CONTRIBUTION AND ASSIGNMENT AGREEMENT
This
CONTRIBUTION AND ASSIGNMENT AGREEMENT (this “Agreement”) is entered into as
of March 31, 2009 (the “Effective Date”), by and
between Carbon County Holdings, LLC, a Delaware limited liability company
(“CCH”), MGMT ENERGY,
INC., a Nevada corporation (“MGMT”), ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
(“▇▇▇▇▇▇▇”), the ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇. Family Trust (the “Trust”), and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
(“▇▇▇▇▇▇▇▇” and
▇▇▇▇▇▇▇▇, Baugues and the Trust are hereinafter referred to collectively at
times, as the “Investors” and individually as
an “Investor”) (CCH,
MGMT, and each of the Investors are hereinafter referred to collectively at
times, as the “Parties”
and individually as a “Party”).
RECITALS
A. WHEREAS,
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (together, “Lessor”) and CCH entered into
that certain Mining Lease on or around January 16, 2009, a copy of which is
attached hereto as Exhibit
A (the “Lease”),
whereby CCH leased from Lessor rights to certain fee and mineral interests (the
“Mineral Rights”) in
Lessor’s lands situated in Carbon County, Montana (the “Leased Premises”), as more
particularly described in the Lease.
B. WHEREAS,
pursuant to Section 23
of the Lease, CCH may assign, sublet or otherwise transfer its interests in the
Lease without notice to or the consent of Lessor.
C. WHERAS,
Investors own one hundred percent (100%) of the equity interests in
CCH.
D. WHEREAS,
Investors desire to cause CCH to contribute and assign to MGMT, and MGMT desires
to acquire from CCH, all of CCH’s right, title and interest in and to the
Mineral Rights, together with all of CCH’s rights in, to and under the Lease
(collectively with the Mineral Rights, the “Contributed
Assets”).
E. WHEREAS,
in exchange for the Contributed Assets, MGMT desires to issue to each Investor,
and each Investor desires to accept from MGMT, the number of shares of MGMT’s
common stock, par value $0.001 (the “Shares”), set forth opposite
such Investor’s name on Schedule
1 hereto.
NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Parties hereby agree as follows:
TERMS
OF AGREEMENT
1. Definitions.
1.1 “Applicable Law” means, for any
Person at any time of determination, any constitution, statute, law (including
the common law and equity), ordinance, rule, regulation or administrative
interpretation or any judgment, decree, order, policy, guidelines, notice,
communication or other requirement, governmental permit, license, certificate of
authority, order or approval to which such Person or any of its properties is
subject at such time.
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1.2 “Contract” means, with respect
to any Person, any material agreement, indenture, debt instrument, contract,
lease, license or other commitment, whether oral or written, to which such
Person is a party, or by which it is bound or to which any of its properties are
subject.
1.3 “Lien” or “Liens” means any mortgage,
security interest, pledge, hypothecation, assignment, deposit arrangement,
lease, encumbrance, lien, charge, preference, priority or other security
agreement, option, warrant, attachment, right of first refusal, preemptive
right, conversion right, put, call or other claim or right, restriction on
transfer, preferential arrangement of any kind or nature whatsoever, easement,
servitude, or transfer.
1.4 “Organizational Documents”
means, with respect to a Person, the articles or certificate of incorporation
and bylaws or articles or certificate of formation and operating agreement (or
other constituent documents) of such Person.
1.5 “Person” means any individual,
partnership (general or limited), corporation, limited liability company,
limited liability partnership, association, trust, joint venture, unincorporated
organization, or similar entity, or any government, governmental department or
agency or political subdivision thereof.
1.6 “Transaction Documents” means
this Agreement and all other agreements, documents, instruments and certificates
entered into in connection herewith or therewith and any and all exhibits and
schedules appertaining thereto.
2. Contribution and
Assignment. Subject to the terms and conditions of this
Agreement, including, but not limited to Section 4 hereof, at the
Closing (a) CCH shall contribute, assign, transfer, convey and deliver to MGMT
(the “Contribution”),
all of its right, title, interest, obligations and liabilities in, to and under
the Contributed Assets, free and clear of any and all Liens, and (b) MGMT shall
accept said assignment and shall assume and hereby agrees to undertake, observe,
perform and discharge in accordance with their terms all duties,
responsibilities, agreements, covenants and obligations of CCH, as lessee, under
the Lease arising from and after the Closing Date.
