CONTRIBUTION AGREEMENT
This
CONTRIBUTION AGREEMENT (“AGREEMENT”) is entered into as of February 1, 2007
by and among GOLDRANGE RESOURCES, INC., a Nevada corporation (“Company”), JMT
RESOURCES, LTD., a Texas limited partnership (“JMT”), REO ENERGY, LTD., a Texas
limited partnership (“REO”), and BENCO OPERATING, INC., a Texas corporation
(“BENCO”) (JMT, REO and BENCO shall sometimes be referred to herein individually
as a “CONTRIBUTOR” and collectively as the “CONTRIBUTORS”).
WHEREAS,
JMT, REO and BENCO have agreed to contribute certain assets and property to
the
Company in exchange for shares of capital stock of the Company (the
“SHARES”);
WHEREAS,
JMT desires to contribute, transfer and assign to the Company all right, title
and interest in and to those assets listed on Exhibit
A
hereto
in exchange for an aggregate of 15,822,750 shares of common stock, par value
$0.001 per share, of the Company (“COMMON STOCK”) pursuant to Section 351 of the
Internal Revenue Code of 1986, as amended (the “CODE”);
WHEREAS,
REO desires to contribute, transfer and assign to the Company all right, title
and interest in and to those assets listed on Exhibit
B
hereto
in exchange for an aggregate of 22,855,500 shares of Common Stock of the Company
pursuant to Section 351 of the Code;
WHEREAS,
BENCO desires to contribute, transfer and assign to the Company all right,
title
and interest in and to those assets listed on Exhibit
C
hereto
in exchange for an aggregate of 16,041,750 shares of Common Stock of the Company
pursuant to Section 351 of the Code;
WHEREAS,
prior to the execution of this Agreement and the contribution of the assets
pursuant hereto, the Company has received an aggregate of 18,820,690 shares
of
its Common Stock from certain of its stockholders for return to the treasury
and
for cancellation, which shares are no longer outstanding, and the Company has
issued and outstanding an aggregate of 13,379,310 shares of its Common Stock
(before taking into effect the issuance of shares pursuant to this
Agreement);
WHEREAS,
the contributions pursuant to this Agreement and the exchange pursuant to the
Agreement and the private placement transaction are part of a plan under Section
351 of the Internal Revenue Code of 1986, as amended, and are intended to close
concurrently; and
WHEREAS,
the parties desire to enter into this Agreement with respect to the assets
and
property being contributed and assigned to the Company by JMT, REO and BENCO
and
the Company desires to accept such contribution and assignment, on the terms
set
forth in this Agreement.
NOW,
THEREFORE, in consideration of the foregoing and the mutual covenants and
conditions set forth below, and for other good and valuable consideration,
the
receipt and sufficiency of which is hereby acknowledged, the parties to this
Agreement agree as follows:
1. DEFINITIONS.For
purposes of this Agreement, except as otherwise expressly provided or unless
the
context otherwise requires, the terms defined in this Section 1.1 have the
meaning herein and assigned to them in the capitalized terms defined by
inclusion in quotation marks and parenthesis elsewhere in the Agreement have
the
meaning so ascribed to them.
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10.1 -
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1.1. “Acquired
Assets” or “Assets” means the Properties, the Related Rights, the Related
Assets, the Related Records, the Related Equity Interests, the Current Assets
and other Assets of Contributors.
1.2. “Agreement”
means this Agreement to contribute assets.
1.3. “Basic
Documents” means all of the oil, gas and other mineral leases, assignments of
other interests which comprise the Properties and all contractually binding
arrangements to which the Properties may be subject and which will be binding
on
the Properties or the Company after the Closing (including without limitation,
overriding royalty assignments, farmout and farmin agreements, option
agreements, forced pooling orders, assignments of production payments, unit
agreements, and joint operating agreements.
1.4. “Closing
Date” means 10:00 a.m., California time, February 2, 2007, or subject to
Section 3.2 such other date as mutually agreed to by the parties hereto.
1.5. “Closing”
means the closing of the transactions contemplated by this Agreement on the
closing day at the offices of Xxxxxxxxx Xxxxxxx, 000 Xxxx Xxxxxx Xxxxx, Xxxxx
0000, Xxxxx Xxxx, Xxxxxxxxxx, or at such other places mutually agreed to by
the
parties hereto.
1.6. “Current
Assets” means all cash, inventories, accounts and notes receivable, prepaid
expenses, other current assets of Contributors as of the Closing
Date.
1.7. “Developed
Leases” means those leases held by actual, constructive or allocated
production.
1.8. “Effective
Date” means the same date as the Closing Date.
1.9. “General
Assignment” means the assignment and xxxx of sale conveying to the Company all
the Acquired Assets.
1.10. “Producing
Properties” means Developed Leases to the extent included as shown on Producing
Properties.
1.11. “Properties”
means all of the oil, gas and other mineral properties, rights and undivided
interests, including but not limited to leasehold, fee, mineral, royalty and
overriding royalty interests, payments out of production and other rights,
including contractual rights to production and contractual rights for providing
for the acquisition or earning of any such interest, owned by Contributors
in
whole or in part, whether directly or indirectly, as set forth in the lease
list.
