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EXHIBIT 6.11
PURCHASE AND SALE AGREEMENT
OCHILTREE COUNTY, TEXAS
EASTLAND COUNTY, TEXAS
This Purchase and Sale Agreement (the "Agreement") is made between
CITATION OIL & GAS CORP., FOR ITSELF AND AS THE GENERAL PARTNER OF CITATION 1987
INVESTMENT LIMITED PARTNERSHIP AND CITATION 1994 INVESTMENT LIMITED
PARTNERSHIP, whose address is 0000 Xxxxxx Xxxxx Xxxxx, Xxxxxxx, Xxxxx 00000
("Seller"), and TREK RESOURCES, INC., whose address is 965 One Energy Square,
0000 Xxxxxxxxxx Xxxxxx, Xxxxxx, Xxxxx 00000 ("Purchaser"), on the following
terms and conditions:
1) Seller agrees to sell and assign and Purchaser agrees to purchase all of
Seller's right, title and interest in, to and under the oil, gas and
mineral leasehold, and mineral, royalty and production interests described
on Exhibit "A" (the "Leases"), together with Seller's interest in the oil
and gas well(s) and all property and equipment located on or used in
connection with the production of hydrocarbons from the Leases, and to the
extent transferable, all contracts, agreements, easements, rights-of-way,
permits and similar rights and interests applicable to or used in
connection with the production of hydrocarbons from the Leases
(collectively, the "Interests"). Said sale and assignment will be without
warranty of title, express or implied, except as to claims arising by,
through and under Seller, but not otherwise.
2) The sale and purchase shall take place at a closing (the "Closing") at a
mutually approved time and place on or before August 1, 2000. As
consideration for the Interests, Purchaser agrees to pay Seller in cash at
the Closing, by a wire transfer of immediately available funds to Seller's
bank account pursuant to Seller's instructions, a consideration of Three
Million Dollars ($3,000,000), less and except any xxxxxxx money previously
paid to Seller as a deposit for the acquisition of the Interests (the
"Purchase Price"). At the Closing, Seller shall deliver to Purchaser
recordable assignments, conveyances and bills of sale and mineral, royalty
and production conveyances on the forms attached as Exhibit "B" and Exhibit
"C", respectively, duly and properly executed and acknowledged by an
authorized officer of Seller.
3) Seller shall deliver the Interest to Seller free and clear of any and all
liens, mortgages, or similar encumbrances.
4) The effective date of this transaction shall be 7:00 a.m., C.S.T., on the
1st day of July, 2000, (the "Effective Date").
5) All oil and gas and other minerals produced prior to the Effective Date and
attributable to the Interests shall continue to be the property of Seller,
including the oil remaining in the tanks at 7:00 a.m. on the Effective
Date. All oil and gas and other minerals produced on and after the
Effective Date and attributable to the Interests shall be the property of
Purchaser. All capital costs, lease rentals, shut-in royalties, overhead or
other sums,
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including without limitation all royalty and overriding royalty and
production, severance, windfall profit and excise taxes attributable to the
Interests and all direct, out-of-pocket operating expenses and overhead
attributable to the Interests and accruing prior to the Effective Date will
be the obligation of Seller. All capital costs, lease rentals, shut-in
royalties, overhead or other sums, including without limitation all royalty
and overriding royalty and production, severance, windfall profit and
excise taxes attributable to the Interests and accruing after the Effective
Date will be the obligation of Purchaser. At the Closing, the Purchase
Price shall be adjusted to reflect income and expenses attributable to the
Interests and allocated to the Purchaser or the Seller in accordance with
the provisions of this Section 5, and the Purchase Price will further be
adjusted to reflect the mutually approved value of any gas imbalances
attributable to the Interests which are in existence as of the Effective
Date. Within ninety (90) days after the Closing, Seller and Purchaser shall
in good faith agree upon the final post-closing settlement statement to
reflect operation of the Interests subsequent to the Effective Date. All
adjustments under this Section 5 shall be made in accordance with the
applicable agreements and in the absence thereof in accordance with
standard accounting practices reasonable and customary within the oil and
gas industry.
6) As of the Effective Date, Purchaser assumes all of Seller's responsibility
for plugging and abandoning xxxxx and facilities associated with the
Interests, and Purchaser shall conduct all plugging and abandonment in a
good and workmanlike manner.