3. Issuance of
Shares. Concurrently with, and as consideration for the
Contribution and delivery of the Contributed Assets pursuant to Section 2 hereof, at the
Closing MGMT shall issue to each Investor the Shares set forth opposite such
Investor’s name on Schedule
I hereto, free and clear of any and all Liens, except for restrictions on
transfer under applicable securities laws. Promptly following the
Closing, MGMT shall cause stock certificates to be issued in the name of each
Investor representing the Shares set forth opposite such Investor’s name on
Schedule
1 hereto.
4. Closing. The
closing of each of the Contribution and the issuance and sale of the Shares, as
provided in Section 2
and Section 3 (the
“Closing”) shall take
place immediately following, and conditioned upon, the approval of the
shareholders of MGMT of this Agreement and the transactions contemplated hereby
(the “Shareholders’
Consent”); provided, that the
date and time of the Closing may be changed by the mutual agreement of the
Parties (the actual date on which the Closing occurs, the “Closing Date”). In
the event that the Shareholders’ Consent is not obtained on or prior to the date
that is ninety (90) days after the Effective Date, then any Party may terminate
this Agreement without liability therefor, by delivery of written notice to the
other Parties.
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5. Representations and
Warranties of the Parties. Each Party, severally but not
jointly, hereby represents and warrants, as of the Effective Date and as of the
Closing Date, as follows:
5.1 Authority and
Validity. It has all necessary power and authority to, and has
taken all action on its part necessary to, execute and deliver this Agreement
and each Transaction Document to which it is a party, consummate the
transactions contemplated hereby and thereby and perform its obligations
hereunder and thereunder, and no other proceedings on its part are necessary to
authorize this Agreement or any such Transaction Document to which it is a party
or the transactions contemplated hereby and thereby; provided, however, that MGMT
has not yet obtained the Shareholders’ Consent. This Agreement and
each Transaction Document that has been executed and delivered by it has been
duly and validly executed and delivered, and is a legal, valid and binding
obligation, enforceable against it in accordance with its terms, except (a) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of creditors’ rights
generally, and (b) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies.
5.2 No
Conflicts. The execution and delivery by it of this Agreement
and each Transaction Document to which it is a party, and the performance by it
of its obligations hereunder and thereunder, and the consummation of the
transactions contemplated hereby and thereby, does not with or without the
giving of notice, the lapse of time or both: (i) violate or conflict with its
Organizational Documents; (ii) materially breach or violate, or result in a
material default under, any Applicable Law applicable to it; (iii) materially
breach or result in a material default under, permit the termination of, or
permit the acceleration of the performance required by, any term or provision of
any Contract of or binding on it; or (iv) result in the creation or imposition
of any Lien on its business or assets.
5.3 Governmental and Third Party
Consents. No consent, approval, order or authorization of, or
registration, qualification, designation, declaration or filing with, any
federal, state or local governmental authority or any third party is required in
connection with the consummation of the transactions contemplated by this
Agreement, except qualification or filings under applicable securities laws as
may be required in connection with the transactions contemplated by this
Agreement and, with respect to MGMT, except for the Shareholders’
Consent.
6. Additional Representations
and Warranties of CCH and the Investors. CCH and each of the
Investors, jointly and severally, hereby represents and warrants, as of the
Effective Date and as of the Closing Date, as follows:
6.1 Good Standing and
Qualification. CCH is a limited liability company validly
existing and in good standing under the laws of the State of
Delaware.
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6.2 Title. CCH
(i) owns all right, title and interest, in and to the rights (including the
Mineral Rights) of lessee under the Lease, and has not sold, pledged,
hypothecated, or otherwise disposed of any such rights to any Person, (ii) has
good and marketable title to, or, in the case of leased property, valid
leasehold interests in, all of the Contributed Assets, and (iii) has all
requisite power and authority to, and has obtained any and all third party
consents necessary to, contribute, assign, transfer, convey and deliver to MGMT
the Contributed Assets, free and clear of any and all Liens. There
are no developments in respect of, or otherwise affecting, any of the
Contributed Assets pending or threatened that individually or in the aggregate
would materially detract from the value or use of such assets.
