SHARE EXCHANGE AND
ACQUISITION AGREEMENT
DATED AS OF
July 27, 2011
BY AND among
XXXXXX INVESTMENTS, inc.
AND
SOUTH UINTAH GAS PROPERTIES, INC.
AND
ITS SHAREHOLDERS
ACQUISITION AGREEMENT
This AGREEMENT, dated as of July 27, 2011 (the "Agreement"), by and among
Xxxxxx Investments, Inc., a Wyoming Corporation, ("GI"), and South Uintah Gas
Properties, Inc. a Colorado corporation ("Acquiree") and the shareholders of
Acquiree ("Shareholders" as listed on Exhibit A hereto).
WHEREAS, the Board of Directors of GI and Acquiree, respectively, have
each approved, as being in the best interest of the respective entities and
their stockholders, the Acquisition of Acquiree by GI, in accordance with the
applicable provisions of the Wyoming Business Corporation Laws;
WHEREAS, GI, 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 368 or 351 of the Internal Revenue Code as
applicable for benefit of Acquiree shareholders.
WHEREAS, this Agreement is intended to set for the terms upon which
Acquiree will be acquired by GI from Shareholders.
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; Effective Time
The Acquisition shall become effective upon the delivery of the stock
certificates in Acquiree duly executed representing 100% of Acquiree's
outstanding shares of common and preferred stock and certain Notes and delivery
of the following consideration:
a) 8,000,000 shares of restricted common stock of GI, shall be issued
pursuant hereto to Acquiree's shareholders pro rata in exchange for
100% of Acquiree's outstanding common stock and certain warrants as
set forth on Schedule 1.01 (a) and shares each of restricted Series A,
B, and C Preferred stock of GI shall be issued on a when authorized
basis pursuant hereto as equivalent to Acquiree's Preferred Stock with
Identical Rights and Privileges as shown on Schedule 1.01(a).
b) Convertible Promissory Notes in the aggregate amounts of $1,000,000 to
replace certain notes of South Uintah Gas Properties, Inc. as further
described on Schedule 1.01(b) hereto.
c) Promissory Notes in the amount of $350,000 as described on 1.01(c).
SECTION 1.02 The Acquisition.
At the Effective Time and by virtue of the Exchange, all of the
outstanding Acquiree common and preferred shares shall be conveyed to GI which
shall be the sole owning entity of the outstanding and preferred common shares
of stock of Acquiree, and the Notes shall be issued by GI in substitution for
the Notes of the Acquiree.
SECTION 1.03 Conversion of Securities.
As of the Effective Time, by virtue of the Exchange: All of the
outstanding common and preferred shares, warrants and all other convertible
notes or other Notes of Acquiree that are issued and outstanding immediately
prior to the Effective Time, shall be deemed exchanged for common shares,
substitute notes, preferred shares, and warrants (on a when issued basis) of GI
pursuant to the Schedule 1.03. All such common and preferred shares, warrants,
and Notes of Acquiree shall be conveyed to GI, and each holder of a certificate
representing such shares, notes or warrants shall cease to have any rights with
respect thereto, except the right to receive the number of GI Common Shares,
Warrants to Purchase common shares, and Preferred Series A, B, and C Stock and
Convertible Notes and other Notes to be issued in consideration therefore in
accordance with Section 1.04.
SECTION 1.04 Exchange Procedures.
(a) As soon as practicable after the execution hereof, GI shall provide to each
Acquiree shareholder a letter of transmittal and Exchange Agreement with
representations for execution by shareholder, warrantholder, or noteholder and
instructions for use in effecting the surrender of certificates representing
shares or Notes 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 GI after the Exchange may reasonably specify. Upon
surrender of a Certificate or Note for cancellation to GI, together with such
letter of transmittal, duly and properly executed, the holder of such
Certificate or Note shall be entitled to receive in exchange therefore a
certificate representing an equal number of shares of GI Common Stock or
Preferred Stock as represented Acquiree's shares represented by the certificate,
and the Certificates 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, GI Common or Preferred 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 GI. Shares of GI Common or Preferred Stock issued
in the Exchange shall be issued, and be deemed to be outstanding, as of the
Effective Time. GI shall cause all such shares of GI Common or Preferred Stock
issued pursuant to the Exchange to be duly authorized, validly issued, fully
paid and non-assessable and not subject to preemptive rights.
