions
contemplated hereby.
4.5 Brokerage. No investment banker, broker, finder or other
Person is entitled to any brokerage or finder's fee or similar commission in
respect of this Agreement or the transactions contemplated hereby based in any
way on agreements, arrangements or understandings made by or on behalf of
Berry. Berry agrees to indemnify and hold Tannehill Oil and the Partners
harmless from and against any and all claims, liabilities or obligations with
respect to all fees, commissions or expenses asserted by any Person on the
basis of any act, statement, agreement or commitment alleged to have been made
by Berry with respect to any such fee, commission or expense.
4.6 Approvals. No approval of the stockholders of Berry is
necessary or required under Delaware General Corporation Law, as currently in
effect, or Berry's Certificate of Incorporation or Bylaws for the consummation
of the transactions contemplated by this Agreement.
19
ARTICLE V
COVENANTS OF TANNEHILL
From and after the date of this Agreement until the Closing, except
as expressly authorized by this Agreement or expressly consented to in writing
by Berry, Tannehill covenants and agrees with Berry as follows:
5.1 Access to Tannehill. Tannehill shall afford to Berry and to
the employees, agents, lenders, investors and authorized representatives of
Berry and to their respective counsel and accountants such reasonable access to
the Assets, officers, offices, equipment, files, agreements, documents, and
books and records of Tannehill (including, without limitation, engineering data
and information, computer programs, tapes and other records), and the
opportunity to make notes, abstracts and copies therefrom, as may be requested
by Berry in order that Berry may have full opportunity to make such reasonable
investigations as it shall desire with respect to the business, operations,
Assets and affairs of Tannehill in connection with the transactions
contemplated hereby and Tannehill shall furnish Berry with such additional
financial and operating data and other information as to the business,
operations and Assets of Tannehill as Berry shall, from time to time,
reasonably request for such purpose. Berry hereby releases Tannehill from all
liability arising out of the entry by Berry or its employees, agents, lenders,
investors or authorized representatives onto the business premises of Tannehill
for purposes of conducting the investigation contemplated by this Section 5.1.
Berry hereby agrees to indemnify, defend and hold harmless Tannehill against
all liability, demands, claims, costs, losses, damages, recoveries, settlements
and expenses incurred by Tannehill arising from or related to the conduct by
Berry or its employees, agents, lenders, investors or authorized
representatives of the investigation.
5.2 Governmental Approvals; Consents.
a. Tannehill shall use its best efforts, and shall cooperate
with Berry, to obtain all permits, approvals and consents, and to make all
filings, necessary or required to be obtained or made, and to begin and cause
all waiting periods required to lapse, for Berry to have full use and
enjoyment of the Assets subsequent to the purchase and sale and for the
consummation by Tannehill of the transactions contemplated by this Agreement
under any applicable federal law or the applicable laws of any state having
jurisdiction over the transactions contemplated hereby (all such permits,
approvals, filings and consents and the lapse of all such waiting periods being
referred to as the "Requisite Regulatory Approvals").
b. Tannehill shall use its best efforts to obtain all
consents, approvals, clearances, waivers, orders or authorizations of any
Person necessary to be obtained by Tannehill for Berry to have full use and
enjoyment of the Assets subsequent to the purchase and sale and for the
consummation of the transactions by Tannehill contemplated by this Agreement.
5.3 Litigation and Claims. Tannehill shall promptly inform Berry
in writing of any litigation, or of any claim or controversy or contingent
liability of which Tannehill
20
becomes aware that might reasonably be expected to become the subject of
litigation, against Tannehill Oil or affecting any of the Assets.
5.4 Notice of Changes. Tannehill shall promptly inform Berry in
writing if Tannehill becomes aware of any change that shall have occurred or
that shall have been threatened (or any development that shall have occurred
or that shall have been threatened involving a prospective change) in the
financial condition, results of operations, business of the Assets or of
Tannehill Oil that is or with the exercise of reasonable business judgment
would be expected to have an adverse effect on the Assets. Tannehill shall
promptly inform Berry in writing if any representation or warranty made by
Tannehill in this Agreement shall cease to be accurate or upon the occurrence
of any breach of any covenant or other agreement required by this Agreement to
be performed or complied with by Tannehill.
5.5 Conduct of Business Operations. Tannehill shall not, without
the prior written consent of Berry:
a. Materially increase the annual level of compensation of
any employee, nor increase at all the annual level of compensation of any
employee whose compensation from Tannehill Oil during the last preceding fiscal
year exceeded Fifty Thousand Dollars ($50,000), and shall not grant any unusual
or extraordinary bonuses, benefits or other forms of direct or indirect
compensation to any employee, officer, partner or consultant except in keeping
with past practices by formulas or otherwise. Nothing in this paragraph 5.5a
shall prohibit the payment by Tannehill of severance payments, accrued and
unpaid vacation pay, or payments in lieu of compensatory time-off to its
employees;
b. From the Effective Date to the Closing, fail to use its
best efforts to prevent the daily production averaged over any calendar week
during the period from declining below one thousand three hundred (1,300)
barrels per day.
c. Other than in the ordinary course of business, sell,
lease or otherwise dispose of any Assets or any interests therein, or enter
into, or consent to the entering into of, any agreement granting to any third
Person a right to purchase, lease or otherwise acquire any Assets or interests
therein, except as otherwise provided for in this Agreement;
d. Enter into any agreement or incur any obligation, the
terms of which would be violated by the consummation of the transactions
contemplated by this Agreement;
e. Organize, invest in or acquire an equity interest in any
corporation, partnership, joint venture, association or other entity or
organization;
f. Create, incur, assume, guarantee or otherwise become
liable or obligated with respect to any indebtedness for monies borrowed or make
any loan or advance to any Person (other than trade receivables in the ordinary
course of business);
21
g. (i) Enter into any new line of business with respect to
the Assets; (ii) change its investment, liability management and other material
policies in any respect; (iii) incur or commit to any capital expenditures or
financing; (iv) acquire or agree to acquire by merging or consolidating with,
or acquire or agree to acquire by purchasing all or substantially all of the
assets of, or in any manner, any Person; (v) otherwise acquire or agree to
acquire any assets for a total consideration in the aggregate in excess of Ten
Thousand Dollars ($10,000); or (vi) waive any right under or cancel any
contract, debt or claim listed in any exhibits hereto or the Tannehill
Disclosure Letter, which waiver or cancellation would have an adverse effect on
the Assets;
h. Enter into any contract, commitment or arrangement (or
amend, modify, supplement or otherwise alter the terms of any existing
contract, agreement or instrument attached to the Tannehill Disclosure Letter)
with any Person;
i. Maintain its books of account other than in the usual,
regular and ordinary manner in accordance with good business practices or make
any change in any of its accounting methods or practices; or
j. Take any action that would or might reasonably be
expected to result in any of the conditions to Closing set forth in Article VII
hereof not being satisfied.
5.6 Maintain Assets and Operations. During the period from the
date hereof through the Closing, Tannehill shall (a) carry on its business in
the usual, regular and ordinary course in a good and diligent manner consistent
with sound business practices and in compliance with all applicable laws, rules
and regulations; (b) not introduce any new method of management or operation;
(c) use its best efforts to preserve its business organization, maintain its
rights and franchises, keep available the services of its officers and
employees and preserve the goodwill and its relationships with customers,
suppliers and others having business dealings with it; (d) preserve in full
force and effect all leases, operating agreements, easements, rights of way,
permits, licenses, contracts and other agreements which relate to the Assets
(other than those expiring by their terms); (e) use its best efforts to perform
or cause to be performed all of its obligations in or under any of such leases,
agreements and contracts; (f) use its best efforts to safeguard and maintain
secure all reports and other confidential data in the possession of Tannehill
relating to the Assets; and (g) use its best efforts to operate its business
and activities in the same manner as they have been carried out and to maintain
the same level of expenditure as have previously been incurred in connection
with such business and activities.
5.7 Exclusive Dealing. Tannehill shall not directly or
indirectly, through any representative or otherwise, solicit or entertain
offers from, negotiate with or in any manner encourage, discuss, accept or
consider any proposal of any Person relating to the acquisition of the assets
or business, in whole or in part, of Tannehill, whether through direct
purchase, consolidation or other business combination (other than sales of
inventory or in the ordinary course of business) so long as this Agreement has
not been terminated. Tannehill recognizes that Berry has and continues to
incur substantial time and expense in evaluating this transaction. Tannehill
acknowledges that Berry, in reliance on this Section 5.7, will continue to
incur
21A
additional time, effort and expense. Tannehill has agreed to this provision
due to the unique terms specified in the AIP and contemplated in this
transaction.
5.8 Termination Fee. In the event that Tannehill breaches Section
5.7 hereof and within twelve (12) months after such breach or termination,
Tannehill closes a transaction with an unrelated third party relating to the
acquisition of a Material portion of the Assets or the business of Tannehill
Oil, in whole or part, whether through direct purchase, merger, consolidation
or other business combination (other than sales of inventory or immaterial
portions of Tannehill's Assets in the ordinary course), then, immediately upon
such closing, Tannehill shall pay to Berry the sum of Two Million Three Hundred
Eighty Thousand Dollars ($2,380,000). Such payment shall constitute liquidated
damages and, in the absence of fraud or bad faith, shall be in lieu of any
other penalty or remedy Berry might otherwise seek, the parties having
determined that the actual damages resulting from the events for which such
22
liquidated damages are to be awarded would be extremely difficult and uncertain
to calculate and that liquidated damages above represent a good faith estimate
of such actual damages.
___________ __________
Tannehill Oil initials Berry initials
___________ ___________ ___________ __________
___________ ___________ ___________ __________
___________ ___________ ___________ __________
___________ ___________ ___________ __________
Partners' initials
5.9 Taxes. Tannehill shall pay any documentary transfer tax due
on the purchase and sale of the Assets.
5.10 Approval of Transaction. Tannehill shall take all actions
necessary to approve this Agreement.
ARTICLE VI
COVENANTS OF BERRY
Berry hereby covenants and agrees with Tannehill as follows:
6.1 Cooperation. Subject to the terms and conditions of this
Agreement, Berry shall cooperate with Tannehill to use its best efforts to
secure all necessary consents, approvals, authorizations, exemptions and
waivers from all Persons and Governmental Entities as shall be required to be
obtained by Berry in order to enable Berry to consummate the transactions
contemplated hereby.
6.2 Governmental Approvals. Berry shall use its best efforts, and
shall cooperate with Tannehill, to obtain all Requisite Regulatory Approvals.
6.3 Disclosure Responsibilities. Berry, as a reporting company
under Section 12 of the Securities Exchange Act of 1934, as amended ("Exchange
Act"), and listed company under the New York Stock Exchange (the "NYSE"), is
required to comply with certain disclosure requirements regarding its business
activities, including, but not limited to, the issuance of press releases and
the preparation and filing of periodic reports with the Securities and Exchange
Commission. In order to comply with the disclosure requirements of the
Exchange Act and NYSE, as well as the timing of such disclosures, all
statements to the public, including press releases, shall be at the sole
discretion of Berry.
23
6.4 Authorization of Warrant. Berry shall take all actions to
qualify the issuance of the Warrant to Tannehill Oil in compliance with all
applicable state securities laws or to comply with any available exemptions
from such qualification requirements. However, Berry shall not be obligated to
register the Warrant, or the shares of Class A Common Stock underlying the
Warrant, under the Securities Act of 1933.
6.5 Cooperation in Exchange. Berry will cooperate with Tannehill
in the completion of one or more tax-deferred exchange transactions and shall
execute such documents as are reasonably required for that purpose, provided
that Berry shall not be required to take title to any other property, shall not
be put at any extra cost or expense, shall not be subject to any additional
liability, and the date for the Closing shall not be extended by virtue of any
requested cooperation.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF BERRY
The obligations of Berry to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction (or waiver
by Berry) on or prior to the Closing of all of the following conditions:
7.1 Accuracy of Representations and Warranties. The
representations and warranties of Tannehill set forth in this Agreement shall
be true and correct in all respects as of the date when made and at and as of
the Closing.
7.2 Performance of Covenants and Agreements. Tannehill shall have
duly performed and complied in all respects with the covenants, agreements and
conditions required by this Agreement to be performed or complied with by them
prior to or at the Closing. None of the events or conditions entitling Berry
to terminate this Agreement under Article IX hereof shall have occurred and be
continuing.
7.3 Consents. Any consent required for the consummation of this
purchase and sale under any agreement, contract, license or other instrument
described in any exhibit hereto or referred to herein, or for the continued
enjoyment by Berry of any benefits of such agreement, contract, license or
other instrument after the Closing, which consent Tannehill is specifically
obligated to obtain pursuant to this Agreement, shall have been obtained and be
effective.
7.4 Governmental Approvals. All Requisite Regulatory Approvals
shall have been obtained, made or lapsed and shall be in full force and effect.
7.5 Approval of Counsel. The form and substance of all legal
matters contemplated hereby and all papers delivered hereunder shall be
reasonably acceptable to Nordman, Cormany, Hair & Compton, counsel to Berry.
24
7.6 Partners' Certificate. Berry shall have received a
certificate of Tannehill Oil, substantially in the form of Exhibit 13 attached
hereto and made a part hereof, satisfactory in form and substance to Berry,
executed on behalf of Tannehill Oil by its Managing General Partners, as to
compliance with the matters set forth in Sections 7.1, 7.2, 7.3 and 7.4 of this
Agreement. By signing this Agreement, each of the Partners hereby authorizes
the Managing General Partners of Tannehill Oil to execute such Certificate.
7.7 Opinion of Counsel. Berry shall have received the opinion of
Roger Coley, counsel to Tannehill, in form and content satisfactory to Berry,
substantially in the form of Exhibit 14 attached hereto and made a part hereof.
7.8 Closing of TEC and TOC Purchase Agreements. The Closing shall
not occur unless the Closings contemplated by the TEC Purchase Agreement and
the TOC Purchase Agreement have occurred or will occur concurrently with the
Closing.
7.9 Condition of Real Property. Berry shall have approved title
to and the condition of the Real Property as follows:
a. A current CLTA Preliminary Title Report prepared by First
American Title Company covering the Real Property, accompanied by legible
copies of all documents referred to as exceptions in the report to the extent
reasonably available through Tannehill's best efforts [and a map plotting all
easements] (the "PTR"), has been delivered to Berry.
b. If Berry elects to obtain an ALTA Policy, a survey of the
Real Property shall have been prepared, at Berry's expense, by a licensed
surveyor or registered civil engineer, in sufficient detail to provide for the
policy of title insurance to be purchased by Berry, certified to Berry in a
form satisfactory to Berry, without boundary, encroachment or survey exceptions
and which shows the location of all easements and improvements. It shall be
Berry's sole responsibility to obtain such survey by the Title Approval Date
defined below. Berry's failure to do so will be deemed Berry's waiver of this
condition. If Berry does not elect to obtain an ALTA Policy, then Tannehill
shall provide Berry with a CLTA Policy at Tannehill's expense.
c. Title shall be free of Encumbrances not approved by
Berry. On or before November 8, 1996 (the "Title Approval Date"), Berry shall
advise Tannehill in writing of what exceptions to coverage, if any, are
unacceptable to Berry (the "Title Disapproval Notice"). Notwithstanding any
other provision of this Section 7.9, Berry hereby objects to all monetary
Encumbrances, which monetary Encumbrances (if any) Tannehill shall cause to be
eliminated at the Closing except for non-delinquent real property taxes and
assessments, which shall be one of the exceptions to coverage. Tannehill shall
have ten (10) business days after receipt of a Title Disapproval Notice to give
Berry notice either: (i) that Tannehill will remove, on or before the Closing,
any disapproved exceptions to coverage and provide Berry with evidence
satisfactory to Berry of such removal; or (ii) that Tannehill elects not to
cause such exceptions to coverage to be removed, in which case Berry shall have
five (5)
25
business days thereafter to notify Tannehill in writing of Berry's election
(a) to waive any objectionable exceptions and to proceed with the purchase of
and to take the Real Property subject to such exceptions, but otherwise
pursuant to the terms of this Agreement, or (b) to terminate this Agreement.
If Berry shall fail to give Tannehill notice of such election within said five
(5) business days, Berry shall be deemed to have elected to waive its objection
to the coverage and to proceed with this purchase. In the event that during
escrow any amended or supplemented PTR is issued disclosing new exceptions to
coverage, Berry shall again have the right to give a Title Disapproval Notice
as to such new exception, in which case all the foregoing rights of the parties
following the giving of such a notice shall again apply as stated above.
d. Berry shall not have given written notice of disapproval
of matters related to the Real Property. Berry's failure to give written
notice of disapproval on or before November 8, 1996 (the "Property Approval
Date") of all aspects and matters related to the Real Property, including size,
shape, configuration, access, easements (express, implied and by prescription),
geologic/subsidence and soil conditions, hydrologic conditions, water supply
quantity and quality, buildings, tanks, pipelines, oil and gas wells, oils and
gas surface equipment, and the condition of all other fixed equipment shall be
deemed approval of matters relating to the Real Property. To facilitate
Berry's review, Tannehill shall deliver to Berry within fifteen (15) business
days after the date of this Agreement, (i) any environmental reports prepared
by or for Tannehill covering all or any portion of the Real Property, without
representation or warranty as to their accuracy or validity; (ii) copies of any
service contracts now in effect, all of which are cancelable at any time, or by
the giving of not more than thirty (30) days' notice; and (iii) any well logs
and reports of water usage made to the Regional Water Quality Control Board,
the Division of Oil, Gas and Geothermal Resources and other agencies, as
applicable.
e. Berry shall be satisfied that there are no Hazardous
Materials, as that term is defined by all or any applicable laws, on the Real
Property or in the groundwater thereunder and Berry's acceptance and approval
of an Environmental Audit and Assessment ("Phase I Report") as to the Real
Property performed at Berry's direction and sole cost and expense. Berry's
failure to give notice of disapproval of the Phase I Report obtained by Berry,
if any, on or before the Property Approval Date shall be deemed as Berry's
approval thereof and acceptance of the Real Property in its present condition.
In the event such Phase I Report or any Phase II Report involving soil and/or
groundwater tests, approved in advance by Tannehill, discloses that the Real
Property or groundwater thereunder is contaminated with Hazardous Materials in
quantities requiring remediation or removal under existing law, Berry shall
have the right to terminate this Agreement. Except as provided in the
succeeding sentence, Berry agrees that the Phase I Report and any other report,
tests, and information and conclusions stated therein shall be kept
confidential and that any reporting requirements to any governmental agency or
any other third party arising therefrom shall be the sole responsibility of
Tannehill. Notwithstanding the foregoing, in the event that any then
applicable law, statute or ordinance requires Berry to report or disclose the
Report or Report findings to a governmental agency, then and only then shall
Berry disclose the Report findings. In no event shall Berry be entitled
26
to conduct any soil borings or groundwater tests without Tannehill's prior
written approval, which may be conditioned or denied in Tannehill's sole
discretion.
f. Berry shall have received an affidavit, certification or
notice required by Section 1445 of the Code and the Regulations pursuant
thereto. In addition, Tannehill shall have provided Berry with the
certification required to show that withholding is not required pursuant to
California Revenue and Taxation Code Section 18662(e). In the event any of the
Partners does not qualify for the exemption from withholding under Section
1445(e) of the Code or Section 18662(e) of the California Revenue and Taxation
Code, Berry will comply with the withholding requirement of such sections.
