$LBTG HUGE PURCHASE AGREEMENT CONFIRMING COLT RESOURCES, AMS DEVELOPMENT & LIBERTY CONNECTION >> August 24/2012
EX-10.1
2
ex10-1.txt
PURCHASE AGREEMENT
Exhibit 10.1
OWSLEY PURCHASE AGREEMENT
This agreement to purchase the coal mineral rights and the surface rights on the
property specified herein is made effective this 24th day of August 2012 (the
"Agreement"). The Agreement is between and among Liberty Coal Energy, a Nevada
Corporation with an address at 99 18th street, Suite 3000, Denver, Colorado
80202 ("Buyer"), AMS Development LLC, a Kentucky Limited Liability Company, with
an address at 103Ohio Lane, London, KY 40741, ("AMS") and Colt Resources Inc, a
Nevada Corporation, with an address at 2756 N. Green Valley Parkway, Suite 225,
Henderson, NV 89014 ("Colt"). Collectively AMS and Colt are sellers (the "
Sellers"). Collectively, Buyer, AMS and Colt are the "Parties" and any one of
the entities is a "Party".
WHEREAS, Sellers own approximately 1,000 acres of surface rights and 100% of the
coal mineral rights on property located in Owsley County, KY (the "Property"),
which is fully described in the legal description in Schedule A attached hereto;
and
WHEREAS, AMS owns 50% of the coal mineral rights on the Property and Colt owns
100% of the surface rights and 50% of the coal mineral rights on the Property;
and
WHEREAS, Buyer has a surface coal lease on about 40% of the Property (the
"Lease"); and
WHEREAS, Buyer desires to purchase the Property and Sellers desire to sell the
Property; and
WHEREAS, Buyers and Seller desire to maintain the lease in an active state until
the Property is purchased by Buyer from Seller; and
WHEREAS, There is a first mortgage with a note of about $150,000 owed to Larry
Bruce Herald (the "Former Owner"); and
WHEREAS, Darrel Herald, an attorney in Jackson County, KY serves as an escrow
agent for payments made to the Former Owner; and
WHEREAS, the Parties desire to pay in full the note underlying the mortgage to
the Former Owner upon the closing of this Agreement.
NOW THEREFORE, The Parties hereby agree to the following terms and conditions
for the purchase of the Property by Buyer and sale of the Property by Sellers.
1. The Purchase price for the Property is $3,890,000, which was allocated
among surface rights of the Property ("Surface Rights", Recoverable
Coal Value on an "in place basis" and underground coal rights as
follows:
a. Surface Rights of the Property, independent of coal revenue:
$600,000 or about $600/acre.
1
b. Recoverable coal value: $2,700,000 based on an estimated
3,600,000 tons in place at $0.75, plus $150,000 payment on first
mortgage to Former Owner.
c. Underground coal rights: $440,000 based on an estimated 2,200,000
tons (($0.20/ton).
d. Total Purchase Price: $3,450,000.
2. The Purchase Price of $3,890,000 is payable through a combination of
cash/promissory note ($3,450,000) and Buyer common shares ($440,000)
as specified herein.
a. The Cash component: A $500,000 cash payment shall be made at
closing. Said cash payment shall be used first to retire the
mortgage note to the Former Owner, with the balance distributed
to AMS and Colt as shall be specified in Schedule B.
b. The Promissory Note component ($2,950,000), collateralized by a
mortgage on the Property, which shall be paid on the following
schedule.
i. Monthly payments equal to 5% of the gross coal revenue
defined as it is in the current lease by Liberty of a
portion of the property. Said monthly payments shall
continue until the Note is paid in full.
ii. A $650,000 cash payment shall be due and payable on the
six-month anniversary of the purchase Closing. Interest on
the unpaid portion shall increase to 9% on this date.
iii. The unpaid balance on the Note shall be due and payable on
the eighteen-month anniversary of the purchase closing date.
iv. There shall be no penalty for prepayment of the Note.
v. The Promissory Note may be assigned for payment to a third
party in order to facilitate conversion of debt to equity
for Liberty. Said assignment is subject to the approval of
Colt, which shall not be unreasonably withheld. The
collateral for the Promissory Note shall remain unchanged if
the Promissory Note is assigned to a third party for
payment.
c. The Common Stock component: Buyer shall issue Sellers $440,000 in
common stock value at Closing. The formula for this valuation
shall be mutually agreed to by Sellers and Buyer at Closing after
the capital structure of buyer is known, following ongoing
efforts to rise capital and reorganize.