6.3 Lease. The
Lease is in full force and effect and is the valid and binding obligation
of CCH and Lessor thereunder. Neither CCH
nor Lessor is in breach or default, and no event has occurred which, with
or without notice or lapse of time, or both, would constitute a breach or
default, or permit termination, modification, or acceleration under, the
Lease, and no party has repudiated any provision of, or provided the other party
with any default notice under, the Lease. The consummation of the
transactions contemplated by this Agreement and the Transaction Documents will
not result in a breach of any term or provision of, or constitute (with or
without notice or lapse of time or both) a default under, the
Lease. The consummation of the transactions contemplated by this
Agreement and the Transaction Documents will not (i) give any other party a
right to cancel or terminate the Lease or a right to modify or amend the terms
thereof, or (ii) result in an acceleration of the maturity or performance of any
obligation under, or the creation of any Lien under, the Lease.
6.4 Leased
Premises. Subject to the payment of rent and the observance
and performance of the terms, covenants and conditions contained in the Lease on
the part of lessee therein to be observed and performed, MGMT may enter into and
upon and hold and enjoy the Leased Premises for the residue of the term of the
Lease for MGMT’s own use and benefit, without any interruption by CCH or by any
person whomsoever claiming through or under CCH.
7. Purchase for
Investment. Each Investor, severally but not jointly, hereby
further represents and warrants, as of the Effective Date and as of the Closing
Date, that such Investor is financially able to bear the economic risks of
acquiring the Shares and the other transactions contemplated hereby, and has no
need for liquidity in this investment. Investor has such knowledge and
experience in financial and business matters in general, and with respect to
businesses of a nature similar to the business of MGMT, so as to be capable of
evaluating the merits and risks of, and making an informed business decision
with regard to, the acquisition of the Shares. Investor is acquiring the Shares
solely for Investor’s own account and not with a view to or for resale in
connection with any distribution or public offering thereof, within the meaning
of any applicable securities laws and regulations, unless such distribution or
offering is registered under the Securities Act of 1933, as amended (the “Securities Act”) or an
exemption from such registration is available. Investor has (i) received all the
information it has deemed necessary to make an informed investment decision with
respect to the acquisition of the Shares, including the information MGMT has
filed publicly with the Securities and Exchange Commission (the “SEC”), (ii) had an opportunity
to make such investigation as Investor has desired pertaining to MGMT and the
acquisition of an interest therein, and to verify the information which is, and
has been, made available to it and (iii) had the opportunity to ask questions of
MGMT concerning its business and operations. Investor has received no
public solicitation or advertisement with respect to the offer or sale of the
Shares. Investor realizes that the Shares are “restricted securities” as that
term is defined in Rule 144 promulgated by the SEC under the Securities Act, the
resale of the Shares is restricted by federal and state securities laws and,
accordingly, the Shares must be held indefinitely unless their resale is
subsequently registered under the Securities Act or an exemption from such
registration is available for their resale. Investor understands that any resale
of the Shares by Investor must be registered under the Securities Act (and any
applicable state securities law) or be effected in circumstances that, in the
opinion of counsel for MGMT at the time, create an exemption or otherwise do not
require registration under the Securities Act (or applicable state securities
laws). Investor acknowledges and consents that certificates now or hereafter
issued for the Shares will bear a legend substantially as
follows:
4
THE
SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR QUALIFIED UNDER
ANY APPLICABLE STATE SECURITIES LAWS (THE “STATE ACTS”), HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED
EXCEPT PURSUANT TO A REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND
QUALIFICATION UNDER THE STATE ACTS OR PURSUANT TO EXEMPTIONS FROM SUCH
REGISTRATION OR QUALIFICATION REQUIREMENTS (INCLUDING, IN THE CASE OF THE
SECURITIES ACT, THE EXEMPTIONS AFFORDED BY SECTION 4(1) OF THE SECURITIES ACT
AND RULE 144 THEREUNDER). AS A PRECONDITION TO ANY SUCH TRANSFER, THE ISSUER OF
THESE SECURITIES SHALL BE FURNISHED WITH AN OPINION OF COUNSEL OPINING AS TO THE
AVAILABILITY OF EXEMPTIONS FROM SUCH REGISTRATION AND QUALIFICATION AND/OR SUCH
OTHER EVIDENCE AS MAY BE SATISFACTORY THERETO THAT ANY SUCH TRANSFER WILL NOT
VIOLATE THE SECURITIES LAWS.
