Exhibit 10.1
AMENDED AND RESTATED OPERATIONS AND CONVERTIBLE NOTE PURCHASE AGREEMENT
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This Agreement ("Agreement") is entered into between HIGH PLAINS GAS, LLC,
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with offices at Gillette, Wyoming 82717 ("Operator"), CURRENT ENERGY PARTNERS
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CORPORATION whose address is ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
("Current") and CEP-M PURCHASE, LLC, whose address is ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇,
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▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ("CEP"). Current and CEP may collectively be referred to
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as Owner. Operator, Current and CEP may collectively be referred to as the
"Parties." This Agreement supersedes and replaces the Operations and Membership
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Purchase Agreement between the Parties dated September 3, 2010.
R E C I T A L S:
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A. On or before September 23, 2010, CEP intends to purchase certain producing
and non-producing oil, gas and mineral leases described on Exhibit A
attached hereto (the "Properties").
B. To facilitate purchase of the Properties, CEP will issue to Operator a
Convertible Promissory Note in the form attached hereto as Exhibit B (the
"Convertible Note") in consideration Operator will provide CEP the funds as
set forth in paragraph 4 hereto. The Convertible Promissory Note is
convertible into 51% of the equity of CEP upon the satisfaction of certain
conditions.
B. Pending the purchase of the Properties, CEP has been the current operator
of the Properties pursuant to that certain Purchase and Sale Agreement
effective July 1, 2010, by and between Pennaco Energy, Inc. and Owner
("Pennaco Agreement").
C. CEP desires to engage Operator to perform the operating duties specified in
the Pennaco Agreement.
D. Operator is experienced in oil and gas operations and desires to be engaged
by Owner as an independent contractor to perform specific duties in the
Owner's operation of the Properties through closing of the Marathon
Agreement.
E. The Parties have agreed upon the terms and conditions upon which Operator
will perform its duties in the Owner's operation of the Properties.
NOW, THEREFORE, for and in consideration of the recitals stated herein above all
of which are fully incorporated as part of the mutual covenants and the below
agreements ("Agreements") contained herein, the Parties agree as follows:
AGREEMENT
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1. Upon execution of this agreement, and upon the terms and subject to the
conditions contained herein, Owner appoints Operator and Operator shall
accept the appointment as operator of the Properties. The Leases shall be
operated in accordance with the terms set forth on Exhibit C attached
hereto and incorporated herein.
2. Upon conversion of the Convertible Note (the "Conversion Date"), Operator
shall no longer be the operator and its obligations under paragraph 1 and
Exhibit C terminate. On the Conversion Date, Operator will receive a 51%
membership interest in CEP, on the following terms and conditions:
A. On the Conversion Date, CEP shall deliver an assignment of
membership interest or comparable document transferring a 51% membership
interest in CEP to Operator, free and clear of all liens and encumbrances.
On or before the Conversion Date, CEP or Current shall also prepare an
Amended Operating agreement satisfactory to Operator, as well as other
amended documents that may be requested by Operator or required by law.
Within two days after the Conversion Date, Operator, or its designee, will
be named as manager of CEP.
B. Affirmative Covenants. Prior to the Conversion Date, except as
consented in writing by Operator, CEP will, and Current will cause CEP to:
(a) conduct its operations according to the ordinary and usual
course of business and use reasonable efforts to preserve intact its
business organization and business relationships;
(b) promptly inform the Operator in writing of any material
variances from the representations and warranties contained in this
Agreement; and
(c) promptly inform the Operator in writing of any material
variances from the information contained in any financial statements
or other documents provided by Owner to Operator.
C. Negative Covenants. Prior to the Conversion Date, except as
consented to in writing by the Operator, CEP will not, and Current will not
permit CEP to:
(a) issue, sell or transfer any of its equity securities,
securities convertible into its equity securities or warrants, options
or other rights to acquire its equity securities, or any bonds or
other securities issued by it;
(b) mortgage, pledge or subject to any material lien, charge or
any other material encumbrance any portion of its properties or
assets, except liens for current property taxes not yet due and
payable and encumbrances and pledges associated with the financings
provided by Amegy as part of the anticipated Closing or any other
encumbrance mutually agreed to by the parties in writing;
(c) sell, assign or transfer any material portion of its tangible
or intangible assets, except in the ordinary course of business; and
(d) make any amendments to its Certificate of Incorporation or
By-Laws, except as expressly approved in writing by the Operator.
D. As an inducement to the Operator to enter into this Agreement, CEP
and Current hereby represent and warrant that, as of the date of this
Agreement and the Conversion Date:
(a) Organization and Corporate Power. CEP is a limited liability
company validly existing and in good standing under the laws of the
State of Delaware. CEP has all requisite corporate power, authority,
material authorizations, licenses, and permits necessary to own its
properties and to carry on its business as now conducted.