Notes or Convertible Notes of Acquiree shall be exchanged upon
surrender for identical Notes containing the same terms, rights, and privileges
of GI.
(b) If any certificate representing shares of GI Common or Preferred 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 GI Common or Preferred Stock in a name other than that of the
registered holder of the Certificate so surrendered.
(c) Warrants as shown on Schedule 1.01(c). Warrants of GI shall be issued in
exchange and replacement for the Warrants of Acquiree. Such Warrants containing
identical terms and conditions as Acquiree.
SECTION 1.05. Dividends and Distributions.
No dividends or other distributions declared or made with respect to GI
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 GI Common Stock until such holder surrenders such
Certificate as provided in Section 1.05 hereof. Upon such surrender, there shall
be paid by GI to the person in whose name certificates representing shares of GI
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 GI 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 GI 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, but no later than August 31, 2011 or, to the extent permitted
thereunder, waived, or extended, 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 GI
Except as set forth in the applicable section of the disclosure
schedule delivered by GI to Sellers prior to the execution of this Agreement
(the "GI Disclosure Schedule"), GI represents and warrants to Sellers as
follows:
SECTION 3.01 Organization of GI; Authority.
GI is an Entity duly organized, validly existing and in good standing
under the laws of the State of Wyoming. GI 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 GI 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 GI, including,
without limitation, the approval of the board of directors of GI. The
Transaction Documents have been duly executed and delivered by each of GI and,
assuming that the Transaction Documents constitute a valid and binding
obligation of the other parties thereto, constitute a valid and binding
obligation of GI, enforceable against GI in accordance with its terms. GI has
heretofore delivered or made available to Acquiree complete and correct copies
of the certificate of incorporation and by-laws of GI, the minute books and
stock transfer records of GI, as in effect as of the date of this Agreement. GI
is not in violation of its organizational documents.
SECTION 3.02 Capitalization.
The authorized capital stock of GI consists of 50,000,000 shares of GI
Common Stock, and no Preferred Stock, of which 4,280,000 common Shares
(approximately) are outstanding on the date hereof. No other shares of any other
class or series of GI Common Stock or Preferred or securities exercisable or
convertible into or exchangeable for GI Common Stock ("GI Common Stock
Equivalents") are authorized, issued or outstanding. The outstanding shares of
GI Common Stock have been duly authorized and validly issued and are fully paid
and non-assessable and were not issued in violation of, and are not subject to,
any preemptive, subscription or similar rights. To GI's knowledge, none of the
outstanding shares of GI 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 GI's
knowledge, voting or transfer of any shares, whether issued or unissued, of GI
Common Stock, GI Common Stock Equivalents or other securities of GI. On the
Closing Date, the shares of GI Common or Preferred 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 GI Common or Preferred Stock will be validly issued, fully paid
and non-assessable.
SECTION 3.03 No Violation; Consents and Approvals.
The execution and delivery by GI 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 GI (b) any Law
applicable to GI or the property or assets of GI, 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 GI under any contract to which GI is a
party or by which GI or any assets of GI 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 GI 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
GI. No Governmental Approval is required to be obtained or made by or with
respect to GI in connection with the execution and delivery of this Agreement or
the consummation by GI 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 GI, threatened against, relating to or affecting
GI, the business, the assets, or any employee, officer, director, stockholder,
or independent contractor of GI in their capacities as such, and (ii) no orders
of any Governmental Entity or arbitrator outstanding against GI, the business,
the assets, or any employee, officer, director, stockholder, or independent
contractor of GI in their capacities as such, or that could prevent or enjoin,
or delay in any respect, consummation of the transactions contemplated hereby.
