1
EXHIBIT 10.1
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is made and entered into
this 29th day of June, 2001, by and between Rocky Mountain Gas, Inc., with an
address of 877 North 8th West, Riverton, Wyoming 82501 (hereinafter as "RMG")
and CCBM, Inc., a Delaware Corporation, with an address of 14701 St. Mary's
Lane, Suite 800, Houston, Texas (herein referred to as "CCBM").
BACKGROUND
WHEREAS, RMG is the owner of certain oil and gas or gas leases and certain
contractual rights related thereto, all being specifically described in the
following instruments (collectively, the "RMG Assets"):
A. Those certain Oil & Gas Leases or Option Agreements and wells described on
Exhibit "A", attached hereto and made a part hereof (the "Leases"), and the
royalty and overriding royalty in same as denoted on said Exhibit "A".
B. Agreement dated January 1, 2000, a copy of which is attached hereto and made
a part hereof as Exhibit "B-1", together with all amendments and revisions
thereto (the "Quantum Agreement").
C. Agreement dated December 31, 2000, a copy of which is attached hereto and
made a part hereof as Exhibit "B-2", together with all amendments and revisions
thereto (the "Suncor Agreement").
D. Agreement dated December 17, 1999, a copy of which is attached hereto and
made a part hereof as Exhibits "C-1, C-2, C-3", and C-4, together with all
amendments and revisions thereto (the , UPR Agreement, Infinity Agreement,
Lebsack Agreement, and Patina Agreement collectively referred as the " Oyster
Ridge Agreements").
WHEREAS, CCBM desires to purchase an undivided 50% interest in the RMG Assets
(the "Acquired Assets"); and
NOW, THEREFORE, in consideration of the mutual covenants, agreements, valuable
consideration, the receipt and sufficiency of which is hereby acknowledged by
the parties, the parties hereto agree as follows:
1
2
ARTICLE I
PURCHASE AND SALE OF ACQUIRED ASSETS
1.1 Transfer of Acquired Assets. Subject to the terms and conditions hereof, RMG
hereby sells, conveys, transfers, assigns and delivers to CCBM, and CCBM
purchases, acquires and accepts from RMG, an undivided fifty percent (50%) of
RMG's right, title and interest in and to the RMG Assets, together with an
undivided 50% of RMG's right, title and interest in and to any Oil and Gas
Leases, Option Agreements, contractual rights, coalbed methane leases, wells,
facilities and/or other right ("Interest") of RMG within the Area of Mutual
Interests whether or not the Interest is described in this Purchase and Sales
Agreement.
1.2 Representations and Warranties. RMG represents that (i) the Acquired Assets
are valid and in full force and effect, (ii) RMG owns the interest set forth on
the attached Exhibits and (iii) RMG owns the Acquired Assets free and clear of
all mortgages, pledges, liens, charges, security interests, encumbrances and any
burdens (excepting the rights created by the Suncor and Quantum Agreements and
provided for in the lease documents) or otherwise set forth in the lease
documents created by or in favor of RMG. RMG shall warrant title to the interest
conveyed to CCBM in the Acquired Assets as to all parties claiming by, through
or under RMG, but not otherwise.
1.3 Earnest Money Deposit. In accordance with that certain Letter of Intent
dated May 31, 2001 between RMG and CCBM, CCBM paid RMG the sum of a
non-refundable Earnest Money Deposit of $50,000, and RMG hereby acknowledges the
timely receipt of the Deposit. The Earnest Money Deposit shall be credited
against CCBM's obligation to spend $2.5 million for RMG's share of the drilling
program described in Section 2.1. Such credit shall apply to the final payment
(s) due by CCBM for such obligation.
1.4 Payment for Purchase. As consideration for the purchase and assignment of
the Acquired Assets, in addition to the remaining obligations set forth
elsewhere in this Agreement, CCBM will pay at closing to RMG a purchase price of
$7.5 million subject to reductions provided for in Section 1.5 (the "Purchase
Price") in the form of a promissory note in a form identical to Exhibit "D"
attached hereto ("the Note") secured solely by the Acquired Assets, excluding
any acreage or wells deemed to be earned pursuant to Section 2.1 (a) below.