7.10 Termination of Operating Agreement. That certain Operating
Agreement and First Amendment to Operating Agreement, dated January 1, 1992,
entered into by and between Tannehill Oil and the Partners shall be cancelled,
in writing, by the parties thereto at the Closing.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF TANNEHILL
The obligations of Tannehill to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction (or waiver
by Tannehill) on or prior to the Closing of all of the following conditions:
8.1 Accuracy of Representations and Warranties. The
representations and warranties of Berry set forth in this Agreement shall be
true and correct in all material respects as of the date when made and at and
as of the Closing.
8.2 Performance of Covenants and Agreements. Berry shall have
duly performed and complied in all respects with the covenants, agreements and
conditions required by this Agreement to be performed or complied with by it
prior to or at the Closing. None of the events or conditions entitling
Tannehill to terminate this Agreement under Article IX hereof shall have
occurred and be continuing.
8.3 Resolutions. Tannehill shall have received certified copies
of resolutions of the Board of Directors of Berry approving this Agreement and
the transactions contemplated hereby.
8.4 Approval of Counsel. The form and substance of all legal
matters contemplated hereby and all papers delivered hereunder shall be
reasonably acceptable to Roger Coley, counsel to Tannehill.
8.5 Governmental Approvals. All Requisite Regulatory Approvals
shall have been obtained, made or lapsed and shall be in full force and effect.
27
8.6 Officers' Certificate. Tannehill shall have received a
certificate of Berry, substantially in the form of Exhibit 15 attached hereto
and made a part hereof, satisfactory in form and substance to Tannehill,
executed on behalf of Berry by the President and Secretary of Berry, as to
compliance with the matters set forth in Sections 8.1, 8.2, 8.3 and 8.5 of this
Agreement.
8.7 Opinion of Counsel. Tannehill shall have received the opinion
of Nordman, Cormany, Hair & Compton, counsel to Berry, in form and content
reasonably satisfactory to Tannehill, substantially in the form of Exhibit 16
attached hereto and made a part hereof.
8.8 Closing of TEC and TOC Purchase Agreements. The Closing shall
not occur unless the Closings contemplated by the TEC Purchase Agreement and
the TOC Purchase Agreement have occurred or will occur concurrently with the
Closing.
ARTICLE IX
TERMINATION PRIOR TO CLOSING
9.1 Termination. This Agreement may be terminated at any time
prior to the Closing:
a. By the mutual written consent of Berry and Tannehill;
b. Subject to the right of either party to extend the
Closing as provided in Section 2.7 hereof, upon written notice by either party
to the other party if Closing has not occurred forty-five (45) days after the
execution of this Agreement;
c. By Berry in writing if Tannehill Oil or the Partners
shall be in Default;
d. By Tannehill in writing if Berry shall be in Default;
e. By Berry if, after the date of this Agreement, there
shall have occurred a Material adverse change (or any development or condition
involving a prospective Material adverse change) in the business, financial
condition or results of operations of Tannehill Oil; or
f. By Tannehill if, after the date of this Agreement, there
shall have occurred a Material adverse change (or any development or condition
involving a prospective Material adverse change) in the business, financial
condition or results of operations of Berry.
9.2 Effect on Obligations. Termination of this Agreement pursuant
to this Article shall terminate all obligations of the parties hereunder,
except for the obligation under
28
Sections 3.13 and 4.5; provided, however, that termination pursuant to
paragraphs 9.1c or d hereof shall not relieve any defaulting party from any
liability to the other parties hereto.
ARTICLE X
INDEMNIFICATION
10.1 Indemnification by Berry. Berry agrees to indemnify, defend
and hold Tannehill, and agents of Tannehill, harmless from and against any and
all loss, liability, damage, costs and expenses (including interest, penalties,
settlements, fines, costs and expenses incurred in connection with
investigating and defending any claims or causes of action, and reasonable
attorneys' fees) that Tannehill and its agents may incur or become subject to
arising out of or due to any inaccuracy of any representation or the breach of
any warranty, covenant, undertaking or other agreement of Berry contained in
this Agreement.
10.2 Indemnification by Tannehill. Tannehill, jointly and
severally, agrees to indemnify, defend and hold Berry, and the officers,
directors, employees and agents of Berry (collectively, the officers,
directors, employees and agents being referred to in each case as its "Related
Parties") harmless from and against any and all loss, liability, damage, costs
and expenses (including interest, penalties, settlements, fines, costs and
expenses incurred in connection with investigating and defending any claims or
causes of action, and reasonable attorneys' fees) that Berry and its Related
Parties may incur or become subject to arising out of or due to any inaccuracy
of any representation or the breach of any warranty, covenant, undertaking or
other agreement of Tannehill contained in this Agreement. Tannehill, jointly
and severally also agrees to indemnify, defend and hold Berry and its Related
Parties harmless from and against any and all loss, liability, damage, costs
and expenses (including interest, penalties, settlements, fines, costs and
expenses incurred in connection with investigating and defending any claims or
causes of action, and reasonable attorneys fees) that Berry and its Related
Parties may incur or become subject to arising out of the Baker Litigation or
attributable to any environmental conditions caused directly or indirectly by
the acts of or failure to act by Baker Chemical and/or its officers, employees
or agents.
10.3 Survival. The several warranties, representations, covenants
and agreements of the parties contained in this Agreement and in any other
instrument delivered pursuant hereto shall survive the Closing and shall remain
in full force and effect thereafter.
10.4 Notice and Opportunity to Defend.
a. If a party seeking indemnification (the "Indemnitee")
becomes aware of any matters that it believes may give rise to an indemnifiable
claim, or asserts any claim that it believes may be indemnifiable pursuant to
this Agreement, the Indemnitee shall give the party obligated to provide
indemnification (the "Indemnifying Party") prompt written notice of such matter
or claim, stating with particularity the nature of such matter or the
aforementioned claim and the amount thereof. Failure to provide such notice
shall not affect the
29
right of the Indemnitee to indemnification except to the extent such failure
shall have resulted in liability to the Indemnifying Party that could have been
actually avoided had such notice been provided within such required time
period.
b. If the matter that the Indemnitee believes gives rise to
an indemnifiable claim does not involve a third party claim against an
ndemnitee, the Indemnifying Party shall have thirty (30) days from the date on
which it received notice of such claim pursuant to this Section to respond to
such notice. If such Indemnifying Party accepts responsibility or does not
respond within such thirty (30)-day period, the Indemnifying Party shall
promptly pay to the Indemnitee the full amount of such claim. If the
Indemnifying Party rejects any liability with respect to such claim, it shall
give written notice of such objection to the Indemnitee within such thirty
(30)-day period and the parties shall seek to resolve such claim by agreement.
If the parties are unable to resolve such claim by agreement within sixty (60)
days following the expiration of such thirty (30)-day period mentioned above,
the parties shall be entitled to pursue, without prejudice to any of their
rights hereunder, such remedies as may be available to the parties under
applicable law.
c. In the event any action, suit, proceeding or investigation
is brought against the Indemnitee by a third party which the Indemnitee
believes may give rise to an indemnifiable claim, the Indemnitee shall
give the Indemnifying Party prompt written notice of the commencement of such
action, suit, proceeding or investigation as provided in paragraph a. of this
Section. Such Indemnifying Party shall have a period of thirty (30) days after
receipt of such notice within which to respond to such notice. If such
Indemnifying Party does not respond within such thirty (30)-day period or
rejects responsibility for such matter in whole or in part, the Indemnitee
shall be free to pursue, without prejudice to any of its rights hereunder, such
remedies as may be available to such party under applicable law. If such
Indemnifying Party accepts responsibility, such Indemnifying Party shall, as
between the Indemnitee and the Indemnifying Party, be obligated to compromise
or defend such matter, at its own expense. The Indemnitee shall employ counsel
of its choice and the Indemnifying Party shall reimburse Indemnitee for
attorneys' fees and costs. The Indemnifying Party shall cooperate fully with
the Indemnitee and its counsel in the defense against any such asserted
liability. Any compromise of such asserted liability by the Indemnitee shall
require the prior written consent of the Indemnifying Party, which shall not be
unreasonably withheld. If, however, the Indemnitee refuses its consent to a
bona fide offer of settlement that involves solely the payment of cash that the
Indemnifying Party wishes to accept, the Indemnitee may continue to pursue such
matter, free of any participation by the Indemnifying Party, at the sole
expense of the Indemnitee. In such event, the obligation of the Indemnifying
Party to the Indemnitee shall be equal to the lesser of (i) the amount of the
offer of settlement that the Indemnitee refused to accept plus the costs and
expenses of the Indemnitee prior to the date the Indemnifying Party notified
the Indemnitee of the offer of settlement; and (ii) the actual out-of-pocket
amount the Indemnitee is obligated to pay as a result of such party's
continuing to pursue such matter. An Indemnifying Party shall be entitled to
recover from the Indemnitee any additional expenses incurred by such
Indemnifying Party as a result of the decision of the Indemnitee to pursue
such matter.
30
10.5 General. The indemnification provided in this Agreement shall
apply regardless of whether the matter subject to indemnification involved an
action taken or omitted that was negligent, grossly negligent or reckless by
the Person to be so indemnified. It is understood that such indemnification is
intended to be a means of compensating the parties for any damage or liability
directly or indirectly realized by them for matters subject to such
indemnification. To the extent the indemnification provided for herein may not
be provided to any Person under law, such indemnification shall be required to
be provided to any other Person for whom such indemnification may be
permissible as herein provided.
ARTICLE XI
MISCELLANEOUS
11.1 Entire Agreement. This Agreement and related documents
executed concurrently herewith constitute the sole understanding of the parties
hereto with respect to the matters provided for herein and supersedes the AIP
and any previous agreements and understandings between the parties with
respect to the subject matter hereof. No amendment, modification or alteration
of the terms or provisions of this Agreement shall be binding unless the same
shall be in writing and duly executed by Berry and Tannehill.
11.2 Successors and Assigns. This Agreement will inure to the
benefit of and be binding upon Berry and Tannehill and their respective
successors and permitted assigns. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto without the prior written consent of the other parties hereto.
11.3 Expenses. Except as provided in Sections 10.1 and 10.2
hereof, each party hereto shall be responsible for the payment of the fees and
expenses of their respective counsel, accountants and other experts.
11.4 Taking of Necessary Action. Subject to the terms and
conditions of this Agreement, each of the parties hereto agrees, subject to
applicable laws, to use all reasonable best efforts promptly to take or cause
to be taken all action and to promptly do or cause to be done all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement.
Without limiting the foregoing and subject to the terms and conditions of this
Agreement, the parties shall use their reasonable best efforts to obtain and
make all consents, approvals, assurances and filings of or with third parties
and Governmental Entities necessary or advisable for the consummation of the
transactions contemplated by this Agreement. Each party shall cooperate with
the other in good faith to help the other satisfy its obligations hereunder.
11.5 Invalidity. Except for satisfaction of the conditions of
Article VII or VIII, and the provisions of Article X, if any term or other
provision of this Agreement is invalid, illegal or incapable of being enforced
by any rule of law, or public policy, all other conditions and provisions of
this Agreement shall nevertheless remain in full force and effect so long as the
31
economic and legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party. Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner to the end that transactions contemplated
hereby are fulfilled to the extent possible.
11.6 Attorneys' Fees. In the event of any claim, dispute or
controversy arising out of or relating to this Agreement, including an action
for declaratory relief, the prevailing party in such action or proceeding shall
be entitled to recover its taxable costs or arbitration fees, and reasonable
out-of-pocket expenses, including but not limited to, telephone calls,
photocopies, expert witnesses, travel, computer expenses related to litigation,
and attorneys' fees to be fixed by the court or the arbitrator. Such recovery
shall include court costs, out-of-pocket expenses and attorneys' fees on
appeal, if any. The court shall determine who is the "prevailing party,"
whether or not the dispute or controversy proceeds to final judgment.
11.7 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall constitute the same instrument.
11.8 Headings. The headings of the articles, sections and
paragraphs of this Agreement and of the exhibits hereto are included for
convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction hereof or thereof.
11.9 Construction and References. Words used in this Agreement,
regardless of the number or gender specifically used, shall be deemed and
construed to include any other number, singular or plural, and any other
gender, masculine, feminine or neuter, as the context shall require. Unless
otherwise specified, all references in this Agreement to articles, sections,
paragraphs or clauses are deemed references to the corresponding articles,
sections, paragraphs or clauses in this Agreement, and all references in this
Agreement to exhibits are references to the corresponding exhibits attached to
this Agreement.
11.10 Modification and Waiver. Any of the terms or conditions
of this Agreement may be waived in writing at any time by the party which is
entitled to the benefits thereof. No waiver of any of the provisions of this
Agreement shall be deemed to or shall constitute a waiver of any other
provisions hereof (whether or not similar).
32
11.11 Notices. Any notice, request, instruction or other
document to be given hereunder by any party hereto to any other party shall be
in writing and delivered personally, via telecopy (with receipt confirmed) or
by registered or certified mail, postage prepaid:
(a) if to Tannehill, to:
Tannehill Oil Company
c/o Boyce Resource Development Company
Attn: Mr. Albert G. Boyce, Jr.
Managing General Partner
120 Manteca Avenue
P.O. Box 871
Manteca, California 95336
Facsimile No. (209) 239-7886
Confirmation No. (209) 239-4014
with copies to:
Roger Coley, Esq.
330 H Street, No. 7
Bakersfield, California 93304
Facsimile No. (805) 327-9120
Confirmation No. (805) 328-5575
(b) if to Berry, to:
Berry Petroleum Company
Attn: Jerry V. Hoffman
President and Chief Executive Officer
28700 Hovey Hills Road
Post Office Bin X
Taft, California 93268
Facsimile No. (805) 769-8960
Confirmation No. (805) 769-8811
33
with copies to:
Nordman, Cormany, Hair & Compton
Attn: Laura K. McAvoy, Esq.
1000 Town Center Drive, Sixth Floor
Post Office Box 9100
Oxnard, California 93031-9100
Facsimile No. (805) 988-8387
Confirmation No. (805) 485-1000
or at such other address for a party as shall be specified by like notice. Any
notice that is delivered personally in the manner provided herein shall be
deemed to have been duly given to the party to whom it is directed upon actual
receipt by such party (or its agents for notices hereunder). Any notice that
is addressed and mailed in the manner herein provided shall be conclusively
presumed to have been duly given to the party to which it is addressed at the
close of business, local time of the recipient, on the third day after the day
it is so placed in the mail. Any notice that is sent by telecopy shall be
deemed to have been duly given to the party to which it is addressed upon
telephonic confirmation of the same as provided herein. A copy of any notices
delivered by telecopy shall promptly be mailed in the manner herein provided to
the party to which such notice was given.
11.12 Public Announcements. Without the prior express consent
of Berry, neither Tannehill Oil nor any Partner shall make any public
statements, including, without limitation, any press releases, with respect to
this Agreement and the transactions contemplated hereby.
11.13 Governing Law; Interpretation. This Agreement shall be
construed in accordance with and governed by the laws of the State of California
(regardless of the laws that might otherwise govern under applicable California
principles of conflict of laws) as to all matters, including, but not limited
to, matters of validity, construction, effect, performance and remedies.
11.14 Jurisdiction. Any legal action or proceeding with
respect to this Agreement may be brought in the federal or state courts for the
County of Kern, in the State of California, and by execution and delivery of
this Agreement, Berry and Tannehill hereby accept the jurisdiction of the
aforesaid courts.
34
IN WITNESS WHEREOF, Berry and Tannehill have caused this Agreement
to be executed as of the date first above written.
BERRY PETROLEUM COMPANY, TANNEHILL OIL COMPANY, a
a Delaware corporation California general partnership
By: _____________________________ By: BOYCE RESOURCE DEVELOPMENT
Jerry V. Hoffman, President COMPANY, a California corporation
and Chief Executive Officer Managing General Partner
By: _____________________________ By: ___________________________
Kenneth A. Olson, Secretary Albert G. Boyce, Jr., President
and Secretary
BOYCE RESOURCE DEVELOPMENT By: HHB, INC., a California corporation
COMPANY, a California corporation Managing General Partner
By: ____________________________ By: ___________________________
Albert G. Boyce, Jr., President James L. Hinkle, President
and Secretary and Secretary
By: PASO ENERGY, INC., a California
corporation
Managing General Partner
By: _____________________________
___________________________
Albert G. Boyce, Jr., as Trustee of John W. Tannehill,President
Trust "B" Under Will of Albert G. and Secretary
Boyce, Sr., Deceased
________________________________ ___________________________________
William J. Boyce Albert G. Boyce V
________________________________ ___________________________________
Mary K. Boyce John T. Hinkle
35
________________________________ ___________________________________
Bettianne H. Bowen James L. Hinkle
VERNIER RESOURCES CORPORATION, GENERAL WESTERN, INC.
a Texas corporation a New Mexico corporation
By: ___________________________ By: ______________________________
Bettianne H. Bowen, President James L. Hinkle, President
and Secretary
By: ___________________________
Cheryl Bailey Harrison, Secretary
________________________________ __________________________________
Lisle Q. Tannehill Thomas H. Tannehill
________________________________ ________________________________
Gail Kay Tannehill, as Trustee of the Delmar R. Archibald, as Trustee of the
Gail Kay Tannehill Family Trust, Delmar R. Archibald Family Trust,
dated April 9, 1996 dated June 22, 1982
________________________________ _________________________________
John W. Tannehill Joy A. Archibald, as Trustee of the
Delmar R. Archibald Family Trust,
dated June 22, 1982
Spousal Consents
The undersigned, spouses of the Partners named in this Agreement,
hereby consent to the terms and conditions of this Agreement and agree that
their community property, if any, included in the Assets, as defined herein,
is subject to this Agreement.
_________________________________ _________________________________
_________________________________ _________________________________
_________________________________ _________________________________
1
EXHIBIT 1 TO THAT CERTAIN PURCHASE AND SALE AGREEMENT
BY AND BETWEEN BERRY PETROLEUM COMPANY
AND TANNEHILL OIL COMPANY, A CALIFORNIA GENERAL PARTNERSHIP, ET AL.
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
IN RELIANCE UPON EXEMPTIONS CONTAINED IN SECTION 4(2) OF THE SECURITIES ACT AND
REGULATION D PROMULGATED PURSUANT THERETO, NOR HAVE THE SECURITIES BEEN
QUALIFIED IN ANY STATE IN RELIANCE UPON EXEMPTIONS FROM QUALIFICATION UNDER
APPLICABLE STATE SECURITIES LAWS. ACCORDINGLY, THE SECURITIES RECEIVED HEREBY
MAY NOT BE RESOLD OR TRANSFERRED BY A SHAREHOLDER UNLESS THEY ARE SUBSEQUENTLY
REGISTERED UNDER FEDERAL AND APPLICABLE STATE SECURITIES LAWS OR UNLESS
EXEMPTIONS FROM REGISTRATION AND QUALIFICATION ARE AVAILABLE.