(b) Membership Interest. As of the Conversion Date, there will be
no lien, charge, pledge, or other encumbrance on the membership
interest of CEP. There are no rights, subscriptions, warrants,
options, conversion rights or agreements of any kind outstanding to
purchase or otherwise acquire any membership interest of CEP or
securities or obligations of any kind convertible into or exchangeable
for any membership interest of CEP.
(c) Subsidiaries. CEP does not own, directly or indirectly, any
stock, partnership interest, joint venture interest, or other security
or interest in any corporation, organization, or entity.
(d) Absence of Undisclosed Liabilities. CEP does not have any
obligations or liabilities, contingent or otherwise, except the
Performance Deposit of $750,000.00 pursuant to the Pennaco Agreement,
accrued payroll and other liabilities (not exceeding a total amount of
$30,000) expressly disclosed in this Agreement or in the financial
statements to be provided by Owner to Operator.
E. Tax Matters.
(a) Except as set forth herein, (i) CEP has timely filed all
material Tax returns and has paid all taxes indicated as due and
payable
on such returns; (ii) all Taxes attributable to periods ending on
or before the date of the Closing (the "Closing Date") whether or not
the Tax period ends on or before the Closing Date) have been
adequately accrued on CEP's books and records; (iii) no deficiency for
any material amount of Tax has been asserted or assessed by any Taxing
authority against CEP or the Current with respect to CEP which remain
outstanding; (iv) neither the Current nor CEP have expressly consented
to extend the time in which any Tax may be assessed or collected by
any Taxing authority; and (v) neither CEP nor the Current has been
notified regarding any ongoing or pending Tax audits by any Taxing
authority against CEP or the Current with respect to CEP.
(b) For purposes of this Agreement, "Tax" or "Taxes" shall mean
any federal, state, local or foreign income, gross receipts, license,
payroll, employment, excise, severance, stamp, occupation, premium,
property or windfall profits taxes, environmental taxes, customs
duties, capital stock, franchise, employees' income withholding,
foreign or domestic withholding, social security, unemployment,
disability, real property, personal property, sales, use, transfer,
value added, alternative or add-on minimum or other tax, fee,
assessment or charge of any kind whatsoever including any interest,
penalties or additions to Tax or additional amounts in respect of the
foregoing.
F Contracts and Commitments. There are no contracts or commitments
which are material to CEP other than the Pennaco Agreement and contracts
and the agreements described therein, and those contracts and commitments
expressly disclosed in writing.
G. Litigation. There are no material actions, suits, proceedings,
orders or investigations pending or, to the Owner's knowledge, threatened
against CEP at law or in equity, or before or by any federal, state,
municipal or other governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign.
H. Compliance with Law. CEP is in compliance in all material respects
with all applicable laws, regulations and orders of any governmental agency
or governing body having jurisdiction over its operation, including, but
not limited to, laws, orders, and regulations relating to the sale and
issuance of securities, zoning, building codes, occupational safety and
health, water or air pollution, employment practices, and payment of taxes.
I. Bankruptcy. Neither CEP nor Current has ever been, and is not now,
debtors or bankrupts in any bankruptcy proceeding.
J. True Statements. Neither this Agreement nor any documents,
certificate, or statement furnished by CEP or Owner to Operator contains
any untrue statement of a material fact or omits to state a material fact
necessary to make such statements of facts not misleading.
3. Subject to the conditions set forth in this Agreement, the closing of this
Agreement ("CLOSING") shall take place at the offices of Current Energy
Partners Corporation on or before September 30, 2010, or at such other
time, date and place as the Parties mutually agree upon in writing (the
"CLOSING DATE"). At the Closing, CEP shall deliver to Operator the executed
Convertible Note.
4. In consideration of the purchase of the Convertible Note, and the
appointment of Operator as operator of the Properties pursuant to paragraph
1, Operator shall pay to CEP the sum of $3,550,000 at the Closing.
Concurrently with the execution of this Agreement, Operator shall deposit
with Marathon (Pennaco Energy) ("ESCROW AGENT") the Contribution, to be
held by Escrow Agent pursuant to this Agreement. All fees payable to the
Escrow Agent under the Escrow Agreement shall be borne and paid one-half by
Operator and one-half by Current. At Closing, the Contribution and any
interest earned thereon shall be distributed to CEP (to an account as shall
be directed in writing by Current. Operator will use commercially
reasonable efforts to obtain the bonds required to close the Pennaco
Agreement. Notwithstanding the preceding sentence, Operator makes no
guarantee or promise that it can obtain such bonds.
5. At any time prior to Closing, the Parties shall have the right to terminate
this Agreement in its entirety, provided notice of termination is provided
in writing and in accordance with paragraph 9. In the event this Agreement
is terminated pursuant to this paragraph, the Contribution and any
accumulated interest (less the fees payable to the Escrow Agent) shall be
immediately returned to Operator, along with any costs and expenses
incurred by Operator in assisting with closing the Pennaco Agreement
(including but not limited to any expenses in obtaining or transferring
bonds and permits as required by the Wyoming Oil and Gas Conservation
Commission or other regulatory authority).