For the consideration set forth herein, CCBM will be entitled to a 50% interest
in the RMG Assets. At Closing, RMG will assign the Acquired Assets to CCBM. The
Acquired Assets will be pledged back to RMG as collateral for the Note and
Mortgage until such collateral is released. RMG shall release 25% interest in
the Acquired Assets upon receiving principal payments totaling 33.3% of the
Purchase Price. When RMG receives principal payments totaling 66.6% of the
Purchase Price, 50% interest in the Acquired Assets shall be released as
collateral. Upon RMG receiving the entire Purchase Price plus all interest due,
all the remaining interest in the Acquired Assets shall be released as
collateral.
2
3
1.5 Title Defects and Remedies. CCBM has identified certain title defects as
identified in that certain letter dated June 15, 2001 a copy of which is
attached as Exhibit "I" and in the event that additional title defects arise
within 60 days of the Closing Date for any of the Acquired Assets, upon written
notice to RMG of the title deficiencies, RMG shall have curative rights as
follows:
a. RMG shall have 120 days from the date of the notice to cure
the defects;
b. If the defect cannot be cured to CCBM's satisfaction within
120 days, RMG will have 60 additional days to offer to CCBM
alternative acreage located in the same vicinity and of the
same quality and quantity. CCBM, in its sole discretion may
accept the alternative properties, recommend alternative
properties or refuse the substitute properties;
c. If alternative property can not be agreed upon and if title is
not cured within 180 days of notice, the Purchase Price
(initially $7.5 million) and the outstanding principal balance
of the Note shall be reduced in an amount equal to the amount
specified for each respective property identified on Exhibit "
E" at the price per acre listed and the final payment due on
the Note shall be reduced by such amount.
ARTICLE II
DRILLING PROGRAM AND AREA OF MUTUAL INTEREST
2.1 Drilling Program for 2001. CCBM and RMG shall enter into a Joint Operating
Agreement ("JOA") identical in form to the agreement attached hereto as Exhibit
"F", which shall govern operations on the RMG Assets, and the Area of Mutual
Interest ("AMI"), as defined below. RMG shall be designated as the Operator,
subject to the JOA.
(a) CCBM agrees to fund $5,000,000 for an initial drilling program on the
Acquired Assets. As funded, CCBM will earn a 50% interest of RMG's interest
in each well drilled and a 50% ownership in RMG's ownership interest in the
associated acreage, (i.e. 80 acres per well), and production. CCBM's
ownership in such wells shall be earned regardless of the status of the
Note or CCBM's ownership in the balance of the RMG Assets. RMG will be
carried for the initial drilling program and will retain the remaining 50%
interest. After the above $5,000,000 is expended, subject to the JOA, all
future operations will be funded equally by CCBM and RMG.
(b) Notwithstanding anything to the contrary, prior to the expenditure of any
monies attributable to the $5,000,000 to be funded by CCBM, RMG shall
furnish CCBM with an Authority for Expenditure ("AFE") in accordance with
the Procedure set forth in the JOA for CCBM's review and approval for each
individual well to be drilled and completed or for facilities construction.
Such AFE's shall be in a form similar to that set out in Exhibit "G".
Multiple AFE's may be submitted by RMG to CCBM, however for the period
beginning July 1, 2001, and ending November 30, 2001 no more than a
cumulative amount of $1.5
3
4
million of AFE's may be submitted during any thirty (30) day period unless
mutually agreed upon by both parties. RMG shall cash call CCBM only for
work RMG reasonably expects to complete during the ensuing 30 day period.
Cash calls and such AFE amounts shall be due and payable by CCBM to RMG
within five (5) business days of commencement of work related to each
individual AFE. Any portion of the $5,000,000 not expended during calendar
year 2001 shall be carried over to the 2002 and 2003 drilling program or to
property acquisitions, if mutually agreed to by the parties. No payment
shall be due until CCBM has received copies of all permits, rights of way,
title opinions, surface use agreements and any other ancillary agreements
necessary for the operation for which the cash call is being made along
with representations from RMG that the operation will be conducted during
the ensuing 30 day period, unless mutually agreed upon in writing by the
parties. It is specifically agreed and understood that the aforementioned
$5,000,000 funded by CCBM shall not be expended for any operation
associated with water disposal wells, compression beyond 100 PSIG nor for
facilities downstream of compression beyond 100 PSIG. Further, the
$5,000,000 funded by CCBM will only be used to pay for CCBM's final working
interest and an equal working interest for RMG. CCBM's final working
interest will not be less than 50% of CCBM's paying interest, less and
except the $225,000 Suncor drilling program per section 2.5, unless
approved by CCBM in writing. Should a cash call amount not be expended
during the ensuing 30 day period, the unspent portion of such cash call
shall be applied to a subsequently due cash call or shall be immediately
refunded if not used for the AFE for which the cash call was made within 90
days of being delivered.
