REVISED AND AMENDED
ACQUISITION AGREEMENT
DATED AS OF
June 23, 2010
BY AND among
gulfstar energy corporation
AND
TALON ENERGY CORPORATION
AND
ITS SHAREHOLDERS
ACQUISITION AGREEMENT
This AGREEMENT, dated as of June ___, 2010 (the "Agreement"), by and
among Gulfstar Energy Corporation, a Colorado Corporation, ("GEC"), and Talon
Energy Corporation which is a Florida corporation ("Acquiree") and the
shareholders of Acquiree ("Shareholders" as listed on Exhibit A hereto).
WHEREAS, the Board of Directors of GEC and Acquiree, respectively, have
each approved, as being in the best interest of the respective entities and
their stockholder, the Acquisition of Acquiree by GEC, in accordance with the
applicable provisions of the Colorado Business Corporation Act;
WHEREAS, GEC, Shareholders and Acquiree desire to make certain
representations, warranties, covenants and agreements in connection with the
Acquisition and also to prescribe various conditions to the Exchange; and
WHEREAS, this Agreement is intended to accomplish a tax free
acquisition pursuant to Section 351 of the Internal Revenue Code for benefit of
Sellers in conjunction with certain other acquisition agreements by and between
GEC and Gulfstar Energy Group, LLC and GEC and certain Interest Holders of
Gulfstar Energy Group, LLC relating to 40% of the ownership interests of
Gulfstar Energy Group, LLC and to 60% of the LLC (owned by Xxxxx Xxxxx and
Xxxxxxx Xxxxx)
WHEREAS, this Agreement is intended to set for the terms upon which
Acquiree will be acquired by GEC from Shareholders.
WHEREAS, this Agreement supersedes and replaces all prior Agreements
between the parties;
WHEREAS, this Agreement is negotiated and executed in tandem with a) an
Agreement to Acquire 60% of Gulfstar Energy Group, LLC from Xxxxx Xxxxx and
Xxxxxxx Xxxxx dated of even date herewith, and b) an Agreement to Acquire up to
40% of Gulfstar Energy Group, LLC dated of even date herewith.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, and for
other good and valuable consideration the receipt and adequacy of which are
hereby acknowledged, and intending to be legally bound hereby, the parties do
hereby agree as follows:
ARTICLE I
THE CONSIDERATION
SECTION 1.01 Consideration/Acquisition; Effective Time
The Acquisition shall become effective upon the delivery of the stock
certificates in Acquiree duly executed representing 100% of Acquiree outstanding
shares of common stock and delivery of the following consideration:
3,500,000 shares of restricted common stock of GEC shall be issued to
Acquiree's Shareholders prorata in exchange for 100% of Acquiree's
outstanding common stock. Further funding efforts post closing and
further mergers after 6 months will be dilutable to such shareholders.
SECTION 1.02 Effects of the Acquisition.
At the Effective Time and by virtue of the Exchange, all of the
outstanding Acquiree common shares shall be conveyed to GEC which shall
be the owning entity of the outstanding common shares of common stock
of Acquiree.
SECTION 1.03 Conversion of Securities.
As of the Effective Time, by virtue of the Exchange:
(a) All of the outstanding common shares of Acquiree that are issued and
outstanding immediately prior to the Effective Time, shall be exchanged for
shares of GEC in the conversion amount. All such shares of Acquiree shall be
conveyed to GEC, and each holder of a certificate representing such shares shall
cease to have any rights with respect thereto, except the right to receive the
number of shares of GEC Common Stock to be issued in consideration therefore
upon surrender of such certificate in accordance with Section 1.03 (b).
(b) Each 1% ownership shares in acquiree shall be entitled to receive 1/100th of
3,500,000 (post reverse split) shares of GEC in exchange for their shares in
Acquiree.
SECTION 1.04 Exchange Procedures.
(a) As soon as practicable after the execution hereof, GEC shall provide to each
Acquiree shareholder a letter of transmittal and Exchange Agreement with
representations for execution by shareholder and instructions for use in
effecting the surrender of certificates representing shares of Acquiree
outstanding immediately prior to the Effective Time (the"Certificates") in
appropriate and customary form with such provisions as the board of directors of
GEC after the Exchange may reasonably specify. Upon surrender of a Certificate
for cancellation to GEC, together with such letter of transmittal, duly and
properly executed, the holder of such Certificate shall be entitled to receive
in exchange therefore a certificate representing that number of shares of GEC
Common Stock as is equal to the product of the percentage of Acquiree's shares
represented by the certificate multiplied by the Conversion Amount, and the
Certificate so surrendered shall be canceled. Until surrendered as contemplated
by this Section 1.04, each Certificate shall, at and after the Effective Time,
be deemed to represent only the right to receive, upon surrender of such
Certificate, GEC Common Stock as contemplated by this Section 1.04, together
with any dividends and other distributions payable as provided in Section 1.05
hereof, and the holders thereof shall have no rights whatsoever as stockholders
of GEC. Shares of GEC Common Stock issued in the Exchange shall be issued, and
be deemed to be outstanding, as of the Effective Time. GEC shall cause all such
shares of GEC Common Stock issued pursuant to the Exchange to be duly
authorized, validly issued, fully paid and non-assessable and not subject to
preemptive rights.
(b) If any certificate representing shares of GEC Common Stock is to be issued
in a name other than that in which the Certificate surrendered in exchange
therefore is registered, it shall be a condition of such exchange that the
Certificate so surrendered shall be properly endorsed and otherwise in proper
form for transfer and that the person requesting such exchange shall pay any
transfer or other taxes required by reason of the issuance of certificates for
such shares of GEC Common Stock in a name other than that of the registered
holder of the Certificate so surrendered.
(c) In the event any Certificate shall have been lost, stolen or destroyed, upon
the making of an affidavit of that fact by the person claiming such Certificate
to be lost, stolen or destroyed and upon the posting by such person of a bond in
such amount as GEC may reasonably direct as an indemnity against any claim that
may be made against it with respect to such Certificate, GEC will issue in
respect of such lost, stolen or destroyed Certificate one or more certificates
representing shares of GEC Common Stock as contemplated by this Section 1.04 and
such person shall be entitled to the dividend and other distribution rights
provided in Section 1.05 hereof.
(d) If any Certificates shall not have been surrendered prior to three years
after the Effective Time (or immediately prior to such earlier date on which any
payment in respect hereof would otherwise escheat or become the property of any
governmental unit or agency), the payment in respect of such Certificates shall,
to the extent permitted by applicable law, become the property of the Surviving
Entity, free and clear of all claims or shares of any person previously entitled
thereto.
(e) GEC shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder of a Certificate
surrendered for shares of GEC Common Stock (and dividends or distributions with
respect to GEC Common Stock as contemplated by Section 1.05 hereof) such amount
as GEC is required to deduct and withhold with respect to the making of such
payment under the Doe, or provisions of any state, local or foreign tax law. To
the extent that amounts are so deducted and withheld, such amounts shall be
treated for all purposes of this Agreement as having been paid to the holder of
such Certificate.