(b) GI has complied and is in compliance in all material respects with all laws
applicable to GI, its business or its assets. Neither GI has received notice
from any Governmental Entity or other Person of any material violation of law
applicable to GI, its business or assets. GI has obtained and holds all required
Licenses (all of which are in full force and effect) from all Government
Entities applicable to GI, 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 GI, 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 GI prior to the execution of this Agreement
(the "Acquiree Disclosure Schedule"), Acquiree represents and warrants to GI 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 Colorado 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 GI,
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 GI
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 are 100,000,000
common shares and 25,000,000 preferred shares of which common shares and
preferred shares as shown on Schedule 4.02(a) are outstanding are issued and
outstanding (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 a
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 GAAP 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.
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, GI agrees as to itself and the GI Subsidiaries, that
GI shall not, and shall cause the GI 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, GI 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 GI.
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,
GI 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 GI.
During the period from the date of this Agreement and continuing until the
Effective Time, Acquiree and GI agrees as to itself and, with respect to GI,
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 GI
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 GI shall it permit the GI 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) GI shall be permitted to issue the shares of GI 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 GI Disclosure
Schedule, as the case may be:
(3) It shall not, nor in the case of GI shall it permit any of the GI
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 GI 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 GI 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 $5,000
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 April
30, 2011, 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 GI agrees as to itself and, with respect to GI,
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 GI 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 GI
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 GI 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
GI 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 GI' or Acquiree's board of
directors or special committee, as the case may be, to its stockholders under
applicable law). Acquiree shall promptly advise GI and GI shall promptly advise
Acquiree, as the case may be, orally and in writing of any such inquiries or
proposals and shall also promptly advise GI or Acquiree, as the case may be, of
any developments or changes regarding such inquiries or proposals. Acquiree and
GI shall immediately cease and cause to be terminated any existing discussions
or negotiations with any persons (other than Acquiree and GI) conducted
heretofore with respect to any Takeover Proposal. Acquiree and GI agree not to
release (by waiver or otherwise) any third party from the provisions of any
confidentiality or standstill agreement to which Acquiree or GI is a party.
SECTION 6.03 Legal Conditions to Exchange; Reasonable Efforts.
Acquiree, GI 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 GI 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 GI in connection with the Exchange or the
taking of any action contemplated thereby or by this Agreement.
SECITON 6.04 Certain Filings.
Each party shall cooperate with the other in (a) connection with the
preparation of an announcement or required filings, (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.
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 GI 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, GI 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 at least 80% of the outstanding shares of Acquiree
or convertible note interests, through an Exchange Agreement, Consent and
Representations signed by each shareholder or note-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.
SECTION 7.02 Additional Conditions of Obligations of GI.
The obligations of GI 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 GI:
(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
GI or GI shall have otherwise obtained:
(1) 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
(2) Audited GAAP Financial Statements of Acquiree pursuant to SEC
Rules and Regulations through July 31, 2011.
(3) The stock Certificates and Notes of South Uintah Gas Properties,
Inc. constituting 100% of the issued and outstanding stock and notes
of Acquiree.
(4) Acquiree's Indebtedness. All outstanding Indebtedness of Acquiree
as listed on Section 7.02(d) shall have been assumed by GI.
(5) Acquiree's ownership of GI shares. Acquiree shall surrender and
cancel 3,000,000 common shares of GI owned by Acquiree.
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 GI 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 GI. GI 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 GI. From the date hereof through and
including the Effective Time, no event shall have occurred which would have a GI
Material Adverse Effect.
(d) 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.
(e) Deliveries. At the Closing, GI shall have delivered to
shareholders of Acquiree:
(1) the share certificates specified in Section 1.01(a), issued
pro-rata in the names of Shareholders of Acquiree, in proper amounts.
(2) Convertible Promissory Notes and Promissory Notes of GI in the
amounts shown on Schedule 7.03(e)(2).
