Exhibit 10.03
 
ASSET PURCHASE AGREEMENT
 

 
THIS ASSET PURCHASE AGREEMENT (the “Agreement”) by and between Trinity Disposal
& Trucking LLC, a Texas limited liability company (“Buyer”), Pegasi Energy
Resources Corporation, a Texas  corporation (“PERC”), 59 Disposal, Inc., a Texas
corporation (and wholly-owned subsidiary of PERC) (“59D”), TR Energy Inc., a
Nevada corporation, and Marion Swamp Fox L.P., a Texas Limited Partnership, is
effective as of July 1, 2011.  PERC, 59D, TR Energy Inc. and Marion Swamp Fox
L.P. are together referred to as “Sellers.”
 
The real estate to be purchased by Buyer is described as follows:
 
2.54 acres, more or less, located in the R. Bennington Survey, A-24, Marion
County, Texas, and being part of the same land described in a Deed dated January
20, 2005 from Lois W. Smith, as Grantor, to TR Energy, Inc., as Grantee, and
recorded in Volume 692, Page 583 of the Official Public records of Marion
County, Texas, together with all improvements, fixtures and accessions thereto,
including without limitation the W. C. Whitfield Heirs #1 Well, which is located
on the 2.54 acres (refer to Exhibit “A”).  Such real estate, salt water disposal
well and improvements, fixtures and accessions are referred to as the “59
Disposal Plant.”
 
W I T N E S E T H:
 
WHEREAS, Buyer desires to acquire and purchase from the Sellers, and Sellers
desire to sell, transfer, and convey to Buyer, the Assets (defined below), which
includes the 59 Disposal Plant and all existing assets used or useable in the
conduct of the business of water disposal and transportation (the “Business”),
on the terms and conditions herein provided;
 
NOW, THEREFORE, in consideration of the promises and the mutual covenants and
agreements herein provided, the parties hereto agree as follows:
 
1.           Assets to be Purchased.
 
Subject to the terms and conditions herein provided, Sellers hereby agree to
sell, transfer and convey to Buyer, and Buyer hereby agrees to purchase and
receive, all of Sellers’ right, title and interest in and to the 59 Disposal
Plant.  Additionally, Sellers hereby agree to sell, transfer and convey to
Buyer, and Buyer hereby agrees to purchase and receive, all of Sellers’ right,
title and interest in and to all of the following assets, as of the Closing Date
of this Agreement:
 
(a)  
Tangible Assets.  The tangible assets, equipment, and other fixed assets,
including all, service tools, aids, manuals, schematics, diagnostics, machinery
and office furnishings, owned, solely employed, or held for use in the conduct
of the Business as well as the land and rights regarding the salt water disposal
well (the “Tangible Assets”) (refer to Exhibit “B”);

 
(b)  
Business Records.  Any and all books, records, files, drawings, documentation,
data, or information that have been or now are used in or with respect to, in
connection with, or otherwise relating to the Business, including Sellers’
client lists with respect to the Assets (the “Business Records”) (refer to
Exhibit “C”); and

 
 
 
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(c)  
Permits.  All licenses, permits, authorizations, certificates, franchises,
variances, waivers, consents and other approvals from any governmental entity
relating to the Assets (the “Permits”) (refer to Exhibit “D”);

 
The 59 Disposal Plant, Tangible Assets, Business Records, Permits, and the other
related assets of the Sellers described above are collectively referred to
herein as the “Assets.”
 
Sellers’ interest in the Assets shall be sold, transferred and conveyed by  the
Sellers to Buyer as of the Closing Date, by virtue of the execution of this
Agreement and by means of recorded conveyance of title for any asset which is
real estate or an interest in real estate, and bills of sale, assignments, and
other instruments of conveyance for all other assets, reasonably satisfactory in
form and substance to Buyer.
 
2.  
Purchase Price For the Assets.

 
At Closing, unless extended in writing by the parties hereto, Buyer agrees to
pay Sellers the sum of one million three hundred thousand dollars ($1,300,000)
(the “Purchase Price”) in exchange for delivery and receipt of the Assets.  In
addition, Buyer agrees to accept disposal water from Sellers at the rate of
$0.45 per barrel for a period of 12 months following the Closing Date and in a
volume of up to 6,000 barrels per month from Sellers’ currently owned production
fields subject to all other normal terms and conditions. Furthermore, following
the initial 12 month period, Buyer agrees to extend to Sellers terms and
conditions equal to the most favorable terms it offers to any other third party
up to 6,000 barrels per month.
 
3.  
Liabilities Assumed by Sellers.

 
Sellers  jointly and severally agree to remain liable for and obligated to
discharge and indemnify and hold Buyer harmless from all liabilities incurred
prior to or as of the Closing Date, whether known or unknown, accrued or not
accrued, fixed or contingent, current or arising hereafter with respect to the
Assets.
 
4.  
Closing.

 
A closing with respect to the transactions contemplated herein (the “Closing”)
shall be held at the offices of Frontier Asset Management LLC, located at 3030
LBJ Freeway, Suite 1320, Dallas, Texas 75234 at 10 a.m. Central Standard Time on
July 1, 2011 (the “Closing Date”).