1.12. “Related
Assets” means all the real, personal and mixed property located on the
Properties or used in operation thereof, including but not limited to those
interests and items which are owned by Contributors, including, without
limitation, xxxxx, well equipment, casings, tanks, crude oil, tubing, pumps,
motors, fixtures, machinery and other equipment, and all other improvements
using the operation thereof.
1.13. “Related
Records” means all the files, records and data relating to the Acquired Assets,
including without limitation, title records (including abstracts of title and
title curative documents), computer software and related contracts,
correspondence, geological, geophysical and seismic records, and all related
matters, and tax returns and related work papers and financial statements of
the
Contributors.
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10.1 -
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1.14. “Related
Rights” means:
(a) (i)
all
rights, privileges, benefits and powers (including without limitation, permits,
licenses, servitudes, easements and rights of way) conferred upon the
Contributors with respect to the use and occupation of the surface of, and
the
subsurface depths under, the land covered by and benefiting its Properties
which
may be necessary, convenient or incidental to the possession and enjoyment
of
the interests; (ii) all rights in respect of any pooled or unitized acreage
by
virtue of any Property being a part thereof, including all production from
the
pool or unit allocated to any such Property; (iii) all rights, options, titles
and interests of Contributors granting Contributors the right to obtain or
otherwise earn interests with respect to its Properties whether by drilling
xxxxx, causing xxxxx to be drilled, payment of money or otherwise; (iv) all
tenements, herediments and appurtenances belonging to such
Properties;
(b) all
orders, gas purchase and sale contracts, pre-purchase and sale agreements,
subsurface leases, farmin agreements, farmout agreements, acreage contribution
agreements, operating agreements, processing agreements, options, leases of
equipment or facilities and other contracts, agreements and rights which are
owned by Contributors in whole or in part and are (i) appurtenant to the
Properties, or (ii) used or held for use in connection with the ownership or
operation of the Properties or with the production, sale or disposal of water,
hydrocarbons or associated substances.
1.15. “Working
Interest” means the operating interests under an oil and gas lease and when used
in the plural, the aggregate of all such interests.
2. CONTRIBUTION
OF ASSETS; ASSUMPTION OF LIABILITIES
2.1. Contribution
Of Assets By JMT.
At the
Closing, JMT shall grant, sell, convey, transfer, assign, release and deliver
to
the Company all right, title and interest in and to the Acquired Assets set
forth on Exhibit
A
hereto,
to have and hold the same unto itself, its successors and assigns forever,
and
the Company shall accept such grant, sale, conveyance, etc.
2.2. Contribution
of Assets by REO.
At the
Closing, REO shall grant, sell, convey, transfer, assign, release and deliver
to
the Company all right, title and interest in and to the Acquired Assets set
forth on Exhibit
B
hereto,
to have and hold the same unto itself, its successors and assigns forever,
and
the Company shall accept such grant, sale, conveyance, etc.
2.3. Contribution
of Assets by BENCO.
At the
Closing, BENCO shall grant, sell, convey, transfer, assign, release and deliver
to the Company all right, title and interest in and to the Acquired Assets
forth
on Exhibit
C
hereto,
to have and hold the same unto itself, its successors and assigns forever,
and
the Company shall accept such grant, sale, conveyance, etc.
2.4. Assumption
of Liabilities by the Company.
At the
Closing, Contributors shall transfer, assign and delegate to the Company all
of
the liabilities set forth on Schedule 2.4
hereto
(the “Liabilities”), and the Company shall accept such transfer, assignment and
delegation and assume and undertake to become liable for such Liabilities and
agree to faithfully pay, perform and discharge such Liabilities when due. The
Company further agrees that it shall indemnify, defend and hold harmless
Contributors, their affiliates, agents, officers, directors and employees from
and against any and all losses, damages, liabilities expenses, costs,
assessments and taxes (including, without limitation, interest, penalties and
attorneys' fees) arising from or in connection with any debts, liabilities,
obligations or contracts assumed under this Agreement.
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3. ISSUANCE
OF SHARES; ITEMS TO BE DELIVERED AT CLOSING
3.1. Issuance
of Shares.
Subject
to the terms and conditions hereof, at the Closing (as hereinafter defined)
the
Company agrees to issue, in consideration for the assets and property
contributed by the respective parties pursuant to Section 1.1, Section 1.2
and
Section 1.3 that number of shares of the Company’s Common Stock as
follows:
|
Name
|
Number
of Shares
|
|
JMT
|
15,822,750
shares of Common Stock
|
|
REO
|
22,885,500
shares of Common Stock
|
|
BENCO
|
16,041,750
shares of Common Stock
|
|
Total
|
54,750,000
shares of Common Stock
|
3.2. Closing
Date.
The
issuance of the Common Stock, the contribution of assets and property, and
the
other transactions contemplated hereunder (the “CLOSING”) shall take place at
the offices of Xxxxxxxxx Xxxxxxx, LLP at 000 Xxxx Xxxxxx Xxxxx, Xxxxx 0000,
Xxxxx Xxxx, Xxxxxxxxxx 00000 on February 2, 2007, or at such other time and
place upon which the Contributors shall agree.
3.3. Delivery
of Shares of Common Stock.