SECTION 1.05. Dividends and Distributions.
No dividends or other distributions declared or made with respect to
GEC Common Stock with a record date on or after the Effective Time shall be paid
to the holder of a Certificate entitled by reason of the Exchange to receive
certificates representing GEC Common Stock until such holder surrenders such
Certificate as provided in Section 1.05 hereof. Upon such surrender, there shall
be paid by GEC to the person in whose name certificates representing shares of
GEC Common Stock shall be issued pursuant to the terms of this Article I (i) at
the time of the surrender of such Certificate, the amount of any dividends and
other distributions theretofore paid with respect to that number of whole shares
of such GEC Common Stock represented by such surrendered Certificate pursuant to
the terms of this Article I, which dividends or other distributions had a record
date on or after the Effective Time and a payment date prior to such surrender
and (ii) at the appropriate payment date, the amount of dividends and other
distributions payable with respect to that number of whole shares of GEC Common
Stock represented by such surrendered Certificate pursuant to the terms of this
Article I, which dividends or other distributions have a record date on or after
the Effective Time and a payment date subsequent to such surrender.
ARTICLE II
THE CLOSING
SECTION 2.01 Closing.
Unless this Agreement shall have been terminated and the transactions
herein contemplated shall have been abandoned pursuant to Article VIII, and
subject to the satisfaction or waiver of the conditions set forth in Article VI,
the closing of the Acquisition (the "Closing") shall take place as soon as
reasonably practicable (but in no event on written notice of less than two (2)
business days) after all of the conditions set forth in Article VI are satisfied
or, to the extent permitted thereunder, waived, at the offices of Xxxxxxx X.
Xxxxxxx, located at 0000 Xxxxxxx Xxxx, Xxxxxx, XX 00000 or at such other time
and place as may be agreed to in writing by the parties hereto (the date of such
Closing being referred to herein as the "Closing Date").
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF GEC
Except as set forth in the applicable section of the disclosure
schedule delivered by GEC to Sellers prior to the execution of this Agreement
(the "GEC Disclosure Schedule"), GEC represents and warrants to Sellers as
follows:
SECTION 3.01 Organization of GEC; Authority.
GEC is an Entity duly organized, validly existing and in good standing
under the laws of the State of Colorado. GEC has all requisite corporate power
and corporate authority to enter into the transaction documents to which it is a
party, to consummate the transactions contemplated hereby and thereby, to own,
lease and operate its properties and to conduct its business. Subject to the
receipt of its board of director's approval, the execution, delivery and
performance by GEC of the Transaction Documents to which it is a party and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action on the part of GEC, including,
without limitation, the approval of the board of directors of GEC. The
Transaction Documents have been duly executed and delivered by each of GEC and,
assuming that the Transaction Documents constitute a valid and binding
obligation of the other parties thereto, constitute a valid and binding
obligation of GEC, enforceable against GEC in accordance with its terms. GEC is
a Colorado corporation operating only in Colorado to date hereof. GEC has
heretofore delivered or made available to Acquiree complete and correct copies
of the certificate of incorporation and by-laws of GEC, the minute books and
stock transfer records of GEC, as in effect as of the date of this Agreement.
GEC is not in violation of its organizational documents.
SECTION 3.02 Capitalization.
The authorized capital stock of GEC consists of 100,000,000 shares of
GEC Common Stock, of which 1,410,000 shares are outstanding on the date hereof.
No other shares of any other class or series of GEC Common Stock or securities
exercisable or convertible into or exchangeable for GEC Common Stock ("GEC
Common Stock Equivalents") are authorized, issued or outstanding, except that up
to 20 million shares of Common are issuable under the two Gulfstar Energy Group
LLC acquisition agreements. The outstanding shares of GEC Common Stock have been
duly authorized and validly issued and are fully paid and nonassessable and were
not issued in violation of, and are not subject to, any preemptive, subscription
or similar rights. To GEC's knowledge, none of the outstanding shares of GEC
Common Stock was issued in violation of any Law, including without limitation,
federal and state securities laws. There are no outstanding warrants, options,
subscriptions, calls, rights, agreements, convertible or exchangeable securities
or other commitments or arrangements relating to the issuance, sale, purchase,
return or redemption, and, to GEC's knowledge, voting or transfer of any shares,
whether issued or unissued, of GEC Common Stock, GEC Common Stock Equivalents or
other securities of GEC. On the Closing Date, the shares of GEC Common Stock for
which shares of Sellers Common Stock shall be issued in the Acquisition will
have been duly authorized and, when issued and delivered in accordance with this
Agreement, such shares of GEC Common Stock will be validly issued, fully paid
and nonassessable.
SECTION 3.03 No Violation; Consents and Approvals.
The execution and delivery by GEC of the transaction documents does
not, and the consummation of the transactions contemplated hereby and thereby
and compliance with the terms hereof and thereof will not, conflict with or
result in any violation of or default (or an event which, with notice or lapse
of time or both, would constitute a default) under, (a) the terms and conditions
or provisions of the certificate of incorporation or by-laws of GEC (b) any Law
applicable to GEC or the property or assets of GEC, or (c) give rise to any
right of termination, cancellation or acceleration under, or result in the
creation of any lien upon any of the properties of GEC under any contract to
which GEC is a party or by which GEC or any assets of GEC may be bound, except,
in the case of clauses (b) and (c), for such conflicts, violations or defaults
which are set forth in Section 3.04 of the GEC Disclosure Schedule and as to
which requisite waivers or consents will have been obtained prior to the Closing
or which, individually or in the aggregate, would not have a material adverse
effect on GEC. No Governmental Approval is required to be obtained or made by or
with respect to GEC in connection with the execution and delivery of this
Agreement or the consummation by GEC of the transactions contemplated hereby.
SECTION 3.04 Litigation; Compliance with Laws.
(a) There are: (i) no claims, actions, suits, investigations or proceedings
pending or, to the knowledge of GEC, threatened against, relating to or
affecting GEC, the business, the assets, or any employee, officer, director,
stockholder, or independent contractor of GEC in their capacities as such, and
(ii) no orders of any Governmental Entity or arbitrator outstanding against GEC,
the business, the assets, or any employee, officer, director, stockholder, or
independent contractor of GEC in their capacities as such, or that could prevent
or enjoin, or delay in any respect, consummation of the transactions
contemplated hereby.