(c) In the event less then the entire $5,000,000 is expended as provided above,
within two (2) years of the closing date (subject to extensions for Force
Majeure), CCBM shall pay to RMG one-half of the unspent portion of the
$5,000,000. The foregoing payment is subject to RMG complying with all of
the terms and provisions of this Agreement, the JOA and the procedures set
forth therein for submitting AFE's to drill $5 million worth of "reasonable
wells". A "reasonable well" shall meet the following economic criteria:
1. Individual well cost, including hook-up to sales,
must meet a projected internal rate of return ("IRR")
in excess of 15% at prevailing market prices.
2. Such wells must be on acreage blocks that are
touching and contain a minimum size as follows:
a) Kirby - at least 2560 acres
b) Clearmont - at least 640 acres
c) Arvada - at least 480 acres
3. No more than 10 wells/calendar year at Oyster Ridge
qualify as reasonable.
The intent of this provision is for CCBM to spend $2.5 million on behalf of
RMG. If CCBM fails to do this despite a total of $5,000,000 of reasonable
well proposals by RMG
4
5
then CCBM shall be obligated to pay any remaining unspent portion of the
$2.5 million directly to RMG.
2.2 Allocation and Payment of Revenue. CCBM is entitled to 20% of RMG's net
revenue interest from all wells jointly drilled under this Agreement (per
Sections 2.1 or 2.2) until such time as the net revenue received by CCBM from
this additional interest equals a total of $1,250,000 in dollars of the day or
CCBM defaults on the Note. The revenues due CCBM shall not be paid to CCBM in
cash, but instead, RMG shall apply such revenue towards prepayment of the Note,
with such payments being applied towards the final payment due under the Note.
The $1,250,000 mentioned above will be reduced proportionately with reductions
in the Purchase Price, if any, under Section 1.5.
2.3 Area of Mutual Interest. CCBM and RMG hereby establish an AMI, which shall
include the entire State of Wyoming and the Powder River Basin of Montana as
outlined on Exhibit "H", which is attached hereto and made a part hereof, and
subject to pre-existing AMI's between RMG, Quaneco and Suncor. The AMI shall be
for a four year term commencing on June 30, 2001 and ending on June 30, 2005
unless otherwise modified by the terms herein or modified by the mutual written
consent of the parties. The JOA shall govern operations within the AMI with CCBM
and RMG each owning a 50% interest in the AMI.
2.4 Management Committee. CCBM and RMG shall form a Management Committee for the
purpose of overseeing operations on the RMG Assets.
(a) The Management Committee shall be composed of two (2) Members representing
CCBM and two (2) Members representing RMG. There shall be at least two (2)
Members representing CCBM and two (2) Members representing RMG at a meeting
to constitute a quorum for the Management Committee.
(b) Upon payment of the Purchase Price, and with the consent of Quaneco, CCBM
shall be allocated one of the RMG Managing Member seats with Powder River
Gas, LLC provided for in the Quaneco Agreement (Exhibit B-1 in Section
3.4(c) (ii)). Prior to such time, RMG agrees to consult with CCBM in order
to come to mutual Agreement on all major decisions made by Powder River
Gas, LLC.
(c) The Management Committee shall:
i. Review and recommend overall annual and quarterly capital
expenditures and preparing for approval budgets for all
expenditures for each succeeding quarter relating to the
Acquired Assets.
ii. Review such other matters as may be necessary to option and/or
lease lands, drill and complete or otherwise conduct
activities within the AMI.
5
6
iii. Review drilling results and the costs thereof in relation to
the budget approved by the Management Committee, and make
recommendations and modifications to the budget as necessary;
iv. Review all drilling contracts to determine that they are
competitive, and if necessary negotiate competitive drilling
contracts for future drilling;
v. Investigate whether to build or contract out the building of
the gathering system;
vi. Meet not less than quarterly or at the request of either CCBM
or RMG. The meeting site shall alternate between
Sheridan/Riverton, Wyoming and CCBM offices in Houston, Texas,
unless otherwise agreed to by the Parties;
vii. Conduct any other business necessary to oversee this
Agreement.