(3) Warrants as specified in Schedule 1.01(c).
(4) An Agreement to authorize and issue Preferred Stock in certain
Series as set forth on Schedule 7.03(e)(4).
(5) Board Resolutions appointing 2 new officers of Acquiree's choice,
or an election of new directors by the shareholders.
(6) Resignations of existing officers effective at closing.
(7) Appointments of new officers of Acquiree's choice.
ARTICLE VIII
TERMINATION
SECTION 8.01 Termination.
This Agreement may be terminated at any time prior to the Effective
Time, by GI or Acquiree as set forth below:
(a) by mutual consent of the boards of directors of GI and Acquiree; or
(b) by GI upon written notice to Acquiree, if: (A) any condition to the
obligation of GI 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 GI's breach of any of its representations, warranties, covenants or
agreements contained herein) or (B) the GI stockholders do not approve the
Exchange; or
(c) by Acquiree upon written notice to GI, 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 GI if the board of directors or special committee of GI
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 GI board of directors or special committee to the
GI stockholders under applicable law; or
(e) by GI if South Uintah Gas Properties, Inc. has failed to acquire all
interests under certain contracts listed on Confidential Schedule 8.01(e).
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 South Uintah Gas Properties, Inc.
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 GI to: Xxxxxx Investments, Inc.
0000 Xxxxxxx Xxxx
Xxxxxx, XX 00000
if to SUGP: South Uintah Gas Properties, Inc.
X/X 0000 Xxxxxxx Xxxx
Xxxxxx, Xxxxxxxx 00000
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 Delaware 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 New Jersey 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.
SECITON 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.
"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.
"Agreement" shall have the meaning set forth in the preamble to this
Agreement.
"Certificates" shall have the meaning set forth in Section 1.04 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.
"Convertible Notes" shall mean $1,350,000 in aggregate notes shown on
Schedule 1.01(c) and 7.03(e)(2).
"Effective Time" shall be the date all conditions and performance
hereunder has been completed but no later than August 31, 2011.
"End Date" shall have the meaning set forth in Section 8.01 of this
Agreement.
"Exchange" shall have the meaning set forth in the recitals of this
Agreement.
"GI" shall have the meaning set forth in the preamble to this
Agreement.
"GI Common Stock" shall have the meaning set forth in the recitals to
this agreement.
"GI Common Stock Equivalents" shall have the meaning set forth in
Section 3.02 of this Agreement.
"GI 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 GI and the GI Subsidiaries taken as a whole (other than those
events, changes or effects resulting from general economic conditions or the
industry in which GI is engaged generally) or (b) the ability of GI 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 collectability)
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.
"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.
"Preferred Shares" shall mean those Series A, B, and C preferred Stock
shown on Schedule 1.01(a).
"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.
IN WITNESS WHEREOF, the parties hereto have caused this Exchange
Agreement to be duly executed as of the day and year first above written.
XXXXXX INVESTMENTS, INC.
By:
Name:
Title:
SOUTH UINTAH GAS PROPERTIES, INC.
By:
Name:
Title:
SCHEDULE 1.01(A)
SHARES AND WARRANTS
SCHEDULE 1.01(b)
CONVERTIBLE NOTES
SCHEDULE 1.01(c)
PROMISSORY NOTES
JOINDER / CONSENT
The undersigned, being the holder of a financial or equity interest in South
Uintah Gas Properties, Inc. described as:
______________________________________________ and dated: _______________,
hereby join in and consent and agree to terms as set forth in the Share Exchange
and Acquisition Agreement dated _____________ by and between Xxxxxx Investments,
Inc. and South Uintah Gas Properties, Inc. attached hereto and made a part
hereof by this reference.
------------------------------------
Name:
EXCHANGE AGREEMENT AND REPRESENTATIONS
Gentlemen:
I understand that shareholders of South Uintah Gas Properties, Inc.
