Document:

Agreement and Plan of Merger Between GeoMet Resources, Inc and GeoMet, Inc.

 EXHIBIT 10.1 

  
  
  
  
  
  
 AGREEMENT AND PLAN OF MERGER 
  
  
 BETWEEN 
  
  
  
 GEOMET RESOURCES, INC. 
  
 and 
  
 GEOMET, INC. 
  
  
  
  
  
  
  
 March 31, 2005 
  
  
  
  
  
  
  
  
  

 TABLE OF CONTENTS 
  

							
	 	  	 	  	 	  	Page

	ARTICLE I THE MERGER	  	1
				
	 	  	1.1	  	The Merger	  	1
	 	  	1.2	  	Closing Date	  	1
	 	  	1.3	  	Consummation of the Merger	  	2
	 	  	1.4	  	Effects of the Merger	  	2
	 	  	1.5	  	Certificate of Incorporation; Bylaws	  	2
	 	  	1.6	  	Directors and Officers	  	3
	 	  	1.7	  	Conversion of Securities	  	3
	 	  	1.8	  	Exchange of Certificates; Fractional Shares	  	3
	 	  	1.9	  	Taking of Necessary Action; Further Action	  	4
	 	  	1.10	  	GeoMet Stock Options	  	4
	 	  	1.11	  	Option to Purchase Additional Shares of Parent Common Stock.	  	4
	 	  	1.12	  	Dissenter’s Rights	  	5
		
	ARTICLE II REPRESENTATIONS AND WARRANTIES	  	5
				
	 	  	2.1	  	Representations and Warranties of GeoMet	  	5
	 	  	2.2	  	Representations and Warranties of Parent	  	15
		
	ARTICLE III COVENANTS OF GEOMET AND PARENT PRIOR TO THE EFFECTIVE TIME	  	21
				
	 	  	3.1	  	Conduct of Business by GeoMet Pending the Merger	  	21
	 	  	3.2	  	Conduct of Business by Parent Pending the Merger	  	23
	 	  	3.3	  	Joint Proxy Statement	  	25
	 	  	3.4	  	Meeting of Stockholders of GeoMet and Parent	  	25
		
	ARTICLE IV CONDITIONS	  	25
				
	 	  	4.1	  	Conditions to Obligation of Each Party to Effect the Merger	  	25
	 	  	4.2	  	Additional Conditions to Obligations of Parent	  	26
	 	  	4.3	  	Additional Conditions to Obligations of GeoMet	  	27
		
	ARTICLE V MISCELLANEOUS	  	27
				
	 	  	5.1	  	Termination	  	27
	 	  	5.2	  	Waiver and Amendment	  	28
	 	  	5.3	  	Nonsurvival of Representations, Warranties and Agreements	  	28
	 	  	5.4	  	Assignment	  	28
	 	  	5.5	  	Notices	  	28
	 	  	5.6	  	Governing Law	  	29
	 	  	5.7	  	Severability	  	29
	 	  	5.8	  	Counterparts	  	29
	 	  	5.9	  	Headings	  	29

  

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	 	  	 5.10
	  	Entire Agreement	  	29
	 	  	 5.11
	  	Third Party Beneficiaries	  	29
		
	 ARTICLE VI DEFINITIONS
	  	30
				
	 	  	 6.1
	  	Certain Defined Terms	  	30
	 	  	 6.2
	  	Certain Additional Defined Terms	  	33

  

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 EXHIBIT 10.1 
  
 AGREEMENT AND PLAN OF MERGER 
  

This Agreement and Plan of Merger, dated as of the 31st day of March, 2005 (the “Agreement“), is between GeoMet Resources, Inc., a Delaware corporation (“Parent“), and GeoMet, Inc., an Alabama corporation (“GeoMet“).

  
 WHEREAS, the respective Boards of Directors of Parent and
GeoMet and the Special Committee of the Board of Directors (the “Special Committee“) of GeoMet have determined that the merger of GeoMet with and into Parent is desirable and in the best interests of the stockholders of the respective
companies; 
  
 WHEREAS, the respective Boards of Directors of
Parent and GeoMet and the Special Committee of GeoMet, have approved the merger of GeoMet with and into Parent (the “Merger“), whereby each issued and outstanding share of Series B voting common stock, par value $.01 per share, of
GeoMet (“GeoMet Common Stock“) (other than Dissenting Shares, as defined herein) not owned directly or indirectly by GeoMet or Parent will be converted into the right to receive shares of common stock, par value $.001 per share, of Parent
(“Parent Common Stock“), upon the terms and subject to the conditions set forth herein; 
  
 WHEREAS, for federal income tax purposes, the parties intend that the Merger shall qualify as a reorganization within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the “Code“); 
  
 WHEREAS, the parties intend that this Agreement, as it relates to the Merger, shall constitute a “plan of reorganization” within the meaning of Treasury Regulation Section 1.368-3; and 
  
 WHEREAS, the parties hereto desire to set forth certain representations,
warranties and covenants made by each to the other as an inducement to the consummation of the Merger; 
  
 NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements herein contained, and intending to be legally bound hereby,
Parent and GeoMet hereby agree as follows: 
  
 ARTICLE I

  
 THE MERGER 
  
 1.1    The Merger. Subject to and in accordance
with the terms and conditions of this Agreement and in accordance with the General Corporation Law of the State of Delaware (the “DGCL“) and the Alabama Business Corporation Act (the “ABCA“), at the Effective Time (as defined in
Section 1.3) GeoMet shall be merged with and into Parent. As a result of the Merger, the separate corporate existence of GeoMet shall cease and Parent shall continue as the surviving corporation (sometimes referred to herein as the
“Surviving Corporation“). 
  
 1.2    Closing Date. The closing of the transactions contemplated by this Agreement (the “Closing“) shall take place at the offices of Thompson & Knight L.L.P., 1700 Pacific Avenue, Suite 3300,
Dallas, Texas 75201, as soon as practicable after the satisfaction or waiver of the conditions set forth in Article IV or at such other time and place and on such other date as 

 
Parent and GeoMet shall agree; provided, that the closing conditions set forth in Article IV shall have been satisfied or waived at or prior to such time.
The date on which the Closing occurs is herein referred to as the “Closing Date“. 
  
 1.3    Consummation of the Merger. As soon as practicable on the Closing Date, the parties hereto will cause the Merger to be consummated by filing with the Secretary of State of Delaware a
certificate of merger and with the Secretary of State of Alabama articles of merger in such forms as required by, and executed in accordance with, the relevant provisions of the DGCL and the ABCA. The “Effective Time“ of the Merger as that
term is used in this Agreement shall mean such time as the certificate of merger and articles of merger are duly filed with the Secretaries of State of Delaware and Alabama or at such later time (not to exceed 90 days from the date the certificate
is filed) as is specified in the certificate of merger and articles of merger pursuant to the mutual agreement of Parent and GeoMet. 
  
 1.4    Effects of the Merger. The Merger shall have the effects set forth in the applicable provisions of the DGCL and the
ABCA. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time all the properties, rights, privileges, powers and franchises of Parent and GeoMet shall vest in the Surviving Corporation, without any transfer or
assignment having occurred, and all debts, liabilities and duties of Parent and GeoMet shall attach to the Surviving Corporation, all in accordance with the DGCL and the ABCA. 
  
 1.5    Certificate of Incorporation; Bylaws 
  
 (a)    The Certificate of Incorporation
of Parent (the “Parent Certificate“), as in effect immediately prior to the Effective Time, shall be the Certificate of Incorporation of the Surviving Corporation, and thereafter shall continue to be its Certificate of Incorporation until
amended as provided therein and under the DGCL, except that such Certificate of Incorporation shall be amended as follows: 
  
 (i)    Article I shall be amended to read in its entirety as follows: 
  
 “The name of the corporation is GeoMet, Inc. (the
“Corporation”).” 
  
 (ii)    Article IV shall be amended to read in its entirety as follows: 
  
 “The aggregate number of shares of all classes of stock that the Corporation shall have the authority to issue is 10,000,000 shares
of common stock, par value of $0.001 per share.” 
  
 (iii)    Article VIII shall be amended to read in its entirety as follows: 
  
 “Intentionally omitted.” 
  
 (b)    The bylaws of Parent, as in effect immediately prior to the Effective Time, shall be the bylaws of the
Surviving Corporation and thereafter shall continue to be its bylaws until amended as provided therein and under the DGCL. 
  

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 1.6    Directors and Officers. At and after the Effective Time the directors
of the Surviving Corporation shall be W. Howard Keenan, Jr., Tomás R. LaCosta, J. Darby Seré, William C. Rankin, Philip G. Malone, Brett S. Camp and Jeffrey Smith, each to hold office in accordance with the Certificate of Incorporation
and bylaws of the Surviving Corporation, and the officers of GeoMet immediately prior to the Effective Time shall be the officers of the Surviving Corporation at and after the Effective Time, in each case until their respective successors are duly
elected or appointed and qualified. 
  
 1.7    Conversion of Securities Subject to the terms and conditions of this Agreement, at the Effective Time, by virtue of the Merger and without any action on the part of Parent or GeoMet or their stockholders:

  
 (a)    Each share of
GeoMet Common Stock issued and outstanding immediately prior to the Effective Time, other than any shares of GeoMet Common Stock to be canceled pursuant to Section 1.7(b), shall be converted into the right to receive 4,660.1243 (the
“Exchange Ratio“) shares of Parent Common Stock. 
  
 (b)    Each share of GeoMet Common Stock held in the treasury of GeoMet and each share of GeoMet Common Stock owned by Parent immediately prior to the Effective Time shall be canceled and
extinguished without any conversion thereof and no payment shall be made with respect thereto. 
  
 (c)    Each share of Parent Common Stock issued and outstanding immediately prior to the Effective Time shall remain
issued and outstanding at the Effective Time. 
  
 1.8    Exchange of Certificates; Fractional Shares 
  
 (a)    As soon as practicable after the Effective Time, each holder of a certificate that prior thereto represented
GeoMet Common Stock shall be entitled, upon surrender thereof to Parent, to receive in exchange therefor a certificate or certificates representing the number of whole shares of Parent Common Stock into which the shares of GeoMet Common Stock so
surrendered shall have been converted as aforesaid, rounded up to the nearest whole share, in such denominations and registered in such names as such holder may request. No fractional shares of Parent Common Stock shall be issued. Until so
surrendered and exchanged, each certificate that prior to the Effective Time represented GeoMet Common Stock shall represent solely the right to receive Parent Common Stock. 
  
 (b)    All shares of Parent Common Stock issued upon the surrender for exchange of
certificates that prior to the Effective Time represented shares of GeoMet Common Stock in accordance with the terms hereof shall be deemed to have been issued in full satisfaction of all rights pertaining to such shares of GeoMet Common Stock. At
and after the Effective Time, there shall be no further registration of transfers on the stock transfer books of the Surviving Corporation of GeoMet Common Stock that were outstanding immediately prior to the Effective Time. If, after the Effective
Time, certificates which prior to the Effective Time represented shares of GeoMet Common Stock are presented to the Surviving Corporation for any reason, they shall be canceled and exchanged as provided in this Article I. 
  

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 1.9    Taking of Necessary Action; Further Action. The parties hereto shall
take all such reasonable and lawful action as may be necessary or appropriate in order to effectuate the Merger as promptly as possible. If, at any time after the Effective Time, any such further action is necessary or desirable to carry out the
purposes of this Agreement and to vest the Surviving Corporation with full right, title and possession to all assets, property, rights, privileges, powers and franchises of GeoMet, such corporations shall direct their respective officers and
directors to take all such lawful and necessary action. 
  
 1.10    GeoMet Stock Options. Subject to the consummation of the Merger and effective at the Effective Time, Parent and GeoMet will take such action as is necessary to convert, effective at the Effective
Time, each option to purchase shares of GeoMet Common Stock (each, a “GeoMet Option“) that remains as of such time unexercised in whole or in part for an option to purchase Parent Common Stock (a “Parent Option“), with such
exchange to be effected as follows: 
  
 (a)    Each Parent Option shall be fully vested by virtue of the fact that vesting of the GeoMet Option being converted will be accelerated by its terms as a result of the Merger; 
  
 (b)    The number of shares of Parent
Common Stock purchasable under the Parent Option shall be equal to the number of shares of Parent Common Stock that the holder of the GeoMet Option being assumed would have received (without regard to any vesting schedule) upon consummation of the
Merger had such GeoMet Option been exercised in full immediately prior to consummation of the Merger; and 
  
 (c)    The per share exercise price of each Parent Option shall be an amount equal to the per share exercise price of
the GeoMet Option being assumed divided by the Exchange Ratio. 
  
 1.11    Option to Purchase Additional Shares of Parent Common Stock. 
  
 (a)    In connection with the Merger, Parent shall grant each of the stockholders of GeoMet other than Parent and each
of the holders of options to purchase GeoMet Common Stock an option (the “Non-dilution Option“) to purchase up to that number of shares of Parent Common Stock that when added to the number of shares of Parent Common Stock and shares of
Parent Common Stock purchasable under Parent Options to be received by such stockholder or optionholder in connection with the Merger would give such stockholder or optionholder the same ownership percentage, on a fully-diluted basis, as such
stockholder or optionholder held in GeoMet immediately prior to the Merger. The Non-dilution Option shall expire on the thirtieth (30th) day following the Closing Date. It shall be a condition to the exercise of the Non-dilution Option that
each stockholder or optionholder exercising the Non-dilution Option enter into a stockholders agreement in a form agreeable to Parent. 
  