6. As of the date hereof and as of the Closing Date, Owner hereby represents
and warrants to Operator that Owner has the legal capacity to enter into
this Agreement and to consummate the transactions contemplated hereby. This
Agreement and all other agreements and instruments executed by Owner in
connection herewith have been duly executed and delivered by Owner, and
assuming this Agreement and such other agreements and instruments
constitute the valid and binding obligations of Operator, constitute legal,
valid and binding obligations of Owner, enforceable against Owner in
accordance with their terms, subject, as to enforceability, to bankruptcy,
insolvency, reorganization, moratorium and other laws of general
applicability relating to or affecting
creditors' rights and to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at
law).
7. The Parties shall not assign, in whole or in part, any of the rights,
obligations or benefits arising under this Agreement, without the prior
written consent of the other Parties, except that either Party may assign
its rights, obligations and benefits hereunder to an affiliate without the
prior written consent of the other Party.
8. This Agreement shall be governed by and construed in accordance with the
laws of the State of Wyoming.
9. Any notice, request, consent, payment, demand or other communication
required or permitted to be given under this Agreement shall be in writing
and shall be deemed to have been duly given on the date of service if
served personally on the Party to whom notice is given, on the date of
confirmation of receipt if sent by facsimile or on the third day after
mailing if mailed to the Party to whom the notice is to be given by
certified mail, return receipt requested, postage prepaid and properly
addressed as follows:
If to Owner:
Current Energy Partners Corporation
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Attention: ▇▇▇▇▇ ▇. ▇▇▇▇
Phone : ▇▇▇-▇▇▇-▇▇▇▇
E-Mail: ▇▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇
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CEP-M Purchase, LLC
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Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
E-Mail: ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇
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If to Operator:
High Plains Gas, LLC
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Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
E-Mail: ▇▇▇▇▇▇▇▇▇_▇▇▇@▇▇▇▇▇▇▇.▇▇▇
Any Party may change its address by giving the other Parties written
notice of the new address in the manner set forth above.
10. If any portion of this Agreement shall be found by a court of competent
jurisdiction to be illegal, unenforceable or invalid, that portion of this
Agreement will be null and void and the remainder of this Agreement will be
binding on the Parties as if the illegal, unenforceable or invalid
provisions had never been contained herein.
11. No waiver by either Party of any term or any breach of this Agreement shall
be construed as a waiver of any other term or breach hereof, or of the same
or a similar term or breach on any other occasion.
12. No modification or amendment of this Agreement shall be binding upon any
Party unless in writing and signed by all Parties.
13. This Agreement constitutes the entire agreement between the Parties
pertaining to the subject matter hereof, and supersedes all prior
agreements, understandings, negotiations and discussions, whether oral or
written, of the Parties regarding the subject matter hereof.
14. This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which shall constitute one and the
same instrument
15. If any party is rendered unable, wholly or in part, by force majeure to
carry out its obligations under this agreement, that party shall give to
all other parties prompt written notice of the force majeure with
reasonably full particulars concerning it; thereupon, the obligations of
the party giving notice, so far as they are affected by the force majeure,
shall be suspended during, but no longer than, the continuance of the force
majeure. The term "force majeure", as here employed, shall mean an act of
God, strike, lockout, or other industrial disturbance, act of the public
enemy, terrorist attack, war, blockade, public riot, lightning, fire,
storm, flood or other act of nature, explosion, governmental action,
governmental delay, restraint or inaction, unavailability of equipment, and
any other
cause, whether of the kind specifically enumerated above or otherwise,
which is not reasonably within the control of the party claiming
suspension. The affected party shall use all reasonable diligence to remove
the force majeure situation as quickly as practicable. The requirement that
any force majeure shall be remedied with all reasonable dispatch shall not
require the settlement of strikes, lockouts, or other labor difficulty by
the party involved, contrary to its wishes; how all such difficulties shall
be handled shall be entirely within the discretion of the party concerned.
16. Each party will use reasonable care in the treatment of the other party's
confidential information including but not limited to financial data,
petroleum reserve data, geologic data, type production data, sales history,
vendors, products, or strategic plans and will not knowingly disclose any
confidential information of the other party to any third party without
first obtaining written consent of the other party. Each party shall limit
dissemination of the other party's confidential information only to those
employees who require access thereto to perform their functions under this
Agreement, and who have been apprised of the confidential nature of such
information and agree to abide by the obligations contained herein. Each
party agrees to return such confidential information to the disclosing
party upon receipt of written request and upon the termination of this
Agreement.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first written above.
OWNER:
CURRENT ENERGY PARTNERS CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇ - CEO 9/30/2010
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇, CEO
CEP-M PURCHASE, LLC
BY: CURRENT ENERGY PARTNERS CORPORATION, MANAGER
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇ - CEO 9/30/2010
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇, CEO
OPERATOR:
HIGH PLAINS GAS, LLC
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ September 30, 2010
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Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Chief Operating Officer