(d) It is specifically agreed that RMG shall have a tie breaking vote
concerning all general operations as outlined herein until the $5 million
drilling commitment has been expended and until the Purchase Price has been
paid.
2.5 Suncor Option Acreage.
(a) The Suncor Agreement (Exhibit B-2) contains a provision whereby RMG has
provided Suncor Energy of Calgary, Alberta ("Suncor") an option to purchase a
37.5% net working interest in approximately 112,000 acres in Montana ("Option
Acreage") known as the Castle Rock Project with a remaining balance of
approximately $2,900,000 from Suncor to RMG, due in February 2002, plus various
drilling commitments. If Suncor exercises the option, all proceeds of such sale
will be solely for the benefit of RMG. If Suncor does not exercise its option
with RMG, then CCBM shall have thirty (30 day) after receipt of written notice
from RMG to elect to purchase 50% of RMG's interest in the Option Acreage for
the equivalent value that would have been due RMG under the Suncor Agreement. If
CCBM does not exercise this option on or before thirty (30) days after receipt
of written notice, then the Option Acreage will belong solely to RMG and will be
removed from the AMI.
CCBM and RMG have agreed that RMG will AFE CCBM for $225,000 on July 1, 2001 for
RMG's obligations for the wells to be drilled for the drilling program that will
take place beginning in July of 2001 with Suncor as operator on the Castle Rock
Properties in Montana. Subject to obtaining the consent of Quaneco and Suncor,
and as consideration for CCBM funding the above-mentioned AFE, CCBM shall
receive an undivided 6.25% working interest in the wells drilled and the leases
underlying an 80 acre area attributable thereto during the 2001 drilling program
conducted by Suncor. The $225,000 funded and paid by CCBM shall be part of the
$5,000,000 drilling program described in Section 2.1.
2.6 Rentals, Surface Use and Option Payments. Subject to the provisions of the
JOA, RMG and CCBM will each be obligated to pay one-half (1/2) of all on going
payments of any kind to maintain any and all leases, options and farmin
agreements and pay for all surface use
6
7
agreements and other ongoing obligations on the Acquired Assets. RMG shall AFE
CCBM for these costs (not to exceed $500,000), which will be part of the
$5,000,000 drilling program. After completion of the $5,000,000 drilling program
or expenditures of this type reaching the $500,000 cap each party shall be
responsible for its share of these payments.
2.7 Land Bank Fund. CCBM agrees that it will use its best efforts to seek out,
obtain and secure financing and raise no less than $20 million to be used for
the acquisition of lease hold interests to develop oil and gas properties within
the AMI. Such funds will be secured and be available for use on or before June
30, 2002, subject to the terms of the financing agreement(s) between the
lender(s) and RMG and CCBM. In the event CCBM is unable to establish the Land
Bank Fund prior to June 30, 2002, RMG shall notify CCBM of its desire to extend
the AMI for or before December 20, 2002. Failure to notify CCBM shall result in
AMI being reduced to a 6 mile radius on all then existing properties held
jointly by the Parties.
ARTICLE III
RIGHT TO RECORDS AND INSPECTION OF PROPERTIES
3.1 Book and records. Upon 10 days of CCBM's written request, RMG shall provide
CCBM with access to and upon request the ability to copy all books, maps,
records, title records, files or other information related to the Acquired
Assets in the possession of RMG, or within RMG's control to obtain, relating to
RMG's activity on the Acquired Assets and within the AMI. CCBM shall reimburse
RMG for its reasonable costs in providing such copies. Similarly, upon 10 days
written request, CCBM shall provide to RMG access to and upon request, the
ability to copy all books, maps, records, title records, files or other
information related to the RMG Assets in the possession of CCBM, or within
CCBM's control to obtain, relating to CCBM's activity on the RMG Assets and
within the AMI. RMG shall reimburse CCBM for its reasonable costs in providing
such copies.
3.2 Access to Inspection of the RMG Assets. Either Party may independently
inspect or cause to be inspected by other qualified persons, at their sole cost
and expense, all aspects of the RMG Assets which in its sole discretion are
relevant or material to their undivided working interest in the RMG Assets.