WARRANT CERTIFICATE
For Purchase of Shares of Class A Common Stock
of
BERRY PETROLEUM COMPANY
November 14, 1996
THIS CERTIFIES THAT, for value received, TANNEHILL OIL COMPANY, a
California general partnership ("Warrant Holder"), is entitled, subject to the
terms and conditions hereinafter set forth, to purchase from BERRY PETROLEUM
COMPANY, a Delaware corporation (the "Company"), one hundred thousand (100,000)
fully paid and nonassessable shares (which number is hereinafter sometimes
referred to as the "Initial Exercise Number") of Class A Common Stock, par
value $.01 per share, of the Company (the "Common Stock"), upon presentation
and surrender of this Warrant Certificate, together with a completed and
executed Election to Purchase in the form attached hereto, at any time during
the Exercise Period (as hereinafter defined), at the principal office of the
Company and upon payment therefore to the Company of the purchase price by wire
transfer, cash or certified check, in lawful money of the United States of
America. The Initial Exercise Number shall be subject to adjustment as
hereinafter set forth.
This Warrant ("Warrant") is issued to the Warrant Holder in partial
consideration for the transactions set forth in the Purchase and Sale Agreement
(the "Agreement"), dated as of
2
November 14, 1996, by and between the Company, the Warrant Holder and the
individual partners of the Warrant Holder.
In certain contingencies provided for below, the number of shares of
Common Stock subject to purchase hereunder or the purchase price thereof are
subject to adjustment, but the shares of Common Stock of the Company subject to
purchase hereunder are the shares of such stock of the Company as they may
exist on the date of the exercise of this Warrant, whether or not the rights or
interests represented by such shares are equivalent to the rights or interests
represented by the shares of Common Stock of the Company authorized as of the
date hereof.
This Warrant is subject to the following terms and conditions:
1. Exercise of Warrant. The purchase rights represented by this
Warrant are exercisable at the option of the holder hereof, in whole at any
time, or in part from time to time (but not as to a fractional share of Common
Stock) during the Exercise Period (as defined below). In the case of the
purchase of less than all the shares purchasable under this Warrant, the
Company shall cancel this Warrant upon the surrender hereof and shall execute
and deliver a new Warrant of like tenor for the balance of the shares
purchasable hereunder. The term "Exercise Period" shall mean and refer to the
period commencing on the date hereof and ending on November 8, 2003.
2. Price. The purchase price for each share of Common Stock
purchasable pursuant to the exercise of this Warrant (the "Exercise Price")
shall be equal to the Market Value (as defined below), plus two dollars ($2.00)
per share in funds of the United States of America (or shall be such other
amount per share if and as adjusted as provided in Section 3 below). The term
"Market Value" shall mean the average closing price per share of Class A Common
Stock traded on the New York Stock Exchange for the twenty (20) trading days
prior to the trading day before the closing of the transactions contemplated by
the Agreement (the "Closing"). For example, assuming the respective closing
prices of the Class A Common Stock for the twenty (20) trading days prior to
Closing are as follows:
10/15 $11-1/2 10/3 $11
10/14 $11-1/2 10/2 $11-1/2
10/11 $11-3/4 10/1 $11-3/4
10/10 $11-3/4 9/30 $12
10/9 $11-1/2 9/27 $12
10/8 $11 9/26 $11-3/4
10/7 $11-1/4 9/25 $11-1/2
10/6 $11 9/24 $11-1/2
10/5 $11-3/4 9/23 $11-1/4
10/4 $11-1/2 9/22 $11-1/4
the aggregate total of the closing prices is 230 and the average closing price
per share is equal to 11.5 (i.e., 230 / 20).
3
3. Adjustments to Exercise Price and Number of Shares.
3.1 The Exercise Price and number of shares of Common Stock
purchasable pursuant to the exercise of this Warrant shall be subject to
adjustment from time to time as follows:
a. Adjustment for Combinations or Consolidations of Common
Stock. In the event the Company, at any time after the date hereof (hereinafter
referred to as the "Original Issue Date"), effects a subdivision or combination
of its outstanding Common Stock into a greater or lesser number of shares, then
and in each such event, the Exercise Price and the number of shares of Common
Stock purchasable pursuant to the exercise of this Warrant shall be decreased or
increased, respectively, proportionately.
b. Adjustment for Certain Dividends and Distributions. In
the event the Company at any time after the Original Issue Date shall make or
issue, or fix a record date for the determination of holders of Common Stock
entitled to receive, a dividend or other distribution payable in additional
shares of Common Stock, then and in each such event the maximum number of
shares (as set forth in the instrument relating thereto without regard to any
provisions contained therein for a subsequent adjustment to such number) of
Common Stock issuable in payment of such dividend or distribution shall be
deemed to be issued and outstanding as of the time of such issuance or, in the
event such a record date shall have been fixed, as of the close of business on
such record date. In each such event, the Exercise Price shall be decreased as
of the time of such issuance or, in the event such a record date shall have been
fixed, as of the close of business on such record date, by multiplying the
Exercise Price by a fraction,
(1) the numerator of which shall be the total number of shares of
Common Stock issued and outstanding or deemed to be issued and outstanding
immediately prior to the time of such issuance or the close of business on
such record date; and
(2) the denominator of which shall be the total number of shares
of Common Stock issued and outstanding or deemed to be issued and
outstanding immediately prior to the time of such issuance or the close of
business on such record date plus the number of shares of Common Stock
issuable in payment of such dividend or distribution;
provided, however, that if such record date shall have been fixed and such
dividend not fully paid or if such distribution is not fully made on the date
fixed therefor, the Exercise Price shall be recomputed accordingly as of the
close of business on such record date and thereafter the Exercise Price shall
be adjusted pursuant to paragraph 3.1(b) as of the time of actual payment of
such dividends or distribution.
c. Adjustments for Reclassifications and for Other Dividends
and Distributions. In the event the Company at any time after the Original
Issue Date shall effect a reclassification of its Common Stock (other than one
resulting in the issuance of additional shares of Common Stock) or shall make
or issue, or fix a record date for the determination of
4
holders of Common Stock entitled to receive, a dividend or other distribution
to its stockholders payable in securities of the Company other than shares of
Common Stock, then and in each such event provision shall be made so that the
holder of this Warrant shall receive, upon exercise thereof, the securities of
the Company which such holder would have received had this Warrant been
exercised and the Common Stock issuable on exercise been received on the date
of such event.
3.2 Upon any adjustment of the Exercise Price and of the number of
shares of Common Stock and, if applicable, other securities and property
issuable upon exercise of this Warrant, pursuant to this Section 3, the
Company, within twenty (20) days thereafter, shall cause to be prepared a
certificate of the Chief Financial Officer of the Company setting forth the
Exercise Price after such adjustment and setting forth in reasonable detail the
method of calculation used.
3.3 In case:
a. The Company shall authorize the issuance to all holders
of Common Stock of rights or warrants to subscribe for or purchase capital
stock of the Company or of any other subscription rights or warrants; or
b. the Company shall authorize the distribution to all
holders of Common Stock of evidences of its indebtedness or assets (other than
cash dividends or cash distributions payable out of consolidated earnings or
earned surplus or dividends payable in Common Stock); or
c. of any consolidation or merger to which the Company is
a party and for which approval of any stockholders of the Company is required,
or of the conveyance or transfer of the properties and assets of the Company
substantially as an entirety, or of any capital reorganization or any
reclassification of the Common Stock (other than a change in par value, or from
par value to no par value, or from no par value to par value, or as a result of
a subdivision or combination); or
d. of the voluntary or involuntary dissolution, liquidation
or winding up of the Company; or
e. the Company proposes to take any other action which would
require an adjustment of the Exercise Price or number or kind of shares
issuable upon exercise of this Warrant, pursuant to this Section 3;
then the Company shall cause to be given to the registered holder of the
outstanding Warrant at its address in the records of the Company at least
thirty (30) calendar days (or fifteen (15) calendar days in any case specified
in paragraph a or b above) prior to the applicable record date hereinafter
specified, by first-class mail, postage prepaid, written notice stating (i) the
date as of which the holders of record of shares of Common Stock to be entitled
to receive any rights, warrants or distribution are to be determined or
(ii) the date on which any consolidation, merger,
5
conveyance, transfer, reorganization, reclassification, dissolution,
liquidation or winding up is expected to become effective, and the date as of
which it is expected that holders of record of shares of Common Stock shall be
entitled to exchange the shares for securities or other property, if any,
deliverable upon the consolidation, merger, conveyance, transfer,
reorganization, reclassification, dissolution, liquidation or winding up.
3.4 Irrespective of any adjustments in the Exercise Price or the
number or kind of shares purchasable upon exercise of the Warrant, the Warrant
theretofore or thereafter issued may continue to express the same price and
number and kind of shares as are stated in the similar Warrant initially
issued.
4. Elimination of Fractional Interests. The Company shall not be
required to issue certificates representing fractions of shares of Common
Stock, but will make a payment in cash based on the Exercise Price in effect at
that time.
5. Covenants of the Company. The Company covenants and agrees that
all shares which may be issued upon the exercise of this Warrant shall, upon
issuance, be duly authorized, validly issued, fully paid and non-assessable and
free from all preemptive rights of any stockholder and all taxes, liens and
charges with respect to the issue thereof (other than taxes in respect of any
transfer occurring contemporaneously with such issue). The Company further
covenants and agrees that during the Exercise Period within which the rights
represented by this Warrant may be exercised, the Company will at all times
have authorized, and reserved, a sufficient number of shares of its Common
Stock to provide for the exercise of the rights represented by this Warrant.
6. Restrictions on Transferability of Securities; Compliance with
Securities Act.
6.1 Restrictions on Transferability. This Warrant and shares of
Common Stock issuable upon exercise of this Warrant are restricted shares and
shall not be transferable, except upon the conditions specified in this Section
6, which conditions are intended to insure compliance with the provisions of
the Securities Act of 1933, as amended (the "Securities Act"). The holder of
this Warrant shall cause any proposed transferee of this Warrant, or the shares
of Common Stock issuable upon exercise of this Warrant held by that holder, to
agree to take and hold those securities subject to the provisions and upon the
conditions specified in this Section 6.
6.2 Certain Definitions. As used in this Section 6, the term
"Restricted Securities" means (i) the Warrants, (ii) the shares of Common Stock
issuable or issued upon exercise of the Warrants, and (iii) any shares of
Common Stock of the Company issued as a dividend or other distribution with
respect to, or in exchange or in replacement of the Warrants or such shares of
Common Stock.
6.3 Restrictive Legend. Each certificate representing (i) the
Warrants, (ii) shares of the Company's Common Stock issued upon exercise of the
Warrants, or (iii) any other securities issued in respect of the Warrants or
the Common Stock issued upon exercise of the
6
Warrants upon any stock split, stock dividend, recapitalization, merger,
consolidation or similar event, shall be stamped or otherwise imprinted with a
legend in the following form (in addition to any legend required under
applicable state securities laws):
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), NOR HAVE THE SECURITIES
BEEN QUALIFIED UNDER ANY STATE SECURITIES LAWS. ACCORDINGLY, THE
SECURITIES MAY NOT BE SOLD OR OFFERED FOR SALE UNLESS SUCH
SECURITIES ARE SUBSEQUENTLY REGISTERED UNDER FEDERAL AND APPLICABLE
STATE SECURITIES LAWS OR UNLESS EXEMPTIONS FROM REGISTRATION AND
QUALIFICATION ARE AVAILABLE.
Upon request of a holder of such a certificate, the Company
shall remove the foregoing legend from the certificate or issue to such holder
a new certificate therefor free of any transfer legend, if, with such request,
the Company shall have received the opinion referred to in Section 6.4 to the
effect that any transfer by such holder of the securities evidenced by such
certificate will not violate the Securities Act and applicable state securities
laws.
6.4 Notice of Proposed Transfers. The holder of each certificate
representing Restricted Securities by acceptance thereof agrees to comply in
all respects with the provisions of this Section 6.4. Prior to any proposed
transfer of any Restricted Securities, the holder thereof shall give written
notice to the Company of such holder's intention to effect such transfer. Each
such notice shall describe the manner and circumstances of the proposed
transfer in sufficient detail, and shall be accompanied (except in transactions
in compliance with Rule 144) by a written opinion of legal counsel who shall be
reasonably satisfactory to the Company, addressed to the Company and reasonably
satisfactory in form and substance to the Company's counsel, to the effect that
the proposed transfer of the Restricted Securities may be effected without
registration under the Securities Act, whereupon the holder of such Restricted
Securities shall be entitled to transfer such Restricted Securities in
accordance with the terms of the notice delivered by the holder to the Company.
Each certificate evidencing the Restricted Securities transferred as above
provided shall bear the appropriate restrictive legend set forth in Section 6.3
above, except that such certificate shall not bear such restrictive legend if
the opinion of counsel letter referred to above is to the further effect that
such legend is not required in order to establish compliance with any provision
of the Securities Act.
6.5 Reports Under Securities Exchange Act of 1934. With a view to
making available to the holders the benefits of Rule 144 promulgated under the
Securities Act and any other rule or regulation of the Commission that may at
any time permit a Holder to sell securities of the Company to the public
without registration, the Company agrees to use its best efforts to:
a. make and keep public information available (as provided
in Rule 144) at all times;
7
b. file with the Commission in a timely manner all reports
and other documents required of the Company under the Securities Act and the
Securities Exchange Act of 1934 (the "Exchange Act"); and
c. furnish to any Holder so long as such Holder owns any of
the Restricted Securities upon request a written statement by the Company that
it has complied with the reporting requirements of Rule 144 and of the
Securities Act and the Exchange Act, a copy of the most recent annual or
quarterly report of the Company, and such other reports and documents so filed
by the Company as may be reasonably requested in availing any holder of any
rule or regulation of the Commission permitting the selling of any such
Restricted Securities without registration.
7. Exchange and Replacement of Warrant. Upon receipt by the Company
of evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant, and, in case of loss, theft or destruction, of an
indemnity agreement or bond reasonably satisfactory to it, and reimbursement to
the Company of all reasonable expenses incidental thereto, and upon surrender
and cancellation of this Warrant, if mutilated, the Company will make and
deliver a new Warrant of like tenor, in lieu of this Warrant.
8. Rights Prior to Exercise of Warrant. Prior to the exercise of this
Warrant, the holder of this Warrant shall not be entitled to any rights of a
stockholder of the Company, including without limitation the right to vote, to
receive dividends or other distributions or to exercise any preemptive rights,
as to those shares of Common Stock subject to this Warrant, and shall not be
entitled to receive any notice of any proceedings of the Company except as
provided herein.
9. Notices. Any and all notices, demands, requests or other
communications required or permitted by this Warrant or by law to be served on,
given to or delivered to any party hereto by any other party to this Warrant
shall be in writing and shall be deemed duly served, given or delivered upon
delivery by facsimile transmission (confirmed by any of the methods that
follow), by courier service (with proof of service), by hand delivery, or by
certified or registered mail (return receipt requested and first-class postage
prepaid) and addressed as follows:
If to the Warrant Holder: with copies to:
Tannehill Oil Company Roger Coley, Esq.
c/o Boyce Resource Development Co. 330 H Street, No. 7
Attn: Mr. Albert G. Boyce, Jr. Bakersfield, California 93304
Managing General Partner
120 Manteca Avenue
P.O. Box 871 Facsimile No. (805) 327-9120
Manteca, California 95336 Confirmation No. (805)328-5575
Facsimile No. (209) 239-7886
Confirmation No. (209) 239-4014
8
If to the Company: with copies to:
Berry Petroleum Company Nordman, Cormany, Hair & Compton
28700 Hovey Hills Road Attn: Laura K. McAvoy, Esq.
Post Office Bin X 1000 Town Center Drive, Sixth Floor
Taft, California 93268 Post Office Box 9100
Attn: President Oxnard, California 93031-9100
Facsimile No. (805) 769-8960 Facsimile No. (805) 988-8387
Confirmation No. (805) 769-8811 Confirmation No. (805)485-1000
Any notice which is addressed and mailed in the manner herein provided shall be
conclusively presumed to have been duly given to the party to which it is
addressed at the close of business, local time of the recipient, on the third
day after the day it is so placed in the mail. Either party may change their
address for the purposes of this Warrant, by giving notice of the change, in
the manner required by this Section, to the other party.
10. Successors. This Warrant shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, executors, personal
representatives, successors and assigns and shall be binding upon any person,
firm, corporation or other entity to whom this Warrant and any shares of Common
Stock issuable upon exercise hereof are transferred (even if in violation of
the provisions of this Warrant) and the heirs, executors, personal
representatives, successors and assigns of such person, firm, corporation or
other entity.
11. Governing Law. This Warrant shall be construed in accordance with
and be governed by the laws of the State of Delaware, without regard to its
conflict of laws principles.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed and delivered by its duly authorized officers.
BERRY PETROLEUM COMPANY,
a Delaware corporation
By: _______________________________
Jerry V. Hoffman, President
and Chief Executive Officer
By: _______________________________
Kenneth A. Olson, Secretary
9
ELECTION TO PURCHASE
To: BERRY PETROLEUM COMPANY
The undersigned owner of the accompanying Warrant hereby irrevocably
exercises the option to purchase ___________ shares of Class A Common Stock in
accordance with the terms of such Warrant, directs that the shares issuable and
deliverable upon such purchase (together with any check for a fractional
interest) be issued in the name of and delivered to the undersigned, and makes
payment in full therefor at the Exercise Price provided in such Warrant.
COMPLETE FOR REGISTRATION OF SHARES OF COMMON STOCK ON THE STOCK TRANSFER
RECORDS MAINTAINED BY BERRY PETROLEUM COMPANY:
_______________________________________________________________________
Name of Warrant Holder
_______________________________________________________________________
Address
_______________________________________________________________________
_______________________________________________________________________
Social Security or Other Identifying Number
Signature: __________________________________
Date: _______________________________________
1
EXHIBIT 2 TO THAT CERTAIN PURCHASE AND SALE AGREEMENT
BY AND BETWEEN BERRY PETROLEUM COMPANY
AND TANNEHILL OIL COMPANY, A CALIFORNIA GENERAL PARTNERSHIP, ET AL.
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
NORDMAN, CORMANY, HAIR & COMPTON
Attn: Laura K. McAvoy
1000 Town Center Drive, 6th Floor
Post Office Box 9100
Oxnard, California 93031-9100
MAIL TAX STATEMENTS TO:
BERRY PETROLEUM COMPANY
Attn: Jerry V. Hoffman, President
28700 Hovey Hills Road
Post Office Bin X
Taft, California 93268
Order No. KER 1125444 A.P.N. 220-181-17-00-4
Escrow No. 1125444N 220-181-18-00-7
220-191-03-00-6
220-181-24-00-4
220-181-09-00-1
GRANT DEED
FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged,
JAMES L. HINKLE, as to an undivided 1.082875125% interest; GENERAL WESTERN,
INC., a New Mexico corporation, as to an undivided 4.331500500% interest;
VERNIER RESOURCES CORPORATION, a Texas corporation, as to an undivided
5.414375625% interest; JOHN T. HINKLE, as to an undivided 9.376932675%
interest; ALBERT G. BOYCE, JR., as trustee of Trust "B" under the will of
Albert G. Boyce, Sr., deceased, as to an undivided 15.776797915% interest;
BOYCE RESOURCE DEVELOPMENT COMPANY, a California corporation, as to an
undivided 13.120240000% interest; WILLIAM J. BOYCE, as to an undivided
13.120240000% interest; DELMAR R. ARCHIBALD AND JOY A. ARCHIBALD, trustees of
the Delmar R. Archibald Family Trust, dated June 22, 1982, as to an undivided
2.885940000% interest; GAIL KAY TANNEHILL, as trustee of the Gail Kay Tannehill
Family Trust, dated April 9, 1996, as to an undivided 3.60958375% interest;
JOHN W. TANNEHILL, as to an undivided 3.60958375% interest; THOMAS H.