3. Status of the Lease through the Closing of the Agreement. The Lease
shall remain in full force and effect, as entering into this Agreement
does not amend the Lease. When the purchase Agreement is closed, the
Lease shall become null and void as the ongoing relationship between
Buyer and Sellers shall then be governed by the terms of this
Agreement. Although the Lease is not amended, the Parties hereby agree
to the following as pertains to the Lease minimum payments.
a. The Lease required $20,000 monthly payments, with provisions for
a payment holiday for the May 20, 2012 and June 20, 2012 payments
2
provided that certain mining milestones were met. The May and
June payments were not made and the mining milestones were not
performed.
b. The Sellers, who are also the recipients of the monthly minimum
payments, agree to allow the Buyer to retain the May and June
payment holiday even though the mining milestones were not met
provided that Buyer resumes the monthly minimum payments as
follows.
i. Buyer shall pay the $20,000 minimum payments due under the
terms of the Lease for July 20, 2012 through the Close of
this Agreement. Said payments shall be treated as Lease
payments per the term of the Lease Agreement if this
Agreement does not close.
ii. Upon the Close of this Agreement, the total amount paid for
the minimum payments from July to the Close shall be
credited against the principal amount of the Promissory Note
($2,950,000).
iii. The minimum payments shall be distributed according to the
schedule on Schedule C.
4. The Close for this Agreement shall occur when the Buyer completes a
funding sufficient to make the initial $500,000 cash payment. The
Parties anticipate that the Close shall be on or before December 1,
2012; however, as long as Buyers make all monthly minimum payments
referenced in 3.b.i., the Close date can be extended to March 1, 2013,
provided the Buyer also performs the milestones referenced in the
Lease to qualify for the minimum payment holiday. In the event that
the Buyer fails to make the monthly payments and meet the Lease
milestones by March 1, 2013, the Sellers shall have the right, but not
the obligation, to terminate the Lease and the purchase Agreement. If
the Sellers terminate the Lease and the Agreement as permitted, the
Sellers shall retain all monies paid as liquidated damages and the
Buyers shall assign the mining permit to Sellers. If the Buyers make
all monthly payments and meet the mining milestones by March 1, 2013,
the Buyers may continue to mine the property under the terms of the
Lease Agreement.
5. The Parties shall each pay there own expenses as incurred under the
terms of this Agreement. The closing cost associated with the transfer
of the property from Sellers to Buyer shall be prorated as is
customary for transactions of this type.
6. This Agreement shall not create a partnership, joint venture, agency,
employer/employee or similar relationship among the Parties.
7. The rights and duties of each Party under this Agreement are personal
and may not be assigned or delegated without prior written consent of
the other Parties.
8. Each Party hereby indemnifies the other Parties and their officers,
directors, shareholders, employees, affiliates, subsidiaries, agents
and assigns, and holds the other Parties, and their officers,
directors, shareholders, employees, affiliates, subsidiaries, agents
and assigns, harmless from, any losses, liabilities, obligations,
damages, costs or expenses (including without limitation, reasonable
3
attorneys' fees) resulting from or relating to any negligent acts or
omissions by a Party in performing their respective Services under
this Agreement, or any breach of any representation, duty, covenant or
obligation hereunder of each Party or any owner, officer, director or
employee of each Party. This Section 8 shall survive termination or
expiration of this Agreement.