(b) GEC has complied and is in compliance in all material respects with all laws
applicable to GEC, its business or its assets. Neither GEC has received notice
from any Governmental Entity or other Person of any material violation of law
applicable to GEC, its business or assets. GEC has obtained and holds all
required Licenses (all of which are in full force and effect) from all
Government Entities applicable to GEC, its business or their assets. No
violations are or have been recorded in respect of any such license and no
proceeding is pending, or, to the knowledge of GEC, threatened to revoke or
limit any such License.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF Acquiree
Except as set forth in the applicable section of the disclosure
schedule delivered by Acquiree to GEC prior to the execution of this Agreement
(the "Acquiree Disclosure Schedule"), Acquiree represents and warrants to GEC as
follows:
SECTION 4.01 Organization of Acquiree; Authority.
Acquiree is a corporation duly organized, validly existing and in good
standing under the laws of the State of Texas and has all requisite corporate
power and corporate authority to enter into the Transaction Documents, to
consummate the transactions contemplated hereby and thereby, to own, lease and
operate its properties and to conduct its business. Subject to the receipt of
shares holder approval by Acquiree holders, the execution, delivery and
performance by Acquiree of the Transaction Documents and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of Acquiree, including, without
limitation, the approval of the board of directors of Acquiree. The Transaction
Documents have been duly executed and delivered by Acquiree and, assuming that
the Transaction Documents constitute a valid and binding obligation of GEC,
constitute a valid and binding obligation of Acquiree. Acquiree is duly
qualified or licensed to do business as a foreign Entity and are in good
standing in each jurisdiction in which the property owned, leased or operated by
it or the nature of the business conducted by it makes such qualification
necessary, except where the failure to obtain such qualification or license
would not, individually or in the aggregate, have a Acquiree Material Adverse
Effect on Acquiree. Acquiree has herewith delivered or made available to GEC
complete and correct copies of the articles of organization and conversion to a
corporation and by-laws of Acquiree, the minute books and stock transfer records
of Acquiree, as in effect as of the date of this Agreement. Acquiree is not in
violation of its organizational documents.
SECTION 4.02 Capitalization.
(a) The authorized and outstanding shares of Acquiree is set forth in Section
4.02(a) of the Acquiree Disclosure Schedule (the "Acquiree shares"). All of the
outstanding shares of the Acquiree are validly issued, fully paid and
non-assessable. To Acquiree's knowledge, none of the outstanding shares of
Acquiree or other securities of Acquiree was issued in violation of any Law,
including, without limitation, state and federal securities laws. There are no
Liens on or with respect to any outstanding shares of Acquiree.
(b) Except as shown in Section 4.02 (a) of Acquiree's disclosure schedule. There
are no outstanding: (i) securities convertible into or exchangeable for Acquiree
shares; (ii) options, warrants or other rights to purchase or subscribe for
Acquiree shares; or (iii) contracts, commitments, agreements, understandings or
arrangements of any kind relating to the issuance of any Acquiree shares, any
such convertible or exchangeable securities or any such options, warrants or
rights. There is no outstanding right, option or other agreement of any kind to
purchase or otherwise to receive from Acquiree, or any stockholder of Acquiree,
any ownership shares in Acquiree, and there is no outstanding right or security
of any kind convertible into such ownership shares. To Acquiree's knowledge,
there are no voting trusts, proxies or other similar agreements or
understandings with respect to the shares of Acquiree. There are no obligations,
contingent or otherwise, of Acquiree to repurchase, redeem or otherwise acquire
any shares of Acquiree or to provide funds to or make any investment (in the
form of a loan, capital contribution or otherwise) in any other Person. There
are no accrued and unpaid dividends with respect to any outstanding shares of
Acquiree.
SECTION 4.03 No Violation; Consents and Approvals.
The execution and delivery by Acquiree of the Transaction Documents
does not, and the consummation of the transactions contemplated hereby and
thereby and compliance with the terms hereof and thereof will not conflict with,
or result in any violation of or default (or an event which, with notice or
lapse of time or both, would constitute a default) under, (a) the terms and
conditions or provisions of the articles of incorporation or by-laws of
Acquiree, (b) any Laws applicable to Acquiree or the property or assets of
Acquiree, or (c) give rise to any right of termination, cancellation or
acceleration under, or result in the creation of any Lien upon any of the
properties of Acquiree under, any Contracts to which Acquiree is a party or by
which Acquiree or any of its assets may be bound, except, in the case of clauses
(b) and (c), for such conflicts, violations or defaults as to which requisite
waivers or consents will have been obtained prior to the Closing or which,
individually or in the aggregate, would not have an Acquiree Material Adverse
Effect. No Governmental Approval is required to be obtained or made by or with
respect to Acquiree or any Acquiree Subsidiary in connection with the execution
and delivery of this Agreement or the consummation by Acquiree of the
transactions contemplated hereby, except where the failure to obtain such
Governmental Approval would not, individually or in the aggregate, have an
Material Adverse Effect on Acquiree.
SECTION 4.04 Litigation; Compliance with Laws.
(a) Except as would not have a Material Adverse Effect on Acquiree, there are:
(i) no claims, actions, suits, investigations or proceedings pending or, to the
knowledge of Acquiree, threatened against, relating to or affecting Acquiree,
its business, its assets, or any employee, officer, director, stockholder, or
independent contractor of Acquiree in their capacities as such, and (ii) no
orders of any Governmental Entity or arbitrator are outstanding against
Acquiree, its business, its assets, or any employee, officer, director,
stockholder, or independent contractor of Acquiree in their capacities as such,
or that could prevent or enjoin, or delay in any respect, consummation of the
transactions contemplated hereby. Section 4.04 of the Acquiree Disclosure
Schedule includes a description of all claims, actions, suits, investigations or
proceedings involving Acquiree, its business, its assets, or any employee,
officer, director, stockholder or independent contractor of Acquiree in their
capacities as such.
(b) Except as would not have an Acquiree Material Adverse Effect, Acquiree has
complied and is in compliance in all material respects with all Laws applicable
to Acquiree, its business or its assets. Acquiree has not received notice from
any Governmental Entity or other Person of any material violation of Law
applicable to it, its business or its assets. Acquiree has obtained and holds
all required Licenses (all of which are in full force and effect) from all
Government Entities applicable to it, its business or its assets. No violations
are or have been recorded in respect of any such License and no proceeding is
pending, or, to the knowledge of Acquiree threatened to revoke or limit any such
License.
SECTION 4.05 Financial Statements.
Acquiree shall have provided, prior to closing hereunder, audited
financial statements in accordance with federal income tax accounting
consistently applied, complete and true and accurate in all respects, disclosing
all liabilities, and assets of Acquiree and shall provide all books and records
necessary to complete all filings in accordance with SEC Rules and Regulations.