7) PURCHASER SHALL INDEMNIFY, DEFEND AND HOLD HARMLESS SELLER AND ITS
AFFILIATES AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, PARTNERS
AND AGENTS, FROM ANY AND ALL LIABILITIES, COSTS, EXPENSES (INCLUDING,
WITHOUT LIMITATION, LITIGATION COSTS AND ATTORNEY FEES), DAMAGES, LIENS,
DEMANDS, JUDGMENTS, SUITS, CAUSES OF ACTION, AND CLAIMS OF ANY KIND OR
CHARACTER ARISING OUT OF, IN CONNECTION WITH OR RELATING TO THE INTERESTS,
INCLUDING, BUT NOT LIMITED TO, CLAIMS FOR INJURY OR DEATH OF ANY PERSONS OR
DAMAGE, LOSS OR DESTRUCTION OF PROPERTY REAL OR PERSONAL, UNDER ANY THEORY
OF TORT, CONTRACT OR STRICT LIABILITY, AND LIABILITIES ARISING FROM THE
PRESENCE OF ANY ENVIRONMENTAL CONDITIONS, INCLUDING BUT NOT LIMITED TO ALL
EXISTING CAUSES OF ACTION, FINES, LOSSES, COSTS AND EXPENSES, INCLUDING BUT
NOT LIMITED TO COSTS TO CLEAN UP OR REMEDIATE, IN ACCORDANCE WITH
APPLICABLE LAW, REGARDLESS OF WHETHER THE SAME WERE CAUSED BY OR
ATTRIBUTABLE TO (IN WHOLE OR IN PART) THE ACTIONS, OMISSIONS OR NEGLIGENCE
OF SELLER, AND REGARDLESS OF WHETHER THE SAME RELATE TO ACTIONS OR EVENTS
OCCURRING BEFORE, ON OR AFTER THE EFFECTIVE DATE. PURCHASER FURTHER
COVENANTS AND AGREES TO DEFEND ANY SUITS BROUGHT AGAINST SELLER ON ACCOUNT
OF ANY SUCH CLAIMS AND TO PAY ANY JUDGMENTS AGAINST SELLER RESULTING FROM
ANY SUCH SUIT OR SUITS ALONG WITH ALL COSTS AND EXPENSES RELATIVE TO ANY
SUCH CLAIMS,
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INCLUDING ATTORNEY'S FEES; PROVIDED, SELLER SHALL, NEVERTHELESS, HAVE THE
RIGHT, IF IT SO ELECTS, TO PARTICIPATE IN THE DEFENSE OF ANY SUCH SUIT OR
SUITS IN WHICH IT MAY BE A PARTY WITHOUT RELIEVING PURCHASER OF THE
OBLIGATION TO DEFEND THE SAME.
8) Seller and Purchaser agree to execute any and all such other and further
instruments of conveyance, assignment or transfer and all such notices,
transfer orders, division orders, releases and other instruments, documents
and writings as may be reasonably necessary to transfer all of the
Interests to Purchaser.
9) Each party represents to the other that:
(a) it is an entity duly organized, validly existing and in good
standing under the laws of the State of its incorporation and/or
registration, and is duly qualified to do business in the States
in which the Interests are located;
(b) it has all authority necessary to enter into this Agreement and
to perform all its obligations hereunder;
(c) its execution, delivery and performance of this Agreement and the
transactions contemplated hereby will not: (i) violate or
conflict with any provision of its Certificate of Incorporation,
by-laws or other governing documents; (ii) result in the breach
of any term or condition of, or constitute a default or cause the
acceleration of any obligation under, any agreement or instrument
to which it is a party or by which it is bound; or (iii) violate
or conflict with any applicable judgment, decree, order, permit,
law, rule or regulation;
(d) this Agreement has been duly executed and delivered on its
behalf, and at the Closing, all documents and instruments
required hereunder will have been duly executed and delivered.
This Agreement and all such documents and instruments shall
constitute legal, valid and binding obligations enforceable in
accordance with their respective terms, except to the extent
enforceability may be affected by bankruptcy, reorganization,
insolvency or similar laws affecting creditors' rights generally;
(e) it has been represented by legal counsel of its own selection who
has reviewed this Agreement; and
(f) it has met all bonding and other requirements of the State of
Texas to serve as an owner and operator of the Interests.
10) Immediately after the Closing, Purchaser shall notify all operators,
non-operators, oil and gas purchasers, government agencies and royalty
owners that it has purchased the Interests. At the Closing, Purchaser shall
execute all transfers of operatorship and notices pertaining thereto
required by regulatory agencies having jurisdiction over the
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Interests, and Seller shall file such notices of record with the
appropriate agencies.