TANNEHILL, as to an undivided 7.219167500% interest; LISLE Q. TANNEHILL, as to
an undivided 7.219167500% interest; MARY K. BOYCE, as to an undivided
4.63551930500% interest; ALBERT G. BOYCE V, as to an undivided 4.635519305%
interest; and BETTIANNE H. BOWEN, as to an undivided 3.96255705% interest, each
hereby GRANTS to BERRY
2
PETROLEUM COMPANY, a Delaware corporation, the following described real
property in the County of Kern, State of California:
Parcel 1:
That certain portion of the East half of the Northeast quarter of
Section 33, Township 12 North, Range 24 West, S.B.B.M., described as
Parcel 1 of Parcel Map 8297 in the unincorporated area of the County
of Kern, State of California, as per Map recorded January 20, 1989
in Book 37, pages 134 and 135 of Parcel Maps, in the Office of the
County Recorder of said County.
EXCEPTING therefrom any vein or lode of quartz or other rock in
place bearing gold, silver, cinnabar, lead, tin, copper or other
valuable deposits within the land above described which may have
been discovered or known to exist on or prior to November 11, 1902.
EXCEPTING AND RESERVING therefrom a royalty of four percent (4%) of
all oil, gas and other hydrocarbon substances produced from zones
lying below 4,500 feet below the surface of the above described
parcel.
Parcel 2:
The East half of the Northeast quarter of Section 33, Township 12
North, Range 24 West, S.B.B.M., in the unincorporated area of the
County of Kern, State of California, as per the official plat
thereof on file in the Office of the Surveyor General.
EXCEPTING therefrom any vein or lode of quartz or other rock in
place bearing gold, silver, cinnabar, lead, tin, copper or other
valuable deposits within the land above described which may have
been discovered or known to exist on or prior to November 11, 1902.
EXCEPTING therefrom a portion of said land now known as Parcel 1 of
Parcel Map no. 8297 recorded January 20, 1989 in Book 37, page 134
and 135 of Parcel Maps.
EXCEPTING AND RESERVING therefrom a royalty of four percent (4%)
of all oil, gas and other hydrocarbon substances produced from zones
lying below 4,500 feet below the surface of the above described
parcel.
3
Parcel 3:
The Northwest quarter of the Northwest quarter of Section 34,
Township 12 North, Range 24 West, S.B.B.M., in the unincorporated
area of the County of Kern, State of California, as per the official
plat thereof on file in the Office of the Surveyor General.
EXCEPTING therefrom any vein or lode of quartz or other rock in
place bearing gold, silver, cinnabar, lead, tin, copper or other
valuable deposits within the land above described which may have
been discovered or known to exist on or prior to May 13, 1901.
EXCEPTING AND RESERVING therefrom a royalty of four percent (4%) of
all oil, gas and other hydrocarbon substances produced from zones
lying below 4,500 feet below the surface of the above described
parcel.
Dated: October 1, 1996
GENERAL WESTERN, INC., ___________________________________
a New Mexico corporation James L. Hinkle
By: _____________________________ ___________________________________
James L. Hinkle, President John T. Hinkle
and Secretary
____________________________________
BOYCE RESOURCE DEVELOPMENT Albert G. Boyce, Jr., as Trustee of
COMPANY, a California corporation Trust B under Will of Albert G. Boyce, Sr.,
Deceased
By: ______________________________
Albert G. Boyce, Jr., President
and Secretary ___________________________________
William J. Boyce
VERNIER RESOURCES CORPORATION,
a Texas corporation
___________________________________
By: __________________________ Delmar R. Archibald, as Trustee of
Bettianne H. Bowen, President the Delmar R. Archibald Family Trust,
dated June 22, 1982
By: ______________________________
Cheryl Bailey Harrison, Secretary
4
___________________________________ ________________________________
Gail Kay Tannehill, as Trustee of the Joy A. Archibald, as Trustee of the
Gail Kay Tannehill Family Trust, Delmar R. Archibald Family Trust,
dated April 9, 1996 dated June 22, 1982
__________________________________ ________________________________
Thomas H. Tannehill John W. Tannehill
__________________________________ ________________________________
Lisle Q. Tannehill Mary K. Boyce
______________________________________ ________________________________
Bettianne H. Bowen Albert G. Boyce V
5
STATE OF CALIFORNIA )
)
COUNTY OF ________)
On {DATE ___________________}, before me, {NOTARY NAME },
Notary Public, personally appeared { }, personally known to
me (or proved to me on the basis of satisfactory evidence) to be the person{s}
whose name{s} {is/are} subscribed to the within instrument and acknowledged to
me that {he/she/they} executed the same in {his/her/their} authorized
capacit{y/ies}, and that by {his/her/their} signature{s} on the instrument the
person{s}, or the entity upon behalf of which the person{s} acted, executed the
instrument.
WITNESS my hand and official seal.
__________________________________
STATE OF CALIFORNIA )
)
COUNTY OF ________)
On {DATE ___________________}, before me, {NOTARY NAME },
Notary Public, personally appeared { }, personally known to
me (or proved to me on the basis of satisfactory evidence) to be the person{s}
whose name{s} {is/are} subscribed to the within instrument and acknowledged to
me that {he/she/they} executed the same in {his/her/their} authorized
capacit{y/ies}, and that by {his/her/their} signature{s} on the instrument the
person{s}, or the entity upon behalf of which the person{s} acted, executed the
instrument.
WITNESS my hand and official seal.
__________________________________
[Acknowledgements to be continued]
6
Tannehill Oil Company
STATEMENT OF TAX DUE UNDER PROVISIONS OF THE
DOCUMENTARY STAMP ACT
and
REQUEST THAT STAMPS NOT BE MADE A PART OF THE PERMANENT RECORD
TO: County Recorder
THE TAX DUE PURSUANT TO THE PROVISIONS OF THE DOCUMENTARY STAMP ACT ON THE
DEED, TRANSFER, OR CONVEYANCE FROM: James L. Hinkle; General Western, Inc.,
a New Mexico corporation; Vernier Resources Corporation, a Texas corporation;
John T. Hinkle; Albert G. Boyce, Jr., as Trustee of Trust "B" under the Will of
Albert G. Boyce, Sr., Deceased; Boyce Resource Development Company, a California
corporation; William J. Boyce; Delmar R. Archibald and Joy A. Archibald,
Trustees of the Delmar R. Archibald Family Trust, dated June 22, 1982; Gail Kay
Tannehill, as Trustee of the Gail Kay Tannehill Family Trust, dated April 9,
1996; John W. Tannehill; Thomas H. Tannehill; Lisle Q. Tannehill; Mary K.
Boyce; Albert G. Boyce V; and Bettianne H. Bowen
[Name of Grantor(s) or Lessor(s)]
TO: Berry Petroleum Company
[Name of Grantee(s) or Lessee(s)]
OF THE FOLLOWING BRIEFLY DESCRIBED REAL PROPERTY: T12N, R24W, Section 33
APNs 220-181-17-00-4; 220-181-18-00-7; 220-191-03-00-6;
220-181-24-00-4; 220-181-09-00-1
Amounts to: $________________ Amounts to: $___________________
(X) Unincorporated Area ( ) City of ___________________
(X) Computed on full value ( ) Computed on full value
( ) Computed on full value LESS liens ( ) Computed on full value LESS
and encumbrances remaining liens and encumbrances
remaining
Documentary Transfer Tax $____________
Computed on full value of property
conveyed
Tannehill Oil Company
By: ____________________________
Affix transfer Tax Stamp Here Stamp Reserved for Recorder's Coding Stamp
Date: ______________________ By:_________________________________
Title:______________________________
AFTER THE PERMANENT RECORD IS MADE, THIS DOCUMENT WILL BE ATTACHED TO THE
CONVEYING DOCUMENT AND RETURNED TO THE PARTY ENTITLED THERETO. A COPY WILL BE
MADE AND PLACED ON FILE FOR AUDITING PURPOSES.
1
EXHIBIT 3 TO THAT CERTAIN PURCHASE AND SALE AGREEMENT
BY AND BETWEEN BERRY PETROLEUM COMPANY AND TANNEHILL OIL COMPANY,
A CALIFORNIA GENERAL PARTNERSHIP, ET AL.
BILL OF SALE
FOR VALUABLE CONSIDERATION, TANNEHILL OIL COMPANY, a California general
partnership ("Tannehill Oil"), and Boyce Resource Development Company, a
California corporation; Albert G. Boyce, Jr., as Trustee of Trust "B" Under the
Will of Albert G. Boyce, Sr., Deceased; William J. Boyce; Albert G. Boyce V;
Mary K. Boyce; John T. Hinkle; Bettianne H. Bowen; Vernier Resources
Corporation, a Texas corporation; James L. Hinkle; General Western, Inc., a New
Mexico corporation; Delmar R. Archibald and Joy A. Archibald, Trustees of the
Delmar R. Archibald Family Trust, dated June 22, 1982; Lisle Q. Tannehill; John
W. Tannehill; Gail Kay Tannehill, as Trustee of the Gail Kay Tannehill Family
Trust, dated April 9, 1996; and Thomas H. Tannehill, all acting as partners of
Tannehill Oil and individually, jointly and severally ("Partners"), with
Tannehill Oil and the Partners collectively referred to herein as "Seller,"
hereby grants, bargains, transfers and sells to BERRY PETROLEUM COMPANY, a
Delaware corporation ("Buyer"), the personal property listed on Schedule A,
attached hereto and incorporated herein by this reference as though set forth
in full (the "Personal Property").
Seller represents and warrants to Buyer that it is the lawful owner of and
holds good and marketable title to the Personal Property, free and clear of
restrictions on or conditions to transfer or assignment, and free and clear of
all liens, pledges, charges or encumbrances of any nature whatsoever. Seller
and Seller's successors and assigns shall warrant and defend Seller's good and
marketable title to the Personal Property and Seller's right to sell the same
against the lawful claims and demands of all persons whomsoever.
Buyer acknowledges and agrees that it will purchase the Personal Property
AS IS and WHERE IS. Seller makes no representations or warranties regarding
the suitability of the Personal Property for any particular use.
DATED this 1st day of October, 1996.
BERRY PETROLEUM COMPANY,
a Delaware corporation
By: _____________________________________
Jerry V. Hoffman, President
and Chief Executive Officer
By: _____________________________________
Kenneth A. Olson, Secretary
"Buyer"
2
TANNEHILL OIL COMPANY, a California GENERAL WESTERN, INC.,
general partnership a New Mexico corporation
By: Boyce Resource Development Company By: _______________________________
a California corporation James L. Hinkle, President
Managing General Partner and Secretary
By: __________________________ VERNIER RESOURCES CORPORATION,
Albert G. Boyce, Jr. a Texas Corporation
President and Secretary
By: HHB, Inc., a California By: ________________________________
corporation Bettianne H. Bowen, President
Managing General Partner
By: ________________________________
Cheryl Bailey Harrison, Secretary
By: __________________________ _________________________________
James L. Hinkle, President James L. Hinkle
and Secretary
By: Paso Energy, Inc., a California _________________________________
corporation John T. Hinkle
Managing General Partner
___________________________________
Albert G. Boyce, Jr., as Trustee of Trust
By: __________________________ B under Will of Albert G. Boyce, Sr.,
John W. Tannehill, President Deceased
and Secretary
____________________________________
William J. Boyce
______________________________________ _______________________________
Delmar R. Archibald, as Trustee of the Joy A. Archibald, as Trustee of the
Delmar R. Archibald Family Trust, dated Delmar R. Archibald Family Trust,
June 22, 1982 dated June 22, 1982
______________________________________ ____________________________________
Gail Kay Tannehill, as Trustee of the John W. Tannehill
Gail Kay Tannehill Family Trust,
dated April 9, 1996 ____________________________________
Thomas H. Tannehill
______________________________________ ____________________________________
Lisle Q. Tannehill Mary K. Boyce
3
______________________________________ ____________________________________
Bettianne H. Bowen Albert G. Boyce V
"Seller"
4
SCHEDULE A
TO EXHIBIT 3
BILL OF SALE ATTACHED TO AND MADE A PART OF THAT CERTAIN
PURCHASE AND SALE AGREEMENT, DATED NOVEMBER 8, 1996,
BY AND BETWEEN BERRY PETROLEUM COMPANY AND
TANNEHILL OIL COMPANY, ET AL.
1
EXHIBIT 4 TO THAT CERTAIN PURCHASE AND SALE AGREEMENT
BY AND BETWEEN BERRY PETROLEUM COMPANY
AND TANNEHILL OIL COMPANY, A CALIFORNIA GENERAL PARTNERSHIP, ET AL.
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
NORDMAN, CORMANY, HAIR & COMPTON
Attn: Laura K. McAvoy, Esq.
1000 Town Center Drive, 6th Floor
Post Office Box 9100
Oxnard, California 93031-9100
MAIL TAX STATEMENTS TO:
Berry Petroleum Company
Jerry V. Hoffman, President
28700 Hovey Hills Road
Post Office Bin X
Taft, California 93265
A.P.N. 220-181-17-00-4
220-181-18-00-7
220-191-03-00-6
220-181-24-00-4
220-181-09-00-1
ASSIGNMENT OF LEASES, RIGHTS OF WAY, EASEMENTS AND CONTRACTS
THIS ASSIGNMENT OF LEASES, RIGHTS OF WAY, EASEMENTS AND CONTRACTS
("Assignment"), dated and effective as of 12:01 a.m. Pacific Standard Time, on
October 1, 1996 (the "Effective Date"), is from TANNEHILL OIL COMPANY, a
California general partnership, and those individuals and entities listed on
Schedule A hereto (collectively, "Assignor"), whose address is 29091 Highway
33, Maricopa, California 93252, P.O. Box 98, Taft, California 93268, to BERRY
PETROLEUM COMPANY, a Delaware corporation ("Assignee"), whose address is 28700
Hovey Hills Road, Post Office Bin X, Taft, California 93268.
1. Assignment. For the sum of Ten Dollars ($10) and other good and
valuable consideration, the receipt and sufficiency of which Assignor hereby
acknowledges, Assignor hereby transfers, grants, bargains, conveys and assigns
to Assignee, effective for all purposes as of the Effective Date, subject to
the terms and conditions set forth in that certain Purchase and Sale Agreement
dated November 8, 1996, by and between Berry Petroleum Company and Tannehill
Oil Company, et al. ("Purchase and Sale Agreement"), and subject to all
contracts,
2
agreements, encumbrances and other matters to which the following assets are
subject as of the Effective Date, all of Assignor's right, title and interest
in and to the interests and rights described in Schedule B to this Assignment
(hereinafter collectively called and referred to as the "Assets") and all other
rights, privileges, obligations, benefits and powers conferred upon the owner
or holder of the Assets.
2. Assumptions. Assignee hereby assumes and agrees to pay, perform and
discharge its obligations under the Assets, and the agreements, associated
contracts and other burdens pertaining thereto, which accrue and relate to, or
are based upon or arise out of, events occurring after the Effective Date, all
in accordance with the terms of the Purchase and Sale Agreement.
3. Further Assurances. The parties agree to take all such further
actions and execute, acknowledge and deliver all such further documents that
are necessary or useful in carrying out the purposes of this Assignment. So
long as authorized by applicable law so to do, Assignor hereby agrees to
execute, acknowledge and deliver to Assignee all such other additional
instruments, notices, division orders, transfer orders and other documents and
to do all such other and further acts and things as may be necessary to more
fully and effectively grant, convey, transfer and assign to Assignee the Assets
conveyed hereby or intended so to be.
4. Schedules. Reference is made to Schedules A and B attached hereto
and made a part hereof for all purposes. Reference in such Schedules to
instruments on file or recorded in the public records are made for all
purposes.
5. Headings. Headings are included in this Assignment for convenience
of reference and shall in no way define, limit, extend, or describe the scope
or intent of any provision of this Assignment.
6. Successors and Assigns. This Assignment shall bind and inure to the
benefit of Assignor and Assignee and their respective successors and assigns.
7. Multiple Counterparts. This Assignment may be executed in any number
of counterparts and each counterpart hereof shall be deemed to be an original
instrument but all of such counterparts shall constitute but one assignment.
8. Recordation. To facilitate recording or filing of this Assignment,
each counterpart filed with a federal or state agency or office may contain
only those portions of Schedules A and B that describe property under the
jurisdiction of that agency or office. Assignor and Assignee have each
retained a counterpart of this Assignment with complete Schedules A and B.
Another counterpart of this Assignment with complete Schedules A and B shall be
recorded in the official real property records of Kern County, California.
9. Governing Law. The provisions of this Assignment shall be governed
by and construed in accordance with the laws of the State of California,
excluding any conflicts of law, rule or principle that might refer same to the
laws of another jurisdiction.
3
TANNEHILL OIL COMPANY, a California GENERAL WESTERN, INC.,
general partnership a New Mexico corporation
By: Boyce Resource Development By: _______________________________
Company, a California corporation James L. Hinkle, President
Managing General Partner and Secretary
By: __________________________
Albert G. Boyce, Jr.,
President and Secretary VERNIER RESOURCES CORPORATION,
a Texas Corporation
By: HHB, Inc., a California
corporation By: _______________________________
Managing General Partner Bettianne H. Bowen, President
By: __________________________ By: _______________________________
James L. Hinkle, President Cheryl Bailey Harrison, Secretary
and Secretary
By: Paso Energy, Inc., a California ___________________________________
corporation John T. Hinkle
Managing General Partner
__________________________________
By: __________________________ James L. Hinkle
John W. Tannehill, President
and Secretary ____________________________________
Albert G. Boyce, Jr., as Trustee of Trust B
_______________________________ under Will of Albert G. Boyce, Sr., Deceased
William J. Boyce
_____________________________________ ________________________________
Delmar R. Archibald, as Trustee of the Joy A. Archibald, as Trustee of the
Delmar R. Archibald Family Trust, dated Delmar R. Archibald Family Trust,
June 22, 1982 dated June 22, 1982
______________________________________ ________________________________
Gail Kay Tannehill, as Trustee of the John W. Tannehill
Gail Kay Tannehill Family Trust,
dated April 9, 1996 ________________________________
Thomas H. Tannehill
______________________________________ ________________________________
Lisle Q. Tannehill Mary K. Boyce
4
______________________________________ ________________________________
Bettianne H. Bowen Albert G. Boyce V
"Assignor"
BERRY PETROLEUM COMPANY,
a Delaware corporation
By: ________________________________
Jerry V. Hoffman, President
By: ________________________________
Kenneth A. Olson, Secretary
"Assignee"
1
SCHEDULE A
TO EXHIBIT 4
ASSIGNMENT OF LEASES, RIGHTS OF WAY, EASEMENTS AND OTHER
CONTRACTS ATTACHED TO AND MADE A PART OF
THAT CERTAIN PURCHASE AND SALE AGREEMENT
DATED NOVEMBER 8, 1996,
BY AND BETWEEN BERRY PETROLEUM COMPANY AND
TANNEHILL OIL COMPANY, ET AL.