ARTICLE IV
CLOSING
4.1 CCBM's Conditions to Closing.
The obligation of CCBM to close the transaction consistent with this Agreement
is subject to CCBM's satisfaction, as determined solely by CCBM, of the
following conditions which are for the sole benefit of CCBM and which may be
waived in whole or in part by CCBM at any time on or before the Closing Date.
(a) CCBM shall have satisfied itself regarding RMG's represented
interests in the Acquired Assets including, but not limited to,
verification that RMG owns such
7
8
represented interests as listed on the attached on Exhibit "A" and is
capable of assigning such interest to CCBM;
(b) Any consents, rights of refusal or other restrictions on the
farmout, transfer, disposition, sale or assignment by RMG of any of the
working interests or net revenue interests represented in Exhibit "A"
shall have been waived or complied with;
(c) CCBM shall have the opportunity to review, and shall be satisfied
with, all agreements relating to RMG's interest in the Acquired Assets.
(d) RMG shall continue to diligently pursue all permits necessary for
drilling and production for state, fee and federal land locations on
the Acquired Assets and CCBM shall be satisfied with the status
thereof;
(e) Subject to no material change in the environmental issues or
liabilities occurring between May 31, 2001 and the Closing Date, CCBM
shall have the opportunity to conduct an environmental audit or
inspection on the Acquired Assets and be satisfied that there are:
(1) no significant environmental issues which would
constrain coalbed methane exploration, development
and production activity, and
(2) no significant outstanding environmental liabilities;
(f) If appropriate, CCBM shall have received releases and registerable
discharges from all parties holding security interests against RMG's
interest in the Acquired Assets.
(g) Subject to no material change in the facts occurring between May
31, 2001 and the Closing Date, CCBM shall review and evaluate any and
all claims or proceedings threatened or pending involving RMG in
connection with the Acquired Assets.
(h) All of RMG's interest in the Acquired Assets shall not be subject
to any contracts for the sale of petroleum substances.
(i) Subject to the approval of the Board of Directors of CCBM and the
consent and approval CCBM's lenders under existing debt agreements.
4.2 RMG's Conditions to Closing.
The obligation of RMG to close the transaction consistent with this Agreement is
subject to RMG's satisfaction, as determined solely by RMG, of the following
conditions which are for the sole benefit of RMG and which may be waived in
whole or in part by RMG at any time on or before the Closing Date.
8
9
(a) RMG shall have received the $50,000 non-refundable Earnest Money
Deposit as described in Section 1.3.
(b) RMG shall have satisfied itself that CCBM will commit to
establishing a "Land Bank" in the amount of $20 million or more
from outside sources for the financing of future land acquisitions
within the AMI. If such Land Bank is not established by June 30,
2002, the AMI described in paragraph 2.7, may be reduced
consistent with paragraph 2.7. If a Land Bank is established in an
amount less than $20 million and committed to be used to fund an
AMI acquisition, such AMI Interest shall be included in the
existing joint property package.
(c) Subject to the approval of the Board of Directors of RMG.
4.3 Closing Date. The transfer of an undivided fifty percent (50%) of RMG's
right, title and interest in the RMG Assets to CCBM and all other transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of RMG in Riverton, Wyoming at 2:00 p.m., local time on June 29, 2001 or at such
other time or other place as RMG and CCBM may mutually agree (the "Closing
Date").
4.4 Deliveries by RMG. At the Closing, RMG shall deliver the following to CCBM,
the receipt of which shall be a condition to Closing:
(a) The duly executed Assignment in recordable form transferring an
undivided fifty percent (50%) of RMG's right, title and interest
in the RMG Assets to CCBM.
(b) Such other documents as may are reasonably requested by CCBM or
its counsel.
4.5 Deliveries by CCBM. At the Closing, CCBM shall deliver the following, the
receipt of which shall be a condition to Closing:
(a) The Note and Mortgage as described in Section 1.4. (a).
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF RMG
The RMG represents and warrants to CCBM as follows:
5.1 Organization and Qualification. RMG is a corporation duly organized under
the laws of the State of Wyoming, and has all corporate powers to own its
properties and to carry on its business as now owned and operated by RMG. RMG is
qualified to do business, is in good standing, and has all appropriate or
necessary licenses in each jurisdiction or place in which the nature of its
business or the character of its properties requires such registration.
