EXHIBIT 10.11
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT ("Agreement") is entered into as of the 30th
day of March 2005, by and between Xxxxx Xxxxxxx Xxxxx ("Seller")," and Petrogen,
Inc. ("Buyer').
WITNESSETH
WHEREAS, Seller owns one-hundred percent (100%) of the pipeline, facilities,
equipment and contracts described on Exhibit "A" (collectively, the "Pipeline");
and
WHEREAS, Seller has agreed to sell and Buyer has agreed to purchase all of
Seller's right, title and interest in the Pipeline.
NOW THEREFORE, in consideration of the premises and the mutual covenants and
benefits to be derived from this Agreement, Seller and Buyer hereby agree as
follows:
ARTICLE 1 - TRANSACTION
Seller shall sell, transfer and assign to Buyer one hundred percent (100%) of
its right, title and interest in the Pipeline (as well as all of the documents
available to Seller that pertain to the construction and operation of the
Pipeline, including any as built drawings, hydrostatic test reports and welding
certifications and including any agreements or records for the ownership,
operation and maintenance of the Pipeline or pipeline: interconnects) by the
delivery to. Buyer, of the executed Pipeline-Xxxx of Sale and Right-of-Way
Assignment ("Assignment") attached hereto as Exhibit 'B."
In consideration for the Assignment, Buyer shall
i) Within ten business days of closing, deliver one hundred and seventy
five thousand (175,000) common share shares of Petrogen Corp, to
Seller, such shares to be restricted as provided in Exhibit "C"
attached hereto.
ii) For the account of Seller, pay Xxxxxx Xxxxxx ten cents (10(cent)) for
each thousand cubic .feet (mcf) of gas produced by Buyer from Buyer's
Xxxxx Field, not to exceed a total of fifty thousand dollars
($50,000.00).
iii) Until such time as the amount paid Xxxxxx Xxxxxx by Buyer for the
account of Seller totals fifty thousand dollars ($50,000.00), pay
Seller six cents (6(cent)) for each thousand cubic feet (mcf) of gas
produced by Buyer from Buyer's Xxxxx Field. For production after the
amount paid Xxxxxx Xxxxxx by Buyer for the account of Seller totals
fifty thousand dollars ($50,000.00), pay Seller twelve cents
(12(cent)) for each thousand cubic feet (mcf) of gas produced by Buyer
from Buyer's Xxxxx Field to a total amount of four billion cubic feet
(bcf) of gas produced from the field.
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ARTICLE 2 - CLOSING AND EFFECTIVE DATE
Title to the Pipeline shall transfer and the Dosing of the transactions
contemplated hereby (the "Closing,,) shall take place at the same time as
execution of this Agreement. All Closing transactions shall be deemed to have
occurred simultaneously.
The date of Closing shall be the effective date (the "Effective Date") of this
transaction
ARTICLE 3 - DOCUMENTS
Upon execution of this Agreement, Seller will provide to Buyer all of documents
that pertain to the construction and operation of the Pipeline, including any
"as-build' drawings, hydrostatic test reports and welding certifications, and
including any agreements or records for the operation and. maintenance of the.
Pipeline or pipeline interconnects.
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES
To Seller's knowledge, there are no required consents to assign or preferential
rights affecting the Pipeline or this transaction.
Buyer represents that it has inspected the Pipeline and acknowledges that it is
familiar with tile. condition aced the. fitness of the Pipeline.
IT IS EXPRESSLY UNDERSTOOD AND AGREED BY THE PARTIES THAT THE PIPELINE IS BEING
TRANSFERRED ON AN "AS IS, WHERE IS" BASIS WITH ALL. FAULTS AND DEFECTS AND THAT
SELLER MAKES NO WARRANTIES, EITHER EXPRESS OR IMPLIED, AS TO THE PRESENT
CONDITION OR SAFETY OF THE PIPELINE, ITS MERCHANTABILITY OR ITS FITNESS FOR ANY
PARTICULAR PURPOSE.
Seller warrants that it has good, clear and unencumbered title to one hundred
percent (100%) of the Pipeline.
ARTICLE 5 - RELEASE
BUYER EXPRESSLY AGREES TO PAY, PERFORM, FULFILL AND DISCHARGE ALL CLAIMS, COSTS,
EXPENSES, LIABILITIES AND OBLIGATIONS RELATING TO OWNING, OPERATING AND
MAINTAINING THE PIPELINE (`CLAIMS"), INSOFAR AND ONLY INSOFAR AS SUCH CLAIMS
ACCRUED OR AROSE ON AND AFTER THE EFFECTIVE DATE.
SELLER EXPRESSLY AGREES TO RETAIN, PAY, PERFORM, FULFILL AND DISCHARGE ALL
CLAIMS, INSOFAR AND ONLY INSOFAR AS SUCH CLAIMS ACCRUED OR AROSE PRIOR TO THE
EFFECTIVE DATE.
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ARTICLE 6 - INDEMNITIES
INDEMNITIES BY SELLER - Seller will protect, defend, indemnity and hold Buyer,
its subsidiaries and affiliated companies, free and harmless from and against
any and all losses, deaths, Injuries, claims, liens, demands, and causes of
action of every kind and character, including the amounts of judgments,
penalties, interest, court costs, investigation expenses and costs, and
reasonable legal fees incurred by Buyer in defense of same arising in favor of
any government agencies, third parties, contractors or subcontractors, on
account of claims, liens, debts, personal injuries, death or damage to property
arising out of or resulting from acts or omissions occurring before Closing, but
excluding any and all costs associated with the physical abandonment of the
Pipeline.
