PURCHASEAND SALE AGREEMENT

 

ThisPurchase and Sale Agreement (the "Agreement"), dated as of December15, 2003, is made and entered into by and between **CBM Energy Inc.**,a Kansas corporation ("Seller"), whose address is 12980 Foster, Suite120, Overland, KS 66213, and **Petrol Oil and Gas, Inc.**, a Nevadacorporation ("Purchaser"), whose address is 2300 Patrick Lane, Suite26, Las Vegas, NV 89119.

 

RECITALS:

 

WHEREAS,Seller has a prospect area containing certain oil and gas mineral leases("Leases") in and around Franklin, Coffey, Woodson, Lyon and GreenwoodCounties, Kansas (the "Prospect Area"), amounting to approximately36,000 acres;

 

WHEREAS,Seller has already transferred the Leases to Purchaser on an evaluation basis;

 

WHEREAS,Seller owns or has title to approximately 10 existing wells ("Wells")with supporting equipment and facilities within the Prospect Area;

 

WHEREAS,collectively the Leases, Wells, supporting equipment and facilities in theProspect Area constitute the purchasable assets of the Seller("Assets");

 

WHEREAS,Seller desires to sell to Purchaser and Purchaser desires to purchase fromSeller the Assets in the manner and upon the terms and conditions hereinafterset forth.

 

NOWTHEREFORE, in consideration of the Recitals and the mutual covenants,conditions, representations and warranties hereinafter set forth, the partiesagree as follows:

 

-  Purchase    of Assets. On the terms and subject to the conditions set forth in  this Agreement, Seller agrees to sell, convey, assign, transfer and deliver to  Purchaser and Purchaser agrees to purchase from Seller all of the Assets.**Purchase  Price.**As consideration for the sale, conveyance, assignment, transfer  and delivery of the Assets, the Purchaser agrees on the Closing Date to  deliver to the Seller Seven Hundred Sixty-Five Thousand (765,000) shares of  unregistered restricted common shares of the Purchaser, $0.001 par value per  share (the "Shares"), said stock to be issued and delivered by the  Purchaser to the Seller concurrent with Closing. Purchaser and Seller  acknowledge that the stock would be restricted and not freely tradeable except  as allowed by SEC regulations and that such stock will bear the following  restrictive legend:**THE    SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER    THE SECURITIES ACT OF 1933 (THE "ACT"). THE SECURITIES HAVE BEEN    ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR    OTHERWISE DISPOSED OF IN THE ABSENCE OF A CURRENT AND EFFECTIVE REGISTRATION    STATEMENT UNDER THE ACT WITH RESPECT TO SUCH SHARES, OR AN OPINION    SATISFACTORY TO THE ISSUER AND ITS COUNSEL TO THE EFFECT THAT REGISTRATION    IS NOT REQUIRED UNDER THE ACT.****-  Sellers    Title. Seller represents that Seller's title to the Assets as of the    Closing shall be Defensible Title as defined below. The conveyance to be    delivered by Seller to Purchaser shall be without warranty of title other    than against the claims of third parties claiming the same or any part    thereof by, through and under Seller. As reasonably requested by Purchaser,    Seller also agrees to execute and deliver at and after Closing such other    assignments, bills of sale and other documents which are appropriate to    transfer the Assets to Purchaser.
As  used in this Agreement, the terms "Defensible Title" shall mean:

(a)  As to each Lease that title of Seller which: (i) is filed of record and free  from reasonable doubt such that a prudent person engaged in the business of  the ownership, development and operation of producing oil and gas properties,  with knowledge of all the facts and their legal effect, would be willing to  accept the same; and (ii) is free and clear of all liens, encumbrances,  obligations or defects which are of record prior to Closing.

(b)  As to each Well that title of Seller which: (i) entitles Seller to own at  least the "Net Revenue Interest" for the Wells as being associated  with such Wells, without reduction, suspension or termination throughout the  productive life of such Well; (ii) requires Seller to bear no greater  "Working Interest" than the Working Interest for each of the Wells,  without increase throughout the productive life of such Well; and (iii) is  free and clear of all liens, encumbrances, obligations or defects.
Waiver    and Release. In consideration of the foregoing undertakings by    Purchaser, Seller forever waives and releases any and all claims, liens,    charges, or encumbrances of any kind whatsoever (collectively, the    "Claims") against Purchaser and any of its directors, officers,    employees, agents, subsidiaries and/or affiliates including, without    limitation, any Claims related to the Assets sold pursuant to paragraph 1 above or    otherwise in connection with any agreement, arrangement or understanding,    actual or alleged, between Seller and Purchaser from now until the end of    the world. Upon reasonable request by Purchaser, Seller agrees to execute    any acknowledgement of the foregoing waiver and release in form reasonably    satisfactory to counsel for Purchaser.**Closing.    The Closing under this Agreement shall be held on or before December 31,    2003 or at such other time as the parties shall designate. At the Closing,    (a) Seller shall deliver: (i) an accurate list of the Leases, including the    legal description, owners name(s) and address, acreage lease costs and due    dates; (ii) a list and physical description of the Wells , along with    attendant supporting equipment and facilities in the Prospect Area; and    (iii) a list and map of all Seller's production and gathering systems; and    (b) Purchaser shall deliver to Seller a certificate for 765,000 Shares.Entire    Agreement; Modification. This Agreement constitutes the entire,    final and complete agreement between Seller and Purchaser and supersedes and    replaces all prior or existing written and oral agreements between Seller    and Purchaser with respect to the subject matter hereof, and may only be    modified in writing by the agreement of all parties.**Applicable    Law; Dispute Resolution. This Agreement shall be governed by and    construed in accordance with the law of the State of Nevada without regard    to the conflicts of law provisions thereof. Any dispute arising under this    Agreement shall be settled by binding arbitration before a single arbitrator    under the Commercial Arbitration Rules of the American Arbitration    Association. The arbitrator shall award the prevailing party its costs and    expenses, together with reasonable attorneys' fees (including the allocable    share, if any, of in-house counsel fees) and, accountants' and expert    witness fees, if any. The award of the arbitrator may be entered in and    enforced by any court of competent jurisdiction.**Investment    Commitment and Registration under the Securities Act.-  Seller      represents to Purchaser as follows: (i) The Shares are being acquired for      Seller's own account for investment only and not with a view to the      distribution or resale of all or any portion of the Shares; and (ii)      Seller has access to complete information regarding the assets,      properties, business and finances of Purchaser. Seller has met and      discussed the assets, properties, business and finances of Purchaser with      Purchaser's officers and directors.Seller      agrees as follows: (i) Seller will not, directly or indirectly, offer or      sell, transfer or otherwise dispose of all or any portion of the Shares,      or solicit any offer to buy, purchase or otherwise acquire all or any      portion of the Shares, after the Closing Date, unless the Shares are duly      registered under the Securities Act of 1933, as amended (the      "Act") and under applicable state securities laws, or such      proposed offer, sale, transfer or other disposition of the Shares is      exempt from the registration requirements of the Act and applicable state      securities laws; and (ii) Certificates representing the Shares may bear a      legend in form and substance satisfactory to counsel for Purchaser      referring to the investment commitment contained in this Agreement, that      the Shares have not been registered under the Act or any state securities      laws, and that no transfer of the Shares may be made unless the Shares are      registered under the Act or an exemption from such registration is      available.**-  Counterparts.      This Agreement may be executed in one or more counterparts, each of which      shall be deemed an original instrument, but all such counterparts together      shall constitute but one agreement.**Notice.    All notices which are required or may be given pursuant to this Agreement    shall be sufficient in all respects if given in writing and delivered    personally, by overnight courier, by telecopy or by registered or certified    mail, postage prepaid, as follows:
If    to Seller:

 

CBM      Energy Inc.

12980      Foster, Suite 120

Overland,      Kansas 66213

Attention:      Mark Haas, President

If    to Purchaser:

 

Petrol      Oil and Gas, Inc.

2300      Patrick Lane, Suite 26

Las      Vegas, NV 89119

Attention:      Paul Branagan, President
**-  Section    Headings. The section headings in this Agreement are included for    convenience only, are not a part of this Agreement and shall not be used in    construing it.
INWITNESS WHEREOF, this Agreement has been signed by each of the parties hereto,all as of the date above written.

 

Seller:

 

CBM      ENERGY INC.

 

 

 

By:      ___________________________________

           Mark Haas, President

 

 

Purchaser:

 

PETROL      OIL AND GAS, INC.

 

 

 

By:      ___________________________________

           Paul Branagan, President**************