(UNRECORDED DOCUMENTS)
ASSIGNORS
1. JAMES L. HINKLE
2. JOHN T. HINKLE
3. VERNIER RESOURCES CORPORATION, a Texas corporation
4. GENERAL WESTERN, INC., a New Mexico corporation
5. DELMAR R. ARCHIBALD FAMILY TRUST
6. LISLE Q. TANNEHILL
7. JOHN W. TANNEHILL
8. THOMAS H. TANNEHILL
9. GAIL KAY TANNEHILL FAMILY TRUST
10. TRUST B UNDER WILL OF ALBERT G. BOYCE, SR., DECEASED
11. BOYCE RESOURCE DEVELOPMENT COMPANY, a California corporation
12. WILLIAM J. BOYCE
13. MARY K. BOYCE
14. BETTIANNE H. BOWEN
15. ALBERT G. BOYCE V
1
SCHEDULE B TO
EXHIBIT 4
ASSIGNMENT OF LEASES, RIGHTS OF WAY, EASEMENTS AND OTHER
CONTRACTS ATTACHED TO AND MADE A PART OF
THAT CERTAIN PURCHASE AND SALE AGREEMENT
DATED NOVEMBER 8, 1996,
BY AND BETWEEN BERRY PETROLEUM COMPANY AND
TANNEHILL OIL COMPANY, ET AL.
(UNRECORDED DOCUMENTS)
1. Paved Road Maintenance Letter from Texaco to San Joaquin Valley Air
Pollution Control District dated 9-23-92.
2. Oil Sales Agreement between Texaco Trading & Transportation (purchase no.
16P85) and Tannehill Oil Company dated 6-13-88.
3. Oil Sales Agreement between Koch (lease no. 20390) and Tannehill Oil
Company dated 11-9-90 and Amended 2-2-96.
4. Oil Sales Agreement between Koch (lease no. 28572) and Tannehill Oil
Company, 90 day contract.
5. Waste Water Disposal Agreement between Oxy U.S.A., Inc. and Tannehill
Oil Company dated 6-1-90.
6. Water District Agreement No. 8 between West Kern Water District and
Tannehill Oil Company dated 5-17-83.
7. Water District Agreement No. 9 between West Kern Water District and
Tannehill Oil Company dated 1-13-87.
8. Easement and Right-of-Way Pipeline Agreement by and between Texaco Inc.,
as Grantor and Mobil Exploration and Production U.S. Inc., as Grantee
dated September 5, 1990. (CAMCL02221)
9. Private Road Easement and Right-of-Way Agreement by and between Texaco
Inc., as Grantor and Oxy U.S.A. Inc., as Grantee dated November 28,
1988. (CAMCLO2225)
10. Private Road Easement and Right-of-Way by and between Texaco Inc., as
Grantor and Berry Petroleum Company, as Grantee dated January 3, 1989.
(CAMCLO1009)
11. Private Road Easement and Right-of-Way by and between Texaco Inc., as
Grantor and Berry Petroleum Company, as Grantee dated January 3, 1989.
(CAMCLO1010)
12. Roadway Easement by and between Texaco Inc., as Grantor and Chevron
U.S.A. Inc., as Grantee dated December 22, 1988. (CAMCLO2223)
13. Road Right-of-Way and Easement by and between Texaco Inc., as Grantor
and Chalk Cliff Ltd., as Grantee dated September 8, 1988.
14. Road Maintenance Agreement between Berry Petroleum Company, as Grantor
and Exxon Corporation, as Grantee dated September 8, 1988. (CAMCL01110)
2
15. Roadway Agreement by and between Texaco, as Grantor and Monarch
Cogeneration, as Grantee dated April 13, 1987.
16. Pipeline Lease Agreement from Texaco Inc., as Lessor to Tannehill Oil
Company, as Lessee dated June 16, 1993.
17. Road Right-of-Way for Cogeneration (from Hwy 33) between Oxy, as Grantor
and Tannehill Oil Company, as Grantee dated October 15, 1984.
18. Pipeline Right-of-Way between The Texas Company (Texaco), as Grantor,
and Union Oil Company of California, as Grantee dated May 15, 1953.
(CAMCL02229)
19. Pipeline License Agreement between Shell Western E&P Inc., as Licensor,
and Tannehill Oil Company, as Licensee dated June 9, 1993.
20. Pipeline License Agreement between Mobil Exploration & Producing U.S.
Inc., as Licensor and Tannehill Oil Company, as Licensee dated May 11,
1993. (CAMCL02153)
21. Pipeline License Agreement between Shell Western E&P Inc., as Licensor
and Tannehill Oil Company, as Licensee dated April 13, 1993.
22. Pipeline Easement between Oxy U.S.A. Inc., as Grantor and Tannehill Oil
Company, as Grantee dated June 1, 1993.
23. Consent to Pipeline Easement (BDT) between Oxy U.S.A. Inc., First Party
and South Midway BDT Service Pipeline System and Berry Petroleum
Company, as Operator dated July 23, 1992. (CAMCL02057)
24. Pipeline License Agreement (BDT) between Mobil Exploration & Producing
U.S. Inc., South Midway BDT Service Pipeline System and Berry Petroleum
Company, as Operator dated February 1, 1992. (CAMCL02057)
25. Pipeline License Agreement (BDT) between Texaco Exploration and
Production Inc., and South Midway BDT Service Pipeline System, and Berry
Petroleum Company, as Operator dated March 20, 1992. (CAMCL02058)
26. Pipeline License Agreement (BDT) between Fredric McCleery, as Grantor
and Berry Petroleum Company, Chalk Cliff Limited, and Tannehill Oil
Company, Grantee dated March 16, 1992. (CAMCL02060)
27. Consent to Pipeline Easement (BDT) between Oxy U.S.A. Inc., South Midway
BDT Service Pipeline System and Berry Petroleum Company dated July 23,
1992 for Nancy Snyder R-O-W dated March 11, 1992. (CAMCL01180)
28. Pipeline License Agreement (BDT) between Nancy M. Snyder, as Grantor and
Berry Petroleum Company, Chalk Cliff Limited, and Tannehill Oil Company,
as Grantee dated March 11, 1992. (CAMCL01180)
29. Consent to Pipeline Easement (BDT) between Oxy U.S.A. Inc., First Party
and South Midway BDT Service Pipeline System, and Berry Petroleum
Company, Operator dated July 23, 1992 for Masonic Homes of California
R-O-W dated March 13, 1992. (CAMCL02116)
30. Pipeline License Agreement (BDT) between Betsy M. Vetter, as Grantor and
Berry Petroleum Company, Chalk Cliff Limited, and Tannehill Oil Company,
as Grantee dated March 13, 1992. (CAMCL02116)
3
31. Consent to Pipeline Easement (BDT) between Oxy U.S.A. Inc., First Party
and South Midway BDT Service Pipeline System, and Berry Petroleum
Company, Operator dated July 23, 1992 for Betsy M. Vetter R-O-W dated
March 3, 1992. (CAMCL02117)
32. Pipeline License Agreement (BDT) between Masonic Homes of California, as
Grantor and Berry Petroleum Company, Chalk Cliff Limited, and Tannehill
Oil Company, as Grantee dated March 3, 1992. (CAMCL02117)
33. Pipeline License Agreement (BDT) between Oxy U.S.A. Inc, as Grantor and
Berry Petroleum Company, Chalk Cliff Limited, and Tannehill Oil Company,
as Grantee dated May 20, 1991. (CAMCL02149)
34. Pipeline License Agreement (BDT) between James F. Thacher, successor in
title to John L. Bradley, as Licensor and South Midway BDT Pipeline
System, as Licensee dated March 31, 1992. (CAMCL02056)
35. Pole Line Easement between Hinkle Resources, et al., as Grantor and
Pacific Gas and Electric Company, as Grantee dated September 15, 1984.
36. Surface Lease Agreement between Tannehill Oil Company, as Lessor and
Berry Petroleum Company, as Lessee, dated June 23, 1993. (CAMCL02151)
37. Agreement for a 6" steam line and 4" water line between Shell Western
E&P Inc., as Grantor and Tannehill Oil Company, as Grantee dated May 14,
1990.
38. Letter regarding a right-of-way for a 3" water disposal line and a 6"
steam line, to Mobil Exploration & Producing Inc. from Tannehill Oil
Company (Russell Goff) dated April 12, 1990. (CAMCL01048)
39. Pipeline License Agreement between Mobil Exploration & Producing Inc., as
Grantor and Tannehill Oil Company, as Grantee with Berry Petroleum
Company's consent, dated May 29, 1990. (CAMCL01048)
40. Pipeline License Agreement between Tannehill Oil Company, as Licensor
and Berry Petroleum Company, as Licensee dated August 9, 1995.
(CAMCL02187)
41. Pipeline License Agreement between Berry Petroleum Company, as Grantor
to Tannehill Oil Company, as Grantee dated June 23, 1993. (CAMCL02142)
42. Easement between Tannehill Oil Company, as Licensor and Mobil
Exploration & Producing, Inc. as Licensee dated September 1, 1993.
43. Temporary Access Agreement between Tannehill Oil Company, as Grantor
and Mobil Exploration & Producing, Inc., as Grantee dated June 27, 1991.
44. Phone Line Right-of-Way between Mobil Exploration & Production Inc., as
Grantor and Tannehill Oil Company, as Grantee dated August 1993.
45. Agreement (BDT) between Solar Cogeneration, Southwest Contractors and
Tannehill Oil, dated February 1992.
46. License Agreement between Monarch Cogeneration 1986-1, as Licensor and
AWAM Petroleum Inc., and Albert G. Boyce, Jr., as Licensee and Southwest
Contractors, as Contractor, (unsigned draft only), dated February 19,
1993.
47. Lease Agreement between Texaco Trading & Transportation Inc., as Lessor
and Tannehill Oil Company, as Lessee dated June 16, 1993.
4
48. Waste Water Pipeline R-O-W between Texaco Producing Inc., as Grantor and
Chalk Cliff Cogeneration, as Grantee, not dated or signed, status
unknown. (CAMCL02222)
49. Road R-O-W Agreement by and between Texaco, Inc., as Grantor and Chalk
Cliff Limited, as Grantee, dated December 12, 1988. (CAMCL02224)
50. Pipeline R-O-W Agreement by and between Texaco, Inc., as Grantor and
Berry Holding Company, as Grantee dated May 24, 1982. (CAMCL01139)
51. Private Road by and between Texaco, Inc., as Grantor and Exxon
Corporation, as Grantee dated June 27, 1988. (CAMCL02228)
52. Pipeline R-O-W Agreement by and between Texaco, Inc., as Grantor and
Berry Holding Company, as Grantee dated October 27, 1966. (CAMCL01076)
53. Pipeline Agreement by and between Texaco, Inc., as Grantor and Socony
Mobil Oil Company, as Grantee dated April 28, 1965. (CAMCL02226)
54. Pole Line R-O-W by and between The Texas Company, as Grantor and
Standard Oil Company of California, as Grantee dated May 11, 1955.
(CAMCL02227)
55. Power and Pole Line Agreement by and between the Texas Company, as
Grantor and Pacific Gas and Electric Company, as Grantee dated August 8,
1944. (CAMCL02230)
56. Pipeline Agreement by and between the Texas Company, as Grantor and
Standard Oil Company of California, as Grantee dated January 23, 1939.
(CAMCL02231)
57. Pipeline Agreement by and between The Texas Company, as Grantor and
Standard Oil Company of California, as Grantee dated November 23, 1937.
(CAMCL02232)
58. Pipeline Agreement by and between The Texas Company, as Grantor and
Standard Gasoline Company, as Grantee dated August 14, 1936.
(CAMCL02233)
59. Water Pipeline Agreement by and between The Texas Company, as Grantor
and Western Water Company, as Grantee dated January 13, 1936.
(CAMCL02234)
60. A Right-of-Way between Albert G. Boyce, Jr., et al. and Security Pacific
Leasing Corporation dated August 24, 1994.
61. A Right-of-Way between Tannehill Oil Company and Security Pacific
Leasing Corporation dated August 24, 1994.
62. An Easement between Tannehill Oil Company and Security Pacific Leasing
Corporation dated August 26, 1994.
63. An Agreement governing the Joint Venture for the Kern River-Mojave
Pipeline Lateral among Mobil Oil Corporation, Berry Petroleum
Company, Chalk Cliff Limited and Tannehill Oil Company dated December 2,
1991.
64. An Agreement governing the Joint Venture for the South Midway BDT
Service Pipeline System among Berry Petroleum Company, Chalk Cliff
Limited and Tannehill Oil Company dated January 8, 1992.
5
65. An interruptible Transportation Agreement between Mojave Pipeline
Operating Company, as Transporter and Tannehill Oil Company, as
Shipper, dated March 1, 1995.
1
EXHIBIT 5 TO THAT CERTAIN PURCHASE AND SALE AGREEMENT
BY AND BETWEEN BERRY PETROLEUM COMPANY
AND TANNEHILL OIL COMPANY, A CALIFORNIA GENERAL PARTNERSHIP, ET AL.
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
NORDMAN, CORMANY, HAIR & COMPTON
Attn: Laura K. McAvoy, Esq.
1000 Town Center Drive, 6th Floor
Post Office Box 9100
Oxnard, California 93031-9100
MAIL TAX STATEMENTS TO:
Berry Petroleum Company
Jerry V. Hoffman, President
28700 Hovey Hills Road
Post Office Bin X
Taft, California 93265
A.P.N. 220-181-17-00-4
220-181-18-00-7
220-191-03-00-6
220-181-24-00-4
220-181-09-00-1
ASSIGNMENT OF LEASES, RIGHTS OF WAY, EASEMENTS AND CONTRACTS
THIS ASSIGNMENT OF LEASES, RIGHTS OF WAY, EASEMENTS AND CONTRACTS
("Assignment"), dated and effective as of 12:01 a.m. Pacific Standard Time, on
October 1, 1996 (the "Effective Date"), is from TANNEHILL OIL COMPANY, a
California general partnership, and those individuals and entities listed on
Schedule A hereto (collectively, "Assignor"), whose address is 29091 Highway
33, Maricopa, California 93252, P.O. Box 98, Taft, California 93268 to BERRY
PETROLEUM COMPANY, a Delaware corporation ("Assignee"), whose address is 28700
Hovey Hills Road, Post Office Bin X, Taft, California 93268.
1. Assignment. For the sum of Ten Dollars ($10) and other good and
valuable consideration, the receipt and sufficiency of which Assignor hereby
acknowledges, Assignor hereby transfers, grants, bargains, conveys and assigns
to Assignee, effective for all purposes as of the Effective Date, subject to
the terms and conditions set forth in that certain Purchase and Sale Agreement
dated November 8, 1996, by and between Berry Petroleum Company and
2
Tannehill Oil Company et al. ("Purchase and Sale Agreement"), and subject to
all contracts, agreements, encumbrances and other matters to which the
following assets are subject as of the Effective Date, all of Assignor's right,
title and interest in and to the interests and rights described in Schedule B
to this Assignment (hereinafter collectively called and referred to as the
"Assets") and all other rights, privileges, obligations, benefits and powers
conferred upon the owner or holder of the Assets.
2. Assumptions. Assignee hereby assumes and agrees to pay, perform and
discharge its obligations under the Assets, and the agreements, associated
contracts and other burdens pertaining thereto, which accrue and relate to, or
are based upon or arise out of, events occurring after the Effective Date, all
in accordance with the terms of the Purchase and Sale Agreement.
3. Further Assurances. The parties agree to take all such further
actions and execute, acknowledge and deliver all such further documents that
are necessary or useful in carrying out the purposes of this Assignment. So
long as authorized by applicable law so to do, Assignor hereby agrees to
execute, acknowledge and deliver to Assignee all such other additional
instruments, notices, division orders, transfer orders and other documents and
to do all such other and further acts and things as may be necessary to more
fully and effectively grant, convey, transfer and assign to Assignee the Assets
conveyed hereby or intended so to be.
4. Schedules. Reference is made to Schedules A and B attached hereto
and made a part hereof for all purposes. Reference in such Schedules to
instruments on file or recorded in the public records are made for all
purposes.
5. Headings. Headings are included in this Assignment for convenience
of reference and shall in no way define, limit, extend, or describe the scope
or intent of any provision of this Assignment.
6. Successors and Assigns. This Assignment shall bind and inure to the
benefit of Assignor and Assignee and their respective successors and assigns.
7. Multiple Counterparts. This Assignment may be executed in any number
of counterparts and each counterpart hereof shall be deemed to be an original
instrument but all of such counterparts shall constitute but one assignment.
8. Recordation. To facilitate recording or filing of this Assignment,
each counterpart filed with a federal or state agency or office may contain
only those portions of Schedules A and B that describe property under the
jurisdiction of that agency or office. Assignor and Assignee have each
retained a counterpart of this Assignment with complete Schedules A and B.
Another counterpart of this Assignment with complete Schedules A and B shall be
recorded in the official real property records of Kern County, California.
3
9. Governing Law. The provisions of this Assignment shall be governed
by and construed in accordance with the laws of the State of California,
excluding any conflicts of law, rule or principle that might refer same to the
laws of another jurisdiction.
TANNEHILL OIL COMPANY, a California GENERAL WESTERN, INC.,
general partnership a New Mexico corporation
By: Boyce Resource Development By: ________________________________
Company, a California corporation James L. Hinkle, President
Managing General Partner and Secretary
By: __________________________
Albert G. Boyce, Jr.,
President and Secretary
VERNIER RESOURCES CORPORATION,
a Texas Corporation
By: HHB, Inc., a California
corporation By: _______________________________
Managing General Partner Bettianne H. Bowen, President
By: __________________________ By: _______________________________
James L. Hinkle, President Cheryl Bailey Harrison, Secretary
and Secretary
By: Paso Energy, Inc., a California ________________________________
corporation John T. Hinkle
Managing General Partner
________________________________
By: __________________________ James L. Hinkle
John W. Tannehill, President
and Secretary __________________________________
Albert G. Boyce, Jr., as Trustee of Trust B
under Will of Albert G. Boyce, Sr., Deceased
______________________________________
William J. Boyce
______________________________________ ______________________________
Delmar R. Archibald, as Trustee of the Joy A. Archibald, as Trustee of the
Delmar R. Archibald Family Trust, dated Delmar R. Archibald Family Trust,
June 22, 1982 dated June 22, 1982
______________________________________ ______________________________
Gail Kay Tannehill, as Trustee of the John W. Tannehill
4
Gail Kay Tannehill Family Trust,
dated April 9, 1996 ____________________________________
Thomas H. Tannehill
_________________________________ ___________________________________
Lisle Q. Tannehill Mary K. Boyce
_________________________________ ___________________________________
Bettianne H. Bowen Albert G. Boyce V
"Assignor"
BERRY PETROLEUM COMPANY,
a Delaware corporation
By: ________________________________
Jerry V. Hoffman, President
By: ________________________________
Kenneth A. Olson, Secretary
"Assignee"
1
SCHEDULE A
TO EXHIBIT 5
ASSIGNMENT OF LEASES, RIGHTS OF WAY, EASEMENTS AND OTHER
CONTRACTS ATTACHED TO AND MADE A PART OF
THAT CERTAIN PURCHASE AND SALE AGREEMENT
DATED NOVEMBER 8, 1996,
BY AND BETWEEN BERRY PETROLEUM COMPANY AND
TANNEHILL OIL COMPANY, ET AL.