Additionally, Acquiree shall have provided, prior to closing hereunder,
financial statements in accordance with federal income tax accounting
consistently applied, complete and true and accurate in all respects, disclosing
all liabilities, and assets of Acquiree.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF
BUSINESS PENDING THE EXCHANGE
SECTION 5.01 Conduct of the Business pending the Exchange
(a) During the period from the date of this Agreement and continuing until the
Effective Time, GEC agrees as to itself and the GEC Subsidiaries, that GEC shall
not, and shall cause the GEC Subsidiaries not to, engage in any business
whatsoever other than in connection with the consummation of the transactions
contemplated by this Agreement, and shall use commercially reasonable efforts to
preserve intact its business and assets, maintain its assets in good operating
condition and repair (ordinary wear and tear excepted), retain the services of
its officers, employees and independent contractors and use reasonable
commercial efforts to keep in full force and effect liability insurance and
bonds comparable in amount and scope of coverage to that currently maintained
with respect to its business, unless, in any case, Acquiree consents otherwise
in writing.
(b) During the period from the date of this Agreement and continuing until the
Effective Time, Acquiree agrees that, other than in connection with the
consummation of the transactions contemplated hereby, it shall carry on its
business only in the ordinary course of business consistent with past practice,
use commercially reasonable efforts to preserve intact its business and assets
and use reasonable commercial efforts to keep in full force and effect liability
insurance and bonds comparable in amount and scope of coverage to that currently
maintained with respect to its business, unless, in any case, GEC consents
otherwise in writing; provided that Acquiree may take any and all of the actions
listed in Schedule 5.01(b) of the Acquiree Disclosure Schedules at any time
prior to or after the date of this Agreement without the consent of GEC.
Additionally, during the period from the date of this Agreement and continuing
until the Effective Time, Acquiree agrees that, other than in connection with
the consummation of the transaction contemplated hereby, Acquiree shall carry on
its business only in the ordinary course of business consistent with past
practice, use commercially reasonable efforts to preserve intact its business
and assets and use reasonable commercial efforts to keep in full force and
effect liability insurance and bonds comparable in amount and scope of coverage
to that currently maintained with respect to its business, unless, in any case,
GEC consents otherwise in writing; provided that Acquiree may take any and all
of the actions listed in Schedule 5.01(b) of the Acquiree Disclosure Schedule at
any time prior to or after the date of this Agreement without the consent of
GEC. During the period from the date of this Agreement and continuing until the
Effective Time, Acquiree and GEC agrees as to itself and, with respect to GEC,
that except as expressly contemplated or permitted by this Agreement, as
disclosed in Section 5.01(c) of the Acquiree's Disclosure Schedule or the GEC
Disclosure Schedule, as applicable, or to the extent that the other party shall
otherwise consent in writing:
(1) It shall not amend or propose to amend its certificate of incorporation or
by-laws or equivalent organizational documents except as contemplated in this
Agreement.
(2) It shall not, nor in the case of GEC shall it permit the GEC Subsidiaries
to, issue, deliver, sell, redeem, acquire, authorize or propose to issue,
deliver, sell, redeem, acquire or authorize, any shares of its capital stock of
any class or any securities convertible into, or any rights, warrants or options
to acquire, any such shares or convertible securities or other ownership of
equity, provided that: (1) GEC shall be permitted to issue the shares of GEC
Common Stock to be issued to Acquiree Stockholders hereunder, and (2) each party
shall be permitted to issue shares of its common stock pursuant to the exercise
of stock options, warrants and other convertible securities outstanding as of
the date hereof and listed on the Acquiree Disclosure Schedule or the GEC
Disclosure Schedule, as the case may be, (3) 11,659,659 shares may be issued in
conjunction with the acquisition of 60% of Gulfstar Energy Group, LLC
concurrently herewith, (4) and up to 8,340,341 shares for 40% of Gulfstar Energy
Group, LLC which is being contracted concurrently herewith, and (5) Acquiree
shall be permitted to issue the shares of GEC common stock in accordance with
section 3.02 to the persons and in the following amounts as shown on attached
Schedule 5.01:
(3) It shall not, nor in the case of GEC shall it permit any of the GEC
Subsidiaries to, nor shall it propose to: (i) declare, set aside, make or pay
any dividend or other distribution, payable in cash, stock, property or
otherwise, with respect to any of its capital stock or (ii) except with respect
to the Reverse Stock Split, reclassify, combine, split, subdivide or redeem,
purchase or otherwise acquire, directly or indirectly, any of its capital stock.
(4) Other than dispositions in the ordinary course of business consistent with
past practice which would not cause a GEC Material Adverse Effect or a Acquiree
Material Adverse Effect (as applicable), individually or in the aggregate, to it
and its subsidiaries, taken as a whole, it shall not, nor shall it permit any of
its subsidiaries to, sell, lease, encumber or otherwise dispose of, or agree to
sell, lease (whether such lease is an operating or capital lease), encumber or
otherwise dispose of its assets.
(5) It shall promptly advise the other party hereto in writing of any change in
the condition (financial or otherwise), operations or properties, businesses or
business prospects of such party or any of its subsidiaries which would result
in a GEC Material Adverse Effect or Acquiree Material Adverse Effect, as the
case may be.
(6) It shall not permit to occur, any (1) change in accounting principles,
methods or practices, investment practices, claims, payment and processing
practices or policies regarding intercompany transactions, (2) incurrence of
Indebtedness or any commitment to incur Indebtedness, any incurrence of a
contingent liability, Contingent Obligation or other liability of any type,
except for, with respect to Acquiree, other than obligations related to the
Exchange of Inventory in the ordinary course of business consistent with past
practices, (3) cancellation of any debt or waiver or release of any contract,
right or claim, except for cancellations, waivers and releases in the ordinary
course of business consistent with its past practice which do not exceed $50,000
in the aggregate, (4) amendment, termination or revocation of, or a failure to
perform obligations or the occurrence of any default under, any contract or
agreement (including, without limitation, leases) to which it is or, as of May
31, 2010, was a party, other than in the ordinary course of business consistent
with past practice, or any License, (5) execution of termination, severance or
similar agreements with any of its officers, directors, employees, agents or
independent contractors or (6) entering into any leases of real property or
agreement to acquire real property.
SECTION 5.02 No Action.
