Document:

EX-10.3

 

Exhibit 10.3

SETTLEMENT MEMORANDUM OF UNDERSTANDING

     This Settlement Memorandum of Understanding
(“Memorandum”) is made this 13th day of June, 2006, by
and among BPI Energy, Inc., for itself and as successor by
merger or otherwise to Methane Management, Inc. and BPI Industries, Inc.,
(“BPI”), Colt LLC (“Colt”), AFC Coal
Properties, Inc. (“AFC”), American Premier
Underwriters, Inc. (“APU”), and Central States Coal
Reserves of Illinois, LLC (“Central States”)
(collectively, the “Parties”), to memorialize and
evidence their agreement in principle for the settlement of the
lawsuit filed in the United States District Court for the
Southern District of Ohio, styled as BPI Energy, Inc. v. Colt
LLC, et al., Case No. 06-cv-144 (the
“Lawsuit”) and the interlocutory appeal arising
therefrom pending before the United States Court of Appeals for
the Sixth Circuit, Appeal No. 06-3559 (the
“Appeal”) (the Lawsuit and the Appeal referred to
collectively as the “Action”). The Parties have agreed
to use commercially reasonable efforts to execute by
June 19, 2006 (the target “Closing Date”) a
mutually agreeable final settlement agreement and mutual release
(the “Settlement Agreement”) and such other mutually
agreeable documentation as may be necessary to memorialize and
effectuate all the terms embodied in their settlement. This
Memorandum summarizes the principal terms of the Parties’
settlement.

     1.     Prior to the Closing Date, Colt
shall obtain any and all of the Methane Assets (as defined in
Section 3(c) below) that it has conveyed to any of its
affiliates.

     2.     Prior to the Closing Date, Colt
shall obtain, by Quit Claim deed, with covenant of after
acquired title to the extent of the purported paper title
conveyed to APU and within the chain of title to APU, all of
APU’s right, title and interest to all coal bed methane gas
(“CBM”) and coal mine methane gas (“CMM”) in
an area more specifically described in
Exhibit C.

 

 

     3.     Subject to Colt’s ability
to obtain the assets described in Sections 1 and 2, on the
Closing Date:

		
	 	     
    (a) the Parties shall execute the Settlement Agreement
    under which each of the Parties shall release and forever
    discharge each of the other Parties for any and all claims
    arising out of or in any way related to the Methane Lease (as
    defined in Section 3(d) below), the Action, or any other
    claims arising from the beginning of time up to the Closing Date
    except for those rights and obligations contained in the
    Settlement Agreement;
	 
	 	     
    (b) BPI shall make a lump sum cash payment of Three Million
    and 00/100 Dollars ($3,000,000.00) (the “Settlement
    Sum”) by way of wire transfer to Colt, and deliver said
    Settlement Sum to Colt’s attorney, Brian A. Glasser, Bailey
    & Glasser, LLP, 227 Capitol Street, Charleston, West
    Virginia, 25301 (or such other person or entity as may be
    designated by Colt). Wire transfer instructions are attached as
    Exhibit A;
	 
	 	     
    (c) Colt and BPI shall execute a Purchase and Sale
    Agreement under which Colt shall provide Quit Claim Deeds
    without covenants of warranty of title of any kind (provided,
    however, Colt shall represent and warrant that it has not
    conveyed or impaired the title conveyed to Colt, that Colt will
    convey the Land free and clear of all liens or other
    encumbrances that have come into existence during its period of
    ownership and with covenant of after acquired title to the
    extent of the paper title conveyed to Colt and within the chain
    of title to Colt and subject to all easements, restrictions and
    encumbrances of record or otherwise,) conveying to BPI all of
    Colt’s respective rights, title and interests in and to the
    CBM and CMM (associated with the 16 sections described in
    Exhibit B (hereinafter the 16 sections
    referred to as the “Land”) (the CBM and CMM in the
    Land, collectively, the “Methane Assets”), in the form
    of a deed that substantially conforms to
    Exhibit H. Colt agrees, except for the rights
    set forth in

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Sections 7 and 8 below, that CBM or CMM operations shall
take priority over other operations (including coal mining
operations) for as long as CBM or CMM is produced anywhere on
the Land. The Methane Assets shall be conveyed “as is”
and “where is” with all faults, without any warranty
whatsoever by Colt as to their physical condition, the extent of
CBM and CMM reserves in situ or the commercial
feasibility of the mining thereof, the condition of title
(provided, however, Colt shall represent and warrant that it has
not conveyed or impaired the title conveyed to Colt, that Colt
will convey the Land free and clear of all liens or other
encumbrances that have come into existence during its period of
ownership and with covenant of after acquired title to the
extent of the paper title conveyed to Colt and within the chain
of title to Colt,) and the existence of hazardous perils of
operations thereon. BPI shall be responsible for recording the
Quit Claim Deeds, and BPI shall be responsible for paying any
associated transfer taxes. Other than the Methane Assets, Colt
is expressly reserving all other mineral rights or other
interests it may possess in the Land; and