(the "SUGP"), a Colorado corporation, are offering to exchange their shares of
Common stock and Preferred, for shares of stock of Xxxxxx Investments, Inc.
("Company"), a Wyoming corporation.
I hereby offer to exchange all of my shares of Common or Preferred
stock of SUGP, as shown on the transfer records of SUGP for equivalent number of
shares of the Company (the "Shares") and tender all my shares of SUGP herewith,
on a one for one basis and upon acceptance by you, agree to become a shareholder
of the Company. In order to induce the Company to accept my offer, I advise you
as follows; and acknowledge:
1. Corporate Documents. Receipt of copies of Articles, By-Laws, and audited
financial statements of the Company and such other documents as I have
requested, I hereby acknowledge that I have received the documents (as may be
supplemented from time to time) relating to the Company and that I have
carefully read the information and that I understand all of the material
contained therein, and agree to the terms, and understand the risk factors as
described therein.
2. Availability of Information. I hereby acknowledge that the Company has made
available to me the opportunity to ask questions of, and receive answers from
the Company and any other person or entity acting on its behalf, concerning the
terms and conditions of the Plan, the financial statements and related
information of the Company and the 2010 10K, 10Q for 3/31/11 and 8K dated
7/11/11 of the Company and the information contained in the corporate documents,
and to obtain any additional information, to the extent the Company possesses
such information or can acquire it without unreasonable effort or expense,
necessary to verify the accuracy of the information provided by the Company and
any other person or entity acting on its behalf.
3. Representations and Warranties. I represent and warrant to the Company (and
understand that it is relying upon the accuracy and completeness of such
representations and warranties in connection with the availability of an
exemption for the offer and exchange of the shares from the registration
requirements of applicable federal and state securities laws) that:
(a) RESTRICTED SECURITIES.
(I) I understand that the Shares have not been registered under the Securities
Act of 1933, as amended (the "Act"), or any state securities laws.
(II) I understand that if this exchange agreement is accepted and the Shares are
issued to me, I cannot sell or otherwise dispose of the shares unless the Shares
are registered under the Act or the state securities laws or exemptions
therefrom are available (and consequently, that I must bear the economic risk of
the investment for an indefinite period of time):
(III) I understand that the Company has no obligation now or at any time to
register the Shares under the Act or the state securities laws or obtain
exemptions therefrom.
(IV) I understand that the Company will restrict the transfer of the Shares in
accordance with the foregoing representations.
(V) There is a limited public market for the common stock of the Company and
there is no certainty that a more liquid market will ever develop or be
maintained. There can be no assurance that I will be able to sell or dispose of
the Shares. Moreover, no assignment, sale, transfer, exchange or other
disposition of the Shares can be made other than in accordance with all
applicable securities laws. It is understood that a transferee may at a minimum
be required to fulfill the investor suitability requirements established by the
Company, or registration may be required.
(b) LEGEND.
I agree that any certificate representing the Shares will contain and be
endorsed with the following, or a substantially equivalent, LEGEND:
"This share certificate has been acquired pursuant to an investment
representation by the holder and shall not be sold, pledged, hypothecated or
donated or otherwise transferred except upon the issuance of a favorable opinion
by its counsel and the submission to the Company of other evidence satisfactory
to and as required by counsel to the Company, that any such transfer will not
violate the Securities Act of 1933, as amended, and applicable state securities
laws. These shares are not and have not been registered in any jurisdiction."
(c) OWN ACCOUNT.
I am the only party in interest with respect to this exchange offer, and I am
acquiring the Shares for my own account for long-term investment only, and not
with an intent to resell, fractionalize, divide, or redistribute all or any part
of my interest to any other person.
(d) AGE: CITIZENSHIP.
I am at least twenty-one years old and a citizen of the United States.
(e) ACCURACY OF INFORMATION.
All information which I have provided to the Company concerning my financial
position and knowledge of financial and business matters is correct and complete
as of the date set forth at the end hereof, and if there should be any material
change in such information prior to acceptance of this exchange offer by the
Company, I will immediately provide the Company with such information.