11) The Interests have been used for oil and gas drilling and producing
operations, related (disposal and other) oilfield operations and the
storage and transportation of oil and gas. Physical changes in the land may
have occurred as a result of such uses. The Interests also may contain
buried pipelines and other equipment, whether or not of a similar nature,
the locations of which may not now be known by Seller or be readily
apparent by a physical inspection of the property. Purchaser understands
that Seller does not have the requisite information with which to determine
the exact nature or condition of the Interests or the effect any such use
has had on the physical condition of the Interests.
12) Purchaser acknowledges that (i) it has been afforded an opportunity to (a)
examine the properties and such materials as it has requested to be
provided to it by Seller, (b) discuss with representatives of Seller such
materials and the nature and operation of the Interests and (c) investigate
the condition, including subsurface condition, of the real property and the
condition of the equipment, (ii) it has entered into this Agreement on the
basis of its own investigation of the physical condition of the Interests
including subsurface condition and (iii) the Interests have been used in
the manner and for the purposes set forth above and that physical changes
to the Interests may have occurred as a result of such use and (iv) in
entering into this Agreement, Purchaser has relied solely on its
independent investigation of, and judgment with respect to, the equipment
and the other Interests and the advice of its own legal, tax, economic,
environmental, engineering, geological and geophysical advisors and not on
any comments or statements of any representatives of, or consultants or
advisors engaged by Seller and (v) low levels of naturally occurring
radioactive material ("norm") and man-made material fibers ("mmmf") may be
present at some locations. Purchaser acknowledges that norm is a natural
phenomenon associated with many oil fields in the U.S. and throughout the
world. Purchaser acknowledges that it has made its own determination of
this phenomenon and other conditions. Seller disclaims any liability
arising out of or in connection with any presence of norm or mmmf on the
Interests and on the Closing date, Purchaser shall assume the risk that the
Interests may contain wastes or contaminants and that adverse physical
conditions, including the presence of wastes or contaminants that may not
have been revealed by Purchaser's investigation. On the Closing date, all
responsibility and liability related to disposal, spills, waste, or
contamination on and below the Interests shall be transferred from Seller
to Purchaser and Purchaser shall thereafter indemnify, defend, save,
discharge, release and hold Seller harmless therefrom. ALL TANGIBLE
PERSONAL PROPERTY, EQUIPMENT, FIXTURES AND APPURTENANCES CONSTITUTING A
PART OF THE INTERESTS ARE SOLD AS IS, WHERE IS, AND SELLER MAKES NO, AND
DISCLAIMS ANY, REPRESENTATION OR WARRANTY, WHETHER EXPRESS OR IMPLIED, AND
WHETHER BY COMMON LAW, STATUTE, OR OTHERWISE, AS TO (i) MERCHANTABILITY,
(ii) FITNESS FOR ANY PARTICULAR PURPOSE, (iii) CONFORMITY TO MODELS OR
SAMPLES OF MATERIALS, AND/OR (iv) CONDITION.
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13) This Agreement, together with any confidentiality agreements relating to
the Interests previously executed by Purchaser, constitute the entire
agreement between the parties and supersede all prior agreements,
understandings, negotiations and discussions, whether oral or written, of
the parties. No supplement, amendment, alteration, modification, waiver or
termination of this Agreement shall be binding unless executed in writing
by the parties hereto after the execution of this Agreement. The provisions
of Sections 9 and 13-22 shall survive any termination of this Agreement.
14) In the event any covenant, condition, or provision contained herein is held
to be invalid by a court of competent jurisdiction, the invalidity of any
such covenant, condition or provision shall in no way affect any other
covenant, condition or provision contained herein; provided, however, that
any such invalidity does not materially prejudice either Purchaser or
Seller in its respective rights and obligations contained in the valid
covenants, conditions, and provisions of this Agreement.
15) No waiver of any of the provisions of this Agreement shall constitute a
waiver of any other provisions hereof (whether or not similar), nor shall
such waiver constitute a continuing waiver unless otherwise expressly
provided.
16) This Agreement shall be governed by and interpreted in accordance with the
laws of the State of Texas, without reference to the conflict of laws or
principles applied by the courts of the State of Texas. All assignments and
instruments of conveyance executed in accordance with this Agreement shall
be governed by and interpreted and enforced in accordance with the laws of
the state where the Interests conveyed thereby are located.
