EXHIBIT 2.1
REORGANIZATION AGREEMENT
This REORGANIZATION AGREEMENT dated as of October 31, 2008 (the
"Agreement") is by and between Xxxxxxx Energy, Inc., a Delaware corporation
("Xxxxxxx Energy") and Granite Energy, Inc., a Nevada corporation ("Granite").
RECITALS
A. WHEREAS, Xxxxxxx Energy desires to acquire certain assets of Granite
described in Exhibit A (the "Granite Assets") in exchange for ten million
(10,000,000) post-split shares of Common Stock of Xxxxxxx Energy (the
"Stock");
B: WHEREAS, Granite desire to exchange the Granite Assets for the Stock;
and
C: WHEREAS, the parties hereto intend that the transaction contemplated
hereby (the "Transaction") shall be completed as a tax-free
reorganization under the U.S. Internal Revenue Code.
NOW, THEREFORE, The respective Boards of Directors of Xxxxxxx Energy and
Granite deem it advisable and in the best interests of their corporations and
the respective shareholders of their corporations that Xxxxxxx Energy acquire
the Granite Assets in exchange for the Stock of Xxxxxxx Energy in accordance
with the terms and conditions of this Agreement.
1. Pre-Closing Actions of Xxxxxxx Energy. Prior to the Closing as set forth
herein, Xxxxxxx Energy shall undertake the following actions:
(a) The Board of Directors of Xxxxxxx Energy shall approve the
execution of this Agreement and the transactions contemplated
thereby.
(b) Xxxxxxx Energy shall have undertaken a 1 for 20 reverse stock split
of its outstanding Common Stock. In addition, the reverse split
shall have the following effect on all issued and outstanding
options and warrants (collectively, "Derivative Securities") to
purchase shares of Common stock of Xxxxxxx Energy: the exercise
price of the Option Plan shares shall not be changed.
(c) Xxxxxxx Energy shall prepare and complete the documents necessary
to be filed by it with local, state and federal authorities to
consummate the transactions contemplated hereby, including an
Information Statement/Registration Statement for the issuance of
the Stock (the "Registration Statement").
(d) During the period from the date of this Agreement until the Closing
Date (the "Due Diligence Period"), Xxxxxxx Energy shall make
available to Granite and Granite's employees, attorneys,
accountants, financial advisors, agents and representatives during
normal business hours all information concerning the operation,
business and prospects of Xxxxxxx Energy as may be reasonably
requested by Granite. Xxxxxxx Energy will cooperate with Granite
for the purpose of permitting Granite to discuss Xxxxxxx Energy's
historical business, including without limitation providing access
to all employees, consultants, assets, properties, books, accounts,
records, tax returns, contracts and other documents of Xxxxxxx
Energy.
(e) The accounts payable of Xxxxxxx Energy and SGI in the amounts set
forth on the balance sheet of Xxxxxxx Energy attached as Exhibit B
hereto (the "Payables") shall be dealt with through the issuance of
182,030 new shares of Common Stock of the Company, all as described
in Exhibit C:
(f) The assets and liabilities of Xxxxxxx Energy at the time of
Closing shall be as set forth on the pro forma balance sheet of
Xxxxxxx Energy attached as Exhibit D.
(g) Xxxxxxx Energy shall update its balance sheet to the Closing
Date. On its Closing balance sheet Xxxxxxx Energy shall have no
material assets and no existing or contingent liabilities except
as set forth in the pro forma balance sheet of Xxxxxxx Energy
attached as Exhibit D or commitments of any kind except those
specifically agreed to in writing by both parties prior to
closing;
At the time of signing this Agreement and at the time of Closing,
Xxxxxxx Energy shall be registered with the Securities and Exchange
Commission as a fully reporting company under Section 12(g) of the
Securities Exchange Act of 1934, current in its filings and with
not less than ten thousand (10,000) shares of its post-split Common
Stock "free trading" on the "bulletin board" and with quotations
posted by not less than 1 market maker.
(h) Xxxxxxx Energy shall have received all permits, authorizations,
regulatory approvals and third party consents necessary for the
consummation of the Transaction and all applicable legal
requirements, including compliance with all applicable federal
and state securities laws, shall have been satisfied.
(i) Xxxxxxx Energy shall have obtained all necessary stockholder
approvals.
2. Pre-Closing Action of Granite. Prior to the Closing as set forth herein,
Granite shall undertake the following actions:
(a) The Board of Directors and shareholders of Granite shall execute
and deliver resolutions unanimously approving the execution of this
Agreement and the transactions contemplated hereby.
(b) During the Due Diligence Period, Granite shall make available to
Xxxxxxx Energy and Granite's employees, attorneys, accountants,
financial advisors, agents and representatives during normal
business hours all information concerning the operation, business
and prospects of Granite as may be reasonably requested by Xxxxxxx
Energy. Granite will cooperate with Xxxxxxx Energy for the purpose
of permitting Xxxxxxx Energy to discuss Granite's business and
prospects with customers, creditors, suppliers and other persons
having business dealings with such party, including without
limitation providing access to all employees, consultants, assets,
properties, books, accounts, records, tax returns, contracts and
other documents of Granite, provided that such access will not
materially interfere with the normal business operations of
Granite.
(c) Granite shall update Exhibit A to the Closing Date. The Exhibit
A Granite Assets of Granite to be acquired by Xxxxxxx Energy shall
not be in the aggregate less than eighty percent (80%) of those
stated in Exhibit A
(d) Granite shall have received all permits, authorizations,
regulatory approvals and third party consents necessary for the
consummation of the Transaction and all applicable legal
requirements, including compliance with all applicable federal and
state securities laws, shall have been satisfied.
(f) Granite shall have obtained all necessary stockholder approvals.
3. Conditions to Closing. Xxxxxxx Energy's and Granite's obligations to
close the proposed Acquisition will be subject to specified conditions
precedent including, but not limited to, the following:
(a) The representations and warranties of Xxxxxxx Energy as set forth
in Section 6 herein shall remain accurate as of the Closing Date
and no material adverse change in the business of Xxxxxxx Energy
shall have occurred.
(b) The representations and warranties of Granite as set forth in
Section 7 herein shall remain accurate as of the Closing Date and
no material adverse change in the business of Granite shall have
occurred.
(c) All required approvals of Directors and shareholders of Granite and
Xxxxxxx Energy shall have been obtained and evidenced by
appropriate documentation.
(d) All the documents necessary to be filed by Xxxxxxx Energy and
Granite with local, state and federal authorities shall have been
prepared.
(e)Xxxxxxx Energy shall have received all permits, authorizations
regulatory approvals and third party consents necessary for the
consummation of the Transaction and all applicable legal requirements,
including compliance with all applicable federal and state securities
laws.
(f)Xxxxxxx Energy shall be registered with the SEC as a fully reporting
company under Section 12(g) of the Securities Exchange Act of 1934,
current in its filings and with not less than ten thousand (10,000)
shares of its post-split common stock "free trading" on the "bulletin
board" and quotations posted by not less than 1 market maker.
(g)Granite shall be and remain in good standing as a publicly traded
company under the U.S. Securities Exchange Act of 1934, quoted and
trading on the "Pink Sheets" under the symbol "XXXX.XX".
(h)Xxxxxxx Energy shall have obtained authorization from its transfer
agent and the NASDAQ, effective upon the completion of the Closing, to
issue its post-split Common Stock with a CUSIP number and trading
symbol assigned to it by the NASD.
(i)Xxxxxxx Energy shall have arranged with the transfer agent and the
Depository Trust Corporation (DTC) for notification to stockholders
and brokerage firms of the effectiveness of the transaction and the
preparation of new certificates for Common Stock.
4. Closing Date. The Closing the contemplated transaction (the "Closing")
will occur on a date agreed upon by the parties, no later than
October___, 2008 (the "Closing Date") as soon as reasonably possible
after the satisfaction of all conditions precedent specified in the
Definitive Agreement. The Closing Date may be extended by mutual consent
in writing.
5. Closing.
5.1 Closing. At the Closing, inter alia, the following events shall occur:
(a) Xxxxxxx Energy shall issue to Granite and/or its nominee(s)
10,000,000 shares of restricted Common Stock, $0.001 par value,
adjusted for the stock split, in exchange for the Granite Assets.
The 10,000,000 shares of Common Stock of Xxxxxxx Energy, as
adjusted for the stock split, shall constitute not less than eighty
percent (80%) of the total outstanding shares of Common Stock of
Xxxxxxx Energy at the completion of the Closing and after issuing
or providing for the issuance of all shares of Common Stock to be
issued to creditors as per Section 1(e).
(b) Xxxxxxx Energy shall issue to the creditors, as itemized in
Section 1(e) the shares of restricted Common Stock described in
Exhibit C in exchange for releases.
(c) All existing Xxxxxxx Energy officers and directors shall resign and
new Xxxxxxx Energy directors and officers shall be appointed.
(d) The Company shall file the Form S-4 Registration/Information
Statement with the SEC covering the proposed distribution of the
Stock to Granite stockholders.
(i) Xxxxxxx Energy and Granite shall exchange such certificates and
other documents as shall be reasonably required by any party in
order to complete the Closing.
5.2 Post-Closing. The following will take place subsequent to the Closing:
(a) Xxxxxxx Energy shall file a SEC Form 8-K reflecting the completion
if the Reorganization.
(b) Granite shall file an amended Form 211 with NASDAQ.
(c) The transfer agent and the Depository Trust Corporation (DTC)
shall notify stockholders and brokerage firms of the Transaction.
(d) The parties will issue such press releases and other
notifications as required.
(e) The SEC will declare Form S-4 effective.
(f) The Stock will be distributed to Granite stockholders.
6. Representations of Xxxxxxx Energy. Xxxxxxx Energy represents and
warrants as of the effective date of this Agreement and as of the Closing
date as follows:
(a)Organization of Xxxxxxx Energy; Authorizations. Xxxxxxx Energy is a
corporation duly organized, validly existing and in good standing
under the laws of Delaware, with full corporate power and authority to
execute and deliver this Agreement and to perform its obligations
hereunder. The execution, delivery and performance of this Agreement
have been duly authorized by all necessary corporate action of Xxxxxxx
Energy and this Agreement constitutes a valid and binding obligation
of Xxxxxxx Energy, enforceable against it in accordance with its
terms.
(b)Capitalization. The authorized capital stock of Xxxxxxx Energy
consists of 100,000,000 shares of Common Stock, par value $0.001 per
share, and 25,000,000 shares of preferred stock, par value $0.001 per
share. As of the Closing Date (subsequent to the proposed reverse
stock split and issuance of all shares of Common Stock at the
Closing), Xxxxxxx Energy will have a total of 842,256 post-split
shares of Common Stock issued and outstanding and no shares of
preferred stock issued and outstanding. As of the Closing Date, all of
the issued and outstanding shares of Common Stock of Xxxxxxx Energy
shall be validly issued, fully paid and non-assessable and there is
not and as of the Closing Date any warrants, options or other
agreements obligating Xxxxxxx Energy to issue any additional shares of
Common Stock or preferred stock or any of its securities of any kind
or any agreements obligating Xxxxxxx Energy to register any securities
for public sale. Xxxxxxx Energy will not issue any shares of capital
stock from the date of this Agreement through the Closing Date. The
Common Stock of Xxxxxxx Energy is presently trading on the OTC
Bulletin Board under the symbol "AGOE".
(c)No Conflict as to Xxxxxxx Energy. Neither the execution and delivery
of this Agreement nor the consummation of the asset purchase will (i)
violate any provision of the certificate of incorporation or by-laws
(or other governing instrument) of Xxxxxxx Energy or (ii) violate, or
be in conflict with, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, or
result in the termination of, or accelerate the performance required
by, or excuse performance by any person of any of its obligations
under, or cause the acceleration of the maturity of any debt or
obligation pursuant to, or result in the creation or imposition of any
encumbrance upon any property or assets of Xxxxxxx Energy or any
subsidiary under, any material agreement or commitment to which
Xxxxxxx Energy is a party or by which its property or assets is bound,
or to which any of the property or assets of Xxxxxxx Energy or any
subsidiary is subject, or (iii) violate any statute or law or any
judgment, decree, order, regulation or rule of any court or other
governmental body applicable to Xxxxxxx Energy..
(d)Consents and Approvals of Governmental Authorities. Other than as
specified in this Agreement, no consent, approval or authorization
of, or declaration, filing or registration with, any governmental body
is required to be made or obtained by Xxxxxxx Energy in connection
with the execution, delivery and performance of this Agreement by
Xxxxxxx Energy.
(e)Other Consents. Other than as specified in this Agreement, no consent
of any person is required to be obtained by Xxxxxxx Energy to the
execution, delivery and performance of this Agreement, including, but
not limited to, consents from parties to leases or other agreements or
commitments, except for any consent which the failure to obtain would
not be likely to have a material adverse effect on the business and
financial condition of Xxxxxxx Energy.
(f)Litigation. There is no action, suit, inquiry, proceeding or
investigation by or before any Court or Governmental body pending or
threatened in writing against or involving Xxxxxxx Energy which is
likely to have a material adverse effect on the business or financial
condition of Xxxxxxx Energy or which questions or challenges the
validity of this Agreement. Xxxxxxx Energy is not subject to any
judgment, order or decree that is likely to have a material adverse
effect on the business or financial condition of Xxxxxxx Energy .
(g)Absence of Certain Changes. Xxxxxxx Energy shall not have:
1. suffered the damage or destruction of any of its properties or
assets (whether or not covered by insurance) which is materially
adverse to the business or financial condition of Xxxxxxx Energy,
or made any disposition of any of its material properties or assets
other than in the ordinary course of business;
2. made any change or amendment in its certificate of incorporation or
by-laws, or other governing instruments existing on the date of
this Agreement;
3. other than the Shares or shares of Common Stock to be issued as
described in Exhibit C, issued or sold, or committed to issue or
sell, any securities or other securities, acquired, directly or
indirectly, by redemption or otherwise, any such securities,
reclassified, split-up or otherwise changed any such security, or
granted or entered into any options, warrants, calls or commitments
of any kind with respect thereto;
4. organized any new subsidiary or acquired any securities or any
equity or ownership interest in any business;
5. borrowed any funds or incurred, or assumed or become subject to,
whether directly or by way of guarantee or otherwise, any
obligation or liability with respect to any such indebtedness for
borrowed money;
6. except as provided in Section 1(h) paid, discharged or satisfied
any material claim, liability or obligation (absolute, accrued,
contingent or otherwise), other than in the ordinary course of
business;
7. except as provided in Section 1(g) prepaid any material obligation
having a maturity of more than 90 days from the date such
obligation was issued or incurred;
8. except as provided in Section 1(g) cancelled any material debts or
waived any material claims or rights, except in the ordinary course
of business;
9. disposed of or permitted to lapse any rights to the use of any
material patent or registered trademark or copyright or other
intellectual property owned or used by it;
10.granted any general increase in the compensation of officers or
employees (including any such increase pursuant to any employee
benefit plan);
11.purchased or entered into any contract or commitment to purchase
any material quantity of raw materials or supplies, or sold or
entered into any contract or commitment to sell any material
quantity of property or assets;
12.made any capital expenditures or additions to property, plant or
equipment or acquired any other property or assets;
13.written off or been required to write off any notes or accounts
receivable;
14.written down or been required to write down any inventory;
15.entered into any collective bargaining or union contract or
agreement; or
16.incurred any liability.
(h)Contracts and Commitments. Other than described in Schedule 6 (k),
Xxxxxxx Energy is not a party to any:
1. Contract or agreement involving any liability on the part of
Xxxxxxx Energy.
2. Lease of personal property;
3. Employee bonus, stock option or stock purchase, performance unit,
profit-sharing, pension, savings, retirement, health, deferred or
incentive compensation, insurance or other material employee
benefit plan (as defined in Section 2(3) of ERISA) or program for
any of the employees, former employees or retired employees of
Xxxxxxx Energy;
4. Commitment, contract or agreement that is currently expected by the
management of Xxxxxxx Energy to result in any material loss upon
completion or performance thereof;
5. Contract, agreement or commitment with any officer, employee,
agent, consultant, advisor, salesman, sales representative, value
added reseller, distributor or dealer; or
6. Employment agreement or other similar agreement.
(i)Compliance with Law. The operations of Xxxxxxx Energy have been conducted
in accordance with all applicable laws and regulations of all
governmental bodies having jurisdiction over them, except for violations
thereof which are not likely to have a material adverse effect on the
business or financial condition of Xxxxxxx Energy. Xxxxxxx Energy has not
received any notification of any asserted present or past failure by it
to comply with any such applicable laws or regulations. Xxxxxxx Energy
has all material licenses, permits, orders or approvals from the
governmental bodies required for the conduct of its business, and is not
in material violation of any such licenses, permits, orders and
approvals. All such licenses, permits, orders and approvals are in full
force and effect, and no suspension or cancellation of any thereof has
been threatened.
(j)Tax Matters.
1. Xxxxxxx Energy (a) has filed or shall file prior to Closing all
nonconsolidated and noncombined tax returns and all consolidated or
combined tax returns required to be filed through the date hereof and
will have paid any tax due through the date hereof with respect to the
time periods covered by such tax returns and shall timely pay any such
taxes required to be paid by it after the date hereof with respect to
such tax returns and shall prepare and timely file all such tax
returns required to be filed after the date hereof and through the
Closing Date and pay all taxes required to be paid by it with respect
to the periods covered by such tax returns; (b) all such tax returns
filed pursuant to clause (a) after the date hereof shall, in each
case, be prepared and filed in a manner consistent in all material
respects (including elections and accounting methods and conventions)
with such tax return most recently filed in the relevant jurisdiction
prior to the date hereof, except as otherwise required by law or
regulation. Any such tax return filed or required to be filed after
the date hereof shall not reflect any new elections or the adoption of
any new accounting methods or conventions or other similar items,
except to the extent such particular reflection or adoption is
required to comply with any law or regulation.
2. There is no (nor has there been any request for an) agreement, waiver
or consent providing for an extension of time with respect to the
assessment of any taxes attributable to Xxxxxxx Energy or its assets
or operations and no power of attorney granted by Xxxxxxx Energy with
respect to any tax matter is currently in force.
3. There is no action, suit, proceeding, investigation, audit, claim,
demand, deficiency or additional assessment in progress, pending or
threatened against or with respect to any tax attributable to Xxxxxxx
Energy or its assets or operations.
4. All amounts required to be withheld as of the Closing Date for taxes
or otherwise have been withheld and paid when due to the appropriate
agency or authority.
5. There shall be delivered or made available to Granite at or prior to
Closing true and complete copies of all Xxxxxxx Energy income tax
returns (or with respect to consolidated or combined returns, the
portion thereof) and any other tax returns requested by Granite as
may be relevant to Xxxxxxx Energy, any subsidiaries, or their assets
or operations for any and all periods ending after December 31, 2004,
or for any tax years which are subject to audit or investigation by
any taxing authority or entity.
(k)Borrowing and Guarantees. Except as provided in Section 1(h), Xxxxxxx
Energy (a) does not have any indebtedness for borrowed money, (b) is not
lending or committed to lend any money (except for advances to employees
in the ordinary course of business), and (c) is not a guarantor or surety
with respect to the obligations of any person.
7. Representations of Granite. Granite represents and warrants as follows,
as of the effective date of this Agreement and as of the Closing Date:
(a)Organization; Authorization. Granite is a corporation duly organized,
validly existing and in good standing under the laws of Nevada with full
corporate power and authority to execute and deliver this Agreement and
to perform its obligations hereunder. The execution, delivery and
performance of this Agreement have been duly authorized by all necessary
corporate action of Granite and this Agreement constitutes a valid and
binding obligation; enforceable against in accordance with its terms.
(b)Capitalization. The authorized capital stock of Granite consists of
150,000,000 shares of Common Stock, par value $.001 per share as of the
date of this Agreement, Granite has 53,040,889 shares of Common Stock
issued and outstanding. No shares have otherwise been registered under
state or federal securities laws. As of the Closing Date, all of the
issued and outstanding shares of Common Stock of Granite are validly
issued, fully paid and non-assessable and there is not and as of the
Closing Date there will not be outstanding any warrants, options or other
agreements on the part of Granite obligating Granite to issue any
additional shares of Common Stock or preferred stock or any of its
securities of any kind. Granite will not issue any shares of capital
stock from the date of this Agreement through the Closing Date.
(c)No Conflict as to Granite. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated herein
will (a) violate any provision of the articles of incorporation or
organization of Granite or (b) violate, or be in conflict with, or
constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or result in the termination of,
or accelerate the performance required by, or excuse performance by any
Person of any of its obligations under, or cause the acceleration of the
maturity of any debt or obligation pursuant to, or result in the creation
or imposition of any encumbrance upon any property or assets of Granite
under, any material agreement or commitment to which Granite, is a party
or by which any of their respective property or assets is bound, or to
which any of the property or assets of Granite is subject, or (c) violate
any statute or law or any judgment, decree, order, regulation or rule of
any court or other Governmental Body applicable to Granite except, in the
case of violations, conflicts, defaults, terminations, accelerations or
encumbrances described in clause (b) of this Section for such matters
which are not likely to have a material adverse effect on the business or
financial condition of Granite, taken as a whole.
(d)Consents and Approvals of Governmental Authorities. No consent, approval
or authorization of, or declaration, filing or registration with, any
Governmental Body is required to be made or obtained by Granite in
connection with the execution, delivery and performance of this Agreement
by Granite or the consummation of the transactions contemplated herein.
(e)Other Consents. No consent of any Person is required to be obtained by
Granite to the execution, delivery and performance of this Agreement or
the consummation of the transactions contemplated herein, including, but
not limited to, consents from parties to leases or other agreements or
commitments, except for any consent which the failure to obtain would not
be likely to have a material adverse effect on the business and financial
condition of Granite.
(f)Litigation. There is no action, suit, inquiry, proceeding or
investigation by or before any court or Governmental Body pending or
threatened in writing against or involving Granite which is likely to
have a material adverse effect on the business or financial condition of
Granite, or which would require a payment by Granite in excess of $2,000
in the aggregate or which questions or challenges the validity of this
Agreement. Granite is not subject to any judgment, order or decree that
is likely to have a material adverse effect on the business or financial
condition of Granite or which would require a payment by Granite in
excess of $50,000 in the aggregate.
(g)Absence of Certain Changes. Granite has not:
1. suffered the damage or destruction of any of its properties or assets
(whether or not covered by insurance) which is materially adverse to
the business or financial condition of Granite, or made any
disposition of any of its material properties or assets other than in
the ordinary course of business;
2. made any change or amendment in its certificate of incorporation or
by-laws, or other governing instruments existing on the date of this
Agreement, other than as contemplated by this Agreement;
3. paid, discharged or satisfied any material claim, liability or
obligation (absolute, accrued, contingent or otherwise), other than in
the ordinary course of business;
4. prepaid any material obligation having a maturity of more than 90 days
from the date such obligation was issued or incurred;
5. cancelled any material debts or waived any material claims or rights,
except in the ordinary course of business;
6. disposed of or permitted to lapse any rights to the use of any
material patent or registered trademark or copyright or other
intellectual property owned or used by it;
7. granted any general increase in the compensation of officers or
employees (including any such increase pursuant to any employee
benefit plan);
8. purchased or entered into any contract or commitment to purchase any
material quantity of raw materials or supplies, or sold or entered
into any contract or commitment to sell any material quantity of
property or assets, except (i) normal contracts or commitments for the
purchase of, and normal purchases of, raw materials or supplies, made
in the ordinary course business, (ii) normal contracts or commitments
for the sale of, and normal sales of, inventory in the ordinary course
of business, and (iii) other contracts, commitments, purchases or
sales in the ordinary course of business;
9. written off or been required to write off any notes or accounts
receivable;
10.written down or been required to write down any inventory;
11.entered into any collective bargaining or union contract or agreement;
or
(h)Compliance with Law. The operations of Granite have been conducted in
accordance with all applicable laws and regulations of all governmental
bodies having jurisdiction over them, except for violations thereof which
are not likely to have a material adverse effect on the business or
financial condition of Granite, or which would not require a payment by
Granite in excess of $50,000 in the aggregate, or which have been cured.
Granite has not received any notification of any asserted present or past
failure by it to comply with any such applicable laws or regulations.
Granite has all material licenses, permits, orders or approvals from the
Governmental Bodies required for the conduct of their businesses, and are
not in material violation of any such licenses, permits, orders and
approvals. All such licenses, permits, orders and approvals are in full
force and effect, and no suspension or cancellation of any thereof has
been threatened.
(i) Tax Matters.
1. Granite (a) has filed or shall file prior to Closing all tax returns
required to be filed through the date hereof and will have paid any
tax due through the date hereof with respect to the time periods
covered by such tax returns and shall timely pay any such taxes
required to be paid by it after the date hereof with respect to such
tax returns and shall prepare and timely file all such tax returns
required to be filed after the date hereof and through the Closing
Date and pay all taxes required to be paid by it with respect to the
periods covered by such tax returns; (a) all such tax returns filed
pursuant to clause (a) after the date hereof shall, in each case, be
prepared and filed in a manner consistent in all material respects
(including elections and accounting methods and conventions) with
each such tax return most recently filed in the relevant jurisdiction
prior to the date hereof, except as otherwise required by law or
regulation. Any such tax return filed or required to be filed after
the date hereof shall not reflect any new elections or the adoption
of any new accounting methods or conventions or other similar items,
except to the extent such particular reflection or adoption is
required to comply with any law or regulation.
2. Granite has not agreed, or been required, to make any adjustment (x)
under Section 481(a) of the Code by reason of a change in accounting
method or otherwise or (y) pursuant to any provision of the tax
Reform Act of 1986, the Revenue Act of 1987 or the Technical and
Miscellaneous Revenue Act of 1988.
3. There is no (nor has there been any request for an) agreement, waiver
or consent providing for an extension of time with respect to the
assessment of any taxes attributable to Granite or its assets or
operations and no power of attorney granted by Granite with respect
to any tax matter is currently in force.
4. There is no action, suit, proceeding, investigation, audit, claim,
demand, deficiency or additional assessment in progress, pending or
threatened against or with respect to any tax attributable to Granite
or its assets or operations.
5. All amounts required to be withheld as of the Closing Date for taxes
or otherwise have been withheld and paid when due to the appropriate
agency or authority.
6. There shall be delivered or made available to Xxxxxxx Energy at or
prior to Closing true and complete copies of all income tax returns
(or with respect to consolidated or combined returns, the portion
thereof) and any other tax returns requested by Xxxxxxx Energy as may
be relevant to Granite or its assets or operations for any and all
periods ending after December 31, 2004, or for any tax years which
are subject to audit or investigation by any taxing authority or
entity.
8. Notices.
Any notice which any of the parties hereto may desire to serve upon any
of the other parties hereto shall be in writing and shall be conclusively
deemed to have been received by the party at its address, if mailed,
postage prepaid, United States mail, registered, return receipt
requested, to the following addresses:
If to Xxxxxxx Energy: Xxxxxxx Energy, Inc.
0000 Xxxxxx Xxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxxxx Xxxxxxxxx, President
Facsimile No.: (000) 000-0000
If to Granite: Granite Energy, Inc.
000 Xxxx 000 Xxxxx
Xxxx Xxxx Xxxx, XX 00000
Attn: Xxxxxxx Xxxxxxx, President
Facsimile No.: ( 000) 000-0000
9. Successors.
This Agreement shall be binding upon and inure to the benefit of the
heirs, personal representatives and successors and assigns of the
parties.
10.Choice of Law.
This Agreement shall be construed and enforced in accordance with the
laws of the State of Nevada, and the parties submit to the exclusive
jurisdiction of the courts of Nevada in respect of all disputes arising
hereunder.
11.Counterparts.
This Agreement may be signed in one or more counterparts, all of which
taken together shall constitute an entire agreement.
12.Confidential Information.
Each of Xxxxxxx Energy and Granite hereby acknowledges and agrees that
all information disclosed to each other whether written or oral, relating
to the other's business activities, its customer names, addresses, all
operating plans, information relating to its existing services, new or
envisioned products or services and the development thereof, scientific,
engineering, or technical information relating to the others business,
marketing or product promotional material, including brochures, product
literature, plan sheets, and any and all reports generated to customers,
with regard to customers, unpublished list of names, and all information
relating to order processing, pricing, cost and quotations, and any and
all information relating to relationships with customers, is considered
confidential information, and is proprietary to, and is considered the
invaluable trade secret of such party (collectively, "Confidential
Information"). Any disclosure of any Confidential Information by any
party hereto, its employees, or representatives shall cause immediate,
substantial, and irreparable harm and loss to the other. Each party
understands that the other desires to keep such Confidential Information
in the strictest confidence, and that such party's agreement to do so is
a continuing condition of the receipt and possession of Confidential
Information, and a material provision of this agreement, and a condition
that shall survive the termination of this Agreement. Consequently, each
party shall use Confidential Information for the sole purpose of
performing its obligations as provided herein.
13. Indemnification.
Each party agrees to indemnify and hold harmless each other party from
and against all loss, liability, claim or expense (including reasonable
attorneys' fees) arising out of or connected to the indemnifying party's
acts or omissions in breach of this Agreement or wilful or grossly
negligent conduct in violation of applicable law, provide that no such
indemnification shall be available to the extent any such loss,
liability, claim or expense was caused in whole or in part by the acts or
omissions of the party seeking indemnification.
14.Public Announcement.
The parties shall make no public announcement concerning this Agreement,
their discussions or any other letters, memos or agreements between the
parties relating to this Agreement until such time as they agree to the
contents of a mutually satisfactory press release which they intend to
release on the date of execution of this Agreement. Either of the
parties, but only after reasonable consultation with the other, may make
disclosure if required under applicable law.
15. Entire Agreement.
This Agreement sets forth the entire agreement and understanding of the
parties hereto with respect to the transactions contemplated hereby, and
supersedes all prior agreements, arrangements and understandings related
to the subject matter hereof. No understanding, promise, inducement,
statement of intention, representation, warranty, covenant or condition,
written or oral, express or implied, whether by statute or otherwise, has
been made by any Party hereto which is not embodied in this Agreement or
the written statements, certificates, or other documents delivered
pursuant hereto or in connection with the transactions contemplated
hereby, and no party hereto shall be bound by or liable for any alleged
understanding, promise, inducement, statement, representation, warranty,
covenant or condition not so set forth.
16. Costs and Expenses.
Except as otherwise specifically set forth herein, each party will bear
its own expenses, including attorneys, brokers, investment bankers,
agents, and finders employed by, such party. The parties will indemnify
each other against any claims, costs, losses, expenses or liabilities
arising from any claim for commissions, finder's fees or other
compensation in connection with the transactions contemplated herein
which may be asserted by any person based on any agreement or arrangement
for payment by the other party.
17. Attorney's Fees.
Should any action be commenced between the parties to this Agreement
concerning the matters set forth in this Agreement or the right and
duties of either in relation thereto, the prevailing party in such action
shall be entitled, in addition to such other relief as may be granted, to
a reasonable sum as and for its Attorney's fees and costs.
18. Finders.
Xxxxxxx Energy represents and warrants that there are no finders or other
parties which have represented Xxxxxxx Energy in connection with this
transaction. In the event any such finders make a claim for any fee,
share issuance of other compensation in connection with the transactions
contemplated hereby, they shall be the sole responsibility of Xxxxxxx
Energy. Granite represents and warrants that there are no finders or
other parties which have represented Granite in connection with this
transaction. In the event any such finders make a claim for any fee,
share issuance of other compensation in connection with the transactions
contemplated hereby, they shall be the sole responsibility of Granite.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
XXXXXXX ENERGY, INC.
By:__________________________
Xxxxxxxx Xxxxxxxxx, President
GRANITE ENERGY, INC.
By:__________________________
S. Xxxxxxx Xxxxxxx, President
EXHIBITS:
EXHIBIT A GRANITE ASSETS TRANSFERRED
EXHIBIT B XXXXXXX ENERGY ACCOUNTS PAYABLE
EXHIBIT C XXXXXXX ENERGY COMMON STOCK TO BE ISSUED
EXHIBIT D PRO FORMA BALANCE SHEET OF XXXXXXX ENERGY
EXHIBIT A - GRANITE ASSETS TRANSFERRED
1. All the issued and outstanding Common Stock of Xxxxxxx, Inc., a Nevada
corporation.
2. 3,553,322 shares of Common Stock of Green Start, Inc., a Nevada
corporation.
EXHIBIT B - XXXXXXX ENERGY - ACCOUNTS PAYABLE
NAME $ OWED
---- ------
Anthem Village Executive Suites $ 31,057.20
DeJoya Xxxxxxxx & Company $ 31,468.10
Xxxxxxxx Xxxxxxxx & Associates $ 120,112.00
Xxxxxxxx Xxxxxxxx & Associates Escrow Acct $ 112,735.50
Xxxxx X. Xxxxxxxx $ 90,424.22
Xxxxxxx X. Xxxxx $ 13,000.00
Xxxxx Life Reinsurance Ltd. $ 10,000.00
S. Xxxxxxx Xxxxxxx $ 46,277.85
$ 455,074.87
EXHIBIT C - XXXXXXX ENERGY COMMON STOCK TO BE ISSUED
The following accounts payable of Xxxxxxx Energy and Granite in the
amounts set forth on the balance sheet of Xxxxxxx Energy attached as
Exhibit B hereto (the "Payables") shall be dealt with in the following
manner:
(i) General Accounts Payable of Xxxxxxx Energy shall be
converted into 182,030 shares of Common Stock in
exchange for full releases.
(ii) UPL shall be liquidated concurrent with the Closing. As
a creditor of Xxxxxxx Energy, UPL, shall execute a full
release in favor of Xxxxxxx Energy and Granite.
(iii) The Xxxxxxx Energy account payable in favor of Xxxxxxx
X. Xxxxxx, outside counsel to Xxxxxxx Energy, shall
remain with Xxxxxxx Energy post-Closing.
(iv) The Xxxxxxx Energy account payable in favor of Xxxxxxxx
Xxxxxxxx & Associates shall be converted into 48,045
shares of common stock of Xxxxxxx Energy in exchange
for a full release prior to the Closing.
(v) The Xxxxxxx Energy account payable in favor of Xxxxxxx
X. Xxxxx shall be converted into 5,200 shares of common
stock of Xxxxxxx Energy in exchange for full release
prior to the Closing.
(vi) The Xxxxxxx Energy account payable in favor of Xxxxx
Life Reinsurance Ltd. shall be converted 4,000 shares
of common stock of Xxxxxxx Energy in exchange for a
full release prior to Closing.
(vii) The Xxxxxxx Energy account payable in favor of Xxxxxx
Xxxxx XxXxxxx & Zhang LLP, the independent auditors of
Xxxxxxx Energy, shall remain with Xxxxxxx Energy post-
Closing.
(viii)The Xxxxxxx Energy account payable in favor of Anthem
Village Executive Suites shall remain with Xxxxxxx
Energy post-Closing and shall be payable in the form of
12,423 shares of common stock in exchange for a full
release post-Closing.
(ix) The Granite account payable in favor of American Stock
Transfer and Trust Company shall be assumed by Xxxxxxx
Energy post-Closing and shall be paid in the form of
cash.
(x) The Xxxxxxx Energy account payable in favor of De Xxxx
Xxxxxxxx & Company shall remain with Xxxxxxx Energy
post-Closing and shall be paid in the form of 12,587
shares of common stock in exchange for a full release.
(xi) The outstanding Xxxxxxx Energy accrued salaries and
related party loans shall be addressed as follows:
(A) Xxxxx X. Xxxxxxxx - outstanding
salary and loans to Xxxxxxx Energy
to be converted into 36,170 shares
of Xxxxxxx Energy common stock as
set forth in Exhibit C in exchange
for a full release prior to the
Closing.
(B) Xxxxxxxx Xxxxxxxx & Associates - which represents
outstanding salary and related party loans to/from
Xxxxxxxx X. Xxxxxxxxx shall be converted into
45,094 shares of common stock of Xxxxxxx Energy in
exchange for a full release prior to the Closing
(the related party loan was used as collateral on
a defaulted loan and will be made payable/issued
to the named party)
..
(i) The Xxxxxxx Energy outstanding loan payable in favor of
S. Xxxxxxx Xxxxxxx shall be converted into 18,511
shares of common stock of Xxxxxxx Energy in exchange
for a full release prior to Closing.
(ii) All intercompany loans between Xxxxxxx Energy and its
subsidiaries will be forgiven.
EXHIBIT D PRO FORMA BALANCE SHEET OF XXXXXXX ENERGY
Six Months ended June 30, 2008
(Unaudited)
AGOE GNGI GNGI Combined
Unaudited Unaudited Assets Unaudited
As of As of remaining year ended
with
June 30, 2008 June 30, 0000 XXXX Adjustments June 30, 2008
------------- ------------- --------- ----------- -------------
ASSETS
Current assets
Cash $ - $ 110,337 $ 110,337
Receivables - 359,209 359,209
------------- ------------- --------- ----------- -------------
Total current
assets - 469,546 - 469,546
Other current
assets
Bank
recievable 4,089 - 4,089
Advances to related party
- - -
Property, plant and equipment
Office equipment, net of
depreciation - 135,669 135,669
Vehicles, net of
depreciation - 14,139 14,139
Property and Equipment
net - 105,000 105,000
Proved reserves, net of
depletion - 546,729 546,729
Unproved reserves, net of
depletion - 6,375,246 6,375,246
Software,
net - 7,303 7,303
Other
Assets
Investment in
Greenstart - 47,995 47,995
Investment in South
Texas Oil - - -
Notes
receivable - 905,489 905,489
Deposits - 950 950
------------- ------------- --------- ----------- -------------
Total $ 4,089 $ 8,608,067 $ - $ 8,612,156
assets ============= ============= ========= =========== =============
LIABILITIES AND STOCKHOLDERS'
(DEFICIT)
Current
liabilities
Accounts payable and $ 458,783 $ 214,212 $ 672,995
accrued liabilities
Accrued payroll for
related party 108,304 - 108,304
Advances from related
parties 175,126 - 175,126
Lawsuit settlement
payable 6,000 - 6,000
Payroll
liabilities - 66,233 66,233
Other
liabilities - - -
------------- ------------- --------- ----------- -------------
Total current
liabilities 748,213 280,445 - $ 1,028,658
Convertible notes payable to
related party -
Long-term
liabilities 7,634,704 7,634,704
------------- ------------- --------- ----------- -------------
Total liabilities 748,213 7,915,150 - $ 8,663,363
Stockholders'
(deficit)
Preferred stock
(25,000,000 shares
auth & 0 shares
outstanding) - - -
Common stock; $.001 par
value;
100,000,000 shares
authorized;
9,447,137 shares
outstanding
at December 31,
2007 - 54,674 (54,674)a -
Additional paid-in
capital - 27,616,215 (27,616,215)a -
Common stock; $.001 par
value; 11,073 10,000 b 21,073
Additional paid-in
capital 13,218,256 682,917 b 13,901,173
Subscribed
stock 19,500 (19,500)a -
Accumulated deficit in
development stage (13,973,453) (26,997,472) 26,997,472 a (13,973,453)
------------- ------------- --------- ----------- -------------
Total stockholders' (deficit) (744,124) 692,917 - (51,207)
------------- ------------- --------- ----------- -------------
Total liabilities and $ 4,089 $ 8,608,067 $ - $ 8,612,156
stockholders' (deficit) ============= ============= ========= =========== =============
- - -
(a). equity does
not transfer
(b). stock issued on amerigo's books for net assets of granite