9. This Agreement and all matters relating to this Agreement shall be
governed by and construed in accordance with the law of the State of
Nevada applicable to contracts made and to be wholly performed within
such state. Any dispute or claim between the parties hereto arising
out of this Agreement including, but not limited to, any dispute
regarding the formation of this Agreement, their validity,
interpretation, effect, performance or breach (an "Arbitrable
Dispute") shall be submitted to and resolved by arbitration in Clark
County, Nevada before a panel of three (3) arbitrators in accordance
with the commercial rules then obtaining of the American Arbitration
Association ("AAA"). If the parties are unable to reach agreement on
the selection of the arbitrators, all three (3) will be selected
pursuant to the rules of the AAA. The arbitrators in any Arbitrable
Dispute shall not have authority to modify or change this Agreement in
anyrespect. The prevailing party in any such Arbitrable Dispute shall
be awarded its costs, expenses and reasonable attorneys' fees incurred
in connection with the arbitration. The arbitrators' decision and/or
award will be fully enforceable and subject to an entry of judgment by
any Nevada court of competent jurisdiction
10. Except as otherwise provided herein, all notices that either party is
required or may desire to give the other party hereunder shall be in
writing and shall be sufficiently given if (i) delivered in person,
(ii) sent by registered or certified mail, postage prepaid, return
receipt requested or (iii) delivered by prepaid overnight courier
(e.g. Federal Express, U.S. Post Office Express Mail, United Parcel
Service). All such notices shall be addressed to each party as
follows:
Liberty Coal Energy
99 18th St. Suite 3000
Denver, CO 80202
Mr. Ed Morrow CEO
Mr. Robert Malasek, CFO
Colt Resources Inc
2756 N. Green Valley Parkway, Suite 225
Henderson, NV 89014
Mr. Johnny Thomas, CEO
4
AMS Development LLC
103 Ohio Lane
London, KY 40741
Mr. David Altizer, Member
AMS Development LLC
% Black Hollow Mining LLC
1426 Hidden Timber Drive
Pittsburg, PA 15220
Mr. Glenn Sitter, Member
AMS Development LLC
P.O. Box 902
Bonnyman, KY 41719
Mr. Pat Mitchell, Member
All notices shall be deemed given when received in the case of
delivery in person or by prepaid overnight courier, or within three
(3) days of posting in the United States mail in case of notice by
registered or certified mail, postage prepaid, return receipt
requested.
11. No Party may assign this Agreement or any rights or obligations
hereunder, without the prior written consent of the other Parties;
except as permitted herein.
12. This Agreement constitutes the entire agreement with respect to the
subject matter hereof, supersedes any prior or contemporaneous
agreement among or between the Parties, whether written or oral, with
respect to the subject matter hereof and may be modified or amended
only by a writing signed by the Parties hereto.
13. In the event of a breach or threatened breach of any of the provisions
of this Agreement by any Party, the other Parties shall be entitled to
injunctive relief against the offending Party. Nothing herein shall be
construed as prohibiting any Party from pursuing any other remedies
available to it, legal or equitable, for such breach or threatened
breach, including the recovery of damages from any Party. This Section
13 shall survive termination of this Agreement.
14. Any provision of this Agreement which is held to be prohibited,
invalid or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition,
invalidity or unenforceability without invalidating the remaining
provisions thereof; that any such prohibition, invalidity or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction; and that any
prohibited, invalid or unenforceable provision shall be deemed,
without further action, modified, amended and limited solely to the
extent necessary to render the same valid and enforceable.
5
15. A waiver by a Party of any term or condition of this Agreement in any
instance shall not be deemed or construed to be a waiver of such term
or condition for the future, or of any subsequent breach thereof. All
rights, remedies, undertakings, or obligations contained in this
Agreement shall be cumulative and none of them shall be in limitation
of any other right, remedy, undertaking or obligation.
16. Section headings contained herein are solely for convenience and are
not in any sense to be given weight in the construction of this
Agreement.
17. This Agreement (or the signature pages hereof) may be executed in any
number of counterparts; all such counterparts shall be deemed to
constitute one and the same instrument; and each of said counterparts
shall be deemed an original hereof.
[SIGNATURE PAGE TO FOLLOW]
6
LIBERTY COAL ENERGY
/s/ Ed Morrow
---------------------------------------------
Ed Morrow, CEO & President
COLT RESOURCES INC.