5.  
Transactions at Closing.

 
(a)  
At the Closing, Sellers shall deliver to Buyer all bills of sale, assignments,
deeds and any and all other instruments of conveyance or other documents that
may reasonably be required to transfer, assign, and convey to Buyer the Assets,
free and clear of any liens, security interests, pledges, encumbrances,
hypothecations, or claims of any kind.

 
(b)  
 At the Closing, Buyer shall deliver to Sellers the Purchase Price in the form
of cash, cashiers check or wire transfer.

 
6.  
Representations and Warranties of Sellers.

 
As of the Closing Date, Sellers jointly and severally hereby represent and
warrant to Buyer, its successors and assigns, as follows:
 
(a)  
Sellers are duly organized entities, validly existing, and in good standing
under the laws of the state in which they were incorporated.  Sellers have the
corporate power to carry on the Business as it is now being conducted;

 
(b)  
The execution, delivery, and performance of this Agreement by Sellers has been
duly authorized by all necessary corporate action and will not result in the
violation of any of Sellers’ Certificates of Formation or their company
regulations;

 
 
 
 
 
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(c)  
Sellers have clear, good, and marketable title to the Assets, free and clear of
all liens, security interests, pledges, encumbrances, hypothecations or claims
of any nature whatsoever; and the 59 Disposal Plant is free from any
environmental damage or adverse claims by any environmental government
authority;

 
(d)  
Sellers have full authority to transfer their interest in and to the Assets, and
no other person or entity has any record or beneficial equity interest in the
Assets;

 
(e)  
The execution, delivery, and performance of this Agreement by Sellers (i) does
not require the consent of any third party; (ii) will not violate any applicable
law, judgment, order, injunction, decree, rule, regulation or ruling of any
governmental authority to which Sellers are subject or by which Sellers are
bound; and (iii) will not, either alone or with the giving of notice or the
passage of time, or both, conflict with, constitute grounds for termination of,
or result in a breach of the terms, conditions or provisions of, or constitute a
default under, any material agreement, instrument, license, or permit to which
Sellers are a party or to which Sellers are subject;

 
(f)  
Sellers, their predecessors and affiliates have complied with all applicable
laws (including rules, regulations, codes, plans, injunctions, judgments,
orders, decrees, rulings, and charges thereunder) of federal, state, local, and
foreign governments (and all agencies thereof), and no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand, or notice has been
filed or commenced against any of them alleging any failure to comply;

 
(g)  
Sellers have timely filed all Tax Returns [which shall mean any return or filing
required or appropriate to file with the Internal Revenue Service or with the
taxing authority of each state, county and other governmental entity in which
Sellers do Business, including without limitation any required state franchise
tax returns] that they were required to file.  All such Tax Returns were correct
and complete in all respects.  All taxes, including without limitation all
franchise, withholding and payroll taxes, owed by Sellers (whether or not shown
or required to be shown on any Tax Return) have been paid, and Sellers shall
remain liable for all taxes that accrue up until the time of Closing; and

 
(h)  
Sellers make no representation or warranty, express or implied, at law or in
equity, with respect to any of its assets (including, without limitation, the
Assets), liabilities, or operations, including, without limitation, with respect
to merchantability or fitness for any particular purpose, and any such other
representations or warranties are hereby expressly disclaimed.  BUYER HEREBY
ACKNOWLEDGES AND AGREES THAT, EXCEPT TO THE EXTENT SPECIFICALLY SET FORTH IN
THIS SECTION 6, BUYER IS PURCHASING THE ASSETS ON AN “AS-IS, WHERE-IS”
BASIS.  WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, SELLERS MAKE NO
REPRESENTATION OR WARRANTY REGARDING ANY ASSETS OTHER THAN THE ASSETS (AS
DEFINED HEREIN) OR ANY LIABILITIES OTHER THAN THE ASSUMED LIABILITIES IN SECTION
3, AND NONE SHALL BE IMPLIED AT LAW OR IN EQUITY.

 
7.  
Representations and Warranties of Buyer.

 
As of the Closing Date, Buyer hereby represents and warrants to Sellers, its
successors and assigns, as follows:
 
(a)  
Buyer is a limited liability company duly organized, validly existing, and in
good standing under the laws of the State of Texas.  Buyer has the corporate
power to carry on its business as it is now is being conducted;

 
(b)  
The execution, delivery, and performance of this Agreement by Buyer has been
duly authorized by all necessary corporate action and will not result in the
violation of Buyer’s Certificate of Formation or its company agreement;

 
(c)  
The execution, delivery, and performance of this Agreement by Buyer: (i) does
not require the consent of any third party; (ii) will not violate any applicable
law, judgment, order, injunction, decree, rule, regulation or ruling of any
governmental authority to which Buyer is subject or by which Buyer is bound; and
(iii) will not, either alone or with the giving of notice or the passage of
time, or both, conflict with, constitute grounds for termination of, or result
in a breach of the terms, conditions or provisions of, or constitute a default
under, any material agreement, instrument, license, or permit to which Buyer is
a party or to which Buyer is subject; and

 
(d)  
Buyer, its predecessors and affiliates have complied with all applicable laws
(including rules, regulations, codes, plans, injunctions, judgments, orders,
decrees, rulings, and charges thereunder) of federal, state, local, and foreign
governments (and all agencies thereof), and no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand, or notice has been
filed or commenced against any of them alleging any failure to comply.

 
 
 
 
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8.  
Notices.

 
All notices, requests, demands, and other communications hereunder shall be in
writing and shall be deemed to have been given if mailed postage prepaid by
certified mail, return receipt requested, or sent by an overnight express
delivery service (e.g. Federal Express), in either of which events the notice
shall be deemed to have been given the date on which said notice is received, to
the following address or to such other address as the parties may from time to
time designate in writing to the other party in accordance with the foregoing
provisions:
 
If to Sellers:                           Mr. Billy Denman
218 N. Broadway, Suite 204
Tyler, TX 75702

If to Buyer:                            Mr. Tim Burroughs & Mr. David York
3030 LBJ Freeway, Suite 1320
Dallas, Texas 75234

9.  
Entire Agreement.

 
Buyer and  Sellers agree that this Agreement and the Exhibits hereto set forth
the entire agreement with respect to the subject matter hereof, and that they
supersede and cancel any and all prior negotiations, arrangements, agreements,
and understandings, whether oral or written, between them, respecting the
subject matter hereof.
 
10.  
Amendments.

 
No change, modification, termination, amendment, or waiver of any provisions of
this Agreement, nor consent to any departure therefrom, shall be of any force or
effect unless the same is in writing and signed by all parties hereto.
 
11.           No Waiver of Rights.
 
Neither any failure nor any delay on the part of any party hereto in exercising
any right, power or privilege hereunder shall operate as a waiver thereof on the
part of such party, nor shall a single or partial exercise thereof preclude any
other or further exercise or the exercise of any other right, power or privilege
by such party.
 
12.  
Expenses.

 
Each party to this Agreement will bear its respective expenses incurred in
connection with the preparation, execution, and performance of this Agreement
and the transactions contemplated hereby, including all fees and expenses of
agents, representatives, counsel and accountants.  In the event of termination
of this Agreement, the obligation of each party to pay its own expenses will be
subject to any rights of such party arising from a breach of this Agreement by
another party.
 
13.  
Public Announcements.

 
Except as may otherwise be required by law or the rules of applicable stock
exchanges, no press release or public announcement concerning this Agreement or
the transactions contemplated hereby shall be made by Buyer or Sellers without
advance approval thereof by the other party, which shall not be unreasonably
withheld.  Sellers agree that Buyer may make disclosure of the transaction in
connection with any offering currently being conducted or conducted in the
future by the Buyer.
 
14.  
Further Assurances.

 
The parties agree to: (i) furnish upon request to each other any additional
information that may be reasonably required; (ii) execute and deliver upon
request to each other any additional documents that may be reasonably required;
and (iii) do such other acts and things as the other parties may reasonably
request for the purpose of carrying out the intent of this Agreement and the
transactions contemplated herein.
 
15.  
Counterparts.

 
This Agreement may be executed in one or more counterparts, each of which
counterpart when executed by the parties shall be deemed to be an original, and
all of which when taken together shall constitute a single agreement.
 
16.  
Severability.

 
In case any one or more of the provisions contained in this Agreement should be
invalid, illegal, or unenforceable in any respect, such provision shall be
deemed modified to the extent necessary to permit its enforcement under
applicable law, and the validity, legality, or enforceability of the remaining
provisions hereof shall not be affected nor impaired and shall remain in full
force and effect.
 
 
 
 
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17.  
Governing Law And Choice Of Venue.

 
Buyer and Sellers expressly agree that this Agreement shall be governed by and
construed in accordance with the laws of the State of Texas. The exclusive venue
for any and all disputes between the parties hereto arising from the terms of
this Agreement or the interpretation thereof shall be Marion County, Texas.
 
18.           Survivability.
 
Buyer and Sellers agree that certain provisions of this Agreement shall by their
context survive the Closing Date and that the survival of such provisions shall
be liberally construed so as to effectuate and enforce the clear meaning and the
intent of the parties hereto.

 
IN WITNESS WHEREOF, Buyer and Sellers through their duly authorized
representatives have hereunto set their hands and caused this Agreement to be
duly executed and effective as of the date and year first above written.

BUYER:
SELLERS:
 
Trinity Disposal & Trucking LLC
 
Pegasi Energy Resources Corporation
By: Frontier Income and Growth, LLC, its Manager
 
By: _____________________________________
 
Richard Lindermanis, Senior Vice President
 
By: Frontier Asset Management LLC, its Manager
 
59 Disposal, Inc.
 
By: _____________________________________
 
By: _____________________________________
Tim Burroughs, Manager and Member
Richard Lindermanis, Senior Vice President
 
By: _____________________________________
 
TR Energy Inc.
David York, Manager and Member
By: _____________________________________
 
W. L. Sudderth, Vice President
     
Marion Swamp Fox L.P.
   
By: _____________________________________
 
W. L. Sudderth, Vice President

 
 

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