     (d) the Parties shall execute a Termination Agreement under
    which each of the Parties acknowledges the termination of that
    certain Oil, Gas and Coal Bed, Methane Gas Lease dated
    April 3, 2001, as amended (the “Methane Lease”),
    and forever discharges and releases each of the Parties from any
    and all obligations thereunder.

     4.     Each of the documents described
in Sections 3(a), (c), and (d) shall be acceptable in form
and substance to each of the Parties, provided that the Quit
Claim Deeds described in Section 3(c) must substantially
conform to Exhibit H.

     5.     BPI agrees that it will not
drill any additional CBM or CMM wells in Sections 10 and 15
of Township 9 South, Range 5 East, Saline County,
Illinois. This does not affect BPI’s right to drill any new
CBM and CMM wells (as permitted by law) in any other acreage in
the

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remaining portion of the Land, nor does it affect BPI’s
    right to produce CBM or CMM from the 15 wells identified in
    Exhibit D, which have already been drilled in
    Sections 10 and 15, provided that BPI does not perforate
    any casing passing through the No. 5 coal seam and all
    seams or other coal strata above the No. 5 coal seam to
    produce any CBM or CMM from the No. 5 coal seam or any coal
    seam above the No. 5 coal seam, or to otherwise stimulate,
    by hydraulic fracture or other method, said coal seams in
    Sections 10 or 15. BPI agrees, at its cost, to plug and
    otherwise reclaim, as and when required by law, the 15 CBM
    wells identified in Exhibit D.

     6. Colt agrees that it will not object to any current or
future applications by BPI or its designees for permits to
develop CBM or CMM on the Land provided, however, that such
applications and their content comply with Illinois laws and
regulations. This does not alter or affect BPI’s promise
not to drill new wells described in Section 5 of this
Memorandum.

     7. At any time, Colt or its designees (not including
Central States) may be permitted, by mere delivery of written
notice to BPI, to move gas gathering or gas transportation lines
or roads, water disposal systems, equipment, or power lines
servicing BPI’s wells, subject to (i) compliance with
any applicable surface agreements and (ii) any applicable
law. Colt shall cause the work to be performed under its
direction and control and shall bear the cost and expense
associated with the work. Colt acknowledges on its behalf and on
behalf of its designees that such cost and expense may include
payments to BPI for any costs incurred and revenue lost as a
result of its CBM and/or CMM production being interrupted.

     8. Subject to the obligation to immediately plug the well,
Colt or its designees (not including Central States) shall have
the right to buy any CBM or CMM well located anywhere on the
Land. Colt shall be wholly and principally liable for amounts
due under this Section. The payment to be made for the purchase
of any well under this Section shall be calculated at the Fair

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Market Value of the well taken, which will be determined in the
    sole discretion of an appraiser who shall be a mutually
    agreeable petroleum reserve engineer who has expertise in CBM
    production and reserve analysis and is a member of the Society
    of Petroleum Engineers (“Appraiser”). In the event
    Colt and BPI are unable to agree on an individual to serve as
    the Appraiser then either party may petition the Energy Section
    of the American Arbitration Association for the appointment of
    the Appraiser pursuant to Rule 11 of the Rules of
    Commercial Arbitration of the American Arbitration Association.
    The American Arbitration Association must appoint an experienced
    petroleum engineer who has expertise in CBM production and
    reserve analysis and is a member of the Society of Petroleum
    Engineers. The Appraiser’s determination of the payment
    amount for the well purchased shall be final and not appealable
    in any way by any Party. The cost, if any, of the appointment of
    the Appraiser and of the Appraiser’s determination shall be
    at Colt’s expense.

     9. Colt agrees, at its cost, to plug and otherwise reclaim,
as required by law, the following four CBM wells located in
Williamson County, Illinois: (a) Delta #4 (located in
Section 1, Township 9 South, Range 4 East);
(b) DDH #4 (located in Section 27, Township 8
South, Range 4 East); (c) DDH #5 (located in
Section 10, Township 8 South, Range 4 East); and
(d) Delta H1A (located in Section 9, Township 8
South, Range 4 East).

