PURCHASE AND SALE AGREEMENT
THIS
PURCHASE AND SALE AGREEMENT (the
“Agreement”), is made and entered into this 9 day of June, 2007, by and between
Xxxxx X. and Xxxxxxxxx X. Xxxxx (“Seller”) and XXXX Oil & Gas Investments,
LLC 0000 Xxxxx Xxxxx Xxxxxx Xxxxxxx Xxxxx 000 Xxxxxxxxx, XX 00000
(“Buyer”).
WITNESSETH:
WHEREAS,
Seller owns 1,760
acres of certain real property located in North Central Oklahoma known
as the Xxxxx Property (“Property”), which Property includes twenty-three (23)
oil xxxxx and seven (7) gas xxxxx drilled to the Mississippi Chat formation
with
current production from twelve (12) of the thirty (30) xxxxx, and capacity
to
drill an additional eighty-eight (88) xxxxx;
WHEREAS,
Seller owns certain oil and
gas leases on said Property known as Cedar Creek (4 quarter sections), Whitetail
(2 quarter sections), Xxxxxxxx (1 quarter section), Sand Creek (1 quarter
section), Xxxxxx (1 quarter section), and Oklahoma Land and Cattle Lease (1
quarter section) as more fully described in the leases attached hereto at
Exhibit “A” (collectively, the “Leases”); and
WHEREAS,
Seller owns certain oil and
gas production, storage and compression equipment, which is situated upon and
used in connection with the production, storage and transportation of oil and
gas purchased from the Leases, which equipment includes, without limitation,
the
equipment described in the Evaluation of Oil and Gas Properties for NEWCO Oil
and Gas Company and the accompanying Appraisal attached hereto
at Exhibit “B” (the “Equipment”), as well as all rolling
stock; and
WHEREAS,
Seller desires to sell the
Leases and Equipment to Buyer, and Buyers desires to purchase the same from
Seller on the terms and conditions hereinafter set forth;
NOW,
THEREFORE, in consideration of the
mutual covenants herein contained, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, Buyer and Seller
agree as follows:
1. Agreement
to Buy and Sell. Upon the terms and conditions hereinafter set
forth, Seller agrees to sell and assign to Buyer on Closing Date, and Buyer
agrees to purchase and receive from Seller on Closing Date, the Assets, as
hereinafter defined, including the Leases and Equipment.
2. Assets.
The Leases and the Equipment are herein sometimes collectively referred to
as
the “Assets.” The parties agree that the Assets to be sold by Seller
to Buyer on Closing Date shall also include all personal property, fixtures,
improvements, permits, licenses, approvals, servitudes, rights-of-way,
easements, surface use agreements, rolling stock, and all other
rights owned by Seller or used in connection with the Leases. The Assets shall
also include all of the files, records, data and information relating to the
Leases and maintained by Seller, copies of which have been heretofore delivered
to Buyer.
3. Purchase
Price. Buyer shall pay to Seller for the Assets, the total purchase price of
One Million Four Hundred Thousand Dollars ($1,400,000) (the “Purchase
Price”). The parties acknowledge the deposit of the sum of $100,000
as xxxxxxx money and partial payment of the Purchase Price (the “Xxxxxxx
Money”). On
Closing Date, as hereinafter
defined, the balance of the Purchase Price
will be paid to Seller by
Buyer.
4. Seller’s
Representations and Warranties. Seller represents and warrants to Buyer the
following, which representations and warranties shall be taken as true as of
the
date of this Agreement and as of Closing Date:
4.1
Seller owns good and marketable title to the Leases and the Equipment, and
both
the Leases and the Equipment are free, clear and unencumbered. The net revenue
interest of Seller in the Leases is correctly reflected on Exhibit “A” attached
to this Agreement.