At the
Closing, the Company shall issue and deliver to each Contributor one or more
certificates representing the shares of Common Stock in consideration for the
contribution of the assets and property set forth herein. Such certificate
or
certificates evidencing the Common Stock shall be registered in the name of
the
applicable Contributor on the books and records of Company.
3.4. Condition
to Closing.
The
obligations of the parties to contribute assets or issue shares and to take
any
other actions required to be taken by the parties hereto shall be subject to,
and contingent upon, the closing of the Private Placement.
3.5. Items
to be Delivered at the Closing.
(a) JMT
Assets. JMT shall deliver the Assets listed on Exhibit
A
hereto,
an Assignment and Assumption Agreement evidencing the transfer of such Assets,
and all other Basic Documents or instruments of assignment, transfer, or
conveyance, in each case dated as of the date of this Agreement, as the
Contributors and the Company and their respective counsels shall reasonably
deem
necessary or appropriate to vest in or confirm title to the contributed Assets.
Each stock certificate shall be duly endorsed or shall be accompanied by an
executed stock power in favor of the Company.
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(b) REO
Assets. REO shall deliver the Assets listed on Exhibit
B
hereto,
an Assignment and Assumption Agreement evidencing the transfer of such assets,
and all other Basic Documents or instruments of assignment, transfer, or
conveyance, in each case dated as of the date of this Agreement, as the
Contributors and the Company and their respective counsels shall reasonably
deem
necessary or appropriate to vest in or confirm title to the contributed Assets.
Each stock certificate shall be duly endorsed or shall be accompanied by an
executed stock power in favor of the Company.
(c) BENCO
Assets. BENCO shall deliver the assets listed on Exhibit
C
hereto,
an Assignment and Assumption Agreement evidencing the transfer of such Assets,
and all other Basic Documents or instruments of assignment, transfer, or
conveyance, in each case dated as of the date of this Agreement, as the
Contributors and the Company and their respective counsels shall reasonably
deem
necessary or appropriate to vest in or confirm title to the contributed Assets.
Each stock certificate shall be duly endorsed or shall be accompanied by an
executed stock power in favor of the Company.
(d) Company
Deliverables. The Company shall deliver (i) a certified copy of the Articles
of
Incorporation of the Company filed with the Secretary of State of the State
of
Nevada and a certificate of good standing from the Secretary of State of the
State of Nevada and each jurisdiction in which the Company is duly qualified
to
transact business, in each case, dated within 10 days of the Closing; (ii)
all
minute books, stock books, ledgers and registers, if any, and other records
relating to the organization, ownership and maintenance of the Company; (iii)
all books and records of the Company, including, without limitation, all work
papers and other backup materials used in the preparation of the Company’s
federal, state and local tax returns for each of the Company’s last five (5)
fiscal years; and (iv) a copy of the bylaws of the Company certified by the
secretary of the Company.
4. TITLE
MATTERS
4.1. General
Access.
Prior
to the execution hereof, Contributors have granted the Company access to certain
of its records. Until Closing, Contributors will, except to the extent that
Contributors are prohibited therefrom by any agreement or contract to which
it
is a party (i) give to the Company and its representatives (such representatives
to include consultants, other attorneys and other advisors of the Company)
full
access to all the Properties, the Related Assets and the Related Records, as
well as all of the offices and personnel of Contributors and any other document
pertaining to the Acquired Assets, including without limitation, all abstracts
of title, lease files, unit files, production marketing files, title policies,
title opinions, title records and files which Contributors may have (or have
access to) relating in any way to the Properties, the past or present operation
thereof and the marketing of production therefrom; (ii) use reasonable efforts
to obtain and submit to the Company or its representatives as promptly as
practical, such abstracts, title reports, status reports, certificates of title,
certificates of facts and other evidence of title covering the Properties as
the
Company may reasonably request; (iii) furnish to the Company all other
information with respect to the Acquired Assets as the Company may from time
to
time reasonably request; and, (iv) authorize the Company and its representatives
to consult with attorneys, abstract companies and other consultants or
independent contractors of the Contributors concerning title related
matters.
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4.2. Covenants
Relating to Title. From and after the date hereof and until the Closing,
Contributors covenant and agree to (i) use reasonable efforts to provide the
Company with a listing of all consents, approvals, waivers and agreements of
all
other parties and governmental authorities which are necessary to the
consummation of the transactions provided for herein (including without
limitation, approvals of the assignment of leases), to the assignment and
transfer to the Company and for the Company to own (except in a case of
Properties operated by others than the Contributors under agreements existing
as
of the Effective Date) to operate the Properties; (ii) use reasonable efforts
to
make all filings which may be made (and to record all instruments that may
be
recorded), with respect to the Properties, in (x) the Bureau of Land Management
Records and (y) the records of the respective counties in which the Properties
are situated, in order that the records maintained by the Bureau of Land
Management and the real property records of such counties shall accurately
reflect Contributors’ current interest in the Properties, including those
interests consisting of all assignments due to Contributors but not yet made
to
Contributors; and (iii) keep in full force and effect insurance comparable
in
amount and scope to coverage that is now maintained by
Contributors.