During the period from the date of this Agreement and continuing until
the Effective Time, Acquiree and GEC agrees as to itself and, with respect to
GEC, that it shall not, and Acquiree shall not, take or agree or commit to take
any action, (i) that is reasonably likely to make any of its representations or
warranties hereunder inaccurate; or (ii) that is prohibited pursuant to the
provisions of this Article V.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01 Access to Information
From the date hereof until the Effective Time or the earlier
termination of this Agreement, each party shall give the other party and its
respective counsel, accountants, representatives and agents, and with respect to
Acquiree it shall provide to GEC with respect to Acquiree, full access, upon
reasonable notice and during normal business hours, to such party's and
Acquieree's facilities and the financial, legal, accounting and other
representatives of such party and Acquiree with knowledge of the business and
the assets of such party and Acquiree and, upon reasonable notice, shall be
furnished all relevant documents, records and other information concerning the
business, finances and properties of such party and its subsidiaries and
Acquiree that the other party and its respective counsel, accountants,
representatives and agents, may reasonably request. No investigation pursuant to
this Section 6.02 shall affect or be deemed to modify any of the representations
or warranties hereunder or the condition to the obligations of the parties to
consummate the Exchange; it being understood that the investigation will be made
for the purposes among others of the board of directors of each party
determining in its good faith reasonable business judgment the accuracy of the
representations and warranties of
the other party. In the event of the termination of this Agreement, each party,
if so requested by the other party, will return or destroy promptly every
document furnished to it by or on behalf of the other party in connection with
the transactions contemplated hereby, whether so obtained before or after the
execution of this Agreement, and any copies thereof (except for copies of
documents publicly available) which may have been made, and will use reasonable
efforts to cause its representatives and any representatives of financial
institutions and investors and others to whom such documents were furnished
promptly to return or destroy such documents and any copies thereof any of them
may have made. It is hereby acknowledged the GEC has filed all of its financial
reports with the SEC which shall constitute delivery of the same to Acquiree.
SECTION 6.02 No Shop; Exchange Proposals.
From the date hereof until the Effective Time or the earlier
termination of this Agreement, neither Acquiree nor GEC shall, nor shall they
authorize or permit any of their respective officers, directors or employees,
Acquiree employees or any investment banker, financial advisor, attorney,
accountant or other representative retained by it to, solicit, initiate or
encourage (including by way of furnishing information), or take any other action
to facilitate, any inquiries or the making of any proposal which constitutes, or
may reasonably be expected to lead to, any Takeover Proposal (as hereinafter
defined), or negotiate with respect to, agree to or endorse any Takeover
Proposal (except in any case if the board of directors or special committee of
GEC or Acquiree, as the case may be, determines in good faith, based upon the
written opinion of its outside legal counsel, that the failure to do so would
constitute a breach of the fiduciary duties of the GEC' or Acquiree's board of
directors or special committee, as the case may be, to its stockholders under
applicable law). Acquiree shall promptly advise GEC and GEC shall promptly
advise Acquiree, as the case may be, orally and in writing of any such inquiries
or proposals and shall also promptly advise GEC or Acquiree, as the case may be,
of any developments or changes regarding such inquiries or proposals. Acquiree
and GEC shall immediately cease and cause to be terminated any existing
discussions or negotiations with any persons (other than Acquiree and GEC)
conducted heretofore with respect to any Takeover Proposal. Acquiree and GEC
agree not to release (by waiver or otherwise) any third party from the
provisions of any confidentiality or standstill agreement to which Acquiree or
GEC is a party.
SECTION 6.03 Legal Conditions to Exchange; Reasonable Efforts.
Acquiree, GEC shall take all reasonable actions necessary to comply
promptly with all legal requirements which may be imposed on itself with respect
to the Exchange and will promptly cooperate with and furnish information to each
other in connection with any such requirements imposed upon any of them or any
of their Subsidiaries in connection with the Exchange. Acquiree and GEC will
take all reasonable actions necessary to obtain (and will cooperate with each
other in obtaining) any consent, authorization, order or approval of, or any
exemption by, any Governmental Entity or other public or private third party,
required to be obtained or made by Acquiree or GEC in connection with the
Exchange or the taking of any action contemplated thereby or by this Agreement.
SECTION 6.04 Certain Filings.
Each party shall cooperate with the other in (a) connection with the
preparation of an 8-K, (b) determining whether any action by or in respect of,
or filing with, any governmental body, agency, official or authority is
required, or any actions, consents, approvals or waivers are required to be
obtained from parties to any material contracts, in connection with the
consummation of the transactions contemplated by this Agreement and (c) seeking
any such actions, consents, approvals or waivers or making any such filings,
furnishing information required in connection therewith or with the 8-K and
seeking timely to obtain any such actions, consents, approvals or waivers. Each
party shall consult with the other in connection with the foregoing and shall
use all reasonable commercial efforts to take any steps as may be necessary in
order to obtain any consents, approvals, permits or authorizations required in
connection with the Exchange.
SECTION 6.05 Public Announcements and Filings.
Each party shall give the other a reasonable opportunity to comment
upon, and, unless disclosure is required, in the opinion of counsel, by
applicable law, approve (which approval shall not be unreasonably withheld), all
press releases or other public communications of any sort relating to this
Agreement or the transactions contemplated hereby.
SECTION 6.06 Tax Matters.
No representation is made that this is a non-taxable transaction.
(a) Acquiree shall prepare and file on a timely basis all Tax Returns which are
due to be filed with respect to Acquiree (giving effect to any extension of
time) prior to the Closing Date including any 2010 short year return as may be
necessary. GEC shall be responsible for the preparation and filing of all Tax
Returns which are due to be filed (giving effect to any extension of time) after
the Closing Date, but Acquiree shall use its best efforts to conduct its affairs
such that any Tax Returns due after the Closing Date can be filed on a timely
basis.
(b) From the date hereof until the Effective Time or the earlier termination of
this Agreement, without the prior written consent of the other party or if
required in the opinion of counsel, neither GEC nor Acquiree, shall make or
change any election, change an annual accounting period, adopt or change any
accounting method, file any amended Tax Return, enter into any closing
agreement, settle any Tax claim or assessment relating to it, surrender any
right to claim a refund of Taxes, consent to any extension or waiver of the
limitation period applicable to any Tax claim or assessment relating to it, or
take any other action relating to the filing of any Tax Return or the payment of
any Tax.
SECTION 6.07 Supplements to Schedules.
Prior to the Closing, Acquiree will supplement or amend its disclosure
schedule with respect to any matter hereafter arising which, if existing or
occurring at the date of this Agreement, would have been required to be set
forth or described in such disclosure schedule. No supplement to or amendment of
the disclosure schedule made pursuant to this Section 6.07 shall be deemed to
cure any breach of any representation or warranty made in this Agreement unless
the other parties hereto specifically agree thereto in writing. Prior to the
Closing, GEC may supplement or amend its disclosure schedule with respect to any
matter which, if existing or occurring at the date of this Agreement, would have
been required to be set forth or described in such disclosure schedule. No
supplement to or amendment of the disclosure schedule made pursuant to this
Section 6.07 shall be deemed to cure any breach of any representation or
warranty made in this Agreement unless the other parties hereto specifically
agree thereto in writing.
ARTICLE VII
CONDITIONS OF THE EXCHANGE
SECTION 7.01 Conditions to Each Party's Obligation to Effect the Exchange.
The respective obligations of each party to effect the Exchange and the
other transactions contemplated herein shall be subject to the satisfaction at
or prior to the Effective Time of the following conditions, any or all of which
may be waived, in whole or in part to the extent permitted by applicable law:
(a) Shareholder Approval. This Agreement shall have been duly adopted and agreed
by the holders of 100% of the outstanding shares of Acquiree, through an
Exchange Agreement, Consent and Representations signed by each shares holder of
Acquiree.