/s/ Johnny R. Thomas
----------------------------------------------
Johnny R. Thomas, CEO & President
AMS DEVELOPMENT LLC
/s/ David Altizer
----------------------------------------------
David Altizer, Member
/s/ Glenn Sitter
---------------------------------------------
Glenn Sitter, Member
/s/ Pat Mitchell
---------------------------------------------
Pat Mitchell, Member
7
Exhibit 10.1
OWSLEY PURCHASE AGREEMENT
This agreement to purchase the coal mineral rights and the surface rights on the
property specified herein is made effective this 24th day of August 2012 (the
"Agreement"). The Agreement is between and among Liberty Coal Energy, a Nevada
Corporation with an address at 99 18th street, Suite 3000, Denver, Colorado
80202 ("Buyer"), AMS Development LLC, a Kentucky Limited Liability Company, with
an address at 103Ohio Lane, London, KY 40741, ("AMS") and Colt Resources Inc, a
Nevada Corporation, with an address at 2756 N. Green Valley Parkway, Suite 225,
Henderson, NV 89014 ("Colt"). Collectively AMS and Colt are sellers (the "
Sellers"). Collectively, Buyer, AMS and Colt are the "Parties" and any one of
the entities is a "Party".
WHEREAS, Sellers own approximately 1,000 acres of surface rights and 100% of the
coal mineral rights on property located in Owsley County, KY (the "Property"),
which is fully described in the legal description in Schedule A attached hereto;
and
WHEREAS, AMS owns 50% of the coal mineral rights on the Property and Colt owns
100% of the surface rights and 50% of the coal mineral rights on the Property;
and
WHEREAS, Buyer has a surface coal lease on about 40% of the Property (the
"Lease"); and
WHEREAS, Buyer desires to purchase the Property and Sellers desire to sell the
Property; and
WHEREAS, Buyers and Seller desire to maintain the lease in an active state until
the Property is purchased by Buyer from Seller; and
WHEREAS, There is a first mortgage with a note of about $150,000 owed to Larry
Bruce Herald (the "Former Owner"); and
WHEREAS, Darrel Herald, an attorney in Jackson County, KY serves as an escrow
agent for payments made to the Former Owner; and
WHEREAS, the Parties desire to pay in full the note underlying the mortgage to
the Former Owner upon the closing of this Agreement.
NOW THEREFORE, The Parties hereby agree to the following terms and conditions
for the purchase of the Property by Buyer and sale of the Property by Sellers.
1. The Purchase price for the Property is $3,890,000, which was allocated
among surface rights of the Property ("Surface Rights", Recoverable
Coal Value on an "in place basis" and underground coal rights as
follows:
a. Surface Rights of the Property, independent of coal revenue:
$600,000 or about $600/acre.
1
b. Recoverable coal value: $2,700,000 based on an estimated
3,600,000 tons in place at $0.75, plus $150,000 payment on first
mortgage to Former Owner.
c. Underground coal rights: $440,000 based on an estimated 2,200,000
tons (($0.20/ton).
d. Total Purchase Price: $3,450,000.
2. The Purchase Price of $3,890,000 is payable through a combination of
cash/promissory note ($3,450,000) and Buyer common shares ($440,000)
as specified herein.
a. The Cash component: A $500,000 cash payment shall be made at
closing. Said cash payment shall be used first to retire the
mortgage note to the Former Owner, with the balance distributed
to AMS and Colt as shall be specified in Schedule B.
b. The Promissory Note component ($2,950,000), collateralized by a
mortgage on the Property, which shall be paid on the following
schedule.
i. Monthly payments equal to 5% of the gross coal revenue
defined as it is in the current lease by Liberty of a
portion of the property. Said monthly payments shall
continue until the Note is paid in full.
ii. A $650,000 cash payment shall be due and payable on the
six-month anniversary of the purchase Closing. Interest on
the unpaid portion shall increase to 9% on this date.
iii. The unpaid balance on the Note shall be due and payable on
the eighteen-month anniversary of the purchase closing date.
iv. There shall be no penalty for prepayment of the Note.
v. The Promissory Note may be assigned for payment to a third
party in order to facilitate conversion of debt to equity
for Liberty. Said assignment is subject to the approval of
Colt, which shall not be unreasonably withheld. The
collateral for the Promissory Note shall remain unchanged if
the Promissory Note is assigned to a third party for
payment.
c. The Common Stock component: Buyer shall issue Sellers $440,000 in
common stock value at Closing. The formula for this valuation
shall be mutually agreed to by Sellers and Buyer at Closing after
the capital structure of buyer is known, following ongoing
efforts to rise capital and reorganize.