4.2
Seller has the necessary authority to enter into this Agreement and to perform
all of the obligations hereunder. This Agreement and all documents
and instruments required hereunder to be delivered on Closing Date shall
constitute the legal, valid and binding obligations of Seller, enforceable
in
accordance with their respective terms, except to the extent enforceability
may
be affected by bankruptcy, reorganization, insolvency or similar laws affecting
creditor's rights generally.
4.3
Seller's execution, delivery and performance of this Agreement will not result
in the breach of any condition of, or constitute a default under or cause the
acceleration of any obligation under any agreement or instrument to which Seller
is a party or by which Seller is bound, or violate or conflict with any
applicable judgment, decree, order, permit, law, rule or
regulation.
4.4
Seller has incurred no liability; contingent or otherwise, for broker’s or
finder’s fees with respect to this transaction for which Buyer shall have any
responsibility whatsoever.
4.5
Seller is not a “foreign person” within the meaning of the IRS Code, Sections
1445 and 7701 (i.e., none of the Seller are nonresident aliens, foreign
corporations, foreign partnerships, foreign trusts, or foreign estates as those
terms are defined in the IRS Code and regulations promulgated
thereunder).
4.6
Seller has not received any written notice of any suit, claim, action or other
proceeding (“Action”) pending, or, to the knowledge of any of Seller,
threatened, before any court or governmental agency as of the date of this
Agreement that relates to the Assets and is not aware of the possibility of
any
such Action.
4.7
The
Assets constitute all of the property rights and assets necessary for Buyer
to
own, operate, use and enjoy the Leases and the Equipment for the same or similar
purposes for which, and in the same or similar manner in which the Assets have
been owned, operated, used and enjoyed by Seller prior to the transfer
contemplated in this Agreement.
4.8
Until
this Agreement is closed, Seller shall operate the Leases and maintain the
equipment in the ordinary and normal course consistent with Seller’s best past
practices. The Leases and Equipment will be on Closing Date in as
good as condition as they are of the date of the execution of this Agreement,
wear and tear from ordinary uses and elements excepted.
5. Buyer’s
Representations and Warranties. Buyer represents and warrants to Seller the
following, which representations and warranties shall be true as of the date
of
this Agreement and as of Closing Date:
5.1
Buyer
is a limited liability company organized and existing under the laws of the
State of Texas.
5.2
Buyer
has the necessary authority to enter into this Agreement and to perform all
of
its obligations hereunder. This Agreement has been duly executed and
delivered on Buyer’s behalf, and, on Closing Date, all documents and instruments
required hereunder shall have been duly executed and delivered by
Buyer. This Agreement and all documents and instruments to be
delivered on Closing Date shall constitute the legal, valid and binding
obligations of Buyer
enforceable
in accordance with the respective terms, except to the extent enforceability
may
be affected by bankruptcy, organization (solvency or some other similar law
affecting creditor’s rights generally).
5.3
Buyer’s execution, delivery and performance of this Agreement and the
transactions contemplated hereby will not violate or conflict with any provision
of its governing documents; result in the breach of any condition or constitute
a default under, or cause the acceleration of any obligation under any agreement
or instrument to which Buyer is a party under which it is bound; or violate
or
conflict with any applicable judgment, decree, order, permit, law, rule or
regulation.
5.4
Buyer
has incurred no liability, contingent or otherwise, for broker’s or finder’s
fees with respect to this transaction for which Seller shall have any
responsibility whatsoever.