(b) No Injunctions or Restraints. No governmental authority of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, execution order, decree, injunction or other order
(whether temporary, preliminary or permanent) which is in effect and which
materially restricts, prevents or prohibits consummation of the Exchange or any
transaction contemplated by this Agreement; provided, however, that the parties
shall use their reasonable commercial efforts to cause any such decree,
judgment, injunction or other order to be vacated or lifted.
(c) Reserved
(d) The Share Exchange Agreement for 40% of GEC shall be valid, executed, and
made pending subject to a subsequent registration statement.
(e) GEC and Gulfstar Energy Group, LLC shall concurrently close the Acquisition
Agreement for the 60% interest in and Gulfstar Energy Group, LLC (attached as
Exhibit C).
SECTION 7.02 Additional Conditions of Obligations of GEC.
The obligations of GEC to effect the Exchange and the other
transactions contemplated by this Agreement are also subject to the satisfaction
at or prior to the Closing Date of the following additional conditions unless
waived by GEC:
(a) Representations and Warranties. The representations and warranties of
Acquiree set forth in this Agreement shall be true and correct in all material
respects (except for those representations and warranties qualified by
materiality, which shall be true and correct in all respects) as of the date of
this Agreement and as of the Closing Date as though made on and as of the
Closing Date, except as otherwise contemplated by this Agreement.
(b) Performance of Obligations of Acquiree. Acquiree shall have performed in all
material respects all conditions, covenants, agreements and obligations required
to be performed by it under this Agreement at or prior to the Closing Date.
(c) No Material Adverse Change to Acquiree. From the date hereof through
and including the Effective Time, no event shall have occurred which would have
an Acquiree Material Adverse Effect.
(d) Third Party Consents. Acquiree shall have obtained all consents and
approvals, required to be obtained prior to or at the Closing Date, from third
parties or governmental and regulatory authorities in connection with the
execution, delivery and performance by Acquiree of this Agreement and the
consummation of the transactions contemplated hereby.
(e) No Governmental Order or Other Proceeding or Litigation. No order of any
Governmental Entity shall be in effect that restrains or prohibits the
transactions contemplated hereby and by the other Transaction Documents, and no
suit, action or other proceeding by any Governmental Entity shall have been
instituted or threatened which seeks to restrain or prohibit the transactions
contemplated hereby or thereby.
(f) Deliveries. At the Closing, Acquiree shall have delivered to GEC or GEC
shall have otherwise obtained:
(1) a certificate, dated the Closing Date, signed on behalf of Acquiree by the
Chief Executive Officer of Acquiree, certifying as to the fulfillment of the
conditions specified in subsections (a), (b) and (c) of this Section 7.02;
2) the consents set forth in Section 4.04 of the Acquiree Disclosure Schedule;
(3) true, correct and complete copies of (1) the certificate of organization or
other charter document, as amended to date, of Acquiree as filed with, the
Secretary of State or other appropriate official of the state or other
jurisdiction of organization of Acquiree, (2) the by-laws or other similar
organizational document of Acquiree, and (3) resolutions duly and validly
adopted by the Board of Directors and the stockholders of Acquiree evidencing
the authorization of the execution and delivery of this Agreement, the other
Transaction Documents to which it is a party and the consummation of the
transactions contemplated hereby and thereby, in each case, accompanied by a
certificate of the Secretary or Assistant Secretary of Acquiree, dated as of the
Closing Date, stating that no amendments have been made thereto from the date
thereof through the Closing Date; and
(4) Audited Financial Statements of Acquiree pursuant to SEC Rules and
Regulations through March 31, 2010.
(g) Closing of Financing. GEC shall have consummated a financing
in form and amount satisfactory to GEC, or shall waive this provision.
(h) Acquiree's Indebtedness. All outstanding Indebtedness of
Acquiree shall have been fully paid or re-negotiated in substance reasonably
satisfactory to GEC.
SECTION 7.03 Additional Conditions of Obligations of Acquiree.
The obligation of Acquiree to effect the Exchange and the other
transactions contemplated by this Agreement is also subject to the satisfaction
at or prior to the Closing Date of the following additional conditions unless
waived by Acquiree:
(a) Representations and Warranties. The representations and warranties of GEC
set forth in this Agreement shall be true and correct in all material respects
(except for those representations and warranties qualified by materiality) as of
the date of this Agreement and as of the Closing Date as though made on and as
of the Closing Date, except as otherwise contemplated by this Agreement.
(b) Performance of Obligations of GEC. GEC shall have performed in all material
respects all conditions, covenants, agreements and obligations required to be
performed by them under this Agreement at or prior to the Closing Date.
(c) No Material Adverse Change to GEC. From the date hereof through and
including the Effective Time, no event shall have occurred which would have a
GEC Material Adverse Effect.
(d) Reserved
(e) No Governmental Order or Other Proceeding or Litigation. No order of any
Governmental Entity shall be in effect that restrains or prohibits the
transactions contemplated hereby and by the other Transaction Documents, and no
suit, action or other proceeding by any Governmental Entity shall have been
instituted or threatened which seeks to restrain or prohibit the transactions
contemplated hereby or thereby.
(f) Deliveries. At the Closing, GEC shall have delivered to Acquiree:
(1) certificates, dated the Closing Date, signed on behalf of GEC by the
President of GEC, certifying as to the fulfillment of the conditions specified
in subsections (a), (b) and (c) of this Section 7.03;
(2) the consents set forth in Section 3.04 of the GEC Disclosure Schedule;
(3) true, correct and complete copies of (1) the certificate of incorporation or
other charter document, as amended to date, of GEC, certified as of a recent
date by the Secretary of State or other appropriate official of the state or
other jurisdiction of incorporation of such company, (2) the by-laws or other
similar organizational document of GEC, and (3) resolutions duly and validly
adopted by the Board of Directors of GEC evidencing the authorization of the
execution and delivery of this Agreement, the other Transaction Documents to
which it is a party and the consummation of the transactions contemplated hereby
and thereby, in each case, accompanied by a certificate of the Secretary of GEC,
dated as of the Closing Date, stating that no amendments have been made thereto
from the date thereof through the Closing Date; and
(4) the share certificates issued prorata in the names of Shareholders of
Acquiree, in proper amounts
ARTICLE VIII
TERMINATION
SECTION 8.01 Termination.