9
10
5.2 Authority to Transfer. RMG has the right, power, legal capacity and
authority to enter into this Agreement, to perform its obligations hereunder and
to consummate the transactions contemplated hereby, and no approvals,
authorizations or consents of any person other than RMG are necessary in
connection with RMG's execution, performance and delivery of this Agreement.
This Agreement constitutes the legal, valid and binding obligation of RMG,
enforceable against RMG in accordance with its terms, except as enforcement may
be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
or equitable principles relating to or limiting creditor's rights generally.
5.3 Title to Acquired Assets. RMG has unencumbered title to all of the Acquired
Assets.
5.4 Condition of Acquired Assets. From May 31, 2001 through the Closing Date,
RMG shall not enter into any agreements, or amend any existing agreements
relating to the Acquired Assets, nor shall RMG enter into any agreements
relating to the sale of production of petroleum substances therefrom, save and
except for such agreements and expenditures as are in the normal course of
business or approved in writing by CCBM. Furthermore, RMG agrees to not directly
or indirectly market its interest in the Acquired Assets or the AMI to any other
party through the Closing Date.
5.5 Agreement Not in Breach of Other Instruments. Subject to the consent
requirements in the Suncor, Quantum and Oyster Ridge Agreements, the execution
and delivery of this Agreement and the other documents to be executed and
delivered in connection herewith and the consummation of the transactions
contemplated hereby and thereby will not result in or constitute any of the
following: (a) a default or event that, with the giving of notice or lapse of
time, or both, would be a default breach or violation of any operating agreement
of RMG or any agreement, instrument or arrangement to which RMG is a party or by
which RMG or any assets or property of RMG is bound; (b) an event that would
permit any party to terminate any contract or other agreement; or (c) the
creation or imposition of any lien, charge, or encumbrance an any of the
Acquired Assets.
5.6 Indemnity Suncor. RMG agrees to defend, indemnify and hold harmless CCBM,
and its Acquired Asset from any and all debts, losses, liabilities, duties,
damages, obligations, payments, settlement, judgment or compromise, cost and
expenses (including, without limitation, any attorneys' fees and any and all
expenses incurred for investigating, preparing or defending any such Action)
under, out of or in connection with any dispute, suite arbitration, or
proceeding (collectively "Action") related in any way whatsoever to the Article
IV, Section 4.2, ;under the Suncor Agreement.
10
11
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF CCBM
CCBM represents and warrants to RMG as follows:
6.1 Organization and Qualifications. CCBM is a corporation duly organized under
the laws of the State of Texas, and has all corporate power to own its
properties and to carry on its business as now owned and operated by CCBM. CCBM
is qualified to do business, is in good standing, and has all appropriate or
necessary licenses in each jurisdiction or place in which the nature of its
business or the character of its properties requires such registration.
6.2 Authority to Purchase. CCBM has the right, power, legal capacity and
authority to enter into this Agreement, to perform its obligation hereunder and
to consummate the transactions contemplated hereby, and no approvals,
authorizations or consents of any person other than CCBM is necessary in
connection with CCBM's execution, performance and delivery of this Agreement.
This Agreement constitutes the legal, valid, and binding obligation of CCBM,
enforceable against CCBM in accordance with its terms, except as enforcement may
be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
or equitable principles relating to or limiting creditor's rights generally.
ARTICLE VII
TERMINATION
7.1 Termination. This Agreement may only be terminated by the mutual consent of
both RMG and CCBM.
ARTICLE VIII
CONFIDENTIALITY
8.1 Confidentiality
(a) Until the Closing Date, there shall be no public release of information
of any kind by RMG or CCBM with respect to this transaction unless mutually
approved by the parties, or, if such release is required by the law,
including necessary disclosure under the security laws, then the parties
shall receive and approve a copy of such release at least twenty four (24)
hours prior to its dissemination, unless waived by both parties.