3. Status of the Lease through the Closing of the Agreement. The Lease
shall remain in full force and effect, as entering into this Agreement
does not amend the Lease. When the purchase Agreement is closed, the
Lease shall become null and void as the ongoing relationship between
Buyer and Sellers shall then be governed by the terms of this
Agreement. Although the Lease is not amended, the Parties hereby agree
to the following as pertains to the Lease minimum payments.
a. The Lease required $20,000 monthly payments, with provisions for
a payment holiday for the May 20, 2012 and June 20, 2012 payments
2
provided that certain mining milestones were met. The May and
June payments were not made and the mining milestones were not
performed.
b. The Sellers, who are also the recipients of the monthly minimum
payments, agree to allow the Buyer to retain the May and June
payment holiday even though the mining milestones were not met
provided that Buyer resumes the monthly minimum payments as
follows.
i. Buyer shall pay the $20,000 minimum payments due under the
terms of the Lease for July 20, 2012 through the Close of
this Agreement. Said payments shall be treated as Lease
payments per the term of the Lease Agreement if this
Agreement does not close.
ii. Upon the Close of this Agreement, the total amount paid for
the minimum payments from July to the Close shall be
credited against the principal amount of the Promissory Note
($2,950,000).
iii. The minimum payments shall be distributed according to the
schedule on Schedule C.
4. The Close for this Agreement shall occur when the Buyer completes a
funding sufficient to make the initial $500,000 cash payment. The
Parties anticipate that the Close shall be on or before December 1,
2012; however, as long as Buyers make all monthly minimum payments
referenced in 3.b.i., the Close date can be extended to March 1, 2013,
provided the Buyer also performs the milestones referenced in the
Lease to qualify for the minimum payment holiday. In the event that
the Buyer fails to make the monthly payments and meet the Lease
milestones by March 1, 2013, the Sellers shall have the right, but not
the obligation, to terminate the Lease and the purchase Agreement. If
the Sellers terminate the Lease and the Agreement as permitted, the
Sellers shall retain all monies paid as liquidated damages and the
Buyers shall assign the mining permit to Sellers. If the Buyers make
all monthly payments and meet the mining milestones by March 1, 2013,
the Buyers may continue to mine the property under the terms of the
Lease Agreement.
5. The Parties shall each pay there own expenses as incurred under the
terms of this Agreement. The closing cost associated with the transfer
of the property from Sellers to Buyer shall be prorated as is
customary for transactions of this type.
6. This Agreement shall not create a partnership, joint venture, agency,
employer/employee or similar relationship among the Parties.
7. The rights and duties of each Party under this Agreement are personal
and may not be assigned or delegated without prior written consent of
the other Parties.
8. Each Party hereby indemnifies the other Parties and their officers,
directors, shareholders, employees, affiliates, subsidiaries, agents
and assigns, and holds the other Parties, and their officers,
directors, shareholders, employees, affiliates, subsidiaries, agents
and assigns, harmless from, any losses, liabilities, obligations,
damages, costs or expenses (including without limitation, reasonable
3
attorneys' fees) resulting from or relating to any negligent acts or
omissions by a Party in performing their respective Services under
this Agreement, or any breach of any representation, duty, covenant or
obligation hereunder of each Party or any owner, officer, director or
employee of each Party. This Section 8 shall survive termination or
expiration of this Agreement.
