Exhibit 10.1
 
STOCK PURCHASE AGREEMENT

THIS STOCK PURCHASE AGREEMENT (the “Agreement”), dated June 9, 2014 (the
“Closing Date”), is by and between Carbon Natural Gas Company, a Delaware
corporation (the “Company”) and RBCP Energy Fund Investments, LP (the “Selling
Stockholder”).  The Company and the Selling Stockholder are sometimes referred
to collectively herein as the “Parties” and individually as a “Party.”
 
RECITALS:

WHEREAS, Selling Stockholder is the owner of 8,153,777 shares of the Company’s
common stock  (the “Shares”);
 
WHEREAS, the Parties have agreed that the Company shall purchase the Shares from
the Selling Stockholder upon the terms and subject to the conditions set forth
in this Agreement.
 
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants hereinafter set forth, the Parties do hereby agree as follows:
 
ARTICLE 1
PURCHASE OF STOCK
 
1.1           Purchase of Shares.  Subject to the terms and conditions
hereinafter set forth, the Company hereby agrees to acquire from the Selling
Stockholder the Shares, at a price in cash equal to $3,261,511 in the aggregate
(or $0.40 per share) (the “Purchase Price”), and the Selling Stockholder agrees
to sell, convey, transfer and assign the Shares to the Company on the Closing
Date, free and clear of all liens, encumbrances, purchase rights, claims,
pledges, mortgages, security interests, or other limitations or restrictions
whatsoever.  The certificate(s) representing the Shares will be surrendered and
delivered by the Selling Stockholder on the Closing Date, along with a duly
executed stock power with Medallion Guarantee, in exchange for the Purchase
Price which shall be paid on the Closing Date by wire transfer of immediately
available funds to the account or accounts designated by the Selling
Stockholder.
 
1.2           Closing. The closing of the transactions contemplated by this
Agreement (the “Closing”) will take place at the offices of the Company on the
Closing Date.

ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SELLING STOCKHOLDER
 
Selling Stockholder represents and warrants to the Company as follows:
 
2.1           Ownership of the Shares. Selling Stockholder is the record and
beneficial owner of the Shares free and clear of all liens, encumbrances,
purchase rights, claims, pledges, mortgages, security interests, or other
limitations or restrictions whatsoever and Selling Stockholder is not subject
to, or a party to, any Articles of Incorporation or Bylaws provisions,
shareholder control agreements, buy-sell agreements, contracts, instruments or
other restrictions of any kind or character which directly or indirectly
restrict or otherwise limit in any manner the voting, sale or other disposition
of such Shares.
 
2.2           Authority of Selling Stockholder.  Selling Stockholder has full
and unrestricted legal right, power and authority to enter into this Agreement,
and to sell, assign, transfer, and deliver to the Company valid, lawful and
marketable title to the Shares to be sold, assigned and transferred by Selling
Stockholder pursuant to this Agreement. Selling Stockholder represents that
neither the execution and delivery of this Agreement or any other agreements
contemplated hereby nor the consummation of the transactions contemplated hereby
will conflict with or result in any violation of, or result in default or loss
of a benefit under, or permit the acceleration of any obligation under, any
judgment, order, decree, mortgage, contract, agreement, deed of trust,
indenture, lease or other instrument or any federal, state or local statute,
law, ordinance, rule, or regulation applicable to Selling Stockholder or any of
its assets or property or business.  This Agreement has been duly executed and
delivered by the Selling Stockholder and (assuming due execution and delivery by
the Company) constitutes the Selling Stockholder’s legal, valid and binding
obligation, enforceable against the Selling Stockholder in accordance with its
terms.
 
 
1

--------------------------------------------------------------------------------

 
 
2.3           Title.  Upon delivery to the Company of certificate(s)
representing all of the Shares, the Company will acquire lawful, valid and
marketable title to the Shares free and clear of all liens, encumbrances,
purchase rights, claims, pledges, mortgages, security interests, or other
limitations or restrictions whatsoever.
 