4.3. Marketable
Title. The parties acknowledge that there are certain assignments of
interests which will be received by Contributors after execution of this
Agreement, which interests are to be included in the Acquired Assets to be
transferred to the Company hereunder. Likewise, pursuant to the terms hereof,
certain assignments of interests affecting the Properties may be made by
Contributors to third parties prior to the Closing, as allowed. The title
warranties of Contributors hereunder, and the documents transferring title
to
the Company at the Closing, shall be applicable after taking into account such
assignments.
4.4. Notice
of Title Defect.
(a) The
Company agrees, to use its reasonable efforts to identify Title Defects (“Title
Defects”) and shall, upon identifying any Title Defects, promptly notify
Contributors of the same; provided, however, that Company may, but is not
required to cure any such Title Defect prior to notifying Contributors. No
later
than ninety (90) calendar days after the Closing, Company shall have identified
in writing for Contributors each Title Defect. At the time Company gives notice
of an uncured Title Defect to Contributors, Company shall deliver to
Contributors all files and other related information and data developed by
the
Company in connection with its curative efforts reasonably related thereto.
(b) Contributors
agree, to use their reasonable efforts to cure each Title Defect so as to render
the title to the respective Property “defensible” which is defined as entitling
Contributors to receive from the Producing Property not less than the interests
shown in the applicable Assignments. Contributors shall promptly deliver to
the
Company written notice of all Title Defects which Contributors have cured and
written notice with respect to all Title Defects not cured. If the Company
advises Contributors of Title Defects, Contributors shall have thirty (30)
days
to cure the Title Defects. If Contributors fail to cure such Title Defects
the
Company may, at its option:
(i) waive
such Title Defects and proceed with the terms and provisions of this
Agreement;
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(ii) accept
title to the Title Defect acreage as represented by Contributors, pursuant
to
Contributors’ written agreement of indemnity in which event Contributors shall
agree to indemnify and hold Company harmless for any loss or damage sustained
by
Company as a result of the existence of such Title Defect (provided, however,
that Contributors’ liability under such indemnity shall be limited to the
portion of the purchase price allocated to such Title Defect.
5. CONSENTS.
5.1. Consents
of Lessors.
Consents of Lessors. Schedule 5.1 contains a list of all leases which require,
as a condition of transfer of Lessee’s interest thereunder, consents of Lessors.
To the best of Contributors’ knowledge, Schedule 5.1 represents a complete and
accurate record of all leases requiring such consent of Lessors. If at the
Closing, these consents which are required in order not to render an assignment
void have not been secured and delivered to the Company by Contributors, the
failure to obtain and deliver any such consents shall be deemed a Title Defect
for such leases as of Closing.
5.2. Contractual
Restraints on Assignments.
Schedule 5.2 contains a list of all contractual restraints on assignments of
executory contracts including, but not limited to farmins, farmouts, or
agreements or options for earning of acreage affecting the Properties. As soon
as practical after Closing, the Contributors shall notify each party to such
contracts of the Company’s purchase of the effected Properties. With regard to
Properties that are not material, Contributors shall use reasonable efforts
to
provide a list of all contractual restraints on assignment of executory
contracts as soon as practical but not later than sixty (60) days after the
Closing.
6. VALUE
OF TITLE FAILURES.
The
value of the title failure or Title Defect shall be determined by mutual
agreement between the Company and Contributors within twenty (20) days after
notice, taking into account the legal effect of the Title Defect giving rise
to
the title failure, the potential economic effect before tax of the Title Defect
of the life of the property involved and applicable contract
provisions.
7. REMEDIES
FOR TITLE FAILURES.
With
respect to each title failure of which notice is given and which is existing
following the Closing, the Company shall have the right to receive from
Contributors an equal amount of Issued Shares or cash derived form the sale
thereof in amount equal to the value of the Title Defect.
8. REPRESENTATIONS,
WARRANTIES, AND COVENANTS OF THE CONTRIBUTORS.
Each of
the Contributors hereby represents, warrants, and covenants to the Company
as
follows:
8.1. Requisite
Power and Authority.
(a) Contributors
have all necessary power and authority under all applicable provisions of law
to
execute and deliver this Agreement and to carry out its provisions. All action
on Contributor’s part required for the lawful execution and delivery of this
Agreement has been or will be taken prior to the Closing. Upon its execution
and
delivery, this Agreement will be a valid and binding obligation of Contributors,
enforceable in accordance with its terms, except (a) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
of
general application affecting enforcement of creditors’ rights and
(b) general principles of equity that restrict the availability of
equitable remedies.
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(b) JMT,
BENCO and REO each represents that it has obtained all necessary consents and/or
approvals of all of its partners to enter into this Agreement and to perform
its
obligations set forth hereunder.
8.2. Ownership.
Contributors are the lawful owners of or have the right to use and transfer
to
Company each of the Assets being transferred by it pursuant hereto. The Assets
are free and clear of all liens, mortgages, pledges, security interests,
restrictions, prior assignments, encumbrances and claims of any kind. The
delivery to Company of the appropriate assignments of interest will vest good
and marketable title to the assets in Company, free and clear of all liens,
mortgages, pledges, security interests, restrictions, prior assignments,
encumbrances and claims of any kind. There are no outstanding agreements,
options or commitments of any nature obligating Contributors to transfer any
of
the Assets or rights or interests therein to any party other than
Company.