9. This Agreement and all matters relating to this Agreement shall be
governed by and construed in accordance with the law of the State of
Nevada applicable to contracts made and to be wholly performed within
such state. Any dispute or claim between the parties hereto arising
out of this Agreement including, but not limited to, any dispute
regarding the formation of this Agreement, their validity,
interpretation, effect, performance or breach (an "Arbitrable
Dispute") shall be submitted to and resolved by arbitration in Clark
County, Nevada before a panel of three (3) arbitrators in accordance
with the commercial rules then obtaining of the American Arbitration
Association ("AAA"). If the parties are unable to reach agreement on
the selection of the arbitrators, all three (3) will be selected
pursuant to the rules of the AAA. The arbitrators in any Arbitrable
Dispute shall not have authority to modify or change this Agreement in
anyrespect. The prevailing party in any such Arbitrable Dispute shall
be awarded its costs, expenses and reasonable attorneys' fees incurred
in connection with the arbitration. The arbitrators' decision and/or
award will be fully enforceable and subject to an entry of judgment by
any Nevada court of competent jurisdiction
10. Except as otherwise provided herein, all notices that either party is
required or may desire to give the other party hereunder shall be in
writing and shall be sufficiently given if (i) delivered in person,
(ii) sent by registered or certified mail, postage prepaid, return
receipt requested or (iii) delivered by prepaid overnight courier
(e.g. Federal Express, U.S. Post Office Express Mail, United Parcel
Service). All such notices shall be addressed to each party as
follows:
Liberty Coal Energy
99 18th St. Suite 3000
Denver, CO 80202
Mr. Ed Morrow CEO
Mr. Robert Malasek, CFO
Colt Resources Inc
2756 N. Green Valley Parkway, Suite 225
Henderson, NV 89014
Mr. Johnny Thomas, CEO
4
AMS Development LLC
103 Ohio Lane
London, KY 40741
Mr. David Altizer, Member
AMS Development LLC
% Black Hollow Mining LLC
1426 Hidden Timber Drive
Pittsburg, PA 15220
Mr. Glenn Sitter, Member
AMS Development LLC
P.O. Box 902
Bonnyman, KY 41719
Mr. Pat Mitchell, Member
All notices shall be deemed given when received in the case of
delivery in person or by prepaid overnight courier, or within three
(3) days of posting in the United States mail in case of notice by
registered or certified mail, postage prepaid, return receipt
requested.
11. No Party may assign this Agreement or any rights or obligations
hereunder, without the prior written consent of the other Parties;
except as permitted herein.
12. This Agreement constitutes the entire agreement with respect to the
subject matter hereof, supersedes any prior or contemporaneous
agreement among or between the Parties, whether written or oral, with
respect to the subject matter hereof and may be modified or amended
only by a writing signed by the Parties hereto.
13. In the event of a breach or threatened breach of any of the provisions
of this Agreement by any Party, the other Parties shall be entitled to
injunctive relief against the offending Party. Nothing herein shall be
construed as prohibiting any Party from pursuing any other remedies
available to it, legal or equitable, for such breach or threatened
breach, including the recovery of damages from any Party. This Section
13 shall survive termination of this Agreement.
14. Any provision of this Agreement which is held to be prohibited,
invalid or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition,
invalidity or unenforceability without invalidating the remaining
provisions thereof; that any such prohibition, invalidity or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction; and that any
prohibited, invalid or unenforceable provision shall be deemed,
without further action, modified, amended and limited solely to the
extent necessary to render the same valid and enforceable.
5
15. A waiver by a Party of any term or condition of this Agreement in any
instance shall not be deemed or construed to be a waiver of such term
or condition for the future, or of any subsequent breach thereof. All
rights, remedies, undertakings, or obligations contained in this
Agreement shall be cumulative and none of them shall be in limitation
of any other right, remedy, undertaking or obligation.
16. Section headings contained herein are solely for convenience and are
not in any sense to be given weight in the construction of this
Agreement.
17. This Agreement (or the signature pages hereof) may be executed in any
number of counterparts; all such counterparts shall be deemed to
constitute one and the same instrument; and each of said counterparts
shall be deemed an original hereof.
[SIGNATURE PAGE TO FOLLOW]
6
LIBERTY COAL ENERGY
/s/ Ed Morrow
---------------------------------------------
Ed Morrow, CEO & President
COLT RESOURCES INC.
/s/ Johnny R. Thomas
----------------------------------------------
Johnny R. Thomas, CEO & President
AMS DEVELOPMENT LLC
/s/ David Altizer
----------------------------------------------
David Altizer, Member
/s/ Glenn Sitter
---------------------------------------------
Glenn Sitter, Member
/s/ Pat Mitchell
---------------------------------------------
Pat Mitchell, Member
7