2.4           Prohibitions of Transactions.  Selling Stockholder is not
presently a party to or subject to or bound by any agreement or any judgment,
order, writ, injunction or decree of any court or any governmental body which
contains any provision which would or could operate to prevent the carrying out
of this Agreement or the transactions contemplated hereby. There are no actions,
suits, proceedings at law or in equity by any person or entity, or any
arbitration or administrative proceeding or other proceeding pending or
threatened, which could prevent consummation of the transactions contemplated by
this Agreement.

ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
 
The Company represents and warrants to Selling Stockholder as follows:
 
3.1           Approval.  The Company has all necessary corporate power and is
duly authorized to purchase, acquire and accept the Shares as specified in this
Agreement.  The Company has taken all action required to authorize and approve
the execution and delivery of this Agreement and the consummation by the Company
of the transactions contemplated hereby.
 
3.2           Authority of Company.  The Company has all requisite corporate
power and authority to execute and deliver this Agreement, to carry out its
obligations hereunder, and to consummate the transactions contemplated
hereby.  The Company has obtained all necessary approvals for the execution and
delivery of this Agreement, the performance of its obligations hereunder, and
the consummation of the transactions contemplated hereby.  This Agreement has
been duly executed and delivered by the Company and (assuming due execution and
delivery by the Selling Stockholder) constitutes the Company’s legal, valid and
binding obligation, enforceable against the Company in accordance with its
terms.
 
3.3           Prohibitions of Transactions. The Company is not presently a party
to or subject to or bound by any agreement or any judgment, order, writ,
injunction or decree of any court or any governmental body which contains any
provision which would or could operate to prevent the carrying out of this
Agreement or the transactions contemplated hereby. There are no actions, suits,
proceedings at law or in equity by any person or entity, or any arbitration or
administrative proceeding or other proceeding pending or threatened, which could
prevent consummation of the transactions contemplated by this Agreement.
 
3.4           Periodic Reports.  The Company has timely filed with the U.S.
Securities and Exchange Commission (the “SEC”) all periodic reports required to
be filed by the Company on Forms 10-K and 10-Q with the SEC and has filed with
the SEC all periodic reports required to be filed on Form 8-K with the
SEC.  The purchase of the Shares by the Company pursuant to this Agreement is
not prompted by any information concerning the Company or any subsidiary which
is not set forth in the periodic reports and other documents of the Company that
have been publicly filed on the SEC’s EDGAR website.

ARTICLE 4 
CLOSING DELIVERIES
 
4.1           Deliveries of Selling Stockholder.  Selling Stockholder shall
deliver to the Company on the Closing Date the stock certificate(s) representing
the Shares duly endorsed for transfer or accompanied by an executed stock power
with Medallion Guarantee.
 
 
2

--------------------------------------------------------------------------------

 
 
4.2           Deliveries of Buyer. The Company shall deliver to Selling
Stockholder on the Closing Date wire transfer of immediately available funds to
the following account:
 

Bank Name:           ABA Bank Routing No.:               Account No.:          
Name on Account:    

 
ARTICLE 5
INDEMNIFICATION
 
5.1           By Company.  The Company agrees to indemnify, reimburse, defend
and hold harmless the Selling Stockholder from and against any and all costs,
losses, liabilities, damages, lawsuits, deficiencies, claims and expenses,
including without limitation, interest, penalties, costs of mitigation,
reasonable attorneys’ fees and all amounts paid in investigation, defense or
settlement of any of the foregoing less any undisputable net tax benefits
recognized by the Party seeking indemnification as a result of the matter which
is the subject of the indemnification claim (collectively, the “Damages”),
incurred in connection with, arising out of, resulting from or incident to:
 
(a)           Any breach of or any inaccuracy in (or any alleged breach of or
inaccuracy in) any representation or warranty made by the Company in this
Agreement or any other document delivered by the Company; or
 
(b)           Any breach of or failure by the Company to perform any covenant or
obligation of the Company set out or contemplated in this Agreement or any other
document delivered by the Company.
 