(RECORDED DOCUMENTS)
ASSIGNORS
1. JAMES L. HINKLE
2. JOHN T. HINKLE
3. VERNIER RESOURCES CORPORATION, a Texas corporation
4. GENERAL WESTERN, INC., a New Mexico corporation
5. DELMAR R. ARCHIBALD FAMILY TRUST
6. LISLE Q. TANNEHILL
7. JOHN W. TANNEHILL
8. THOMAS H. TANNEHILL
9. GAIL KAY TANNEHILL FAMILY TRUST
10. TRUST B UNDER WILL OF ALBERT G. BOYCE, SR., DECEASED
11. BOYCE RESOURCE DEVELOPMENT COMPANY, a California corporation
12. WILLIAM J. BOYCE
13. MARY K. BOYCE
14. BETTIANNE H. BOWEN
15. ALBERT G. BOYCE V
2
SCHEDULE B TO
EXHIBIT 5
ASSIGNMENT OF LEASES, RIGHTS OF WAY, EASEMENTS AND OTHER
CONTRACTS ATTACHED TO AND MADE A PART OF
THAT CERTAIN PURCHASE AND SALE AGREEMENT
DATED NOVEMBER 8, 1996,
BY AND BETWEEN BERRY PETROLEUM COMPANY AND
TANNEHILL OIL COMPANY, ET AL.
(RECORDED DOCUMENTS)
1. A premises Lease dated August 15, 1994, between Albert G. Boyce, Jr. as
Trustee of Trust B under Will of Albert G. Boyce, Sr., et. al., as Lessor
and Security Pacific Leasing Corporation as Lessee, recorded August 26,
1994 in Book 7079, Page 2007, Official Records.
2. Agreement for the Sale and Delivery of Oil Between Monte Cristo Oil and
Development Company and Standard Oil Company, recorded March 18, 1910 in
Book 21, Page 139 of Agreements.
3. Memorandum of Operating Agreement between Tannehill Oil Company and Delmar
R. Archibald, et. al., for the production of oil and gas, recorded August
18, 1992 in Book 6715, Page 661, Official Records.
4. Road Agreement between Oxy USA, Inc. and Tannehill Oil Company, recorded
December 27, 1988 in Book 6194, Page 1339, Official Records.
5. Road Right of Way Agreement between Oxy U.S.A. Inc. and Monarch
Co-Generation 1986-1, a California limited partnership, recorded December
27, 1988 in Book 6194, Page 1351, Official Records.
6. Grant of Easement between Masonic Homes of California, a corporation and
Tannehill Oil Company, recorded March 6, 1985 in Book 5740, Page 170,
Official Records.
3
Tannehill Oil Company
STATEMENT OF TAX DUE UNDER PROVISIONS OF THE
DOCUMENTARY STAMP ACT
and
REQUEST THAT STAMPS NOT BE MADE A PART OF THE PERMANENT RECORD
TO: Kern County Recorder
THE TAX DUE PURSUANT TO THE PROVISIONS OF THE DOCUMENTARY STAMP ACT ON THE
DEED, TRANSFER, OR CONVEYANCE FROM: Tannehill Oil Company, a California general
partnership, James L. Hinkle; John T. Hinkle; Vernier Resources Corporation, a
Texas corporation; General Western, Inc., a New Mexico corporation; Delmar R.
Archibald Family Trust; Lisle Q. Tannehill; John W. Tannehill; Thomas H.
Tannehill; Gail Kay Tannehill Family Trust; Trust B under Will of Albert G.
Boyce, Sr., Deceased; Boyce Resource Development Company, a California
corporation; William J. Boyce; Mary K. Boyce; Bettianne H. Bowen; and Albert G.
Boyce V.
[Name of Grantor(s) or Lessor(s)]
TO: Berry Petroleum Company
[Name of Grantee(s) or Lessee(s)]
OF THE FOLLOWING BRIEFLY DESCRIBED REAL PROPERTY: T12N, R24W, Section 33,
APNs 220-181-17-00-4; 220-181-18-00-7; 220-191-03-00-6;
220-181-24-00-4; 220-181-09-00-1
Amounts to: $______0_________ Amounts to: $_________________
(X) Unincorporated Area ( ) City of_________________
(X) Computed on full value ( ) Computed on full value
( ) Computed on full value LESS liens ( ) Computed on full value LESS
and encumbrances remaining and encumbrances remaining
Documentary Transfer Tax $____________
Computed on full value of property
conveyed
Tannehill Oil Company
By: _________________________________
Affix transfer Tax Stamp Here Stamp Reserved for Recorder's Coding Stamp
Date: _____________________________ By:___________________________________
Title:____________________________
AFTER THE PERMANENT RECORD IS MADE, THIS DOCUMENT WILL BE ATTACHED TO THE
CONVEYING DOCUMENT AND RETURNED TO THE PARTY ENTITLED THERETO. A COPY WILL BE
MADE AND PLACED ON FILE FOR AUDITING PURPOSES.
1
EXHIBIT 6 TO THAT CERTAIN PURCHASE AND SALE AGREEMENT
BY AND BETWEEN BERRY PETROLEUM COMPANY
AND TANNEHILL OIL COMPANY, A CALIFORNIA GENERAL PARTNERSHIP, ET AL.
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
NORDMAN, CORMANY, HAIR & COMPTON
Attn: Laura K. McAvoy, Esq.
1000 Town Center Drive, 6th Floor
Post Office Box 9100
Oxnard, California 93031-9100
MAIL TAX STATEMENTS TO:
BERRY PETROLEUM COMPANY
Attn: Jerry V. Hoffman
Post Office Bin X
Taft, California 93268
A.P.N. 098-170-14-00-4
ASSIGNMENT OF OIL AND GAS LEASES
THIS ASSIGNMENT OF OIL AND GAS LEASES ("Assignment"), dated and effective
as of 12:01 a.m. Pacific Standard Time, on October 1, 1996 (the "Effective
Date"), is from TANNEHILL OIL COMPANY, a California general partnership, whose
address is 29091 Highway 33, Maricopa, California 93252, P.O. Box 98, Taft,
California 93268, and those individuals and entities listed on Schedule A
(collectively "Assignor"), to BERRY PETROLEUM COMPANY, a Delaware corporation
("Assignor"), whose address is Post Office Bin X, 28700 Hovey Hills Road, Taft,
California 93268.
1. Assignment. For the sum of Ten Dollars ($10) and other good and
valuable consideration, the receipt and sufficiency of which Assignor hereby
acknowledges, Assignor hereby transfers, grants, bargains, conveys and assigns
to Assignee, effective for all purposes as of the Effective Date, subject to
the terms and conditions set forth in that certain Purchase and Sale Agreement
dated November 8, 1996, by and between Berry Petroleum Company and Tannehill
Oil Company et al. ("Purchase and Sale Agreement"), and subject to all
contracts, agreements, encumbrances and other matters to which the following
assets are subject as of the Effective Date, all of the following assets (such
assets are hereinafter collectively called and referred to as the "Assets"):
2
a. All of Assignor's right, title and interest in and to the oil,
gas and mineral leasehold estates, overriding royalty, royalty and other
interests and rights described in Schedule B to this Assignment.
b. To the extent attributable or allocable to the Assets, all of
Assignor's right, title and interest in and to (i) all wells, equipment and
facilities which constitute fixtures and are located on or used directly in
connection with production, treatment or transportation of oil and gas from the
Assets; (ii) all oil and gas produced after the Effective Date; and (iii) all
other rights, privileges, obligations, benefits and powers conferred upon the
owner or holder of the Assets.
2. Assumption. Assignee hereby assumes and agrees to pay, perform and
discharge its obligations under the Assets, and the agreements, associated
contracts and other burdens pertaining thereto, which accrue and relate to, or
are based upon or arise out of, events occurring after the Effective Date, all
in accordance with the terms of the Purchase and Sale Agreement.
3. Further Assurances. The parties agree to take all such further
actions and execute, acknowledge and deliver all such further documents that
are necessary or useful in carrying out the purposes of this Assignment. So
long as authorized by applicable law so to do, Assignor hereby agrees to
execute, acknowledge and deliver to Assignee all such other additional
instruments, notices, division orders, transfer orders and other documents and
to do all such other and further acts and things as may be necessary to more
fully and effectively grant, convey, transfer and assign to Assignee the Assets
conveyed hereby or intended so to be.
4. Governmental Assignments. Separate assignments of certain of the Oil
and Gas Leases may be executed on officially approved forms by Assignor to
Assignee in sufficient counterparts to satisfy applicable statutory and
regulatory requirements. Those assignments shall incorporate this Assignment
by reference and be deemed to contain all of the exceptions, reservations,
rights, titles, powers and privileges set forth herein and in the Purchase and
Sale Agreement as fully as though they were set forth in each such assignment.
The interests conveyed by such separate assignments are the same, and not in
addition to, the Assets conveyed herein.
5. Schedules. Reference is made to the Schedules attached hereto and
made a part hereof for all purposes. Reference in such Schedules to
instruments on file or recorded in the public records are made for all
purposes.
6. Headings. Headings are included in this Assignment for convenience
of reference and shall in no way define, limit, extend, or describe the scope
or intent of any provision of this Assignment.
7. Successors and Assigns. This Assignment shall bind and inure to the
benefit of Assignor and Assignee and their respective successors and assigns.
3
8. Multiple Counterparts. This Assignment may be executed in any number
of counterparts and each counterpart hereof shall be deemed to be an original
instrument but all of such counterparts shall constitute but one assignment.
9. Recordation. To facilitate recording or filing of this Assignment,
each counterpart filed with a federal or state agency or office may contain
only those portions of the Schedule that describe property under the
jurisdiction of that agency or office. Assignor and Assignee have each
retained a counterpart of this Assignment with complete Schedules. Another
counterpart of this Assignment with complete Schedules shall be recorded in the
official real property records of Kern County, California.
10. Governing Law. The provisions of this Assignment shall be governed
by and construed in accordance with the laws of the State of California,
excluding any conflicts of law, rule or principle that might refer same to the
laws of another jurisdiction.
TANNEHILL OIL COMPANY, a California GENERAL WESTERN, INC.,
general partnership a New Mexico corporation
By: Boyce Resource Development By: _______________________________
Company, a California corporation James L. Hinkle, President
Managing General Partner
By: __________________________
Albert G. Boyce, Jr.,
President and Secretary
By: HHB, Inc., a California VERNIER RESOURCES CORPORATION,
corporation a Texas corporation
Managing General Partner
By: _________________________________
By: __________________________ Bettianne H. Bowen, President
James L. Hinkle, President
and Secretary By: ______________________________
Cheryl Bailey Harrison, Secretary
By: Paso Energy, Inc., a California ________________________________
corporation James L. Hinkle
Managing General Partner
By: __________________________ _________________________________
John W. Tannehill, President John T. Hinkle
and Secretary
4
___________________________________ ______________________________
Albert G. Boyce, Jr., as Trustee of Trust William J. Boyce
B under Will of Albert G. Boyce, Sr., Deceased
______________________________________ ______________________________
Delmar R. Archibald, as Trustee of the Joy A. Archibald, as Trustee of the
Delmar R. Archibald Family Trust, dated Delmar R. Archibald Family Trust,
June 22, 1982 dated June 22, 1982
______________________________________ ________________________________
Gail Kay Tannehill, as Trustee of the John W. Tannehill
Gail Kay Tannehill Family Trust dated
April 9, 1996 _______________________________
Thomas H. Tannehill
______________________________________ _________________________________
Lisle Q. Tannehill Mary K. Boyce
______________________________________ _________________________________
Bettianne H. Bowen Albert G. Boyce V
"Assignor"
BERRY PETROLEUM COMPANY,
a Delaware corporation
By: ________________________________
Jerry V. Hoffman, President
By: ________________________________
Kenneth A. Olson, Secretary
"Assignee"
1
CONSENT TO ASSIGNMENT OF OIL, GAS AND MINERAL LEASE
Albert A. Geiger and Lois J. Geiger, Lessor in that certain Oil, Gas and
Mineral Lease dated February 25, 1977, covering the following described real
property in Kern County, California, a Short Form of which lease was recorded
July 12, 1977, in Book 5040, Page 911, Official Records of Kern County,
California, and assigned by Assignment of Oil, Gas and Mineral Lease dated
August 19, 1977, and recorded July 13, 1978, in Book 5124, Page 1288, Official
Records of Kern County, from W.D. Newsome & Associates, as Assignor, to
Tannehill Oil Company, as Assignee, hereby consent to the assignment of the
aforesaid lease by Tannehill Oil Company, as Assignor, to Berry Petroleum
Company, as Assignee.
Township 29 South, Range 21 East, M.D.B & M:
Section 28: S/2 N/2 N/2 NE/4
This consent is executed effective as of _______________, 1996.
Albert A. Geiger
Lois J. Geiger
2
SCHEDULE A TO
EXHIBIT 6
ASSIGNMENT OF OIL AND GAS LEASES ATTACHED TO AND MADE A PART
OF THAT CERTAIN PURCHASE AND SALE AGREEMENT
DATED NOVEMBER 8, 1996 BY AND BETWEEN
BERRY PETROLEUM COMPANY AND TANNEHILL OIL COMPANY, ET AL.
1. JAMES L. HINKLE
2. JOHN T. HINKLE
3. VERNIER RESOURCES CORPORATION, a Texas corporation
4. GENERAL WESTERN, INC., a New Mexico corporation
5. DELMAR R. ARCHIBALD FAMILY TRUST
6. LISLE Q. TANNEHILL
7. JOHN W. TANNEHILL
8. THOMAS H. TANNEHILL
9. GAIL KAY TANNEHILL FAMILY TRUST
10. TRUST B UNDER WILL OF ALBERT G. BOYCE, SR., DECEASED
11. BOYCE RESOURCE DEVELOPMENT COMPANY, a California corporation
12. WILLIAM J. BOYCE
13. MARY K. BOYCE
14. BETTIANNE H. BOWEN
15. ALBERT G. BOYCE V
1
SCHEDULE B TO
EXHIBIT 6
ASSIGNMENT OF OIL AND GAS LEASES ATTACHED TO AND MADE A PART
OF THAT CERTAIN PURCHASE AND SALE AGREEMENT
DATED NOVEMBER 8, 1996 BY AND BETWEEN
BERRY PETROLEUM COMPANY AND TANNEHILL OIL COMPANY, ET AL.
Oil and Gas Lease, dated February 25, 1977, by and between Albert A.
and Lois J. Geiger and W. D. Newsome & Associates, a short form of which lease
was recorded July 12, 1977 in Book, 5040, Page 911, Official Records of Kern
County, regarding that certain real property described as follows:
Township 29 South, Range 21 East, M.D.B.M., Section 28 S1/2
N1/2 N1/2 NE1/4
which lease was assigned by W.D. Newsome and Associates to Tannehill Oil
Company, a California general partnership on or about August 19, 1977, and
recorded July 13, 1978, in Book 5124, Page 1288, Official Records of Kern
County.
2
Tannehill Oil Company
STATEMENT OF TAX DUE UNDER PROVISIONS OF THE
DOCUMENTARY STAMP ACT
and
REQUEST THAT STAMPS NOT BE MADE A PART OF THE PERMANENT RECORD
TO: Kern County Recorder
THE TAX DUE PURSUANT TO THE PROVISIONS OF THE DOCUMENTARY STAMP ACT ON THE
DEED, TRANSFER, OR CONVEYANCE FROM: Tannehill Oil Company, a California general
partnership; James L. Hinkle; John T. Hinkle; Vernier Resources Corporation, a
Texas corporation; General Western, Inc., a New Mexico corporation; Delmar R.
Archibald Family Trust; Lisle Q. Tannehill; John W. Tannehill; Thomas H.
Tannehill; Gail Kay Tannehill Family Trust; Trust B Under Will of Albert G.
Boyce, Sr., Deceased; Boyce Resource Development Company, a California
corporation; William J. Boyce; Mary K. Boyce; Bettianne H. Bowen; and Albert G.
Boyce V.
[Name of Grantor(s) or Lessor(s)]
TO: Berry Petroleum Company
[Name of Grantee(s) or Lessee(s)]
OF THE FOLLOWING BRIEFLY DESCRIBED REAL PROPERTY: T12N, R24W, Section 33,
APNs 220-181-17-00-4; 220-181-18-00-7; 220-191-03-00-6; 098-170-14-00-4
Amounts to: $_____5.50_______ Amounts to: $___________________
(X) Unincorporated Area ( ) City of __________________
( ) Computed on full value ( ) Computed on full value
( ) Computed on full value LESS liens ( ) Computed on full value LESS
and encumbrances remaining liens and encumbrances
remaining
Documentary Transfer Tax $____________
Computed on full value of property
conveyed
Tannehill Oil Company
By: _________________________________
Affix transfer Tax Stamp Here Stamp Reserved for Recorder's Coding Stamp
Date: _______________________ By:___________________________
Title:____________________________
AFTER THE PERMANENT RECORD IS MADE, THIS DOCUMENT WILL BE ATTACHED TO THE
CONVEYING DOCUMENT AND RETURNED TO THE PARTY ENTITLED THERETO. A COPY WILL
BE MADE AND PLACED ON FILE FOR AUDITING PURPOSES.
1
EXHIBIT 7 TO THAT CERTAIN PURCHASE AND SALE AGREEMENT
BY AND BETWEEN BERRY PETROLEUM COMPANY
AND TANNEHILL OIL COMPANY, A CALIFORNIA GENERAL PARTNERSHIP, ET AL.
PROMISSORY NOTE
(Unsecured)
$3,700,000 Taft, California November _, 1996
FOR VALUE RECEIVED, BERRY PETROLEUM COMPANY, a Delaware corporation
("Promisor"), hereby promises to pay to SUNSET INVESTMENTS LLC, a California
limited liability company, as the assignee of TANNEHILL OIL COMPANY, a
California general partnership ("Promisee"), the sum of Three Million Seven
Hundred Thousand Dollars ($3,700,000), together with simple interest thereon at
the rate of four percent (4%) per annum commencing on _______________, 1996.
This Note shall mature on January 6, 1997, at which time all accrued interest
and unpaid principal shall be due and payable in full.
Promisor promises to pay all costs, including, without limitation,
attorneys' fees, of enforcement of any remedies, including, without limitation,
collection of the obligation evidenced hereby, upon default by Promisor in the
performance of any duty or obligation arising out of or in connection with this
Note.
All payments shall be made in lawful money of the United States.
BERRY PETROLEUM COMPANY,
a Delaware corporation
By: _____________________________________
Jerry V. Hoffman, President
By: _____________________________________
Kenneth A. Olson, Secretary
"Promisor"
2
THIS ALLONGE SHALL BE AFFIXED TO THAT CERTAIN PROMISSORY NOTE (THE
"NOTE"), DATED NOVEMBER 8, 1996, IN THE PRINCIPAL AMOUNT OF $3.7 MILLION
EXECUTED BY BERRY PETROLEUM COMPANY, A DELAWARE CORPORATION, FOR THE BENEFIT
OF SUNSET INVESTMENT COMPANY, LLC, A CALIFORNIA LIMITED LIABILITY COMPANY.