(b) In the event CCBM does not close the transaction consistent with this
Agreement, CCBM agrees to return all information of any kind obtained by it
from RMG, and its agent and representative, concerning the Acquired Assets,
including proprietary data obtained from drilling and testing coalbed
methane wells on the Acquired Assets ("Information") and to keep any and
all Information obtained by CCBM or its agents and representatives
confidential for a period of four (4) years from May 31, 2001. The
Information obtained by CCBM shall not be considered confidential if:
11
12
(i) It obtained such Information from the public domain other than as
a result of a disclosure by RMG, or one of its agents or
representatives;
(ii) Such Information became available to CCBM on a non-confidential
basis from a source other than RMG, or one of its agents or
representatives, where that source has represented CCBM it is
entitled to disclose it; or
(iii) Such Information was known to CCBM on a non-confidential basis
prior to its disclosure to CCBM by RMG, or one of its agents or
representatives.
ARTICLE IX
GENERAL PROVISIONS
9.1 Notices. All notices and other communication hereunder ("Notices") shall be
in writing and shall be deemed given upon personal delivery, facsimile
transmissions (with written or facsimile confirmation of receipt), or delivery
by a reputable overnight commercial delivery service (delivery, postage or
freight charges prepaid) on the fourth day following deposit in the United
States mail (if sent by registered or certified mail, return receipt requested,
delivery, postage or freight charges prepaid), addressed to the parties at the
following addresses (or at such other address for a party as shall be specified
by like Notice):
If to RMG:
Rocky Mountain Gas, Inc.
1 East Alger
Suite 206
Sheridan, WY 82801
Fax: (307) 673-9711
Attn: Peter G. Schoonmaker, President
And
U.S. Energy Corp.
877 N. 8TH West
Riverton, WY 82501
Fax: (307) 857-3050
Attn: Keith G. Larsen, President
If to CCBM:
CCBM, INC.
14701 St. Mary's Lane, Suite 800
Houston, TX 77079
Fax: (281) 496-0884
Attn: Ken Trahan
12
13
9.2 Survival of Representations, Warranties, Covenants and Agreements, All
representations, warranties, covenants, obligations, liabilities and agreements
of the parties contained in this Agreement or in any schedule, document
certificate or other instrument delivered by or on behalf of the parties
pursuant to this Agreement, shall survive the Closing Date, except for the
representations and warranties contained in Sections 1.2 and 5.3, which are
limited in their application solely to events or circumstances occurring or
arising before the transfer of the Acquired Assets to CCBM.
9.3 Further Assurances. The parties hereto agree to do such further acts and to
execute and deliver any additional agreements or documents as maybe required to
consummate, evidence or confirm the transactions and agreements contained in
this Agreement.
9.4 Entire Agreement, Amendment Waivers. This Agreement and any exhibits
delivered by the parties hereto contemporaneously herewith constitute the entire
agreement between the parties pertaining to the subject matter contained herein
and supersede all prior agreement, representations and understandings of the
parties hereto. No supplement, modification or amendment of this Agreement shall
be binding unless executed in writing by all of the parties hereto.
9.5 Binding Upon Heirs and Successors. This Agreement shall be binding upon and
inure to the benefit of the respective successors, heirs, assigns and personal
representatives of the parties hereto.
9.6 Signatures in a Representative Capacity. Each party whose signature is
affixed hereto in a representative capacity represents and warrants that he is
authorized to execute this Agreement on behalf of and to bind the entity on
whose behalf his signature is affixed.
9.7 Governing Law. This Agreement shall be construed in accordance with and be
governed by the laws of the State of Wyoming.
9.8 Severability. In the event any provision of this Agreement shall be held to
be void or unenforceable, the remaining provisions shall remain in full force
and effect.
9.9 Expenses. Each party to this Agreement shall bear its own expenses in
connection with this Agreement and the transactions contemplated hereby.
9.10 Currency. All references herein to dollars or "$" shall be in the currency
of the United States of America.
9.11 Headings. The paragraph heading in this Agreement are included for ease and
reference only and are in no way intended to describe, interpret, define or
limit the scope of this Agreement or any provisions hereof.
9.12 Arbitration. Any dispute that arises by virtue of this Agreement between
CCBM and RMG shall be resolved by arbitration pursuant to the rules and
procedures of the American
13
14
Arbitration Association and governed by the laws of the State of Wyoming.
Arbitration shall be conducted in the state of Colorado.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the _____ day
of June, 2001.
ROCKY MOUNTAIN GAS, INC. CCBM, INC.
By: By:
--------------------------------- ---------------------------------
Title: Title:
------------------------------ ------------------------------
14