8.3. No
Conflict. The execution, delivery and performance by Contributors of this
Agreement and the consummation of the transactions contemplated hereby do not
and will not: (i) violate or conflict with any provision of the charter
documents or bylaws of Contributors; (ii) violate any provision or requirement
of any domestic or foreign, national, state, or local law, statute, judgment,
order, writ, injunction, decree, award, rule, or regulation of any governmental
entity applicable to Contributors; (iii) violate, result in a breach of,
constitute (with due notice or lapse of time or both) a default or cause any
obligation, penalty, premium or right of termination to arise or accrue under
any contract ; (iv) result in the creation or imposition of any lien, charge
or
encumbrance of any kind whatsoever upon any of the properties or assets of
Contributors; and (v) result in the cancellation, modification, revocation
or
suspension of any license, permit, certificate, franchise, authorization or
approval issued or granted by any governmental entity.
8.4. Consents.
All consents and notices required to be obtained or given by or on behalf of
Contributors before consummation of the transactions contemplated by this
Agreement in compliance with all applicable laws, rules, regulations, orders
or
governmental or other agency directives, or the provisions of any document
binding upon Contributors are described on Section 8.4 of the Disclosure
Schedule and all such consents have been duly obtained and are in full force
and
effect.
8.5. Schedules.
To the
best knowledge of the Contributors, the schedules to this Agreement, and the
extent they related to the Assets owned by the Contributors or any entity with
respect to which the Contributors own a related equity interest, are true and
correct in all material respects as of the Effective Date.
8.6. Books
and Records.
Contributors have maintained their books, records and files accurately and
in
accordance with generally accepted industry standards and all books, records
and
files are in Contributors’ possession and the accounting records have been
maintained in accordance with generally accepted accounting principles
consistently applied.
8.7. Basic
Documents.
(i) All
Basic Documents to which Contributors are a party or by which they are bound
are
in full force and effect and are the valid and legally binding obligations
of
the Contributors and are enforceable in accordance with their respective terms;
(ii) the Contributors are not in breach of default with respect to any of their
material obligations pursuant to any such basic document or any regulations
incorporated therein or governing same; (iii) all payments including, without
limitation, royalties, and valid calls under unit or joint operating agreements
due thereunder have been made by Contributors; (iv) to the knowledge of
Contributors, no other party to any such Basic Documents (or any successor
in
interest thereto) is in breach of default with respect to any of its obligations
thereunder; (v) there has not occurred any event, fact or circumstance which,
with the lapse of time or the giving of notice, or both, would constitute such
a
breach or default on behalf of Contributors, or to the knowledge of Contributors
with respect to any other party; (vi) neither Contributors or any other party
to
any Basic Document have given or threatened to give notice of any action to
terminate, cancel, rescind or procure a judicial reaffirmation of any such
Basic
Document or any material provision thereof.
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10.1 -
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8.8. Leases.
With
respect to the oil, gas and other mineral leases, unit agreements, pooling
agreements, and other documents creating interests comprising Contributors’
Assets, except as otherwise disclosed in the Schedules; (i) such interests
are
to transferred to the Company hereunder without reservation by Contributors
of
any interest; (ii) Contributors have fulfilled all requirements for filings,
certificates, disclosures of parties in interest, and other similar matters
contained in such leases or other documents and are fully qualified to own
and
hold all such leases or other interests; (iii) there are no provisions
applicable to such leases or other documents which increase the royalty share
of
the lessor thereunder, except as such increases are reflected in Schedule 8.10;
(iv) there are no royalty provisions (other than those allowing a lessor the
right to take in kind) requiring the payment of royalty on any basis other
than
proceeds actually received by the lessees, except with respect to natural gas
liquids extracted and gas processing facilities; (v) upon the establishment
of
production in commercial quantities the leases and other interests are to be
in
full force and effect over the economic life of the Property involved and do
not
have terms fixed by a certain number of years.
8.9. Operating
Agreements.
Schedule 8.11 is a true and complete list of all of Contributors’ operating
agreements covering Properties. With respect to the joint, unit or other
operating agreements relating to the Properties, to the best knowledge of
Contributors there are no operating agreements under which Contributors or
other
parties have been elected to become a non-consenting party where such election
would have a material adverse effect on the acquired assets.
8.10. Calls.
Schedule 8.12 sets forth substantially all calls on Contributors’ production
from the material Properties.
8.11. Legal
Proceedings.
Except
as shown in Schedule 8.13, there is no suit, action, claim, investigation by
any
person or entity or by any administrative agency or governmental body, and
no
legal administrative or arbitration proceeding pending or, to the Contributors’
best knowledge, threatened against Contributors which has materially adversely
affected or may so affect the Acquired Assets.
8.12. Permits.
Contributors have all governmental licenses and permits and have properly made
all filings necessary and appropriate to obtain such licenses and permits and
to
own and operate the Assets as presently being owned and operated, and such
licenses, permits and filings are in full force and effect and no material
violations exist or have been recorded in respect of any such licenses, permits
or filings, no proceeding is pending or Contributors’ best knowledge is
threatened looking toward the challenge, revocation or limitation of any such
licenses, permits or filings, the failure of which would have a materially
adverse effect on the Acquired Assets.