Investor
understands that the Shares are being sold to Investor pursuant to the exemption
from registration and that MGMT is relying upon the representations made herein
as one of the bases for claiming the exemption.
8. Additional Representations
and Warranties of MGMT. MGMT hereby further represents and
warrants, as of the Effective Date and as of the Closing Date, as
follows:
8.1 Good Standing and
Qualification. MGMT is a corporation validly existing and in
good standing under the laws of the State of Nevada.
8.2 Valid
Issuance. The Shares, when issued and delivered in accordance
with the terms of this Agreement, will be duly and validly issued, fully paid
and non-assessable, and will be free and clear from any and all Liens, other
than those under applicable securities laws.
8.3 Exemption. Subject
in part to the truth and accuracy of each Investor’s representations set forth
in Section 7 of this
Agreement, the issuance of the Shares are exempt from the registration or
qualification requirements of any applicable state and federal securities
laws.
5
9. Indemnification.
9.1 Indemnification by
MGMT. MGMT shall indemnify, defend and hold harmless CCH and
each of the Investors and their respective parents, subsidiaries, affiliates,
agents, managers, members, officers and assigns, and each of them (each, a
“CCH Indemnified Party”)
against any losses, claims, damages or liabilities of any kind or nature, joint
or several, and all expenses related thereto (including, without limitation,
reasonable attorney’s fees) (“Claims”), to which any CCH
Indemnified Party may become subject to the extent such Claims (or actions in
respect thereof) arise out of, or are based upon, (a) any breach by MGMT of any
of its representations, warranties or covenants contained in this Agreement, or
(b) any Claims arising out of, or with respect to, the Lease, to the extent
that, with respect to clause
(b) only, the
act, omission, or circumstance giving rise to such Claims relates to the period
on or after the Closing Date.
9.2 Indemnification by CCH and
Investors.
(a) CCH
and the Investors, jointly and severally, shall indemnify, defend and hold
harmless MGMT and its parents, subsidiaries, affiliates, agents, stockholders,
directors, officers and assigns (but excluding any Investor that is an officer,
director, or affiliate of MGMT), and each of them (each, an “MGMT Indemnified Party”)
against any and all Claims to which any MGMT Indemnified Party may become
subject to the extent such Claims (or actions in respect thereof) arise out of,
or are based upon, (a) any breach by CCH or an Investor of any of its
representations or warranties contained in Section 6 of this Agreement,
(b) any breach by CCH of Section 2 of this Agreement,
or (c) any Claims arising out of, or with respect to, the Lease, to the extent
that, with respect to clause
(c) only, the act, omission, or circumstance giving rise to such Claims
relates to the period prior to the Closing Date.
(b) CCH
and each Investor, severally and not jointly, shall indemnify, defend and hold
harmless the MGMT Indemnified Parties against any and all Claims to which any
MGMT Indemnified Party may become subject to the extent such Claims (or actions
in respect thereof) arise out of, or are based upon, (a) any breach by CCH or
such Investor, as applicable, of any of its respective representations or
warranties contained in this Agreement (excluding Section 6 hereof), or (b) any
breach by CCH or such Investor, as applicable, of any of its respective
covenants contained in this Agreement (other than Section 2
hereof).
10. General.
10.1 Successors and
Assigns. Except as otherwise provided herein, the terms and
conditions of this Agreement shall inure to the benefit of, and be binding upon,
the respective successors and assigns of the Parties. Nothing in this
Agreement, express or implied, is intended to confer upon any party, other than
the Parties or any of their respective successors and assigns, any rights,
remedies, obligations, or liabilities under, or by reason of, this
Agreement.