     10. Other than the four wells listed in Section 9
above, BPI agrees, at its cost, to plug and otherwise reclaim,
when required by law, all CBM and CMM wells owned and/or
operated by BPI on the Land. BPI acknowledges that it will
abandon wells Delta Mine #14 (D6) and Delta #003, both
located in Williamson County, and BPI agrees to plug both of
these wells within 6 months of the Closing Date.

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     11.     With
respect to all existing and future CBM and CMM wells on the Land that
pierce mineable No. 5 or No. 6 coal including, without
limitation, those wells listed on Exhibit E, BPI
shall, when required by law, plug such wells in accordance with then
existing legal standards designed by appropriate regulatory agencies
to allow mining through the plug and well-bore. By way of
illustration and not limitation, today’s standards are set forth
on Exhibit F, attached hereto.

     12.     BPI
expressly represents and warrants that it will continue to honor its
obligations in relation to the Settlement Agreement and Mutual
Release between BPI and Delta Mine Holding Company and Peabody
Development Land Holdings, LLC dated April 15, 2005 (hereinafter
the “Peabody Agreement”) including, but not limited to,
Prohibited Area (i.e., the “no fly zone”) as
described in Section 4 of the Agreement, a copy of which is
attached Exhibit G. The Peabody Agreement shall
remain in full force and effect and shall not be deemed modified or
amended in any manner as a result of the Parties entering into this
Memorandum and the final Settlement Agreement. The execution of the
Settlement Agreement and performance of the terms and provisions
contained in the Settlement Agreement shall not constitute a waiver
of any breach of the Peabody Agreement.

     13.     By
June 29, 2006, subject to the occurrence of all of the events
described in paragraph 3 above, the Parties, through counsel,
shall cause the Lawsuit and Appeal to be dismissed with prejudice by
tendering the appropriate entries of dismissal.

     14.     The
Parties shall bear their own costs, expenses and attorney’s fees
relating to the Lawsuit and Appeal.

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     15. The Parties agree that BPI has the right to publicly
    disclose the terms of this Memorandum and the terms of the final
    Settlement Agreement as required by federal securities laws.

     16. The Parties represent that no right, action or cause of
action that one may have against the other arising out of the
Methane Lease and/or the Lawsuit, or any portion of recovery or
settlement to which they may be entitled, has been assigned or
transferred by or for in any manner, including by way of
subrogation or operation of law.

     17. This Memorandum and the Settlement Agreement shall be
governed by the laws of Illinois and that any action or
proceeding to enforce or arising out of this Memorandum or the
Settlement Agreement shall be maintained in the United States
District Court for the Southern District of Illinois or the
Circuit Court of Saline County, Illinois.

     18. Neither the existence of this Memorandum or the
Settlement Agreement nor anything contained therein shall be
construed as an admission of liability of the Parties.

     19. This Memorandum may be executed in multiple
counterparts, all which together shall constitute one
instrument. The Parties shall accept facsimile signatures to
this Memorandum.

		
	 	
    Agreed to and acknowledged by:
		
	 
	 	/s/ James Morris

    _______________________________________

     James Morris 

     Authorized Representative of Colt, LLC
	 
	 
	 	/s/ James Azlein

    _______________________________________ 

     James Azlein 

     Chief Executive Officer and President 

     BPI Energy, Inc.
		
	 
	 	/s/ Joseph D. Stelzer

    _______________________________________ 

     Joseph D. Stelzer

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    Authorized representative for AFC 

     and APU
	 
	 	/s/ James C. Sevem

    _______________________________________ 

     Authorized Representative for 

     Central States

8EX-10.20

 

Exhibit 10.20

SUMMARY OF DIRECTOR COMPENSATION

     Directors who are not employees of Black Box Corporation (the “Company”) receive
directors’ fees of $7,500 per annum, paid quarterly, and an additional fee of $375 for each
meeting of the Board of Directors attended in person. The Chairman of the Board also receives an
annual fee of $60,000, paid quarterly. Non-employee directors also may receive grants of stock
options or stock appreciation rights under the 1992 Director Stock Option Plan, as amended (the
“Director Plan”). During Fiscal 2006, non-employee directors were
each granted an option to purchase 7,000
shares of the Company’s common stock, par value $.001 per share (the “Common Stock”) under the
Director Plan at an exercise price of $39.77 per share, the fair market value of the Common Stock on the
date of grant of the options.

     Members of the Audit Committee of the Board of Directors receive a fee of $1,500 for each
meeting of the Audit Committee attended in person or by telephone. The Chairman of the Audit
Committee also receives an annual fee of $6,000, paid quarterly.

     In addition, the Company maintains directors’ and officers’ liability insurance. Directors
also are reimbursed customary expenses for attending meetings of the board of directors, board
committees and stockholders.

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