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8.13. Investment
Representations.
Contributors understand that the Shares have not been registered under the
Securities Act of 1933, as amended (the “SECURITIES ACT”). Contributors also
understand that the Shares are being offered and sold pursuant to an exemption
from registration contained in the Securities Act based in part upon
Contributors’ representations contained in this Agreement. Each Contributors
hereby further represent and warrant as follows:
(a) Contributors
Bear Economic Risk. Contributors have substantial experience in evaluating
and
investing in private transactions of securities in companies similar to the
Company so that it is capable of evaluating the merits and risks of its
investment in the Company and has the capacity to protect its own interests.
Contributors must bear the economic risk of this investment indefinitely unless
the Shares are registered pursuant to the Securities Act, or an exemption from
registration is available. Contributors also understands that there is no
assurance that any exemption from registration under the Securities Act will
be
available and that, even if available, such exemption may not allow Contributors
to transfer all or any portion of the Shares under the circumstances in the
amounts or at the times Contributors might propose.
(b) Acquisition
for own Account. Contributors are acquiring the Shares for Contributors’ own
account for investment only, and not with a view towards their distribution
within the meaning of the Securities Act.
(c) Contributors
Can Protects Their Interest. Contributors represent that by reason of
Contributors’ business or financial experience, Contributors have the capacity
to protect Contributors’ own interests in connection with the transactions
contemplated in this Agreement.
(d) Company
Information. Contributors have had an opportunity to discuss the Company’s
business, management and financial affairs with directors, officers and
management of the Company and has had the opportunity to review the Company’s
operations and facilities. Contributors have also had the opportunity to ask
questions of and receive answers from, the Company and its management regarding
the terms of this transaction.
(e) Rule
144.
Contributors acknowledge and agree that the Shares must be held indefinitely
unless they are subsequently registered under the Securities Act or an exemption
from such registration is available. Contributors have been advised or are
aware
of the provisions of Rule 144 promulgated under the Securities Act as in effect
from time to time, which permits limited resale of shares purchased in a private
transaction subject to the satisfaction of certain conditions, including, among
other things: the availability of certain current public information about
the
Company, the resale occurring following the required holding period under Rule
144 promulgated under the Securities Act and the number of shares being sold
during any three-month period not exceeding specified limitations.
(f) Residence.
Contributors reside or have a principal place of business in the state of
residence provided on the Contributors’ signature page to this
Agreement.
EX
10.1 -
10
9. REPRESENTATION,
WARRANTIES AND COVENANTS OF THE COMPANY
.
The
Company hereby represents, warrants, and covenants to the Contributors as
follows:
9.1. Organization,
Good Standing and Qualification.
The
Company is duly organized, validly existing and in good standing under the
laws
of the State of Nevada. The Company has all requisite corporate power and
authority to execute and deliver this Agreement, to issue, sell and deliver
the
Shares, and to carry out the provisions of this Agreement.
9.2. Capitalization.
The
authorized capital stock of the Company, as of the date hereof and immediately
prior to the Closing, will consist of 200,000,000 shares of Common Stock, of
which 13,379,310 shares are issued or outstanding. As of the Closing Date,
there
are no outstanding options, warrants, rights (including conversion or preemptive
rights and rights of first refusal), proxy or stockholder agreements, or
agreements of any kind for the purchase or acquisition from the Company of
any
of its securities or which are convertible into or exercisable for securities
of
the Company. As of the Closing Date, the Shares shall be validly issued, fully
paid and nonassessable, and are free of any restrictions, limits, claims, liens
or other encumbrances; provided, however, that the Shares may be subject to
restrictions on transfer under state and/or federal securities laws as set
forth
herein or as otherwise required by such laws at the time a transfer is
proposed.
9.3. Authorization;
Binding Obligations.
The
Agreement, when executed and delivered, will be a valid and binding obligation
of the Company enforceable in accordance with its terms, except (a) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws of general application affecting enforcement of creditors’ rights and
(b) general principles of equity that restrict the availability of
equitable remedies. The sale of the Shares is not subject to any preemptive
or
similar rights or rights of first refusal that have not been properly waived
or
complied with.
9.4. Offering
Valid.
Assuming the accuracy of the representations and warranties of each of the
Contributors contained in Section 3 hereof, the offer, sale and issuance of
the
Shares, will be exempt from the registration requirements of the Securities
Act
and will have been registered or qualified (or are exempt from registration
and
qualification) under the registration, permit or qualification requirements
of
all applicable state securities laws.
10. COVENANTS
OF CONTRIBUTORS.
10.1. Contributors
Covenant With the Company as follows:
(a) Contributors
will use reasonable efforts to obtain all such provisions, approvals and
consents by federal, state and local governmental authorities and others as
may
be required, to vest title to its Properties in the Company as provided
hereunder and for the subsequent use and operation by the Company of the
Properties, or as may be otherwise reasonably requested by the Company and
Contributors will use reasonable efforts to obtain from all Purchasers from
the
Properties appropriate transfer orders designating Company as the appropriate
party for payment effective as of the Closing.
(b) Transfers.