5.2           By Selling Stockholder.  Selling Stockholder agrees to indemnify,
reimburse, defend and hold harmless the Company, from and against any and all
Damages incurred in connection with, arising out of, resulting from or incident
to:
 
(a)           Any breach of or any inaccuracy in (or any alleged breach of or
inaccuracy in) any representation or warranty made by such Stockholder in this
Agreement or any other document delivered by Selling Stockholder; or
 
(b)           Any breach of or failure by Selling Stockholder to perform any
covenant or obligation of Selling Stockholder set out or contemplated in this
Agreement or any other document delivered by Selling Stockholder.
 
5.3           Defense of Claims.
 
(a)           If any action, claim, suit, proceeding, arbitration, order, or
governmental investigation or audit (an “Action or Proceeding”) is filed or
initiated by any third party against any Party entitled to the benefit of
indemnity hereunder (an “Indemnified Party”), the Indemnified Party shall give
written notice of such Action or Proceeding to the Party owing indemnity
hereunder (an “Indemnifying Party”) as promptly as practicable (and in any event
within 30 days after the service of the citation or summons in respect of such
Action or Proceeding); provided, however, that the failure of any Indemnified
Party to give timely notice of any Action or Proceeding shall not affect any
rights to indemnification hereunder except to the extent that the Indemnifying
Party demonstrates actual damage caused by such failure.
 
(b)           After an Indemnified Party gives notice of an Action or Proceeding
to an Indemnifying Party, if the Indemnifying Party acknowledges in writing to
the Indemnified Party that the Indemnifying Party is obligated under the terms
of its indemnity hereunder in connection with such Action or Proceeding, then
the Indemnifying Party shall be entitled, if it so elects, to take control of
the defense and investigation of such Action or Proceeding and to employ and
engage attorneys of its own choice to handle and defend the same, such attorneys
to be reasonably satisfactory to the Indemnified Party, at the Indemnifying
Party’s cost, risk and expense (unless (i) the Indemnifying Party has failed to
assume the defense of such Action or Proceeding or (ii) the named parties to
such Action or Proceeding include both of the Indemnifying Party and the
Indemnified Party and the Indemnified Party has been advised in writing by
counsel that there may be one or more legal defenses available to such
Indemnified Party that are different from or additional to those available to
the Indemnifying Party), and to compromise or settle such Action or Proceeding,
which compromise or settlement shall be made only with the written consent of
the Indemnified Party, such consent not to be unreasonably withheld. The
Indemnified Party may withhold such consent if, among other things, such
compromise or settlement (x) would adversely affect the conduct of business of
such Indemnified Party or (y) requires less than an unconditional release to be
obtained.  If the Indemnifying Party takes control of the defense and
investigation of an Action or Proceeding under this Section 5.3, the
Indemnifying Party will provide the Indemnified Party access to all records,
documents and personnel of the Indemnifying Party and keep the Indemnified Party
informed relating to any Action or Proceeding under this Section 5.3
 
 
3

--------------------------------------------------------------------------------

 
 
(c)           If (i) the Indemnifying Party fails to assume the defense of such
Action or Proceeding within 15 days after the Indemnified Party gives notice
thereof pursuant to this Section 5.3, or (ii) the named parties to such Action
or Proceeding include both of the Indemnifying Party and the Indemnified Party
and the Indemnified Party has been advised in writing by counsel that there may
be one or more legal defenses available to such Indemnified Party that are
different from or additional to those available to the Indemnifying Party, the
Indemnified Party against which such Action or Proceeding has been filed or
initiated will (upon delivering notice to such effect to the Indemnifying Party)
have the right to undertake, at the Indemnifying Party’s cost and expense, the
defense, compromise or settlement of such Action or Proceeding on behalf of and
for the account and risk of the Indemnifying Party; provided, however, that such
Action or Proceeding shall not be compromised or settled without the written
consent of the Indemnifying Party, which consent shall not be unreasonably
withheld.  In the event the Indemnified Party assumes the defense of the Action
or Proceeding, the Indemnified Party will keep the Indemnifying Party reasonably
informed of the progress of any such defense, compromise or settlement.
 