INDEMNITIES BY BUYER - Buyer will protect, defend, indemnify and hold Seller,
its subsidiaries and affiliated companies, free and harmless from and against
any and all losses, deaths, injuries, claims, liens, demands, and causes of
action of every kind and character, including the amounts of judgments,
penalties, interest, court costs, investigation expenses and costs, and
reasonable legal fees incurred by Seller In defense of same arising in favor of
any government agencies, third parties, contractors or subcontractors, on
account of claims, liens, debts, personal injuries, death or damage to property
arising out of or resulting -from acts or omissions occurring on or after
Closing.
DEFENSE OF CLAIMS - The party entitled to indemnification pursuant to this
Article (the "Indemnified Party") shall notify the other party .("the
Indemnifying Party") in writing of the nature of any claim by a third party for
which indemnification is sought under this Agreement promptly after the
assertion thereof. The Indemnifying Party shall be entitled to participate at
its own expense in the defense, or if the Indemnifying Party so elects with a
-reasonable tine after receipt of such -notice, to assume the defense of any
suit brought to enforce such claim. In the event of any suit, the Indemnified
Party and Indemnifying Party shall cooperate with each other in connection with
the defense thereof.
ARTICLE 7 - TAXES
Any taxes assessed for periods ending prior to Closing shall be borne solely by
Seller. Any taxes assessed for all periods on or after Closing shall be borne by
Buyer, its successors and assigns. All sales, use and other transfer taxes or
fees associated with the sale, assignment, transfer of possession or delivery of
the Pipeline, or any agreement, instrument or certificate associated therewith,
shall be paid by Buyer.
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ARTICLE 8 - MISCELLANEOUS
This Agreement, together with the Assignment, constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes al!
prior agreements and understandings, both written and oral.
This Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and permitted assigns.
From time-to-time following the Closing, at the request of either party and
without further consideration, the other party shall execute and deliver to such
requesting party such instruments and documents and take such action (but
without incurring any material financial obligation) as requesting party may
reasonably request in order to consummate more fully and effectively the
transactions contemplated under this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement, in multiple
originals, on the date first set forth above
SELLER
XXXXX XXXXXXX XXXXX
WITNESSES:
/s/ By: /s/ XXXXX X. XXXXX
/s/
BUYER
PETROGEN INC.
______________________ By: /s/ ______________________________
______________________ Title: C.E.O.
_______________________________
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EXHIBIT "C"
RESTRICTED SECURITIES AND DISPOSITION UNDER "RULE 144"
2.1 NO REGISTRATION The Subscriber acknowledges and understands that neither the
sale of the nits which the Subscriber is acquiring nor any of the Units
themselves have been registered under the United States Securities Act of 1933,
as amended (the VS. Act") or any state securities laws, and, furthermore, that
the Securities must b(R) held indefinitely unless subsequently registered under
the U.S, Act or an exemption from such registration is available.
2.2 LENDING OF THE SECURITIES. The Subscriber also acknowledges and understands
t e certificates representing the Securities will be stamped with the following
legend (or substantially equivalent language) restricting transfer in the
following manner:
'The securities represented by this certificate have not been registered
under the United States Securities Act of 1933, as amended, or the laws of
any state, and have been issued pursuant to an exemption from registration
pertaining to such securities and pursuant to a representation by the
security holder named hereon that said securities have been acquired for
purposes of investment and not for purposes of distribution. These
securities may not tie offered, sold, transferred, pledged or hypothecated
in the absence of registration, or the availability of an exemption from
such registration. Furthermore, no offer, sale, transfer, pledge or
hypothecation is to take place without the prior written approval of
counsel to the Company being affixed to this certificate. The stock
transfer agent has been ordered to effectuate transfers of this certificate
only in accordance with the above instructions.(degree).
The Subscriber hereby consents to the Company making a notation on its
records or giving instructions to any transfer agent of the Securities in order
to implement the restrictions on transfer set forth and described hereinabove,
2.3 DISPOSITION UNDER RULE 144. The Subscriber also acknowledges and understands
that:
(a) the Securities are restricted securities within the meaning of Rule
144 promulgated under the U.S. Act;
(b) the exemption from registration under Rule 144 will not be available
in any event for at least one year from rte date of purchase and
payment of the Units by the Subscriber, and even then will not be
available unless (i a public trading market then exists for the common
stock of the Company, (ii) adequate information
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concerning the Company is then available to the public and (iii) other
terms and conditions of Rule 144 are complied with; and
(c) any sale of the Securities may be made by the Subscriber only in
limited amounts in accordance with such terms and conditions.
2.4 FURTHER RESTRICTIONS ON DISPOSITIONThe Subscriber further
acknowledges an un erstands that, ' out in anyway limiting the acknowledgements
and understandings as set forth hereinabove, the Subscriber agrees that the
Subscriber shall in no event make any disposition of ail or any portion of the
Securities which the Subscriber is acquiring hereunder unless and until:
(a) there Is then in effect a "Registration Statement' under the U.S. Act
covering such proposed disposition and such disposition is made in
accordance with said Registration Statement; or
(b)(i) the Subscriber shall have notified the Company of the proposed
disposition and shell have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition,
(iii) the Subscriber shall have furnished the Company with an opinion
of the Subscriber's own counsel to the effect that such disposition
will not require registration of any such Securities under the U.S.
Act and (iii) such opinion of the Subscriber's counsel shall have been
concurred in by counsel for the Company and the Company shall have
advised the Subscriber of such concurrence.
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