10.2 Governing
Law. This Agreement shall be deemed to be an agreement made
under the laws of the State of Delaware and for all purposes shall be governed
by, and construed under, such laws without reference to its conflicts of law
principals.
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10.3 Facsimile;
Counterparts. This Agreement may be executed in counterparts
and delivered by facsimile or electronic signature, each of which shall be
deemed to be an enforceable original and all of which together shall constitute
one enforceable instrument.
10.4 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.
10.5 Notices. Except
as otherwise provided herein, all notices, requests, waivers and other
communications made pursuant to this Agreement shall be in writing and shall be
conclusively deemed to have been duly given (a) when hand delivered to the
other Parties, (b) when received by facsimile at the number for such Party
set forth on the signature page hereto, (c) three (3) business days after
deposit in the U.S. mail with first class or certified mail receipt requested,
postage prepaid, and addressed to the other Parties as set forth on the
signature page hereto, or (d) the next business day after deposit with a
national overnight delivery service, postage prepaid, addressed to the Parties
as set forth on the signature page hereto, with next business day delivery
guaranteed. A Party may change or supplement its addresses for the
purposes of receiving notice pursuant to this Section 10.5 by giving the
other Parties written notice of the new address in the manner set forth
above.
10.6 Amendments and
Waivers. Any term of this Agreement may be amended, only with
the written consent of all of the Parties. No provision of this
Agreement may be waived except in a writing signed by the Party granting such
waiver.
10.7 Severability. If
any provision of this Agreement is held to be unenforceable under Applicable
Law, such provision shall be excluded from this Agreement and the balance of
this Agreement shall be interpreted as if such provision were so excluded and
shall be enforceable in accordance with its terms.
10.8 Further
Assurances. Each Party shall take all further actions and
execute and deliver all further documents that are reasonably required to effect
the transactions contemplated by this Agreement.
10.9 Notice of
Assignment. A copy of this Agreement shall be sufficient
notice to all persons of the assignments contained herein and may be relied upon
by any third party.
10.10 Entire
Agreement. This Agreement, the Transaction Documents and all
other agreements referred to herein constitute the entire agreement and
understanding among the Parties with respect to the subject matter hereof, and
supersede all prior and contemporaneous negotiations and agreements, whether
oral or written, with respect to the subject matter hereof.
[Signature
Page Follows]
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IN WITNESS WHEREOF, the
Parties have executed this Agreement as of the Effective Date.
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CARBON
COUNTY HOLDINGS, LLC
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By:
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By:
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Name:
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Name:
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Title:
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Title:
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Address
for Notice:
Carbon
County Holdings, LLC
▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Facsimile:
(___) ___-____
Attention:
_____________
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Address
for Notice:
▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile:
(___) ___-____
Attention:
_____________
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▇▇▇▇
▇. ▇▇▇▇▇▇▇, ▇▇.
___________________________________________
▇▇▇▇
▇. ▇▇▇▇▇▇▇
Address
for Notice:
_____________________
_____________________
Facsimile:
(___) ___-____
Attention:
_____________
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With a copy to (which shall not constitute notice):
▇▇▇▇▇▇,
▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇
▇▇▇▇▇▇, Esq.
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THE
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇. FAMILY TRUST
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▇▇▇▇▇
▇▇▇▇▇▇▇▇
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By:
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▇▇▇▇▇
▇▇▇▇▇▇▇▇
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Name:
Title:
Trustee
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Address for
Notice:
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Address
for Notice:
_____________________
_____________________
Facsimile:
(___) ___-____
Attention:
_____________
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_____________________
_____________________
Facsimile:
(___) ___-____
Attention:
_____________
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8
SCHEDULE
1
Schedule of
Investors
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Name of Investor
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Number of Shares
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▇▇▇▇
▇. ▇▇▇▇▇▇▇, ▇▇.
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3,185,000 | |||
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The
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇. Family Trust
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3,315,000 | |||
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▇▇▇▇▇
▇▇▇▇▇▇▇▇
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5,500,000 | |||
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Total
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12,000,000 | |||
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EXHIBIT
A
LEASE
[Attached]
10