6. Effective
Time. The purchase and sale of the Assets shall be effective no later than
forty-five (45) days from the date of this Agreement on a Closing Date to be
agreed by the parties. Buyer shall take possession of the Assets as
of the Closing Date and shall commence operating the Leases from and after
the
Closing Date. The parties shall determine the amount of oil in storage tanks
(above the pipeline connections) as of the Effective Time, and shall determine
the volumes of all gas produced by Seller prior to the Effective
Time. Buyer and Seller shall cooperate with one another to notify
crude oil purchasers and gas purchasers of the transfer of ownership of the
Lease as of the Effective Time and cause such oil and gas purchasers to pay
to
Buyer the proceeds for the sale of oil and gas produced from and after the
Effective Time. In the event Buyer receives payment for oil or gas
produced by Seller prior to the Effective Time, upon receipt of any such
payment, Buyer shall remit the same to Seller. On the other hand, in the event
Seller should receive payment for gas or oil produced by Buyer subsequent to
the
Effective Time, Seller shall remit payment therefor to Buyer. Seller shall
pay
when and as the same becomes due all of the expenses attributable to the
operation of the Lease prior to the Effective Time, and Buyer shall pay all
expenses attributable to the operation of the Lease subsequent to the Effective
Time.
7. Taxes.
All taxes, including ad valorem, personal property, production, excise,
severance and similar obligations assessed against the Assets or based on or
measured by the ownership of the Assets or production therefrom, shall be
prorated
between
Seller and Buyer as of the Effective Time. Buyer shall be responsible for
reporting and remitting payment for all sales, use or similar taxes payable
in
connection with the transaction contemplated by this Agreement.
8. Liabilities
and Obligations of Seller and Buyer. Seller shall pay, perform,
fulfill and discharge all claims, costs, expenses, liabilities and obligations
relating to Seller’s ownership and operation of the Assets prior to the
Effective Time. Buyer shall pay, perform, fulfill and discharge all claims,
costs, expenses, liabilities and obligations relating to Buyer’s ownership and
operation of the Assets subsequent to the Effective Time.
9. Indemnification
and Release. Buyer shall defend, indemnify, save and hold harmless Seller,
and its employees, representatives, agents, successors and assigns, from and
against all Losses which arise from or in connection with Buyer’s ownership and
operation of the Assets subsequent to the Effective Time.
Seller
shall defend, indemnify, save and hold harmless Buyer, its employees,
representatives, agents, successors and assigns from and against all Losses
which arise from or in connection with Seller’s ownership and operation of the
Assets prior to the Effective Time.
The
term
“Losses” as used in this Section 9 shall mean any actual losses, costs,
expenses, liabilities, damages, demands suits
and sanctions of every kind and character, including reasonable fees and
expenses of attorneys, technical experts and expert witnesses reasonably
incident to matters indemnified against. Buyer shall be deemed to have released
Seller at Closing Date from any Losses for which Buyer has agreed to indemnify
Seller hereunder. Seller shall be deemed to have released Buyer at Closing
Date
from any Losses for which Seller has agreed to indemnify Buyer
hereunder.
10. Title
Matters. Buyer shall satisfy itself as to the title of Seller in and to the
Assets prior to Closing Date. In the event Buyer determines that a defect in
title exists, Buyer shall provide Seller written notice describing such title
defect not later than five (5) business days prior to Closing Date. The term
“defect” means any lien, encumbrance or encroachment associated with Seller’s
title to the Assets. With respect to any alleged title defect, Seller may
undertake to satisfy and cure same, all or none of such defects. Buyer and
Seller shall meet prior to Closing Date to attempt to mutually agree on any
proposed satisfaction or cure of title defects. If Seller is unwilling or unable
to satisfy or cure any such title defect and to deliver to Buyer good and
marketable title to all of the Assets,
Buyer
shall be entitled to rescind in writing this Agreement, or Buyer, at Buyer’s
option, may elect to waive any such title defect and proceed with the closing
of
this transaction.