This Agreement may be terminated at any time prior to the Effective
Time, by GEC or Acquiree as set forth below:
(a) by mutual consent of the boards of directors of GEC and Acquiree; or
(b) by GEC upon written notice to Acquiree, if: (A) any condition to the
obligation of GEC to close contained in Article VII hereof has not been
satisfied by 60 days after date hereof (the "End Date") (unless such failure is
the result of GEC' breach of any of its representations, warranties, covenants
or agreements contained herein) or (B) the GEC stockholders do not approve the
Exchange; or
(c) by Acquiree upon written notice to GEC, if: (A) any condition to the
obligation of Acquiree to close contained in Article VII hereof has not been
satisfied by the End Date (unless such failure is the result of Acquiree's
breach of any of its representations, warranties, covenants or agreements
contained herein); or (B) the Acquiree shares holders do not approve the
Exchange; or
(d) by GEC if the board of directors or special committee of GEC determines in
good faith, based upon the written opinion of its outside legal counsel, that
the failure to terminate this Agreement would constitute a breach of the
fiduciary duties of the GEC board of directors or special committee to the GEC
stockholders under applicable law; or
SECTION 8.02 Fees, Costs and Expenses.
Whether or not the Exchange is consummated, all legal costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by GEC.
ARTICLE IX
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
None of the representations and warranties of the parties set forth in this
Agreement shall survive the Closing. Following the Closing Date with respect to
any particular representation or warranty, no party hereto shall have any
further liability with respect to such representation and warranty. None of the
covenants, agreements and obligations of the parties hereto shall survive the
Closing.
ARTICLE X
MISCELLANEOUS
SECTION 10.01 Notices.
All notices, requests and other communications to any party hereunder
shall be in writing (including telecopy, telex or similar writing) and shall be
deemed given or made as of the date delivered, if delivered personally or by
telecopy (provided that delivery by telecopy shall be followed by delivery of an
additional copy personally, by mail or overnight courier), one day after being
delivered by overnight courier or three days after being mailed by registered or
certified mail (postage prepaid, return receipt requested), to the parties at
the following addresses:
if to GEC to: Gulfstar Energy Corporation.
Fax: 000 000-0000
with a copy to (which shall not constitute notice):
Xxxxxxx Xxxxxxx, Esq.
0000 Xxxxxxx Xxxx
Xxxxxx, XX 00000
Fax: (000) 000-0000
or such other address or telex or telecopy number as such party may hereafter
specify for the purpose by notice to the other party hereto.
SECTION 10.02 Amendment; Waiver.
This Agreement may be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may be given, provided that
the same are in writing and signed by or on behalf of the parties hereto.
SECTION 10.03 Successors and Assigns.
The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns,
provided that no party shall assign, delegate or otherwise transfer any of its
rights or obligations under this Agreement without the written consent of the
other party hereto.
SECTION 10.04 Governing Law.
This Agreement shall be construed in accordance with and governed by
the law of the State of Colorado without regard to principles of conflict of
laws.
SECTION 10.05 Waiver of Jury Trial.
Each party hereto hereby irrevocably and unconditionally waives any
rights to a trial by jury in any legal action or proceeding in relation to this
Agreement and for any counterclaim therein.
SECTION 10.06 Consent to Jurisdiction.
Each of the Parties hereby irrevocably and unconditionally submits to
the exclusive jurisdiction of any court of the State of Colorado or any federal
court sitting in Colorado for purposes of any suit, action or other proceeding
arising out of this Agreement and the Transaction Documents (and agrees not to
commence any action, suit or proceedings relating hereto or thereto except in
such courts). Each of the Parties agrees that service of any process, summons,
notice or document pursuant to the laws of the State of Colorado and on the
individuals designated in Section 10.01 shall be effective service of process
for any action, suit or proceeding brought against it in any such court.
SECTION 10.07 Counterparts; Effectiveness.
Facsimile transmissions of any executed original document and/or
retransmission of any executed facsimile transmission shall be deemed to be the
same as the delivery of an executed original. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
SECTION 10.08 Entire Agreement; No Third Party Beneficiaries; Rights of
Ownership.
Except as expressly provided herein, this Agreement (including the
documents and the instruments referred to herein) constitute the entire
agreement and supersede all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter hereof. Except as
expressly provided herein, this Agreement is not intended to confer upon any
person other than the parties hereto any rights or remedies hereunder. The
parties hereby acknowledge that no person shall have the right to acquire or
shall be deemed to have acquired shares of common stock of the other party
pursuant to the Exchange until consummation thereof.
SECTION 10.09 Headings.
The headings contained in this Agreement are for reference purposes
only and shall not in any way affect the meaning or interpretation of this
Agreement.
SECTION 10.10 No Strict Construction.
The parties hereto have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises under any provision of this Agreement, this Agreement
shall be construed as if drafted jointly by the parties thereto, and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any of the provisions of this Agreement.
SECTION 10.11 Severability.
If any term or other provision of this Agreement is invalid, illegal or
unenforceable, all other provisions of this Agreement shall remain in full force
and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in a manner that is materially adverse to
any party.
ARTICLE XI
DEFINITIONS
"Affiliate" shall mean (a) with respect to an individual, any member of
such individual's family including lineal ancestors and descendents; (b) with
respect to an entity, any officer, director, stockholder, partner, manager,
investor or holder of an ownership shares of or in such entity or of or in any
Affiliate of such entity; and (c) with respect to a Person, any Person which
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with such Person or entity.
"Agreement" shall have the meaning set forth in the preamble to this
Agreement.
"Acquiree" shall have the meaning set forth in the preamble to this
Agreement.
" "Acquiree Common Stock" shall have the meaning set forth in the
recitals to this Agreement, and elsewhere in Section 4.02"Acquiree Material
Adverse Effect" shall mean an event or change, individually or in the aggregate
with other events or changes, that could reasonably be expected to have a
material adverse effect on (a) the business, properties, prospects, condition
(financial or otherwise) or results of operations of Acquiree taken as a whole
(other than those events, changes or effects resulting from general economic
conditions or the industry in which Acquiree is engaged generally) or (b) the
ability of Acquiree to consummate the transactions contemplated hereby.
"Acquiree Shareholders" mean the holders of common shares in Acquiree.
"Certificates" shall have the meaning set forth in Section 1. of this
Agreement.
"Closing" shall have the meaning set forth in Section 2.01 of this
Agreement.
"Closing Date" shall have the meaning set forth in Section 2.01 of this
Agreement.
"Code" shall have the meaning set forth in the recitals of this
Agreement.
"Contingent Obligation" as to any Person shall mean the undrawn face
amount of any letters of credit issued for the account of such Person and shall
also mean any obligation of such Person guaranteeing or having the economic
effect of guaranteeing any Indebtedness, leases, dividends, letters of credit or
other obligations ("Primary Obligations") of any other Person (the "Primary
Obligor") in any manner, whether directly or indirectly, including, without
limitation, any obligation of such Person, whether or not contingent, (a) to
purchase any such Primary Obligation or any property constituting direct or
indirect security therefore, (b) to advance or supply funds (i) for the purchase
or payment of any such Primary Obligation or (ii) to maintain working capital or
equity capital of the Primary Obligor or otherwise to maintain the financial
condition
or solvency of the Primary Obligor, (c) to purchase property, securities or
services primarily for the purpose of assuring the obligee under any such
Primary Obligation of the ability of the Primary Obligor to make payment of such
Primary Obligation, or (d) otherwise to assure or hold harmless the obligee
under such Primary Obligation against loss in respect thereof; provided,
however, that the term Contingent Obligation shall not include endorsements of
instruments for deposit or collection in the ordinary course of business.