The
Contributors will not sell, assign, transfer, mortgage, convey or otherwise
dispose of any of the Properties to any party.
EX
10.1 -
11
(c) Defaults.
Contributors shall give prompt written notice to the Company of any Notice
of
Default (or written threat of default, whether disputed or denied) received
or
given by Contributors under any instrument or agreement affecting any material
portion of the Properties or by which any of the Properties is
bound.
(d) Operating
Agreements.
To the
extent that any operating agreement covering any of the Properties does not
retain the right to transfer operation of such leasehold interests that are
the
subject of such operating agreements to a purchaser of Contributors’ interests,
Contributors shall use reasonable efforts to secure consent from all interested
parties for the Company to become the operator under all the operating
agreements affecting Properties wherein Contributors are the
operators.
(e) Section
351 Compliance.
Contributors shall not take any action which is not expressly permitted by
the
Agreement if such action would be inconsistent with the treatment of the
transaction described in this Agreement under Section 351 of the “Code” and
shall report the transactions consistently with such provisions of the Code
for
United States federal income tax purposes.
11. CONDITIONS
PRECEDENT.
11.1. Conditions
Precedent To The Obligations of the Company
11.2. .
The
obligations of the Company to consummate the transactions at Closing are subject
to each of the following conditions:
(a) Representations
and Warranties True as of the Effective Date and Closing Date.
The
representations and warranties of Contributors contained in this Agreement
or in
any certificate or document delivered pursuant to the provisions hereof, shall
be true on and as of the Effective Date and the Closing Date with the same
effect as though such representations and warranties were made at and as of
such
dates, except to the extent that the failure to be so true would not materially
and adversely affect the ability of Contributors to consummate the transaction
contemplated by this Agreement or materially and adversely affect the Acquired
Assets.
(b) Compliance
with Agreement.
On and
as of the Closing Date, Contributors shall have performed and complied in all
material respects with all agreements and conditions required by this Agreement
to be performed and complied with by it.
(c) Injunction.
On and
as of the Effective Date and Closing Date, there shall be no effective
injunction, writ or preliminary restraining order or any order of any nature
issued by a court or governmental agency of competent jurisdiction directing
that the transaction provided for herein not be consummated as herein
provided.
(d) Pending
Matters.
No
suit, action or other proceeding shall be pending or threatened against
Contributors which could result in a material impairment or loss of value as
to
the Assets.
EX
10.1 -
12
12. POST-CLOSING
CONVENANTS.
12.1. Further
Assurances.
After
the Closing Date, Contributors shall at any time upon request of Company
execute, acknowledge, and deliver to Company such further instruments of
conveyance, assignment, and transfer and take such other action as the other
party may reasonably request in order to more effectively perfect and cure,
convey, assign, transfer and deliver title to the Acquired Assets, the proceeds
of production attributable thereto and personal property in connection
therewith, all as contemplated by this Agreement.
12.2. Obligation
to Register Securities. Upon contribution of the Assets to the Company and
the issuance of the Shares to Contributors therefore as contemplated by this
Agreement, Contributors will own a majority interest in the Company.
Accordingly, Contributors agree to undertake all obligations of the Company
existing prior to the Closing, including, but not limited to, the Agreement
by
and between the Company and those certain investors listed on Schedule 12.2
who
have subscribed to that certain private placement of the Company stock (the
“Placement”) pursuant to which, the Company is obligated to file an SB-2 Resale
Registration Statement under the Securities Act of 1933 and to keep such
statement effective for a period of three (3) years. Contributors further agree
to take appropriate steps to register all remaining shares which are subject
to
restriction (except shares held by Contributors, which shares are governed
by
that certain Letter Agreement restricting the transfer of Contributor’s shares
for two years) and to qualify any portion of such shares for sale in
jurisdictions as may reasonably requested from time to time.
13. TERMINATION.
13.1. Right
of Termination.
This
Agreement and the transactions contemplated herein may be completely terminated
at any time at or prior to the Closing:
(a) by
mutual
consent of the parties;
(b) by
either
party if the Closing shall not have occurred by February 28, 2007 providing
no
party can terminate if such party has breached any portion of this
Agreement.
13.2. Effect
of Termination. In the event of the termination of this Agreement pursuant
to the provisions of this Article 13, this Agreement shall become void and
have
no effect and neither party shall have any further right or duty to the other
hereunder, except as expressly provided to the contrary herein.
14. MISCELLANEOUS.
14.1. Governing
Law.
This
Agreement shall be governed by, and construed and enforced in accordance with,
the laws of the State of Nevada, without regard to its choice-of-law
principles.
14.2. Survival.
The
representations, warranties, covenants and agreements made herein shall survive
any investigation made by each Contributor and the closing of the transactions
contemplated hereby.
14.3. Successors
and Assigns.
Except
as otherwise expressly provided herein, the provisions hereof shall inure to
the
benefit of, and be binding upon, the successors, assigns, heirs, executors
and
administrators of the parties hereto and shall inure to the benefit of and
be
enforceable by each person who shall be a holder of the Shares from time to
time.
EX
10.1 -
13
14.4. Entire
Agreement.