(d)           The Indemnifying Party shall be liable for any settlement of any
action effected pursuant to and in accordance with this Section 5.3 and for any
final judgment (subject to any right of appeal), and the Indemnifying Party
agrees to indemnify and hold harmless the Indemnified Party from and against any
Damages by reason of such settlement or judgment.  Regardless of whether the
Indemnifying Party or the Indemnified Party assumes the defense of any Action or
Proceeding under this Section 5.3, the Indemnifying Party will pay all costs and
expenses in connection with the defense, compromise or settlement for such
Action or Proceeding.
 
(e)           If the Indemnifying Party assumes the defense of any Action or
Proceeding under this Section 5.3, the Indemnified Party shall cooperate in all
reasonable respects with the Indemnifying Party and the Indemnifying Party’s
attorneys in the investigation, trial and defense of such Action or Proceeding
and any appeal arising therefrom; provided, however, that the Indemnified Party
may, at its own cost, participate in the investigation, trial and defense of
such Action or Proceeding and any appeal arising therefrom. The Indemnifying
Party shall pay all expenses due under this Section 5.3 as such expenses become
due.  In the event such expenses are not so paid, the Indemnified Party shall be
entitled to settle any Action or Proceeding under this Section 5.3 without the
consent of the Indemnifying Party and without waiving any rights the Indemnified
Party may have against the Indemnifying Party.
 
5.4           Claims.  After becoming aware of a claim for indemnification under
this ARTICLE 5 not involving any Action or Proceeding of the type described in
Section 5.3, the Indemnified Party shall give notice to the Indemnifying Party
of such claim and the amount the Indemnified Party will be entitled to receive
hereunder from the Indemnifying Party; provided, however, that the failure of
the Indemnified Party to give notice shall not relieve the Indemnifying Party of
its obligations under this ARTICLE 5 except to the extent (if any) that the
Indemnifying Party shall have been actually prejudiced thereby.  If the
Indemnified Party does not receive an objection in writing (a “Notice of
Disagreement”) to such indemnification claim within 30 days of receiving notice
thereof, the Indemnified Party shall be entitled to recover promptly from the
Indemnifying Party the amount of such claim, and no later objection by the
Indemnifying Party shall be permitted.  If the Indemnifying Party agrees that it
has an indemnification obligation but objects in a timely-delivered Notice of
Disagreement that it is obligated to pay only a lesser amount, the Indemnified
Party shall nevertheless be entitled to recover promptly from the Indemnifying
Person the lesser amount, without prejudice to the Indemnified Party’s claim for
the difference.
 
 
4

--------------------------------------------------------------------------------

 
 
ARTICLE 6
 MISCELLANEOUS
 
6.1           Survival of Representations and Warranties.  The representations,
warranties, covenants and agreements set forth in this Agreement or in any
writing delivered to the Company or Selling Stockholder in connection with this
Agreement will survive the Closing Date and the consummation of the transactions
contemplated hereby.
 
6.2           Further Assurances.  Following the date hereof, each of the
Parties hereto shall execute and deliver such additional documents, instruments,
conveyances and assurances, and take such further actions as may be reasonably
required to carry out the provisions hereof and give effect to the transactions
contemplated by this Agreement.
 
6.3           Expenses.  The Company and Selling Stockholder will each pay all
of their respective legal and other expenses incurred in the preparation of this
Agreement and the performance of the terms and conditions hereof.
 
6.4           Governing Law.  This Agreement shall be construed and enforced in
accordance with the internal laws (and not the law of conflicts) of the State of
Delaware.
 