11. Closing. The
closing of the transactions contemplated by this Agreement (herein sometimes
referred to as the “Closing” or “Closing Date”) shall be conducted on at the
offices of the Seller’s attorneys, or at such other time and place as the
parties may agree in writing. At the Closing, the Seller shall
deliver to Buyer properly executed and acknowledged assignments of the Leases
and a properly executed Assignment, Xxxx of Sale and Conveyance in the form
attached hereto as Exhibit “C”, covering the Assets, with full warranties of
title subject only to the exceptions permitted in this Agreement. In
addition, on Closing Date and thereafter Seller shall execute such other
assignments, bills of sale, deeds, or Oklahoma Corporation Commission forms,
transfer orders or division orders necessary to transfer the Assets to Buyer
and
to comply with all of the requirements of the Oklahoma Corporation Commission
and the Bureau of Indian Affairs if applicable. At Closing, Buyer
shall cause to be paid to Seller in collected funds the Purchase
Price.
12. Breach;
Litigation. In the event Buyer shall refuse to close the
transactions contemplated by this Agreement and pay the Purchase Price to Seller
on Closing Date for any reasons other than those set forth herein, Seller shall
be entitled to terminate this Agreement and retain the Xxxxxxx Money as
liquidated damages, the parties agreeing the damages of such breach to be of
different ascertainment, or seek specific performance of the Agreement or seek
any other equitable remedy available to Seller under Oklahoma law. In the event
Seller shall refuse to close the transaction contemplated by this Agreement
for
any reasons other than those set forth herein, Buyer shall be entitled to
terminate this Agreement and receive a refund of the Xxxxxxx Money paid herewith
or seek specific performance of this Agreement or seek any other legal or
equitable remedy available to Buyer under Oklahoma law. In the event litigation
is instituted by either Seller or Buyer to interpret or enforce the terms and
provisions of this Agreement, the prevailing party in any such litigation shall
be entitled to recover, in addition to any other relief, the costs of litigation
including reasonable attorney fees.
13. Miscellaneous.
13.1 Notices. All
notices under this Agreement shall be in writing and addressed as set forth
below. Any communication or delivery hereunder shall be deemed to have been
duly
made and the receiving party charged with notice (i) if
personally
delivered, when received, (ii) if mailed, three business days after mailing,
certified mail, return receipt requested, or (iii) if sent by overnight courier,
one day after sending. All notices shall be addressed as
follows:
If
to
Seller:
Ash
Xxxxxxxxxxx
XXXX
Oil
& Gas Investments, LLC
0000
Xxxxx Xxxxx Xxxxxx Xxxxxxx Xxxxx 000
Xxxxxxxxx,
XX 00000
If
to
Buyer:
[Buyer: Please
Provide.]
13.2 Amendments.
This Agreement may not be amended nor any rights hereunder waived except by
an
instrument in writing signed by the
party to be charged.
13.3 Governing
Law. This Agreement and the transactions contemplated hereby
shall be construed in accordance with, and governed by, the laws of the State
of
Oklahoma.
13.4 Entire
Agreement. This Agreement constitutes the entire agreement among the
parties, their respective partners, shareholders, officers, directors and
employees with respect to the subject matter hereof.
13.5 Binding
Effect. This Agreement shall be binding upon and inure to the benefit of the
parties hereto, and their heirs, devisees, personal representatives, successors
and assigns.
13.6 Representations,
Warranties and Covenants. All representations, warranties and covenants of
the parties set forth in this Agreement, or any document executed in connection
with the consummation of this Agreement, shall survive the Closing of this
Agreement and the transfer of the Assets from Seller to Buyer.
13.7 Counterparts.
This Agreement may be executed by
the parties in counterparts.
All counterparts together shall constitute
one document binding on all parties. The execution pages and the pages necessary
to show acknowledgments may be combined with the other pages of this Agreement
to form what is deemed and treated as a single original Agreement showing
execution by all
parties. An electronically transmitted facsimile (“fax”) of the signature of a
party is binding on the signing party, and delivery of this Agreement by fax
constitutes delivery of this Agreement for all purposes and is thus binding
on
the party sending the fax.
Dated
the
date first above written.
SELLER:
/s/
Xxxxx X. Xxxxx
By:
______________________________
BUYER:
Xxxxxx
Xxxxxxxxxxx,
Manager
By:
______________________________