This Note is partial collateral under that certain Security Agreement (the
"Security Agreement"), dated November 8, 1996, executed by Sunset Investment
Company, LLC, a California limited liability company, for the benefit of
Monarch Cogeneration 1986-1, A California Limited Partnership, a limited
partnership organized under the laws of the State of California, Caterpillar
Capital Company, Inc., a Delaware corporation, Solar Turbines Incorporated, a
Delaware corporation, and Berry Petroleum Company, a Delaware corporation. The
terms and conditions of the Security Agreement shall govern, among other
things, the payments under the Note and restrictions on the transfer of the
Note.
SUNSET INVESTMENT COMPANY, LLC,
a California limited liability
company
By: BOYCE RESOURCE DEVELOPMENT
COMPANY, a California
corporation, as a Managing
Member
Dated: November ___, 1996 By: ____________________________
Albert G. Boyce, Jr.,
President and Secretary
By: HHB, INC., a California
corporation, as a Managing
Member
Dated: November ___, 1996 By: ____________________________
James L. Hinkle,
President and Secretary
By: PASO ENERGY, INC., a California
corporation, as a Managing
Member
Dated: November ___, 1996 By: ____________________________
John W. Tannehill,
President and Secretary
1
EXHIBIT 8A TO THAT CERTAIN PURCHASE AND SALE AGREEMENT
BY AND BETWEEN BERRY PETROLEUM COMPANY
AND TANNEHILL OIL COMPANY, A CALIFORNIA GENERAL PARTNERSHIP, ET AL.
PROMISSORY NOTE
(Unsecured)
$450,000.00 Taft, California November _, 1996
FOR VALUE RECEIVED, BERRY PETROLEUM COMPANY, a Delaware corporation
("Promisor"), hereby promises to pay to JOHN T. HINKLE ("Promisee"), the sum of
Four Hundred Fifty Thousand Dollars ($450,000.00), together with simple
interest thereon at the rate of four percent (4%) per annum commencing on
_______________, 1996. This Note shall mature on January 6, 1997, at which
time all accrued interest and unpaid principal shall be due and payable in
full.
Promisor promises to pay all costs, including, without limitation,
attorneys' fees, of enforcement of any remedies, including, without limitation,
collection of the obligation evidenced hereby, upon default by Promisor in the
performance of any duty or obligation arising out of or in connection with this
Note.
All payments shall be made in lawful money of the United States.
BERRY PETROLEUM COMPANY,
a Delaware corporation
By: _____________________________________
Jerry V. Hoffman, President
By: _____________________________________
Kenneth A. Olson, Secretary
"Promisor"
2
EXHIBIT 8B TO THAT CERTAIN PURCHASE AND SALE AGREEMENT
BY AND BETWEEN BERRY PETROLEUM COMPANY
AND TANNEHILL OIL COMPANY, A CALIFORNIA GENERAL PARTNERSHIP, ET AL.
PROMISSORY NOTE
(Unsecured)
$450,000.00 Taft, California November _, 1996
FOR VALUE RECEIVED, BERRY PETROLEUM COMPANY, a Delaware corporation
("Promisor"), hereby promises to pay to BETTIANNE H. BOWEN ("Promisee"), the
sum of Four Hundred Fifty Thousand Dollars ($450,000.00), together with simple
interest thereon at the rate of four percent (4%) per annum commencing on
_______________, 1996. This Note shall mature on January 6, 1997, at which
time all accrued interest and unpaid principal shall be due and payable in
full.
Promisor promises to pay all costs, including, without limitation,
attorneys' fees, of enforcement of any remedies, including, without limitation,
collection of the obligation evidenced hereby, upon default by Promisor in the
performance of any duty or obligation arising out of or in connection with this
Note.
All payments shall be made in lawful money of the United States.
BERRY PETROLEUM COMPANY,
a Delaware corporation
By: _____________________________________
Jerry V. Hoffman, President
By: _____________________________________
Kenneth A. Olson, Secretary
"Promisor"
3
EXHIBIT 8C TO THAT CERTAIN PURCHASE AND SALE AGREEMENT
BY AND BETWEEN BERRY PETROLEUM COMPANY
AND TANNEHILL OIL COMPANY, A CALIFORNIA GENERAL PARTNERSHIP, ET AL.
PROMISSORY NOTE
(Unsecured)
$300,000.00 Taft, California November _, 1996
FOR VALUE RECEIVED, BERRY PETROLEUM COMPANY, a Delaware corporation
("Promisor"), hereby promises to pay to THOMAS H. TANNEHILL ("Promisee"), the
sum of Three Hundred Thousand Dollars ($300,000.00), together with simple
interest thereon at the rate of four percent (4%) per annum commencing on
_______________, 1996. This Note shall mature on January 6, 1997, at which
time all accrued interest and unpaid principal shall be due and payable in
full.
Promisor promises to pay all costs, including, without limitation,
attorneys' fees, of enforcement of any remedies, including, without limitation,
collection of the obligation evidenced hereby, upon default by Promisor in the
performance of any duty or obligation arising out of or in connection with this
Note.
All payments shall be made in lawful money of the United States.
BERRY PETROLEUM COMPANY,
a Delaware corporation
By: _____________________________________
Jerry V. Hoffman, President
By: _____________________________________
Kenneth A. Olson, Secretary
"Promisor"
4
EXHIBIT 8D TO THAT CERTAIN PURCHASE AND SALE AGREEMENT
BY AND BETWEEN BERRY PETROLEUM COMPANY
AND TANNEHILL OIL COMPANY, A CALIFORNIA GENERAL PARTNERSHIP, ET AL.
PROMISSORY NOTE
(Unsecured)
$650,000.00 Taft, California November _, 1996
FOR VALUE RECEIVED, BERRY PETROLEUM COMPANY, a Delaware corporation
("Promisor"), hereby promises to pay to WILLIAM J. BOYCE ("Promisee"), the sum
of Six Hundred Fifty Thousand Dollars ($650,000.00), together with simple
interest thereon at the rate of four percent (4%) per annum commencing on
_______________, 1996. This Note shall mature on January 6, 1997, at which
time all accrued interest and unpaid principal shall be due and payable in
full.
Promisor promises to pay all costs, including, without limitation,
attorneys' fees, of enforcement of any remedies, including, without limitation,
collection of the obligation evidenced hereby, upon default by Promisor in the
performance of any duty or obligation arising out of or in connection with this
Note.
All payments shall be made in lawful money of the United States.
BERRY PETROLEUM COMPANY,
a Delaware corporation
By: _____________________________________
Jerry V. Hoffman, President
By: _____________________________________
Kenneth A. Olson, Secretary
"Promisor"
5
EXHIBIT 8E TO THAT CERTAIN PURCHASE AND SALE AGREEMENT
BY AND BETWEEN BERRY PETROLEUM COMPANY
AND TANNEHILL OIL COMPANY, A CALIFORNIA GENERAL PARTNERSHIP, ET AL.
PROMISSORY NOTE
(Unsecured)
$925,000.00 Taft, California November _, 1996
FOR VALUE RECEIVED, BERRY PETROLEUM COMPANY, a Delaware corporation
("Promisor"), hereby promises to pay to ALBERT G. BOYCE JR., as trustee of
Trust "B" under the Will of Albert G. Boyce, Sr., deceased ("Promisee"), the
sum of Nine Hundred Twenty-Five Thousand Dollars ($925,000.00), together with
simple interest thereon at the rate of four percent (4%) per annum commencing
on _______________, 1996. This Note shall mature on January 6, 1997, at which
time all accrued interest and unpaid principal shall be due and payable in
full.
Promisor promises to pay all costs, including, without limitation,
attorneys' fees, of enforcement of any remedies, including, without limitation,
collection of the obligation evidenced hereby, upon default by Promisor in the
performance of any duty or obligation arising out of or in connection with this
Note.
All payments shall be made in lawful money of the United States.
BERRY PETROLEUM COMPANY,
a Delaware corporation
By: _____________________________________
Jerry V. Hoffman, President
By: _____________________________________
Kenneth A. Olson, Secretary
"Promisor"
6
EXHIBIT 8F TO THAT CERTAIN PURCHASE AND SALE AGREEMENT
BY AND BETWEEN BERRY PETROLEUM COMPANY
AND TANNEHILL OIL COMPANY, A CALIFORNIA GENERAL PARTNERSHIP, ET AL.
PROMISSORY NOTE
(Unsecured)
$425,000.00 Taft, California November _, 1996
FOR VALUE RECEIVED, BERRY PETROLEUM COMPANY, a Delaware corporation
("Promisor"), hereby promises to pay to ALBERT G. BOYCE, V. ("Promisee"), the
sum of Four Hundred Twenty-Five Thousand Dollars ($425,000.00), together with
simple interest thereon at the rate of four percent (4%) per annum commencing on
_______________, 1996. This Note shall mature on January 6, 1997, at which
time all accrued interest and unpaid principal shall be due and payable in
full.
Promisor promises to pay all costs, including, without limitation,
attorneys' fees, of enforcement of any remedies, including, without limitation,
collection of the obligation evidenced hereby, upon default by Promisor in the
performance of any duty or obligation arising out of or in connection with this
Note.
All payments shall be made in lawful money of the United States.
BERRY PETROLEUM COMPANY,
a Delaware corporation
By: _____________________________________
Jerry V. Hoffman, President
By: _____________________________________
Kenneth A. Olson, Secretary
"Promisor"
1
EXHIBIT 9 TO THAT CERTAIN PURCHASE AND SALE AGREEMENT
BY AND BETWEEN BERRY PETROLEUM COMPANY
AND TANNEHILL OIL COMPANY, A CALIFORNIA GENERAL PARTNERSHIP, ET AL.
REAL PROPERTY
1. Parcel 1:
That certain portion of the East half of the Northeast quarter of
Section 33, Township 12 North, Range 24 West, S.B.B.M., described as
Parcel 1 of Parcel Map 8297 in the unincorporated area of the County
of Kern, State of California, as per Map recorded January 20, 1989
in Book 37, pages 134 and 135 of Parcel Maps, in the Office of the
County Recorder of said County.
EXCEPTING therefrom any vein or lode of quartz or other rock in
place bearing gold, silver, cinnabar, lead, tin, copper or other
valuable deposits within the land above described which may have
been discovered or known to exist on or prior to November 11, 1902.
EXCEPTING AND RESERVING therefrom a royalty of four percent (4%) of
all oil, gas and other hydrocarbon substances produced from zones
lying below 4,500 feet below the surface of the above described
parcel.
Parcel 2:
The East half of the Northeast quarter of Section 33, Township 12
North, Range 24 West, S.B.B.M., in the unincorporated area of the
County of Kern, State of California, as per the official plat
thereof on file in the Office of the Surveyor General.
EXCEPTING therefrom any vein or lode of quartz or other rock in
place bearing gold, silver, cinnabar, lead, tin, copper or other
valuable deposits within the land above described which may have
been discovered or known to exist on or prior to November 11 1902.
EXCEPTING therefrom a portion of said land now known as Parcel 1 of
Parcel Map no. 8297 recorded January 20, 1989 in Book 37, page 134
and 135 of Parcel Maps.
EXCEPTING AND RESERVING therefrom a royalty of four percent (4%)
of all oil, gas and other hydrocarbon substances produced from zones
lying below 4,500 feet below the surface of the above described
parcel.
2
Parcel 3:
The Northwest quarter of the Northwest quarter of Section 34,
Township 12 North, Range 24 West, S.B.B.M., in the unincorporated
area of the County of Kern, State of California, as per the official
plat thereof on file in the Office of the Surveyor General.
EXCEPTING therefrom any vein or lode of quartz or other rock in
place bearing gold, silver, cinnabar, lead, tin, copper or other
valuable deposits within the land above described which may have
been discovered or known to exist on or prior to May 13, 1901.
EXCEPTING AND RESERVING therefrom a royalty of four percent (4%)
of all oil, gas and other hydrocarbon substances produced from zones
lying below 4,500 feet below the surface of the above described
parcel.
2. Oil and Gas Lease, dated February 25, 1977, by and between Albert A.
and Lois J. Geiger and W.D. Newsome and Associates, regarding that
certain real property described as follows:
Township 29 South, Range 21 East, M.D.B.M., Section 28 S1/2
N1/2 N1/2 NE1/4
and assigned by W.D. Newsome and Associates to Tannehill Oil
Company, a California general partnership on or about August
19, 1977
1
EXHIBIT 10 TO THAT CERTAIN PURCHASE AND SALE AGREEMENT
BY AND BETWEEN BERRY PETROLEUM COMPANY
AND TANNEHILL OIL COMPANY, A CALIFORNIA GENERAL PARTNERSHIP, ET AL.
ALLOCATION OF PURCHASE PRICE
THE PARTIES AGREE TO THE ALLOCATION OF PURCHASE PRICE
AS REPRESENTED ON IRS FORM 8594 ATTACHED HERETO
FORM 8594 ASSET ACQUISITION STATEMENT OMB No. 1545-1021
(Rev Jan 1996) UNDER SECTION 1060
Department of the Treasury Attachment
Internal Revenue Service Sequence No. 61
Attach to your Federal income tax return
Name as Shown on return Identification number as shown on return
Tannehill Oil Company 94-1546098
Check the box that identifies you Buyer (X) Seller
Part 1 General Information - to be completed by all filers.
1. Name of other party to the transaction
Berry Petroleum Company
Other party's identification number
77-0079387
Address (number, street, and room or suite no.)
28700 Hovey Hills Road, P.O. Bin X
Taft, California 93268
2. Date of Sale 3. Total sales price
October 1, 1996 $2,285,000
Part II Assets Transferred - to be completed by all filers of an original
statement
4. Assets Aggregate Fair Market Value Allocation of Sales price
(Actual Amount for Class I)
Class I $ $
Class II $ $
Class III $ $ 2,285,000
Class IV $ $
Total $ $ 2,285,000
5. Did the buyer and seller provide for an allocation of the sales price in
the sales contract or in another written document signed by both parties?
(X) Yes No
If Yes, are the aggregate fair market values listed for each of asset
Classes I, II, III and IV the amounts agreed upon in your sales contract
or in a separate written document?
(X) Yes No
6. In connection with the purchase of the group of assets, did the buyer also
purchase a license or a covenant not to complete, or enter into a lease
agreement, employment contract, management contract, or similar
arrangement with the seller (or managers, directors, owners, or employees
of the seller)?
Yes (X) No
If Yes, specify (a) the type of agreement, and (b) the maximum amount of
consideration (not including interest) paid or to be paid under the
agreement. See the instructions for line 6.
For Paperwork Reduction Act Notice, see instructions.
Cat. No. 63768Z Form 8592 (Rev. 1-96)
2/19/96 Published by Tax Management Inc., a subsidiary of The Bureau of
National Affairs, Inc. 8594.I
2
Form 8594 (Rev. 1-96)
Page 2
Part III Supplemental Statement - To be completed only if amending an
original statement or previously filed supplemental statement
because of an increase or decrease in consideration.
7. Assets Allocation of Sales Price Increase or Redetermined Allocation
as previously reported (Decrease) of Sales Price
Class I $ $ $
Class II $ $ $
Class III $ $ $
Class IV $ $ $
Total $ $ $
8. Reason(s) for increase or decrease. Attach additional sheets if more
space is needed.
9. Tax year and tax return form number with which the original form 8594 and
any supplemental statements were filed.
8594.2 Published by Tax Management Inc., a Subsidiary of The
Bureau of National Affairs, Inc. 2/19/96
1
FORM 8594 ASSET ACQUISITION STATEMENT OMB No. 1545-1021
(Rev Jan 1996) UNDER SECTION 1060
Department of the Treasury Attachment
Internal Revenue Service Sequence No. 61
Attach to your Federal income tax return
Name as Shown on return Identification number as shown on return
Berry Petroleum Company 77-0079389
Check the box that identifies you (X) Buyer ( ) Seller
Part 1 General Information - to be completed by all filers.
1. Name of other party to the transaction
Tannehill Oil Company
Other party's identification number
94-1546098
Address (number, street, and room or suite no.)
P.O. Box 98
Taft, California 93268
2. Date of Sale 3. Total sales price
October 1, 1996 $2,285,000
Part II Assets Transferred - to be completed by all filers of an original
statement
4. Assets Aggregate Fair Market Value Allocation of Sales Price
(Actual Amount for Class I)
Class I $ $
Class II $ $
Class III $ $ 2,285,000
Class IV $ $
Total $ $ 2,285,000
5. Did the buyer and seller provide for an allocation of the sales price in
the sales contract or in another written document signed by both parties?
(X) Yes No
If Yes, are the aggregate fair market values listed for each of asset
Classes I, II, III and IV the amounts agreed upon in your sales contract
or in a separate written document?
(X) Yes No
6. In connection with the purchase of the group of assets, did the buyer also
purchase a license or a covenant not to complete, or enter into a lease
agreement, employment contract, management contract, or similar
arrangement with the seller (or managers, directors, owners, or employees
of the seller)?
Yes (X) No
If Yes, specify (a) the type of agreement, and (b) the maximum amount of
consideration (not including interest) paid or to be paid under the
agreement. See the instructions for line 6.
For Paperwork Reduction Act Notice, see instructions.
Cat. No. 63768Z Form 8592 (Rev. 1-96)
2
Form 8594 (Rev. 1-96) 77-0079387
Page 2
Part III Class III, Intangible Amortizable Assets Only - Complete if
applicable. The amounts shown below also must be included under
Class III assets in Part II. Attach additional sheets if more
space is needed.
Assets Fair Market Value Useful Life Allocation of Sales Price
$ $
$ $
$ $
$ $
$ $
Part IV Supplemental Statement - To be completed only if amending an
original statement or previously filed supplemental statement
because of anincrease or decrease in consideration N/A
7. Assets Allocation of Sales Price Increase or Redetermined Allocation
as Previously Reported (Decrease) of Sales Price
Class I $ $ $
Class II $ $ $
Class III $ $ $
Class IV $ $ $
Totals $ $
8. Reason(s) for increase or decrease. Attach additional sheets if more
space is needed.
9. Tax year and tax return form number with which the original form 8594 and
any supplemental statements were filed.
1
EXHIBIT 11 TO THAT CERTAIN PURCHASE AND SALE AGREEMENT
BY AND BETWEEN BERRY PETROLEUM COMPANY
AND TANNEHILL OIL COMPANY, A CALIFORNIA GENERAL PARTNERSHIP, ET AL.
CERTIFICATE OF SATISFACTION TO THE PURCHASE AND SALE AGREEMENT
ENTERED INTO NOVEMBER 8, 1996
(PARAGRAPH 2.12(e) THEREOF)
The undersigned parties to that certain Purchase and Sale Agreement by and
between Berry Petroleum Company, a Delaware corporation, and Tannehill Oil
Company, a California general partnership, and Boyce Resource Development
Company, a California corporation; Albert G. Boyce, Jr., as Trustee of Trust
"B" Under the Will of Albert G. Boyce, Sr., Deceased; William J. Boyce;
Albert G. Boyce V; Mary K. Boyce; John T. Hinkle; Bettianne H. Bowen; Vernier
Resources Corporation, a Texas corporation; James L. Hinkle; General Western,
Inc., a New Mexico corporation; Delmar R. Archibald and Joy A. Archibald,
Trustees of the Delmar R. Archibald Family Trust, Dated June 22, 1982; Lisle Q.