 (b)    The exercise price for the Non-dilution Option shall be $30.57 per share. The exercise price shall be paid to
Parent in cash or by execution and delivery of a promissory note and stock pledge agreement, or a combination thereof. If any portion of the exercise price is paid by execution and delivery of a promissory note and stock pledge 

  

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agreement, such promissory note and stock pledge agreement shall be in the forms set forth as Exhibit A and Exhibit B, respectively to this
Agreement and shall be full-recourse to the stockholder or optionholder and secured by Parent Common Stock or Parent Options equal in value to 200% of the aggregate principal amount of the note (100% in the case of optionholders). 
  
 1.12    Dissenter’s Rights. Notwithstanding
anything in this Agreement to the contrary, any shares of GeoMet Common Stock outstanding immediately prior to the Effective Time and held by a holder who has properly exercised the holder’s dissenter’s rights in accordance with
Article 13 of the ABCA or any successor provision (“Dissenting Shares“), shall not be converted into, or represent the right to receive, Parent Common Stock in accordance with Section 1.7, unless and until such holder fails to
perfect or effectively withdraws or otherwise loses his right to appraisal and payment under the ABCA. If, after the Effective Time, any such holder fails to perfect or effectively withdraws or loses his right to appraisal, such Dissenting Shares
shall thereupon be treated as if they had been converted as of the Effective Time into the right to receive Parent Common Stock in accordance with Section 1.7, without interest or dividends thereon. 
  
 ARTICLE II 
  
 REPRESENTATIONS AND WARRANTIES 
  
 2.1     Representations and Warranties of
GeoMet. GeoMet hereby represents and warrants to Parent that: 
  
 (a)     Organization and Qualification of GeoMet. GeoMet is duly organized, validly existing and in good standing under the laws of the State of Alabama and has all requisite corporate
power and authority and all necessary governmental authorizations to own, lease and operate all of its properties and assets and to carry on its business as now being conducted, except where the failure to be so organized, existing or in good
standing or to have such authority would not reasonably be expected to have a Material Adverse Effect. GeoMet is duly qualified as a foreign corporation to do business, and is in good standing, in each jurisdiction in which the property owned,
leased or operated by it or the nature of the business conducted by it makes such qualification necessary, except in such jurisdictions where the failure to be duly qualified does not and would not, either individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. No actions or proceedings to dissolve GeoMet are pending. GeoMet has heretofore delivered to Parent true and complete copies of GeoMet’s Articles of Incorporation (the “GeoMet
Articles“) and bylaws as in existence on the date hereof. 
  
 (b)     No Subsidiaries. GeoMet does not own, directly or indirectly, the capital stock or other securities of any corporation or partnership or have any direct or indirect equity or
ownership interest in any other person, other than GeoMet Operating Company Inc., an Alabama corporation and Hudson’s Hope Gas, Ltd., a Canadian national corporation, (collectively, the “GeoMet Subsidiaries“), both of which are
wholly-owned subsidiaries of GeoMet. 
  

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 (c)     Capitalization. 
  
 (i)    The authorized capital stock of
GeoMet consists of 6,000 shares of GeoMet Common Stock, par value $.01 per share, all of which shares are classified as Series B Voting Common Stock. There are issued and outstanding 1,250 shares of GeoMet Common Stock. No shares of GeoMet
Common Stock are held as treasury shares. A total of 62.5 shares of GeoMet Common Stock have been reserved for issuance pursuant to the stock option plans described in Section 2.1(c)(ii). All issued shares of GeoMet Common Stock are validly
issued, fully paid and nonassessable and no holder thereof is entitled to preemptive rights. Except for the Stockholders’ Agreement dated as of December 8, 2000, GeoMet is not a party to, and is not aware of, any voting agreement, voting
trust or similar agreement or arrangement relating to any class or series of its capital stock, or any agreement or arrangement providing for registration rights with respect to any capital stock or other securities of GeoMet. 
  
 (ii)    There are outstanding GeoMet
Options to purchase an aggregate of 49.625 shares of GeoMet Common Stock under the 2001 Stock Option Plan (the “2001 Plan“). Other than as set forth in Section 2.1(c)(i) and this Section 2.1(c)(ii), there are not now, and at the
Effective Time there will not be, any (A) shares of capital stock or other equity securities of GeoMet outstanding other than GeoMet Common Stock issued pursuant to the exercise of GeoMet Options or (B) outstanding options, warrants,
scrip, rights to subscribe for, calls or commitments of any character whatsoever relating to, or securities or rights convertible into or exchangeable for, shares of any class of capital stock of GeoMet, or contracts, understandings or arrangements
to which GeoMet is a party, or by which GeoMet is or may be bound, to issue additional shares of capital stock or equity interests or options, warrants, scrip or rights to subscribe for, or securities or rights convertible into or exchangeable for,
any additional shares of capital stock or equity interests. 
  
 (iii)    Other than shares of capital stock or partnership interests of the GeoMet Subsidiaries owned by GeoMet, there are not now, and at the Effective Time there will not be, any (A) shares
of capital stock, partnership interest or other equity securities of the GeoMet Subsidiaries outstanding or (B) outstanding options, warrants, scrip, rights to subscribe for, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for, shares of any class of capital stock or partnership interest of the GeoMet Subsidiaries, or contracts, understandings or arrangements to which GeoMet or any of the GeoMet Subsidiaries is a
party, or by which GeoMet or any of the GeoMet Subsidiaries is or may be bound, to issue additional shares of capital stock, partnership interest or equity interests or options, warrants, scrip or rights to subscribe for, or securities or rights
convertible into or exchangeable for, any additional shares of capital stock, partnership interest or equity interests. 
  
 (d)     Authorization and Validity of Agreement. GeoMet has all requisite corporate power and authority to
enter into this Agreement and to perform its obligations hereunder. The execution and delivery by GeoMet of this Agreement and the 

  

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consummation by it of the transactions contemplated hereby have been duly authorized by all necessary corporate action (subject only, with respect to the
Merger, to approval of this Agreement by its stockholders as provided for in Section 3.4). On or prior to the date hereof the Board of Directors (the “GeoMet Board“) and Special Committee has determined to recommend approval of the
Merger to the stockholders of GeoMet, and such determination is in effect as of the date hereof. This Agreement has been duly executed and delivered by GeoMet and is the valid and binding obligation of GeoMet, enforceable against GeoMet in
accordance with its terms. 
  
 (e)     No Approvals or Notices Required; No Conflict with Instruments to which GeoMet is a Party. Neither the execution and delivery of this Agreement nor the performance by GeoMet of its obligations
hereunder, nor the consummation of the transactions contemplated hereby by GeoMet, will (i) conflict with the GeoMet Articles or the bylaws of GeoMet; (ii) governing documents of any of the GeoMet Subsidiaries; (iii) assuming
satisfaction of the requirements set forth in clause (iv) below, violate any provision of law applicable to GeoMet or the GeoMet Subsidiaries; (iv) except for the filing of a certificate of merger and articles of merger in accordance with
the DGCL and ABCA, require any consent or approval of, or filing with or notice to, any Governmental Entity, domestic or foreign, under any provision of law applicable to GeoMet or the GeoMet Subsidiaries; or (v) require any consent, approval
or notice under, or violate, breach, be in conflict with or constitute a default (or an event that, with notice or lapse of time or both, would constitute a default) under, or permit the termination of any provision of, or result in the creation or
imposition of any lien upon any properties, assets or business of GeoMet or the GeoMet Subsidiaries under, any note, bond, indenture, mortgage, deed of trust, lease, franchise, permit, authorization, license, contract, instrument, partnership
agreement or other agreement or commitment or any order, judgment or decree to which GeoMet or the GeoMet Subsidiaries is a party or by which GeoMet or the GeoMet Subsidiaries or any of their assets or properties is bound or encumbered, except those
that have already been given, obtained or filed or that will be given, obtained or filed prior to the Closing or as would not have a Material Adverse Effect on GeoMet. 
  
 (f)     Financial Statements. GeoMet has heretofore delivered to Parent
copies of GeoMet’s consolidated balance sheet as of December 31, 2004 and the related consolidated statements of income, change in stockholders’ equity and cash flows for the three years ended December 31, 2004 (collectively, the
“Financial Statements“). The Financial Statements (including any related notes or schedules) were prepared in accordance with generally accepted accounting principles applied on a consistent basis (except as may be noted therein or in the
notes or schedules thereto). The Financial Statements fairly present the financial position of GeoMet and the GeoMet Subsidiaries as of the dates thereof and the results of operations, cash flows and changes in stockholders’ equity for the
periods then ended. As of the date hereof, neither GeoMet nor the GeoMet Subsidiaries has any liabilities, absolute or contingent, direct or indirect, that are not reflected in the Financial Statements, except as would not have a Material Adverse
Effect on GeoMet. 
  
 (g)     Conduct of Business in the Ordinary Course; Absence of Certain Changes and Events. Since December 31, 2004, except as contemplated by this Agreement, 

  

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GeoMet and the GeoMet Subsidiaries have conducted their business only in the ordinary and usual course, and there has not been (i) any Material Adverse
Effect pertaining to GeoMet, or any condition, event or development that reasonably may be expected to result in any such Material Adverse Effect; (ii) any material change by GeoMet or the GeoMet Subsidiaries in their accounting methods,
principles or practices; (iii) any revaluation by GeoMet or the GeoMet Subsidiaries of any of their assets, including, without limitation, writing down the value of properties or assets or writing off notes or accounts receivable other than in
the ordinary course of business; (iv) any entry by GeoMet or the GeoMet Subsidiaries into any commitment or transaction material to GeoMet or the GeoMet Subsidiaries; (v) any declaration, setting aside or payment of any dividends or
distributions in respect of the GeoMet Common Stock or any redemption, purchase or other acquisition of any of its securities; (vi) any increase in indebtedness for borrowed money other than advances under the Credit Agreement in the ordinary
course; (vii) any granting of a security interest or lien on any material property or assets of GeoMet or the GeoMet Subsidiaries, other than Permitted Encumbrances; or (viii) any increase in or establishment of any bonus, insurance,
severance, deferred compensation, pension, retirement, profit sharing, stock option (including, without limitation, the granting of stock options, stock appreciation rights, performance awards or restricted stock awards), stock purchase or other
employee benefit plan or any other increase in the compensation payable or to become payable to any officers or key employees of GeoMet or the GeoMet Subsidiaries other than any increase or establishment approved by the Compensation Committee of
GeoMet and disclosed in writing to Parent. 
  
 (h)     Litigation. Except as would not have a Material Adverse Effect on GeoMet, there are no claims, actions, suits, investigations, inquiries or proceedings pending or, to the knowledge of GeoMet,
threatened against or affecting GeoMet or the GeoMet Subsidiaries or any of their properties at law or in equity, or any of their respective employee benefit plans or fiduciaries of such plans, or before or by any Governmental Entity or before any
arbitration board or panel. 
  
 (i)     Compliance with Laws and Permits. Except as would not have a Material Adverse Effect on GeoMet, GeoMet and the GeoMet Subsidiaries (i) have complied with all Applicable Laws (including without
limitation Applicable Laws relating to securities, properties, production, sales, gathering and transportation of hydrocarbons, employment practices, terms and conditions of employment, wages and hours, safety, occupational safety, product safety,
and civil rights); (ii) have obtained and hold all material permits, licenses, variances, exemptions, orders, franchises, approvals and authorizations of all Governmental Entities necessary for the lawful conduct of their business or the lawful
ownership, use and operation of their assets; (iii) have not received any written notice, which has not been dismissed or otherwise disposed of, that it has not so complied; and (iv) have not been charged or, to the best knowledge of
GeoMet, threatened with, or, to the best knowledge of GeoMet, under investigation with respect to, any violation of any Applicable Law relating to any aspect of the business of GeoMet or the GeoMet Subsidiaries. 
  

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 (j)    Employees; Employee Benefit Plans. 
  
    (i)    True and
complete copies of each of GeoMet’s or any of the GeoMet’s Subsidiaries’ Plans, Benefit Programs or Agreements, related trusts, if applicable, and all amendments thereto, have been furnished to Parent. 
  
    (ii)    Except as would
not have a Material Adverse Effect on GeoMet: 
  
        (A)    None of GeoMet, the GeoMet Subsidiaries, nor any corporation, trade, business or entity under common control with GeoMet or the GeoMet Subsidiaries within the meaning of
Section 414(b), (c), (m) or (o) of the Code or Section 4001 of ERISA (a “GeoMet ERISA Affiliate“) contributes to or has an obligation to contribute to, or has at any time contributed to or had an obligation to
contribute to, a plan subject to Title IV of ERISA, including, without limitation, a multiemployer plan within the meaning of Section 3(37) of ERISA; 
  
        (B)    Each Plan and each Benefit Program or Agreement has been
administered, maintained and operated in all material respects in accordance with the terms thereof and in compliance with its governing documents and applicable law (including, where applicable, ERISA and the Code); 
  
        (C)    There is no matter pending with respect to any of the Plans before any governmental agency, and there are no actions, suits or claims pending (other than routine claims
for benefits) or to the knowledge of GeoMet, threatened against, or with respect to, any of the Plans or Benefit Programs or Agreements or their assets; 
  
        (D)    No act, omission or transaction has occurred which would result in
imposition on GeoMet, the GeoMet Subsidiaries, or any GeoMet ERISA Affiliate of breach of fiduciary duty liability damages under Section 409 of ERISA, a civil penalty assessed pursuant to subsections (c), (i) or (l) of
Section 502 of ERISA or a tax imposed pursuant to Chapter 43 of Subtitle D of the Code; and 
  
        (E)    The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby will not require GeoMet, the GeoMet Subsidiaries or any GeoMet ERISA Affiliate to make a larger contribution to, or pay greater benefits under, any Plan, Benefit Program or Agreement than it otherwise would or
create or give rise to any additional vested rights or service credits under any Plan or Benefit Program or Agreement. 
  
    (iii)    Termination of employment of any employee of GeoMet, the GeoMet Subsidiaries or any GeoMet
ERISA Affiliate immediately after consummation of the transactions contemplated by this Agreement would not result in payments under the Plans, Benefit Programs or Agreements which, in the 

  

 9 

 
aggregate, would result in imposition of the sanctions imposed under Sections 280G and 4999 of the Code. 
  
     (iv)    Each Plan
which is an “employee welfare benefit plan,” as such term is defined in Section 3(1) of ERISA, may be unilaterally amended or terminated in its entirety without liability except as to benefits accrued thereunder prior to such
amendment or termination. 
  
     (v)    None of the employees of GeoMet, the GeoMet Subsidiaries or any GeoMet ERISA Affiliate are subject to union or collective bargaining agreements. 
  
 (k)     Severance Payments.
Except as would not have a Material Adverse Effect on GeoMet, GeoMet and the GeoMet Subsidiaries do not and will not owe a severance payment or similar obligation to any of their respective employees, officers or directors as a result of the Merger
or the transactions contemplated by this Agreement, nor will any of such persons be entitled to an increase in severance payments or other benefits as a result of the Merger or the transactions contemplated by this Agreement in the event of the
subsequent termination of their employment. 
  
 (l)     Taxes. Except as would not have a Material Adverse Effect, all Tax Returns of or relating to any Tax that are required to be filed on or before the Closing Date by or with respect to GeoMet, the
GeoMet Subsidiaries, or any other corporation that is or was a member of an affiliated group (within the meaning of Section 1504(a) of the Code) of corporations of which GeoMet or the GeoMet Subsidiaries was a member for any period ending on or
prior to the Closing Date, have been or will be duly and timely filed, and all Taxes, including interest and penalties, due and payable pursuant to such Tax Returns have been paid or adequately provided for in reserves established by GeoMet or the
GeoMet Subsidiaries. There is no material claim against GeoMet or the GeoMet Subsidiaries with respect to any Taxes, and no material assessment, deficiency or adjustment has been asserted or proposed with respect to any Tax Return of or with respect
to GeoMet or the GeoMet Subsidiaries that has not been adequately provided for in reserves established by GeoMet or the GeoMet Subsidiaries. The total amounts set up as liabilities for current and deferred Taxes in the Financial Statements have been
prepared in accordance with generally accepted accounting principles and are sufficient to cover the payment of all material Taxes, including any penalties or interest thereon and whether or not assessed or disputed, that are, or are hereafter found
to be, or to have been, due with respect to the operations of GeoMet and the GeoMet Subsidiaries through the periods covered thereby. GeoMet and the GeoMet Subsidiaries have (and as of the Closing Date will have) made all deposits (including
estimated tax payments for taxable years for which the federal income tax return is not yet due) required with respect to Taxes. No waiver or extension of any statute of limitations as to any federal, local or foreign Tax matter has been given by or
requested from GeoMet or the GeoMet Subsidiaries. Except for statutory liens for current Taxes not yet due, no liens for Taxes exist upon the assets of GeoMet or the GeoMet Subsidiaries. 
  
 (m)     Books and Records. All books, records and files of GeoMet and the
GeoMet Subsidiaries (including those pertaining to oil and gas properties, wells and other 

  

 10 

 
assets, those pertaining to the production, gathering, transportation and sale of hydrocarbons, and corporate, accounting, financial and employee records)
(i) have been prepared, assembled and maintained in accordance with usual and customary policies and procedures and (ii) fairly and accurately reflect in all material respects the ownership, use, enjoyment and operation by GeoMet and the
GeoMet Subsidiaries of their respective assets. 
  
 (n)     Governmental Regulation. Neither GeoMet nor any of the GeoMet Subsidiaries is an “investment company,” or a company “controlled” by an “investment company,” within the
meaning of the Investment Company Act of 1940, as amended. Neither GeoMet nor any of the GeoMet Subsidiaries is a “holding company,” or a “subsidiary company” of a “holding company,” or an “affiliate” of a
“holding company” or of a “subsidiary company” of a “holding company,” within the meaning of the Public Utility Holding Company Act of 1935, as amended. Neither GeoMet nor any of the GeoMet Subsidiaries has a similar
status under any similar state laws or regulations of the type regulating public utilities. 
  
 (o)     Environmental Matters. Except as would not reasonably be expected to have a Material Adverse
Effect: 
  
 (i)    GeoMet and
the GeoMet Subsidiaries have conducted their business and operated their assets, and are conducting their business and operating their assets, in material compliance with all Applicable Laws pertaining to health, safety, the environment, Hazardous
Material (as such term is defined in CERCLA), or Solid Wastes (as such term is defined in RCRA) (such Applicable Laws as they now exist or are hereafter enacted and/or amended are collectively, for purposes of this Agreement, called
“Environmental Laws“ including, without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986 (as amended, for purposes of this
Section, called “CERCLA“), the Resource Conservation and Recovery Act of 1976, as amended by the Used Oil Recycling Act of 1980, the Solid Waste Disposal Act Amendments of 1980, and the Hazardous and Solid Waste Amendments of 1984 (as
amended, for purposes of this Section, called “RCRA“); 
  
 (ii)    Neither GeoMet nor any of the GeoMet Subsidiaries has been notified by any Governmental Entity that any of the operations or assets of GeoMet or any of the GeoMet Subsidiaries is the
subject of any investigation or inquiry by any Governmental Entity evaluating whether any material remedial action is needed to respond to a release of any Hazardous Material or to the improper storage or disposal (including storage or disposal at
offsite locations) of any Hazardous Material; 
  
 (iii)    Neither GeoMet, the GeoMet Subsidiaries nor, to GeoMet’s knowledge, any other person has filed any notice under any federal, state or local law indicating that (i) GeoMet or any of the GeoMet
Subsidiaries is responsible for the improper release into the environment, or the improper storage or disposal, 

  

 11 

 
of any Hazardous Material, or (ii) any Hazardous Material is improperly stored or disposed of upon any property of GeoMet or any of the GeoMet
Subsidiaries; 
  
 (iv)    Neither GeoMet nor any of the GeoMet Subsidiaries has any material contingent liability in connection with (A) the release into the environment at or on any property now or previously owned or leased by any
of such persons, or (B) storage or disposal of any Hazardous Material; 
  
 (v)    In the last six years, neither GeoMet nor any of the GeoMet Subsidiaries has received any claim, complaint, notice, inquiry or request for information which remains unresolved as of the date
hereof with respect to any alleged material violation of any Environmental Law or regarding potential material liability under any Environmental Law relating to operations or conditions or any facilities or property owned, leased or operated by any
of such persons; 
  
 (vi)    No property now or previously owned, leased or operated by GeoMet or any of the GeoMet Subsidiaries is listed on the National Priorities List pursuant to CERCLA or on any similar federal or state list as sites
requiring investigation or cleanup; 
  
 (vii)    Neither GeoMet nor any of the GeoMet Subsidiaries is directly transporting, has directly transported or is directly arranging for the transportation of any Hazardous Material to any location which is listed on
the National Priorities List pursuant to CERCLA or on any similar federal or state list or which is the subject of federal, state or local enforcement actions that may lead to material claims against such company for remedial work, damage to natural
resources or personal injury, including claims under CERCLA; 
  
 (viii)    There are no sites, locations or operations at which GeoMet or any of the GeoMet Subsidiaries is currently undertaking any remedial or response action relating to any disposal or release
of any Hazardous Material, as required by Environmental Laws; and 
  
 (ix)    All underground storage tanks and solid waste disposal facilities owned or operated by GeoMet or any of the GeoMet Subsidiaries are used and operated in material compliance with
Environmental Laws. 
  
 (p)     Insurance. All material properties and material risks of GeoMet and the GeoMet Subsidiaries are covered by valid and currently effective insurance policies or binders of insurance or programs of
self-insurance in such types and amounts and with such deductible amounts as are consistent with customary practices and standards of companies engaged in businesses and operations similar to those of GeoMet and the GeoMet Subsidiaries. Neither
GeoMet nor any of the GeoMet Subsidiaries shall have any liability for retroactive price adjustments arising under such insurance coverage based on levels of actual activity during the time period of such coverage. GeoMet has provided Parent with
true and correct copies of all policies of fire, liability, casualty, life and other insurance currently in force. 
  

 12 

 (q)     Title to Oil and Gas Interests. The title of
GeoMet and the GeoMet Subsidiaries to each of GeoMet’s and the GeoMet Subsidiaries’ Oil and Gas Interests is Defensible Title. The oil and gas leases included within the Oil and Gas Interests are in full force and effect. 
  
 (r)     Oil and Gas
Operations. Except as would not have a Material Adverse Effect on GeoMet: 
  
     (i)    All wells included in the Oil and Gas Interests of GeoMet and the GeoMet Subsidiaries have been drilled and (if completed) completed, operated and produced in
accordance with generally accepted oil and gas field practices and in compliance in all material respects with Applicable Law. 
  
     (ii)    Proceeds from the sale of hydrocarbons produced from GeoMet’s and the GeoMet
Subsidiaries’ Oil and Gas Interests are being received by GeoMet or one of the GeoMet Subsidiaries, as applicable, in a timely manner and are not being held in suspense for any reason (except for amounts, individually or in the aggregate, not
in excess of $100,000 and held in suspense in the ordinary course of business). 
  
 (s)     Hydrocarbon Sales and Purchase Agreements. Except as would not have a Material Adverse Effect on
GeoMet, each of the Hydrocarbon Agreements to which GeoMet or one of the GeoMet Subsidiaries is a party is valid, binding and in full force and effect, and no party is in material breach or default of any Hydrocarbon Agreement, and no event has
occurred (including for this purpose, the execution of this Agreement or the consummation of the Merger) that with notice or lapse of time (or both) would constitute a material breach or default or permit termination, modification or acceleration
under any Hydrocarbon Agreement. 
  
 (t)     Intellectual Property. GeoMet or one of the GeoMet Subsidiaries either owns or has valid licenses or other rights to use all patents, copyrights, trademarks, software, databases, geological data,
geophysical data, engineering data, maps, interpretations and other technical information used in their businesses as presently conducted, subject to the limitations contained in the agreements governing the use of the same, which limitations are
customary for companies engaged in the business of the exploration and production of oil, gas, condensate and other hydrocarbons. There are no limitations contained in the agreements of the type described in the immediately preceding sentence which,
upon consummation of the Merger, will alter or impair any such rights, breach any such agreement with any third party vendor, or require payments of additional sums thereunder except as would not have a Material Adverse Effect on GeoMet. GeoMet and
the GeoMet Subsidiaries are in compliance in all material respects with such licenses and agreements and there are no pending or threatened claims, actions, suits or proceedings challenging or questioning the validity or effectiveness of any license
or agreement relating to such property or the right of GeoMet or any of the GeoMet Subsidiaries to use, copy, modify or distribute the same. 
  

 13 

 (u)     Maintenance of Machinery. All equipment and
machinery owned by GeoMet and the GeoMet Subsidiaries has had reasonable and prudent maintenance upkeep and repair since the date it was acquired thereby. 
  
 (v)     Gas Imbalances; Calls on Production; Prepayments. Except as would not have a Material Adverse
Effect, (i) Neither GeoMet nor any of the GeoMet Subsidiaries has received any deficiency payments under gas contracts for which any party has a right to take deficiency gas therefrom nor received any payments for production which are subject
to refund or recoupment out of future production; (ii) no prepayment for hydrocarbon sales has been received by GeoMet or any of the GeoMet Subsidiaries for hydrocarbons which have not been delivered as of the date hereof; and (iii) no
party has a call or preferential right to purchase production from any of GeoMet’s or any of the GeoMet Subsidiaries’ Oil and Gas Interests. 
  
 (w)     Royalties. To the knowledge of GeoMet (after due inquiry) as to wells not operated by GeoMet or
any of the GeoMet Subsidiaries, and without qualification as to knowledge as to all wells operated by GeoMet or any of the GeoMet Subsidiaries, all royalties, overriding royalties, compensatory royalties and other payments due from or in respect of
production with respect to GeoMet’s or any of the GeoMet Subsidiaries’ Oil and Gas Interests, have been or will be, prior to the Effective Time, properly and correctly paid or provided for in all material respects, except for those for
which GeoMet or any of the GeoMet Subsidiaries’ has a valid right to suspend. 
  
 (x)     Plugging and Abandonment Liabilities. Except would not have a Material Adverse Effect, neither
GeoMet nor any of the GeoMet Subsidiaries has an obligation as of the date hereof under Applicable Law to plug and abandon any well. 
  
 (y)     Contracts; No Defaults. Each agreement to which GeoMet or any GeoMet Subsidiaries is a party
involving amounts in excess of $1,000,000 (the “Contracts“) is a valid and binding agreement of GeoMet or one of the GeoMet Subsidiaries and, to the knowledge of GeoMet, the other party or parties thereto, enforceable against GeoMet or one
of the GeoMet Subsidiaries and, to the knowledge of GeoMet, such other parties in accordance with its terms. GeoMet or one of the GeoMet Subsidiaries, as applicable, has performed all of its obligations under and is not in breach of or in default
under, nor has any event occurred which (with or without the giving of notice or the passage of time or both) would constitute a default by GeoMet or one of the GeoMet Subsidiaries, as applicable, under, any of such Contracts, and neither GeoMet nor
any of the GeoMet Subsidiaries has received any notice from, or given any notice to, any other party indicating that GeoMet or one of the GeoMet Subsidiaries, as applicable, is in breach of or in default under any of such Contracts. To the knowledge
of GeoMet, no other party to any of such Contracts is in breach of or in default under such Contracts, nor has any assertion been made by GeoMet or one of the GeoMet Subsidiaries of any such breach or default. 
  
 (z)     Voting Requirements.
The affirmative vote of the holders of two-thirds of the outstanding shares of GeoMet Common Stock is the only vote of the holders of any class or series of the capital stock of GeoMet necessary to approve this Agreement and 

  

 14 

 
the Merger, notwithstanding any greater percentage that this Agreement may be conditioned on. 
  
 2.2     Representations and Warranties of Parent. Parent hereby represents and warrants to GeoMet
that: 
  
 (a)     Organization and Compliance with Law. Parent is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and
authority and all necessary governmental authorizations to own, lease and operate all of its properties and assets and to carry on its business as now being conducted, except where the failure to be so organized, existing or in good standing or to
have such authority would not reasonably be expected to have a Material Adverse Effect on Parent. 
  
 (b)     No Subsidiaries. Parent does not own, directly or indirectly, the capital stock or other
securities of any corporation or partnership or have any direct or indirect equity or ownership interest in any other person, other than its ownership in GeoMet and indirect ownership in the GeoMet Subsidiaries. 
  
 (c)     Capitalization.

  
 (i)    The authorized
capital stock of Parent consists of 6,000,000 shares of Parent Common Stock, par value $.001 per share. As of the date hereof, there are issued and outstanding 6,000,000 shares of Parent Common Stock and no shares of Parent Common Stock were held as
treasury shares. On or before the Closing Date, an aggregate of 300,000 shares of Parent Common Stock will be reserved for issuance pursuant to Parent’s 2005 Stock Option Plan, 450,603 shares of Parent Common Stock will be reserved for issuance
pursuant to the Non-dilution Options, and an additional 300,000 shares of Parent Common Stock will be reserved for issuance upon the exercise of other outstanding stock options granted. All issued shares of Parent Common Stock are validly issued,
fully paid and nonassessable and no holder thereof is entitled to preemptive rights. All shares of Parent Common Stock to be issued pursuant to the Merger, when issued in accordance with this Agreement, will be validly issued, fully paid and
nonassessable and will not violate the preemptive rights of any person. Except for the Stock Acquisition and Shareholders’ Agreement, dated December 7, 2000, as amended Parent is not a party to, and is not aware of, any voting agreement,
voting trust or similar agreement or arrangement relating to any class or series of its capital stock, or any agreement or arrangement providing for registration rights with respect to any capital stock or other securities of Parent. 
  
 (ii)    Other than as set forth in this
Section 2.2(c) and except for issuances contemplated by this Agreement in connection with the Merger, there are not now, and at the Effective Time there will not be, any (A) shares of capital stock or other equity securities of Parent
outstanding or (B) except for options referenced above, outstanding options, warrants, scrip, rights to subscribe for, calls or commitments of any character whatsoever relating to, or securities or rights convertible into or exchangeable for,
shares of any class of capital stock of 

  

 15 

 
Parent, or contracts, understandings or arrangements to which Parent is a party, or by which it is or may be bound, to issue additional shares of its capital
stock or options, warrants, scrip or rights to subscribe for, or securities or rights convertible into or exchangeable for, any additional shares of its capital stock. 
  
 (d)     Authorization and Validity of Agreement. Parent has all requisite
corporate power and authority to enter into this Agreement and to perform its obligations hereunder. The execution and delivery by Parent of this Agreement and the consummation by it of the transactions contemplated hereby have been duly authorized
by all necessary corporate action (subject only, with respect to the Merger and related amendment to the Parent Certificate, to the approval of this Agreement by the stockholders of Parent as provided for in Section 3.4). On or prior to the
date hereof, the Board of Directors of Parent has determined to recommend the adoption of the approval of the Merger to the stockholders of Parent, and such determination is in effect as of the date hereof. This Agreement has been duly executed and
delivered by Parent and is the valid and binding obligation of Parent, enforceable against Parent in accordance with its terms. 
  
 (e)     No Approvals or Notices Required; No Conflict with Instruments to which Parent is a Party. Neither
the execution and delivery of this Agreement nor the performance by Parent of its obligations hereunder, nor the consummation of the transactions contemplated hereby by Parent, will (i) conflict with the Parent Certificate or the bylaws of
Parent; (ii) assuming satisfaction of the requirements set forth in clause (iii) below, violate any provision of law applicable to Parent; (iii) except for the filing of a certificate of merger and articles of merger by GeoMet and
Parent in accordance with the DGCL and the ABCA, require any consent or approval of, or filing with or notice to, any Governmental Entity, domestic or foreign, under any provision of law applicable to Parent; or (iv) require any consent,
approval or notice under, or violate, breach, be in conflict with or constitute a default (or an event that, with notice or lapse of time or both, would constitute a default) under, or permit the termination of any provision of, or result in the
creation or imposition of any lien upon any properties, assets or business of Parent under, any note, bond, indenture, mortgage, deed of trust, lease, franchise, permit, authorization, license, contract, instrument or other agreement or commitment
or any order, judgment or decree to which Parent is a party or by which Parent or any of its assets or properties is bound or encumbered, except those that have already been given, obtained or filed or that will be given, obtained or filed prior to
the Closing or as would not have a Material Adverse Effect on Parent. 
  
 (f)     Financial Statements. Parent has heretofore delivered to GeoMet copies of Parent’s balance sheet as of December 31, 2004 and the related statements of income, change
in stockholders’ equity and cash flows for the three years ended December 31, 2004 (collectively, the “Parent Financial Statements“). The Parent Financial Statements (including any related notes or schedules) were prepared in
accordance with generally accepted accounting principles applied on a consistent basis (except as may be noted therein or in the notes or schedules thereto). The Parent Financial Statements fairly present the financial position of Parent as of the
dates thereof and the results of operations, cash flows and changes in stockholders’ equity for the periods then ended. As of the date hereof, Parent has no liabilities, absolute or contingent, direct or indirect, 

  

 16 

 
that are not reflected in the Financial Statements, except as would not have a Material Adverse Effect on Parent. 
  
 (g)     Conduct of Business in
the Ordinary Course; Absence of Certain Changes and Events. Since December 31, 2004, except as contemplated by this Agreement, Parent has conducted its business only in the ordinary and usual course, and there has not been (i) any
Material Adverse Effect pertaining to Parent, or any condition, event or development that reasonably may be expected to result in any such Material Adverse Effect; (ii) any material change by Parent in its accounting methods, principles or
practices; (iii) any revaluation by Parent of any of its assets, including, without limitation, writing down the value of properties or assets or writing off notes or accounts receivable other than in the ordinary course of business;
(iv) any entry by Parent into any commitment or transaction material to Parent; (v) any declaration, setting aside or payment of any dividends or distributions in respect of the Parent Common Stock (other than $3,000,000 that will be paid
to the Stockholders of Parent prior to the Merger) or any redemption, purchase or other acquisition of any of its securities; (vi) any increase in indebtedness for borrowed money; (vii) any granting of a security interest or lien on any
material property or assets of Parent, other than Permitted Encumbrances; or (viii) any increase in or establishment of any bonus, insurance, severance, deferred compensation, pension, retirement, profit sharing, stock option (including,
without limitation, the granting of stock options, stock appreciation rights, performance awards or restricted stock awards), stock purchase or other employee benefit plan or any other increase in the compensation payable or to become payable to any
officers or key employees of Parent other than any increase or establishment in the ordinary course and consistent with past practices or that has been disclosed in writing to GeoMet. 
  
 (h)     Litigation. Except as would not have a Material Adverse Effect on
Parent, there are no claims, actions, suits, investigations, inquiries or proceedings pending or, to the knowledge of Parent, threatened against or affecting Parent or any of its properties at law or in equity, or any of its employee benefit plans
or fiduciaries of such plans, or before or by any Governmental Entity, or before any arbitration board or panel, wherever located. 
  
 (i)     Compliance with Laws and Permits. Except as would not have a Material Adverse Effect on Parent,
Parent (i) has complied with all Applicable Laws (including without limitation Applicable Laws relating to securities, properties, production, sales, gathering and transportation of hydrocarbons, employment practices, terms and conditions of
employment, wages and hours, safety, occupational safety, product safety, and civil rights); (ii) has obtained and hold all material permits, licenses, variances, exemptions, orders, franchises, approvals and authorizations of all Governmental
Entities necessary for the lawful conduct of its business or the lawful ownership, use and operation of its assets; (iii) has not received any written notice, which has not been dismissed or otherwise disposed of, that it has not so complied;
and (iv) has not been charged or, to the best knowledge of Parent, threatened with, or, to the best knowledge of Parent, under investigation with respect to, any violation of any Applicable Law relating to any aspect of the business of Parent.

  

 17 

 (j)    Employees; Employee Benefit Plans. 
  
    (i)    True and
complete copies of each of Parent’s Plans, Benefit Programs or Agreements, related trusts, if applicable, and all amendments thereto, have been furnished to GeoMet. 
  
    (ii)    Except as would not have a Material Adverse Effect on Parent:

  
      (A)    None of Parent or any corporation, trade, business or entity under common control with Parent within the meaning of Section 414(b), (c), (m) or (o) of the Code or
Section 4001 of ERISA (a “Parent ERISA Affiliate“) contributes to or has an obligation to contribute to, or has at any time contributed to or had an obligation to contribute to, a plan subject to Title IV of ERISA, including, without
limitation, a multiemployer plan within the meaning of Section 3(37) of ERISA; 
  
      (B)    Each Plan and each Benefit Program or Agreement has been administered,
maintained and operated in all material respects in accordance with the terms thereof and in compliance with its governing documents and applicable law (including, where applicable, ERISA and the Code); 
  
      (C)    There is no matter pending with respect to any of the Plans before any governmental agency, and there are no actions, suits or claims pending (other than routine claims for benefits)
or to the knowledge of Parent, threatened against, or with respect to, any of the Plans or Benefit Programs or Agreements or their assets; 
  
      (D)    No act, omission or transaction has occurred which would result in imposition on
Parent or any Parent ERISA Affiliate of breach of fiduciary duty liability damages under Section 409 of ERISA, a civil penalty assessed pursuant to subsections (c), (i) or (l) of Section 502 of ERISA or a tax imposed pursuant to
Chapter 43 of Subtitle D of the Code; and 
  
      (E)    The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby will not require Parent or any Parent ERISA Affiliate to make a larger
contribution to, or pay greater benefits under, any Plan, Benefit Program or Agreement than it otherwise would or create or give rise to any additional vested rights or service credits under any Plan or Benefit Program or Agreement. 
  
    (iii)    Each Plan
which is an “employee welfare benefit plan,” as such term is defined in Section 3(1) of ERISA, may be unilaterally amended or terminated in its entirety without liability except as to benefits accrued thereunder prior to such
amendment or termination. 
  

 18 

 (iv)    None of the employees of Parent or any Parent ERISA Affiliate
are subject to union or collective bargaining agreements. 
  
 (k)    Taxes. Except as would not have a Material Adverse Effect, all Tax Returns of or relating to any Tax that are required to be filed on or before the Closing Date by or with respect to
Parent, or any other corporation that is or was a member of an affiliated group (within the meaning of Section 1504(a) of the Code) of corporations of which Parent was a member for any period ending on or prior to the Closing Date, have been or
will be duly and timely filed, and all Taxes, including interest and penalties, due and payable pursuant to such Tax Returns have been paid or adequately provided for in reserves established by Parent. There is no material claim against Parent with
respect to any Taxes, and no material assessment, deficiency or adjustment has been asserted or proposed with respect to any Tax Return of or with respect to Parent that has not been adequately provided for in reserves established by Parent. The
total amounts set up as liabilities for current and deferred Taxes in the Parent Financial Statements have been prepared in accordance with generally accepted accounting principles and are sufficient to cover the payment of all material Taxes,
including any penalties or interest thereon and whether or not assessed or disputed, that are, or are hereafter found to be, or to have been, due with respect to the operations of Parent through the periods covered thereby. Parent has (and as of the
Closing Date will have) made all deposits (including estimated tax payments for taxable years for which the federal income tax return is not yet due) required with respect to Taxes. No waiver or extension of any statute of limitations as to any
federal, local or foreign Tax matter has been given by or requested from Parent. Except for statutory liens for current Taxes not yet due, no liens for Taxes exist upon the assets of Parent. 
  
 (l)    Books and Records. All
books, records and files of Parent (including those pertaining to the corporate, accounting, financial and employee records) have been prepared, assembled and maintained in accordance with usual and customary policies and procedures. 
  
 (m)    Governmental Regulation.
Parent is not an “investment company,” or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940, as amended. Parent is not a “holding company,” or a
“subsidiary company” of a “holding company,” or an “affiliate” of a “holding company” or of a “subsidiary company” of a “holding company,” within the meaning of the Public Utility Holding
Company Act of 1935, as amended. Parent does not have a similar status under any similar state laws or regulations of the type regulating public utilities. 
  
 (n)    Environmental Matters. Except as would not reasonably be expected to have a Material Adverse Effect:

  
 (i)    Parent has
conducted its business and operated its assets, and is conducting its business and operating its assets, in material compliance with all Environmental Laws; 
  
 (ii)    Parent has not been notified by any Governmental Entity that any of the operations or assets of Parent is the
subject of any investigation or inquiry 

  

 19 

 
by any Governmental Entity evaluating whether any material remedial action is needed to respond to a release of any Hazardous Material or to the improper
storage or disposal (including storage or disposal at offsite locations) of any Hazardous Material; 
  
 (iii)    Neither Parent nor, to Parent’s knowledge, any other person has filed any notice under any federal,
state or local law indicating that (i) Parent is responsible for the improper release into the environment, or the improper storage or disposal, of any Hazardous Material, or (ii) any Hazardous Material is improperly stored or disposed of
upon any property of Parent; 
  
 (iv)    Parent does not have any material contingent liability in connection with (A) the release into the environment at or on any property now or previously owned or leased by any of such persons, or
(B) storage or disposal of any Hazardous Material; 
  
 (v)    In the last six years, Parent has not received any claim, complaint, notice, inquiry or request for information which remains unresolved as of the date hereof with respect to any alleged material violation of any
Environmental Law or regarding potential material liability under any Environmental Law relating to operations or conditions or any facilities or property owned, leased or operated by any of such persons; 
  
 (vi)    No property now or previously
owned, leased or operated by Parent is listed on the National Priorities List pursuant to CERCLA or on any similar federal or state list as sites requiring investigation or cleanup; 
  
 (vii)    Parent is not directly transporting, has not directly transported and is not
directly arranging for the transportation of any Hazardous Material to any location which is listed on the National Priorities List pursuant to CERCLA or on any similar federal or state list or which is the subject of federal, state or local
enforcement actions that may lead to material claims against such company for remedial work, damage to natural resources or personal injury, including claims under CERCLA; 
  
 (viii)    There are no sites, locations or operations at which Parent is currently
undertaking any remedial or response action relating to any disposal or release of any Hazardous Material, as required by Environmental Laws; and 
  
 (ix)    All underground storage tanks and solid waste disposal facilities owned or operated by Parent are used and
operated in material compliance with Environmental Laws. 
  
 (o)    Insurance. All material properties and material risks of Parent are covered by valid and currently effective insurance policies or binders of insurance or programs of self-insurance
in such types and amounts and with such deductible amounts as are consistent with customary practices and standards of companies engaged in businesses and operations similar to those of Parent. Parent shall not have any liability for 

  

 20 

 
retroactive price adjustments arising under such insurance coverage based on levels of actual activity during the time period of such coverage. Parent has
provided GeoMet with true and correct copies of all policies of fire, liability, casualty, life and other insurance currently in force. 
  
 (p)    Oil and Gas Interests and Operations. Parent has no Oil and Gas Interests and conducts no oil and gas
operations. 
  
 (q)    Contracts; No Defaults. Each agreement to which Parent is a party involving amounts in excess of $1,000,000 (the “Parent Contracts“) is a valid and binding agreement of Parent and, to the
knowledge of Parent, the other party or parties thereto, enforceable against Parent and, to the knowledge of Parent, such other parties in accordance with its terms. Parent has performed all of its obligations under and is not in breach of or in
default under, nor has any event occurred which (with or without the giving of notice or the passage of time or both) would constitute a default by Parent under, any of such Parent Contracts, and Parent has not received any notice from, or given any
notice to, any other party indicating that Parent is in breach of or in default under any of such Parent Contracts. To the knowledge of Parent, no other party to any of such Parent Contracts is in breach of or in default under such Parent Contracts,
nor has any assertion been made by Parent of any such breach or default. 
  
 (r)    Voting Requirements. The affirmative vote of the holders of a majority of the shares of Parent Common Stock present at the Parent special stockholders’ meeting convened in
accordance with Section 3.4 and entitled to vote thereon is the only vote of the holders of any class or series of the capital stock of Parent necessary to approve this Agreement. 
  
 ARTICLE III 
  
 COVENANTS OF GEOMET AND PARENT PRIOR TO THE EFFECTIVE TIME 
  

3.1     Conduct of Business by GeoMet Pending the Merger. GeoMet covenants and agrees that, from the date of this
Agreement until the Effective Time, unless Parent shall otherwise agree in writing: 
  
 (a)    the business of GeoMet and the GeoMet Subsidiaries shall be conducted only in, and GeoMet shall not and shall
not permit the GeoMet Subsidiaries to take any action except in, the ordinary course of business and consistent with past practice; 
  
 (b)    GeoMet shall not and shall not permit the GeoMet Subsidiaries to directly or indirectly do any of the
following: (i) issue, sell, pledge, dispose of or encumber, (A) any capital stock of GeoMet or the GeoMet Subsidiaries except upon the exercise of GeoMet Options or (B) other than in the ordinary course of business and consistent with
past practice and not relating to the borrowing of money, any assets of GeoMet or the GeoMet Subsidiaries; (ii) amend or propose to amend the GeoMet Articles or the bylaws of GeoMet or the governing documents of the GeoMet Subsidiaries;
(iii) split, combine or reclassify any outstanding capital stock, or declare, set aside or pay any dividend payable in cash, stock, property or otherwise with respect to GeoMet’s or any of the 

  

 21 

 
GeoMet Subsidiaries’ capital stock, partnership interest or other securities or equity equivalents, whether now or hereafter outstanding;
(iv) redeem, purchase or acquire or offer to acquire, any of its capital stock or other securities or equity equivalents; (v) except in the ordinary course of business and consistent with past practice, enter into any contract, agreement,
commitment or arrangement with respect to any of the matters set forth in this Section 3.1(b); (vi) enter into, adopt or (except as may be required by law) amend or terminate any bonus, profit sharing, compensation, severance, termination,
stock option, stock appreciation right, restricted stock, performance unit, stock equivalent, stock purchase, pension, retirement, deferred compensation, employment, severance or other employee benefit agreement, trust, plan, fund or other
arrangement for the benefit or welfare of any director, officer or employee; (vii) except for normal increases in the ordinary course of business consistent with past practice that, in the aggregate, do not result in a material increase in
benefits or compensation expense, increase in any manner the compensation or fringe benefits of any director, officer or employee; or (viii) pay to any director, officer or employee any benefit not required by any employee benefit agreement,
trust, plan, fund or other arrangement as in effect on the date hereof; 
  
 (c)    GeoMet shall use its reasonable efforts (i) to preserve intact the business organization of GeoMet and the GeoMet Subsidiaries; (ii) to maintain in effect any authorizations or
similar rights of GeoMet and the GeoMet Subsidiaries; (iii) to keep available the services of its and the GeoMet Subsidiaries’ current officers and key employees; (iv) to preserve the goodwill of those having business relationships
with it and the GeoMet Subsidiaries; (v) to maintain and keep its and the GeoMet Subsidiaries’ properties in as good a repair and condition as presently exists, except for deterioration due to ordinary wear and tear and damage due to
casualty; and (vi) to maintain in full force and effect insurance comparable in amount and scope of coverage to that currently maintained by it and the GeoMet Subsidiaries; 
  
 (d)    Neither GeoMet nor the GeoMet Subsidiaries shall make or agree to make new
capital expenditures that in the aggregate exceed $500,000 unless such capital expenditures have been included in the 2005 annual budget that has been approved by the GeoMet Board; 
  
 (e)    GeoMet and the GeoMet Subsidiaries shall perform their respective obligations
under any contracts and agreements to which they are a party or to which their assets are subject; 
  
 (f)    Neither GeoMet nor the GeoMet Subsidiaries shall acquire, sell, lease, transfer, or otherwise dispose of,
directly or indirectly, any assets outside the ordinary course of business consistent with past practice or stock, equity interests or any assets that in the aggregate are material to GeoMet or the GeoMet Subsidiaries; 
  
 (g)    Neither GeoMet nor the GeoMet
Subsidiaries shall acquire (by merger, consolidation, or acquisition of stock or assets or otherwise) any corporation, partnership, or other business organization or division thereof; 
  

 22 

 (h)    Neither GeoMet nor the GeoMet Subsidiaries shall amend any Tax
Return or make any Tax election or settle or compromise any federal, state, local, or foreign Tax liability; 
  
 (i)    Neither GeoMet nor the GeoMet Subsidiaries shall pay, discharge, or satisfy any claims, liabilities, or
obligations (whether accrued, absolute, contingent, unliquidated, or otherwise, and whether asserted or unasserted), other than the payment, discharge, or satisfaction in the ordinary course of business consistent with past practice, or in
accordance with their terms, of liabilities reflected or reserved against in the Financial Statements; 
  
 (j)    Neither GeoMet, nor the GeoMet Subsidiaries shall enter into any lease, contract, agreement, commitment,
arrangement, or transaction outside the ordinary course of business consistent with past practice; 
  
 (k)    Neither GeoMet, nor the GeoMet Subsidiaries shall amend, modify, or change in any material respect any existing
lease, contract, or agreement, other than in the ordinary course of business consistent with past practice; 
  
 (l)    Neither GeoMet, nor the GeoMet Subsidiaries shall waive, release, grant, or transfer any rights of value, other
than in the ordinary course of business consistent with past practice; 
  
 (m)    Neither GeoMet, nor the GeoMet Subsidiaries shall take any action that would, or that reasonably could be expected to, result in any of the representations and warranties set forth in this
Agreement becoming untrue or any of the conditions to the Merger set forth in Article IV not being satisfied. GeoMet promptly shall advise Parent orally and in writing of any change or event having, or which, insofar as reasonably can be foreseen,
would have, a Material Adverse Effect on GeoMet; and 
  
 (n)    Neither GeoMet, nor the GeoMet Subsidiaries shall authorize or propose, or agree in writing or otherwise to take, any of the actions described in this Section. 
  
 3.2     Conduct of Business by Parent Pending the
Merger. Parent covenants and agrees that, from the date of this Agreement until the Effective Time, unless the Special Committee shall otherwise agree in writing: 
  
 (a)    the business of Parent shall be conducted only in, and Parent shall not take any
action except in, the ordinary course of business and consistent with past practice; 
  
 (b)    Parent shall not directly or indirectly do any of the following: (i) issue, sell, pledge, dispose of or
encumber, (A) any capital stock of Parent except upon the exercise of Parent Options or (B) other than in the ordinary course of business and consistent with past practice and not relating to the borrowing of money, any assets of Parent;
(ii) amend or propose to amend the Parent Certificate or the bylaws of Parent; (iii) except for $3,000,000 that will be paid to the stockholders of Parent as a dividend prior to the Merger, split, combine or reclassify any outstanding
capital stock, or declare, set aside or pay any dividend payable in cash, stock, property or otherwise with respect to 

  

 23 

 
its capital stock or other securities or equity equivalents, whether now or hereafter outstanding; (iv) redeem, purchase or acquire or offer to acquire,
any of its capital stock or other securities or equity equivalents; (v) except in the ordinary course of business and consistent with past practice, enter into any contract, agreement, commitment or arrangement with respect to any of the
matters set forth in this Section 3.2(b); (vi) except for the adoption of the 2005 Stock Option Plan and the issuance of Parent Options and Non-dilution Options in connection with the Merger, enter into, adopt or (except as may be required
by law) amend or terminate any bonus, profit sharing, compensation, severance, termination, stock option, stock appreciation right, restricted stock, performance unit, stock equivalent, stock purchase, pension, retirement, deferred compensation,
employment, severance or other employee benefit agreement, trust, plan, fund or other arrangement for the benefit or welfare of any director, officer or employee; (vii) except for normal increases in the ordinary course of business consistent
with past practice that, in the aggregate, do not result in a material increase in benefits or compensation expense, increase in any manner the compensation or fringe benefits of any director, officer or employee; or (viii) pay to any director,
officer or employee any benefit not required by any employee benefit agreement, trust, plan, fund or other arrangement as in effect on the date hereof; 
  
 (c)    Parent shall use its reasonable efforts (i) to preserve intact the business organization of Parent;
(ii) to maintain in effect any authorizations or similar rights of Parent; (iii) to keep available the services of its current officers and key employees; (iv) to preserve the goodwill of those having business relationships with it;
(v) to maintain and keep its properties in as good a repair and condition as presently exists, except for deterioration due to ordinary wear and tear and damage due to casualty; and (vi) to maintain in full force and effect insurance
comparable in amount and scope of coverage to that currently maintained by it; 
  
 (d)    Parent shall not make or agree to make new capital expenditures that in the aggregate exceed $50,000; 
  

(e)    Parent shall perform its respective obligations under any contracts and agreements to which it is a party or
to which its assets are subject; 
  
 (f)    Parent shall not acquire, sell, lease, transfer, or otherwise dispose of, directly or indirectly, any assets outside the ordinary course of business consistent with past practice or stock, equity interests or any
assets that in the aggregate are material to Parent; 
  
 (g)    Other than the Merger, Parent shall not acquire (by merger, consolidation, or acquisition of stock or assets or otherwise) any corporation, partnership, or other business organization or division thereof;

  
 (h)    Parent shall not
amend any Tax Return or make any Tax election or settle or compromise any federal, state, local, or foreign Tax liability; 
  
 (i)    Parent shall not pay, discharge, or satisfy any claims, liabilities, or obligations (whether accrued, absolute,
contingent, unliquidated, or otherwise, and 

  

 24 

 
whether asserted or unasserted), other than the payment, discharge, or satisfaction in the ordinary course of business consistent with past practice, or in
accordance with their terms, of liabilities reflected or reserved against in the Parent Financial Statements; 
  
 (j)    Parent shall not enter into any lease, contract, agreement, commitment, arrangement, or transaction outside the
ordinary course of business consistent with past practice; 
  
 (k)    Parent shall not amend, modify, or change in any material respect any existing lease, contract, or agreement, other than in the ordinary course of business consistent with past practice;

  
 (l)    Parent shall not
waive, release, grant, or transfer any rights of value, other than in the ordinary course of business consistent with past practice; 
  
 (m)    Parent shall not take any action that would, or that reasonably could be expected to, result in any of the
representations and warranties set forth in this Agreement becoming untrue or any of the conditions to the Merger set forth in Article IV not being satisfied. Parent promptly shall advise GeoMet orally and in writing of any change or event having,
or which, insofar as reasonably can be foreseen, would have, a Material Adverse Effect on Parent; and 
  
 (n)    Parent shall not authorize or propose, or agree in writing or otherwise to take, any of the actions described
in this Section. 
  
 3.3     Joint
Proxy Statement. Promptly after the date of this Agreement, GeoMet shall cooperate with Parent in preparing a joint proxy statement (the “Proxy Statement“) with respect to the meetings or actions by written consent of stockholders of
GeoMet and Parent referred to in Section 3.4. The Proxy Statement shall contain the recommendation of the GeoMet Board and the Special Committee that the stockholders of GeoMet vote to approve and adopt this Agreement. 
  
 3.4     Meeting of Stockholders of GeoMet and
Parent. GeoMet and Parent shall promptly take all action reasonably necessary in accordance with the DGCL and the ABCA and the GeoMet Articles, the Parent Certificate and GeoMet’s and Parent’s bylaws to convene a meeting of its
stockholders to consider and vote upon the adoption and approval of this Agreement (or to submit such action to stockholders by written consent in lieu of a meeting). 
  
 ARTICLE IV 
  
 CONDITIONS 
  
 4.1     Conditions to Obligation of Each Party to Effect the Merger. The respective obligations of each party to effect
the Merger shall be subject to the fulfillment at or prior to the Closing Date of the following conditions: 
  
 (a)    This Agreement shall have been approved by the requisite vote of the stockholders of Parent and GeoMet, as may
be required by this Agreement, by Applicable Law, and by any applicable provisions of the GeoMet Articles, the Parent 

  

 25 

 
Certificate and GeoMet’s and Parent’s bylaws and in addition to any such requirements, the Merger shall have been approved by holders of two-thirds
of the GeoMet Common Stock not held by Parent; 
  
 (b)    Other than suits to enforce this Agreement, there shall not be (i) any effective injunction, writ or temporary restraining order or any other order of any nature issued by a court or Governmental Entity of
competent jurisdiction directing that any aspect of the Merger not be consummated, or (ii) any action, suit or proceeding pending or threatened in writing in which it is or may be sought to prohibit, substantially delay or rescind this
Agreement or any aspect of the Merger or to obtain an award of damages in connection with the Merger and which, in the good faith judgment of any of the parties, is material; and 
  
 (c)    All approvals of private persons or corporations, (i) the granting of which
is necessary for the consummation of the Merger or the transactions contemplated in connection therewith and (ii) the non-receipt of which would reasonably be expected to have a Material Adverse Effect on Parent or the Surviving Corporation
after the consummation of the Merger, shall have been obtained, including, without limitation, any consents required under the Credit Agreement, the Master Equipment Lease Agreement No. 36137 with Bank of America Leasing & Capital
dated October 29, 2003 and the ISDA Master Agreement with BNP Paribas dated November 21, 2003. 
  
 4.2     Additional Conditions to Obligations of Parent. The obligation of Parent to effect the Merger is, at the option of
Parent, also subject to the fulfillment at or prior to the Closing Date (unless an earlier date is provided herein) of the following conditions: 
  
 (a)    The representations and warranties of GeoMet contained in this Agreement shall be accurate in all material
respects as of the date of this Agreement and (except to the extent such representations and warranties speak specifically as of an earlier date) as of the Closing Date as though such representations and warranties had been made at and as of that
time, all of the terms, covenants and conditions of this Agreement to be complied with and performed by GeoMet or the GeoMet Subsidiaries on or before the Closing Date shall have been duly complied with and performed in all material respects, and a
certificate to the foregoing effect dated the Closing Date and signed by the president of GeoMet shall have been delivered to Parent; 
  
 (b)    Since the date of this Agreement, no Material Adverse Effect pertaining to GeoMet shall have occurred, and
neither GeoMet, nor the GeoMet Subsidiaries shall have suffered any damage, destruction or loss materially and adversely affecting the properties or business of GeoMet and the GeoMet Subsidiaries as a whole, and Parent shall have received a
certificate signed by the president of GeoMet dated the Closing Date to such effect; 
  
 (c)    The persons who will be the stockholders of the Surviving Corporation immediately following the Merger shall
have entered into a stockholders’ agreement in a form agreeable to Parent; 
  

 26 

 (d)    Each of the stockholders of GeoMet shall have delivered a
certificate to the Parent pursuant to which each such stockholder represents and warrants that such stockholder is (and immediately prior to the Effective Time will be) the sole record and beneficial owner of the shares of GeoMet Common Stock owned
by such stockholder and that such shares are free and clear of all Encumbrances, other than restrictions on transfer that may be imposed by federal or state securities laws and under the Stockholders’ Agreement dated as of December 8, 2000
by and among GeoMet and its stockholders; and 
  
 (e)    The GeoMet Board or committee of the GeoMet Board with authority to administer the 2001 Stock Option Plan shall have taken action such that the GeoMet Options shall have converted into Parent Options in accordance
with Section 1.10. 
  
 4.3     Additional Conditions to Obligations of GeoMet. The obligation of GeoMet to effect the Merger is, at the option of GeoMet (as determined by the Special Committee), also subject to the fulfillment at
or prior to the Closing Date of the following condition: 
  
 (a)    The representations and warranties of Parent contained in this Agreement shall be accurate in all material respects as of the date of this Agreement and (except to the extent such
representations and warranties speak specifically as of an earlier date) as of the Closing Date as though such representations and warranties had been made at and as of that time; all the terms, covenants and conditions of this Agreement to be
complied with and performed by Parent on or before the Closing Date shall have been duly complied with and performed in all material respects, and a certificate to the foregoing effect dated the Closing Date and signed by the president of Parent
shall have been delivered to GeoMet; and 
  
 (b)    Parent shall have agreed to cancel the $40,000,000 principal amount of subordinated debt owed by GeoMet to Parent. 
  
 ARTICLE V 
  
 MISCELLANEOUS 
  
 5.1     Termination . This Agreement may be terminated and the Merger and the other transactions contemplated herein may be abandoned at any time prior to the Effective Time, whether
prior to or after approval by the stockholders of Parent or the stockholders of GeoMet: 
  
 (a)    by mutual consent of Parent and GeoMet; 
  
 (b)    by either Parent or GeoMet if the Merger has not been effected on or before
June 30, 2005; 
  
 (c)    by Parent if any of the conditions set forth in Sections 4.2 is not satisfied; 
  
 (d)    by GeoMet if any of the conditions set forth in Section 4.3 is not satisfied; or 
  

 27 

 (e)    by either Parent or GeoMet if a final, unappealable order of a
judicial or administrative authority of competent jurisdiction to restrain, enjoin or otherwise prevent a consummation of this Agreement or the transactions contemplated in connection herewith shall have been entered. 
  
 5.2     Waiver and Amendment. Any provision
of this Agreement may be waived at any time by the party that is, or whose stockholders are, entitled to the benefits thereof. This Agreement may not be amended or supplemented at any time, except by an instrument in writing signed on behalf of each
party hereto, provided that after this Agreement has been approved and adopted by the stockholders of Parent and GeoMet, this Agreement may be amended only as may be permitted by applicable provisions of the DGCL and ABCA. The waiver by any party
hereto of any condition or of a breach of another provision of this Agreement shall not operate or be construed as a waiver of any other condition or subsequent breach. The waiver by any party hereto of any of the conditions precedent to its
obligations under this Agreement shall not preclude it from seeking redress for breach of this Agreement other than with respect to the condition so waived. 
  
 5.3     Nonsurvival of Representations, Warranties and Agreements. None of the representations, warranties, covenants or
agreements in this Agreement or in any instrument delivered pursuant to this Agreement shall survive the Effective Time, except for the terms of Article I, and the representations and warranties set forth in Section 2.2(a), (c), (d), (e),
(f), (g), (h), (i), (k) and (q) which shall survive the Effective Time for a period of one year solely for the benefit of the stockholders of GeoMet other than the stockholders of Parent prior to the Merger. 
  
 5.4     Assignment. This Agreement shall
inure to the benefit of and will be binding upon the parties hereto and their respective legal representatives, successors and permitted assigns. Except as set forth in this Agreement, this Agreement shall not be assignable by the parties hereto.

  
 5.5     Notices. All notices,
requests, demands, claims and other communications which are required to be or may be given under this Agreement shall be in writing and shall be deemed to have been duly given if (i) delivered in person or by expedited courier service,
(ii) sent by telecopy or facsimile transmission, answer back requested, or (iii) mailed, certified first class mail, postage prepaid, return receipt requested, to the parties hereto at the following addresses: 
  

					
	 	 	if to GeoMet:	  	 GeoMet, Inc.
 5336 Stadium Trace Parkway, Suite 206
 Birmingham, AL 35244
 Attention: J. Neil Walden, Jr.

			
	 	 	with a copy to:	  	 Burr & Foreman
 420 North 20th Street, Suite 3100
 Birmingham, Alabama 35203
 Attention:
Edward R. Christian

  

 28 

					
	 	 	 if to Parent:
	  	 GeoMet Resources, Inc.
 909 Fannin, Suite 3208
 Houston, Texas 77010
 Attention: J. Darby Seré

			
	 	 	with a copy to:	  	 Thompson & Knight L.L.P.
 1700 Pacific Avenue, Suite 3300
 Dallas, Texas 75201
 Attention: Jeffrey A. Zlotky

  
 or to such other address as any party
shall have furnished to the other by notice given in accordance with this Section 5.5. Such notices shall be effective, (i) if delivered in person or by expedited courier service, upon actual receipt by the intended recipient, (ii) if
sent by telecopy or facsimile transmission, when the answer back is received, or (iii) if mailed, upon the earlier of five days after deposit in the mail and the date of delivery as shown by the return receipt therefor. 
  
 5.6     Governing Law. This Agreement shall
be governed by and construed in accordance with the substantive law of the State of Delaware without giving effect to the principles of conflicts of law thereof. 
  
 5.7     Severability. If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provision, covenants and restrictions of this Agreement shall continue in full force and effect and shall in no way be affected, impaired or
invalidated. 
  
 5.8     Counterparts. This Agreement may be executed in counterparts, each of which shall be an original, but all of which together shall constitute one and the same agreement. 
  
 5.9     Headings . The Section headings
herein are for convenience only and shall not affect the construction hereof. 
  
 5.10   Entire Agreement. This Agreement constitutes the entire agreement and supersedes all other prior agreements and understandings, both oral and written, among the parties or any of them,
with respect to the subject matter hereof. 
  
 5.11   Third Party Beneficiaries. Parent acknowledges and agrees that the shareholders of GeoMet, other than the current stockholders of Parent, are relying upon the representations and warranties of Parent contained
Section 2.2(a), (c), (d), (e), (f), (g), (h), (i), (k) and (q) and that consequently such stockholders shall be deemed third party beneficiaries of such representations, entitled to enforce any breach of such representations and
warranties against Parent. 
  

 29 

 ARTICLE VI 
  

DEFINITIONS 
  
 6.1     Certain Defined Terms. As used in this Agreement, each of the following terms has the meaning given it in this
Article: 
  
 “Applicable Law” means any
statute, law, rule, or regulation or any judgment, order, writ, injunction, or decree of any Governmental Entity to which a specified person or property is subject. 
  
 “Benefit Program or Agreement” means each personnel policy, stock option plan, collective
bargaining agreement, bonus plan or arrangement, incentive award plan or arrangement, vacation policy, severance pay plan, policy or agreement, deferred compensation agreement or arrangement, executive compensation or supplemental income
arrangement, consulting agreement, employment agreement and each other employee benefit plan, agreement, arrangement, program, practice or understanding that is not a Plan. 
  
 “Defensible Title” means, as to each Oil and Gas Interest, such title that: 
  
 (i)    Is defensible by GeoMet or one of
the GeoMet Subsidiaries, as applicable, against the claims of all other persons; and 
  
 (ii)    Entitles GeoMet or one of the GeoMet Subsidiaries, as applicable, to receive not less than the net revenue
interest for such Oil and Gas Interest; and 
  
 (iii)    Obligates GeoMet or one of the GeoMet Subsidiaries, as applicable, to pay costs and expenses relating to such Oil and Gas Interest in an amount not greater than the “Working Interest” with respect to
such Oil and Gas Interest; and 
  
 (iv)    Except for Permitted Encumbrances, is free and clear of any Encumbrance. 
  
 “Encumbrances” means liens, charges, pledges, options, mortgages, deeds of trust, security interests, claims, restrictions
(whether on voting, sale, transfer, disposition, or otherwise), easements, and other encumbrances of every type and description, whether imposed by law, agreement, understanding, or otherwise. 
  
 “ERISA” means the Employee Retirement Income
Security Act of 1974, as amended. 
  
 “Governmental Entity” means any court or tribunal in any jurisdiction (domestic or foreign) or any public, governmental, or regulatory body, agency, department, commission, board, bureau, or other authority or instrumentality
(domestic or foreign). 
  

 30 

 “Hydrocarbon Agreement” means any of the following: 
  
 (i)    “Hydrocarbon Purchase
Agreement,” which means any sales agreement, purchase contract or marketing agreement that is currently in effect and under which GeoMet or one of the GeoMet Subsidiaries is a buyer of hydrocarbons for resale (other than purchase agreements
entered into in the ordinary course of business with a term of three months or less, terminable without penalty on 30 days’ notice or less, which provide for a price not greater than the market value price that would be paid pursuant to an
arm’s-length contract for the same term with an unaffiliated third party seller, and which do not obligate the purchaser to take any specified quantity of hydrocarbons or to pay for any deficiencies in quantities of hydrocarbons not taken).

  
 (ii)    “Hydrocarbon
Sales Agreement,” which means any sales agreement, purchase contract or marketing agreement that is currently in effect and under which any of GeoMet or the GeoMet Subsidiaries is a seller of hydrocarbons (other than “spot” sales
agreements entered into in the ordinary course of business with a term of three months or less, terminable without penalty on 30 days’ notice or less, and which provide for a price not less than the market value price that would be received
pursuant to an arms’-length contract for the same term with an unaffiliated third party purchaser). 
  
 (iii)    “Hydrocarbon Support Agreement,” which means any gathering, transportation, treatment, compression,
processing or similar agreement that is currently in effect and to which GeoMet or one of the GeoMet Subsidiaries is a party (other than gathering, transportation, treatment, compression, processing and similar agreements that have been entered into
in the ordinary course of business and which contain market value prices and terms of the type found in gathering, transportation, treatment, compression, processing and similar agreements entered into between unaffiliated parties in
arm’s-length transactions). 
  
 “Material Adverse Effect” means any change, development, or effect (individually or in the aggregate) which is, or would reasonably likely be, materially adverse (i) to the business, assets, results of operations, condition
(financial or otherwise), or prospects of (A) GeoMet and the GeoMet Subsidiaries as a whole, or (B) Parent, such that GeoMet and the GeoMet Subsidiaries as a whole or Parent, as applicable has or would suffer a diminution in value of 10%
or more, or (ii) to the ability of GeoMet or Parent, as applicable, to perform on a timely basis any material obligation of GeoMet or Parent, respectively, under this Agreement or any agreement, instrument, or document entered into or delivered
in connection herewith. 
  
 “Oil and Gas
Interest(s)” means (a) direct and indirect interests in and rights with respect to oil, gas, mineral and related properties and assets of any kind and nature, direct or indirect, including working, royalty and overriding royalty interests,
production payments, operating rights, net profits interests, other non-working interests and non-operating interests; (b) interests in and rights with respect to hydrocarbons and other minerals or revenues therefrom and contracts in connection
therewith and claims and rights thereto (including oil and gas leases, operating agreements, unitization and pooling 

  

 31 

 
agreements and orders, division orders, transfer orders, mineral deeds, royalty deeds, oil and gas sales, exchange and processing contracts and agreements
and, in each case, interests thereunder), surface interests, fee interests, reversionary interests, reservations and concessions; (c) easements, rights of way, licenses, permits, leases, and other interests associated with, appurtenant to, or
necessary for the operation of any of the foregoing; and (d) interests in equipment and machinery (including well equipment and machinery), oil and gas production, gathering, transmission, compression, treating, processing and storage
facilities (including tanks, tank batteries, pipelines and gathering systems), pumps, water plants, electric plants, gasoline and gas processing plants, refineries and other tangible personal property and fixtures associated with, appurtenant to, or
necessary for the operation of any of the foregoing. 
  
 “Permitted Encumbrances” means (i) Encumbrances for inchoate mechanics’ and materialmen’s liens for construction in progress and workmen’s, repairmen’s, warehousemen’s and carriers’ liens arising
in the ordinary course of business, (ii) requirements for consent to assignment and other encumbrances of a similar nature which are part of contracts customarily used in the oil and gas industry, (iii) Encumbrances for Taxes not yet
payable, (iv) Encumbrances and imperfections of title, including servitudes, permits, surface leases and other rights in respect to surface operations, pipelines, grazing, logging, canals, ditches, reservoirs or the like; conditions, covenants
or other restrictions; easements for streets, alleys, highways, pipelines, power lines, telephone lines and railways, and other assessments and rights-of-way, and all other liens, in each case listed in this subsection (iv) that (A) do not
arise in connection with or secure indebtedness for money borrowed or owed or the extension of credit, (B) do not materially detract from the value of the Oil and Gas Interests subject thereto or affected thereby or otherwise materially impair
the Property or operations being conducted thereon or therewith, so a reasonably prudent operator engaged in the oil and gas industry with knowledge of the facts and circumstances and the legal effect thereon would accept title to such Oil and Gas
Interests subject to such detractions, interferences or impairments or (C) do not reduce the net revenue interest or increase the working interest for the affected Oil and Gas Interests, (v) all liens, mortgages and deeds of trust granted
by GeoMet in favor of Fleet National Bank, as Administrative Agent under the Amended and Restated Credit Agreement, dated November 21, 2003, as amended on November 22, 2004 (the “Credit Agreement“), and (vi) any other
Encumbrances to the extent such Encumbrances do not have a Material Adverse Effect on GeoMet. 
  
 “person” means any individual, corporation, partnership, joint venture, limited liability company association, joint-stock
company, trust, enterprise, unincorporated organization, or Governmental Entity. 
  
 “Plan” shall mean an “employee benefit plan” as such term is defined in Section 3(3) of ERISA. 
  
 “Taxes” means any income taxes or similar
assessments or any sales, excise, occupation, use, ad valorem, property, production, severance, transportation, employment, payroll, franchise, or other tax imposed by any United States federal, state, or local (or any foreign or provincial) taxing
authority, including any interest, penalties, or additions attributable thereto. 
  

 32 

 “Tax Return” means any return or report, including any related or supporting
information, with respect to Taxes. 
  
 6.2     Certain Additional Defined Terms. In addition to such terms as are defined in Section 6.1, the following terms are used in this Agreement as defined in the pages set forth opposite such terms:

  

			
	 Term

	  	Page

	 2001 Plan
	  	6
	 ABCA
	  	1
	 Agreement
	  	1
	 CERCLA
	  	11
	 Closing
	  	1
	 Closing Date
	  	2
	 Code
	  	1
	 Contracts
	  	14
	 Credit Agreement
	  	32
	 DGCL
	  	1
	 Dissenting Shares
	  	5
	 Effective Time
	  	2
	 Environmental Laws
	  	11
	 Exchange Ratio
	  	3
	 Financial Statements
	  	7
	 GeoMet
	  	1
	 GeoMet Articles
	  	5
	 GeoMet Board
	  	7
	 GeoMet Common Stock
	  	1
	 GeoMet ERISA Affiliate
	  	9
	 GeoMet Option
	  	4
	 GeoMet Subsidiaries
	  	5
	 Merger
	  	1
	 Non-dilution Option
	  	4
	 Parent
	  	1
	 Parent Certificate
	  	2
	 Parent Common Stock
	  	1
	 Parent Contracts
	  	21
	 Parent ERISA Affiliate
	  	18
	 Parent Financial Statements
	  	16
	 Parent Option
	  	4
	 Proxy Statement
	  	25
	 RCRA
	  	11
	 Special Committee
	  	1
	 Surviving Corporation
	  	1

  

 33 

 IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed on its behalf by its
officers thereunto duly authorized, all as of the date first above written. 
  

			
	GEOMET RESOURCES, INC.
		
	By:	 	  

	 	 	 Name:

	 	 	 Title:

	
	GEOMET, INC.
		
	By	 	  

	 	 	 Name:

	 	 	 Title:

  

 342005 Stock Option Plan of GeoMet, Inc., dated April 15, 2005

 EXHIBIT 10.2 
  
 GEOMET, INC. 
  
 2005 STOCK OPTION PLAN 
  
  
 Section 1. Purpose. The purpose of this 2005 Stock Option Plan
(the “Plan”) is to promote the interests of GeoMet, Inc., a Delaware corporation formerly known as GeoMet Resources, Inc. (the “Company”), and the interests of the Company’s shareholders by attracting and retaining
Employees, Non-Employee Directors and Consultants, and giving such persons the opportunity to purchase Common Stock of the Company. By encouraging such stock ownership, the Company seeks to attract, retain and motivate such Employees, Non-Employee
Directors and Consultants, and to encourage them to devote their best efforts to the business and financial success of the Company and its Affiliates. 
  
 Section 2.    Definitions. As used herein the following terms have the following meanings: 
  
     (a)    “Affiliate” means any parent or subsidiary corporation of the Company within the meaning of Section 424(e) and (f) of the Code. 
  
     (b)    “Board” means the Board of Directors of the Company. 
  
     (c)    “Code” means the Internal Revenue Code of 1986, as amended. 
  
     (d)    “Committee” shall mean the Committee of the Board referred to in Section 19 hereof. 
  

    (e)    “Common Stock” means the Common Stock, $0.001 par value, of the Company.

  
     (f)    “Consultant” means any consultant or advisor of the Company or an Affiliate who is not an Employee or Non-Employee Director, provided that bona fide services are rendered by the
consultant or advisor and such services are not in connection with the offer or sale of securities in a capital-raising transaction. 
  
     (g)    “Employee” means any regular salaried officer or employee of the Company or
an Affiliate. 
  
     (h)    “Fair Market Value” means either (i) the closing sales price per share of Common Stock on the date of the grant of the Option, or, if no sales of shares of Common Stock shall
have been made on such date, on the next succeeding business day on which shares of Common Stock are sold, on the principal national securities exchange on which the shares of Common Stock are listed or admitted to trading, or if the shares of
Common Stock are not listed or admitted to trading on any national securities exchange, on the National Association of Securities Dealers Automated Quotation National Market (the “NASDAQ National Market”), or, if the shares of Common Stock
are not quoted on the NASDAQ National Market, the average of the highest reported “bid” and the lowest 

  

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reported “asked” prices per share of such Common Stock on the date in question, as furnished by the National Association of Securities Dealers,
Inc., or (ii) if the Common Stock is not reported or quoted by any such organization, as determined in good faith by the Committee, after taking all relevant facts into consideration. 
  
     (i)    “Non-Employee Director” means an individual duly elected or chosen as a director of the Company or an Affiliate who is not also an Employee or officer of the Company or an
Affiliate. 
  
     (j)    “Option” means an option granted to an Employee, Non-Employee Director or Consultant pursuant to the Plan that is (a) a “nonqualified stock option” as described in
Treasury Regulation Section 1.83-7 or any successor regulation thereto and that shall not constitute nor be treated as an incentive stock option (as defined in Section 422(b) of the Code) or (b) an incentive stock option (as defined
in Section 422(b) of the Code); provided, however, that incentive stock options (as defined in Section 422(b) of the Code) shall only be granted to Employees. 
  
     (k)    “Option Agreement” means a written agreement
between the Company and an Employee, Non-Employee Director or Consultant that sets forth the terms, conditions, restrictions and/or limitations applicable to an Option granted under the Plan. 
  
     (l)    “Optionee” means an Employee, Non-Employee Director or Consultant who has been granted an Option under the Plan. 
  
 Section 3.    Number of Shares. The total number of shares of Common Stock for which Options
may be granted by the Company from time to time under the Plan shall not exceed in the aggregate three hundred (300,000) shares of the authorized Common Stock, subject to adjustment as provided in Section 10 below. Such shares may be in
whole or part, as the Committee shall from time to time determine, authorized but unissued shares of Common Stock or issued shares of Common Stock which shall have been reacquired by the Company. If any Option granted under the Plan expires or
terminates for any reason without having been exercised in full, or is reduced as to the number of shares covered thereby, the unpurchased shares subject thereto, or the shares by which such Option is reduced, shall again be available for purposes
of the Plan. 
  
 Section 4.    Administration of the Plan. The following provisions shall apply to the administration of the Plan by the Committee: 
  
     (a)    The Plan shall be administered by the Committee. The
Committee shall have total and exclusive responsibility to control, operate, manage and administer the Plan in accordance with its terms. The Committee shall have all the authority that may be necessary or helpful to enable it to discharge its
responsibilities with respect to the Plan. Without limiting the generality of the preceding sentence, the Committee shall have the exclusive right to: (i) interpret the Plan and the Options granted hereunder; (ii) determine eligibility for
participation in the Plan; (iii) decide all questions concerning eligibility for, and the number of, Options issuable under the Plan; (iv) construe any ambiguous provision of the Plan or any Option Agreement; (v) prescribe the form of
the 

  

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Option Agreements embodying Options granted under the Plan (which need not be identical); (vi) correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Option Agreement; (vii) issue administrative guidelines as an aid to administer the Plan and make changes in such guidelines as it from time to time deems proper; (viii) make regulations for carrying out
the Plan and make changes in such regulations as it from time to time deems proper; (ix) determine whether Options should be granted singly, in combination or in tandem; (x) to the extent permitted under the Plan, grant waivers of Plan
terms, conditions, restrictions and limitations; (xi) accelerate the exercise, vesting or payment of an Option when such action or actions would be in the best interests of the Company; (xii) grant Options in replacement of Options
previously granted under the Plan or any other employee benefit plan of the Company; and (xiii) take any and all other actions it deems necessary or advisable for the proper operation or administration of the Plan. 
  
     (b)    Neither
the members of the Board nor the Committee shall be liable for any act, omission, or determination taken or made in good faith with respect to the Plan or any Options granted under it, and members of the Board or the Committee shall be entitled to
indemnification and reimbursement by the Company in respect of any claim, loss, damage, or expense (including attorneys’ fees, the costs of settling any suit, provided such settlement is approved by independent legal counsel selected by the
Company, and amounts paid in satisfaction of a judgment, except a judgment based on a finding of bad faith) arising therefrom to the fullest extent permitted by law. 
  
 Section 5.    Grant of Options. At any time and from time to time during the duration of the
Plan and subject to the express provisions thereof, Options may be granted by the Committee to any Employee, Non-Employee Director or Consultant for such number of shares of Common Stock as the Committee in its discretion shall deem to be in the
best interest of the Company and which will serve to further the purposes of the Plan. The Committee, in its discretion, shall designate whether any Option so granted shall be either (i) a nonqualified stock option or (ii) an incentive
stock option intended to qualify under Section 422 of the Code; provided, however, that in no case shall an Option granted to a Non-Employee Director or a Consultant be designated as an incentive stock option under Section 422 of the Code.

  
 Section 6.    Option Price.
The purchase price per share of Common Stock for each option shall be determined by the Committee but in no event shall be less than 100% of the Fair Market Value per share of Common Stock at the time the Option is granted; provided, however, that
the purchase price per share of Common Stock for any incentive stock option granted to an Optionee who, at the time such incentive stock option is granted, owns stock possessing more than 10% of the total combined voting power of all classes of
stock of the Company or any Affiliate shall be at least 110% of the Fair Market Value per share of Common Stock at the date of grant. Upon exercise of an Option, the purchase price shall be paid in full either: 1) in cash, 2) with the consent of the
Committee, by the execution of a promissory note and/or a combination of cash and execution of a promissory note or 3) with the consent of the Committee and if and to the extent provided for under the Option Agreement for such Option, in cash and/or
by delivery of shares of Common Stock already owned by the Optionee having an aggregate Fair Market Value (determined as of the date of exercise) equal to the purchase price. The proceeds of such sale shall constitute general funds of the Company.
Upon exercise of an Option, the Optionee 

  

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will be required to pay to the Company the amount of any federal, state or local taxes required by law to be withheld in connection with such exercise, and
no certificates representing shares of Common Stock shall be delivered to the Optionee until such tax is paid by the Optionee. 
  
 Section 7.    Option Period and Terms of Exercise of Options. Except as otherwise provided for herein, each Option granted
under the Plan shall be exercisable during such period commencing on or after the date of the grant of such Option as the Committee shall determine and specify in the related Option Agreement. In the event that the Option Agreement does not set
forth the exercise period of the Option, the otherwise unexpired portion of any Option shall expire and become null and void no later than upon the first to occur of (i) the expiration of 10 years from the date such Option was granted,
(ii) the expiration of three months from the date of the termination of the Optionee’s employment or consulting or director services, as applicable, with the Company or an Affiliate for any reason other than death or disability, or
(iii) the expiration of one year (in the case of an incentive stock option) or two years (in the case of a nonqualified stock option) from the date of termination of the Optionee’s employment or consulting or director services, as
applicable, with the Company or an Affiliate by reason of death or disability. Anything herein to the contrary notwithstanding, the otherwise unexpired portion of any Option granted hereunder shall expire and become null and void immediately upon
the termination of Optionee’s employment or consulting or director services with the Company or an Affiliate by reason of such Optionee’s fraud, dishonesty or performance of other acts detrimental to the Company or an Affiliate, as
determined by the Board in its sole discretion, or for “cause” as defined in any employment, consulting or similar agreement that may exist between Optionee and the Company or an Affiliate, as determined by the Board in its sole
discretion. Any incentive stock option granted to an Optionee who, at the time such incentive stock option is granted, owns stock possessing more than l0% of the total combined voting power of all classes of stock of the Company or any Affiliate
shall not be exercisable after the expiration of five years from the date of its grant. Under the provisions of any Option Agreement evidencing an Option, the Committee may limit the number of shares purchasable thereunder in any period or periods
of time during which the Option is exercisable and may impose such other terms and conditions upon the exercise of an Option and the shares of Common Stock to be purchased as are not inconsistent with the terms of this Plan; provided, however, that
the Committee, in its discretion, may accelerate the exercise date of any Option to any date following the date of grant. 
  
 Section 8.    Nontransferability of Options. An Option granted under the Plan shall be transferable by the Optionee only
by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the Optionee only by the Optionee, or if the Optionee is legally incompetent, by the Optionee’s legal representative. No person or entity shall
be entitled to vote, receive dividends, or be deemed for any purpose the holder of any shares of Common Stock until the Options granted with respect to such shares shall have been exercised in accordance with the provisions of the Plan. 

 

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 Section 9.     Termination. 
  
     (a)    Termination of Employment. Transfers of employment by an Employee between the Company and any of its Affiliates shall not be considered to be a termination of employment for the
purposes of this Plan. Nothing in the Plan or in any Option Agreement evidencing an Option granted under the Plan shall confer upon any Optionee any right to continue in the employ of the Company or any Affiliate or in any way interfere with the
right of the Company or any Affiliate to terminate the employment of the Optionee at any time, with or without cause. 
  
     (b)    Termination of Consulting Services. Transfers of consulting services by a
Consultant between the Company or any of its Affiliates shall not be considered to be a termination of consulting services for the purposes of this Plan. Nothing in the Plan or in any Option Agreement evidencing an Option granted under the Plan to a
Consultant shall confer upon any Consultant any right to continue as a Consultant of the Company, or any Affiliate or in any way interfere with the right of the Company or any Affiliate to terminate the services of the Consultant at any time, with
or without cause. 
  
     (c)    Termination of Membership on the Board. Nothing in the Plan or in any Option Agreement evidencing an Option granted under the Plan to a Non-Employee Director shall confer upon any
Non-Employee Director any right to continue as a Non-Employee Director of the Company or any Affiliate. 
  
 Section 10.    Adjustments Upon Changes in Common Stock. In the event that, after the adoption of the Plan by the Board,
the outstanding shares of the Company’s Common Stock shall be changed into or exchanged for a different number or kind of shares of stock or other securities of the Company or of another corporation through reorganization, merger or
consolidation, recapitalization, reclassification, stock split, split-up, combination or exchange of shares or increase because of any dividends paid in Common Stock, the Committee shall appropriately adjust (i) the number of shares of Common
Stock (and the exercise price per share) subject to any unexercised Options, and (ii) the number of shares of Common Stock for which Options may be granted under the Plan, as set forth in Section 3 hereof, and such adjustments shall be
effective and binding for all purposes of the Plan. 
  
 Section 11.    Amendment and Termination of the Plan. Subject to the right of the Board to terminate the Plan prior thereto, the Plan shall terminate at the expiration of 10 years from the date of adoption of
the Plan by the Board. No Options may be granted after termination of the Plan. The Board may alter or amend the Plan but may not, without the approval of the shareholders of the Company having a majority of the general voting power, make any
alteration or amendment thereof which operates (i) to increase the total number of shares of Common Stock as to which Options may be granted under the Plan (other than as provided in Section 10 hereof), (ii) to extend the term of the
Plan or the exercise period beyond the 10 year maximum provided in Section 7 hereof, (iii) to decrease the minimum purchase price provided in Section 6 hereof (other than as provided in Section 10 hereof) or (iv) to make any
other change requiring shareholder approval under any applicable rule, regulation, or procedure of any national securities exchange or securities association upon which any securities of the Company are 

  

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listed. No termination or amendment of the Plan shall adversely affect the rights of an Optionee under an outstanding Option, except with the consent of such
Optionee. 
  
 Section 12.    Modification of Options. Subject to the terms and conditions of and within the limitations of the Plan, the Committee may modify, extend or renew outstanding Options granted under the Plan
(including the conversion of an incentive stock option qualified under Section 422 of the Code to a nonqualified stock option), or accept the surrender of Options outstanding hereunder (to the extent not theretofore exercised) and authorize the
granting of new Options in substitution therefor. Notwithstanding the foregoing, no modification of an Option shall, without the consent of the Optionee, alter or impair any rights or obligations under any Option theretofore granted to such
Optionee, except as may be necessary, with respect to incentive stock options, to satisfy the requirements of Section 422(b) of the Code. 
  
 Section 13.    Corporate Changes. Upon (a) the dissolution or liquidation of the Company; (b) the sale of all or
substantially all the assets of the Company; (c) the occurrence of a Change in Control (as defined below); or (d) upon the closing of the first underwritten public offering of the Common Stock of the Company that is pursuant to a
registration statement filed with, and declared effective by, the Securities and Exchange Commission under the Securities Act of 1933, as amended (the “Securities Act”), covering the offer and sale of any Common Stock to the public for the
Company’s account, subject to the terms of any applicable option agreement, the Board serving prior to the date of the applicable event shall accelerate the exercise dates of all outstanding Options, and may, in its discretion, without
obtaining stockholder approval, pay cash to any or all Optionees in exchange for the cancellation of their outstanding Options. 
  
 A “Change in Control” shall be deemed to have occurred for purposes of this Section 13 if (a) individuals who were directors of the
Company immediately prior to a Control Transaction (as defined below) shall cease, within one year of such Control Transaction, to constitute a majority of the Board of Directors of any successor to the Company or to a company which has acquired all
or substantially all its assets or (b) any entity, person or group (other than a beneficial owner of Common Stock on the date this Plan is adopted) acquires shares of the Company in a transaction or series of transactions that result in such
entity, person or group directly or indirectly owning beneficially 50% or more of the outstanding shares of Common Stock. As used in this Section 13, the term “Control Transaction” shall mean (a) any tender offer for or
acquisition of capital stock of the Company, (b) any reorganization, merger, consolidation or sale of all or substantially all the assets of the Company, (c) any contested election of directors of the Company or (d) any combination of
the foregoing that results in a change in voting power sufficient to elect a majority of the Board. The Board’s determination as to what adjustments shall be made under this Section 13 and the extent of such adjustments shall be final,
binding and conclusive. 
  
 Section 14.    Legal Restrictions. Nothing herein, in any Option Agreement entered into hereunder, or in any Options granted hereunder, shall require the Company to sell or issue any Common Stock pursuant to
an Option if such sale or issuance would, in the opinion of counsel for the Company, constitute a violation of the Securities Act or any similar or superseding statute or statutes, or any applicable state “blue sky” law, in any case as
then in effect. 
  

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 Section 15.    Investment Letter and Legend. At the time of any grant or
exercise of any Options, or sale or issuance of Common Stock pursuant thereto, the Company may, as a condition precedent to the grant or exercise of such Option or the sale or issuance of such Common Stock, require from the holder of such Option (or
in the event of his death, his representatives, legatees, or distributees) such written representations, if any, concerning his (or the transferee’s) status as a sophisticated and/or “accredited” investor under applicable federal and
state securities laws and his (or the transferee’s) intentions with regard to the retention or disposition of the Options or the Common Stock being acquired pursuant to such Options, and such written covenants and agreements, if any, as to the
manner of acquisition of such Option and/or the disposal of such Common Stock as, in the opinion of counsel to the Company, may be necessary to ensure that any acquisition or disposition by such holder (or in the event of his death, his legal
representatives, legatees, or distributees) will not involve a violation of the Securities Act or any similar or superseding statute or statutes, or any other applicable federal or state statute, rule, or regulation, as then in effect. Certificates
for Common Stock, when issued, shall have appropriate legends, or statements of other applicable restrictions, endorsed thereon, and may or may not be immediately transferable. 
  
 Section 16.    Restrictions on Transfer of Shares. The Common Stock acquired pursuant to the
exercise of Options shall be subject to such restrictions and agreements regarding sale, assignment, encumbrances or other transfer as are in effect among the shareholders of the Company at the time such Common Stock is acquired, as well as to such
other restrictions as the Board shall deem advisable. The Company may require as a condition to the exercise of any Option that the holder thereof enter into any stockholders’ agreement then in effect among the stockholders of the Company.

  
 Section 17.    Gender. Words
of any gender used in the Plan shall be construed to include any other gender, unless the context requires otherwise. 
  
 Section 18.    Governing Law. All questions arising with respect to the provisions of the Plan or any agreement entered
into hereunder or any Option shall be determined by application of the internal laws of the State of Delaware (without regard to principles of conflicts of law), except to the extent Delaware law is preempted by federal law. 
  
 Section 19.    The Committee. The Plan shall
be administered by the Compensation Committee appointed by the Board; provided that at least one member of the Compensation Committee must be one of the three directors designated by the New Stockholders (as such term is defined in the Stockholders
Agreement to be dated as of April 15, 2005 by and among the Company and its stockholders). All actions taken by the Committee must be by either (i) the affirmative vote of a majority of the total number of members at a meeting of the
Committee at which a quorum is present or (ii) the unanimous written consent of all members of the Committee. 
  
 Section 20.    Government and Stock Exchange Regulations. The Plan, and the granting and exercise of Options thereunder,
and the obligation of the Company to sell and deliver shares under such Options, shall be subject to all applicable governmental laws, rules and regulations, and to such approvals by any governmental agencies as may then be required, and shall also
be subject to all applicable rules and regulations of any stock exchange upon which the Common 

  

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Stock of the Company may then be listed. The Committee is expressly authorized to impose such restrictions and limitations as it may deem advisable upon the
exercise of Options in order to satisfy any such regulatory requirements. 
  
 Section 21.    Effective Date of the Plan. The Plan shall become effective, as of the date of its adoption by the Board, when it has been duly approved by the holders of at least a
majority of the shares of Common Stock present or represented and entitled to vote at a meeting of the shareholders of the Company duly held in accordance with applicable law within twelve months after the date of adoption of the Plan by the Board.
If the Plan is not so approved, the Plan shall terminate and any Option granted hereunder shall be null and void. 
  
 IN WITNESS WHEREOF, this 2005 Stock Option Plan is executed as of the 15th day of April, 2005. 
  

					
	GEOMET, INC.
		
	By:	 	  

	 	 	Name:	 	  

	 	 	Title:	 	  

  

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