4. Exchange Procedure. I understand that this exchange is subject to each of the
following terms and conditions:
(a) The Company may reject this exchange for legal reasons, and this exchange
shall become binding upon the Company only when accepted, in writing, by the
Company.
(b) This offer may not be withdrawn by me.
(c) The share certificates to be issued and delivered pursuant to this exchange
will be issued in the name of and delivered to the undersigned.
5. Suitability. I hereby warrant and represent:
(a) That I can afford a complete loss of the investment and can afford to hold
the securities being received hereunder for an indefinite period of time.
(b) That I consider this investment a suitable investment, and
(c) That I am sophisticated and knowledgeable and have had prior experience in
financial matters and investments.
6. Acknowledgement of Risks. I have been furnished and have carefully read the
Plan and information relating to the Company, including this form of Exchange
Agreement. I am aware that:
(a) There are substantial risks incident to the ownership of Shares from the
Company, and such investment is speculative and involves a high degree of risk
of loss by me of my entire investment in the Company.
(b) No federal or state agency has passed upon the Shares or made any finding or
determination concerning the fairness of this investment.
(c) The books and records of the Company will be reasonably available for
inspection by me and/or my investment advisors, if any, at the Company's place
of business.
(d) All assumptions and projections set forth in any documents provided by the
Company have been included therein for purposes of illustration only, and no
assurance is given that actual results will correspond with the results
contemplated by the various assumptions set forth therein.
(e) Prior to the completion of the exchange, SUGP has a very limited operating
history. SUGP is in the development stage, and its proposed operations are
subject to all of the risk inherent in the establishment of a new business
enterprise, including a limited operating history. The unlikelihood of the
success of the Company must be considered in light of the problems, expenses,
difficulties, complications and delays frequently encountered in connection with
the formation and operation of a new business and the competitive environment in
which the Company will operate.
7. Receipt of Advice. I acknowledge that I have been advised to consult my own
attorney and investment advisor
concerning the investment.
8. Restrictions on Transfer. I acknowledge that the investment in the Company is
an illiquid investment. In particular, I recognize that:
(a) Due to restrictions described below, the lack of any market existing or to
exist for these Shares, in the event I should attempt to sell my Shares in the
Company, my investment will be highly illiquid and, probably must be held
indefinitely.
(b) I must bear the economic risk of investment in the Shares for an indefinite
period of time, since the Shares have not been registered under the Securities
Act of 1933, as amended, and issuance is made in reliance upon Section 4(2) and
4(6) of said Act and/or Rules 501-506 of Regulation D under the Act, as may be
applicable. Therefore, the Shares cannot be offered, sold, transferred, pledged,
or hypothecated to any person unless either they are subsequently registered
under said Act or an exemption from such registration is available and the
favorable opinion of counsel for the Company to that effect is obtained, which
is not anticipated. Further, unless said Shares are registered with the
securities commission of the state in which offered and sold, I may not resell,
hypothecate, transfer, assign or make other disposition of said Shares except in
a transaction exempt or exempted from the registration requirement of the
securities act of such state, and that the specific approval of such sales by
the securities regulatory body of the state is required in some states.
(c) My right to transfer my Shares will also be restricted by the legend
endorsed on the certificates.
9. Access to Information. I represent and warrant to the Company that:
(a) I have carefully reviewed and understand the risks of, and other
considerations relating to, the exchange of the Shares, including the risks of
total loss in the event the Company's business is unsuccessful.
(b) I and my investment advisors, if any, have been furnished all materials
relating to the Company and its proposed activities and anything which they have
requested and have been afforded the opportunity to obtain any additional
information necessary to verify the accuracy of any representations about the
Company.
(c) The Company has answered all inquiries that I and my investment advisors, if
any, have put to it concerning the Company and its proposed activities and the
Plan and exchange for the Shares.