"Contracts" shall mean all contracts, leases, subleases, notes, bonds,
mortgages, indentures, Permits and Licenses, non-competition agreements, joint
venture or partnership agreements, powers of attorney, purchase orders, and all
other agreements, arrangements and other instruments, in each case whether
written or oral, to which such Person is a party or by which any of them or any
of its assets are bound.
"Conversion Amount" shall mean an amount equal to 1/100th of 3,500,000
shares of GEC Common Stock per 1% shares in acquirees.
"Effective Time" shall be the date all conditions and performance
hereunder has been completed but no later than July 31, 2010.
"End Date" shall have the meaning set forth in Section 8.01 of this
Agreement.
"GEC" shall have the meaning set forth in the preamble to this
Agreement.
"GEC" Common Stock" shall have the meaning set forth in the recitals to
this agreement.
"GEC" Common Stock Equivalents" shall have the meaning set forth in
Section 3.02 of this Agreement.
"GEC" Material Adverse Effect" shall mean an event or change,
individually, or in the aggregate with other events or changes, that could
reasonably be expected to have a material adverse effect on (a) the business,
properties, prospects, condition (financial or otherwise) or results of
operations of GEC and the GEC Subsidiaries taken as a whole (other than those
events, changes or effects resulting from general economic conditions or the
industry in which GEC is engaged generally) or (b) the ability of GEC to
consummate the transactions contemplated hereby.
"Governmental Approval" shall mean the consent, approval, order or
authorization of, or registration, declaration or filing with any court,
administrative agency or commission or other Governmental Entity, authority or
instrumentality, domestic or foreign.
"Governmental Entity" means the government of the United States of
America, any other nation or any political subdivision thereof, whether foreign,
state or local, and any agency, authority, instrumentality, regulatory body,
court, tribunal, arbitrator, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative powers or functions
of or pertaining to government.
"Indebtedness" shall mean as to any Person and whether recourse is
secured by or is otherwise available against all or only a portion of the assets
of such Person and whether or not contingent, but without duplication: (a) every
obligation of such Person for money borrowed; (b) every obligation of such
Person evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the Exchange of property,
assets or businesses; (c) every reimbursement obligation of such Person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such Person; (d) every obligation of such Person issued or
assumed as the deferred purchase price of property or services (including
securities repurchase agreements but excluding trade accounts payable or accrued
liabilities arising in the ordinary course of business which are not more than
120 days overdue or which are being contested in good faith by appropriate
proceedings and for which adequate reserves have been provided in accordance
with GAAP); (e) every Capital Lease Obligation of such Person; (f) any
obligation of such Person to pay any discount, shares, fees, indemnities,
penalties, recourse, expenses or other amounts in connection with any sales by
such Person unless such sales are on a non-recourse basis (as to collectibility)
of (i) accounts or general intangibles for money due or to become due, (ii)
chattel paper, instruments or documents creating or evidencing a right to
payment of money or (iii) other receivables, whether pursuant to a purchase
facility or otherwise, other than in connection with the disposition of the
business operations of such Person relating thereto or a disposition of
defaulted receivables for collection and not as a financing arrangement; (g)
every obligation of such Person under any forward contract, futures contract,
swap, option or other financing agreement or arrangement (including, without
limitation, caps, floors, collars and similar agreements), the value of which is
dependent upon shares rates, currency exchange rates, commodities or other
indices (a "derivative contract"); (h) every obligation in respect of
Indebtedness of any other entity (including any partnership in which such Person
is a general partner) to the extent that such Person is liable therefore as a
result of such Person's ownership shares in or other relationship with such
entity, except to the extent that the terms of such Indebtedness provide that
such Person is not liable therefore and such terms are enforceable under
applicable law; and (i) every Contingent Obligation of such Person with respect
to Indebtedness of another Person. Notwithstanding anything to the contrary in
this Agreement, the term "Indebtedness" expressly includes the following debts
and obligations of Acquiree:
"Laws" shall mean all foreign, federal, state and local statutes, laws,
ordinances, regulations, rules, resolutions, orders, writs, injunctions,
judgments and decrees applicable to the specified Person and to the businesses
and assets thereof.
"License" shall mean any franchise, authorization, license, permit,
certificate of occupancy, easement, variance, exemption, certificate, consent or
approval of any Governmental Entity or other Person.
"Lien" shall mean any mortgage, pledge, assessment, security interest,
lease, lien, adverse claim, levy, charge or other encumbrance of any kind.
"Exchange" shall have the meaning set forth in the recitals of this
Agreement.
"Person" shall mean any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, limited liability company,
association, Entity, institution, entity, party, Governmental Entity or any
other juridical entity of any kind or nature whatsoever.
"Takeover Proposal" shall mean any proposal for a tender or exchange
offer, Exchange, consolidation, sale of all or substantially all of such party's
assets, sale of in excess of fifteen percent of the shares of capital stock or
other business combination involving such party or any proposal or offer to
acquire in any manner a substantial equity shares (including any shares
exceeding fifteen percent of the equity outstanding) in, or all or substantially
all of the assets of, such party other than the transactions contemplated by
this Agreement.
"Taxes" means all federal, state, county, local, municipal, foreign and
other taxes, assessments, duties or similar charges of any kind whatsoever,
including all corporate franchise, income, gross receipts, occupation, windfall
profits, sales, use, ad valorem, value-added, profits, license, withholding,
payroll, employment, excise, premium, real property, personal property, customs,
net worth, capital gains, transfer, stamp, documentary, social security,
disability, environmental, alternative minimum, recapture and other taxes, and
including all shares, penalties and additions imposed with respect thereto,
whether disputed or not and including any obligations to indemnify or otherwise
assume or succeed to the Tax liability of any Person, and any liability in
respect of any Tax as a result of being a member of any affiliated, combined,
consolidated, unitary or similar group.
"Tax Return" means any report, return, statement, estimate,
informational return, declaration or other written information required to be
supplied to a taxing authority in connection with Taxes.
"Taxing Authority" means any domestic, foreign, federal, national,
state, county or municipal or other local government, any subdivision, agency,
commission or authority thereof, or any quasi-governmental body exercising tax
regulatory authority.
"Transaction Documents" shall mean this Agreement
[Remainder of page intentionally left blank.]
IN WITNESS WHEREOF, the parties hereto have caused this Exchange
Agreement to be duly executed as of the day and year first above written.
GULFSTAR ENERGY CORPORATION
By:
Name:
Title:
TALON ENERGY CORPORATION
By:
Name:
Title:
