ASSIGNMENT AGREEMENT
THIS ASSIGNMENT AGREEMENT ("Agreement") dated March 12, 2003, is made and
entered into by and between Far Group, Inc. , a Washington corporation (herein
referred to as "Far Group"), and Oklahoma Hills Gas, L.P. , a Delaware Limited
Partnership (hereinafter referred to as "Oklahoma Hills"), but shall be
effective as of February 27, 2003 ("Effective Date"). Far Group and Oklahoma
Hills are sometimes separately called a "party" and together referred to herein
as "parties."
WHEREAS, Far Group has acquired all of the right, title, and interest of
BWP Gas, L.L.C. in and to a certain Exploration Agreement dated February 27,
2003 (hereinafter referred to as the "Exploration Agreement") providing for the
Far Group's participation in the exploration and development of the Potato Hills
Deep Prospect located in Latimer and Pushmataha Counties, Oklahoma (hereinafter
sometimes referred to as "Potato Hills Deep Prospect"). All of the said
undivided interests, working interests, net revenue interests, and contractual
rights to acquired by Far Group are more fully described in the Exploration
Agreement;
WHEREAS, Far Group desires to assign all of its rights in the Exploration
Agreement and Oklahoma Hills desires to acquire such rights in the Exploration
Agreement from Far Group and to assume all obligations and duties relating
thereto, in accordance with the terms and conditions set forth herein.
NOW, THEREFORE, the parties hereto, with the intent to be legally bound, in
return for good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, including the mutual exchange of covenants and promises
herein contained, agree as follows:
1. Far Group does hereby grant, bargain, sell, transfer, assign and
convey to Oklahoma Hills all of Far Group's right, title, and interest (of
whatever kind or character, whether legal or equitable, and whether vested or
contingent) currently owned, and to be earned, in and to the Exploration
Agreement.
2. Oklahoma Hills does hereby assume all of the obligations, duties,
and/or liabilities under the terms of the Exploration Agreement and the BWP
Assignment Agreement (as hereinafter defined), and Oklahoma Hill does hereby
agree to indemnify, defend, save and hold harmless Far Group (and its respective
affiliates, officers, directors, employees, attorneys, contractors, and agents
of Far Group and such affiliates) from any and all claims, causes of action,
liabilities, damages of any nature and kind, losses, costs or expenses
(including, without limitation, court costs and attorneys fees), arising out of
or in any manner related to or connected with the Exploration Agreement and the
BWP Assignment Agreement after the Effective Date hereof.
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Assignment Agreement
FAR GROUP, INC./OKLAHOM HILLS GAS, L.P.
Page 1
3. A true and correct fully executed copy of the Exploration Agreement
is attached hereto as Exhibit "A" and incorporated herein for all purposes. A
true and correct copy of the Assignment Agreement by and between BWP and Far
Group (hereinafter referred to as the "BWP Assignment Agreement") is attached
hereto as Exhibit "B" and incorporated herein for all purposes. The transaction
contemplated herein is made expressly subject to the terms and conditions set
forth within the BWP Assignment Agreement and the Exploration Agreement.
4. Simultaneous with the delivery of the executed conveyances of all of
Far Group's right, title and interest in and to the Exploration Agreement,
Oklahoma Hills shall cause to be issued the "Percentage Interest" (as that term
is defined in the Limited Partnership Agreement of Oklahoma Hills Gas, L.P.) in
and to Oklahoma Hills as follows:
Partner Percentage Interest
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Far Group 98.0%
BWP 1.0%*
* At such time as Far Group has received the return of all capital invested
by Far Group in Oklahoma Hills, the "Percentage Interest" of BWP shall be
increased to fifteen percent (15%) and the "Percentage Interest of the Far Group
will be decreased to eighty four percent (84%). The Limited Partnership
Agreement of Oklahoma Hills shall give effect to the forgoing.
5. Representations and Warranties of Far Group. Far Group represents
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and warrants to Oklahoma Hills as follows:
a. Organization. Far Group is a corporation duly organized, validly
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existing, and in good standing under the laws of the State of
Washington.
b. Authority and Conflicts. Far Group has full power and authority
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to carry on its business as presently conducted, to enter into
this Agreement, and to perform its obligations under this
Agreement. The execution and delivery of this Agreement by Far
Group does not, and the consummation of the transactions
contemplated by this Agreement shall not violate, conflict with,
or require the consent of any person or entity under any
provision of Far Group's bylaws or other governing documents, any
material agreements or contracts to which Far Group is a party,
or any material agreements or contracts concerning the
Exploration Agreement and/or the BWP Assignment Agreement. The
execution and delivery of this Agreement has been, and the
performance of this Agreement and the transactions contemplated
by this Agreement shall be at the time required to be performed,
duly and validly authorized by all requisite corporate action on
the part of Far Group.
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Assignment Agreement
FAR GROUP, INC./OKLAHOM HILLS GAS, L.P.
Page 2
c. Enforceability. This Agreement has been duly executed and
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delivered on behalf of Far Group and constitutes the legal and
binding obligation of Far Group enforceable in accordance with
its terms, except as enforceability may be limited by applicable
bankruptcy, reorganization, or moratorium statues, equitable
principles, or other similar laws affecting the rights of
creditors generally ("Equitable Limitations").
d. Litigation and Claims. There are no pending suits, actions, or
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other proceedings in which Far Group is a party (or, to Far
Group's knowledge, which have been threatened to be instituted
against Far Group) which affect Far Group's interest to be
transferred hereunder, in any material respect or effecting the
execution and delivery of this Agreement or the consummation of
the transaction contemplated herein.
e. Accuracy of Representations. To the best of Far Group's
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knowledge, no representation or warranty by Far Group in this
Agreement or any agreement or document delivered by Far Group
pursuant to this Agreement contains an untrue statement of a
material fact or omits to state a material fact necessary to make
the statements contained in any representation or warranty, in
light of the circumstances under which it was made, not
misleading
f. Encumbrances. Far Group shall also represent and warrant that
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there are no liens, encumbrances, reversions or reassignment
obligations caused by Far Group adverse to or affecting the
interest to be assigned hereunder, other than those identified in
the Exploration Agreement and the BWP Assignment Agreement.
6. Representations by Oklahoma Hills. Oklahoma Hills represents to Far
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Group that the following statements are true and correct:
a. Organization. Oklahoma Hills is a limited partnership duly
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organized and legally existing under the laws of the State of
Delaware and has the power and authority to carry on its business
as presently conducted, to own and hold the Exploration
Agreement, and to perform all obligations required by this
Agreement, the BWP Assignment Agreement, and the Exploration
Agreement.
b. Authority. The execution and delivery of this Agreement has been
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authorized by all necessary action, partnership, corporate and
otherwise, on the part of Oklahoma Hills. Execution and delivery
of this Agreement does not, and the consummation of the
transactions contemplated by this Agreement will not, violate or
be in conflict with any agreement, instrument, judgment, order,
decree, law or regulation by which Oklahoma Hills is bound.
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Assignment Agreement
FAR GROUP, INC./OKLAHOM HILLS GAS, L.P.
Page 3
c. Binding Agreement. Subject to laws and equitable principles
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affecting the rights of creditors, this Agreement is a binding
obligation of Oklahoma Hills enforceable according to its terms.
There are neither bankruptcy nor reorganization proceedings
pending or, to Oklahoma Hills' knowledge, threatened against
Oklahoma Hills.
d. EXCEPT AS SET FORTH HEREIN, OKLAHOMA HILLS IS NOT RELYING ON ANY
STATEMENT OR ANY INFORMATION PROVIDED BY FAR GROUP OR BWP IN ITS
DECISION TO ACQUIRE THE RIGHTS TO THE EXPLORATION AGREEMENT AND
ASSUME THE OBLIGATIONS AND DUTIES OF THE EXPLORATION AGREEMENT.
OKLAHOMA HILLS HEREBY WAIVES AND ACKNOWLEDGES THAT NEITHER FAR
GROUP NOR BWP HAS MADE ANY REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, AND OKLAHOMA HILLS HEREBY EXPRESSLY DISCLAIMS AND
NEGATES ANY REPRESENTATION AND WARRANTY, EXPRESS OR IMPLIED, WITH
RESPECT OR RELATING TO (1) TITLE TO ANY OF THE PROPERTIES
IDENTIFIED IN THE EXPLORATION AGREEMENT, (2) THE CONTENTS,
CHARACTER, OR NATURE OF ANY DESCRIPTIVE MEMORANDUM, OR ANY REPORT
OF ANY PETROLEUM ENGINEERING CONSULTANT, OR ANY GEOLOGICAL OR
SEISMIC DATA OR INTERPRETATION RELATING TO THE PROPERTIES, (3)
THE ACCURACY, COMPLETENESS, OR MATERIALITY OF ANY INFORMATION,
DATA, OR OTHER MATERIALS (WHETHER WRITTEN OR ORAL) NOW,
HERETOFORE, OR HEREAFTER, FURNISHED TO OKLAHOMA HILLS BY OR ON
BEHALF OF FAR GROUP, (4) THE QUANTITY, QUALITY, OR RECOVERABILITY
OF PETROLEUM SUBSTANCES IN OR FROM THE PROPERTIES IDENTIFIED IN
THE EXPLORATION AGREEMENT, (5) ANY ESTIMATES OF THE VALUE OF THE
PROPERTIES IDENTIFIED IN THE EXPLORATION AGREEMENT OR FUTURE
REVENUES TO BE GENERATED BY THE PROPERTIES IDENTIFIED IN THE
EXPLORATION AGREEMENT, INCLUDING, WITHOUT LIMITATION, PRICING
ASSUMPTIONS OR THE ABILITY TO SELL OR MARKET ANY PETROLEUM
SUBSTANCES AFTER CLOSING, (6) THE PRODUCTION OR RATES OF
PRODUCTION OF PETROLEUM SUBSTANCES FROM THE PROPERTIES IDENTIFIED
IN THE EXPLORATION AGREEMENT, OR WHETHER PRODUCTION HAS BEEN
CONTINUOUS, OR IN PAYING QUANTITIES THEREFROM, (7) THE
MAINTENANCE, REPAIR, CONDITION, QUALITY, SUITABILITY, DESIGN, OR
MARKETABILITY OF THE PROPERTIES IDENTIFIED IN THE EXPLORATION
AGREEMENT, OR, (9) ANY OTHER MATERIALS OR INFORMATION THAT MAY
HAVE BEEN MADE AVAILABLE
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Assignment Agreement
FAR GROUP, INC./OKLAHOM HILLS GAS, L.P.
Page 4
OR COMMUNICATED IN ANY MANNER WHATSOEVER TO OKLAHOMA HILLS, OR
ITS PARTNERS, AFFILIATES, OR ITS OR THEIR OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS, CONSULTANTS, REPRESENTATIVES, OR ADVISORS IN
CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS ASSIGNMENT
OR ANY DISCUSSION OR PRESENTATION RELATING THERETO. OKLAHOMA
HILLS FURTHER EXPRESSLY DISCLAIMS AND NEGATES ANY REPRESENTATION
OR WARRANTY, EXPRESS OR IMPLIED, RELATING TO THE CONDITION OF ANY
IMMOVABLE PROPERTY, MOVABLE PROPERTY, EQUIPMENT, INVENTORY,
MACHINERY, FIXTURES, AND PERSONAL PROPERTY CONSTITUTING PART OF
THE PROPERTY INCLUDING, WITHOUT LIMITATION, (A) ANY IMPLIED OR
EXPRESS WARRANTY OF MERCHANTABILITY, (B) ANY IMPLIED OR EXPRESS
WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE, (C) ANY IMPLIED OR
EXPRESS WARRANTY OF CONFORMITY TO MODELS OR SAMPLES OF MATERIALS,
(D) ANY RIGHTS OF OKLAHOMA HILLS UNDER APPROPRIATE STATUTES TO
CLAIM DIMINUTION OF CONSIDERATION OR RETURN OF THE PURCHASE
PRICE, (E) ANY IMPLIED OR EXPRESS WARRANTY OF FREEDOM FROM PATENT
OR TRADEMARK INFRINGEMENT, (I) ANY IMPLIED OR EXPRESS WARRANTY OF
FREEDOM FROM REHIBITORY VICES OR DEFECTS OR OTHER VICES OR
DEFECTS, WHETHER KNOWN OR UNKNOWN, (G) ANY AND ALL IMPLIED
WARRANTIES EXISTING UNDER APPLICABLE LAW NOW OR HEREAFTER IN
EFFECT, AND (H) ANY IMPLIED OR EXPRESS WARRANTY REGARDING
ENVIRONMENTAL LAWS, THE RELEASE OF MATERIALS INTO THE
ENVIRONMENT, OR PROTECTION OF THE ENVIRONMENT OR HEALTH, IT BEING
THE EXPRESS INTENTION OF FAR GROUP AND OKLAHOMA HILLS THAT THE
IMMOVABLE PROPERTY, MOVABLE PROPERTY, EQUIPMENT, INVENTORY,
MACHINERY, FIXTURES, AND PERSONAL PROPERTY SHALL BE CONVEYED TO
OKLAHOMA HILLS "AS IS, WHERE IS" AND IN THEIR PRESENT CONDITION
AND STATE OF REPAIR, AND OKLAHOMA HILLS REPRESENTS TO FAR GROUP
THAT OKLAHOMA HILLS HAS MADE OR CAUSED TO BE MADE SUCH
INSPECTIONS WITH RESPECT TO THE IMMOVABLE PROPERTY, MOVABLE
PROPERTY, EQUIPMENT, INVENTORY, MACHINERY, FIXTURES, AND PERSONAL
PROPERTY AS OKLAHOMA HILLS DEEMS APPROPRIATE AND NECESSARY, AND
OKLAHOMA HILLS ACCEPTS THE IMMOVABLE PROPERTY, MOVABLE PROPERTY,
EQUIPMENT, INVENTORY, MACHINERY, FIXTURES, AND PERSONAL PROPERTY
"AS IS, WHERE IS" IN
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Assignment Agreement
FAR GROUP, INC./OKLAHOM HILLS GAS, L.P.
Page 5
THEIR PRESENT CONDITION AND STATE OF REPAIR. THE PARTIES AGREE
THAT THIS PARAGRAPH CONSTITUTES A CONSPICUOUS LEGEND.
e. Securities Laws. Oklahoma Hills is acquiring the Exploration
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Agreement and the Properties identified therein for its own
account and not with the intent to make a distribution in
violation of the Securities Act of 1933, as amended. Oklahoma
Hills acknowledges that it and its partners, officers, and/or
directors are experienced in investments with limited liquidity
through a variety of entities and vehicles including but not
limited to Limited Partnerships and private placements and is a
Accredited Investor as that term is defined in the Securities Act
of 1933, as amended. Oklahoma Hills, at its sole risk and
expense, has had unrestricted access during normal business hours
to the Exploration Agreement, the Properties identified therein,
the land files and accounting, engineering, operational,
geological and geophysical data, less and except those deemed
proprietary by Far Group. Oklahoma Hills has conducted its own
independent evaluation of the Exploration Agreement and the
Properties identified therein.
7. Conditions Precedent to Closing.
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7.1. Conditions Precedent to Obligations of Oklahoma Hills. The
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obligations of Oklahoma Hills under this Agreement are expressly subject to
completion of each of the following conditions:
1. Each and every representation and warranty of Far Group made
to Oklahoma Hills under this Agreement shall be true and
accurate in all material respects.
2. Far Group shall have performed and complied in all material
respects with (or compliance therewith shall have been
waived by Oklahoma Hills) each and every covenant and
agreement required by this Agreement to be performed, or
complied with by Far Group.
3. No suit, action, or other proceedings, shall be pending or
threatened before any court or government agency seeking to
restrain, prohibit, or obtain material damages or other
material relief in connection with the consummation of the
transaction contemplated by this Agreement.
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Assignment Agreement
FAR GROUP, INC./OKLAHOM HILLS GAS, L.P.
Page 6
7.2 Conditions Precedent to Obligations of Far Group. The
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obligations of Far Group under this Agreement are expressly subject to each of
the following conditions being met:
a. Each and every representation of Oklahoma Hills under this
Agreement shall be true and accurate in all material
respects.
b. Oklahoma Hills shall have performed and complied in all
material respects with (or compliance therewith shall have
been waived by Far Group) each and every covenant and
agreement required by this Agreement to be performed or
complied with by Oklahoma Hills.
c. No suit, action, or other proceedings shall be pending or
threatened before any court or government agency seeking to
restrain, prohibit, or obtain material damages or other
material relief in connection with the consummation of the
transaction contemplated by this Agreement.
8. Closing.
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a. Actions at Closing. The Closing of the transaction contemplated
hereby shall take place in the offices of BWP Gas, L.L.C. located
at 5858 Westheimer, Suite 708, Houston, Texas 77057, on or before
April 26, 2003, or at such other date and time as Far Group and
Oklahoma Hills may mutually agree, being herein called the
"Closing Date". At the Closing:
(i) Delivery of Conveyance. Far Group shall execute,
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acknowledge, and deliver to Oklahoma Hills, in a mutually
acceptable form, an Assignment and Bill of Sale
("Conveyance").
(ii) Issuance of Percentage Interest. Oklahoma Hills, by and
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through its General Partner, shall issue the to the Far
Group and BWP the Percentage Interest in Oklahoma Hills Gas,
L.P.
(iii) Execution and Delivery of Amended Limited Partnership
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Agreement. The Limited Partnership Agreement of Oklahoma
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Hills Gas, L.P. shall be, to the extent necessary, amended
to reflect the transaction contemplated hereby. The Amended
Limited Partnership Agreement shall be executed by Far
Group, BWP, the General Partner, and all other parties
thereto.
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Assignment Agreement
FAR GROUP, INC./OKLAHOM HILLS GAS, L.P.
Page 7
9. Notice. All notices required or permitted under this Agreement shall
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be effective upon receipt if personally delivered, if mailed by registered or
certified mail, postage prepaid, or if delivered by telegram, telecopy or
facsimile if directed to the parties as follows:
TO Far Group: TO Oklahoma Hills:
Far Group, Inc. C/O NANG, Inc.
9594 First Avenue N.E., Suite 675 210-580 Hornby Street
Seattle, Washington 98115 Vancouver, B.C. V6C 3B6
Facsimile: (604) 684-0342 Facsimile: (604) 687-3496
Any party may give written notice of a change in the address or individual to
whom delivery shall be made provided such notice is given at least ten (10)
business days prior to becoming effective.
10. Miscellaneous Matters.
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a. Choice of Law. TIME IS OF THE ESSENCE IN THIS AGREEMENT. This
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Agreement and all operations hereunder shall be subject to all
valid and applicable laws, orders, rules and regulations of any
governmental body having jurisdiction over such operations. This
Agreement and the legal relations among the parties hereto shall
be governed by and construed in accordance with the substantive
laws of the State of Delaware. Far Group and Oklahoma Hills agree
that any dispute that arises with respect to this agreement shall
be arbitrated by a panel of three (3) arbitrators in accordance
with the rules of the American Arbitration Association ("Rules").
The panel of arbitrators will consist of one (1) arbitrator
appointed by Oklahoma Hills, one (1) arbitrator appointed by Far
Group, and one (1) arbitrator selected by the two (2) appointed
arbitrators. The decision of the arbitration panel rendered
pursuant to the Rules shall be binding and non-appealable upon
the parties and may be enforced in any court of competent
jurisdiction. Any arbitration proceedings pursuant to this
Agreement shall be held in Houston, the Parties hereto execute an
single counterpart hereof, and this Agreement shall be effective
when each party hereto has executed a counterpart hereof (whether
or not any other party has executed the same counterpart).
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Assignment Agreement
FAR GROUP, INC./OKLAHOM HILLS GAS, L.P.
Page 8
EXECUTED on the date first written above and shall be effective as of the
Effective Date.
FAR GROUP, INC. OKLAHOMA HILLS GAS, L.P.
"Far Group" "Oklahoma Hills"
By: "Harry J. Briscoe" By: "Harry J. Briscoe"
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Harry J. Briscoe President of
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NANG, Inc., General Partner
Of Oklahoma Hills Gas, L.P.
Title: President & CEO
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NANG, NC. **
By: "Harry J. Briscoe"
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Title: President
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* *NANG, Inc. joins in the execution of this Agreement solely for the
purpose of acknowledging its obligation as the General Partner of Oklahoma Hills
Gas, L.P. to effectuate the assignment and transfer of the limited partnership
interests identified in Paragraph 4 hereinabove and to consent to the assignment
of the limited partnership interests as set forth therein.
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Assignment Agreement
FAR GROUP, INC./OKLAHOM HILLS GAS, L.P.
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