(d) Neither I nor my investment advisors, if any, have been furnished any
offering literature other than the documents attached as exhibits thereto and I
and my investment advisors, if any, have relied only on the information
contained in such exhibits and the information, as described in subparagraphs
(b) and (c) above, furnished or made available to them by the Company.
(e) I am acquiring the Shares for my own account, as principal, for investment
purposes only and not with a view to the resale of distribution of all or any
part of such Shares, and that I have no present intention, agreement or
arrangement to divide my participation with others or to resell, transfer or
otherwise dispose of all or any part of the Shares subscribed for unless and
until I determine, at some future date, that changed circumstances, not in
contemplation at the time of this exchange, makes such disposition advisable;
(f) I, the undersigned, if on behalf of a corporation, partnership, trust, or
other form of business entity, affirm that: it is authorized and otherwise duly
qualified to purchase and hold Shares in the Company; recognize that the
information under the caption as set forth in (a) above related to investments
by an individual and does not address the federal income tax consequences of an
investment by any of the aforementioned entities and have obtained such
additional tax advice that I have deemed necessary; such entity has its
principal place of business as set forth below; and such entity has not been
formed for the specific purpose of acquiring Shares in the Company.
(g) I have adequate means of providing for my current needs and personal
contingencies and have no need for liquidity in this investment; and
(h) The information provided by the Company is confidential and non-public and I
agree that all such information shall be kept in confidence by it and neither
used by it to its personal benefit (other than in connection with its exchange
for the Shares) nor disclosed to any third party for any reason; provided,
however, that this obligation shall not apply to any such information which (i)
is part of the public knowledge or literature and readily accessible at the date
hereof; (ii) becomes part of the public knowledge or literature and readily
accessible by publication (except as a result of a breach of these provisions);
or (iii) is received from third parties (except those parties who disclose such
information in violation of any confidentiality agreements including, without
limitation, any Exchange Agreement they may have with the Company).
10. Binding Agreement. I hereby adopt, accept, and agree to be bound by all the
terms and conditions of the Plan, and by all of the terms and conditions of the
Articles of Incorporation, and amendments thereto, and By-Laws of the Company.
Upon acceptance of this Exchange Agreement by the Company, I shall become a
Shareholder for all purposes.
11. Agreement to Be Bound. The Exchange Agreement, upon acceptance by the
Company, shall be binding upon the heirs, executors, administrators, successors,
and assigns of mine.
12. Indemnification. I further represent and warrant:
(a) I hereby indemnify the Company and hold the Company harmless from and
against any and all liability, damage, cost, or expense incurred on account of
or arising out of:
(I) Any inaccuracy in my declarations, representations, and warranties
hereinabove set forth;
(II) The disposition of any of the Shares which I will receive, contrary to my
foregoing declarations, representations, and warranties; and
(III) Any action, suit or proceeding based upon (1) the claim that said
declarations, representations, or warranties were inaccurate or misleading or
otherwise cause for obtaining damages or redress from the Company; or (2) the
disposition of any of the Shares or any part thereof.
13. Governing Law. This Agreement shall be construed in accordance with and
governed by the laws of the State of Colorado, except as to the manner in which
the undersigned elects to take title to the Shares in the Company that shall be
construed in accordance with the state of his principal residence.
14. Financial Statement. Upon request of the Company, I shall provide a sworn
and signed copy of my current financial statement.
15. Accredited Investor. [__] (Check if applicable. Accredited Investor. I
represent that I am an "Accredited Investor" or an Officer of an "Accredited
Investor" as defined below:
Accredited investor shall mean any person who comes within any
of the following categories, or who the issuer reasonably believes come within
any of the following categories, at the time of the sale of the securities to
that person.