17) Seller and Purchaser do hereby irrevocably waive, to the fullest extent
permitted by law, any and all right to a trial by jury in any action, suit
or other legal proceeding based upon, arising out of or relating to this
agreement or the transactions contemplated hereby.
18) Seller and Purchaser do hereby covenant and agree that the recovery by
either party hereto of any damages suffered or incurred by it as a result
of any breach by the other party of any provision of this Agreement shall
be limited to the actual damages suffered or incurred by the non-breaching
party as a result of the breach by the breaching party and in no event
shall the breaching party be liable to the non-breaching party for any
indirect, consequential, exemplary or punitive damages suffered or incurred
by the non-breaching party as a result of the breach by the breaching
party.
19) Except as otherwise expressly provided herein, each party shall bear and
pay its own costs and expenses, including, but not limited to attorneys
fees, incurred in connection with this transaction.
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20) Nothing contained in this Agreement shall be deemed to create a joint
venture, partnership, tax partnership or agency relationship between the
parties.
21) Prior to the Closing, Seller and Purchaser to the extent permitted by law,
shall keep confidential all information received from the other unless such
information is readily ascertainable from public or published information
or trade sources or is received from a third-party having no obligation of
confidentiality with respect to such information. In the event of the
termination of this Agreement, Seller and Purchaser shall return to the
other or destroy all information received from the other and, to the extent
permitted by law, keep confidential and not use any confidential
information obtained pursuant to this Agreement.
22) If a dispute arises out of or relates to this Agreement, or the breach
thereof, and if the dispute cannot be settled through negotiation, the
parties agree first to try in good faith to settle the dispute by mediation
administered by the American Arbitration Association under its Commercial
Mediation Rules (or such other form of mediation as is reasonably
acceptable to both parties) before resorting to arbitration, litigation, or
some other dispute resolution procedure. The mediator selected to resolve
any dispute hereunder shall be acceptable to both parties. If the parties
cannot agree on a mediator, then they shall make application to the
Administrative Judge of the State District Courts of Xxxxxx County, Texas
for appointment of a mediator. Each party shall bear its own attorneys'
fees in connection with any mediation and the cost of the mediation shall
be shared equally by both parties.
23) This Agreement shall be binding upon the parties and their respective
successors and assigns.
24) To the extent transferable, Seller specifically conveys to Purchaser all of
the right, title and interest heretofore reserved by Seller in those
certain instruments described as:
(a) The Xxxxxxx Money Contract dated January 21, 2000 between Seller and
Xxxxxxx Xxxxxxxx; and
(b) The Special Warranty Deed dated June 12, 2000 between Seller and
Xxxxxx X. Xxxxx recorded in Volume 1937, Page 29 of the official
records of Eastland County, Texas.
In addition, Seller acknowledges that Purchaser shall be entitled to the
status of a successor in interest to Purchaser under those certain
instruments described as:
(a) Release and Covenant Not to Xxx dated June 16, 2000 executed by Xxxxxx
X. Xxxxx; and
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(b) Notice of Release and Covenant Not to Xxx dated June 16, 2000 executed
by Xxxxxx X. Xxxxx and recorded in Volume 1944, Page 43 of the
official records of Eastland County, Texas.
The instruments described in this section 24 and any related agreements
shall be referred to as the "Surface Instruments". Purchaser acknowledges
this prior conveyance of certain surface rights to a third party, and
accepts the Interests subject to the Surface Instruments.
25) Except as otherwise specifically provided herein, this Agreement is subject
to and Purchaser shall assume the obligations and all burdens,
encumbrances, and agreements of any kind whatsoever related to the
Interests, including, but not limited to, royalties, overriding royalties,
production payments, operating agreements, assignments, conveyances,
reassignment obligations, and the Surface Instruments. This Agreement is
further subject to and Purchaser shall assume all obligations concerning
use and operation of the Interests under applicable local, state and
federal laws and regulations.
ACCEPTED and AGREED to this 1st day of August, 2000.
SELLER: PURCHASER:
CITATION OIL & GAS CORP., TREK RESOURCES, INC.
for itself and as the general partner of
Citation 1987 Investment Limited Partnership
and Citation 1994 Investment Limited Partnership
/s/ Xxxxxx X. Xxxxxxx /s/ Xxxxxxx X. Xxxxxxxxxx
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By: Xxx X. Xxxxxxx By: Xxxxxxx X. Xxxxxxxxxx
Title: Vice President Land Title: President