This
Agreement and the other documents delivered pursuant hereto constitute the
full
and entire understanding and agreement between the parties with regard to the
subject matter hereof and no party shall be liable or bound to any other in
any
manner by any representations, warranties, covenants and agreements except
as
specifically set forth herein and therein.
14.5. Severability.
In case
any provision of this Agreement shall be invalid, illegal or unenforceable,
the
parties intend that (a) in lieu of such provision there be added as part of
this Agreement a provision as similar in terms to such invalid, illegal or
unenforceable provision as may be possible and be valid, legal and enforceable
and (b) the validity, legality and enforceability of the remaining
provisions, or any subsequent applications thereof, shall not in any way be
affected or impaired thereby.
14.6. Amendment
and Waiver.
(a) This
Agreement may be amended or modified only upon the written consent of the
Company and each Contributor.
(b) The
rights of each Contributor may be waived only with the written consent of the
Company and each Contributor.
14.7. Delays
or Omissions.
It is
agreed that no delay or omission to exercise any right, power or remedy accruing
to any party, upon any breach, default or noncompliance by another party under
this Agreement shall impair any such right, power or remedy, nor shall it be
construed to be a waiver of any breach, default or noncompliance, or any
acquiescence therein, or of or in any similar breach, default or noncompliance
thereafter occurring. All remedies, either under this Agreement, by law, or
otherwise afforded to any party, shall be cumulative and not
alternative.
14.8. Notices.
All
notices required or permitted hereunder shall be in writing and shall be deemed
effectively given: (a) upon personal delivery to the party to be notified;
(b) when sent by confirmed telex or facsimile if sent during normal
business hours of the recipient, if not, then on the next business day;
(c) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid; or (d) one (1) day after deposit
with a nationally recognized overnight courier, specifying next day delivery,
with written verification of receipt. All communications shall be sent to the
Contributors at the respective addresses set forth below or at such other
address as Contributors may designate by ten (10) days advance written notice
to
the other party hereto:
Addresses
for Notices:
If
to
Company: Goldrange
Resources, Inc.
Tel:
(000) 000-0000
Email:
xxxxx@xxxxx.xxx
EX
10.1 -
14
If
to
Contributors: Benco
Operating, Inc.
0000
Xxxxxxxx Xxx.
Xxxx
Xxxxx, Xxxxx 00000
Tel: (000)
000-0000
JMT
Resources, Ltd.
0000
Xxxxxxxx Xxx.
Xxxx
Xxxxx, Xxxxx 00000
Tel: (000)
000-0000
REO
Energy, Ltd.
0000
Xxxxxxxx Xxx.
Xxxx
Xxxxx, Xxxxx 00000
Tel: (000)
000-0000
With
a
copy to: Applbaum
& Zouvas LLP
000
Xxxxx
Xxxxxx Xxxxx
Xxx
Xxxxx, XX 00000
Tel:
(000) 000-0000
Fax:
(000) 000-0000
14.9. Expenses.
Each party shall pay all costs and expenses that it incurs with respect to
the
negotiation, execution, delivery and performance of the Agreement.
14.10. Titles
and Subtitles.
The
titles of the sections and subsections of the Agreement are for convenience
of
reference only and are not to be considered in construing this
Agreement.
14.11. Counterparts.
This
Agreement may be executed in any number of counterparts, each of which shall
be
an original, but all of which together shall constitute one
instrument.
14.12. Broker’s
Fees.
Each
party hereto represents and warrants that no agent, broker, investment banker,
person or firm acting on behalf of or under the authority of such party hereto
is or will be entitled to any broker’s or finder’s fee or any other commission
directly or indirectly in connection with the transactions contemplated herein.
Each party hereto further agrees to indemnify each other party for any claims,
losses or expenses incurred by such other party as a result of the
representation in this Section 6.12 being untrue.
14.13. Pronouns.
All
pronouns contained herein, and any variations thereof, shall be deemed to refer
to the masculine, feminine or neutral, singular or plural, as to the identity
of
the parties hereto may require.
14.14. Public
Disclosure.
Unless
otherwise required by law or by obligations pursuant to any listing agreement
or
rules of any securities exchange (in which case the disclosing party shall
employ reasonable best efforts to provide the other parties hereto with as
much
notice as possible with respect to the contemplated disclosure and the content
of the disclosure) or as otherwise contemplated by or to enforce this Agreement,
no disclosure (whether or not in response to an inquiry) of the subject matter
of this Agreement and the other transactions contemplated by this Agreement
without the prior consultation and consent of the other parties.
EX
10.1 -
15
IN
WITNESS WHEREOF, the parties hereto have executed this CONTRIBUTION AGREEMENT
as
of the date set forth in the first paragraph hereof.
CONTRIBUTORS:
BENCO
OPERATING, INC.
By:_____________________
Name:_____________________
Title:_____________________
JMT
RESOURCES LTD.
a
Texas
limited partnership
By:_____________________
Name:_____________________
Title: _____________________
REO
ENERGY LTD.
a
Texas
limited partnership
By:_____________________
Name:_____________________
Title: _____________________
COMPANY:
By:_____________________
Name:_____________________
Title:_____________________
SIGNATURE
PAGE TO CONTRIBUTION AGREEMENT
EX
10.1 -
16