(1) Any bank as defined in section 3(a)(2) of the Act, or any
savings and loan association or other institution as defined in section
3(a)(5)(A) of the Act whether acting in its individual or fiduciary capacity;
any broker or dealer registered pursuant to section 15 of the Securities
Exchange Act of 1934; any insurance company as defined in section 2(13) of the
Act; any investment company registered under the Investment Company Act of 1940
or a business development company as defined in section 2(a)(48) of that Act;
any Small Business Investment Company licensed by the U.S. Small Business
Administration under section 301(c) or (d) of the Small Business Investment Act
of 1958; any plan established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state or its political
subdivisions, for the benefit of its employees, if such plan has total assets in
excess of $5,000,000; any employee benefit plan within the meaning of the
Employee Retirement Income Security Act of 1974 if the investment decision is
made by a plan fiduciary, as defined in section 3(21) of such act, which is
either a bank, savings and loan association, insurance company, or registered
investment adviser, or if the employee benefit plan has total assets in excess
of $5,000,000 or, if a self-directed plan, with investment decisions made solely
by persons that are accredited investors;
(2) Any private business development company as defined in
section 202(a)(22) of the Investment Advisers Act of 1940;
(3) Any organization described in section 501(c)(3) of the
Internal Revenue Code, corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring the securities
offered, with total assets in excess of $5,000,000;
(4) Any director, executive officer, or general partner of the
issuer of the securities being offered or sold, or any director, executive
officer, or general partner of a general partner of that issuer;
(5) Any natural person whose individual net worth, or joint net
worth with that person's spouse, at the time of his purchase exceeds $1,000,000;
(6) Any natural person who had an individual income in excess of
$200,000 in each of the two most recent years or joint income with that person's
spouse in excess of $300,000 in each of those years and has a reasonable
expectation of reaching the same income level in the current year;
(7) Any trust, with total assets in excess of $5,000,000, not
formed for the specific purpose of acquiring the securities offered, whose
purchase is directed by a sophisticated person as described in
ss.230.506(b)(2)(ii); and
(8) Any entity in which all of the equity owners are accredited
investors.
(9) An entity or person defined under SEC CFR ss.2330.001 and
California Corporations Code ss.25102(n) (by inclusion).
An affiliate of, or person affiliated with, a specific person
shall mean a person that directly, or indirectly through one or more
intermediaries, controls or is controlled by, or is under common control with,
the person specified.
I will hold title to my interest as follows:
{ } Community Property
{ } Joint Tenants with Right Survivorship
{ } Tenants in Common
{ } Individually
{ } Other: (Corporation, Trust, Etc., please indicate)
(Note: Subscribers should seek the advice of their attorneys in
deciding in which of the above forms they should take ownership of the Shares,
since different forms of ownership can have varying gift tax and other
consequences, depending on the state of the investor's domicile and their
particular personal circumstances. For example, in community property states, if
community property assets are used to purchase shares held in individual
ownership, this might have adverse gift tax consequences. If OWNERSHIP IS BEING
TAKEN IN JOINT NAME WITH A SPOUSE OR ANY OTHER PERSON, THEN ALL SUBSCRIPTION
DOCUMENTS MUST BE EXECUTED BY ALL SUCH PERSONS.)
16. No Assignability. This exchange is personal to the person/entity whose name
and address appear below. The undersigned may not assign any of its rights or
obligations under this Exchange Agreement to any other person or entity.
17. Conditions. This Exchange Agreement shall become binding upon the Company
only when accepted, in writing, by the Company.
18. Effective Date. The exchange for Shares evidenced by this Exchange Agreement
shall, if accepted by the Company, be effective as soon after July 28, 2011, as
all state laws have been complied with to effectuate the transaction.
19. Conveyance. I hereby agree to convey title to all of my interest in all my
common or preferred shares of SUGP, as shown on the transfer records of SUGP to
the Company in exchange for an equal number of Common (or Preferred shares) as
applicable.
20. Further Acts. The undersigned hereby agrees to execute any other documents
and take any further actions that are reasonably necessary or appropriate in
order to implement the transaction contemplated by this Exchange Agreement.
Shareholder
Dated: _________________________ ____________________________________
Name:
