Document:

ex10-5.htm

EXHIBIT 10.5

COMMON STOCK PURCHASE AGREEMENT

 

This Common Stock Purchase Agreement (this “Agreement”) is made and entered into as of the 7th day of December, 2010 by and among Gulf United Energy, Inc., a Nevada corporation (the “Company”), Gulf United Energy de Colombia Ltd., a company organized under the laws of the British Virgin Islands and a wholly-owned subsidiary of the Company (“BVI Sub”) and John Eddie Williams, Jr., an individual (together with his estate or heirs or devisees, “Williams”), and Reese Minerals, Ltd. (“Reese,” and collectively with Williams the “Investors”).

 

 

ARTICLE I.

RECITALS

 

1.01           Company.  The Company has two authorized classes of its capital stock, that being its common stock (the “Common Stock”) and preferred stock (the “Preferred Stock”).

 

1.02           Consideration.  Each of the Parties acknowledges that each has given and received good, valuable and present consideration to support each of the obligations of the Parties under this Agreement.

 

 

ARTICLE II.

TRANSACTION TO BE EFFECTED PURSUANT TO THIS AGREEMENT

 

2.01           Issuance of Common Stock

 

(a)           Sale of Common Stock for Cash.  Subject to the terms and conditions of this Agreement, at the Closing, the Company shall issue and sell to the Investors, and the Investors shall purchase from the Company, severally and not jointly, One Million (1,000,000) shares of Common Stock, (“Investors’ Common Stock” and, for each investor, that “Investor’s Common Stock”), with each Investor issued Five Hundred Thousand (500,000) Common Stock, for an aggregate purchase price of Two Hundred Thousand Dollars ($200,000), with each Investor’s individual purchase price of One Hundred Thousand Dollars ($100,000), as set forth on the signature page hereof.

 

2.02           Determination of Purchase Price for the Investors’ Common Stock.  The Company and the Investors acknowledge that the purchase price for the Investors’ Common Stock under this Agreement is fair and reasonable and has been determined by negotiation, with each of the Parties considering, among other factors, the following:

 

(a)           the need for capital for growth;

 

(b)           the fact that the current global credit crisis has made the continued financing of the operations of the Company and its Subsidiaries very difficult; and

 

(c)           the fact that the market for the stock of the Company will not absorb a substantial volume of sales of the Company’s Common Stock at almost any price.

 

  

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ARTICLE III.

CLOSINGS

 

3.01           Purchase Agreement.  Contemporaneously with the execution of this Agreement, Investors and the Company shall have entered into that certain purchase agreement (the “Purchase Agreement”) pursuant to which, among other things, Investors will agree to purchase from the Company an aggregate principal amount of $3,800,000 debentures (collectively the “Debenture”), subject to certain terms and conditions.

 

3.02           Date and Place of Closing.  The closing (the “Closing”) hereunder with respect to the issuance and sale of the shares of Common Stock and the consummation of the related transactions contemplated hereby shall take place as of the date hereof (the “Closing Date”) at the offices of Brewer & Pritchard, P.C., 3 Riverway, Suite 1800, Houston, Texas 77056.

 

3.03           Deliveries at Closing.

 

(a)           At, or prior to, the Closing, the Company shall:

 

(i)           execute and deliver to the Company this Agreement and the other Transaction Documents.

 

(b)           At the Closing, the Investors shall:

 

(i)           deliver to the Company the purchase price for the Investors’ Common Stock pursuant to the Flow of Funds; and

 

(ii)           execute and deliver to the Company this Agreement and the other Transaction Documents.

 

3.04           Post Closing Deliveries.  The Company shall deliver to each Investor a certificate evidencing the Investor’s Common Stock in customary form and containing only the restrictive legend described in Section 5.03 below, within three (3) calendar days of the Closing Date.

 

 

ARTICLE IV.

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

4.01           Representations and Warranties of the Company.  The Company represents and warrants to the Investors as set forth in this Article IV.

 

4.02           Organization and Standing of the Company; Authority.  The Company is a corporation duly organized, validly existing and in good standing under the laws of Nevada with the power and authority to own and lease its properties (as applicable) and to carry on its business as now being conducted and is qualified and authorized to do business, in all jurisdictions in which the character of its properties or the nature of its businesses requires such qualification or authorization.   The Company is duly and validly authorized by all necessary corporate action, has full power and authority to and has taken or caused to be taken all necessary action to authorize it to execute and deliver this Agreement and the Transaction Documents, and to perform and comply with the terms, conditions, and agreements set forth herein and therein.

 

  

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4.03           Duly Issued.  Upon issuance and delivery to the Investors of the Investors’ Common Stock against payment of the purchase price therefore pursuant to this Agreement, such shares will be validly issued, fully paid and non-assessable shares of Common Stock, and will be free and clear of all liens, charges, restrictions, claims and encumbrances imposed by or through the Company.

 

4.04           No Conflict.  The execution, delivery and performance of this Agreement and the other Transaction Documents to which the Company is a party will not violate the Articles of Incorporation or Bylaws of the Company and will not violate any provision of law, or order of any court or governmental agency affecting the Company in any respect, and will not conflict with, result in a breach of the provisions of, constitute a default under any material agreement binding on the Company, or result in the imposition of any lien, charge, or encumbrance upon any assets of the Company that could have a Material Adverse Effect.  No approval or consent from any third party not already obtained is required in connection with the execution of or performance under this Agreement or the Transaction Documents.

 

4.05           Governmental Authorization: Third Party Consents.  The Company is in compliance with all (x) material contracts and (y) laws, rules or regulations, orders, judgments, writs, injunctions, decrees, determinations, awards of any applicable governmental authority and all governmental approvals.  No consent or approval of, giving of notice to, registration with, or taking of any other action in respect of any state, federal or other governmental authority or agency is required of the Company with respect to the execution, delivery and performance by the Company of its obligations under this Agreement, except for the filing of notices pursuant to applicable state securities law, which filings will be made by the time required thereby.

 

4.06           Finder’s Fees.  No Person has or will have, as a result of the issuance of Investors’ Common Stock pursuant to this Agreement, any right, interest or valid claim against or upon the Company or any of its subsidiaries for any commission, fee or other compensation as a finder or broker because of any act or omission by the Investors or their agents.

 

 

ARTICLE V.

REPRESENTATIONS AND WARRANTIES OF INVESTORS

 

5.01           Representations and Warranties of the Investors.  Each Investor, severally and not jointly, hereby represents and warrants to the Company as set forth in this Article V.

 

5.02           Authorization; Authority.  This Agreement has been duly authorized and executed by the Investor and constitutes a valid agreement binding upon the Investor, enforceable in accordance with its terms (except to the extent that such enforceability may be limited by bankruptcy or similar laws affecting creditors’ rights generally or by general equitable principles).  Investor has the full legal right, power and authority to enter into this Agreement and to perform such Investor’s obligations hereunder and thereunder upon the terms and conditions herein and therein set forth.

 

  

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5.03           Securities Not Registered.  The Investor is acquiring the Investor’s Common Stock being purchased for Investor’s own account and not with a view to or for sale in connection with the distribution thereof in violation of applicable securities laws.  Investor has been advised that the shares of the Common Stock to be issued and sold hereunder have not been registered under the Securities Act, or applicable state securities laws and that they must be held indefinitely unless the offer and sale thereof are subsequently registered under the Securities Act or any exemption from such registration is available.  Investor acknowledges and agrees that the certificates representing the shares of the Investor’s Common Stock will bear a restrictive legend in substantially the following form:

 

	
  

	
“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS.  THE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR SOLD IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES UNDER THE SECURITIES ACT OF 1933, A “NO ACTION” LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION WITH RESPECT TO SUCH OFFER FOR SALE OR SALE, COMPLIANCE WITH RULE 144 UNDER THE SECURITIES ACT OF 1933, OR AN OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.”

The Investor further acknowledges and agrees that the Company may issue appropriate “stop transfer” instructions to its transfer agent, if any, with respect to such securities and/or make appropriate notations to such effect in its own transfer records.

5.04           Investment Experience, Etc.  The Investor represents that such Investor (i) has such knowledge and experience in financial and business matters that such Investor is capable of evaluating the merits and risks of the purchase of the Investor’s Common Stock, (ii) has a net worth significantly in excess of the amount of the purchase price for the Investor’s Common Stock and is able to bear the economic risk of a complete loss on the purchase of the Investor’s Common Stock, and (iii) is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D under the Securities Act.

 

5.05           Finder’s Fees.  The Investor has not incurred any liability for commissions or other fees to any finder, broker or agent in connection with the transactions contemplated by this Agreement, except as disclosed in the Purchase Agreement.

 

ARTICLE VI.

COVENANTS OF THE COMPANY

 

Until the date of repayment of the Debenture in full the Company and BVI Sub shall comply with the covenants as set forth below:

 

6.01           Maintenance of Corporate Existence, etc.  Maintain in full force and effect its corporate existence, rights and franchises and all licenses and other rights in or to use patents, processes, licenses, trademarks, trade names or copyrights owned or possessed by it of any subsidiary and deemed by the Company or BVI Sub to be necessary to the conduct of their business.

 

  

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6.02           Accounts and Records.  Keep true records and books of account in which full, true and correct entries will be made of all dealings or transactions in relation to its business and affairs in accordance with generally accepted accounting principles applied on a consistent basis.

 

6.03           Compliance with Requirements of Government Authorities.  Duly observe and conform to all valid requirements of governmental authorities relating to the conduct of their businesses or to their properties or assets.

 

6.04           Conduct of Business.  Engage only in business consisting primarily of business conducted on the Closing Date and other businesses reasonably related thereto.

 

6.05           Compliance with Agreements.  Perform and observe all of its material obligations to the Investors, set forth in this Agreement, the Transaction Documents, and the Articles of Incorporation, Bylaws or organizational and governing documents of the Company and the BVI Sub.

 

6.06           Compliance with Transaction Documents.  Comply in all material respects with each term, condition and provision of the Articles of Incorporation, Bylaws, any other organizational and governing documents and the other Transaction Documents.

 

 

ARTICLE VII.

INDEMNIFICATION

 

7.01           Indemnification.  In addition to all other sums due hereunder or provided for in this Agreement, the Company agrees to indemnify and hold harmless Investors and its Affiliates and their officers, directors, agents, employees, subsidiaries, partners and controlling Persons (each, an “Indemnified Party”) to the fullest extent permitted by law, from and against any and all out-of-pocket losses, claims, damages, expenses (including reasonable fees, disbursements and other charges of counsel) or other liabilities (collectively, “Liabilities”) resulting from or arising out of (a) any breach of any representation or warranty, covenant or agreement of the Company in this Agreement or any of the other Transaction Documents or (b) any investigation or proceeding against the Company or any Indemnified Party and arising out of or in connection with this Agreement or any of the Transaction Documents, whether or not the transactions contemplated by this Agreement are consummated, which investigation or proceeding requires the participation of, or is commenced or filed against, any Indemnified Party because of this Agreement, any other Transaction Document or such other documents and the transactions contemplated hereby or thereby, provided, that the Company shall not be liable under this Section 7.01 to an Indemnified Party for any liabilities resulting primarily from any actions that involved the gross negligence or willful misconduct of such Indemnified Party; and provided, further, that if and to the extent that such indemnification is unenforceable for any reason, the Company shall make the maximum contribution to the payment and satisfaction of such Liabilities for which it would otherwise be liable hereunder which shall be permissible under applicable laws.  In connection with the obligation of the Company to indemnify for Liabilities as set forth above, the Company further agrees, upon presentation of appropriate invoices containing reasonable detail, to reimburse each Indemnified Party for all such Liabilities (including reasonable fees, disbursements and other charges of counsel) as they are incurred by such Indemnified Party; provided, that if an Indemnified Party is reimbursed hereunder for any Liabilities, such reimbursement of Liabilities shall be refunded to the extent it is finally judicially determined that the Liabilities in question resulted primarily from the willful misconduct or gross negligence of such Indemnified Party.  The obligations of the Company under this paragraph will survive any transfer of the Investors’ Common Stock.  In the event that the foregoing indemnity is unavailable or insufficient to hold an Indemnified Party harmless, then the Company will contribute to amounts paid or payable by such Indemnified Party in respect of such Indemnified Party’s Liabilities in such proportions as appropriately reflect the relative benefits received by and fault of the Company and such Indemnified Party in connection with the matters as to which such Liabilities relate and other equitable considerations.

 

  

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7.02           Notification.  Each Indemnified Party under this Article VII will, promptly after the receipt of notice of the commencement of any action, investigation, claim or other proceeding against such Indemnified Party in respect of which indemnity may be sought from the Company under this Article VII, notify the Company in writing of the commencement thereof.  The omission of any Indemnified Party so to notify the Company of any such action shall not relieve the Company from any liability which it may have to such Indemnified Party under this Article VII unless, and only to the extent that, such omission results in the Company’s forfeiture of substantive rights or defenses or the Company is otherwise irrevocably prejudiced in defending such proceeding.  In case any such action, claim or other proceeding shall be brought against any Indemnified Party and it shall notify the Company of the commencement thereof, the Company shall be entitled to assume the defense thereof at its own expense, with counsel satisfactory to the Company; provided, that any Indemnified Party may, at its own expense, retain separate counsel to participate in such defense.  Notwithstanding the foregoing, in any action, claim or proceeding in which both the Company, on the one hand, and an Indemnified Party, on the other hand, is, or is reasonably likely to become, a party, such Indemnified Party shall have the right to employ separate counsel at the Company’s expense and to control its own defense of such action, claim or proceeding if, (a) the Company has failed to assume the defense and employ counsel as provided herein, (b) the Company has agreed in writing to pay such fees and expenses of separate counsel or (c) in the reasonable opinion of counsel to such Indemnified Party, a conflict or likely conflict exists between the Company, on the one hand, and such Indemnified Party, on the other hand, that would make such separate representation advisable, provided, however, that the Company shall not in any event be required to pay the fees and expenses of more than one separate counsel (and if deemed necessary by such separate counsel, appropriate local counsel who shall report to such separate counsel).  The Company agrees that it will not, without the prior written consent of an Indemnified Party, settle, compromise or consent to the entry of any judgment in any pending or threatened claim, action or proceeding relating to the matters contemplated hereby (if such Indemnified Party is a party thereto or has been actually threatened to be made a party thereto) unless such settlement, compromise or consent includes an unconditional release of such Indemnified Party from all liability arising or that may arise out of such claim, action or proceeding.  The Company shall not be liable for any settlement of any claim, action or proceeding effected against an Indemnified Party without the prior written consent of the Company.  The rights accorded to Indemnified Parties hereunder shall be in addition to any rights that any Indemnified Party may have at common law, by separate agreement or otherwise.

 

 

 

 

 

 

 

 

 

  

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ARTICLE VIII.

MISCELLANEOUS

 

8.01           Governing Law.  This Agreement shall be governed by and construed in all respects by the internal laws of the State of Texas (except for the proper application of the United States federal securities laws), without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Texas or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Texas.

 

8.02           Notices, Etc.  Unless otherwise specified within a provision of this Agreement all notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is electronically or mechanically generated and kept on file by the sending party); (iii) three Business Days after deposit with the United States Mail when sent by registered or certified mail; or (iv) one Business Day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same.  The addresses and facsimile numbers for such communications shall be:

 

	  	
If to the Company:

	  
	  	  	  
	  	
Gulf United Energy, Inc.

	  
	  	
P.O Box 22165;

	  
	  	
Houston, Texas  77227-2165

	  
	  	
Attention:   John B. Connally III

	  
	
 

	  	  
	  	
With a copy to:

 

	  
	  	
Brewer & Pritchard, PC

	  
	  	
3 Riverway, Ste. 1800

	  
	  	
Houston, Texas 77056

	  
	  	
Attention:  Thomas Pritchard, Esq.

	  
	  	  	  
	  	
If to the Investors, to the addresses set forth on the signature page

	  	  	  
	  	
With a copy to:

	  
	  	  	  
	  	
Porter Hedges LLP

	  
	  	
1000 Main Street, 36th Floor

	  
	  	
Houston, Texas 77002

	  
	  	
Attention:  Ephraim del Pozo

	  
	  	  	  

 

 

  

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8.03           Amendments and Waivers.

 

(a)           This Agreement may be terminated, amended or modified, by a written instrument executed by (a) the Company, and (b) the Investors.

 

(b)           Any obligation of the Company under this Agreement may be waived or excused by the Investors.

 

8.04           Gender.  Wherever herein the singular number is used, the same shall include the plural, and the masculine gender shall include the feminine and neuter genders, and vice versa, as the context may require.

 

8.05           Certain Expenses.  Each party shall be responsible for their own costs and expenses.

 

8.06           Section and Other Headings.  The section and other headings contained in this Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.

 

8.07           Counterparts.  This Agreement may be executed simultaneously in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

8.08           Severability.  If any provision of this Agreement is held by final judgment of a court of competent jurisdiction to be invalid, illegal or unenforceable, such invalid, illegal or unenforceable provision shall be severed from the remainder of this Agreement, and the remainder of this Agreement shall be enforced.  In addition, the invalid, illegal or unenforceable provision shall be deemed to be automatically modified, and, as so modified, to be included in this Agreement, such modification being made to the minimum extent necessary to render the provision valid, legal and enforceable.  Notwithstanding the foregoing, however, if the severed or modified provision concerns all or a portion of the essential consideration to be delivered under this Agreement by one party to the other, the remaining provisions of this Agreement shall also be modified to the extent necessary to equitably adjust the parties’ respective rights and obligations hereunder.

 

8.09           Telecopy Execution and Delivery.  A facsimile, telecopy or other reproduction of this Agreement may be executed by one or more parties hereto, and an executed copy of this Agreement may be delivered by one or more parties hereto by facsimile or similar electronic transmission device pursuant to which the signature of or on behalf of such party can be seen, and such execution and delivery shall be considered valid, binding and effective for all purposes.  At the request of any party hereto, all parties hereto agree to execute an original of this Agreement as well as any facsimile, telecopy or other reproduction hereof.

 

8.10           Entire Agreement.  This Agreement and the other Transaction Documents constitute the entire agreement between the parties with respect to the subject matter hereof and thereof.  All proposals, negotiations and representations (if any) made prior, and with reference to the subject matter of this Agreement, are merged herein.  This Agreement has been negotiated by the parties and their respective counsel and will be interpreted fairly in accordance with its terms and without any strict construction in favor of or against either party.  Neither the Company nor the Investors shall be bound by any oral agreement or representation, irrespective of when made.

 

  

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8.11           Survival of Representations, Warranties and Covenants.  All of the representations and warranties made herein shall survive the execution and delivery of this Agreement, any investigation by or on behalf of the Investors, or acceptance of the shares of Common Stock and payment therefore and shall survive until such time as the shares of Common Stock have been sold or redeemed in full in cash.  All covenants and indemnities made herein shall survive in perpetuity, unless otherwise provided in this Agreement.

 

8.12           Remedies Cumulative.  No failure or delay on the part of the Company or the Investors in exercising any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy.  The remedies provided for herein are cumulative and are not exclusive of any remedies that may be available to the Company or the Investors at law, in equity or otherwise.

 

8.13           Further Assurances.  Each of the parties shall execute such documents and perform such further acts (including, without limitation, obtaining any consents, exemptions, authorizations, or other actions by, or giving any notices to, or making any filings with, any Governmental Authority or any other Person) as may be reasonably required or desirable to carry out or to perform the provisions of this Agreement or any of the Transaction Documents.

 

8.14           Disputes.  The parties agree that all disputes arising under this Agreement shall be submitted to a court of competent jurisdiction located in Houston, Harris County, Texas.

 

8.15           WAIVER OF JURY TRIAL.  EACH OF THE PARTIES WAIVES ITS RIGHTS TO TRIAL BY JURY AND AGREES TO SUBMIT ANY LAWSUIT TO TRIAL BEFORE THE COURT AND WITHOUT A JURY.

 

 

ARTICLE IX.

DEFINITIONS

 

9.01           Definitions.  Unless otherwise defined herein, capitalized terms used herein shall have the meanings ascribed to such terms in the Purchase Agreement, and in addition, unless the context requires a different meaning, the following terms have the meanings indicated:

 

“Affiliate” means, with respect to a Person, (a) any director, executive officer, general partner, managing member or other manager of such Person, (b) any other Person which directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such Person and (c) if such Person is an individual, any member of the immediate family (including parents, spouse and children) of such individual, any trust whose principal beneficiary is such individual or one or more members of such individual’s immediate family and any Person who is controlled by any such member or trust. The term “control” means (i) the power to vote more than 50% of the securities or other equity interests of a Person having ordinary voting power (on a fully diluted basis), or (ii) the possession, directly or indirectly, of any other power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.

 

  

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“Agreement” means this Common Stock Purchase Agreement, as amended, modified or supplemented from time to time.

 

“Articles of Incorporation” means the Articles of Incorporation of the Company and as in effect on the Closing Date, including, all amendments and restatements of the same.

 

“Board of Directors” shall mean the group that manages the business and affairs of the Company as described in the bylaws of the Company.

 

“Business Day” means a day, other than a Saturday or Sunday, on which banks in Houston, Texas are open for the general transaction of business.

 

“Code” means the Internal Revenue Code of 1986, as amended, or any successor statute  thereto.

 

“Commission” means the Securities and Exchange Commission or any similar agency then having jurisdiction to enforce the Securities Act.

 

“Common Stock” has the meaning set forth in Section 1.01 of this Agreement.

 

“Company” means Gulf United Energy, Inc., a Nevada corporation.

 

“GAAP” means generally accepted United States accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board that are applicable to the circumstances as of the date of determination.

 

“Governmental Authority” means the government of any nation, state, city, locality or other political subdivision of any thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing.

 

“Material Adverse Effect” means a material adverse effect upon the business, assets, operation, condition (financial or otherwise), results of operations or prospects of the Company or any Subsidiary of the Company.

 

“Person” means any individual, firm, corporation, partnership, trust, limited liability company, incorporated or unincorporated association, joint venture, joint stock company, Governmental Authority or other entity of any kind, and shall include any successor (by merger or otherwise) of such entity.

 

“Subsidiary” means, as to any Person, (i) any corporation more than fifty percent (50%) of whose stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of such corporation (irrespective of whether or not at the time stock of any class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time owned such Person and/or one or more Subsidiaries of such Person and (ii) any partnership, limited liability company, association, joint venture or other entity in which such Person and/or one or more Subsidiaries of such Person has more than a 50% equity interest at the time.

 

  

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“United States” and “U.S.” shall mean the United States of America.

 

9.02           Accounting Terms: Financial Statements.  All accounting terms used herein not expressly defined in this Agreement shall have the respective meanings given to them in accordance with sound accounting practice.  The term “sound accounting practice” shall mean such accounting practice as, in the opinion of the independent certified public accountants regularly retained by the Company, conforms at the time to GAAP applied on a consistent basis except for changes with which such accountants concur.

 

[Signature page to follow]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the day and year first above written.

GULF UNITED ENERGY, INC.

By: /s/ John B. Connally                   

John B. Connally III

Chief Executive Officer

GULF UNITED ENERGY DE COLOMBIA LTD.

By: /s/ John B. Connally                 

Name:  John B. Connally III           

Title:    Atty in fact                          

INVESTORS:

JOHN EDDIE WILLIAMS, JR.

/s/ John Eddie Williams, Jr.

Number of shares of Common Stock:  500,000

Purchase Price for Shares:  $100,000

Address for Notice:

c/o Williams Kherkher Hart Boundas, LLP

8441 Gulf Freeway, Suite 600

Houston, Texas 77017-5051

Attention:  John Eddie Williams, Jr.

Facsimile: 713.643.6226

REESE MINERALS, LTD.

By:           Reese Holdings, LLC, its general partner

By: /s/ Jordan Reese                  

Jordan W. Reese, III

Managing Manager

 

Number of shares of Common Stock:  500,000

Purchase Price for Shares:  $100,000

Address for Notice:

P.O. Box 21838

Beaumont, Texas 77720

Attention:  Jordan W. Reese, III

Facsimile: __________________

 

 

 

  

12ex10-1.htm

Exhibit 10.1

PURCHASE AGREEMENT

THIS PURCHASE AGREEMENT (“Agreement”) is made as of the 7th day of December, 2010, by and among Gulf United Energy, Inc., a Nevada corporation (“Company”), Gulf United Energy de Colombia Ltd., a company organized under the laws of the British Virgin Islands and a wholly-owned subsidiary of the Company (“BVI Sub”) and the individuals set forth on the signature page hereof (each an “Investor” and collectively, the “Investors”).

Recitals

A.           The Investors wish to purchase from the Company, and the Company wishes to sell and issue to the Investors, upon the terms and conditions stated in this Agreement debentures in the aggregate principal amount of $3,800,000 in the form attached hereto as Exhibit A (each a “Debenture” and collectively the “Debentures”), which shall be secured by the collateral pursuant to the security agreement in the form attached hereto as Exhibit B (the “Security Agreement”).

B.           In connection with entering into this Agreement and the Security Agreement and the sale of the Debentures, the Company will issue 1,000,000 shares of Common Stock (the “Shares”) for $200,000 of consideration pursuant to the stock purchase agreement in the form attached hereto as Exhibit C (the “Stock Purchase Agreement”).

C.           In connection with the execution of the Security Agreement, the Investors purchasing the Debentures hereunder shall enter into an intercreditor agreement, dated as of the date hereof, in the form attached hereto as Exhibit D (the “Intercreditor Agreement”).

D.           The Company and the Investors are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by the provisions of Regulation D (“Regulation D”), as promulgated by the U.S. Securities and Exchange Commission (the “SEC”) under the 1933 Act.

In consideration of the mutual promises made herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1.           Definitions.  In addition to those terms defined above and elsewhere in this Agreement, for the purposes of this Agreement, the following terms shall have the meanings set forth below:

“Affiliate” means, with respect to any Person, any other Person which directly or indirectly through one or more intermediaries Controls, is controlled by, or is under common control with, such Person.

“ANH” means the National Hydrocarbon Agency of Colombia.

“Approvals” mean the Colombian Approval and the Korean Approval.

  

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“Business Day” means a day, other than a Saturday or Sunday, on which banks in Houston, Texas are open for the general transaction of business.

“Closing” has the meaning set forth in Section 3.

“Closing Date” has the meaning set forth in Section 3.

“Colombian Approval” means the approval of ANH to the assignment of an undivided twelve and one-half percent (12.5%) of the right, title and interest of SK Energy in and to the License pursuant to Section 2.1(i) of the Farmout Agreement.

“Colombian Interest” means an undivided 12.5% interest in certain rights and obligations pursuant to the terms of the Farmout Agreement and related to the offer and award of Block CPO-4 by the National Hydrocarbon Agency of Colombia on December 5, 2009.

“Common Stock” means common stock of the Company, par value $0.001.

“Confidential Information” means trade secrets, confidential information and know-how (including but not limited to ideas, formulae, compositions, processes, procedures and techniques, research and development information, computer program code, performance specifications, support documentation, drawings, specifications, designs, business and marketing plans, and customer and supplier lists and related information).

“Control” (including the terms “controlling”, “controlled by” or “under common control with”) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

“Debentures” has the meaning set forth in recitals.

“Farmout Agreement” means that certain Farmout Agreement dated July 31, 2010 by and between SK Energy Co, Ltd. and BVI Sub.

“First Amendment to JOA” means that certain Amendment No. 1 to the Joint Operating Agreement for Block CPO-4 in Colombia effective on July 31, 2010 by and between SK Energy, HAEC and BVI Sub.

“Flow of Funds” means that certain Flow of Funds, dated as of the date hereof, in the form attached hereto as Exhibit E.

“GAAP” has the meaning set forth in Section 4.6.

“HAEC” means Houston American Energy Corp., a Delaware corporation.

 

  

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“Interim Financing” means the anticipated one-time equity raise by the Company raised by the engagement of brokers operating through finders fees or similar means in the anticipated amount of not more than Ten Million Dollars ($10,000,000), to be raised mainly from existing investors of the Company during December 2010.

“Invoice” means the invoice from SK Energy to the Company attached hereto as Annex A.

“JOA” means the Joint Operating Agreement dated October 1, 2009, and effective as of May 31, 2009, by and between HAEC and SK Energy, as amended by that certain First Amendment to JOA.

“Korean Approval” means the approval of the Republic of Korea to the assignment of an undivided twelve and one-half percent (12.5%) of the right, title and interest of SK Energy in and to the License pursuant to Section 2.1(ii) of the Farmout Agreement.

“License” means the Contract for Exploration and Production No. 29 of 2008 Llanos Orientales – Area Occidental Block CPO-4 (Contrato de Exploración y Producción No. 29 de 2008 Llanos Orientales – Area Occidental CPO-4) dated December 18, 2008 by and between ANH and SK Energy.

“Material Adverse Effect” means a material adverse effect on (i) the assets, liabilities, results of operations, condition (financial or otherwise), business, or prospects of the Company, BVI Sub and any other Subsidiaries taken as a whole, or (ii) the ability of the Company to perform its obligations under the Transaction Documents, the Farmout Agreement or the JOA, as applicable.

“Person” means an individual, corporation, partnership, limited liability company, trust, business trust, association, joint stock company, joint venture, sole proprietorship, unincorporated organization, governmental authority or any other form of entity not specifically listed herein.

“New Financing” means funds received by the Company, BVI Sub or any other Subsidiaries which are arranged by a third-party engaged to raise gross proceeds of at least Twenty Million Dollars ($20,000,000) in the form of equity, equity equivalent, debt financing or any other source of funds, from one or more sources and from one transaction or a series of transactions, provided that such New Financing shall not include any funds received in respect of the Interim Financing.

“Purchase Price” means, in the aggregate, $3,800,000.

“Shares” has the meaning set forth in the recitals.

“SK Energy” means SK Energy CO., Ltd., a company organized under the laws of the Republic of Korea.

 

  

3

  

“Subsidiary” of any Person means another Person, an amount of the voting securities, other voting ownership or voting partnership interests of which is sufficient to elect at least a majority of its Board of Directors or other governing body (or, if there are no such voting interests, 50% or more of the equity interests of which) is owned directly or indirectly by such first Person.

“Transaction Documents” means this Agreement, the Debentures, the Stock Purchase Agreement, the Security Agreement, the Intercreditor Agreement, the Flow of Funds and such other documents and agreements executed in connection with this Agreement, related thereto and in support thereof.

“1933 Act” means the Securities Act of 1933, as amended, or any successor statute, and the rules and regulations promulgated thereunder.

2.           Purchase and Issuance of the Debentures

2.1           Debentures.  Subject to the terms and conditions of this Agreement, on the Closing Date the Investors shall purchase, severally and not jointly, and the Company shall sell and issue to each of the Investors, a Debenture in the amount as set forth opposite each of the Investors’ name on the signature page attached hereto in exchange for the Purchase Price.

3.           Closing.  The closing (the “Closing”) of the purchase and sale of the Debentures shall take place as of the date hereof (such date being the “Closing Date”).  The Closing of the purchase and sale of the Debentures shall take place at the offices of Porter Hedges LLP, 1000 Main Street, 36th Floor, Houston, Texas 77002.

3.1           Deliveries at Closing.  At, or prior to, the Closing, the Company shall:

 

	
  

	
a)

	
execute and deliver to the Investors this Agreement and the other Transaction Documents;

 

	
  

	
b)

	
deliver a fully executed Debenture to each Investor, registered in the names and amounts of the Investors as set forth on the signature pages attached hereto to the Investors; and

	
  

	
c)

	
execute and deliver to the Investors a certificate executed by an authorized officer of the Company providing copies of (i) the Company’s Articles of Incorporation; (ii) the Company’s Bylaws and (ii) resolutions duly adopted by the sole director of the Company authorizing the Company to execute and deliver this Agreement and the other Transaction Documents and to perform its obligations hereunder and thereunder and certifying that each of the documents described clauses (i), (ii) and (iii) is a true and correct copy.

 

 

  

4

  

At the Closing, the Investors shall:

 

	
  

	
a)

	
Deliver to the Company the Purchase Price pursuant to the Flow of Funds solely to be applied as set forth therein; and

 

 

	
  

	
b)

	
Execute and deliver to the Company this Agreement and the other Transaction Documents.

	 

 

3.2           Post Closing Deliveries.  The Company and the BVI Sub shall:

 

	
  

	
a)

	
Deliver to the Investors within ten (10) calendar days of the Closing Date, a certificate executed by an authorized director of BVI Sub providing copies of (i) BVI Sub’s Certificate of Incorporation; (ii) BVI Sub’s Memorandum and Articles of Association and (ii) resolutions duly adopted by the sole director of BVI Sub authorizing BVI Sub to execute and deliver this Agreement and the other Transaction Documents to which it is a party and to perform its obligations hereunder and thereunder and certifying that each of the documents described clauses (i), (ii) and (iii) is a true and correct copy;

 

 

	
  

	
b)

	
Deliver to the Investors within ten (10) calendar days of the Closing Date, (i) a Letter of Resignation of Directors, undated and duly executed in blank by the sole director of the BVI Sub substantially in the form attached hereto as Exhibit E; (ii) an Acknowledgement and Undertaking, undated and duly executed in blank by the sole director of the BVI Sub substantially in the form attached hereto as Exhibit F; and (iii) resolutions of BVI Sub to amend the Memorandum and Articles Association of BVI Sub substantially in the form attached hereto as Exhibit G; and

 

 

	
  

	
c)

	
Deliver to the Investors within two (2) calendar days of the Closing Date, a favorable legal opinion, dated effective on or about the Closing Date, and in form and substance satisfactory to the Investors, from Brewer & Pritchard, P.C., legal counsel for the Company and BVI Sub.

 

4.           Representations and Warranties of the Company.  Each of the Company, BVI Sub and each of the other Subsidiaries hereby represents and warrants to the Investors that:

4.1           Organization, Good Standing and Qualification.  The Company is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has all requisite corporate power and authority to carry on its business as now conducted and to own its properties.  BVI Sub and each of the other Subsidiaries are duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation and has all requisite corporate power and authority to carry on its business as now conducted and to own its properties.  Each of the Company, BVI Sub and each of the other Subsidiaries is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property makes such qualification or leasing necessary unless the failure to so qualify has not had and could not reasonably be expected to have a Material Adverse Effect.

  

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4.2           Authorization.  The Company has full power and authority and has taken all requisite action on the part of the Company, its officers, directors and stockholders necessary for (i) the authorization, execution and delivery of the Transaction Documents, (ii) the authorization of the performance of all obligations of the Company hereunder or thereunder, and (iii) the authorization, issuance (or reservation for issuance) and delivery of the Debentures.  The Transaction Documents constitute the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability, relating to or affecting creditors’ rights generally.  The Company has obtained any and all consents, permits, approvals, registrations and waivers necessary or appropriate for consummation of the purchase and sale of the Debentures and the consummation of the other transactions contemplated by the Transaction Documents, all of which are in full force and effect

4.3           Valid Issuance.  The Debentures have been duly and validly authorized and, when issued and paid for pursuant to this Agreement, will be validly issued, fully paid and nonassessable, and shall be free and clear of all encumbrances and restrictions (other than those created by the Investors), except for restrictions on transfer set forth in the Transaction Documents or imposed by applicable securities laws.

4.4           Consents.  The execution, delivery and performance by the Company of the Transaction Documents and the offer, issuance and sale of the Debentures require no consent of, action by or in respect of, or filing with, any Person, governmental body, agency, or official other than filings that have been made pursuant to applicable state securities laws and post-sale filings pursuant to applicable state and federal securities laws which the Company undertakes to file within the applicable time periods.  Subject to the accuracy of the representations and warranties of the Investors set forth in Section 5 hereof, the Company has taken all action necessary to exempt (i) the issuance and sale of the Debentures and (ii) the other transactions contemplated by the Transaction Documents from the provisions of any stockholder rights plan or other “poison pill” arrangement, any anti-takeover, business combination or control share law or statute binding on the Company or to which the Company or any of its assets and properties may be subject and any provision of the Company’s Articles of Incorporation or Bylaws that is or could reasonably be expected to become applicable to the Investors as a result of the transactions contemplated hereby, including without limitation, the issuance of the Debentures and the ownership, disposition or voting of the Debentures by the Investors or the exercise of any right granted to the Investors pursuant to this Agreement or the other Transaction Documents.

4.5           No Conflict, Breach, Violation or Default.  The execution, delivery and performance of the Transaction Documents by the Company and the issuance and sale of the Debentures will not conflict with or result in a breach or violation of any of the terms and provisions of, or constitute a default under (i) the Company’s Articles of Incorporation or the Company’s Bylaws, or the organizational documents of BVI Sub or each of the other Subsidiaries, all as in effect on the date hereof, or (ii)(a) any statute, rule, regulation or order of any governmental agency or body or any court, domestic or foreign, having jurisdiction over the Company, BVI Sub or any other Subsidiary or any of their respective assets or properties, or (b) any agreement or instrument to which the Company, BVI Sub or any other Subsidiary is a party or by which the Company, BVI Sub or any other Subsidiary is bound or to which any of their respective assets or properties is subject.

  

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4.6           Financial Statements.  The Company’s financial statements set forth in its filings with the Securities and Exchange Commission present fairly, in all material respects, the consolidated financial position of the Company as of the dates shown and its consolidated results of operations and cash flows for the periods shown, and such financial statements have been prepared in conformity with United States generally accepted accounting principles applied on a consistent basis (“GAAP”).  Except as set forth in the financial statements of the Company as described in the Company’s filings with the Securities and Exchange Commission, neither the Company, nor BVI Sub, nor any other Subsidiaries has incurred any liabilities, contingent or otherwise, except those incurred in the ordinary course of business, consistent (as to amount and nature) with past practices since the date of such financial statements, none of which, individually or in the aggregate, have had or could reasonably be expected to have a Material Adverse Effect.

4.7           Judgments; litigation.  No judgment, writ, order, injunction, award or decree of or by any court, or judge, justice or magistrate, including any bankruptcy court or judge, or any order of or by any governmental authority, shall have been issued or, to the Company’s knowledge, threatened to be issued, and no action or proceeding shall have been instituted, or to the Company’s knowledge threatened to be issued, by any governmental authority, enjoining or preventing the consummation of the transactions contemplated hereby or in the other Transaction Documents.

4.8           Indebtedness.  Except as described in the Company’s filings with the Securities and Exchange Commission with an aggregate amount of $4,523,516, neither the Company, nor BVI Sub, nor any other Subsidiaries, has any indebtedness outstanding.

4.9           Colombian Interest, Farmout Agreement, JOA and License.

	
a)

	
BVI Sub is a party to the Farmout Agreement and the JOA and has a right and interest to the Colombian Interest, subject to the provisions set forth in the Farmout Agreement and the JOA;

	  	  
	
b)

	
BVI Sub has the financial and technical capability or wherewithal to meet its financial and technical obligations under the Farmout Agreement and the JOA;

	  	  
	
c)

	
No event has occurred which constitutes, or which with the giving of notice and/or lapse of time and/or a relevant determination, would constitute a contravention of, or default under, the Farmout Agreement, the JOA or the License.  There is no default under the Farmout Agreement or the JOA as of the date hereof.  No event has occurred which would have a Material Adverse Effect;

	  	  

 

 

 

  

7

  

 

	
d)

	
The First Amendment to JOA satisfies all the requirements for transfer of the Colombian Interest including without limitation, as provided in Article 12 of the JOA;

	  	  
	
e)

	
The Approvals are being diligently pursued and the Company and BVI Sub fully expect the Approvals will be received by the Cut-Off Date (as such term is defined in the Farmout Agreement); and

	  	  
	
f)

	
Upon the execution of this Agreement and the other Transaction Documents and the consummation of the transactions contemplated herein and therein, BVI Sub shall have paid in full the Invoice and shall have satisfied, in full, all Past Costs (as such term is defined in the Farmout Agreement) and shall have satisfied, in full, all of the Premium (as such term is defined in the Farmout Agreement) up to and including the date hereof.  BVI Sub has paid all On-going Costs (as such term is defined in the Farmout Agreement) that are due and payable.  To the extent the payment of the Invoice is past due, such past due payment will be received by SK Energy without any adverse effect under the Farmout Agreement or the JOA.  The Farmout Agreement and the JOA are in full force and effect and neither the Company, nor the BVI Sub has received any notice to the contrary or any notice of default thereunder.

 

5.           Representations and Warranties of the Investors.  Each Investor, severally and not jointly, hereby represents and warrants to the Company that:

5.1           Organization and Existence.  If Investor is an entity, such Investor is a validly existing corporation, limited partnership or limited liability company and has all requisite corporate, partnership or limited liability company power and authority to invest in the Debentures pursuant to this Agreement.  If Investor is a natural person, such Investor resides in the jurisdiction set forth on the signature pages affixed hereto and has all requisite authority to invest in the Debentures pursuant to this Agreement.

5.2           Authorization.  The execution, delivery and performance by Investor of the Agreement and the Transaction Documents to which Investor is a party have been duly authorized and will each constitute the valid and legally binding obligation of such Investor, enforceable against Investor in accordance with their respective terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability, relating to or affecting creditors’ rights generally.

5.3           Purchase Entirely for Own Account.  The Debentures to be received by Investor hereunder will be acquired for Investor’s own account, not as nominee or agent, and not with a view to the resale or distribution of any part thereof in violation of the 1933 Act, and such Investor has no present intention of selling, granting any participation in, or otherwise distributing the same in violation of the 1933 Act without prejudice, however, to such Investor’s right at all times to sell or otherwise dispose of all or any part of such Debentures in compliance with applicable federal and state securities laws.  Nothing contained herein shall be deemed a representation or warranty by such Investor to hold the Debentures for any period of time.  Investor is not a broker-dealer registered with the SEC under the 1934 Act or an entity engaged in a business that would require it to be so registered.

  

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5.4           Investment Experience.  Investor acknowledges that it can bear the economic risk and complete loss of its investment in the Debentures and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment contemplated hereby.

5.5           Disclosure of Information.  Investor has had an opportunity to receive all information related to the Company requested by it and to ask questions of and receive answers from the Company regarding the Company, its business and the terms and conditions of the offering of the Debentures.  Neither such inquiries nor any other due diligence investigation conducted by such Investor shall modify, amend or affect Investor’s right to rely on the Company’s representations and warranties contained in this Agreement.

5.6           Restricted Securities.  Investor understands that the Debentures are characterized as “restricted securities” under the U.S. federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under such laws and applicable regulations such securities may be resold without registration under the 1933 Act only in certain limited circumstances.  The Investor understands that the Debentures are being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and Investor’s compliance with, the representations, warranties, agreements, acknowledgments and understanding of Investor set forth herein in order to determine the availability of such exemptions and the eligibility of Investor to acquire such securities.

5.7           Legends.  It is understood that, except as provided below, certificates evidencing the Debentures may bear the following or any similar legend:

(a)           “The securities represented hereby may not be transferred unless (i) such securities have been registered for sale pursuant to the Securities Act of 1933, as amended, (ii) such securities may be sold pursuant to Rule 144, or (iii) the Company has received an opinion of counsel reasonably satisfactory to it that such transfer may lawfully be made without registration under the Securities Act of 1933 or qualification under applicable state securities laws.  Notwithstanding the foregoing, the securities may be pledged in connection with a bona fide margin account secured by the securities.”

(b)           If required by the authorities of any state in connection with the issuance of sale of the Debentures, the legend required by such state authority.

5.8           Accredited Investor.  Investor is an accredited investor as defined in Rule 501(a) of Regulation D, as amended, under the 1933 Act.

 

  

9

  

5.9           No General Advertisement.  Investor did not learn of the investment in the Debentures as a result of any public advertisement, article, notice or other communication regarding the Debentures published in any newspaper, magazine or similar media or broadcast over television, radio or internet or presented at any seminar or other general advertisement.

5.10           Brokers and Finders.  No Person will have, as a result of the transactions contemplated by the Transaction Documents, any valid right, interest or claim against or upon the Company, BVI Sub or any other Subsidiary or an Investor for any commission, fee or other compensation pursuant to any agreement, arrangement or understanding entered into by or on behalf of such Investor.

5.11           Patriot Act.  Neither Investor nor any of its Affiliates has been designated, and is not owned or controlled, by a “suspected terrorist” as defined in Executive Order 13224.  None of the cash used to fund such Investor’s portion of the Purchase Price has been, or derived from, any activity that could cause the Company to be in violation of the United States Bank Secrecy Act, the United States International Money Laundering Control Act of 1986 or the United States International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001.

6.           Covenants and Agreements of the Company.

6.1           No Conflicting Agreements.  The Company, BVI Sub and any other Subsidiaries will not take any action, enter into any agreement or make any commitment that would conflict or interfere in any material respect with the Company’s obligations to the Investor under the Transaction Documents.

6.2           Compliance with Laws.  The Company, BVI Sub and any other Subsidiaries will comply in all material respects with all applicable laws, rules, regulations, orders and decrees of all governmental authorities.

6.3           New Financing.  The Company will use its best efforts to obtain New Financing.

6.4           Colombian Interest, Farmout Agreement, JOA and License.  Until the repayment in full of the Debenture, the Company, BVI Sub and any other Subsidiaries will comply in all material respects with the terms and conditions of the Farmout Agreement and the JOA.  Until the repayment in full of the Debenture, the Company and BVI Sub shall not, without the prior written consent of the Investors, (i) sell, assign, gift, pledge or otherwise transfer any interest in the Farmout Agreement, the JOA or the Colombian Interest; (ii) enter into any contract, option or other agreement or understanding with respect to the transfer of any interest in the Farmout Agreement, the JOA or the Colombian Interest; or (iii) take any action which would adversely affect BVI Sub’s ability to perform its obligations under the Farmout Agreement, the JOA or adversely affect BVI Sub’s rights to the Colombian Interest or take any other action that will otherwise have a Material Adverse Effect.  The Company and BVI Sub shall take all reasonable action to pursue and complete the receipt of, or cause SK Energy to pursue and complete the receipt of, the Approvals.  Upon the payment of the Invoice, the Company and BVI Sub shall provide the Investors a copy of any receipt or any other documentation received from SK Energy confirming the payment of the Invoice.

  

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6.5           Other Negative Covenants.  Until the repayment in full of the Debenture, the Company, BVI Sub and any other Subsidiaries shall not, unless such transaction is approved in writing by each Investor:

a)           Sell, lease, or otherwise dispose of all or substantially all of its assets;

b)           Dissolve, liquidate, or wind up its business;

c)           Conduct its business other than in its ordinary and usual course;

d)           Merge, consolidate with another entity or otherwise sell all, or substantially all, of its ownership interests to an unrelated third-party; or

e)           Without the prior written consent of the Investors, sell any equity, equity equivalent, or debt securities to third parties (other than Investors), except for the Interim Financing and the New Financing.

6.6.           Legal Fees.  On and as of the Maturity Date (as defined in the Debenture), Company agrees to pay in full all reasonable attorney’s fees and expenses of Porter Hedges LLP, legal counsel to the Investors, accrued and invoiced up to and including the Maturity Date.

7.           Survival and Indemnification.

7.1  Survival.  All of the representations and warranties made herein shall survive the execution and delivery of this Agreement, any investigation by or on behalf of the Investor, or acceptance of the Debenture and the Shares and payment therefore and shall survive until such time as the Debentures and Shares have been sold or redeemed in full in cash.  All covenants and indemnities made herein shall survive in perpetuity, unless otherwise provided in this Agreement.

7.2  Indemnification.  The Company agrees to indemnify and hold harmless the Investors and their Affiliates and their respective directors, officers, employees, representatives, counsels and agents from and against any and all losses, actions, proceedings, claims, damages, liabilities and expenses (including without limitation reasonable attorney fees and disbursements and other expenses incurred in connection with investigating, preparing or defending any action, claim or proceeding, pending or threatened and the costs of enforcement thereof) to which such Person may become subject as a result of any breach of representation, warranty, covenant or agreement made by or to be performed on the part of the Company under the Transaction Documents, and will reimburse any such Person for all such amounts as they are incurred by such Person unless such action is based upon a breach of Investor’s representations, warranties or covenants under the Transaction Documents which causes a Material Adverse Effect on the Company or any conduct by Investors which constitutes fraud, gross negligence, willful misconduct or malfeasance related to the transactions contemplated by the Transaction Documents.  Notwithstanding the foregoing, the Company shall only indemnify an Investor in an amount not exceeding the Purchase Price.

  

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7.3  Conduct of Indemnification Proceedings.  Promptly after receipt by any Person (the “Indemnified Person”) of notice of any demand, claim or circumstances which would or might give rise to a claim or the commencement of any action, proceeding or investigation in respect of which indemnity may be sought pursuant to Section 7.2, such Indemnified Person shall promptly notify the Company in writing and the Company shall assume the defense thereof, including the employment of counsel reasonably satisfactory to such Indemnified Person, and shall assume the payment of all fees and expenses; provided, however, that the failure of any Indemnified Person so to notify the Company shall not relieve the Company of its obligations hereunder except to the extent that the Company is materially prejudiced by such failure to notify.  In any such proceeding, any Indemnified Person shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Person unless: (i) the Company and the Indemnified Person shall have mutually agreed to the retention of such counsel; or (ii) in the reasonable judgment of counsel to such Indemnified Person representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them.  The Company shall not be liable for any settlement of any proceeding effected without its written consent, which consent shall not be unreasonably withheld, but if settled with such consent, or if there be a final judgment for the plaintiff, the Company shall indemnify and hold harmless such Indemnified Person from and against any loss or liability (to the extent stated above) by reason of such settlement or judgment.  Without the prior written consent of the Indemnified Person, which consent shall not be unreasonably withheld, the Company shall not effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Person is or could have been a party and indemnity could have been sought hereunder by such Indemnified Party, unless such settlement includes an unconditional release of such Indemnified Person from all liability arising out of such proceeding.

8.           Miscellaneous.

8.1           Successors and Assigns.  This Agreement may not be assigned by a party hereto without the prior written consent of the Company or the Investor, as applicable, provided, however, that an Investor may assign its rights and delegate its duties hereunder in whole or in part to an Affiliate or to a third party acquiring some or all of its Debentures in a private transaction without the prior written consent of the Company, after notice duly given by Investor to the Company provided, that no such assignment or obligation shall affect the obligations of Investor hereunder.  The provisions of this Agreement shall inure to the benefit of and be binding upon the respective permitted successors and assigns of the parties.  Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

8.2           Counterparts; Faxes.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.  This Agreement may also be executed via facsimile, which shall be deemed an original.

  

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8.3           Titles and Subtitles.  The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

8.4           Notices.  Unless otherwise provided, any notice required or permitted under this Agreement shall be given in writing and shall be deemed effectively given as hereinafter described (i) if given by personal delivery, then such notice shall be deemed given upon such delivery, (ii) if given by telex or telecopier, then such notice shall be deemed given upon receipt of confirmation of complete transmittal, (iii) if given by mail, then such notice shall be deemed given upon the earlier of (A) receipt of such notice by the recipient or (B) three days after such notice is deposited in first class mail, postage prepaid, and (iv) if given by an internationally recognized overnight air courier, then such notice shall be deemed given one Business Day after delivery to such carrier.  All notices shall be addressed to the party to be notified at the address as follows, or at such other address as such party may designate by ten days’ advance written notice to the other party:

	  	
If to the Company:

	  	  
	  	
Gulf United Energy, Inc.

	  	
P.O Box 22165;

	  	
Houston, Texas  77227-2165

	  	
Attention:   John B. Connally III

	  	  
	  	
With a copy to:

	  	  
	  	
Brewer & Pritchard, PC

	  	
3 Riverway, Ste. 1800

	  	
Houston, Texas 77056

	  	
Attention:  Thomas Pritchard, Esq.

	  	  
	  	
If to the Investors, to the addresses set forth on the signature page.

	  	  
	  	
With a copy to:

	  	  
	  	
Porter Hedges LLP

	  	
1000 Main Street, 36th Floor

	  	
Houston, Texas 77002

	  	
Attention:  Ephraim del Pozo

8.5           Expenses.  The parties hereto shall pay their own costs and expenses in connection herewith.  In the event that legal proceedings are commenced by any party to this Agreement against another party to this Agreement in connection with this Agreement or the other Transaction Documents, the party or parties which do not prevail in such proceedings shall severally, but not jointly, pay their pro rata share of the reasonable attorneys’ fees and other reasonable out-of-pocket costs and expenses incurred by the prevailing party in such proceedings.

  

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8.6           Amendments and Waivers.  Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the Investor.  Any amendment or waiver effected in accordance with this paragraph shall be binding upon each holder of any Debentures purchased under this Agreement at the time outstanding, each future holder of all such Debentures, and the Company.

8.7           Publicity.  Except as required pursuant to any U.S. law, regulation, or order, no public release or announcement concerning the transactions contemplated hereby shall be issued by the Company or the Investors without the prior consent of the Company or the Investors.

8.8           Severability.  Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof but shall be interpreted as if it were written so as to be enforceable to the maximum extent permitted by applicable law, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.  To the extent permitted by applicable law, the parties hereby waive any provision of law which renders any provision hereof prohibited or unenforceable in any respect.

8.9           Entire Agreement.  THIS AGREEMENT, INCLUDING THE EXHIBITS AND THE OTHER TRANSACTION DOCUMENTS CONSTITUTE THE ENTIRE AGREEMENT AMONG THE PARTIES HEREOF WITH RESPECT TO THE SUBJECT MATTER HEREOF AND THEREOF AND SUPERSEDE ALL PRIOR AGREEMENTS AND UNDERSTANDINGS, BOTH ORAL AND WRITTEN, BETWEEN THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF AND THEREOF.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

8.10           Further Assurances.  The parties shall execute and deliver all such further instruments and documents and take all such other actions as may reasonably be required to carry out the transactions contemplated hereby and to evidence the fulfillment of the agreements herein contained.

8.11           Governing Law; Consent to Jurisdiction; Waiver of Jury Trial.  This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of Texas without regard to the choice of law principles thereof.  Each of the parties hereto irrevocably submits to the exclusive jurisdiction of the courts of the State of Texas located in Harris County and the United States District Court for the Southern District of Texas for the purpose of any suit, action, proceeding or judgment relating to or arising out of this Agreement and the transactions contemplated hereby.  Service of process in connection with any such suit, action or proceeding may be served on each party hereto anywhere in the world by the same methods as are specified for the giving of notices under this Agreement.  Each of the parties hereto irrevocably consents to the jurisdiction of any such court in any such suit, action or proceeding and to the laying of venue in such court.  Each party hereto irrevocably waives any objection to the laying of venue of any such suit, action or proceeding brought in such courts and irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.

 

  

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                      8.12           Remedies Cumulative.  No failure or delay on the part of the Company or the Investor in exercising any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy.  The remedies provided for herein are cumulative and are not exclusive of any remedies that may be available to the Company or the Investor at law, in equity or otherwise.

 

[Signature page follows]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

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IN WITNESS WHEREOF, the parties have executed this Agreement or caused their duly authorized officers to execute this Agreement as of the date first above written.

	
The Company:

	
GULF UNITED ENERGY, INC.

	  	  
	  	  
	  	
By: /s/ John B. Connally

	  	
Name:  John B. Connally III

	  	
Title:    Chief Executive Officer

	  	  
	
BVI Sub:

	
GULF UNITED ENERGY DE COLOMBIA LTD.

	  	  
	  	
By: /s/ John B. Connally

	  	
Name:  John B. Connally III

	  	
Title:    Atty in fact

	  	  
	
Investor #1:

	
JOHN EDDIE WILLIAMS, JR.

	  	  
	  	
/s/ John Eddie Williams

	  	  
	  	
Purchase Price:  $1,900,000

	  	
Principal Amount of Debenture:  $1,900,000

	  	  
	  	
Address for Notice:

	  	
c/o Williams Kherkher Hart Boundas, LLP

	  	
8441 Gulf Freeway, Suite 600

	  	
Houston, Texas 77017-5051

	  	
Attention:  John Eddie Williams, Jr.

	  	
Facsimile: 713.643.6226

	  	  
	
Investor #2:

	
REESE MINERALS, LTD.

	  	
By: Reese Holdings, LLC, its general partner

	  	  
	  	
By: /s/ Jordan Reese, III

	  	
Jordan W. Reese, III

	  	
Managing Manager

	  	  
	  	
Purchase Price:  $1,900,000

	  	
Principal Amount of Debenture:  $1,900,000

	  	  
	  	
Address for Notice:

	  	
P.O. Box 21838

	  	
Beaumont, Texas 77720

	  	
Attention:  Jordan W. Reese, III

	  	
Facsimile: __________________

 

Signature Page to Purchase Agreement

 

  

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