6.5           Entire Agreement.  This Agreement, including the other documents
referred to herein which form a part hereof, contains the entire understanding
of the Parties hereto with respect to the subject matter contained
herein.  There are no restrictions, promises, warranties, covenants, or
undertakings, other than those expressly provided for herein.  This Agreement
supersedes all prior agreements and undertakings between the Parties with
respect to such subject matter.  No waiver and no modification or amendment of
any provision of this Agreement shall be effective unless specifically made in
writing and duly signed by the Party to be bound thereby.
 
6.6           Severability.  If any term or provision of this Agreement is
invalid, illegal or unenforceable in any jurisdiction, such invalidity,
illegality or unenforceability shall not affect any other term or provision of
this Agreement or invalidate or render unenforceable such term or provision in
any other jurisdiction.  Upon such determination that any term or other
provision is invalid, illegal or unenforceable, the Parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the Parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated hereby be consummated as originally
contemplated to the greatest extent possible.
 
6.7           Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the Parties hereto and their respective successors
and assigns, and no other person shall acquire or have any right under or by
virtue of this Agreement.
 
6.8           Section Headings. Section headings contained in this Agreement are
inserted only as a matter of convenience and in no way define, limit, extend or
describe the scope of this Agreement or the intent of any of the provisions
hereof.
 
6.9           Counterparts.  This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall be
deemed to be one and the same agreement.  A signed copy of this Agreement
delivered by facsimile, e-mail or other means of electronic transmission shall
be deemed to have the same legal effect as delivery of an original signed copy
of this Agreement.
 
6.10         Waiver.  Waiver by any Party hereunder of any breach of or failure
to comply with any provision of this Agreement by the other Party shall not be
construed as, or constitute a continuing waiver of, or a waiver of any other
breach of, or failure to comply with, any other provision of this Agreement.
 
6.11         Non-exclusivity.  The rights, remedies, powers and privileges
provided in this Agreement are cumulative and not exclusive and shall be in
addition to any and all other rights, remedies, powers and privileges granted by
law, rule, regulation or instrument.
 
 
5

--------------------------------------------------------------------------------

 
 
6.12         Notices.  All notices, requests, consents and other communications
required or permitted hereunder must be in writing and must be personally
delivered, mailed first-class postage prepaid, registered or certified mail, or
delivered by a nationally recognized overnight courier:
 
If to the Selling Stockholder:

RBCP Energy Fund Investments LP
c/o RBCP Capital Partners
Royal Bank Plaza, South Tower
200 Bay Street, 9th Floor
Toronto, Ontario  M5J 2J2

If to the Company:

Carbon Natural Gas Company
1700 Broadway, Suite 1170
Denver, CO  80290
Attention: Patrick R. McDonald

With a copy to:

Welborn Sullivan Meck & Tooley, P.C.
1125 17th Street, Suite 2200
Denver, CO  80202
Attention: Jeffrey J. Peterson

or to such other address as Selling Stockholder or the Company may specify to
the other by written notice, and such notices and other communications will be
treated as being effective or having been given when delivered, if personally
delivered, or when received, if sent by mail.
 
[Signature page follows]
 
 
6

--------------------------------------------------------------------------------

 
 
IN WITNESS WHEREOF, this Agreement has been executed by the Parties hereto on
the day and year first above written.
 

 
COMPANY:
    CARBON NATURAL GAS COMPANY,     a Delaware corporation        
 
By:
/s/ Patrick R. McDonald       
Patrick R. McDonald,
     
Chief Executive Officer
            SELLING STOCKHOLDER:     RBCP ENERGY FUND INVESTMENTS LP          
By: 2001 RBCP U.S. GP LIMITED,
its general partner
              By: /s/ Amy Swaim        Name: Amy Swaim       Title: Treasurer  

 
 
7

--------------------------------------------------------------------------------