Tannehill; John W. Tannehill; Gail Kay Tannehill, as Trustee of the Gail Kay
Tannehill Family Trust, Dated April 9, 1996; and Thomas H. Tannehill, as
partners of Tannehill Oil Company, and individually, to be entered into this
8th day of November, 1996, declare that all conditions to the Closing have been
satisfied and the transaction is Closed.
BERRY PETROLEUM COMPANY, TANNEHILL OIL COMPANY, a
a Delaware corporation California general partnership
By: ___________________________ By: BOYCE RESOURCE DEVELOPMENT
Jerry V. Hoffman, President COMPANY, a California
and Chief Executive Officer corporation
Managing General Partner
By: ___________________________
Kenneth A. Olson, Secretary By: ___________________________
Albert G. Boyce, Jr., President
and Secretary
By: HHB, INC., a California corporation
Managing General Partner
By: __________________________
James L. Hinkle, President
and Secretary
By: PASO ENERGY, INC., a
California corporation
Managing General Partner
By: ____________________________
John W. Tannehill, President
and Secretary
1
EXHIBIT 12 TO THAT CERTAIN PURCHASE AND SALE AGREEMENT
BY AND BETWEEN BERRY PETROLEUM COMPANY
AND TANNEHILL OIL COMPANY, A CALIFORNIA GENERAL PARTNERSHIP, ET AL.
ESCROW INSTRUCTIONS
FIRST AMERICAN TITLE INSURANCE COMPANY
MAIN OFFICE: 4540 CALIFORNIA AVENUE, SUITE 100 (93309)
MAILING ADDRESS: P.O. BOX 1945, BAKERSFIELD, CA 93303
TELEPHONE (805) 327-5311
FACSIMILE (805) 327-8533
E S C R O W I N S T R U C T I O N S
FIRST AMERICAN TITLE INSURANCE COMPANY CONDUCTS ESCROW BUSINESS UNDER
CERTIFICATE OF AUTHORITY NO. 2787 ISSUED BY THE STATE OF CALIFORNIA
DEPARTMENT OF INSURANCE.
FINAL DRAFT
Escrow Officer: NANCY J. SMITH Property: REAL PROPERTY AND
ASSIGNMENT OF
LEASES
Escrow Number: 1125444N
Date: November 4, 1996
To:FIRST AMERICAN TITLE INSURANCE COMPANY
THESE INSTRUCTIONS ARE ENTERED INTO PURSUANT TO THAT CERTAIN PURCHASE AND SALE
AGREEMENT DATED WHEN EXECUTED BY BERRY PETROLEUM COMPANY AND TANNEHILL OIL
COMPANY, A GENERAL PARTNERSHIP, BOYCE RESOURCES DEVELOPMENT COMPANY, A
CALIFORNIA CORPORATION; ALBERT G. BOYCE, JR., AS TRUSTEE OF TRUST B UNDER THE
WILL OF ALBERT G. BOYCE SR., DECEASED; WILLIAM J. BOYCE; ALBERT G. BOYCE V;
MARY K. BOYCE; JOHN T. HINKLE; BETTIANNE H. BOWEN; VERNIER RESOURCES
CORPORATION, A TEXAS CORPORATION; JAMES L. HINKLE; GENERAL WESTERN, INC., A
NEW MEXICO CORPORATION; DELMAR R. ARCHIBALD AND JOY A. ARCHIBALD, TRUSTEES OF
THE DELMAR R. ARCHIBALD FAMILY TRUST, DATED JUNE 22, 1982; LISLE Q. TANNEHILL;
JOHN W. TANNEHILL; GAIL KAY TANNEHILL, AS TRUSTEE OF THE GAIL KAY TANNEHILL
FAMILY TRUST, DATED APRIL 9, 1996; AND THOMAS H. TANNEHILL, AS PARTNERS OF
TANNEHILL OIL COMPANY AND INDIVIDUALLY A COPY OF WHICH IS ATTACHED HERETO.
AS ESCROW HOLDER YOU SHALL BE CONCERNED ONLY WITH THOSE SPECIFIC PROVISIONS OF
SAID CONTRACT SET FORTH AND ENUMERATED THEREIN AS FOLLOWS:
#1.3, #1.5, #1.11,
#2.1, #2.2, #2.3, #2.6 #2.7 CLARIFICATION: DISTRIBUTION OF SALE PROCEEDS AND
RECORDATION OF DOCUMENTS WITH KERN COUNTY RECORDER WILL BE HANDLED AT THE
OFFICE OF ESCROW HOLDER, FIRST AMERICAN TITLE INSURANCE COMPANY, 4540
CALIFORNIA #100, BAKERSFIELD, CA. 93309. THIS ESCROW TO CLOSE CONCURRENTLY
WITH ESCROWS #1128321N AND #1125444N,
#2.8 AND #2.9 CLARIFICATION: PARTIES TO SUPPLY ESCROW HOLDER WITH INFORMATION
SO PRORATIONS CAN BE HANDLED THROUGH ESCROW OR NOTIFY ESCROW HOLDER BY MUTUAL
WRITTEN INSTRUCTIONS THAT PRORATIONS WILL BE HANDLED OUTSIDE OF THIS ESCROW;
2
#2.11, #2.12 CLARIFICATION: DOCUMENTS TO BE DEPOSITED INTO ESCROW OR PARTIES TO
NOTIFY ESCROW HOLDER BY MUTUAL WRITTEN INSTRUCTIONS THAT SAID DOCUMENTS HAVE
BEEN DELIVERED OUTSIDE OF ESCROW, #2.14, ARTICLES VII AND VIII, DOCUMENTS WILL
BE DEPOSITED AND APPROVED BY COUNSEL PRIOR TO CLOSE OF ESCROW.
ALL PARTIES AGREE THAT TRANSFER OF SAID PROPERTY IS NOT BEING HANDLED THROUGH
THE BULK SALE PROCESS. ESCROW HOLDER WILL NOT CONDUCT ANY UCC SEARCHES. NO
TITLE INSURANCE OR GUARANTEES OF TITLE WILL BE ISSUED BY ESCROW HOLDER WITH
REGARD TO PERSONAL PROPERTY BEING TRANSFERRED IN THIS ESCROW. A CLTA POLICY OF
TITLE INSURANCE WILL BE ISSUED BY FIRST AMERICAN TITLE INSURANCE COMPANY IN THE
AMOUNT AS SHOWN IN ALLOCATION FOR REAL PROPERTY AND COST FOR SAME WILL BE PAID
BY TANNEHILL OIL COMPANY OTHERS LISTED AS SELLERS HEREIN.
ANY AND ALL OTHER PROVISIONS OF SAID CONTRACT NOT ENUMERATED ABOVE IMPOSE NO
DUTIES ON YOU AS ESCROW HOLDER AND ARE MATTERS OF AGREEMENT AND UNDERSTANDING
BETWEEN THE PARTIES WITH WHICH YOU SHALL NOT BE CONCERNED.
THE ATTACHED GENERAL PROVISIONS AND PAGE #1B ARE HEREBY MADE A PART OF THESE
INSTRUCTIONS.
TANNEHILL OIL COMPANY AND
OTHERS SEE ATTACHED SIGNATURE
BLOCK
BERRY PETROLEUM COMPANY
SEE ATTACHED SIGNATURE BLOCK
1
EXHIBIT 13 TO THAT CERTAIN PURCHASE AND SALE AGREEMENT
BY AND BETWEEN BERRY PETROLEUM COMPANY
AND TANNEHILL OIL COMPANY, A CALIFORNIA GENERAL PARTNERSHIP, ET AL.
CERTIFICATE OF COMPLIANCE TO THE
PURCHASE AND SALE AGREEMENT
ENTERED INTO NOVEMBER 8, 1996
(PARAGRAPH 7.6 THEREOF)
The undersigned certifies that Tannehill Oil Company has complied with the
matters set forth in Sections 7.1, 7.2, 7.3 and 7.4 of that certain Purchase
and Sale Agreement by and between Berry Petroleum Company, a Delaware
corporation, and Tannehill Oil Company, a California general partnership, and
Boyce Resource Development Company, a California corporation; Albert G. Boyce,
Jr., as Trustee of Trust "B" Under the Will of Albert G. Boyce, Sr., Deceased;
William J. Boyce; Albert G. Boyce V; Mary K. Boyce; John T. Hinkle; Bettianne
H. Bowen; Vernier Resources Corporation, a Texas corporation; James L. Hinkle;
General Western, Inc., a New Mexico corporation; Delmar R. Archibald and Joy A.
Archibald, Trustees of the Delmar R. Archibald Family Trust, dated June 22,
1982; Lisle Q. Tannehill; John W. Tannehill; Gail Kay Tannehill, as Trustee of
the Gail Kay Tannehill Family Trust, dated April 9, 1996; and Thomas H.
Tannehill, as partners of Tannehill Oil Company, and individually, entered into
on November 8, 1996.
Date: ___________________ TANNEHILL OIL COMPANY, a California
general partnership
By: BOYCE RESOURCE DEVELOPMENT
COMPANY, a California corporation,
Managing General Partner
By: ______________________________
Albert G. Boyce, Jr., President
and Secretary
By: HHB, INC., a California corporation,
Managing General Partner
By: ______________________________
James L. Hinkle, President and Secretary
By: PASO ENERGY, INC., a California
corporation, Managing General Partner
By: ______________________________
John W. Tannehill, President
and Secretary
1
EXHIBIT 14 TO THAT CERTAIN PURCHASE AND SALE AGREEMENT
BY AND BETWEEN BERRY PETROLEUM COMPANY
AND TANNEHILL OIL COMPANY, A CALIFORNIA GENERAL PARTNERSHIP, ET AL.
FORM OF OPINION OF COUNSEL
TO TANNEHILL OIL COMPANY
______________, 1996
Berry Petroleum Company
Attn: Jerry V. Hoffman
President and Chief Executive Officer
28700 Hovey Hills Road
Post Office Bin X
Taft, CA 93268
Re: Berry Petroleum Company / Tannehill Oil Company,
Asset Purchase and Sale Transaction
Gentlemen:
We have acted as counsel to Tannehill Oil Company, a California general
partnership ("Tannehill"), and individuals and entities that are partners of
Tannehill Oil Company (the "Partners"), in connection with the sale of
substantially all the assets of Tannehill and certain undivided mineral
interests of the Partners to Berry Petroleum Company, a Delaware corporation
("Berry"), pursuant to that certain Purchase and Sale Agreement, dated
______________, 1996, by and between Tannehill, the Partners and Berry
(the "Agreement").
In rendering the opinions set forth below, we have assumed the due
authorization, execution and delivery of the Agreement by Berry.
Based on the foregoing, and in reliance thereon, but subject to the
qualifications herein set forth, we are of the opinion that:
1. Tannehill is a general partnership duly organized and validly
existing under, and by virtue of, the laws of the State of California and
is in good standing under such laws. Tannehill has requisite power to own and
operate its properties and assets, and to carry on its business as presently
conducted.
2. Tannehill and the Partners have full power and authority to execute
and deliver the Agreement and to perform their obligations under the terms of
the Agreement.
3. All partnership action on the part of Tannehill and its Partners
necessary for the authorization, execution, delivery and performance of the
Agreement, and the consummation of the transactions contemplated thereby, has
been taken. The Agreement has been duly executed
2
and delivered by Tannehill and its Partners and constitutes a legal, valid and
binding obligation of Tannehill and its Partners, enforceable against them in
accordance with its respective terms, except as such enforceability may be
limited by or subject to (a) any bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to creditor's rights generally and
(b) general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law).
4. The Partners executing the Agreement are the beneficial owners of an
aggregate of one hundred percent (100%) of the partnership interests in
Tannehill (the "Partnership Interests"). There are no outstanding options,
warrants, rights of first refusal, or other rights calling for the issuance of,
or any security convertible into or exchangeable for, Partnership Interests and
no other person or entity has any right in or to the Partnership Interests.
5. No consent, approval or authorization of or designation of Tannehill
or the Partners is required in connection with the valid execution and delivery
of the Agreement, or the consummation of the transactions contemplated thereby
on the Closing thereof, except as such have been obtained or made prior to or
upon the date hereof.
6. To our best knowledge, no default exists and no event has occurred
which would constitute a default under, or violation in the due performance and
observance of any term, covenant or condition, or breach of, Tannehill's
Partnership Agreement or any indenture, license, lease, franchise, mortgage,
instrument, or other agreement to which Tannehill or its Partners are a party,
or by which Tannehill or its Partners or their properties may be bound; or (a)
an event that would permit any party to any agreement or instrument to
terminate it or to accelerate the maturity of any indebtedness or other
obligation of Tannehill or its Partners; (b) an event that would result in the
creation or imposition of any lien, charge, or encumbrance on any asset of
Tannehill or its Partners; or (c) an event that would conflict with any order,
rule, or regulation directed to Tannehill or its Partners by any court or
governmental agency or body having jurisdiction over it.
7. Except as disclosed in the Tannehill Disclosure Letter (as defined
in the Agreement), to our best knowledge, there is no suit, action,
arbitration, or legal, administrative, or other proceeding or governmental
investigation pending or threatened against or affecting Tannehill or its
Partners or any of their businesses or properties or financial or other
condition.
8. Except as disclosed in the Tannehill Disclosure Letter, there are no
agreements, written or oral, between Tannehill or its Partners and any other
party that affect, directly or indirectly, the Assets (as defined in the
Agreement).
We are members of the bar of the State of California, and accordingly we
do not purport to be experts on, or to be qualified to express any opinion
herein concerning, nor do we express any opinions herein concerning, any law
other than federal law and the laws of the State of California.
3
This opinion letter is limited to the matters expressly stated herein and
no opinion or other statement may be inferred or implied beyond the matters
expressly stated herein. This opinion letter is addressed to Berry for the
benefit of Berry and is only for Berry's use in connection with the Agreement.
This opinion letter may not be relied upon by any other person or entity
without prior written consent. This opinion is as of this date, and we
expressly decline any undertaking to advise you of any matters arising
subsequent to the date hereof which would cause us to amend any portion of the
foregoing in whole or in part.
Very truly yours,
cc: Nordman, Cormany, Hair & Compton
Attn: Laura K. McAvoy, Esq.
1
EXHIBIT 15 TO THAT CERTAIN PURCHASE AND SALE AGREEMENT
BY AND BETWEEN BERRY PETROLEUM COMPANY
AND TANNEHILL OIL COMPANY, A CALIFORNIA GENERAL PARTNERSHIP, ET AL.
CERTIFICATE OF COMPLIANCE TO THE
PURCHASE AND SALE AGREEMENT
ENTERED INTO NOVEMBER 8, 1996
(PARAGRAPH 8.6 THEREOF)
The undersigned certify that Berry Petroleum Company has complied with the
matters set forth in Sections 8.1, 8.2, 8.3 and 8.5 of that certain Purchase
and Sale Agreement by and between Berry Petroleum Company, a Delaware
corporation, and Tannehill Oil Company, a California general partnership, and
Boyce Resource Development Company, a California corporation; Albert G. Boyce,
Jr., as Trustee of Trust "B" Under the Will of Albert G. Boyce, Sr., Deceased;
William J. Boyce; Albert G. Boyce V; Mary K. Boyce; John T. Hinkle; Bettianne
H. Bowen; Vernier Resources Corporation, a Texas corporation; James L. Hinkle;
General Western, Inc., a New Mexico corporation; Delmar R. Archibald and Joy A.
Archibald, Trustees of the Delmar R. Archibald Family Trust, dated June 22,
1982; Lisle Q. Tannehill; John W. Tannehill; Gail Kay Tannehill, as Trustee of
the Gail Kay Tannehill Family Trust, dated April 9, 1996; and Thomas H.
Tannehill, as partners of Tannehill Oil Company, and individually, entered into
on November 8, 1996.
Date: ___________________ BERRY PETROLEUM COMPANY,
a Delaware corporation
By: ______________________________
Jerry V. Hoffman, President
and Chief Executive Officer
By: _____________________________
Kenneth A. Olson, Secretary
1
EXHIBIT 16 TO THAT CERTAIN PURCHASE AND SALE AGREEMENT
BY AND BETWEEN BERRY PETROLEUM COMPANY
AND TANNEHILL OIL COMPANY, A CALIFORNIA GENERAL PARTNERSHIP, ET AL.
FORM OF OPINION OF COUNSEL
TO BERRY PETROLEUM COMPANY
__________________, 1996
Tannehill Oil Company
c/o Boyce Resource Management Company
Attn: Mr. Albert G. Boyce, Jr.
Managing General Partner
120 Manteca Avenue
P.O. Box 871
Manteca, CA 95336
Re: Berry Petroleum Company / Tannehill Oil Company,
Asset Purchase and Sale Transaction
Gentlemen:
We have acted as counsel to Berry Petroleum Company, a Delaware
corporation ("Berry"), in connection with the purchase of substantially all the
assets of Tannehill Oil Company, a California general partnership, and certain
undivided mineral interests from individuals and entities that are partners of
Tannehill Oil Company (collectively, "Tannehill"), by Berry, pursuant to that
certain Purchase and Sale Agreement, dated ______________, 1996, by and between
Tannehill and Berry (the "Agreement").
In rendering the opinions set forth below, we have assumed the due
authorization, execution and delivery of the Agreement by Tannehill.
1. Berry is a corporation duly organized and validly existing under, and
by virtue of, the laws of the State of Delaware and is in good standing under
such laws. Berry has requisite corporate power to own and operate its
properties and assets, and to carry on its business as presently conducted.
2. Berry has full corporate power and authority to execute and deliver
the Agreement and to perform its obligations under the terms of the Agreement.
3. All corporate action on the part of Berry necessary for the
authorization, execution, delivery and performance of the Agreement and the
consummation of the transactions contemplated thereby, has been taken. The
Agreement has been duly executed and delivered by Berry and constitutes a
legal, valid and binding obligation of Berry, enforceable against it in
2
accordance with its respective terms, except as such enforceability may be
limited by or subject to (a) any bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to creditor's rights generally and
(b) general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
4. No consent, approval or authorization of or designation of Berry is
required in connection with the valid execution and delivery of the Agreement
by Berry, or the consummation by Berry of the transactions contemplated
thereby on the Closing thereof, except as such have been obtained or made prior
to or upon the date hereof.
5. To our best knowledge, there is no suit, action, arbitration, or
legal, administrative, or other proceeding or governmental investigation that
is material to the transactions contemplated by the Agreements pending or
threatened against or affecting Berry or any of its businesses or properties or
financial or other condition.
We are members of the bar of the State of California, and except for our
opinion set forth in Paragraph 1 above, we do not purport to be experts on, or
to be qualified to express any opinion herein concerning, nor do we express any
opinions herein concerning, any law other than federal law and the laws of the
State of California.
This opinion letter is limited to the matters expressly stated herein and
no opinion or other statement may be inferred or implied beyond the matters
expressly stated herein. This opinion letter is addressed to Tannehill for the
benefit of Tannehill and is only for Tannehill's use in connection with the
Agreement. This opinion letter may not be relied upon by any other person or
entity without prior written consent. This opinion is as of this date, and we
expressly decline any undertaking to advise you of any matters arising
subsequent to the date hereof which would cause us to amend any portion of the
foregoing in whole or in part.
Very truly yours,
NORDMAN, CORMANY, HAIR & COMPTON
cc: Roger Coley, Esq.